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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Year Ended: DECEMBER 31, 1999 Commission File Number: 0-19334
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OUTBACK STEAKHOUSE, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 59-3061413
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
2202 N. WESTSHORE BLVD., 5TH FLOOR, TAMPA, FLORIDA 33607
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(Address of principal executive offices) (Zip Code)
(813) 282-1225
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
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Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE.
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(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in Definitive Proxy or Information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
As of March 24, 2000, the aggregate market value of the voting stock
held by nonaffiliates of the Registrant was $2,113,948,510.
As of March 24, 2000, the number of shares outstanding of the
Registrant's Common Stock, $.01 par value was 77,728,149.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year ended
December 31, 1999 are incorporated by reference in Part II of this report.
Portions of the Registrant's Proxy Statement of Outback Steakhouse, Inc. ("the
Proxy Statement") dated March 28, 2000 for the Annual Meeting of Shareholders
to be held on April 27, 2000 are incorporated by reference in Parts I and III
of this report.
PART I
This Annual Report on Form 10-K and the documents incorporated herein by
reference contain forward-looking statements that have been made pursuant to
the provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements represent the Company's expectations or beliefs
concerning future events, including the following: any statements regarding
future sales and gross profit percentages, any statements regarding the
continuation of historical trends, and any statements regarding the sufficiency
of the Company's cash balances and cash generated from operating and financing
activities for the Company's future liquidity and capital resource needs.
Without limiting the foregoing, the words "believes," "anticipate," "plans,"
"expects," and similar expressions are intended to identify forward-looking
statements. The Company cautions that these statements are further qualified by
important economic and competitive factors that could cause actual results to
differ materially from those in the forward-looking statements, including,
without limitation, risks of the restaurant industry, including a highly
competitive industry with many well-established competitors with greater
financial and other resources than the Company, and the impact changes in
consumer tastes, local, regional and national economic conditions, demographic
trends, employee availability and cost increases. In addition, the Company's
ability to expand is dependent upon various factors, such as the availability
of attractive sites for new restaurants, the ability to negotiate suitable
lease terms, the ability to generate or borrow funds to develop new
restaurants, the ability to obtain various government permits and licenses, and
the recruitment and training of skilled management and restaurant employees.
Accordingly, such forward-looking statements do not purport to be predictions
of future events or circumstances and may not be realized.
ITEM 1. BUSINESS
GENERAL
The Company was incorporated in October 1987 as Multi-Venture Partners, Inc., a
Florida corporation, and in January 1990 the Company changed its name to
Outback Steakhouse, Inc. ("Outback Florida"). Outback Steakhouse, Inc., a
Delaware corporation ("Outback Delaware"), was formed in April 1991 as part of
a corporate reorganization completed in June 1991 in connection with the
Company's initial public offering, as a result of which Outback Delaware became
a holding company for Outback Florida. Carrabba's Italian Grill, Inc. ("CIGI"),
a Florida corporation, was formed in January 1995. Unless the context requires
otherwise, references to the "Company" mean Outback Delaware, its wholly owned
subsidiaries Outback Florida, CIGI and each of the limited partnerships and
joint ventures controlled by the Company.
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In April 1993, the Company purchased a 50% interest in the cash flows of two
Carrabba's Italian Grill restaurants located in Houston, Texas (the "Original
Restaurants"), and entered into a 50-50 joint venture with the founders of
Carrabba's to develop additional Carrabba's Italian Grill restaurants
("Carrabba's"). In January 1995, the founders obtained sole ownership of the
Original Restaurants ("Carrabba's"), and the Company obtained sole ownership of
the Carrabba's concept and the four restaurants in Florida. The original 50-50
joint venture continues to develop restaurants in the State of Texas. The
Company has sole ownership of restaurants outside of Texas, and continues to
develop Carrabba's Italian Grills outside of Texas as Company owned
restaurants, and will pay royalties to the founders ranging from 1.0% to 1.5%
of sales of Carrabba's restaurants opened after 1994.
During 1999, the Company recorded a pre-tax charge to earnings of $5,493,000
which includes approximately $3,617,000 for the write down of impaired assets
and $1,876,000 related to restaurant closings, severance and other costs.
During 1997, the Company recorded a pre-tax charge to earnings of $26,001,000
which included approximately $23,113,000 for the write down of certain impaired
assets and $2,888,000 related to restaurant closings, severance and other
costs. The write down primarily related to Carrabba's restaurant properties,
nine of which were closed during the fourth quarter of 1997. The charges are
presented in the Company's Consolidated Statements of Income in the line item
"Provision for impaired assets and restaurant closings."
In June 1999, the Company, through its wholly owned subsidiary, OS Pacific,
Inc., a Florida corporation, entered into an agreement with Roy Yamaguchi, the
founder of Roy's Restaurants, to develop and operate future Roy's Restaurants
worldwide. Roy's Restaurants is an upscale casual restaurant featuring
"Euro-Asian" cuisine. Although there were 17 Roy's Restaurants in operation at
December 31, 1999, the Company does not have an economic interest in them. The
Company expects to open the first Roy's Restaurant in connection with this
agreement during 2000.
In October 1999, the Company, through its wholly owned subsidiary, OS Prime,
Inc., a Florida corporation, purchased three Fleming's Prime Steakhouse and
Wine Bar ("Fleming's")restaurants and agreed to purchase three additional
Fleming's currently under development by the founders of Fleming's. At the same
time the Company entered into an agreement with the founders of Fleming's to
develop and operate additional Fleming's worldwide. Fleming's is an upscale
casual steakhouse format that serves dinner only and features prime cuts of
beef, fresh seafood, as well as pork, veal and chicken entrees and offers a
selection of over 100 quality wines available by the glass.
CONCEPTS AND STRATEGIES
As of December 31, 1999, the Company's restaurant system included 611
full-service restaurants operated under the name Outback Steakhouse, 95 of
which were franchised to unaffiliated domestic franchisees, 31 of which were
franchised to unaffiliated international franchisees, and one domestic and
six international restaurants which were operated as development joint
ventures. The Company had a direct ownership interest in 476 domestic and two
international Outback Steakhouses. The system also included 72 full-service
restaurants operated under the name Carrabba's Italian Grill, 56 of which were
Company owned and 16 of which were operated as development joint ventures. The
system also included three full-service restaurants operated under the name
Fleming's Prime Steakhouse and Wine Bar. The majority of Outback restaurants
serve dinner only and feature a limited menu of high quality, uniquely seasoned
steaks, prime rib, chops, ribs, chicken, seafood and pasta. Outback also offers
specialty appetizers, including the signature "Bloomin' Onion," desserts and
full liquor service. The majority of
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Carrabba's restaurants serve dinner only and feature a limited menu of high
quality Italian cuisine including a variety of pastas, chicken, seafood, veal
and wood-fired pizza. Carrabba's also offers specialty appetizers, desserts,
coffees and full liquor service. Fleming's restaurants serve dinner only and
feature a limited menu of prime cuts of beef, fresh seafood, veal and chicken
entrees. Fleming's also offers several specialty appetizers and desserts. In
addition to a full service bar, Fleming's offers over 100 quality wines by the
glass. The Company believes that it differentiates its Outback Steakhouse,
Carrabba's and Fleming's restaurants by:
- -- emphasizing consistently high quality ingredients and preparation of a
limited number of menu items that appeal to a broad array of tastes;
- -- featuring generous portions;
- -- attracting a diverse mix of customers through a casual dining
atmosphere emphasizing highly attentive service;
- -- hiring and retaining experienced restaurant management by providing
general managers the opportunity to purchase a 10% interest in the
restaurants they manage; and
- -- limiting service to dinner for the majority of its locations,
(generally from 4:30 p.m. to 11:00 p.m.), which reduces the hours of
restaurant management and employees.
OUTBACK STEAKHOUSE:
Menu. The Outback Steakhouse menu includes several cuts of freshly
prepared, uniquely seasoned and seared steaks, plus prime rib, barbecued ribs,
pork chops, chicken, seafood and pasta. The menu is designed to have a limited
number of selections to permit the greatest attention to quality while offering
sufficient breadth to appeal to all taste preferences. The Company tests new
menu items to replace slower-selling items and regularly upgrades ingredients
and cooking methods to improve quality and consistency of its food offerings.
The menu also includes several specialty appetizers and desserts, together with
full bar service featuring Australian beer and wine. Liquor service accounts
for approximately 13.4% of Outback Steakhouses' revenues. The price range of
appetizers is $2.29 to $7.99 and the price range of entrees is $6.99 to $23.99.
The average check per person was $17.52 during 1999. Outback Steakhouses also
offer a low-priced children's menu, and certain Outback Steakhouses also offer
a separate menu offering larger portions of prime beef with prices ranging from
$19.99 to $28.99.
Casual Atmosphere. Outback Steakhouses feature a casual dining
atmosphere with a decor suggestive of the rustic atmosphere of the Australian
outback. The decor includes blond woods, large booths and tables and Australian
memorabilia such as boomerangs, surfboards, maps and flags.
Restaurant Management and Employees. The general manager of each
Outback is required to purchase a 10% interest in the restaurant he or she
manages for $25,000, and is required to enter into a five-year employment
agreement. By requiring this level of commitment and by providing the general
manager with a significant stake in the success of the restaurant, the Company
believes that it is able to attract and retain experienced and highly motivated
managers. In addition, since the Company's restaurants are generally open for
dinner only, the Company believes that it has an advantage
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in attracting and retaining servers, food preparers and other employees who
find the shorter hours an attractive life-style alternative to restaurants
serving both lunch and dinner.
CARRABBA'S ITALIAN GRILL:
Menu. The Carrabba's Italian Grill menu includes several types of
uniquely prepared Italian dishes including pastas, chicken, seafood, and
wood-fired pizza. The menu is designed to have a limited number of selections
to permit the greatest attention to quality while offering sufficient breadth
to appeal to all taste preferences. The Company tests new menu items to replace
slower-selling items and regularly upgrades ingredients and cooking methods to
improve quality and consistency of its food offerings. The menu also includes
several specialty appetizers, desserts, and coffees, together with full bar
service featuring Italian wines and specialty drinks. Liquor service accounts
for approximately 15.9% of Carrabba's revenues. The price range of appetizers
is $5.99 to $8.99 and the price range of entrees is $7.99 to $17.99 with
nightly specials to $24.99. The average check per person was $18.71 during
1999.
Casual Atmosphere. Carrabba's Italian Grills feature a casual dining
atmosphere with a decor suggestive of a traditional Italian exhibition kitchen
where customers can watch their meals being prepared. The decor includes dark
woods, large booths and tables and Italian memorabilia featuring Carrabba's
family photos, authentic Italian pottery and cooking utensils.
Restaurant Management and Employees. The general manager of each
Carrabba's Italian Grill is required to purchase a 10% interest in the
restaurant he or she manages for $25,000 and is required to enter into a
five-year employment agreement. By requiring this level of commitment and by
providing the general manager with a significant stake in the success of the
restaurant, the Company believes that it is able to attract and retain
experienced and highly motivated managers. In addition, since the Company's
restaurants are generally open for dinner only, the Company believes that it
has an advantage in attracting and retaining servers, food preparers and other
employees who find the shorter hours an attractive life-style alternative to
restaurants serving both lunch and dinner.
FLEMING'S PRIME STEAKHOUSE & WINE BAR:
Menu. The Fleming's Prime Steakhouse and Wine Bar menu features prime
cuts of beef, fresh seafood, as well as pork, veal and chicken entrees.
Accompanying the entrees is an extensive assortment of freshly prepared salads
and side dishes available a la carte. The menu also includes several specialty
appetizers and desserts. In addition to full bar service, Fleming's offers a
selection of over 100 quality wines available by the glass. The price range of
entrees is $17.00 to $34.00. Appetizers range from $4.95 to $9.95 and side
dishes rage from $3.95 to $6.95.
Upscale-Casual Atmosphere. Fleming's Prime Steakhouse and Wine Bar
offers an upscale dining experience in an upbeat, casual setting. The decor
includes rich dark wood in the open dining room. One focal point of the
restaurant is the exhibition kitchen finished in stainless steel and appointed
with copper accents. Private dining rooms are available for private gatherings
or corporate functions.
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EXPANSION STRATEGY
During the year ended December 31, 1999, 71 Outback Steakhouses and 8
Carrabba's Italian Grills were added to the Company's restaurant system. In
2000 and 2001, the Company expects to develop six to eight Carrabba's
restaurants, the majority of which will be Company owned, in existing markets
where it has demonstrated success. The Company expects to open 35 to 45
domestic company-owned Outback Steakhouse restaurants in 2000 and 2001, 5 to 10
domestic franchised restaurants and 20 to 30 international restaurants each
year, of which 2 to 3 will be company-owned, 2 to 3 will be Joint Venture
restaurants primarily in Brazil and Asia and 16 to 24 franchised restaurants.
During 2000, the Company expects to develop new Outback Steakhouses and
Carrabba's Italian Grills in its existing markets and in select new domestic
and international markets including locations in Japan, Dominican Republic,
Portugal, Taiwan, Honduras, China, Australia, Venezuela, and Korea. The Company
also intends to add 2-3 Fleming's Prime Steakhouse & Wine Bar restaurants and 3
to 5 Roy's restaurants to the system during 2000.
The above statements regarding the Company's expansion plans
constitute forward looking statements. The Company notes that a variety of
factors could cause the actual results and experience to differ from the
anticipated results referred to above. The Company's development schedule for
new restaurant openings is subject to a number of risk factors that could cause
actual results to differ, including:
(i) Ability to obtain appropriate real estate sites at acceptable prices;
(ii) Ability to obtain all required governmental permits including zoning
approvals and liquor licenses on a timely basis;
(iii) Impact of government moratoriums or approval processes which could
result in significant delays;
(iv) Ability to obtain all necessary contractors and sub-contractors;
(v) Union activities such as picketing and hand billing which could delay
construction;
(vi) Weather and acts of God beyond the Company's control resulting in
construction delays.
The Company utilizes controlled partnerships, in which the Company
owns 51% to 90%, for the development of restaurants in order to attract
experienced restaurant operators and to provide them with the incentive to
actively supervise the development and operation of several restaurants in a
particular market.
The Company also utilizes development joint ventures, in which the
Company owns between 40.5% to 45% and its joint venture partner owns 36% to
40.5%, and the remaining 19% is owned by the area operating partner and the
restaurant managing partner for select Outback Steakhouses and Carrabba's
Italian Grills located in Florida, Georgia, South Carolina, Tennessee and Texas.
Site Selection. The Company currently leases approximately 50% of its
restaurant sites. In the future, the Company expects to construct a significant
number of free standing restaurants on owned or leased sites. The Company's
leased sites are generally located in strip shopping centers. The Company
expects 75% to 85% of new restaurants to be free standing locations.
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The Company considers the location of a restaurant to be critical to its
long-term success and devotes significant effort to the investigation and
evaluation of potential sites. The site selection process focuses on trade area
demographics, such as visibility, accessibility and traffic volume. The Company
also reviews potential competition and the profitability of national chain
restaurants operating in the area. Senior management inspects and approves each
restaurant site. Construction of a new restaurant takes approximately 90 to 360
days from the date the location is leased or under contract.
The Company designs the interior of its restaurants in-house and
utilizes outside architects when necessary. A typical Outback Steakhouse is
approximately 6,200 square feet and features a dining room and an island,
full-service liquor bar. The dining area of a typical Outback Steakhouse
consists of 35 to 38 tables and seats approximately 166 people. The bar area
consists of approximately ten tables and has seating capacity for approximately
54 people. Appetizers and complete dinners are served in the bar area.
A typical Carrabba's Italian Grill is approximately 6,650 square feet
and features a dining room, pasta bar and a full service liquor bar. The dining
area of a typical Carrabba's Italian Grill consists of 35 to 40 tables and
seats approximately 160 people. The liquor bar area includes six tables and
seating capacity for approximately 59 people, and the pasta bar has seating
capacity for approximately 12 people. Appetizers and complete dinners are
served in both the pasta bar and liquor bar.
A typical Fleming's is approximately 7,500 square feet and features a
dining room, an exhibition kitchen and full service liquor bar. The dining area
of a typical Fleming's consists of approximately 50 tables and seats
approximately 200 people. The bar area includes 4 tables and bar seating with a
capacity for approximately 32 people.
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RESTAURANT LOCATIONS
The following table sets forth the location of each existing Outback
Steakhouse as of December 31, 1999:
<TABLE>
<CAPTION>
UNAFFILIATED UNAFFILIATED
COMPANY OWNED DOMESTIC FRANCHISED INTERNATIONAL
RESTAURANTS RESTAURANTS FRANCHISED RESTAURANTS
- --------------------------------- ----------------------------- -------------------------------- ---------------------------
<S> <C> <C> <C>
Arizona (9) Nevada (7) Alaska (1) Aruba (1)
Arkansas (5) New Hampshire (1) Alabama (12) Bahamas (1)
Colorado (12) New Jersey (13) California (46) Canada (13)
Connecticut (4) New Mexico (3) Florida (1) Germany (1)
Delaware (1) New York (20) Idaho (4) Guam (1)
Florida (57) North Carolina (23) Mississippi (5) Hawaii (2)
Georgia (24) North Dakota (1) New York (1) Hong Kong (2)
Illinois (17) Ohio (25) Oregon (8) Korea (3)
Indiana (15) Oklahoma (8) Tennessee (3) Mexico (2)
Iowa (4) Pennsylvania (16) Washington (13) Peru (1)
Kansas (5) Rhode Island (1) Panama (1)
Kentucky (8) South Carolina (16) DOMESTIC Puerto Rico (3)
Louisiana (12) South Dakota (1) JOINT VENTURE
Maryland (13) Tennessee(12) RESTAURANTS INTERNATIONAL
Massachusetts (12) Texas (50) ------------------- COMPANY OWNED
Michigan (18) Utah (5) Florida (1) RESTAURANTS
Minnesota (9) Virginia (25) -------------------
Missouri (10) West Virginia (6) Phillipines (1)
Montana (1) Wisconsin (3) Cayman Islands (1)
Nebraska (3) Wyoming (1)
INTERNATIONAL
JOINT VENTURE
RESTAURANTS
-------------------
Brazil (5)
Phillipines (1)
</TABLE>
The following table sets forth the location of each existing Carrabba's Italian
Grill as of December 31, 1999:
COMPANY OWNED JOINT VENTURE
RESTAURANTS RESTAURANTS
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Arizona (3) Florida (3)
Colorado (6) Georgia (1)
Georgia (5) South Carolina (1)
Florida (24) Tennessee (2)
Maryland (4) Texas (9)
New Jersey (3)
New Mexico (2)
Ohio (1)
North Carolina (5)
Pennsylvania (2)
Virginia (1)
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The following table sets forth the location of each existing Fleming's Prime
Steakhouse & Wine Bar as of December 31, 1999:
COMPANY OWNED
RESTAURANTS
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Arizona (1)
California (2)
RESTAURANT OPERATIONS
Management and Employees. The management staff of a typical Outback
Steakhouse or Carrabba's Italian Grill consists of one general manager, one
assistant manager and one kitchen manager. Each restaurant also employs
approximately 50 to 70 hourly employees, many of whom work part-time. The
general manager of each restaurant has primary responsibility for the
day-to-day operation of his or her restaurant and is required to abide by
Company established operating standards.
Purchasing. The Company's management negotiates directly with
suppliers for most food and beverage products to ensure uniform quality and
adequate supplies and to obtain competitive prices. The Company and its
franchisees purchase substantially all food and beverage products from
authorized local or national suppliers and the Company will periodically make
advance purchases of various inventory items to ensure adequate supply or
obtain favorable pricing. The Company currently purchases substantially all of
its beef from three suppliers. The Company believes that beef of comparable
quality, as well as all other essential food and beverage products are
available, or upon short notice can be made available from alternative
qualified suppliers.
Supervision and Training. The Company requires its area operating
partners and restaurant general managers to have significant experience in the
full-service restaurant industry. In addition, the Company has developed a
comprehensive 12-week training course which all operating partners and general
managers are required to complete. The program emphasizes the Company's
operating strategy, procedures and standards. The Company's senior management
meets quarterly with the Company's operating partners to discuss
business-related issues and share ideas. In addition, members of senior
management regularly visit the restaurants to ensure that the Company's
concept, strategy and standards of quality are being adhered to in all aspects
of restaurant operations.
The restaurant general manager and area operating partners, together
with the Company's President, Regional Vice Presidents, Vice President of
Training and Director of Training, are responsible for selecting and training
the employees for each new restaurant. The training period for new
non-management employees lasts approximately one week and is characterized by
on-the-job supervision by an experienced employee. Ongoing employee training
remains the responsibility of the restaurant manager. Written tests and
observation in the work place are used to evaluate each employee's performance.
Special emphasis is placed on the consistency and quality of food preparation
and service which is monitored through monthly meetings between kitchen managers
and senior management.
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Advertising and Marketing. The Company uses radio and television
advertising in selected markets where it is cost-effective. Historically the
Company's goal was to develop a sufficient number of restaurants in each market
it serves to permit the cost-effective use of radio and television advertising.
In the future, the Company expects that its non-Outback restaurants will be less
dependent on broadcast media and more dependent on site visibility and local
marketing. In addition, the Company engages in a variety of promotional
activities, such as contributing goods, time and money to charitable, civic and
cultural programs, in order to increase public awareness of the Company's
restaurants.
GENERAL MANAGER PROGRAM
The general manager of each Company owned Outback and Carrabba's
restaurant is required, as a condition of employment, to sign a five-year
employment agreement and is required to purchase a 10% interest in the
restaurant he or she is employed to manage. The Company requires each new
unaffiliated franchisee to provide the same opportunity to the general manager
of each new restaurant opened by that franchisee. To date, the purchase price
for the 10% interest has been fixed at $25,000. During the five-year employment
term, each general manager is prohibited from selling or otherwise transferring
his 10% interest, and after the five-year term of employment, any sale or
transfer of that interest is subject to certain rights of first refusal as
defined in the employment agreement. In addition, each general manager is
required to sell his 10% interest to his employer or its general partners upon
termination of employment on terms set forth in his employment agreement. The
Company intends to continue the general manager investment program.
The three Fleming's that the Company acquired in 1999 do not have a
general manager investment program. However, the Company expects to develop a
similar program with new concepts.
OWNERSHIP STRUCTURES
The Company's ownership interests in Outback Steakhouse restaurants
and Carrabba's Italian Grills are divided into two basic categories: (i)
Company owned restaurants which are owned directly by the Company, by limited
partnerships or by controlled joint ventures, and (ii) development joint
ventures. The results of operations of Company owned restaurants are included
in the Company's Consolidated Statements of Income, and the results of
operations of restaurants owned by development joint ventures are accounted for
using the equity method of accounting.
COMPETITION
The restaurant industry is intensely competitive with respect to
price, service, location and food quality, and there are many well-established
competitors with substantially greater financial and other resources than the
Company. Some of the Company's competitors have been in existence for a
substantially longer period than the Company and may be better established in
the markets where the Company's restaurants are or may be located. The
restaurant business is often affected by changes in consumer tastes, national,
regional or local economic conditions, demographic trends, traffic patterns and
the type, number and location of competing restaurants. In addition, factors
such as inflation, increased food, labor and benefits costs and the
availability of experienced management and hourly employees may adversely
affect the restaurant industry in general and the Company's restaurants in
particular.
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UNAFFILIATED FRANCHISE PROGRAM
At December 31, 1999, there were 95 domestic franchised Outback
Steakhouses and 31 international franchised Outback Steakhouses. Each
unaffiliated domestic franchisee paid an initial franchise fee of $40,000 for
each restaurant and pays a continuing monthly royalty of 3% of gross restaurant
sales and a monthly marketing administration fee of 0.5% of gross restaurant
sales. In addition, until such time as the Company establishes a national
advertising fund or a regional advertising cooperative, all franchisees are
required to expend, on a monthly basis, a minimum of 3% of gross restaurant
sales on local advertising. Once the Company establishes a national advertising
fund or a regional advertising cooperative, covered domestic franchisees will be
required to contribute, on a monthly basis, 3.5% of gross restaurant sales to
the fund or cooperative in lieu of local advertising. Initial fees and royalties
for international franchisees vary by market. There were no unaffiliated
franchises of Carrabba's Italian Grills or Fleming's at December 31, 1999.
All unaffiliated franchisees are required to operate their Outback
Steakhouse restaurants in compliance with the Company's methods, standards and
specifications regarding such matters as menu items, ingredients, materials,
supplies, services, fixtures, furnishings, decor and signs although the
franchisee has full discretion to determine the prices to be charged to
customers. In addition, all franchisees are required to purchase all food,
ingredients, supplies and materials from suppliers approved by the Company.
EMPLOYEES
The Company employs approximately 40,500 persons, approximately 250 of
whom are corporate personnel employed by Outback Steakhouse, Carrabba's, and
Outback Steakhouses International franchising group. Approximately 1,700 are
restaurant management personnel and the remainder are hourly restaurant
personnel. Of the approximately 250 corporate employees, 35 are in management
and 215 are administrative or office employees. None of the Company's employees
is covered by a collective bargaining agreement.
TRADEMARKS
The Company regards its Outback Steakhouse service mark, its
Carrabba's Italian Grill service mark and its "Bloomin' Onion" trademark as
having significant value and as being important factors in the marketing of its
restaurants. The Company has also obtained a trademark for several other of its
Outback Steakhouse menu items, and the "No Rules. Just Right." and "Aussie
Mood. Awesome Food." advertising slogans. The Company is aware of names and
marks similar to the service mark of the Company used by other persons in
certain geographic areas in which the Company has restaurants. However, the
Company believes such uses will not adversely affect the Company. The Company's
policy is to pursue registration of its marks whenever possible and to oppose
vigorously any infringement of its marks.
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GOVERNMENT REGULATION
The Company is subject to various federal, state and local laws
affecting its business. Each of the Company's restaurants is subject to
licensing and regulation by a number of governmental authorities, which may
include alcoholic beverage control, health and safety and fire agencies in the
state or municipality in which the restaurant is located. Difficulties in
obtaining or failures to obtain the required licenses or approvals could delay
or prevent the development of a new restaurant in a particular area.
Approximately 13.7% of the Company's revenues is attributable to the
sale of alcoholic beverages. Alcoholic beverage control regulations require
each of the Company's restaurants to apply to a state authority and, in certain
locations, county or municipal authorities for a license or permit to sell
alcoholic beverages on the premises and to provide service for extended hours
and on Sundays. Typically, licenses must be renewed annually and may be revoked
or suspended for cause at any time. Alcoholic beverage control regulations
relate to numerous aspects of daily operations of the Company's restaurants,
including minimum age of patrons and employees, hours of operation,
advertising, wholesale purchasing, inventory control and handling, storage and
dispensing of alcoholic beverages. The failure of a restaurant to obtain or
retain liquor or food service licenses would adversely affect the restaurant's
operations.
The Company may be subject in certain states to "dram-shop" statutes,
which generally provide a person injured by an intoxicated person the right to
recover damages from an establishment which wrongfully served alcoholic
beverages to the intoxicated person. The Company carries liquor liability
coverage as part of its existing comprehensive general liability insurance.
The Company's restaurant operations are also subject to federal and
state minimum wage laws governing such matters as working conditions, overtime
and tip credits. Significant numbers of the Company's food service and
preparation personnel are paid at rates related to the federal minimum wage
and, accordingly, further increases in the minimum wage could increase the
Company's labor costs.
The Americans with Disabilities Act prohibits discrimination in
employment and public accommodations on the basis of disability. The Act became
effective in January 1992 with respect to public accommodation and July 1992
with respect to employment. Under the Act, the Company could be required to
expend funds to modify its restaurant to provide service to, or make reasonable
accommodations for the employment of, disabled persons.
12
<PAGE> 13
ITEM 2. PROPERTIES
Approximately 50% of the Company's restaurants are located in leased
space. In the future, the Company intends to continue to construct and own a
significant number of new restaurants on owned or leased land. Initial lease
expirations primarily range from five to ten years, with the majority of the
leases providing for an option to renew for at least one additional term. All
of the Company's leases provide for a minimum annual rent, and most leases call
for additional rent based on sales volume at the particular location over
specified minimum levels. Generally, the leases are net leases which require
the Company to pay the costs of insurance, taxes and a portion of lessors'
operating costs. See page 7 for listing of restaurant locations.
The Company's executive offices are located in approximately 90,000
square feet of leased space in Tampa, Florida, under a lease expiring in 2010.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any litigation other than routine
matters which are incidental to the Company's business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
There were no matters submitted for vote of security holders during
the fourth quarter of 1999.
Executive Officers of Registrant. Joseph J. Kadow, 43, joined the
Company in April, 1994, as Vice President, General Counsel and Secretary. Mr.
Kadow serves at the pleasure of the Board of Directors.
13
<PAGE> 14
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCK MATTERS
Filed herewith as Exhibit 13.03 and incorporated herein by reference.
DIVIDEND POLICY:
The Company has never paid a cash dividend on its Common Stock. The
Board of Directors intends to retain earnings of the Company to support
operations and to finance expansion and does not intend to pay cash dividends
on Common Stock for the foreseeable future. The payment of cash dividends in
the future will depend upon such factors as earnings levels, capital
requirements, the Company's financial condition and other factors deemed
relevant by the Board of Directors.
The Board of Directors authorized a three-for-two stock-split of the
Company's Common Stock to be effected in the form of a stock dividend payable
on March 2, 1999 to the shareholders of record as of February 16, 1999.
14
<PAGE> 15
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- -------- -------- --------
(Dollar amounts in thousands,
except per share data)
<S> <C> <C> <C> <C> <C>
Statements of Income Data(2):
Restaurant sales........................ $1,632,720 $1,392,587 $1,179,211 $954,481 $741,989
Other revenues.......................... 13,293 10,024 7,684 4,979 3,119
---------- ---------- ---------- -------- --------
Revenues ............................... $1,646,013 $1,402,611 $1,186,895 $959,460 $745,108
---------- ---------- ---------- -------- --------
Cost of sales .......................... 620,249 543,770 453,826 372,080 291,382
Labor and other related expenses ....... 387,006 327,261 281,233 219,824 166,855
Other operating expenses ............... 347,644 298,630 260,084 200,690 153,419
General & administrative expenses ...... 64,067 53,757 45,158 34,932 27,129
Provision for impaired assets and
restaurant closings (1) .............. 5,493 26,001
Loss (income) from operations of
unconsolidated affiliates ............ (1,089) (514) 467 102 (442)
---------- ---------- ---------- -------- --------
Total costs and expenses ............... 1,423,370 1,222,904 1,066,769 827,628 638,343
---------- ---------- ---------- -------- --------
Income from operations ................. 222,643 179,707 120,126 131,832 106,765
Other income (expense) net (3,042) (1,870)
Interest income (expense)............... 1,416 (1,357) (2,847) (1,400) (1,587)
---------- ---------- ---------- -------- --------
Income before elimination of
minority partners' interest
and provision for income taxes ....... 221,017 176,480 117,279 130,432 105,178
Elimination of minority
partners' interest ................... 29,770 21,914 19,882 18,165 15,250
---------- ---------- ---------- -------- --------
Income before provision for income taxes 191,247 154,566 97,397 112,267 89,928
Provision for income taxes ............. 66,924 53,638 33,749 40,287 29,167
---------- ---------- ---------- -------- --------
Income before cumulative effect of a
change in accounting principle........ 124,323 100,928 63,648 71,980 60,761
Cumulative effect of a change in
accounting principle (net of taxes)... (4,880)
---------- ---------- ---------- -------- --------
Net income ............................. $ 124,323 $ 96,048 $ 63,648 $ 71,980 $ 60,761
========== ========== ========== ======== ========
Basic earnings per common share
Income before cumulative effect of
change in accounting principle....... $ 1.61 $ 1.33 $ 0.86 $ 0.97 $ 0.83
Cumulative effect of change in
accounting principle (net of taxes).. (0.06)
---------- ---------- ---------- -------- --------
Net income $ 1.61 $ 1.27 $ 0.86 $ 0.97 $ 0.83
========== ========== ========== ======== ========
Diluted earnings per common share
Income before cumulative effect of
change in accounting principle....... $ 1.57 $ 1.30 $ 0.85 $ 0.94 $ 0.82
Cumulative effect of change in
accounting principle (net of taxes).. (0.06)
---------- ---------- ---------- -------- --------
Net income $ 1.57 $ 1.24 $ 0.85 $ 0.94 $ 0.82
========== ========== ========== ======== ========
Pro forma net income (2) ............... $ 122,398 $ 94,683 $ 62,774 $ 71,847 $ 57,554
========== ========== ========== ======== ========
Pro forma basic earnings per common
share (2) ............................ $ 1.59 $ 1.25 $ 0.85 $ 0.97 $ 0.79
========== ========== ========== ======== ========
Pro forma diluted earnings per
common share (2) ..................... $ 1.55 $ 1.22 $ 0.84 $ 0.94 $ 0.78
========== ========== ========== ======== ========
Basic weighted average number of
common shares outstanding ............ 77,089 75,702 74,007 73,976 72,744
Diluted weighted average number of
common shares outstanding ............. 79,197 77,484 75,014 76,190 74,072
Balance Sheet Data:
Working capital (deficiency) ........... $ 12,276 $ 5,600 $ (10,153) $(36,392) $(12,350)
Total assets ........................... 852,282 718,918 603,568 479,561 377,810
Long-term debt ......................... 1,519 38,966 70,492 49,850 40,102
Interest of minority partners in
consolidated partnerships ............ 17,704 9,912 4,561 1,675 2,749
Stockholders' equity ................... 692,965 548,440 437,382 343,686 267,719
</TABLE>
15
<PAGE> 16
(1) The 1999 amount includes approximately $3,617,000 for the write down of
certain impaired assets and $1,876,000 related to restaurant closings,
severence and other costs. The 1997 amount includes approximately
$23,113,000 for the write down of certain impaired assets and $2,888,000
related to restaurant closings, severance and other costs. These write downs
primarily related to Carrabba's restaurant properties.
(2) In 1999, the Company issued shares of its Common Stock for all of the
outstanding shares of its New England franchisee which owned 17 Outback
Steakhouses in Connecticut, Massachusetts, New Hampshire and Rhode Island.
In 1995 and 1996, the Company issued shares of its Common Stock to five of
its franchisees in exchange for all of their outstanding interests in
Outback Steakhouses located in Oklahoma, Nebraska, Arkansas, Kansas, Ohio,
Kentucky, Virginia, Illinois, Missouri and Tennessee. Pro forma amounts
include an adjustment to increase the provision for income taxes to reflect
the anticipated tax as if the merging Companies had not elected to be taxed
under Subchapter S of the Internal Revenue Code. These mergers were
accounted for by the pooling-of-interests method using historical amounts
and the amounts have been restated to give retroactive effect to the mergers
for all periods presented.
All applicable share and per share data have been restated to reflect the
retroactive effect of a three-for-two stock split effective on March 2, 1999.
16
<PAGE> 17
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Filed as Exhibit 13.01 and incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Report of Independent Certified Public Accountants and Consolidated
Financial Statements of the Company are filed herewith as Exhibit 13.02 and are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
17
<PAGE> 18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item concerning the Company's
executive officers, except for Joseph J. Kadow whose information is reported on
Part I under the caption of Executive Officers of Registrant, and directors is
incorporated herein by reference to the information set forth under the section
entitled "Election of Directors" and "Beneficial Owners and Management" in the
Company's Definitive Proxy Statement dated March 28, 2000.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by
reference to the information set forth under the section entitled "Executive
Compensation" in the Company's Definitive Proxy Statement dated March 28, 2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated herein by
reference to the information set forth under the section entitled "Beneficial
Owners and Management" in the Company's Definitive Proxy Statement dated March
28, 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated herein by
reference to the information set forth under the section entitled "Compensation
Committee Interlocks and Insider Participation" in the Company's Definitive
Proxy Statement dated March 28, 2000.
18
<PAGE> 19
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a)(1) LISTING OF FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants
Page 7
The following consolidated financial statements of the Registrant and
subsidiaries, included in the Registrant's Annual Report to
Shareholders, are incorporated by reference in Item 8:
Consolidated Balance Sheets -
December 31, 1999 and 1998
Page 8
Consolidated Statements of Income - Years ended December 31, 1999,
1998, and 1997
Page 9
Consolidated Statements of Stockholders' Equity - Years ended December
31, 1999, 1998, and 1997
Page 10
Consolidated Statements of Cash Flows Years ended December 31, 1999,
1998, and 1997
Page 11
Notes to Consolidated Financial Statements
Pages 12 - 19
(b) REPORTS ON FORM 8-K
None.
(c) FINANCIAL STATEMENT SCHEDULES
None.
19
<PAGE> 20
(d) EXHIBITS
The exhibits in response to this portion of Item 14 are listed below.
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
3.01 Certificate of Incorporation of the Company (included as an exhibit to
Registrant's Registration Statement on Form S-1, No. 33-40255, and
incorporated herein by reference)
3.02 By-laws of the Company (included as an exhibit to Registrant's
Registration Statement on Form S-1, No. 33-40255, and incorporated
herein by reference)
4.01 Specimen Stock Certificate (included as an exhibit to Registrant's
Registration Statement on Form S-1, No. 33-40255, and incorporated
herein by reference)
4.02 Agreement and Plan of Reorganization dated December 18, 1991 among
Outback Delaware, Outback Florida, American Restaurants of South
Florida, Inc. ("ARSF") and the stockholders of ARSF (included as an
exhibit to Registrant's Registration Statement on Form S-1, No.
33-44452, and incorporated herein by reference)
4.03 Agreement and Plan of Reorganization dated July 1, 1992 among Outback
Delaware, Outback Florida, Stone Danker, Inc. ("SDI") and the
stockholders of SDI (included as an exhibit to Registrant's
Registration Statement on Form S-1, No. 33-49586 and incorporated
herein by reference)
4.04 Agreement and Plan of Reorganization dated March 1, 1993 among Outback
Delaware, Outback Florida, Florida Summit Corporation ("Summit") and
the stockholders of Summit (included as an exhibit to Registrant's
Annual Report on Form 10-K for the year ended December 31,1992 and
incorporated herein by reference)
4.05 Agreement and Plan of Reorganization dated March 1, 1993 among Outback
Delaware, Outback Florida, Grantham Group, Inc. ("Grantham Group") and
the stockholders of Grantham Group (included as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended December
31,1992 and incorporated herein by reference)
4.06 Agreement and Plan of Reorganization dated March 1, 1993 among Outback
Delaware, Outback Florida, F & B, Inc. ("F & B") FT & B
Enterprises/Ohio, Inc. ("FT & B"), Taste Buds, Inc. ("Taste Buds"),
Taste Buds of St. Matthews, Ltd., the stockholders of F & B, FT & B,
and Taste Buds, and the partners of Taste Buds of St. Matthews, Ltd
(included as an exhibit to Registrant's Annual Report on Form 10-K for
the year ended December 31,1992 and incorporated herein by reference)
4.07 Joint Venture Agreement dated March 31, 1993 between Outback/Carrabba,
Inc. and Mangia Beve, Inc. (included as an exhibit to Registrant's
Annual Report on Form 10-K for the year ended December 31,1993 and
incorporated herein by reference)
</TABLE>
20
<PAGE> 21
<TABLE>
<S> <C>
4.08 Agreement and Plan of Reorganization Among Outback Steakhouse, Inc.,
Outback Steakhouse of Florida, Inc., Aussie Enterprises, Inc., Attinger
& Associates, Inc., Aussie of Louisiana, L.L.P., Aussie of Baton Rouge
No. 1901, L.L.C., Aussie of New Orleans No. 1911, L.L.C., Aussie of
Lafayette No. 1921, L.L.C., Aussie of Shreveport No. 1931, L.L.C., Aussie
of Slidell No. 1912, L.L.C., Braxton I. Moody, IV and Bruce Attinger
(included as an exhibit to Registrant's Report on Form 10-Q for the
quarter ended March 31, 1994 and incorporated herein by reference)
4.09 Agreement and Plan of Reorganization dated May 18, 1994 Among Outback
Steakhouse, Inc., Outback Steakhouse of Florida, Inc., Hugh Connerty,
Carl Sahlsten, Ridge Sink, Michael Coble, and the Partnerships and
their respective General Partners (included as an exhibit to
Registrant's Report on Form 10-Q/A for the quarter ended March 31, 1994
and incorporated herein by reference)
4.10 Royalty Agreement dated April 1995 among Carrabba's Italian Grill,
Inc., Outback Steakhouse, Inc., Mangia Beve, Inc., Carrabba, Inc.,
Carrabba Woodway, Inc., John C. Carrabba, III, Damian C. Mandola, and
John C. Carrabba, Jr. (included as an exhibit to Registrant's Report on
Form 10-Q for the quarter ended March 31, 1995 and incorporated herein
by reference)
4.11 Reorganization Agreement dated January 1, 1995 among Carrabba/Outback
Joint Venture, Outback/Carrabba, Inc., Outback Steakhouse, Inc., Mangia
Beve, Inc., Carrabba, Inc., Carrabba's of Woodway, Inc., John C.
Carrabba, III, Damian C. Mandola, and John C. Carrabba, Jr. (included
as an exhibit to Registrant's Report on Form 10-Q for the quarter ended
March 31, 1995 and incorporated herein by reference)
4.12 Agreement and Plan of Reorganization dated March 24, 1995 among Outback
Steakhouse, Inc., Outback Steakhouse of Florida, Inc.,
Fioretti-Theisen, Inc., and Charles E. Fioretti (included as an exhibit
to Registrant's Registration Statement on Form S-3, No. 33-95498, and
incorporated herein by reference)
4.13 Agreement and Plan of Reorganization dated July 31, 1995 among Outback
Steakhouse, Inc., Outback Steakhouse of Florida, Inc., G'Day, Inc.,
Donald R. Everts, and Claire E. Everts (included as an exhibit to
Registrant's Registration Statement on Form S-3, No. 33-97166, and
incorporated herein by reference)
4.14 Agreement for Sale and Purchase of Partnership Interest among Outback
Steakhouse, Inc., Shlemon, Inc. and Steve Shlemon (included as an
exhibit to Registrant's Registration Statement on Form S-3,
No.333-00176, and incorporated herein by reference)
4.15 Agreement and Plan of Reorganization dated December 26, 1995 among
Outback Steakhouse, Inc., Outback Steakhouse of Florida, Inc., Hal W.
Smith, William E. Rosenthal, Geoff Alston, David M. Brauckmann, Don
Elliot, Joseph C. Penshorn, Waymon D. Williams, Williams J. Bishop,
Dan Trierweiler, OB-Little Rock, Inc., Lane Resources Trust (included
as an exhibit to Registrant's Report on Form 8-K dated December 31,
1995 and incorporated herein by reference)
</TABLE>
21
<PAGE> 22
<TABLE>
<S> <C>
4.16 Agreement and Plan of Reorganization dated December 26, 1995 among
Outback Steakhouse, Inc., Outback Steakhouse of Florida, Inc., Michael
Duty, Robert Krug, Henry Harris, Kent Little (included as an exhibit to
Registrant's Report on Form 8-K dated December 31, 1995 and
incorporated herein by reference)
4.17 Agreement and Plan of Reorganization dated December 26, 1995 among
Outback Steakhouse, Inc., Outback Steakhouse of Florida, Inc., Frank
Attinger, Kevin A. Rowell, F. Beaven Smith (included as an exhibit to
Registrant's Report on Form 8-K dated December 31, 1995 and
incorporated herein by reference)
4.18 Agreement and Plan of Reorganization dated February 2, 1996 among
Outback Steakhouse, Inc., Outback Steakhouse of Florida, Inc., Robert
Frey, Ronald Sock, David Ferry, Joseph Sumislawski, FMI Restaurants,
Inc., Fore Management West End, Inc., Fore Management, Inc. and Fore
Management Leasing , L.P. (included as an exhibit to Registrant's
Report on Form 8-K/A dated December 31, 1995 and incorporated herein by
reference)
4.19 Agreement and Plan of Reorganization dated February 2, 1996 among
Outback Steakhouse, Inc., Eric P. Bachelor, Brenica Restaurant Group,
Inc., First Four Group, Inc., and various partners (included as an
exhibit to Registrant's Registration Statement on Form S-3, No.
333-4674, and incorporated herein by reference)
4.20 Agreement and Plan of Reorganization, dated May 28, 1996, among Outback
Steakhouse, Inc., Outback Steakhouse of Florida, Inc., Nevada Summit
Corporation, and Anthony P. Grappo (included as Exhibit 2.2 to
Registration Statement on Form S-3, No. 333-14597, and incorporated
herein by reference)
4.21 Agreement and Plan of Reorganization among Outback Steakhouse, Inc.,
Outback Steakhouse of Florida, Inc. and Wibel & Associates (included
as Exhibit 2.1 to Registration Statement on Form S-3, No. 333-38985,
and incorporated herein by reference)
4.22 Agreement and Plan of Reorganization among Outback Steakhouse Inc.,
Outback Steakhouse of Florida, Inc. and Novello and Associates, Inc.
(included as an exhibit to Registrant's Annual Report on Form 10-K for
the year ended December 31,1997 and incorporated herein by reference)
4.23 Agreement and Plan of Reorganization among Outback Steakhouse Inc.,
Outback Steakhouse of Florida, Inc. and Songlines, Inc. (included as
an exhibit to Registrant's Annual Report on Form 10-K for the year
ended December 31,1997 and incorporated herein by reference)
4.24 Agreement and Plan of Reorganization among Outback Steakhouse Inc.,
Outback Steakhouse of Florida, Inc. and Stone, Inc. (included as an
exhibit to Registrant's Annual Report on Form 10-K for the year ended
December 31,1997 and incorporated herein by reference)
4.25 Agreement and Plan of Reorganization among Outback Steakhouse Inc., Outback
Steakhouse of Florida, Inc. and Hood & Associates, Inc. and Dennis L. Hood
(included as an exhibit to Registrant's Annual Report on Form 10-K for the
year ended December 31,1997 and incorporated herein by reference)
</TABLE>
22
<PAGE> 23
<TABLE>
<S> <C>
4.26 Agreement and Plan of Reorganization among Outback Steakhouse Inc.,
Outback Steakhouse of Florida, Inc. and Aaron Restaurant Group, Ltd.
(included as an exhibit to Registrant's Annual Report on Form 10-K for
the year ended December 31,1997 and incorporated herein by reference)
4.27 Agreement and Plan of Reorganization among Outback Steakhouse Inc.,
Outback Steakhouse of Florida, Inc., Samuel Tancredi and Tancredi, Inc.
(included as an exhibit to Registrant's Annual Report on Form 10-K for
the year ended December 31,1998 and incorporated herein by reference)
4.28 Agreement and Plan of Reorganization among Outback Steakhouse Inc.,
Outback Steakhouse of Florida, Inc., Flanagan & Associates, Inc., and
Thomas J. Flanagan (filed herewith)
4.29 Agreement and Plan of Reorganization among Outback Steakhouse Inc.,
Outback Steakhouse of Florida, Inc., J K Steak, Inc., and James Pollard
(filed herewith)
4.30 Joint Venture Agreement of Roy's/Outback dated June 17, 1999 between OS
Pacific, Inc., a wholly-owned subsidiary of Outback Steakhouse, Inc.,
and Roy's Holdings, Inc. (filed herewith)
4.31 Agreement and Plan of Reorganization among Outback Steakhouse Inc.,
Outback Steakhouse of Florida, Inc., Coble, Inc., and Michael W. Coble
(filed herewith)
4.32 Asset Purchase Agreement by and between OS Prime, Inc., a wholly-owned
subsidiary of Outback Steakhouse, Inc., and Fleming Prime Steakhouse I,
L.L.C. (filed herewith)
4.33 Operating Agreement of Outback/Fleming's, LLC, a Delaware limited
liability company, dated October 1, 1999, by and among OS Prime, Inc.,
a wholly-owned subsidiary of Outback Steakhouse, Inc., FPSH Limited
Partnership and AWA III Steakhouses, Inc. (filed herewith)
4.34 Agreement and Plan of Reorganization among Outback Steakhouse Inc.,
Outback Steakhouse of Florida, Inc., Charles Angelopulos, Anthony
Athanas, Jr., Donald W. Burton, Arthur Collias, Peter Lynch, J. Brian
McCarthy, John F. Doyle, Kevin P. Harron, Tedesco Steakhouse, Inc., a
Massachusetts corporation, and KPH, Inc., a Massachusetts corporation
(filed herewith)
10.01 Lease for the Company's executive offices (included as and exhibit to
Registrant's Registration Statement on Form S-1, No. 33-44452, and
incorporated herein by reference)
10.02 Service and Non-Competition Agreement dated January 2, 1990, between
Outback Florida and Chris T. Sullivan (included as and exhibit to
Registrant's Registration Statement on Form S-1, No. 33- 40255, and
incorporated herein by reference)
10.03 Service and Non-Competition Agreement dated January 2, 1990, between
Outback Florida and Robert D. Basham (included as and exhibit to
Registrant's Registration Statement on Form S-1, No. 33-40255, and
incorporated herein by reference)
</TABLE>
23
<PAGE> 24
<TABLE>
<S> <C>
10.04 Service and Non-Competition Agreement dated January 2, 1990, between
Outback Florida and John Timothy Gannon (included as and exhibit to
Registrant's Registration Statement on Form S-1, No. 33-40255, and
incorporated herein by reference)
10.05 Employment Agreement dated February 2, 1988, between Outback Florida
and John Timothy Gannon (included as and exhibit to Registrant's
Registration Statement on Form S-1, No. 33-40255, and incorporated
herein by reference)
10.06 Employment Agreement dated January 2, 1990, between Outback Florida and
Robert Merritt (included as and exhibit to Registrant's Registration
Statement on Form S-1, No. 33-40255, and incorporated herein by
reference)
10.07 Stock Option Agreement dated January 2, 1990, between Outback Florida
and Robert Merritt (included as and exhibit to Registrant's
Registration Statement on Form S-1, No. 33-40255, and incorporated
herein by reference)
10.08 Stock Option Plan (included as and exhibit to Registrant's Registration
Statement on Form S-1, No. 33-40255, and incorporated herein by
reference)
10.09 Loan Agreement dated September 14, 1994 between Outback Steakhouse,
Inc. and Barnett Bank of Tampa (included as an exhibit to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994 and
incorporated herein by reference)
10.10 Employment Agreement dated October, 1990 between Paul Avery and Outback
Florida (included as an exhibit to Registrant's Annual Report on Form
10-K for the year ended December 31, 1994 and incorporated herein by
reference)
10.11 Stock Option Agreement dated November 30, 1990 between Outback Florida
and Paul Avery (included as an exhibit to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994 and incorporated herein
by reference)
10.12 Employment Agreement dated March, 1994 between Outback Florida and
Joseph J. Kadow (included as an exhibit to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1994 and incorporated
herein by reference)
10.13 Stock Option Agreement dated April 1, 1994 between Outback Florida and
Joseph J. Kadow (included as an exhibit to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1994 and incorporated
herein by reference)
10.14 Amendment to Lease for the Company's executive offices dates June 10,
1994 (included as an exhibit to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994 and incorporated herein by
reference)
10.15 Amendment to Lease for the Company's executive office dated December
17, 1995 (included as an exhibit to Registrant's Annual Report on Form
10-K for the year ended December 31, 1995 and incorporated herein by
reference)
</TABLE>
24
<PAGE> 25
<TABLE>
<S> <C>
10.16 Stock Purchase Agreement dated July 18, 1995 among Outback Steakhouse,
Inc., Robert D. Basham, J. Timothy Gannon, and Bommerang Air, Inc.
(included as an exhibit to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995 and incorporated herein by reference)
10.17 First Amendment to Loan Agreement dated August 14, 1995 between Outback
Steakhouse, Inc. and Barnett Bank of Tampa (included as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended December 31,
1995 and incorporated herein by reference)
10.18 Amended and Restated Revolving Promissory Noted dated August 14, 1995
between Outback Steakhouse, Inc. and Barnett Bank of Tampa (included as
an exhibit to Registrant's Annual Report on Form 10- K for the year
ended December 31, 1995 and incorporated herein by reference)
10.19 Second Amendment to Loan Agreement dated May 30, 1996 between Outback
Steakhouse, Inc. and Barnett Bank of Tampa (included as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended December 31,
1996 and incorporated herein by reference)
10.20 Amended and Restated Revolving Promissory Note dated May 30, 1996
between Outback Steakhouse, Inc. and Barnett Bank of Tampa (included as
an exhibit to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996 and incorporated herein by reference)
10.21 First Amendment to Second Amended and Restated Loan Agreement dated May
30, 1996 between Outback Steakhouse, Inc. and Barnett Bank of Tampa
(included as an exhibit to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1996 and incorporated herein by reference)
10.22 Amended and Restated Commercial Promissory Note dated May 30, 1996
between Outback Steakhouse, Inc. and Barnett Bank of Tampa (included as
an exhibit to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996 and incorporated herein by reference)
10.23 Credit Agreement dated as of August 22, 1997 among Outback Steakhouse,
Inc., as Borrower, Outback Steakhouse of Florida, Inc., and Carrabba's
Italian Grill, Inc., as Guarantors, The Lenders Identified Herein, as
Lenders and Barnett Bank, N.A., as Agent (included as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended December 31,
1997 and incorporated herein by reference)
10.24 Lease for the Company's executive offices (included as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended December 31,
1998 and incorporated herein by reference)
10.25 Credit Agreement dated as of December 21, 1999 among Outback
Steakhouse, Inc., Wachovia Bank, N.A., as Agent, Wachovia Securities,
Inc., as Sole Arranger, SunTrust Bank, [Tampa Bay], as Syndication
Agent, and SouthTrust Bank, National Association, as Documentation
Agent (filed herewith)
</TABLE>
25
<PAGE> 26
<TABLE>
<S> <C>
13.01 Management's Discussion and Analysis (filed herewith)
13.02 Report of Independent Certified Public Accountants and Consolidated
Financial Statements (filed herewith)
13.03 Market for the Registrant's Common Stock and Related Stock Matters
(filed herewith)
13.04 Independent Auditors' Report (filed herewith)
21.01 List of Subsidiaries (filed herewith)
23.01 Consent of PricewaterhouseCoopers LLP (filed herewith)
27.01 Financial Data Schedule (filed herewith)(for SEC use only)
</TABLE>
26
<PAGE> 27
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) 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.
OUTBACK STEAKHOUSE, INC.
By: /s/ Chris T. Sullivan
-----------------------------------
Chris T. Sullivan, Chairman
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT
AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<S> <C> <C>
/s/ Chris T. Sullivan Chairman, Chief Executive March 29, 2000
- ----------------------------- Officer and Director
Chris T. Sullivan (Principal Executive Officer)
/s/ Robert S. Merritt Senior Vice President, March 29, 2000
- ----------------------------- Chief Financial Officer,
Robert S. Merritt Treasurer and Director
(Principal Financial Officer and
Principal Accounting Officer)
/s/ Robert D. Basham President, Chief Operating March 29, 2000
- ----------------------------- Officer and Director
Robert D. Basham
/s/ J. Timothy Gannon Senior Vice President and March 29, 2000
- -------------------------- Director
J. Timothy Gannon
/s/ Paul E. Avery Director March 29, 2000
- -----------------------------
Paul E. Avery
/s/ John A. Brabson, Jr. Director March 29, 2000
- -----------------------------
John A. Brabson, Jr.
/s/ Charles H. Bridges Director March 29, 2000
- -----------------------------
Charles H. Bridges
/s/ W.R. Carey, Jr. Director March 29, 2000
- -----------------------------
W.R. Carey, Jr.
</TABLE>
27
<PAGE> 28
<TABLE>
<S> <C> <C>
/s/ Edward L. Flom Director March 29, 2000
- -----------------------------
Edward L. Flom
/s/ Debbi Fields Rose Director March 29, 2000
- -----------------------------
Debbi Fields Rose
/s/ Nancy Schneid Director March 29, 2000
- -----------------------------
Nancy Schneid
/s/ Lee Roy Selmon Director March 29, 2000
- -----------------------------
Lee Roy Selmon
/s/ Toby S. Wilt Director March 29, 2000
- -----------------------------
Toby S. Wilt
</TABLE>
28
<PAGE> 1
EXHIBIT 4.28
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
OUTBACK STEAKHOUSE, INC.,
OUTBACK STEAKHOUSE OF FLORIDA, INC.,
FLANAGAN & ASSOCIATES, INC.,
AND
THOMAS J. FLANAGAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 - PLAN OF ACQUISITION....................................................................1
1.1 THE MERGER................................................................................1
1.2 ADJUSTMENTS...............................................................................2
1.3 CLOSING...................................................................................2
1.4 EXECUTION AND DELIVERY OF CLOSING DOCUMENTS...............................................2
1.5 EXECUTION AND FILING OF MERGER DOCUMENTS..................................................3
1.6 EFFECTIVENESS OF MERGER...................................................................3
1.7 FURTHER ASSURANCES........................................................................3
1.8 CERTIFICATES..............................................................................3
1.9 CLOSING OF TRANSFER BOOKS.................................................................3
1.10 FRACTIONAL SHARES.........................................................................3
1.11 ACCOUNTING TREATMENT......................................................................3
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF FAI AND FLANAGAN.....................................4
2.1 ORGANIZATION AND GOOD STANDING............................................................4
2.2 POWER AND AUTHORITY.......................................................................4
2.3 FOREIGN CORPORATION.......................................................................4
2.4 AUTHORITY AND VALIDITY....................................................................4
2.5 BINDING EFFECT............................................................................4
2.6 COMPLIANCE WITH OTHER INSTRUMENTS.........................................................5
2.7 CAPITALIZATION OF FAI.....................................................................5
2.8 ABSENCE OF CERTAIN CHANGES................................................................5
2.9 TAX LIABILITIES...........................................................................6
2.10 NO UNDISCLOSED LIABILITIES................................................................7
2.11 TITLE TO PROPERTIES.......................................................................7
2.12 CONTRACTS.................................................................................7
2.13 LITIGATION AND GOVERNMENT CLAIMS..........................................................7
2.14 NO VIOLATION OF ANY INSTRUMENT............................................................7
2.15 NECESSARY APPROVALS AND CONSENTS..........................................................8
2.16 COMPLIANCE WITH LAWS......................................................................8
2.17 ACCURACY OF INFORMATION FURNISHED.........................................................8
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF FLANAGAN.............................................8
3.1 AUTHORITY AND VALIDITY....................................................................8
3.2 BINDING EFFECT............................................................................8
3.3 OWNERSHIP.................................................................................9
3.4 VOTING....................................................................................9
3.5 RESIDENCY.................................................................................9
3.6 COMPLIANCE WITH OTHER INSTRUMENTS.........................................................9
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS (Continued)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF OSI AND OUTBACK......................................9
4.1 ORGANIZATION AND GOOD STANDING............................................................9
4.2 FOREIGN QUALIFICATION.....................................................................9
4.3 POWER AND AUTHORITY.......................................................................9
4.4 AUTHORITY AND VALIDITY....................................................................9
4.5 BINDING EFFECT............................................................................9
4.6 COMPLIANCE WITH OTHER INSTRUMENTS.........................................................10
4.7 CAPITALIZATION OF OSI.....................................................................10
4.8 SEC REPORTS...............................................................................10
4.9 LITIGATION AND GOVERNMENT CLAIMS..........................................................11
4.10 NECESSARY APPROVALS AND CONSENTS..........................................................11
4.11 ABSENCE OF CERTAIN CHANGES OR EVENTS......................................................11
ARTICLE 5 - JOINT COVENANTS OF FAI, FLANAGAN, OSI AND OUTBACK......................................11
5.1 NOTICE OF ANY MATERIAL CHANGE.............................................................11
5.2 COOPERATION...............................................................................12
5.3 POST-CLOSING ADJUSTMENT...................................................................12
5.4 DISTRIBUTION AND ALLOCATIONS..............................................................12
5.5 ADDITIONAL AGREEMENTS.....................................................................13
ARTICLE 6 - COVENANTS OF FAI AND FLANAGAN..........................................................13
6.1 SECURITIES LAW COMPLIANCE.................................................................13
6.2 PAYMENT OF LIABILITIES....................................................................14
6.3 POOLING...................................................................................15
ARTICLE 7 - COVENANTS OF OSI AND OUTBACK...........................................................15
7.1 EMPLOYMENT AGREEMENTS.....................................................................15
7.2 ASSUMED LIABILITIES.......................................................................15
ARTICLE 8 - JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS......................................15
8.1 CONSENTS TO TRANSACTION...................................................................15
8.2 ABSENCE OF LITIGATION.....................................................................16
8.3 DISSENTER'S RIGHTS........................................................................16
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS OF FAI.............................................16
9.1 COMPLIANCE................................................................................16
9.2 REPRESENTATIONS AND WARRANTIES............................................................16
9.3 MATERIAL ADVERSE CHANGES..................................................................16
ARTICLE 10 - CONDITIONS PRECEDENT TO OBLIGATIONS OF OSI AND
OUTBACK...................................................................................16
10.1 COMPLIANCE................................................................................17
10.2 REPRESENTATIONS AND WARRANTIES............................................................17
10.3 CURRENT FINANCIAL STATUS..................................................................17
10.4 MATERIAL ADVERSE CHANGES..................................................................17
10.5 POOLING...................................................................................17
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS (Continued)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 11 - INDEMNIFICATION.......................................................................17
11.1 INDEMNIFICATION BASED ON AGREEMENT........................................................17
11.2 LIMITATION................................................................................18
11.3 COOPERATION...............................................................................18
11.4 NOTICE....................................................................................18
ARTICLE 12 - MISCELLANEOUS.........................................................................18
12.1 TERMINATION...............................................................................18
12.2 EXPENSES..................................................................................19
12.3 ENTIRE AGREEMENT..........................................................................19
12.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES................................................19
12.5 COUNTERPARTS..............................................................................19
12.6 NOTICES...................................................................................20
12.7 SUCCESSORS AND ASSIGNS....................................................................20
12.8 GOVERNING LAW.............................................................................20
12.9 WAIVER AND OTHER ACTION...................................................................20
12.10 SEVERABILITY..............................................................................20
12.11 HEADINGS..................................................................................20
12.12 CONSTRUCTION..............................................................................21
12.13 JURISDICTION AND VENUE....................................................................21
12.14 ENFORCEMENT...............................................................................21
12.15 FURTHER ASSURANCES........................................................................21
12.16 EQUITABLE REMEDIES........................................................................21
EXHIBIT A
ARTICLES OF MERGER.................................................................................A-1
EXHIBIT B
DISCLOSURE SCHEDULES...............................................................................B-1
</TABLE>
iii
<PAGE> 5
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered effective as of the 30th day of September, 1998, by and among OUTBACK
STEAKHOUSE, INC., a Delaware corporation ("OSI"), OUTBACK STEAKHOUSE OF FLORIDA,
INC., a Florida corporation ("Outback"), FLANAGAN & ASSOCIATES, INC., a Colorado
corporation ("FAI") and THOMAS J. FLANAGAN, an individual residing in the State
of Colorado ("Flanagan").
W I T N E S S E T H:
WHEREAS, Outback is a wholly-owned subsidiary of OSI; and
WHEREAS, Flanagan is the sole owner of the issued and outstanding
common stock of FAI, and Flanagan is the sole director, President and is
responsible for the day-to-day operations of FAI; and
WHEREAS, Outback and FAI have entered into that certain Florida limited
partnership known as Outback/Denver-I, Limited Partnership ("Partnership");
WHEREAS, the Partnership operates Outback Steakhouse restaurants in the
State of Colorado, Wyoming and Montana; and
WHEREAS, the Board of Directors of FAI has approved the merger of FAI
into Outback (the "Merger") upon the terms and conditions set forth in this
Agreement; and
WHEREAS, for federal income tax purposes it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, pursuant to the Merger, FAI will be merged with and into
Outback and all of the outstanding shares of capital stock of FAI will be
converted into shares of common stock, par value $.01, of OSI (the "OSI Common
Stock"); and
WHEREAS, the parties hereto desire by this Agreement to set forth the
terms and conditions upon which they are willing to consummate the Merger.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties hereto covenant and agree
as follows:
ARTICLE 1
PLAN OF ACQUISITION
1.1 THE MERGER. Subject to and upon the terms and conditions
contained herein, FAI shall be merged with and into Outback, with Outback being
the surviving corporation, in accordance with the Articles of Merger
substantially in the form attached to this Agreement as EXHIBIT A (the "Merger
<PAGE> 6
Agreement"), which will be executed and delivered by OSI, Outback, and FAI prior
to the Merger. As a result of the Merger, each voting and nonvoting common share
of FAI outstanding immediately before the Effective Date (as herein defined)
shall, by virtue of the Merger and without any further action being required by
the holders thereof, be converted into and exchanged for 35.6675 shares of OSI
Common Stock.
1.2 ADJUSTMENTS.
(a) Except as otherwise provided in this SECTION 1.2, the
total number of shares of OSI Common Stock to be issued pursuant to the
Merger shall be Seventy-One Thousand Three Hundred Thirty Five
(71,335).
(b) If, between the date of this Agreement and the Closing
Date or the Effective Date, as the case may be, (i) the outstanding
shares of capital stock of FAI shall have been changed into a different
number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination, exchange of
shares, or readjustment, with a record date within such period, or a
stock dividend thereon shall be declared with a record date within such
period or (ii) FAI shall have issued additional shares of its capital
stock, the number of shares of OSI Common Stock received in exchange
for each share of FAI's capital stock shall be adjusted so that the
aggregate number of shares of OSI Common Stock received in exchange for
all shares of FAI's capital stock (assuming no Dissenting Shares)
remains at 71,335.
(c) If, between the date of this Agreement and the Closing
Date or the Effective Date, as the case may be, the outstanding shares
of OSI Common Stock shall have been changed into a different number of
shares or a different class by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares, or
readjustment, with a record date within such period, or a stock
dividend thereon shall be declared with a record date within such
period, the number of shares of OSI Common Stock received in exchange
for each share of capital stock of FAI (as specified in SECTION 1.1
hereof) shall be adjusted to accurately reflect such change.
1.3 CLOSING. The closing of the transactions contemplated by this
Agreement, including the Merger (the "Closing"), shall take place at 10:00 a.m.,
Tampa time, at the offices of Outback on January 31, 1999, or on such date and
at such other time and place as is agreed upon by the parties hereto. The day on
which the Closing occurs is herein referred to as the "Closing Date". If any of
the conditions to the obligations of the parties to this Agreement have not been
satisfied or waived by the Closing Date, then the party to this Agreement that
is unable to meet such condition or conditions shall be entitled to postpone the
Closing by written notice to the other parties until such condition shall have
been satisfied (which such party shall seek to cause to happen at the earliest
practicable date) or waived, but the Closing shall occur not later than February
28, 1999, unless further extended by written agreement of the parties to this
Agreement. The parties shall use their best efforts to effectuate a timely
closing as provided in this SECTION 1.3.
1.4 EXECUTION AND DELIVERY OF CLOSING DOCUMENTS. Before the
Closing, each party shall cause to be prepared and at the Closing the parties
shall execute and deliver each agreement and instrument required by this
Agreement or the Merger Agreement to be so executed and delivered and not
theretofore accomplished. At the Closing, each party also shall execute and
deliver such other appropriate and customary documents as the other parties
2
<PAGE> 7
reasonably may request for the purpose of consummating the transactions
contemplated by this Agreement and the Merger Agreement. All actions taken at
the Closing shall be deemed to have been taken simultaneously at the time the
last of any such actions is taken or completed.
1.5 EXECUTION AND FILING OF MERGER DOCUMENTS. At the time of
completion of the Closing, OSI, Outback, FAI and Flanagan agree to take the
following actions:
(a) to execute and deliver all documents and certificates
relating to the Merger required to be executed by them that have not
already been so executed and that are required under applicable
federal, state and local laws to be filed in order validly to
effectuate the Merger; and
(b) to cause Articles of Merger to be filed with the Secretary
of State of the State of Florida and the Secretary of State of the
State of Colorado and a Certificate of Merger to be issued by each such
officer.
1.6 EFFECTIVENESS OF MERGER. The Merger shall become effective
under the laws of Florida upon filing of the Articles of Merger with the
Secretary of State of the State of Florida and the Secretary of State of the
State of Colorado (the "Effective Date"). Such Effective Date shall be indicated
on Certificates of Merger issued by the Secretary of State of the State of
Florida and by the Secretary of State of the State of Colorado pursuant to the
provisions of Sections 607.1101-607.1107 of the Florida Business Corporation Act
(the "Florida Act") and the laws of the State of Colorado ("Colorado Law").
1.7 FURTHER ASSURANCES. After the Closing, the parties hereto
shall execute and deliver such additional documents and take such additional
actions as may reasonably be deemed necessary or advisable by any party in order
to consummate the transactions contemplated by this Agreement and by the Merger
Agreement, and to vest more fully in Outback the ownership of and the rights to
the business and assets of FAI as existed immediately before the Effective Date.
1.8 CERTIFICATES. As soon as practicable after the Effective Date,
OSI shall make available and each holder of capital stock of FAI shall be
entitled to receive upon surrender of stock certificates of FAI representing FAI
capital stock for cancellation, certificates representing the number of shares
of OSI Common Stock into which such shares are converted in the Merger as
provided in SECTION 1.1 hereof. The OSI Common Stock into which such FAI capital
stock is converted shall be deemed issued at the Effective Date.
1.9 CLOSING OF TRANSFER BOOKS. At the Closing Date, the stock
transfer books of FAI shall be closed and no transfer of capital stock of FAI,
shall thereafter be made.
1.10 FRACTIONAL SHARES. No fractional shares of OSI Common Stock
and no certificates or scrip therefor shall be issued. Instead, one whole share
of OSI Common Stock shall be issued for each fractional share of .5 or more of
one whole share and each fractional share of less than .5 of one whole share
shall be disregarded.
1.11 ACCOUNTING TREATMENT. It is the intention of the parties
hereto that the Merger will be treated for financial reporting purposes as a
pooling of interests.
3
<PAGE> 8
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF FAI AND FLANAGAN
Each of FAI and Flanagan, jointly and severally, represent and warrant
to OSI and Outback as follows:
2.1 ORGANIZATION AND GOOD STANDING. FAI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado.
2.2 POWER AND AUTHORITY. FAI has the requisite power and authority
and all material licenses and permits required by governmental authorities to
own, lease and operate its properties and assets and to carry on its businesses
as currently being conducted.
2.3 FOREIGN CORPORATION. FAI is duly qualified or licensed to do
business and in good standing as a foreign corporation in every jurisdiction
where the failure to so qualify could have a material adverse effect on its
respective business, operations, assets or financial condition.
2.4 AUTHORITY AND VALIDITY.
(a) FAI has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement, the Merger
Agreement and the other documents executed or to be executed by FAI in
connection with this Agreement; and the execution, delivery and
performance by FAI of this Agreement, the Merger Agreement and the
other documents executed or to be executed by FAI in connection with
this Agreement have been duly authorized by all necessary corporate
action. The execution, delivery and performance by FAI of this
Agreement, the Merger Agreement and any other documents executed or to
be executed in connection with this Agreement and the consummation of
the transactions provided for herein have been duly authorized and
approved by the board of directors and shareholders of FAI as required
under the laws of the State of Colorado and FAI's corporate governance
documents.
(b) Flanagan has the power and authority to execute, deliver
and perform his obligations under this Agreement and the other
documents executed or to be executed by Flanagan in connection with
this Agreement.
2.5 BINDING EFFECT. This Agreement, the Merger Agreement and the
other documents executed or to be executed by FAI and Flanagan in connection
with this Agreement have been or will have been duly executed and delivered by
FAI and Flanagan, and are or will be, when executed and delivered, the legal,
valid and binding obligations of each of FAI and Flanagan enforceable in
accordance with their terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by
equitable principles of general applicability.
4
<PAGE> 9
2.6 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the execution and
delivery by FAI nor Flanagan of this Agreement and the Merger Agreement, nor the
consummation by them of the transactions contemplated hereby and thereby, will
violate, breach, be in conflict with, or constitute a default under, or permit
the termination or the acceleration of maturity of, or result in the imposition
of any lien, claim or encumbrance upon any material property or asset of FAI or
Flanagan pursuant to, its certificate of incorporation, bylaws, partnership
agreement, operating agreement or other charter or governance document, or any
note, bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan
or lease agreement, other agreement or instrument (including with customers),
judgment, order, injunction or decree by which FAI or Flanagan is bound, to
which either of them is a party, or to which any assets of either of them are
subject; PROVIDED, HOWEVER, this SECTION 2.5 shall not apply with respect to any
of the foregoing if FAI is bound thereby, a party thereto, or its assets
subject, solely by reason of its status as a partner in the Partnership.
2.7 CAPITALIZATION OF FAI.
(a) The authorized capital stock of FAI consists of Fifty
Thousand (50,000) common shares. There are two thousand (2,000) common
shares issued and outstanding, all of which are owned by Flanagan.
There are no other shareholders of FAI and no other persons with rights
or options to acquire capital stock of FAI. All of the issued and
outstanding shares of capital stock of FAI have been duly authorized
and validly issued and are fully paid and nonassessable. There are no
shares of capital stock of FAI held in its treasury.
(b) There are no voting trusts, shareholder agreements or
other voting arrangements to which the shareholder of FAI is a party.
(c) There is no outstanding subscription, contract,
convertible or exchangeable security, option, warrant, call or other
right obligating FAI to issue, sell, exchange or otherwise dispose of,
or to purchase, redeem or otherwise acquire, shares of, or securities
convertible into or exchangeable for, capital stock of FAI.
2.8 ABSENCE OF CERTAIN CHANGES. From December 31, 1997 to the
Closing Date, (except solely as a result of FAI's status as a partner in the
Partnership) FAI has not:
(a) suffered any material adverse change in its business,
results of operations, working capital, assets, liabilities, or
condition (financial or otherwise) or the manner of conducting its
business;
(b) suffered any material damage or destruction to or loss of
its assets not covered by insurance, or any loss of suppliers or
employees;
(c) acquired or disposed of any asset, or incurred, assumed,
guaranteed, endorsed, paid or discharged any indebtedness, liability or
obligation, or subjected or permitted to be subjected any material
amount of assets to any lien, claim or encumbrance of any kind, except
in the ordinary course of business or pursuant to agreements in force
at the date of this Agreement and identified in Item 2.8(c) of the
Disclosure Schedules;
5
<PAGE> 10
(d) forgiven, compromised, canceled, released, waived or
permitted to lapse any material rights or claims;
(e) entered into or terminated any lease, agreement,
commitment or transaction, or agreed to or made any changes in any
leases or agreements, other than transactions and commitments entered
into in the ordinary course of business;
(f) written up, written down or written off the book value of
any assets;
(g) declared, paid or set aside for payment any dividend or
distribution with respect to its capital stock;
(h) redeemed, purchased or otherwise acquired, or sold,
granted or otherwise disposed of, directly or indirectly, any of its
capital stock or securities or any rights to acquire such capital stock
or securities, or agreed to changes in the terms and conditions of any
such rights outstanding as of the date of this Agreement;
(i) except in the ordinary course of business, increased the
compensation of any employee or paid any bonuses to any employee or
contributed to any employee benefit plan;
(j) entered into any employment, consulting, compensation or
collective bargaining agreement with any person or group, except oral
employment agreements which can be terminated at will; or
(k) entered into, adopted or amended any employee benefit plan
or severance agreements.
2.9 TAX LIABILITIES. FAI has filed all federal, state, county,
local and foreign tax returns and reports required to be filed by them by the
date hereof, including those with respect to income, payroll, property,
withholding, social security, unemployment, franchise, excise and sales taxes;
FAI has either paid in full all taxes that have become due as reflected on any
return or report and any interest and penalties with respect thereto or have
fully accrued on their books or have established adequate reserves for all taxes
payable but not yet due; and have made cash deposits with appropriate
governmental authorities representing estimated payments of taxes, including
income taxes and employee withholding tax obligations. No extension or waiver of
any statute of limitations or time within which to file any return has been
granted to FAI with respect to any tax. No unsatisfied deficiency, delinquency
or default for any tax, assessment or governmental charge has been claimed,
proposed or assessed against FAI nor has FAI received notice of any such
deficiency, delinquency or default. FAI has no reason to believe that FAI has or
may have any tax liabilities other than those reflected on the unaudited balance
sheet of FAI as of December 31, 1998, with any notes thereto, and the related
unaudited statements of income for the twelve months ended December 31, 1998,
together with supplemental information on FAI, each prepared and attested to by
the chief financial officer of FAI (the "Balance Sheets") and those arising in
the ordinary course of business since the date thereof. With regard to the
foregoing, FAI has relied on the accuracy and completeness of the Schedule K-1
provided by the Partnership.
Flanagan shall have sole responsibility for filing all required tax
returns for FAI. OSI shall assist Flanagan in preparing income tax returns and
shall cooperate with Flanagan to the extent necessary therefor, and Flanagan
6
<PAGE> 11
shall provide OSI with copies of all such returns at least fifteen (15) days
prior to filing.
2.10 NO UNDISCLOSED LIABILITIES. There are no liabilities or
obligations of FAI (other than material liabilities arising solely by reason of
FAI's status as a partner in the Partnership) of any nature, whether absolute,
accrued, contingent or otherwise, other than liabilities or obligations
indicated in Items 2.10(a) and 2.10(b) of the Disclosure Schedules.
2.11 TITLE TO PROPERTIES. FAI has good and marketable title to the
assets reflected in its books and records as being owned by it, (except as they
have since been affected by transactions in the ordinary course of business and
consistent with past practices) the real and personal properties reflected in
the Balance Sheets (except for assets subject to financing leases required to be
capitalized under generally accepted accounting principles, all of which are so
reflected in the Balance Sheet or notes thereto) and all assets purchased by FAI
since the date of the Balance Sheet, in each case free and clear of any lien,
claim or encumbrance, except as reflected in the Balance Sheet or notes thereto
and in Item 2.11 of the Disclosure Schedule and except for liens for taxes,
assessments or other governmental charges not yet due and payable.
Except for those assets acquired since the date of the Balance Sheets,
all material properties and assets owned by FAI are properly reflected on the
applicable Balance Sheets and notes thereto.
2.12 CONTRACTS. Excluding (i) contracts and commitments between
Outback or OSI and FAI or the Partnership, (ii) contracts and commitments
entered into by the Partnership to which Outback or OSI is a party, (iii)
contracts and commitments entered into by FAI in the ordinary course of the
Partnership's business without violation of the provisions of the Partnership
Agreement, and (iv) contracts and commitments entered into with the written
consent of OSI or Outback, Item 2.12 of the Disclosure Schedule is a complete
and accurate list of all of the contracts and commitments (including summaries
of oral contracts) to which FAI is a party or by which FAI is bound:
2.13 LITIGATION AND GOVERNMENT CLAIMS. Except as indicated in Item
2.13 of the Disclosure Schedule, there is no pending suit, claim, action or
litigation or administrative, arbitration or other proceeding or governmental
investigation or inquiry against FAI or the Partnership or to which any of their
business or assets is subject. Except as indicated in Item 2.13 of the
Disclosure Schedule, there are no such proceedings threatened or, to the best
knowledge of FAI or Flanagan, contemplated or, to the best knowledge of FAI or
Flanagan, any basis for any unasserted claims (whether or not the potential
claimant may be aware of the claim) of any nature that might be asserted against
FAI or the Partnership.
2.14 NO VIOLATION OF ANY INSTRUMENT. Except as indicated in Item
2.14 of the Disclosure Schedule, FAI is not in violation of or default under nor
has any event occurred that, with the lapse of time or the giving of notice or
both, would constitute a violation of or default under or permit the termination
or the acceleration of maturity of or result in the imposition of a lien, claim
or encumbrance upon any property or asset of FAI pursuant to, the articles or
certificates of incorporation, bylaws or other chartering or governance document
of FAI or (excluding any of the following entered into by the Partnership and to
which Outback or OSI is a signatory or to which Outback or OSI consented in
writing or which were entered into by FAI in the ordinary course of business
without violation of the provisions of the Partnership Agreement) any note,
bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan or
lease agreement, other material agreement or instrument (including with
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customers), judgment, order, injunction or decree to which FAI is a party, by
which FAI is bound or to which any of the assets of FAI are subject.
2.15 NECESSARY APPROVALS AND CONSENTS. Other than (a) in connection
with or in compliance with the laws of the States of Florida and Colorado with
respect to effectuating the Merger, (b) consents required to be obtained from
applicable liquor control authorities, (c) consents required to be obtained from
lessors, and (d) under the provisions of the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, or state securities or blue sky
laws, no authorization, consent, permit or license or approval of or
declaration, registration or filing with, any person or governmental or
regulatory authority or agency is necessary for the execution and delivery by
each of FAI and Flanagan of this Agreement, the Merger Agreement and the other
agreements executed or to be executed by them in connection with this Agreement,
and the consummation by FAI and Flanagan of the transactions contemplated by
this Agreement and the Merger Agreement, and the ownership and operation by
Outback of the respective businesses and properties of FAI after the Effective
Date in substantially the same manner as now operated.
2.16 COMPLIANCE WITH LAWS. Flanagan has no actual knowledge that
FAI or the Partnership are not in compliance with any such laws applicable to
their respective business, where failure to so comply would have a material
adverse effect on their business, operations, properties, assets or conditions.
2.17 ACCURACY OF INFORMATION FURNISHED. No representation or
warranty by FAI or Flanagan in this Agreement nor any information in the
Financial Statements or in the Disclosure Schedule contains any untrue statement
of a material fact or omits to state any material fact that would make the
statements herein or therein, in light of the circumstances under which they
were made, false or misleading. Each of FAI and Flanagan have disclosed to OSI
and Outback all facts known to them that are material to FAI's and the
Partnership's respective businesses, operations, financial condition or
prospects.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF FLANAGAN
In addition to the representations and warranties contained in ARTICLE
2, Flanagan represents and warrants to OSI and Outback as follows:
3.1 AUTHORITY AND VALIDITY. He has the capacity and authority to
execute, deliver and perform this Agreement and all other agreements and
documents he is executing or will execute in connection herewith or therewith.
3.2 BINDING EFFECT. This Agreement and the other documents
executed or to be executed by Flanagan in connection with this Agreement have
been or will have been duly executed and delivered by him and are or will be,
when executed and delivered, his legal, valid and binding obligations
enforceable in accordance with their terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights; and
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(b) the availability of equitable remedies may be limited by
equitable principles of general applicability.
3.3 OWNERSHIP. Flanagan is the sole record and beneficial
shareholder of FAI and no other person has any rights (in any form) to acquire
any capital stock of FAI.
3.4 VOTING. He acknowledges that in his individual capacity as
shareholder and director of FAI, he has voted in favor of the execution and
delivery of this Agreement and the Merger Agreement.
3.5 RESIDENCY. Flanagan is, and has been at all times during the
one year period ending on the date hereof, a resident of the State of Colorado.
3.6 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the execution and
delivery by Flanagan of this Agreement and the Merger Agreement, nor the
consummation by him of the transactions contemplated hereby and thereby will
violate, breach, be in conflict with or constitute a default under or permit the
termination or the acceleration of maturity of or result in the imposition of
any lien, claim or encumbrance upon any material property or asset of Flanagan
pursuant to any note, bond, indenture, mortgage, deed of trust, evidence of
indebtedness, loan or lease agreement, other agreement or instrument (including
with customers), judgment order, injunction or decree by which Flanagan is
bound, to which he is a party or to which he is subject.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF OSI AND OUTBACK
OSI and Outback jointly and severally represent and warrant to FAI and
Flanagan as follows:
4.1 ORGANIZATION AND GOOD STANDING. OSI and Outback are
corporations duly organized, validly existing and in good standing under the
laws of the States of Colorado and Florida, respectively.
4.2 FOREIGN QUALIFICATION. Outback is duly qualified or licensed
to do business and in good standing as a foreign corporation in Colorado and in
every other jurisdiction where the failure to so qualify could have a material
adverse effect on its respective business, operations, assets or financial
condition.
4.3 POWER AND AUTHORITY. OSI and Outback each have the corporate
power and authority and all licenses and permits required by governmental
authorities to own, lease and operate their respective properties and assets and
to carry on their respective business as currently being conducted.
4.4 AUTHORITY AND VALIDITY. OSI and Outback each have the
corporate power and authority to execute, deliver and perform their respective
obligations under this Agreement, the Merger Agreement and the other documents
executed or to be executed by OSI and Outback in connection with this Agreement
and the execution, delivery and performance by OSI and Outback of this
Agreement, the Merger Agreement and the other documents executed or to be
executed by OSI and Outback in connection with this Agreement have been duly
authorized by all necessary corporate action.
4.5 BINDING EFFECT. This Agreement, the Merger Agreement and the
other documents executed or to be executed by OSI and Outback in connection with
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this Agreement have been or will have been duly executed and delivered by OSI
and Outback and are or will be, when executed and delivered, the legal, valid
and binding obligations of OSI and Outback, enforceable in accordance with their
terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by
equitable principles of general applicability.
4.6 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the execution and
delivery by OSI and/or Outback of this Agreement, the Merger Agreement, nor the
consummation by it of the transactions contemplated hereby and thereby will
violate, breach, be in conflict with or constitute a default under or permit the
termination or the acceleration of maturity of or result in the imposition of
any lien, claim or encumbrance upon any property or asset of OSI or Outback
pursuant to, the certificate of incorporation or bylaws of OSI or Outback or any
note, bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan
or lease agreement, other agreement or instrument, judgment order, injunction or
decree by which OSI or Outback is bound, to which it is a party or to which its
assets are subject.
4.7 CAPITALIZATION OF OSI. The authorized capital stock of OSI
consists of Two Hundred Million (200,000,000) shares of Common Stock, $.01 par
value and Two Million (2,000,000) shares of Preferred Stock, $.01 par value, of
which approximately 49,155,774 shares of Common Stock and no shares of Preferred
Stock were issued and outstanding as of August 7, 1998. All of the issued and
outstanding shares of OSI Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable. The shares of OSI Common Stock to
be issued in exchange for FAI's capital stock at the Effective Date, when issued
and delivered, will be duly authorized, validly issued, fully paid and
nonassessable. As of the date hereof, except for (i) employee and director stock
options to acquire shares of OSI Common Stock and (ii) employee stock ownership
plans, there are no options, warrants or other rights, agreements or commitments
outstanding obligating Outback or OSI to issue shares of its capital stock. All
of the outstanding shares of capital stock of Outback are owned by OSI, free and
clear of any lien or encumbrance.
4.8 SEC REPORTS. OSI has delivered to FAI and Flanagan true and
complete copies of its (i) Annual Report on Form 10-K for the year ended
December 31, 1997; (ii) Proxy Statement used in connection with its 1997 Annual
Meeting of Shareholders; (iii) 1997 Annual Report to Shareholders; (iv) all
periodic reports, if any, on Form 8-K filed with the Securities and Exchange
Commission since December 31, 1997 to the date hereof; and (v) all Forms 10-Q,
if any, filed with the Securities and Exchange Commission since December 31,
1997 to the date hereof. Such documents and reports did not on their dates or
the date of filing, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. OSI has filed all material documents required to be filed by it
with the SEC and all such documents complied as to form with the applicable
requirements of law. Copies of all other reports filed by OSI with the SEC from
the date hereof to and including the Effective Date have been or will be
delivered to FAI and Flanagan. All financial statements and schedules included
in the documents referred to in this SECTION 4.8 were prepared in accordance
with generally accepted accounting principles, applied on a consistent basis
except as noted therein and fairly present the information purported to be shown
therein.
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4.9 LITIGATION AND GOVERNMENT CLAIMS. There is no pending suit,
claim, action or litigation or administrative, arbitration or other proceeding
or governmental investigation or inquiry against OSI or Outback which would,
severally or in the aggregate, have a material adverse effect on the business,
results of operations, assets or the condition, financial or otherwise, of OSI
and its subsidiaries, taken as a whole. There are no such proceedings threatened
or, to the knowledge of OSI or Outback, contemplated or any unasserted claims
(whether or not the potential claimant may be aware of the claim), which might,
severally or in the aggregate have a material adverse effect on the business,
results of operations, assets or the condition, financial or otherwise, of OSI
and its subsidiaries, taken as a whole.
4.10 NECESSARY APPROVALS AND CONSENTS. Other than (a) in connection
with or in compliance with the laws of the States of Florida and Colorado with
respect to effectuating the Merger, (b) consents required to be obtained from
applicable liquor control authorities, (c) consents required to be obtained from
lessors, and (d) under the provisions of the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, or state securities or blue sky laws, no
authorization, consent, permit or license or approval of or declaration,
registration or filing with, any person or governmental or regulatory authority
or agency is necessary for the execution and delivery by OSI and Outback of this
Agreement, the Merger Agreement and the other agreements executed or to be
executed by either of them in connection with this Agreement and the
consummation by OSI and Outback of the transactions contemplated by this
Agreement and the Merger Agreement.
4.11 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
public filings by OSI with the Securities and Exchange Commission prior to the
date hereof and the Closing Date, since December 31, 1997, there has not been
any material adverse change in the financial condition, results of operations or
the business, properties, assets or liabilities of Outback or OSI.
ARTICLE 5
JOINT COVENANTS OF FAI, FLANAGAN, OSI AND OUTBACK
FAI and Flanagan, jointly and severally, on the one hand, and OSI and
Outback, jointly and severally on the other hand, covenant with each other as
follows:
5.1 NOTICE OF ANY MATERIAL CHANGE. Until the Effective Date, each
of FAI, Flanagan, OSI and Outback shall, promptly after the first notice or
occurrence thereof but prior to the Effective Date, advise the others in writing
of any event or the existence of any state of facts that:
(a) would make any of its representations and warranties in
this Agreement untrue in any material respect; or
(b) would otherwise constitute a material adverse change in
the business, results of operation, working capital, assets,
liabilities or condition (financial or otherwise) of OSI, Outback or
FAI and their respective subsidiaries, taken as a whole. No supplement
or amendment to any Disclosure Schedule shall have any effect for the
purpose of determining the satisfaction of or compliance with the
conditions to the obligations of the parties to consummate the Merger
set forth elsewhere in this Agreement.
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5.2 COOPERATION. Until the Effective Date, each of the parties
hereto shall and shall cause each of its affiliates to use its best efforts to:
(a) proceed promptly to make or give the necessary
applications, notices, requests and filings to obtain at the earliest
practicable date and, in any event, before the Closing Date, the
approvals, authorizations and consents necessary to consummate the
transactions contemplated by this Agreement;
(b) cooperate with and keep the other informed in connection
with this Agreement; and
(c) take such actions as the other parties may reasonably
request to consummate the transactions contemplated by this Agreement
and use its best efforts and diligently attempt to satisfy, to the
extent within its control, all conditions precedent to the obligations
to close this Agreement.
5.3 POST-CLOSING ADJUSTMENT. As soon as practicable after the
Closing Date, but in no event more than forty-five (45) days thereafter, OSI
shall determine and report in writing to all parties hereto:
(a) the amount of current assets of FAI as of the Effective
Date; and
(b) the amount of all liabilities of FAI (other than
liabilities specified in Item 6.2 of the FAI Disclosure Schedule to the
extent assumed by Outback) which were not paid in full prior to the
Effective Date.
Upon receipt of such report, Flanagan (by notice to OSI as provided
herein) shall have a period of ten (10) days in which to object in writing to
any portion or item of such report. In the event no objection is timely made,
OSI's report shall be final and binding on all parties. If timely objection is
made, the chief financial officer of OSI and Flanagan (and at the expense of
Flanagan) shall meet and attempt to agree on the items to which objection was
made. If such persons cannot agree within thirty (30) days from the date of
written objection, the items on which agreement has not been reached shall be
submitted to the Tampa, Florida office of PricewaterhouseCoopers (or other
agreed upon independent "Big Five" accounting firm) for a resolution of such
items and whose decision shall be final and binding on all parties. The fees and
expenses of PricewaterhouseCoopers (or other accounting firm) shall be paid by
the non-prevailing party.
If, as finally determined, the sum of Subsection (a) above exceeds the
sum of Subsections (b) and (c), OSI shall pay such excess to Flanagan within ten
(10) days of such final determination. If, as finally determined, the sum of
Subsections (b) and (c) exceeds the sum of Subsection (a), Flanagan shall pay
such excess to OSI within ten (10) days of the final determination.
5.4 DISTRIBUTION AND ALLOCATIONS. The parties acknowledge and
agree that notwithstanding the effective date of the Merger, Outback shall be
entitled to FAI's entire share of Partnership distributions of cash flow, and
shall be allocated FAI's shares of profit and loss, from and after January 1,
1999.
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5.5 ADDITIONAL AGREEMENTS.
(a) Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use all reasonable efforts to take or
cause to be taken, all actions and to do or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement, including using all reasonable efforts
to obtain all necessary waivers, consents and approvals, to effect all
necessary registrations and filings and to lift any injunction or other
legal bar to the Merger (and, in such case, to proceed with the Merger
as expeditiously as possible), subject, however, to the appropriate
vote of the shareholders of FAI.
(b) In case at any time after the Effective Date any further
action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and/or directors of OSI and Outback and
Flanagan shall take all such necessary action.
(c) Neither Outback, OSI, FAI nor Flanagan shall take any
action which would jeopardize the characterization of the Merger as a
reorganization within the meaning of Section 368(a) of the Code or the
treatment of the Merger for financial reporting purposes as a pooling
of interests.
ARTICLE 6
COVENANTS OF FAI AND FLANAGAN
FAI and Flanagan covenant and agree with OSI as follows:
6.1 SECURITIES LAW COMPLIANCE. Flanagan represents and warrants,
and covenants to Outback and OSI that:
(a) Flanagan has received all schedules and exhibits and the
documents furnished to FAI pursuant to SECTION 4.8;
(b) Flanagan has had the opportunity to ask questions of and
receive answers from representatives of the management of OSI
concerning the terms and conditions of the transactions contemplated
hereby and to obtain all additional information that OSI possesses or
could acquire without unreasonable expense that is necessary to verify
the accuracy of information furnished to Flanagan.
(c) OSI and Outback have furnished him with all information
requested and full access to materials concerning OSI and Outback which
Flanagan and/or his advisors deemed necessary to properly evaluate the
Merger. Such information and access have been made available and
utilized to the extent Flanagan considers necessary and advisable in
making an informed investment decision, and Flanagan has consulted his
own tax advisor and understands the evaluation of such materials may
require the assistance of experts and Flanagan has utilized such
experts to the extent deemed necessary.
(d) Flanagan understands that the OSI Common Stock to be
received is an investment of a speculative nature and Flanagan must
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bear the risks thereof for an indefinite period of time. Flanagan has
adequate means for providing for his needs, is able to bear the
economic risk of the investment and has no need for liquidity in the
OSI Common Stock to be received in the Merger.
(e) Flanagan and/or his representatives or advisors who have
acted with or on behalf of Flanagan and who have advised Flanagan in
this matter have such knowledge and experience in financial and
business matters that Flanagan is capable of evaluating the merits and
risks of the Merger for OSI Common Stock.
(f) Flanagan is participating in the Merger solely for his
account as a private investment, and Flanagan has no present agreement,
understanding, arrangement or intention to sell or transfer all or any
portion of the shares of OSI Common Stock to be issued in the Merger to
any other person or persons. Flanagan does not presently intend to
enter into any such agreement or undertaking and there are no present
circumstances which will compel Flanagan to sell any OSI Common Stock
so received. Flanagan will not sell or otherwise transfer the shares
(except for DE MINIMIS gifts of shares) unless they are registered
under the Securities Act and applicable state securities laws or, in
the opinion of OSI and its counsel, an exemption from registration is
available therefor.
(g) The investment by Flanagan in OSI Common Stock pursuant to
the Merger is a suitable investment for Flanagan given the investment
goals and objectives of Flanagan.
(h) Flanagan agrees to indemnify and hold OSI and Outback and
each of their respective officers, directors and advisors harmless
against all liability arising out of or in connection with any
purchase, resale or distribution by Flanagan of any OSI Common Stock
received hereby which is effected other than in strict compliance with
the terms hereof and applicable law.
(i) Flanagan understands that the shares of OSI Common Stock
to be issued in the Merger will not be registered under the Securities
Act, nor any state securities laws, and such OSI Common Stock may not
be sold or transferred except in compliance with such laws. Neither OSI
nor Outback will have any obligation to register any such OSI Common
Stock.
(j) Flanagan understands that OSI will place an appropriate
legend on the certificate representing OSI Common Stock to be received
restricting the transfer of the shares and stop-transfer instructions
will be given to the transfer agent for the OSI Common Stock with
respect to such certificates.
(k) Flanagan is a natural person (i) whose net worth (the
excess of total assets over total liabilities), individually or jointly
with his spouse, exceeds $1,000,000 (inclusive of the value of home,
home furnishings and automobiles); or (ii) who had an Individual Annual
Adjusted Gross Income in excess of $200,000 in each of the two most
recent tax years or joint income with Flanagan's spouse in excess of
$300,000 in each of those years and reasonably expects to reach the
same income level in the current tax year.
6.2 PAYMENT OF LIABILITIES. FAI and Flanagan covenant and agree
that all debts and liabilities of FAI relating to periods prior to the Closing
Date shall be paid or satisfied in full prior to the Effective Date, except only
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current liabilities and those debts and liabilities of FAI assumed by Outback as
specified in Item 6.2 of the Disclosure Schedules.
6.3 POOLING. Flanagan agrees that until such time as financial
results of OSI covering at least thirty (30) days of combined operations of OSI
and FAI subsequent to the Effective Date have been published, he will not sell
or otherwise dispose of any shares of OSI Common Stock held by him as of the
Effective Date or any of such shares thereafter acquired by him at any time or
from time to time prior to the date of such publication. OSI shall give
instructions to its transfer agent and registrar, Bank of New York, Inc., with
respect to the shares of OSI Common Stock issued pursuant to the Merger, to the
effect that no transfer of such shares shall be effected until the date on which
the requisite financial results have been published and OSI and the transfer
agent may take any action, including placing an appropriate legend on the
certificates, they deem necessary to enforce this provision.
ARTICLE 7
COVENANTS OF OSI AND OUTBACK
OSI and Outback, jointly and severally, covenant and agree with FAI and
Flanagan as follows:
7.1 EMPLOYMENT AGREEMENTS. Solely with respect to the Merger, and
any consequential termination of any partnership by operation of law, Outback
agrees not to elect to terminate the Employment Agreements between the
Partnership, as employer, and the general managers of the Partnership's Outback
Steakhouse restaurants, as employees. Outback shall succeed to all rights and
obligations of the Partnership under such Employment Agreements. Nothing
contained herein shall be construed as in any way limiting Outback's right to
terminate any such Employment Agreement as a result of any circumstance or event
other than the Merger and consequential termination of the Partnership by
operation of law.
7.2 ASSUMED LIABILITIES. OSI and Outback agree to assume and pay
the liabilities specified in Item 6.2 (subject to the amount limits specified in
Item 6.2 of the Disclosure Schedules) and to indemnify and hold harmless
Flanagan from any loss or liability therefor.
ARTICLE 8
JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
Except as may be waived by OSI, the obligations of FAI, Flanagan, OSI
and Outback to consummate the transactions contemplated by this Agreement shall
be subject to the satisfaction, on or before the Closing Date, of each of the
following conditions:
8.1 CONSENTS TO TRANSACTION. FAI, Outback and OSI shall have
received all consents or approvals and made all applications, requests, notices
and filings with, any person, governmental authority or governmental agency
required to be obtained or made in connection with the consummation of the
transactions contemplated by this Agreement. There shall have been obtained from
all state and local governments and governmental agencies all approvals and
consents necessary to enable FAI and/or the Partnership, as applicable, to
transfer their liquor licenses and permits to Outback, to enable Outback to
assume such licenses and permits or to enable Outback to operate restaurants (of
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the kind and quality customarily operated by Outback) using such permits or
licenses. Copies of all consents and approvals received by any party pursuant to
this SECTION 8.1 shall be furnished to the other party.
8.2 ABSENCE OF LITIGATION. No governmental agency or authority
shall have instituted or threatened in writing to institute, any action or
proceeding seeking to delay, restrain, enjoin or prohibit the consummation of
the transactions contemplated by this Agreement and no order, judgment or decree
by any court or governmental agency or authority shall be in effect that
enjoins, restrains or prohibits the same or otherwise would materially interfere
with the operation of the assets and business of FAI or the Partnership or OSI
and its subsidiaries, including the surviving corporation in the Merger, after
the Closing Date.
8.3 DISSENTER'S RIGHTS. The number of shares of capital stock of
FAI for which shareholders have exercised appraisal or dissenters' rights under
applicable law shall be a number which, in the sole and absolute discretion of
OSI, does not jeopardize the financial reporting and accounting treatment of the
Merger specified in SECTION 1.11 or is otherwise not contrary to the best
interests of Outback or OSI.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF FAI
The obligations of FAI and Flanagan to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction on or before
the Closing Date of each of the following conditions:
9.1 COMPLIANCE. OSI and Outback shall have, or shall have caused
to be, satisfied or complied with and performed in all material respects all
terms, covenants and conditions of this Agreement to be complied with or
performed by OSI and Outback on or before the Closing Date.
9.2 REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties made by OSI and Outback in this Agreement, and in all certificates
and other documents delivered by OSI and Outback to FAI and Flanagan pursuant
hereto or in connection with the transactions contemplated hereby, shall have
been true and correct in all material respects as of the date hereof and shall
be true and correct in all material respects at the Closing Date with the same
force and effect as if such representations and warranties had been made at and
as of the Closing Date, except for changes permitted or contemplated by this
Agreement.
9.3 MATERIAL ADVERSE CHANGES. Since the date of OSI's most recent
10-Q, as filed with the Securities and Exchange Commission, through the date
hereof, there shall have occurred no material adverse change in the business,
properties, assets, liabilities, results of operations or condition, financial
or otherwise, of OSI and Outback, taken as a whole.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS OF OSI AND OUTBACK
Except as may be waived by OSI and Outback, the obligations of OSI and
Outback to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions:
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10.1 COMPLIANCE. FAI and Flanagan shall have or shall have caused
to be satisfied or complied with and performed in all material respects all
terms, covenants and conditions of this Agreement to be complied with or
performed by any of them on or before the Closing Date.
10.2 REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties made by FAI and/or Flanagan in this Agreement, the Disclosure
Schedule, and in all certificates and other documents delivered by FAI or
Flanagan pursuant hereto or in connection with the transactions contemplated
hereby, shall have been true and correct in all material respects as of the date
hereof and shall be true and correct in all material respects at the Closing
Date with the same force and effect as if such representations and warranties
had been made at and as of the Closing Date, except for changes permitted or
contemplated by this Agreement.
10.3 CURRENT FINANCIAL STATUS. OSI shall have received the
unaudited financial statements of FAI as of January 1, 1999, for the month then
ended.
10.4 MATERIAL ADVERSE CHANGES. Since December 31, 1997, there shall
have occurred no material adverse change in the business, properties, assets,
liabilities, results of operations or condition, financial or otherwise, of FAI
or the Partnership.
10.5 POOLING. OSI shall have received a letter from Deloitte &
Touche, in form and substance satisfactory to OSI and dated not more than five
days prior to the Closing Date, to the effect that the Merger shall qualify as a
pooling of interests for financial reporting purposes.
ARTICLE 11
INDEMNIFICATION
Flanagan, on the one hand, and OSI and Outback, jointly and severally,
on the other hand, agree as follows:
11.1 INDEMNIFICATION BASED ON AGREEMENT. Subject to the limitations
contained in SECTION 11.2 hereof, Flanagan shall indemnify and hold harmless
OSI, Outback and FAI, and OSI, Outback and FAI, jointly and severally, shall
indemnify and hold harmless Flanagan, against any losses, claims, damages or
liabilities to which such indemnified party may become subject, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any facts or circumstances that would constitute a breach
by the other of any representation, warranty or covenant contained herein or in
any agreement executed pursuant hereto and will reimburse any legal or other
expenses reasonably incurred by any indemnified party in connection with
investigating or defending any such loss, claim, damage, liability or action.
In addition to the above, Flanagan shall indemnify OSI, Outback and
FAI, as provided in the first paragraph of this SECTION 11.1, against any loss,
claim, damage or liability arising out of (i) any tax liability of FAI for any
period prior to and including the Effective Date and (ii) any debt of FAI (other
than the debts specified in Item 6.2 of the Disclosure Schedule to the extent
assumed by Outback), and (iii) all claims, obligations, causes of action and
liabilities, of whatever kind or character, of any of FAI which arise out of or
are based upon events first occurring on or before the Effective Date, except
only the liabilities assumed by Outback as specified in Item 6.2 of the
Disclosure Schedule.
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11.2 LIMITATION. Flanagan shall have no obligation under SECTION
11.1 to indemnify OSI, Outback or FAI for any liability, loss, claim or damage
arising out of or based upon facts or actions first occurring after the
Effective Date. All obligations of indemnity (other than those relating to tax
obligations of FAI under SECTION 11.1 above which shall continue for the period
specified in SECTION 12.4(B) hereof) shall terminate two (2) years from the
Closing Date; PROVIDED, HOWEVER, the obligations of indemnity shall not
terminate with respect to any matter for which indemnification is claimed within
two (2) years from the Closing Date.
11.3 COOPERATION. If any claim, demand, action, suit, proceeding or
investigation arising out of or pertaining to this Agreement or the transactions
contemplated hereby is begun or asserted, whether begun or asserted before or
after the Closing Date, the parties hereto will cooperate and use their best
efforts to defend against and respond thereto.
11.4 NOTICE. An indemnified party shall give notice to the
indemnifying party or parties within ten (10) business days after actual receipt
of service or summons to appear in any action begun in respect of which
indemnity may be sought hereunder. Failure to so notify the indemnifying party
or parties shall cause the indemnified party to be liable for any damage caused
by failure to give timely notice. The indemnifying party or parties may
participate at their own expense and with their counsel in the defense of such
action. If the indemnifying party or parties so elect within a reasonable time
after receipt of such notice, they may assume the defense of such action with
counsel chosen by the indemnifying party or parties and approved by the
indemnified party in such action, unless the indemnified party reasonably
objects to such assumption on the ground that its counsel has advised it that
there may be legal defenses available to it that are different from or in
addition to those available to the indemnifying party or parties, in which case
the indemnified party shall have the right to employ counsel approved by the
indemnifying party or parties. If the indemnifying party or parties assume the
defense of such action, the indemnifying party or parties shall not be liable
for fees and expenses of counsel for the indemnified party incurred thereafter
in connection with such action. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one counsel for the
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances unless, in the reasonable opinion of such counsel,
there is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more indemnified parties.
ARTICLE 12
MISCELLANEOUS
12.1 TERMINATION. This Agreement and the transactions contemplated
hereby may be terminated at any time on or before the Closing Date
(notwithstanding approval by the shareholders of FAI):
(a) by mutual consent of FAI and OSI;
(b) by OSI if there has been a material misrepresentation or
breach of warranty in the representations and warranties of FAI or
Flanagan set forth herein or if there has been any material failure on
the part of FAI or Flanagan to comply with their obligations hereunder;
18
<PAGE> 23
(c) by FAI if there has been a material misrepresentation or
breach of warranty in the representations and warranties of OSI or
Outback set forth herein or if there has been any material failure on
the part of OSI or Outback to comply with their obligations hereunder;
(d) by either OSI, FAI or Flanagan, if the transactions
contemplated by this Agreement have not been consummated by February
28, 1999, unless such failure of consummation is due to the failure of
the terminating party to perform or observe the covenants, agreements
and conditions hereof to be performed or observed by it at or before
the Closing Date;
(e) by either OSI, or FAI if the conditions precedent to its
obligations to close this Agreement have not been satisfied or waived
by it at or before the Closing Date; and
(f) by either FAI or OSI if the transactions contemplated
hereby violate any nonappealable final order, decree or judgment of any
court or governmental body or agency having competent jurisdiction.
12.2 EXPENSES. Each party hereto shall pay its own expenses
incurred in connection with this Agreement and the transactions contemplated
hereby.
12.3 ENTIRE AGREEMENT. This Agreement and the exhibits and
Disclosure Schedule hereto constitute and contain the complete agreement among
the parties with respect to the transactions contemplated hereby and supersede
all prior agreements and understandings among the parties with respect to such
transactions. The parties hereto have not made any representation or warranty
except as expressly set forth in this Agreement, the Merger Agreement or in any
certificate or schedule delivered pursuant hereto. The obligations of any party
under any agreement executed pursuant to this Agreement shall not be affected by
this SECTION 12.3.
12.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) The representations, warranties and indemnification
obligations of OSI and Outback contained herein or in any exhibit,
certificate, document or instrument delivered pursuant to this
Agreement shall survive the Closing for a period of two years;
PROVIDED, HOWEVER, that the obligations of OSI and Outback under
ARTICLE 11 hereof shall survive for the periods provided therein.
(b) Except where otherwise specifically provided in this
Agreement, the representations, warranties and indemnification
obligations of Flanagan contained herein or in any exhibit, schedule,
certificate, document or instrument delivered pursuant to this
Agreement shall survive the Closing for a period of three years from
the Effective Date; PROVIDED, HOWEVER, the representations and
warranties contained in SECTION 2.9 (TAX LIABILITIES) shall survive the
Closing for a period ending four years after the filing of FAI's
federal income tax return for the period including the Effective Date.
12.5 COUNTERPARTS. This Agreement may be executed in any number of
identical counterparts, each of which when so executed and delivered shall be
deemed an original and such counterparts together shall constitute only one
original.
19
<PAGE> 24
12.6 NOTICES. All notices, demands, requests or other
communications that may be or are required to be given, served or sent by any
party to any other party pursuant to this Agreement shall be in writing and
shall be mailed by registered or certified mail, return receipt requested,
postage prepaid or transmitted by hand delivery, recognized national overnight
delivery service, telegram or telex, addressed as follows:
If to FAI or Flanagan: FLANAGAN & ASSOCIATES, INC.
440 S. McCaslin Blvd., Suite 108
Louisville, CO 80027
Attention: Thomas J. Flanagan
If to OSI or Outback: OUTBACK STEAKHOUSE, INC.
550 North Reo Street, Suite 200
Tampa, Florida 33609
Attention: Joseph J. Kadow, General Counsel
Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request or communication that is mailed, delivered
or transmitted in the manner described above shall be deemed sufficiently given,
served, sent and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt, the affidavit of
messenger or (with respect to a telex) the answer back being deemed conclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
12.7 SUCCESSORS AND ASSIGNS. This Agreement and the rights,
interests and obligations hereunder shall be binding upon and shall inure to the
benefit of the parties hereto and, except as otherwise specifically provided for
herein, their respective successors and assigns.
12.8 GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws of the State of Florida without giving effect to
principles of comity or conflicts of law thereof.
12.9 WAIVER AND OTHER ACTION. This Agreement may be amended,
modified or supplemented only by a written instrument executed by the parties
against which enforcement of the amendment, modification or supplement is
sought.
12.10 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance; and in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
12.11 HEADINGS. All headings and captions in this Agreement are
intended solely for the convenience of the parties and none shall be deemed to
affect the meaning or construction of any provision hereof.
20
<PAGE> 25
12.12 CONSTRUCTION. All references herein to the masculine, neuter
or singular shall be construed to include the masculine, feminine, neuter or
plural, where applicable.
12.13 JURISDICTION AND VENUE. The parties agree that any action
brought by either party against the other in any court, whether federal or
state, shall be brought within the State of Florida in the judicial circuit in
which OSI has its principal place of business. Each party hereby agrees to
submit to the personal jurisdiction of such courts and hereby waives all
questions of personal jurisdiction or venue for the purpose of carrying out this
provision, including, without limitation, the claim or defense therein that such
courts constitute an inconvenient forum.
12.14 ENFORCEMENT. In the event it is necessary for any party to
retain legal counsel or institute legal proceedings to enforce the terms of this
Agreement, including, without limitation, obligations upon expiration or
termination, the prevailing party shall be entitled to receive from the
non-prevailing party, in addition to all other remedies, all costs of such
enforcement including, without limitation, attorney's fees and court costs and
including appellate proceedings.
12.15 FURTHER ASSURANCES. Each party covenants and agrees to execute
and deliver, prior to or after the Merger, such further documents as may
reasonably be requested by another party to fully effectuate the transactions
provided for herein.
12.16 EQUITABLE REMEDIES. The parties hereto acknowledge that a
refusal by a party to consummate the transactions contemplated hereby will cause
irreparable harm to the other parties, for which there may be no adequate remedy
at law. A party not in default at the time of such refusal shall be entitled, in
addition to other remedies at law or in equity, to specific performance of this
Agreement by the party that refused to consummate the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"OSI"
Attest: OUTBACK STEAKHOUSE, INC.
a Delaware corporation
By:_____________________________ By: _____________________________________
JOSEPH J. KADOW, Secretary ROBERT D. BASHAM, President
21
<PAGE> 26
"Outback"
Attest: OUTBACK STEAKHOUSE OF FLORIDA, INC.,
a Florida corporation
By:_______________________________ By: ________________________________
JOSEPH J. KADOW, Secretary ROBERT D. BASHAM, Chief
Operating Officer
"FAI"
Attest: FLANAGAN & ASSOCIATES, INC.
a Colorado corporation
By:_______________________________ By: ________________________________
THOMAS J. FLANAGAN, Secretary THOMAS J. FLANAGAN, President
Witness: "FLANAGAN"
__________________________________ _____________________________________
THOMAS J. FLANAGAN
__________________________________
22
<PAGE> 1
EXHIBIT 4.29
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
OUTBACK STEAKHOUSE, INC.,
OUTBACK STEAKHOUSE OF FLORIDA, INC.,
J K STEAK, INC.
AND
JAMES POLLARD
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 - PLAN OF ACQUISITION....................................................................1
1.1 THE MERGER................................................................................1
1.2 ADJUSTMENTS...............................................................................2
1.3 CLOSING...................................................................................2
1.4 EXECUTION AND DELIVERY OF CLOSING DOCUMENTS...............................................2
1.5 EXECUTION AND FILING OF MERGER DOCUMENTS..................................................2
1.6 EFFECTIVENESS OF MERGER...................................................................3
1.7 FURTHER ASSURANCES........................................................................3
1.8 CERTIFICATES..............................................................................3
1.9 CLOSING OF TRANSFER BOOKS.................................................................3
1.10 FRACTIONAL SHARES.........................................................................3
1.11 ACCOUNTING TREATMENT......................................................................3
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF JKI AND
POLLARD...................................................................................3
2.1 ORGANIZATION AND GOOD STANDING............................................................3
2.2 POWER AND AUTHORITY.......................................................................3
2.3 FOREIGN CORPORATION.......................................................................3
2.4 AUTHORITY AND VALIDITY....................................................................4
2.5 BINDING EFFECT............................................................................4
2.6 COMPLIANCE WITH OTHER INSTRUMENTS.........................................................4
2.7 CAPITALIZATION OF JKI.....................................................................4
2.8 ABSENCE OF CERTAIN CHANGES................................................................5
2.9 TAX LIABILITIES...........................................................................6
2.10 NO UNDISCLOSED LIABILITIES................................................................6
2.11 TITLE TO PROPERTIES.......................................................................6
2.12 CONTRACTS.................................................................................6
2.13 LITIGATION AND GOVERNMENT CLAIMS..........................................................6
2.14 NO VIOLATION OF ANY INSTRUMENT............................................................7
2.15 NECESSARY APPROVALS AND CONSENTS..........................................................7
2.16 COMPLIANCE WITH LAWS......................................................................7
2.17 ACCURACY OF INFORMATION FURNISHED.........................................................7
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF POLLARD..............................................7
3.1 AUTHORITY AND VALIDITY....................................................................7
3.2 BINDING EFFECT............................................................................8
3.3 OWNERSHIP.................................................................................8
3.4 VOTING....................................................................................8
3.5 RESIDENCY.................................................................................8
3.6 COMPLIANCE WITH OTHER INSTRUMENTS.........................................................8
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF OSI AND
OUTBACK...................................................................................8
4.1 ORGANIZATION AND GOOD STANDING............................................................8
4.2 FOREIGN QUALIFICATION.....................................................................8
4.3 POWER AND AUTHORITY.......................................................................8
4.4 AUTHORITY AND VALIDITY....................................................................8
4.5 BINDING EFFECT............................................................................9
4.6 COMPLIANCE WITH OTHER INSTRUMENTS.........................................................9
4.7 CAPITALIZATION OF OSI.....................................................................9
4.8 SEC REPORTS...............................................................................9
4.9 LITIGATION AND GOVERNMENT CLAIMS..........................................................10
4.10 NECESSARY APPROVALS AND CONSENTS..........................................................10
4.11 ABSENCE OF CERTAIN CHANGES OR EVENTS......................................................10
ARTICLE 5 - JOINT COVENANTS OF JKI, POLLARD, OSI AND OUTBACK.......................................10
5.1 NOTICE OF ANY MATERIAL CHANGE.............................................................10
5.2 COOPERATION...............................................................................10
5.3 POST-CLOSING ADJUSTMENT...................................................................11
5.4 DISTRIBUTION AND ALLOCATIONS..............................................................11
5.5 ADDITIONAL AGREEMENTS.....................................................................11
ARTICLE 6 - COVENANTS OF JKI AND POLLARD...........................................................12
6.1 SECURITIES LAW COMPLIANCE.................................................................12
6.2 PAYMENT OF LIABILITIES....................................................................13
6.3 POOLING...................................................................................13
ARTICLE 7 - COVENANTS OF OSI AND OUTBACK...........................................................13
7.1 EMPLOYMENT AGREEMENTS.....................................................................13
7.2 ASSUMED LIABILITIES.......................................................................14
ARTICLE 8 - JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS......................................14
8.1 CONSENTS TO TRANSACTION...................................................................14
8.2 ABSENCE OF LITIGATION.....................................................................14
8.3 DISSENTER'S RIGHTS........................................................................14
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS OF JKI.............................................14
9.1 COMPLIANCE................................................................................14
9.2 REPRESENTATIONS AND WARRANTIES............................................................14
9.3 MATERIAL ADVERSE CHANGES..................................................................15
ARTICLE 10 - CONDITIONS PRECEDENT TO OBLIGATIONS OF OSI AND
OUTBACK...................................................................................15
10.1 COMPLIANCE................................................................................15
10.2 REPRESENTATIONS AND WARRANTIES............................................................15
10.3 CURRENT FINANCIAL STATUS..................................................................15
10.4 MATERIAL ADVERSE CHANGES..................................................................15
10.5 POOLING...................................................................................15
ARTICLE 11 - INDEMNIFICATION.......................................................................15
11.1 INDEMNIFICATION BASED ON AGREEMENT........................................................15
11.2 LIMITATION................................................................................16
11.3 COOPERATION...............................................................................16
11.4 NOTICE....................................................................................16
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 12 - MISCELLANEOUS.........................................................................16
12.1 TERMINATION...............................................................................16
12.2 EXPENSES..................................................................................17
12.3 ENTIRE AGREEMENT..........................................................................17
12.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES................................................17
12.5 COUNTERPARTS..............................................................................17
12.6 NOTICES...................................................................................18
12.7 SUCCESSORS AND ASSIGNS....................................................................18
12.8 GOVERNING LAW.............................................................................18
12.9 WAIVER AND OTHER ACTION...................................................................18
12.10 SEVERABILITY..............................................................................18
12.11 HEADINGS..................................................................................18
12.12 CONSTRUCTION..............................................................................18
12.13 JURISDICTION AND VENUE....................................................................18
12.14 ENFORCEMENT...............................................................................19
12.15 FURTHER ASSURANCES........................................................................19
12.16 EQUITABLE REMEDIES........................................................................19
EXHIBIT A
ARTICLES OF MERGER.................................................................................A-1
EXHIBIT B
DISCLOSURE SCHEDULES...............................................................................B-1
ARTICLE I.
</TABLE>
iii
<PAGE> 5
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered effective as of the 1st day of September, 1998, by and among OUTBACK
STEAKHOUSE, INC., a Delaware corporation ("OSI"), OUTBACK STEAKHOUSE OF FLORIDA,
INC., a Florida corporation ("Outback"), J K STEAK, INC., a Florida corporation
("JKI") and JAMES POLLARD, an individual residing in the State of Florida
("Pollard").
W I T N E S S E T H:
WHEREAS, Outback is a wholly-owned subsidiary of OSI; and
WHEREAS, Pollard is the sole owner of the issued and outstanding common
stock of JKI, and Pollard is the sole director, President and is responsible for
the day-to-day operations of JKI; and
WHEREAS, Outback and JKI have entered into that certain Florida limited
partnership known as Outback/West Florida-II, Limited Partnership
("Partnership");
WHEREAS, the Partnership operates Outback Steakhouse restaurants in the
West and Central regions of the State of Florida; and
WHEREAS, the Board of Directors of JKI has approved the merger of JKI
into Outback (the "Merger") upon the terms and conditions set forth in this
Agreement; and
WHEREAS, for federal income tax purposes it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, pursuant to the Merger, JKI will be merged with and into
Outback and all of the outstanding shares of capital stock of JKI will be
converted into shares of common stock, par value $.01, of OSI (the "OSI Common
Stock"); and
WHEREAS, the parties hereto desire by this Agreement to set forth the
terms and conditions upon which they are willing to consummate the Merger.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties hereto covenant and agree
as follows:
ARTICLE 1
PLAN OF ACQUISITION
1.1 THE MERGER. Subject to and upon the terms and conditions
contained herein, JKI shall be merged with and into Outback, with Outback being
the surviving corporation, in accordance with the Articles of Merger
substantially in the form attached to this Agreement as EXHIBIT A (the "Merger
Agreement"), which will be executed and delivered by OSI, Outback, and JKI prior
to the Merger. As a result of the Merger, each voting and nonvoting common share
of JKI outstanding immediately before the Effective Date (as herein defined)
<PAGE> 6
shall, by virtue of the Merger and without any further action being required by
the holders thereof, be converted into and exchanged for 261.3 shares of OSI
Common Stock.
1.2 ADJUSTMENTS.
(a) Except as otherwise provided in this SECTION 1.2, the
total number of shares of OSI Common Stock to be issued pursuant to the
Merger shall be Twenty-Six Thousand One Hundred Thirty (26,130).
(b) If, between the date of this Agreement and the Closing
Date or the Effective Date, as the case may be, (i) the outstanding
shares of capital stock of JKI shall have been changed into a different
number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination, exchange of
shares, or readjustment, with a record date within such period, or a
stock dividend thereon shall be declared with a record date within such
period or (ii) JKI shall have issued additional shares of its capital
stock, the number of shares of OSI Common Stock received in exchange
for each share of JKI's capital stock shall be adjusted so that the
aggregate number of shares of OSI Common Stock received in exchange for
all shares of JKI's capital stock (assuming no Dissenting Shares)
remains at 26,130.
(c) If, between the date of this Agreement and the Closing
Date or the Effective Date, as the case may be, the outstanding shares
of OSI Common Stock shall have been changed into a different number of
shares or a different class by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares, or
readjustment, with a record date within such period, or a stock
dividend thereon shall be declared with a record date within such
period, the number of shares of OSI Common Stock received in exchange
for each share of capital stock of JKI (as specified in SECTION 1.1
hereof) shall be adjusted to accurately reflect such change.
1.3 CLOSING. The closing of the transactions contemplated by this
Agreement, including the Merger (the "Closing"), shall take place at 10:00 a.m.,
Tampa time, at the offices of Outback on February 12, 1999, or on such date and
at such other time and place as is agreed upon by the parties hereto. The day on
which the Closing occurs is herein referred to as the "Closing Date." If any of
the conditions to the obligations of the parties to this Agreement have not been
satisfied or waived by the Closing Date, then the party to this Agreement that
is unable to meet such condition or conditions shall be entitled to postpone the
Closing by written notice to the other parties until such condition shall have
been satisfied (which such party shall seek to cause to happen at the earliest
practicable date) or waived, but the Closing shall occur not later than March
31, 1999, unless further extended by written agreement of the parties to this
Agreement. The parties shall use their best efforts to effectuate a timely
closing as provided in this SECTION 1.3.
1.4 EXECUTION AND DELIVERY OF CLOSING DOCUMENTS. Before the
Closing, each party shall cause to be prepared and at the Closing the parties
shall execute and deliver each agreement and instrument required by this
Agreement or the Merger Agreement to be so executed and delivered and not
theretofore accomplished. At the Closing, each party also shall execute and
deliver such other appropriate and customary documents as the other parties
reasonably may request for the purpose of consummating the transactions
contemplated by this Agreement and the Merger Agreement. All actions taken at
the Closing shall be deemed to have been taken simultaneously at the time the
last of any such actions is taken or completed.
1.5 EXECUTION AND FILING OF MERGER DOCUMENTS. At the time of
completion of the Closing, OSI, Outback, JKI and Pollard agree to take the
following actions:
2
<PAGE> 7
(a) to execute and deliver all documents and certificates
relating to the Merger required to be executed by them that have not
already been so executed and that are required under applicable
federal, state and local laws to be filed in order validly to
effectuate the Merger; and
(b) to cause Articles of Merger to be filed with the Secretary
of State of the State of Florida and a Certificate of Merger to be
issued by such officer.
1.6 EFFECTIVENESS OF MERGER. The Merger shall become effective
under the laws of Florida upon filing of the Articles of Merger with the
Secretary of State of the State of Florida (the "Effective Date"). Such
Effective Date shall be indicated on Certificate of Merger issued by the
Secretary of State of the State of Florida pursuant to the provisions of
Sections 607.1101-607.1107 of the Florida Business Corporation Act (the "Florida
Act").
1.7 FURTHER ASSURANCES. After the Closing, the parties hereto
shall execute and deliver such additional documents and take such additional
actions as may reasonably be deemed necessary or advisable by any party in order
to consummate the transactions contemplated by this Agreement and by the Merger
Agreement, and to vest more fully in Outback the ownership of and the rights to
the business and assets of JKI as existed immediately before the Effective Date.
1.8 CERTIFICATES. As soon as practicable after the Effective Date,
OSI shall make available and each holder of capital stock of JKI shall be
entitled to receive upon surrender of stock certificates of JKI representing JKI
capital stock for cancellation, certificates representing the number of shares
of OSI Common Stock into which such shares are converted in the Merger as
provided in SECTION 1.1 hereof. The OSI Common Stock into which such JKI capital
stock is converted shall be deemed issued at the Effective Date.
1.9 CLOSING OF TRANSFER BOOKS. At the Closing Date, the stock
transfer books of JKI shall be closed and no transfer of capital stock of JKI,
shall thereafter be made.
1.10 FRACTIONAL SHARES. No fractional shares of OSI Common Stock
and no certificates or scrip therefor shall be issued. Instead, one whole share
of OSI Common Stock shall be issued for each fractional share of .5 or more of
one whole share and each fractional share of less than .5 of one whole share
shall be disregarded.
1.11 ACCOUNTING TREATMENT. It is the intention of the parties
hereto that the Merger will be treated for financial reporting purposes as a
pooling of interests.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF JKI AND POLLARD
Each of JKI and Pollard, jointly and severally, represent and warrant
to OSI and Outback as follows:
2.1 ORGANIZATION AND GOOD STANDING. JKI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida.
2.2 POWER AND AUTHORITY. JKI has the requisite power and authority
and all material licenses and permits required by governmental authorities to
own, lease and operate its properties and assets and to carry on its businesses
as currently being conducted.
2.3 FOREIGN CORPORATION. JKI is duly qualified or licensed to do
business and in good standing as a foreign corporation in every jurisdiction
where the failure to so qualify could have a material adverse effect on its
respective business, operations, assets or financial condition.
3
<PAGE> 8
2.4 AUTHORITY AND VALIDITY.
(a) JKI has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement, the Merger
Agreement and the other documents executed or to be executed by JKI in
connection with this Agreement; and the execution, delivery and
performance by JKI of this Agreement, the Merger Agreement and the
other documents executed or to be executed by JKI in connection with
this Agreement have been duly authorized by all necessary corporate
action. The execution, delivery and performance by JKI of this
Agreement, the Merger Agreement and any other documents executed or to
be executed in connection with this Agreement and the consummation of
the transactions provided for herein have been duly authorized and
approved by the board of directors and shareholders of JKI as required
under the laws of the State of Florida and JKI's corporate governance
documents.
(b) Pollard has the power and authority to execute, deliver
and perform his obligations under this Agreement and the other
documents executed or to be executed by Pollard in connection with this
Agreement.
2.5 BINDING EFFECT. This Agreement, the Merger Agreement and the
other documents executed or to be executed by JKI and Pollard in connection with
this Agreement have been or will have been duly executed and delivered by JKI
and Pollard, and are or will be, when executed and delivered, the legal, valid
and binding obligations of each of JKI and Pollard enforceable in accordance
with their terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by
equitable principles of general applicability.
2.6 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the execution and
delivery by JKI nor Pollard of this Agreement and the Merger Agreement, nor the
consummation by them of the transactions contemplated hereby and thereby, will
violate, breach, be in conflict with, or constitute a default under, or permit
the termination or the acceleration of maturity of, or result in the imposition
of any lien, claim or encumbrance upon any material property or asset of JKI or
Pollard pursuant to, its certificate of incorporation, bylaws, partnership
agreement, operating agreement or other charter or governance document, or any
note, bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan
or lease agreement, other agreement or instrument (including with customers),
judgment, order, injunction or decree by which JKI or Pollard is bound, to which
either of them is a party, or to which any assets of either of them are subject;
PROVIDED, HOWEVER, this SECTION 2.5 shall not apply with respect to any of the
foregoing if JKI is bound thereby, a party thereto, or its assets subject,
solely by reason of its status as a partner in the Partnership.
2.7 CAPITALIZATION OF JKI.
(a) The authorized capital stock of JKI consists of One
Thousand Five Hundred (1,500) common shares. There are One Hundred
(100) common shares issued and outstanding, all of which are owned by
Pollard. There are no other shareholders of JKI and no other persons
with rights or options to acquire capital stock of JKI. All of the
issued and outstanding shares of capital stock of JKI have been duly
authorized and validly issued and are fully paid and nonassessable.
There are no shares of capital stock of JKI held in its treasury.
4
<PAGE> 9
(b) There are no voting trusts, shareholder agreements or
other voting arrangements to which the shareholder of JKI is a party.
(c) There is no outstanding subscription, contract,
convertible or exchangeable security, option, warrant, call or other
right obligating JKI to issue, sell, exchange or otherwise dispose of,
or to purchase, redeem or otherwise acquire, shares of, or securities
convertible into or exchangeable for, capital stock of JKI.
2.8 ABSENCE OF CERTAIN CHANGES. From December 31, 1998 to the
Closing Date, (except solely as a result of JKI's status as a partner in the
Partnership) JKI has not:
(a) suffered any material adverse change in its business,
results of operations, working capital, assets, liabilities, or
condition (financial or otherwise) or the manner of conducting its
business;
(b) suffered any material damage or destruction to or loss of
its assets not covered by insurance, or any loss of suppliers or
employees;
(c) acquired or disposed of any asset, or incurred, assumed,
guaranteed, endorsed, paid or discharged any indebtedness, liability or
obligation, or subjected or permitted to be subjected any material
amount of assets to any lien, claim or encumbrance of any kind, except
in the ordinary course of business or pursuant to agreements in force
at the date of this Agreement and identified in Item 2.8(c) of the
Disclosure Schedules;
(d) forgiven, compromised, canceled, released, waived or
permitted to lapse any material rights or claims;
(e) entered into or terminated any lease, agreement,
commitment or transaction, or agreed to or made any changes in any
leases or agreements, other than transactions and commitments entered
into in the ordinary course of business;
(f) written up, written down or written off the book value of
any assets;
(g) declared, paid or set aside for payment any dividend or
distribution with respect to its capital stock;
(h) redeemed, purchased or otherwise acquired, or sold,
granted or otherwise disposed of, directly or indirectly, any of its
capital stock or securities or any rights to acquire such capital stock
or securities, or agreed to changes in the terms and conditions of any
such rights outstanding as of the date of this Agreement;
(i) except in the ordinary course of business, increased the
compensation of any employee or paid any bonuses to any employee or
contributed to any employee benefit plan;
(j) entered into any employment, consulting, compensation or
collective bargaining agreement with any person or group, except oral
employment agreements which can be terminated at will; or
(k) entered into, adopted or amended any employee benefit plan
or severance agreements.
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2.9 TAX LIABILITIES. JKI has filed all federal, state, county,
local and foreign tax returns and reports required to be filed by them by the
date hereof, including those with respect to income, payroll, property,
withholding, social security, unemployment, franchise, excise and sales taxes;
JKI has either paid in full all taxes that have become due as reflected on any
return or report and any interest and penalties with respect thereto or have
fully accrued on their books or have established adequate reserves for all taxes
payable but not yet due; and have made cash deposits with appropriate
governmental authorities representing estimated payments of taxes, including
income taxes and employee withholding tax obligations. No extension or waiver of
any statute of limitations or time within which to file any return has been
granted to JKI with respect to any tax. No unsatisfied deficiency, delinquency
or default for any tax, assessment or governmental charge has been claimed,
proposed or assessed against JKI nor has JKI received notice of any such
deficiency, delinquency or default. JKI has no reason to believe that JKI has or
may have any tax liabilities other than those reflected on the unaudited balance
sheet of JKI as of December 31, 1998, with any notes thereto, and the related
unaudited statements of income for the twelve months ended December 31, 1998,
together with supplemental information on JKI, each prepared and attested to by
the chief financial officer of JKI (the "Balance Sheets") and those arising in
the ordinary course of business since the date thereof. With regard to the
foregoing, JKI has relied on the accuracy and completeness of the Schedule K-1
provided by the Partnership.
Pollard shall have sole responsibility for filing all required tax
returns for JKI. OSI shall assist Pollard in preparing income tax returns and
shall cooperate with Pollard to the extent necessary therefor, and Pollard shall
provide OSI with copies of all such returns at least fifteen (15) days prior to
filing.
2.10 NO UNDISCLOSED LIABILITIES. There are no liabilities or
obligations of JKI (other than material liabilities arising solely by reason of
JKI's status as a partner in the Partnership) of any nature, whether absolute,
accrued, contingent or otherwise, other than liabilities or obligations
indicated in Items 2.10(a) and 2.10(b) of the Disclosure Schedules.
2.11 TITLE TO PROPERTIES. JKI has good and marketable title to the
assets reflected in its books and records as being owned by it, (except as they
have since been affected by transactions in the ordinary course of business and
consistent with past practices) the real and personal properties reflected in
the Balance Sheets (except for assets subject to financing leases required to be
capitalized under generally accepted accounting principles, all of which are so
reflected in the Balance Sheet or notes thereto) and all assets purchased by JKI
since the date of the Balance Sheet, in each case free and clear of any lien,
claim or encumbrance, except as reflected in the Balance Sheet or notes thereto
and in Item 2.11 of the Disclosure Schedule and except for liens for taxes,
assessments or other governmental charges not yet due and payable.
Except for those assets acquired since the date of the Balance Sheets,
all material properties and assets owned by JKI are properly reflected on the
applicable Balance Sheets and notes thereto.
2.12 CONTRACTS. Excluding (i) contracts and commitments between
Outback or OSI and JKI or the Partnership, (ii) contracts and commitments
entered into by the Partnership to which Outback or OSI is a party, (iii)
contracts and commitments entered into by JKI in the ordinary course of the
Partnership's business without violation of the provisions of the Partnership
Agreement, and (iv) contracts and commitments entered into with the written
consent of OSI or Outback, Item 2.12 of the Disclosure Schedule is a complete
and accurate list of all of the contracts and commitments (including summaries
of oral contracts) to which JKI is a party or by which JKI is bound:
2.13 LITIGATION AND GOVERNMENT CLAIMS. Except as indicated in Item
2.13 of the Disclosure Schedule, there is no pending suit, claim, action or
litigation or administrative, arbitration or other proceeding or governmental
investigation or inquiry against JKI or the Partnership or to which any of their
business or assets is subject. Except as indicated in Item 2.13 of the
Disclosure Schedule, there are no such proceedings threatened or, to the best
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knowledge of JKI or Pollard, contemplated or, to the best knowledge of JKI or
Pollard, any basis for any unasserted claims (whether or not the potential
claimant may be aware of the claim) of any nature that might be asserted against
JKI or the Partnership.
2.14 NO VIOLATION OF ANY INSTRUMENT. Except as indicated in Item
2.14 of the Disclosure Schedule, JKI is not in violation of or default under nor
has any event occurred that, with the lapse of time or the giving of notice or
both, would constitute a violation of or default under or permit the termination
or the acceleration of maturity of or result in the imposition of a lien, claim
or encumbrance upon any property or asset of JKI pursuant to, the articles or
certificates of incorporation, bylaws or other chartering or governance document
of JKI or (excluding any of the following entered into by the Partnership and to
which Outback or OSI is a signatory or to which Outback or OSI consented in
writing or which were entered into by JKI in the ordinary course of business
without violation of the provisions of the Partnership Agreement) any note,
bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan or
lease agreement, other material agreement or instrument (including with
customers), judgment, order, injunction or decree to which JKI is a party, by
which JKI is bound or to which any of the assets of JKI are subject.
2.15 NECESSARY APPROVALS AND CONSENTS. Other than (a) in connection
with or in compliance with the laws of the State of Florida with respect to
effectuating the Merger, (b) consents required to be obtained from applicable
liquor control authorities, (c) consents required to be obtained from lessors,
and (d) under the provisions of the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, or state securities or blue sky
laws, no authorization, consent, permit or license or approval of or
declaration, registration or filing with, any person or governmental or
regulatory authority or agency is necessary for the execution and delivery by
each of JKI and Pollard of this Agreement, the Merger Agreement and the other
agreements executed or to be executed by them in connection with this Agreement,
and the consummation by JKI and Pollard of the transactions contemplated by this
Agreement and the Merger Agreement, and the ownership and operation by Outback
of the respective businesses and properties of JKI after the Effective Date in
substantially the same manner as now operated.
2.16 COMPLIANCE WITH LAWS. Pollard has no actual knowledge that JKI
or the Partnership are not in compliance with any such laws applicable to their
respective business, where failure to so comply would have a material adverse
effect on their business, operations, properties, assets or conditions.
2.17 ACCURACY OF INFORMATION FURNISHED. No representation or
warranty by JKI or Pollard in this Agreement nor any information in the
Financial Statements or in the Disclosure Schedule contains any untrue statement
of a material fact or omits to state any material fact that would make the
statements herein or therein, in light of the circumstances under which they
were made, false or misleading. Each of JKI and Pollard have disclosed to OSI
and Outback all facts known to them that are material to JKI's and the
Partnership's respective businesses, operations, financial condition or
prospects.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF POLLARD
In addition to the representations and warranties contained in ARTICLE
2, Pollard represents and warrants to OSI and Outback as follows:
3.1 AUTHORITY AND VALIDITY. He has the capacity and authority to
execute, deliver and perform this Agreement and all other agreements and
documents he is executing or will execute in connection herewith or therewith.
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3.2 BINDING EFFECT. This Agreement and the other documents
executed or to be executed by Pollard in connection with this Agreement have
been or will have been duly executed and delivered by him and are or will be,
when executed and delivered, his legal, valid and binding obligations
enforceable in accordance with their terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by
equitable principles of general applicability.
3.3 OWNERSHIP. Pollard is the sole record and beneficial
shareholder of JKI and no other person has any rights (in any form) to acquire
any capital stock of JKI.
3.4 VOTING. He acknowledges that in his individual capacity as
shareholder and director of JKI, he has voted in favor of the execution and
delivery of this Agreement and the Merger Agreement.
3.5 RESIDENCY. Pollard is, and has been at all times during the
one year period ending on the date hereof, a resident of the State of Florida.
3.6 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the execution and
delivery by Pollard of this Agreement and the Merger Agreement, nor the
consummation by him of the transactions contemplated hereby and thereby will
violate, breach, be in conflict with or constitute a default under or permit the
termination or the acceleration of maturity of or result in the imposition of
any lien, claim or encumbrance upon any material property or asset of Pollard
pursuant to any note, bond, indenture, mortgage, deed of trust, evidence of
indebtedness, loan or lease agreement, other agreement or instrument (including
with customers), judgment order, injunction or decree by which Pollard is bound,
to which he is a party or to which he is subject.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF OSI AND OUTBACK
OSI and Outback jointly and severally represent and warrant to JKI and
Pollard as follows:
4.1 ORGANIZATION AND GOOD STANDING. OSI and Outback are
corporations duly organized, validly existing and in good standing under the
laws of the States of Delaware and Florida, respectively.
4.2 FOREIGN QUALIFICATION. Outback is duly qualified or licensed
to do business and in good standing as a foreign corporation in Florida and in
every other jurisdiction where the failure to so qualify could have a material
adverse effect on its respective business, operations, assets or financial
condition.
4.3 POWER AND AUTHORITY. OSI and Outback each have the corporate
power and authority and all licenses and permits required by governmental
authorities to own, lease and operate their respective properties and assets and
to carry on their respective business as currently being conducted.
4.4 AUTHORITY AND VALIDITY. OSI and Outback each have the
corporate power and authority to execute, deliver and perform their respective
obligations under this Agreement, the Merger Agreement and the other documents
executed or to be executed by OSI and Outback in connection with this Agreement
and the execution, delivery and performance by OSI and Outback of this
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Agreement, the Merger Agreement and the other documents executed or to be
executed by OSI and Outback in connection with this Agreement have been duly
authorized by all necessary corporate action.
4.5 BINDING EFFECT. This Agreement, the Merger Agreement and the
other documents executed or to be executed by OSI and Outback in connection with
this Agreement have been or will have been duly executed and delivered by OSI
and Outback and are or will be, when executed and delivered, the legal, valid
and binding obligations of OSI and Outback, enforceable in accordance with their
terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by
equitable principles of general applicability.
4.6 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the execution and
delivery by OSI and/or Outback of this Agreement, the Merger Agreement, nor the
consummation by it of the transactions contemplated hereby and thereby will
violate, breach, be in conflict with or constitute a default under or permit the
termination or the acceleration of maturity of or result in the imposition of
any lien, claim or encumbrance upon any property or asset of OSI or Outback
pursuant to, the certificate of incorporation or bylaws of OSI or Outback or any
note, bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan
or lease agreement, other agreement or instrument, judgment order, injunction or
decree by which OSI or Outback is bound, to which it is a party or to which its
assets are subject.
4.7 CAPITALIZATION OF OSI. The authorized capital stock of OSI
consists of Two Hundred Million (200,000,000) shares of Common Stock, $.01 par
value and Two Million (2,000,000) shares of Preferred Stock, $.01 par value, of
which approximately 49,155,774 shares of Common Stock and no shares of Preferred
Stock were issued and outstanding as of August 7, 1998. All of the issued and
outstanding shares of OSI Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable. The shares of OSI Common Stock to
be issued in exchange for JKI's capital stock at the Effective Date, when issued
and delivered, will be duly authorized, validly issued, fully paid and
nonassessable. As of the date hereof, except for (i) employee and director stock
options to acquire shares of OSI Common Stock and (ii) employee stock ownership
plans, there are no options, warrants or other rights, agreements or commitments
outstanding obligating Outback or OSI to issue shares of its capital stock. All
of the outstanding shares of capital stock of Outback are owned by OSI, free and
clear of any lien or encumbrance.
4.8 SEC REPORTS. OSI has delivered to JKI and Pollard true and
complete copies of its (i) Annual Report on Form 10-K for the year ended
December 31, 1997; (ii) Proxy Statement used in connection with its 1997 Annual
Meeting of Shareholders; (iii) 1997 Annual Report to Shareholders; (iv) all
periodic reports, if any, on Form 8-K filed with the Securities and Exchange
Commission since December 31, 1997 to the date hereof; and (v) all Forms 10-Q,
if any, filed with the Securities and Exchange Commission since December 31,
1997 to the date hereof. Such documents and reports did not on their dates or
the date of filing, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. OSI has filed all material documents required to be filed by it
with the SEC and all such documents complied as to form with the applicable
requirements of law. Copies of all other reports filed by OSI with the SEC from
the date hereof to and including the Effective Date have been or will be
delivered to JKI and Pollard. All financial statements and schedules included in
the documents referred to in this SECTION 4.8 were prepared in accordance with
generally accepted accounting principles, applied on a consistent basis except
as noted therein and fairly present the information purported to be shown
therein.
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4.9 LITIGATION AND GOVERNMENT CLAIMS. There is no pending suit,
claim, action or litigation or administrative, arbitration or other proceeding
or governmental investigation or inquiry against OSI or Outback which would,
severally or in the aggregate, have a material adverse effect on the business,
results of operations, assets or the condition, financial or otherwise, of OSI
and its subsidiaries, taken as a whole. There are no such proceedings threatened
or, to the knowledge of OSI or Outback, contemplated or any unasserted claims
(whether or not the potential claimant may be aware of the claim), which might,
severally or in the aggregate have a material adverse effect on the business,
results of operations, assets or the condition, financial or otherwise, of OSI
and its subsidiaries, taken as a whole.
4.10 NECESSARY APPROVALS AND CONSENTS. Other than (a) in connection
with or in compliance with the laws of the States of Florida and Florida with
respect to effectuating the Merger, (b) consents required to be obtained from
applicable liquor control authorities, (c) consents required to be obtained from
lessors, and (d) under the provisions of the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, or state securities or blue sky laws, no
authorization, consent, permit or license or approval of or declaration,
registration or filing with, any person or governmental or regulatory authority
or agency is necessary for the execution and delivery by OSI and Outback of this
Agreement, the Merger Agreement and the other agreements executed or to be
executed by either of them in connection with this Agreement and the
consummation by OSI and Outback of the transactions contemplated by this
Agreement and the Merger Agreement.
4.11 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
public filings by OSI with the Securities and Exchange Commission prior to the
date hereof and the Closing Date, since December 31, 1997, there has not been
any material adverse change in the financial condition, results of operations or
the business, properties, assets or liabilities of Outback or OSI.
ARTICLE 5
JOINT COVENANTS OF JKI, POLLARD, OSI AND OUTBACK
JKI and Pollard, jointly and severally, on the one hand, and OSI and
Outback, jointly and severally on the other hand, covenant with each other as
follows:
5.1 NOTICE OF ANY MATERIAL CHANGE. Until the Effective Date, each
of JKI, Pollard, OSI and Outback shall, promptly after the first notice or
occurrence thereof but prior to the Effective Date, advise the others in writing
of any event or the existence of any state of facts that:
(a) would make any of its representations and warranties in
this Agreement untrue in any material respect; or
(b) would otherwise constitute a material adverse change in
the business, results of operation, working capital, assets,
liabilities or condition (financial or otherwise) of OSI, Outback or
JKI and their respective subsidiaries, taken as a whole. No supplement
or amendment to any Disclosure Schedule shall have any effect for the
purpose of determining the satisfaction of or compliance with the
conditions to the obligations of the parties to consummate the Merger
set forth elsewhere in this Agreement.
5.2 COOPERATION. Until the Effective Date, each of the parties
hereto shall and shall cause each of its affiliates to use its best efforts to:
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(a) proceed promptly to make or give the necessary
applications, notices, requests and filings to obtain at the earliest
practicable date and, in any event, before the Closing Date, the
approvals, authorizations and consents necessary to consummate the
transactions contemplated by this Agreement;
(b) cooperate with and keep the other informed in connection
with this Agreement; and
(c) take such actions as the other parties may reasonably
request to consummate the transactions contemplated by this Agreement
and use its best efforts and diligently attempt to satisfy, to the
extent within its control, all conditions precedent to the obligations
to close this Agreement.
5.3 POST-CLOSING ADJUSTMENT. As soon as practicable after the
Closing Date, but in no event more than forty-five (45) days thereafter, OSI
shall determine and report in writing to all parties hereto:
(a) the amount of current assets of JKI as of the Effective
Date; and
(b) the amount of all liabilities of JKI (other than
liabilities specified in Item 6.2 of the JKI Disclosure Schedule to the
extent assumed by Outback) which were not paid in full prior to the
Effective Date.
Upon receipt of such report, Pollard (by notice to OSI as provided
herein) shall have a period of ten (10) days in which to object in writing to
any portion or item of such report. In the event no objection is timely made,
OSI's report shall be final and binding on all parties. If timely objection is
made, the chief financial officer of OSI and Pollard (and at the expense of
Pollard) shall meet and attempt to agree on the items to which objection was
made. If such persons cannot agree within thirty (30) days from the date of
written objection, the items on which agreement has not been reached shall be
submitted to the Tampa, Florida office of PricewaterhouseCoopers (or other
agreed upon independent "Big Five" accounting firm) for a resolution of such
items and whose decision shall be final and binding on all parties. The fees and
expenses of PricewaterhouseCoopers (or other accounting firm) shall be paid by
the non-prevailing party.
If, as finally determined, the sum of Subsection (a) above exceeds the
sum of Subsections (b) and (c), OSI shall pay such excess to Pollard within ten
(10) days of such final determination. If, as finally determined, the sum of
Subsections (b) and (c) exceeds the sum of Subsection (a), Pollard shall pay
such excess to OSI within ten (10) days of the final determination.
5.4 DISTRIBUTION AND ALLOCATIONS. The parties acknowledge and
agree that notwithstanding the effective date of the Merger, Outback shall be
entitled to JKI's entire share of Partnership distributions of cash flow, and
shall be allocated JKI's shares of profit and loss, from and after January 1,
1999.
5.5 ADDITIONAL AGREEMENTS.
(a) Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use all reasonable efforts to take or
cause to be taken, all actions and to do or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement, including using all reasonable efforts
to obtain all necessary waivers, consents and approvals, to effect all
necessary registrations and filings and to lift any injunction or other
legal bar to the Merger (and, in such case, to proceed with the Merger
as expeditiously as possible), subject, however, to the appropriate
vote of the shareholders of JKI.
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(b) In case at any time after the Effective Date any further
action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and/or directors of OSI and Outback and
Pollard shall take all such necessary action.
(c) Neither Outback, OSI, JKI nor Pollard shall take any
action which would jeopardize the characterization of the Merger as a
reorganization within the meaning of Section 368(a) of the Code or the
treatment of the Merger for financial reporting purposes as a pooling
of interests.
ARTICLE 6
COVENANTS OF JKI AND POLLARD
JKI and Pollard covenant and agree with OSI as follows:
6.1 SECURITIES LAW COMPLIANCE. Pollard represents and warrants,
and covenants to Outback and OSI that:
(a) Pollard has received all schedules and exhibits and the
documents furnished to JKI pursuant to SECTION 4.8;
(b) Pollard has had the opportunity to ask questions of and
receive answers from representatives of the management of OSI
concerning the terms and conditions of the transactions contemplated
hereby and to obtain all additional information that OSI possesses or
could acquire without unreasonable expense that is necessary to verify
the accuracy of information furnished to Pollard.
(c) OSI and Outback have furnished him with all information
requested and full access to materials concerning OSI and Outback which
Pollard and/or his advisors deemed necessary to properly evaluate the
Merger. Such information and access have been made available and
utilized to the extent Pollard considers necessary and advisable in
making an informed investment decision, and Pollard has consulted his
own tax advisor and understands the evaluation of such materials may
require the assistance of experts and Pollard has utilized such experts
to the extent deemed necessary.
(d) Pollard understands that the OSI Common Stock to be
received is an investment of a speculative nature and Pollard must bear
the risks thereof for an indefinite period of time. Pollard has
adequate means for providing for his needs, is able to bear the
economic risk of the investment and has no need for liquidity in the
OSI Common Stock to be received in the Merger.
(e) Pollard and/or his representatives or advisors who have
acted with or on behalf of Pollard and who have advised Pollard in this
matter have such knowledge and experience in financial and business
matters that Pollard is capable of evaluating the merits and risks of
the Merger for OSI Common Stock.
(f) Pollard is participating in the Merger solely for his
account as a private investment, and Pollard has no present agreement,
understanding, arrangement or intention to sell or transfer all or any
portion of the shares of OSI Common Stock to be issued in the Merger to
any other person or persons. Pollard does not presently intend to enter
into any such agreement or undertaking and there are no present
circumstances which will compel Pollard to sell any OSI Common Stock so
received. Pollard will not sell or otherwise transfer the shares
(except for DE MINIMIS gifts of shares) unless they are registered
under the Securities Act and applicable state securities laws or, in
the opinion of OSI and its counsel, an exemption from registration is
available therefor.
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(g) The investment by Pollard in OSI Common Stock pursuant to
the Merger is a suitable investment for Pollard given the investment
goals and objectives of Pollard.
(h) Pollard agrees to indemnify and hold OSI and Outback and
each of their respective officers, directors and advisors harmless
against all liability arising out of or in connection with any
purchase, resale or distribution by Pollard of any OSI Common Stock
received hereby which is effected other than in strict compliance with
the terms hereof and applicable law.
(i) Pollard understands that the shares of OSI Common Stock to
be issued in the Merger will not be registered under the Securities
Act, nor any state securities laws, and such OSI Common Stock may not
be sold or transferred except in compliance with such laws. Neither OSI
nor Outback will have any obligation to register any such OSI Common
Stock.
(j) Pollard understands that OSI will place an appropriate
legend on the certificate representing OSI Common Stock to be received
restricting the transfer of the shares and stop-transfer instructions
will be given to the transfer agent for the OSI Common Stock with
respect to such certificates.
(k) Pollard is a natural person (i) whose net worth (the
excess of total assets over total liabilities), individually or jointly
with his spouse, exceeds $1,000,000 (inclusive of the value of home,
home furnishings and automobiles); or (ii) who had an Individual Annual
Adjusted Gross Income in excess of $200,000 in each of the two most
recent tax years or joint income with Pollard's spouse in excess of
$300,000 in each of those years and reasonably expects to reach the
same income level in the current tax year.
6.2 PAYMENT OF LIABILITIES. JKI and Pollard covenant and agree
that all debts and liabilities of JKI relating to periods prior to the Closing
Date shall be paid or satisfied in full prior to the Effective Date, except only
current liabilities and those debts and liabilities of JKI assumed by Outback as
specified in Item 6.2 of the Disclosure Schedules.
6.3 POOLING. Pollard agrees that until such time as financial
results of OSI covering at least thirty (30) days of combined operations of OSI
and JKI subsequent to the Effective Date have been published, he will not sell
or otherwise dispose of any shares of OSI Common Stock held by him as of the
Effective Date or any of such shares thereafter acquired by him at any time or
from time to time prior to the date of such publication. OSI shall give
instructions to its transfer agent and registrar, Bank of New York, Inc., with
respect to the shares of OSI Common Stock issued pursuant to the Merger, to the
effect that no transfer of such shares shall be effected until the date on which
the requisite financial results have been published and OSI and the transfer
agent may take any action, including placing an appropriate legend on the
certificates, they deem necessary to enforce this provision.
ARTICLE 7
COVENANTS OF OSI AND OUTBACK
OSI and Outback, jointly and severally, covenant and agree with JKI and
Pollard as follows:
7.1 EMPLOYMENT AGREEMENTS. Solely with respect to the Merger, and
any consequential termination of any partnership by operation of law, Outback
agrees not to elect to terminate the Employment Agreements between the
Partnership, as employer, and the general managers of the Partnership's Outback
Steakhouse(R) restaurants, as employees. Outback shall succeed to all rights and
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obligations of the Partnership under such Employment Agreements. Nothing
contained herein shall be construed as in any way limiting Outback's right to
terminate any such Employment Agreement as a result of any circumstance or event
other than the Merger and consequential termination of the Partnership by
operation of law.
7.2 ASSUMED LIABILITIES. OSI and Outback agree to assume and pay
the liabilities specified in Item 6.2 (subject to the amount limits specified in
Item 6.2 of the Disclosure Schedules) and to indemnify and hold harmless Pollard
from any loss or liability therefor.
ARTICLE 8
JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
Except as may be waived by OSI, the obligations of JKI, Pollard, OSI
and Outback to consummate the transactions contemplated by this Agreement shall
be subject to the satisfaction, on or before the Closing Date, of each of the
following conditions:
8.1 CONSENTS TO TRANSACTION. JKI, Outback and OSI shall have
received all consents or approvals and made all applications, requests, notices
and filings with, any person, governmental authority or governmental agency
required to be obtained or made in connection with the consummation of the
transactions contemplated by this Agreement. There shall have been obtained from
all state and local governments and governmental agencies all approvals and
consents necessary to enable JKI and/or the Partnership, as applicable, to
transfer their liquor licenses and permits to Outback, to enable Outback to
assume such licenses and permits or to enable Outback to operate restaurants (of
the kind and quality customarily operated by Outback) using such permits or
licenses. Copies of all consents and approvals received by any party pursuant to
this SECTION 8.1 shall be furnished to the other party.
8.2 ABSENCE OF LITIGATION. No governmental agency or authority
shall have instituted or threatened in writing to institute, any action or
proceeding seeking to delay, restrain, enjoin or prohibit the consummation of
the transactions contemplated by this Agreement and no order, judgment or decree
by any court or governmental agency or authority shall be in effect that
enjoins, restrains or prohibits the same or otherwise would materially interfere
with the operation of the assets and business of JKI or the Partnership or OSI
and its subsidiaries, including the surviving corporation in the Merger, after
the Closing Date.
8.3 DISSENTER'S RIGHTS. The number of shares of capital stock of
JKI for which shareholders have exercised appraisal or dissenters' rights under
applicable law shall be a number which, in the sole and absolute discretion of
OSI, does not jeopardize the financial reporting and accounting treatment of the
Merger specified in SECTION 1.11 or is otherwise not contrary to the best
interests of Outback or OSI.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF JKI
The obligations of JKI and Pollard to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction on or before
the Closing Date of each of the following conditions:
9.1 COMPLIANCE. OSI and Outback shall have, or shall have caused
to be, satisfied or complied with and performed in all material respects all
terms, covenants and conditions of this Agreement to be complied with or
performed by OSI and Outback on or before the Closing Date.
9.2 REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties made by OSI and Outback in this Agreement, and in all certificates
and other documents delivered by OSI and Outback to JKI and Pollard pursuant
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hereto or in connection with the transactions contemplated hereby, shall have
been true and correct in all material respects as of the date hereof and shall
be true and correct in all material respects at the Closing Date with the same
force and effect as if such representations and warranties had been made at and
as of the Closing Date, except for changes permitted or contemplated by this
Agreement.
9.3 MATERIAL ADVERSE CHANGES. Since the date of OSI's most recent
10-Q, as filed with the Securities and Exchange Commission, through the date
hereof, there shall have occurred no material adverse change in the business,
properties, assets, liabilities, results of operations or condition, financial
or otherwise, of OSI and Outback, taken as a whole.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS OF OSI AND OUTBACK
Except as may be waived by OSI and Outback, the obligations of OSI and
Outback to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions:
10.1 COMPLIANCE. JKI and Pollard shall have or shall have caused to
be satisfied or complied with and performed in all material respects all terms,
covenants and conditions of this Agreement to be complied with or performed by
any of them on or before the Closing Date.
10.2 REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties made by JKI and/or Pollard in this Agreement, the Disclosure
Schedule, and in all certificates and other documents delivered by JKI or
Pollard pursuant hereto or in connection with the transactions contemplated
hereby, shall have been true and correct in all material respects as of the date
hereof and shall be true and correct in all material respects at the Closing
Date with the same force and effect as if such representations and warranties
had been made at and as of the Closing Date, except for changes permitted or
contemplated by this Agreement.
10.3 CURRENT FINANCIAL STATUS. OSI shall have received the
unaudited financial statements of JKI as of December 31, 1998, for the month
then ended.
10.4 MATERIAL ADVERSE CHANGES. Since December 31, 1998, there shall
have occurred no material adverse change in the business, properties, assets,
liabilities, results of operations or condition, financial or otherwise, of JKI
or the Partnership.
10.5 POOLING. OSI shall have received a letter from
PricewaterhouseCoopers, in form and substance satisfactory to OSI and dated not
more than five days prior to the Closing Date, to the effect that the Merger
shall qualify as a pooling of interests for financial reporting purposes.
ARTICLE 11
INDEMNIFICATION
Pollard, on the one hand, and OSI and Outback, jointly and severally,
on the other hand, agree as follows:
11.1 INDEMNIFICATION BASED ON AGREEMENT. Subject to the limitations
contained in SECTION 11.2 hereof, Pollard shall indemnify and hold harmless OSI,
Outback and JKI, and OSI, Outback and JKI, jointly and severally, shall
indemnify and hold harmless Pollard, against any losses, claims, damages or
liabilities to which such indemnified party may become subject, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
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of or are based upon any facts or circumstances that would constitute a breach
by the other of any representation, warranty or covenant contained herein or in
any agreement executed pursuant hereto and will reimburse any legal or other
expenses reasonably incurred by any indemnified party in connection with
investigating or defending any such loss, claim, damage, liability or action.
In addition to the above, Pollard shall indemnify OSI, Outback and JKI,
as provided in the first paragraph of this SECTION 11.1, against any loss,
claim, damage or liability arising out of (i) any tax liability of JKI for any
period prior to and including the Effective Date and (ii) any debt of JKI (other
than the debts specified in Item 6.2 of the Disclosure Schedule to the extent
assumed by Outback), and (iii) all claims, obligations, causes of action and
liabilities, of whatever kind or character, of any of JKI which arise out of or
are based upon events first occurring on or before the Effective Date, except
only the liabilities assumed by Outback as specified in Item 6.2 of the
Disclosure Schedule.
11.2 LIMITATION. Pollard shall have no obligation under SECTION
11.1 to indemnify OSI, Outback or JKI for any liability, loss, claim or damage
arising out of or based upon facts or actions first occurring after the
Effective Date. All obligations of indemnity (other than those relating to tax
obligations of JKI under SECTION 11.1 above which shall continue for the period
specified in SECTION 12.4(B) hereof) shall terminate two (2) years from the
Closing Date; PROVIDED, HOWEVER, the obligations of indemnity shall not
terminate with respect to any matter for which indemnification is claimed within
two (2) years from the Closing Date.
11.3 COOPERATION. If any claim, demand, action, suit, proceeding or
investigation arising out of or pertaining to this Agreement or the transactions
contemplated hereby is begun or asserted, whether begun or asserted before or
after the Closing Date, the parties hereto will cooperate and use their best
efforts to defend against and respond thereto.
11.4 NOTICE. An indemnified party shall give notice to the
indemnifying party or parties within ten (10) business days after actual receipt
of service or summons to appear in any action begun in respect of which
indemnity may be sought hereunder. Failure to so notify the indemnifying party
or parties shall cause the indemnified party to be liable for any damage caused
by failure to give timely notice. The indemnifying party or parties may
participate at their own expense and with their counsel in the defense of such
action. If the indemnifying party or parties so elect within a reasonable time
after receipt of such notice, they may assume the defense of such action with
counsel chosen by the indemnifying party or parties and approved by the
indemnified party in such action, unless the indemnified party reasonably
objects to such assumption on the ground that its counsel has advised it that
there may be legal defenses available to it that are different from or in
addition to those available to the indemnifying party or parties, in which case
the indemnified party shall have the right to employ counsel approved by the
indemnifying party or parties. If the indemnifying party or parties assume the
defense of such action, the indemnifying party or parties shall not be liable
for fees and expenses of counsel for the indemnified party incurred thereafter
in connection with such action. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one counsel for the
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances unless, in the reasonable opinion of such counsel,
there is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more indemnified parties.
ARTICLE 12
MISCELLANEOUS
12.1 TERMINATION. This Agreement and the transactions contemplated
hereby may be terminated at any time on or before the Closing Date
(notwithstanding approval by the shareholders of JKI):
(a) by mutual consent of JKI and OSI;
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(b) by OSI if there has been a material misrepresentation or
breach of warranty in the representations and warranties of JKI or
Pollard set forth herein or if there has been any material failure on
the part of JKI or Pollard to comply with their obligations hereunder;
(c) by JKI if there has been a material misrepresentation or
breach of warranty in the representations and warranties of OSI or
Outback set forth herein or if there has been any material failure on
the part of OSI or Outback to comply with their obligations hereunder;
(d) by either OSI, JKI or Pollard, if the transactions
contemplated by this Agreement have not been consummated by March 31,
1999, unless such failure of consummation is due to the failure of the
terminating party to perform or observe the covenants, agreements and
conditions hereof to be performed or observed by it at or before the
Closing Date;
(e) by either OSI, or JKI if the conditions precedent to its
obligations to close this Agreement have not been satisfied or waived
by it at or before the Closing Date; and
(f) by either JKI or OSI if the transactions contemplated
hereby violate any nonappealable final order, decree or judgment of any
court or governmental body or agency having competent jurisdiction.
12.2 EXPENSES. Each party hereto shall pay its own expenses
incurred in connection with this Agreement and the transactions contemplated
hereby.
12.3 ENTIRE AGREEMENT. This Agreement and the exhibits and
Disclosure Schedule hereto constitute and contain the complete agreement among
the parties with respect to the transactions contemplated hereby and supersede
all prior agreements and understandings among the parties with respect to such
transactions. The parties hereto have not made any representation or warranty
except as expressly set forth in this Agreement, the Merger Agreement or in any
certificate or schedule delivered pursuant hereto. The obligations of any party
under any agreement executed pursuant to this Agreement shall not be affected by
this SECTION 12.3.
12.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) The representations, warranties and indemnification
obligations of OSI and Outback contained herein or in any exhibit,
certificate, document or instrument delivered pursuant to this
Agreement shall survive the Closing for a period of two years;
PROVIDED, HOWEVER, that the obligations of OSI and Outback under
ARTICLE 11 hereof shall survive for the periods provided therein.
(b) Except where otherwise specifically provided in this
Agreement, the representations, warranties and indemnification
obligations of Pollard contained herein or in any exhibit, schedule,
certificate, document or instrument delivered pursuant to this
Agreement shall survive the Closing for a period of three years from
the Effective Date; PROVIDED, HOWEVER, the representations and
warranties contained in SECTION 2.9 (TAX LIABILITIES) shall survive the
Closing for a period ending four years after the filing of JKI's
federal income tax return for the period including the Effective Date.
12.5 COUNTERPARTS. This Agreement may be executed in any number of
identical counterparts, each of which when so executed and delivered shall be
deemed an original and such counterparts together shall constitute only one
original.
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12.6 NOTICES. All notices, demands, requests or other
communications that may be or are required to be given, served or sent by any
party to any other party pursuant to this Agreement shall be in writing and
shall be mailed by registered or certified mail, return receipt requested,
postage prepaid or transmitted by hand delivery, recognized national overnight
delivery service, telegram or telex, addressed as follows:
If to JKI or Pollard: J K STEAK, INC.
5502 Executive Drive
Tampa, Florida 33609
Attention: James Pollard
If to OSI or Outback: OUTBACK STEAKHOUSE, INC.
550 North Reo Street, Suite 200
Tampa, Florida 33609
Attention: Joseph J. Kadow, General Counsel
Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request or communication that is mailed, delivered
or transmitted in the manner described above shall be deemed sufficiently given,
served, sent and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt, the affidavit of
messenger or (with respect to a telex) the answer back being deemed conclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
12.7 SUCCESSORS AND ASSIGNS. This Agreement and the rights,
interests and obligations hereunder shall be binding upon and shall inure to the
benefit of the parties hereto and, except as otherwise specifically provided for
herein, their respective successors and assigns.
12.8 GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws of the State of Florida without giving effect to
principles of comity or conflicts of law thereof.
12.9 WAIVER AND OTHER ACTION. This Agreement may be amended,
modified or supplemented only by a written instrument executed by the parties
against which enforcement of the amendment, modification or supplement is
sought.
12.10 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance; and in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
12.11 HEADINGS. All headings and captions in this Agreement are
intended solely for the convenience of the parties and none shall be deemed to
affect the meaning or construction of any provision hereof.
12.12 CONSTRUCTION. All references herein to the masculine, neuter
or singular shall be construed to include the masculine, feminine, neuter or
plural, where applicable.
12.13 JURISDICTION AND VENUE. The parties agree that any action
brought by either party against the other in any court, whether federal or
state, shall be brought within the State of Florida in the judicial circuit in
which OSI has its principal place of business. Each party hereby agrees to
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submit to the personal jurisdiction of such courts and hereby waives all
questions of personal jurisdiction or venue for the purpose of carrying out this
provision, including, without limitation, the claim or defense therein that such
courts constitute an inconvenient forum.
12.14 ENFORCEMENT. In the event it is necessary for any party to
retain legal counsel or institute legal proceedings to enforce the terms of this
Agreement, including, without limitation, obligations upon expiration or
termination, the prevailing party shall be entitled to receive from the
non-prevailing party, in addition to all other remedies, all costs of such
enforcement including, without limitation, attorney's fees and court costs and
including appellate proceedings.
12.15 FURTHER ASSURANCES. Each party covenants and agrees to execute
and deliver, prior to or after the Merger, such further documents as may
reasonably be requested by another party to fully effectuate the transactions
provided for herein.
12.16 EQUITABLE REMEDIES. The parties hereto acknowledge that a
refusal by a party to consummate the transactions contemplated hereby will cause
irreparable harm to the other parties, for which there may be no adequate remedy
at law. A party not in default at the time of such refusal shall be entitled, in
addition to other remedies at law or in equity, to specific performance of this
Agreement by the party that refused to consummate the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"OSI"
Attest: OUTBACK STEAKHOUSE, INC.
a Delaware corporation
By:___________________________ By: _____________________________________
JOSEPH J. KADOW, Secretary ROBERT D. BASHAM, President
"Outback"
Attest: OUTBACK STEAKHOUSE OF FLORIDA, INC.,
a Florida corporation
By:___________________________ By: _____________________________________
JOSEPH J. KADOW, Secretary ROBERT D. BASHAM, Chief
Operating Officer
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"JKI"
Attest: J K STEAK, INC.
a Florida corporation
By:___________________________ By: _____________________________________
JAMES POLLARD, Secretary JAMES POLLARD, President
Witness: "POLLARD"
______________________________ _________________________________________
JAMES POLLARD
_______________________________
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EXHIBIT 4.30
JOINT VENTURE AGREEMENT
Article I. Introduction
This Agreement is entered into as of ________________, 1999, among
RY-8, Inc., a Hawaii corporation (being a wholly owned subsidiary of Roy's
Holdings, Inc., a Hawaii corporation) ("Roy's") and OS Pacific, Inc., a Florida
corporation (being a wholly owned subsidiary of Outback Steakhouse, Inc., a
Delaware corporation) ("Outback") for the purpose of carrying on a joint
venture. The name of the joint venture shall be "Roy's/Outback Joint Venture."
Article II. Purpose of Joint Venture
The purpose of the joint venture shall be to develop, own and operate
throughout the world (excluding Hawaii, Japan, Guam and certain markets in the
United States where there are existing franchisees as of the date hereof to the
extent such franchisees have been granted exclusive territories) a chain of
casual, fine dining restaurants featuring Pacific Rim cuisine, the culinary
style and concept having been originally developed by Chef Roy Yamaguchi and
Hawaiian Pacific Restaurant Group, Inc. (a wholly owned subsidiary of Roy's
Holdings, Inc.), and which are commonly referred to as "Roy's," followed by a
geographic tag, e.g., Roy's at Pebble Beach, Roy's Scottsdale and Roy's Bonita
Springs (the "Restaurants" or "Restaurant").
Article III. Duties of Parties
3.1. General Duties
Each Joint Venturer will devote such time and efforts as may be
reasonably necessary to develop, own and operate as many Restaurants as are
viable and feasible in the shortest period of time, provided, however, that (i)
the quality of each new Restaurant and all existing Restaurants shall not be
impaired, and (ii) mutually agreed upon rates of return are achieved.
3.2. Exclusive and Primary Obligations
3.2.1 Exclusive Obligations
Each Joint Venturer agrees that neither one shall engage in any
activities that would conflict with the operations and business purpose of the
Joint Venture. Notwithstanding the foregoing, the preceding sentence shall not
be construed in any way to limit Outback's ability to expand its existing chain
of Outback Steakhouse restaurants, nor to limit Outback's ability to acquire,
invest in or otherwise be involved with other casual, fine dining concepts (or
any other restaurant concepts) as long as such concepts are not considered to
feature Pacific Rim or Euro-Asian cuisine and Outback's involvement with such
other concepts does not materially impair the growth and viability of the Joint
Venture. Similarly, said first sentence shall not be construed in any way to
limit Roy's ability to own and operate its existing Roy's restaurants in Hawaii
<PAGE> 2
and Denver (including reopening any existing restaurant that should close), nor
to limit its activities as franchisor in relation to the existing Roy's
franchises as of the date hereof and any renewals and extensions thereof. As to
any new franchisees and locations worldwide (except as aforesaid), only the
Joint Venture may grant the same. The rights and obligations of the Joint
Venturers under this Section 3.2.1 shall extend to their affiliated companies
("Affiliates"). "Affiliates" mean a parent company, brother-sister company,
subsidiary or other company in which the Joint Venturer's parent company or the
Joint Venturer owns or controls over 50% of the voting interests of said
company.
The parties acknowledge and agree that Roy Yamaguchi ("RY"), in his
individual capacity, is free to pursue other business opportunities other than
restaurant concepts, such as writing books, personal appearances (TV and other
media) and any product endorsements which do not impair the image of the
Restaurants. Any restaurant concept that RY wishes to be involved with must
first be presented to the Joint Venture and only if the Joint Venture declines
to become involved, then RY may pursue such opportunity, provided his
involvement does not materially impair the growth and viability of the Joint
Venture, as determined by the Joint Venture in its reasonable discretion.
Notwithstanding the foregoing, RY agrees to exert his time, efforts and skill in
such reasonable amounts as may be necessary to maximize the success and growth
of the Joint Venture and the Restaurants.
3.2.2 Roy's Primary Duties and Obligations
Roy's shall be primarily responsible for consulting with the President
regarding the training, development and supervision of all Joint Venture
executive level and Restaurant managerial level employees relating to the
quality and integrity of the Roy's concept to be sure it is being properly
executed, maintained and enhanced, including but not limited to, developing the
schematic and conceptual drawings for each Restaurant for approval by the Joint
Venture, recommending to the Joint Venture for approval the appropriate
"corporate" operations executives who will possess the necessary knowledge and
skill to train the Restaurant managerial employees concerning the proper
execution of the Roy's concept, hiring and firing of the executive chef, sous
chef and pastry chef, training and supervision of said chefs, control over menu
and recipe development, control over kitchen design, control over wine lists and
training and supervision of the general manager and assistant managers.
Notwithstanding the foregoing, the parties acknowledge and agree that the
day-to-day implementation of the foregoing duties and obligations will be
delegated to the President of the Joint Venture, as provided for in Section 8.1,
below, except that said President and the Joint Venturers will recognize and
give due consideration to the unique and specialized knowledge and skill of each
Joint Venturer in its respective area of primary duties and obligations.
3.2.3 Outback's Primary Duties and Obligations
Outback shall be primarily responsible for consulting with the
President regarding the training, development and supervision of all Joint
Venture executive level and Restaurant managerial employees relating to the
administrative, financial and other aspects of the Restaurants that do not
materially impair the quality and integrity of the food and customer service at
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the Restaurants or the Roy's concept, including but not limited to, conducting
preliminary site selection and negotiations with landlords, preparing
development and operating budgets for approval by the Joint Venture, selection
of and negotiations with the contractor(s) for the construction of each
Restaurant, hiring and firing of the bookkeeper for each Restaurant,
establishment of accounting and cash control policies and procedures, selection
of and negotiation with all liability, property, health and workers'
compensation insurers, preparation of all operating and financial statements for
each Restaurant and the Joint Venture, preliminary selection of the general
manager and assistant managers for each Restaurant for approval by the Joint
Venture, and recommending to the Joint Venture for approval the appropriate
general and administrative staff (executive, managerial and non-managerial) to
support the Restaurants and the Joint Venture. Notwithstanding the foregoing,
the parties acknowledge and agree that the day-to-day implementation of the
foregoing duties and obligations will be delegated to the President of the Joint
Venture, as provided for in Section 8.1, below, except that said President and
the Joint Venturers will recognize and give due consideration to the unique and
specialized knowledge and skill of each Joint Venturer in its respective area of
primary duties and obligations.
Article IV. Contributions/Liabilities
4.1. Nature and Amount of Contributions
The amount and nature of the contributions of each Joint Venturer are
as follows:
Outback $1,000,000 cash
Roy's $1,000,000 cash
In addition to the foregoing, Roy's shall grant or cause to be granted
to the Joint Venture a royalty-free master license for the exclusive use in the
world of the service mark "Roy's" and the Roy's system and shall contribute the
services specified in Article III, above. Such license, however, shall expressly
reserve unto Roy's the right to continue use and licensing of the service mark
in connection with its existing Hawaii and franchise operations. Attached hereto
as Exhibit "A" is a list of said existing Hawaii and franchise operations.
In addition to the foregoing, Outback agrees to cause its parent
company, Outback Steakhouse, Inc. to provide the Joint Venture with financial
guarantees for up to 50% of any debt of the Joint Venture where such guarantees
will be beneficial to the Joint Venture, including but not limited to,
Restaurant premises leases, any promissory notes or other indebtedness of the
Joint Venture, and any lease for furniture, fixture and equipment. Outback shall
also contribute the services described in Article III, above.
4.2. Time for Making Contributions
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(a) The contributions of money by each party must be made on or before
June 30, 1999.
(b) The contributions of services and skill must be made commencing
immediately following the full execution of this Agreement.
4.3. Effect of Failure To Make Contributions
If any Joint Venturer fails to make that Joint Venturer's contribution
within the time specified in this Agreement, the nondefaulting Joint Venturer
shall have the right to enforce any and all remedies available at law or in
equity, including but not limited to, rescinding this Agreement, seeking
injunctive relief and/or recovering damages.
4.4. Subsequent Capital Contributions
In no event shall any Joint Venturer be obligated to make any
additional capital contributions, except as otherwise expressly provided herein.
4.5. Interest on Capital Contributions
No Joint Venturer shall receive, or be entitled to receive, interest on
its contributions to the capital of the Joint Venture
4.6 Liabilities
4.6.1. Liability for Certain Obligations
The parties acknowledge that the Joint Venture will incur certain
material long term obligations, including, without limitation, liability as
lessee under leases for Restaurant premises and liability on loans. Roy's and
Outback covenant and agree that as to any debt, liability, or obligation of the
Joint Venture, including, without limitation, the liabilities described in the
preceding sentence, Roy's and Outback shall each be proportionately liable to
the third party creditor for only up to fifty percent (50%) of amounts
outstanding under such obligations and shall not be jointly and severally liable
therefor.
4.6.2. Documentation
Roy's and Outback covenant and agree that all documentation evidencing
the Joint Venture's material, long term obligations, including, without
limitation, a Restaurant premises lease, any promissory notes, and any lease for
furniture, fixture and equipment, shall limit the liability of each of Roy's and
Outback to proportionately fifty percent (50%) of any amounts outstanding under
such obligations and shall specifically state that Roy's and Outback shall not
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be individually liable for the entire amount thereof, nor jointly and severally
liable therefor.
4.6.3 Indemnification
Roy's and Outback each hereby indemnify and hold each other harmless
from and against any liability, claim, damage, action or obligation for any
material long term obligation of the Joint Venture, including, but not limited
to, the liabilities described herein, in excess of fifty percent (50%) of
amounts outstanding under such obligations.
Article V. Ownership of Venture Property
5.1. Title to Property
All property of the Joint Venture shall be held in the name of the
Joint Venture.
5.2. Interest in Property
Except as provided below, the beneficial interest of each party in
Joint Venture property, unless changed pursuant to the terms of this Agreement,
shall be as follows: Fifty percent (50%) Roy's and Fifty percent (50%) Outback.
5.3 Interest in Recipes
All recipes developed by the Joint Venture shall be owned by the Joint
Venture. All recipes developed by Roy's shall be owned by Roy's. Any recipes
developed through the collaborative efforts of Roy's and the Joint Venture,
shall be owned jointly by Roy's and the Joint Venture. During the continued
existence of the Joint Venture, Roy's and the Joint Venture agree to license to
the other use of each other's recipes.
Article VI. Term
The term of the Joint Venture will commence on the date first indicated
above and shall terminate as provided in Article X, below.
Article VII. Distributions; Allocation of Profits and Losses
7.1. Division or Share of Profits
Any profits of the Joint Venture shall be allocated among the Joint
Venturers in the following percentages unless that percentage is changed
pursuant to the terms of this Agreement:
Roy's 50%
Outback 50%
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7.2. Calculation of Profits
For the purposes of this Agreement, the profits of the Joint Venture
shall be calculated as follows:
(a) The expenses of conducting the Joint Venture shall be deducted from the
income of the Joint Venture. The expenses of conducting the Joint Venture shall
include all expenses customarily incurred by businesses similar to the Joint
Venture.
(b) In regards to the San Francisco, San Diego and Dallas Restaurants, after the
payment of expenses as described above and retention of adequate operating and
capital reserves, Roy's and Outback shall each be entitled to receive equal
distributions of any remaining available cash. As to all other Restaurants, the
parties agree that except for distributions necessary to enable each party to
pay their respective income tax obligations, all available cash from operations
shall be reinvested into new Restaurants.
7.3. Apportionment or Share of Loss
Should a loss be sustained by the Joint Venture, the parties shall bear
the loss in the same percentages as profits.
7.4. Computation of Loss
In computing any loss as between the parties, deductions shall be made
from any assets remaining in the same manner as computing profits in 7.2, that
is, deductions shall first be made to pay expenses, and any remaining sums shall
be allocated on a pro rata percentage basis to contributions, as set forth in
7.2 for computing profits. Should there be insufficient assets to pay expenses
due and owing as a result of the conduct of the joint enterprise, each party
shall contribute to the payment of those expenses in the percentage of losses
attributed to that party in this Article.
Article VIII. Management Structure
8.1. Management of Joint Venture
The business and affairs of the Joint Venture shall be managed by a
committee (the "Executive Committee") consisting of five (5) members appointed
by the Joint Venturers. Outback shall name two (2) members of the committee,
Roy's shall name two (2) members of the committee, and the fifth member (the
"Wise Man") shall be named jointly by Outback and Roy's. The Wise Man must be
(i) independent and not employed by or have any ownership interest in or
licensing or franchise relationship with either Joint Venturer (or its
Affiliates), and (ii) possess not less than ten (10) years of full-time
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<PAGE> 7
executive level management experience in one or more casual, fine dining
restaurants having at least ten (10) stores under his or her control or such
other qualifications as Outback and Roy's may agree. Each individual named to
the Executive Committee will serve as a member of the Executive Committee until
his or her death, withdrawal or expulsion from the Executive Committee, or until
his or her removal from the Executive Committee by the Joint Venturer who
appointed him or her or in the case of the Wise Man, by the majority vote or
consent of the Joint Venturers. All decisions as to the day to day operations of
the Joint Venture shall be made by a President hired by the majority agreement
of the Executive Committee, provided, that the President shall not, without the
majority consent of all of the members of the Executive Committee:
(1) Confess a judgment against the Joint Venture;
(2) Admit any person as a Joint Venturer;
(3) Execute or deliver any assignment for the benefit of the creditors of
the Joint Venture;
(4) Enter into any lease of real or personal property;
(5) Enter into any loan transaction or incur any indebtedness of the Joint
Venture in excess of $25,000;
(6) Open any Restaurant;
(7) Purchase any real property;
(8) Fire Gordon Hopkins (Corporate Chef), Christian Maldonado (Operations
Director), Randal Caparoso (Wine and Beverage Director), or hire/fire
their respective successors; and
(9) Such other matter(s) as may be mutually agreed upon by the parties.
8.2. Composition of Committee
The following individuals are appointed as the initial members of the
Executive Committee:
ROY'S APPOINTEES OUTBACK APPOINTEES
---------------- ------------------
Roy Yamaguchi Chris Sullivan
Terrence Lee Michael O'Donnell
The Wise Man shall be appointed by said members within sixty (60) days from the
effective date hereof.
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Vacancies on the Executive Committee shall be filled by the Joint
Venturer who appointed the member who created the vacancy, or in the case of the
Wise Man, by vote or written consent of a majority of the Joint Venturers.
8.3. Actions by Majority Vote
Except as otherwise expressly provided in this Agreement, all actions
taken by the Executive Committee shall be by majority vote of its members.
Article IX. Confidentiality
9.1. Definition
For the purpose of this Agreement, "Proprietary Information" shall
include all information designated by any Joint Venturer, either orally or in
writing, as confidential or proprietary, or which reasonably would be considered
proprietary or confidential to the business contemplated by this Agreement,
including but not limited to suppliers, marketing and technical plans, plans for
products and ideas, recipes, menus, wine lists and proprietary techniques and
other trade secrets. Notwithstanding the foregoing, "Proprietary Information"
shall not include information which (i) has entered the public domain or became
known other than due to a breach of any obligation of confidentiality owed to
the owner of such information; (ii) was known prior to the disclosure of such
information; (iii) became known to the recipient from a source other than a
Joint Venturer or its Affiliate, provided there was no breach of an obligation
of confidentiality owed to said Joint Venturer or its Affiliate; or (iv) was
independently developed by the party receiving such information.
9.2. No Disclosure, Use, or Circumvention
No Joint Venturer or its Affiliates shall disclose any Proprietary
Information to any third parties (other than existing or permitted franchisees)
and will not use any Proprietary Information in that Joint Venturer's or
Affiliates' business or any affiliated business without the prior written
consent of the other Joint Venturer, and then only to the extent specified in
that consent. Consent may be granted or withheld at the sole discretion of any
Joint Venturer. No Joint Venturer shall contact any suppliers, customers,
employees, affiliates or associates to circumvent the purposes of this
provision.
9.3. Maintenance of Confidentiality
Each Joint Venturer shall take all steps necessary or appropriate to
maintain the strict confidentiality of the Proprietary Information and to assure
compliance with this Agreement.
Article X. Termination
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10.1. Date of Termination
This Agreement shall be terminated on the earlier to occur of:
(a) The mutual agreement of all of the parties to this Agreement;
(b) Any act or event which makes the continuation of the business of the
Joint Venture impossible or impracticable;
(c) The bankruptcy or insolvency of any of the parties to this Agreement;
or
(d) Fifteen (15) years after the effective date hereof .
10.2. Effect of Termination
On the termination of this Joint Venture, the Joint Venture shall be
dissolved and wound up in accordance with the provisions of the Florida Uniform
Partnership Act, except as otherwise specifically provided in this Agreement or
any amendment to this Agreement.
Article XI. Put Options/Maximization of Value
11.1 Put Options in Favor of Roy's
Roy's shall have the right to require Outback to purchase up to 25% of
Roy's interests in the Joint Venture at anytime after the 5th anniversary of the
effective date hereof. Additionally, at anytime after the 10th anniversary of
the effective date hereof, Roy's shall have the right to require Outback to
purchase up to another 25% (total 50%) of Roy's interests in the Joint Venture.
The percentage interest in the entire Joint Venture being sold under these put
options is referred to herein as the "Put Percentage". The purchase price to be
paid by Outback shall be equal to the fair market value of the Joint Venture as
of the date Roy's exercises its put option, multiplied by the Put Percentage.
11.2 Exercise of Put Options
11.2.1 Exercise Notice
Upon Roy's exercising its put options, it shall give Outback written
notice thereof. The written notice (the "Exercise Notice") shall state the
proposed fair market value of the Joint Venture, a detailed explanation of the
valuation methodology and supporting information utilized by Roy's in arriving
at said fair market value and the Put Percentage.
11.2.2 Answering Notice
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<PAGE> 10
Within five (5) business days after receipt of such notice by Outback,
it shall advise Roy's in writing (the "Answering Notice") if Outback either :
(a) agrees with such valuation, or (b) disagrees with such valuation, in which
case Outback shall propose its own valuation and a detailed explanation of the
valuation methodology and supporting information utilized by Outback in arriving
at its proposed value.
11.2.3 Responding Notice
Within five (5) business days after Roy's receives the Answering
Notice, Roy's shall respond to Outback in writing (the "Responding Notice")
stating either: (a) Roy's agreement with Outback's valuation, or (b) Roy's
disagreement with such valuation and any revised value.
11.2.3 Resolution of Disputed Value by Wise Man
In the event Roy's and Outback fail to reach agreement on the valuation
of the Joint Venture within ten (10) business days following Outback's receipt
of the Responding Notice, then the value shall be determined by the Wise Man,
who shall be limited to selecting either of the values most recently proposed in
writing by Roy's or Outback in the Exercise Notice, Answering Notice and/or
Responding Notice. The Wise Man shall be empowered to engage such consultant(s)
as he deems reasonable and prudent, at the expense of the Joint Venture, to
assist him in selecting which of the two most recently proposed values best
represents the fair market value of the Joint Venture. The Wise Man shall notify
each party in writing of his decision no later than twenty (20) days after the
matter has been submitted to him. Upon the Wise Man rendering his written
decision, the value established by said decision shall be final and binding upon
Roy's and Outback.
11.2.4 Payment of Purchase Price
The purchase price shall be equal to the fair market value of the Joint
Venture, as established by mutual agreement or by the decision of the Wise Man,
multiplied by the Put Percentage. Within ten (10) business days after the
purchase price is finally established, Outback shall pay Roy's the applicable
purchase price in either cash or unrestricted Outback common stock or any
combination of both. The term "unrestricted Outback common stock" means that
there shall be no limitations or restrictions on Roy's ability to sell all of
said stock on the stock exchange handling the buying and selling of such stock
contemporaneously upon receipt of such stock.
11.3 Outback Right to Void Exercise of Option if Acquisition of Put
Percentage is Dilutive
Notwithstanding the foregoing, in the event the final purchase price
has the effect, upon Outback's acquisition of the Put Percentage at such price,
of diluting the earnings per share for the next 12 months of Outback, Outback
shall have the option of voiding Roy's exercise of its put option, which must be
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exercised by written notice to Roy's of Outback's election to void said exercise
(the "Void Notice") prior to the expiration of the 10-day period to pay the
purchase price. The purchase price will be considered to dilute the earnings per
share of Outback if the accounting effect of the transaction, determined in
accordance with generally accepted accounting principles, would cause a
reduction in pro forma Basic Earnings Per Share and/or Diluted Earnings Per
Share (or an increase in Net Loss Per Share) calculated in accordance with SFAS
No. 128 "Earnings Per Share" for the 12 months following the purchase. Upon
Roy's receipt of the Void Notice, Roy's may elect to accept a lower purchase
price which has the effect of eliminating said dilutive effects of Outback's
acquisition, which election must be exercised by written notice to Outback
within five (5) business days after receipt of the Void Notice (the "Lower Price
Notice"). Outback shall pay Roy's said lower purchase price amount in cash,
stock or any combination thereof as aforesaid, within ten (10) business days
after receipt of the Lower Price Notice.
11.4 Maximization of Value
The Joint Venturers agree that from time to time, they shall evaluate
in good faith all available options to the Joint Venture to maximize the value
of each Joint Venturer's ownership interests in the Joint Venture, such as but
not limited to, an initial public offering, strategic sale or merger into
Outback Steakhouse, Inc.
Article XII. Assignment
No Joint Venturer may assign its rights and obligations hereunder due
to the unique expertise and qualifications of the Joint Venturers. It shall be
permissible, however, to assign or pledge as collateral either Joint Venturer's
interest in profit distributions and/or Roy's put options.
Article XIII. Arbitration
Any dispute arising under this Agreement, or under any instrument made
to carry out the terms of this Agreement, shall be submitted to arbitration in
accordance with the commercial dispute arbitration rules of the American
Arbitration Association. The venue and situs for such arbitration proceedings
shall be San Francisco, California.
Article XIV. Notices
All notices to the Joint Venturers pursuant to this Agreement shall be
in writing and shall be deemed effective when given by personal delivery or by
certified mail, express delivery service, or facsimile transmission.
Article XV. Applicable Law
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<PAGE> 12
To the extent not otherwise provided in the Agreement, the terms of
this Joint Venture and the relationship of the Joint Venturers to each other
shall be governed by the provisions of the Florida Uniform Partnership Act, and
any amendments or successor statute to that Act.
Article XVI. Amendments
This Agreement may be amended only by the written agreement of all of
the Joint Venturers.
Article XVII. Condition Subsequent
As a condition subsequent to each Joint Venturer's obligations under
the Agreement, the Joint Venture must secure a credit facility for not less than
$20 million dollars from a reputable lending institution on terms and conditions
satisfactory to the Joint Venture to be used to finance the business purpose of
the Joint Venture. If the Joint Venture is unable to secure such a credit
facility within 90 days following the effective date hereof, either party may
terminate the Agreement upon prior written notice to the other. Upon such
termination, each party shall be released and discharged from any and all
obligations under this Agreement.
Article XVIII. Tax Related Provisions
18.1 Composition of Capital Accounts
A separate capital account shall be maintained by the Joint Venture for
each Joint Venturer in accordance with Section 704(b) of the Internal Revenue
Code of 1986, as amended (the "Code"), and Treasury Regulations promulgated
thereunder. There shall be credited to each Joint Venturer's capital account (i)
the amounts of money contributed by it to the Joint Venture, (ii) the fair
market value of property contributed by it to the Joint Venture (net of
liabilities secured by such contributed property that the Joint Venture is
considered to assume or take subject to under Section 752 of the Code), and
(iii) allocations to it of Joint Venture income and gain (or items thereof),
including income and gain exempt from tax, as computed for book purposes, in
accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(g), as set forth
pursuant to Article VII of this Agreement. Each Joint Venturer's capital account
shall be decreased by (i) the amount of money distributed to it by the Joint
Venture, (ii) the fair market value of property distributed to it by the Joint
Venture (net of liabilities secured by such distributed property that such Joint
Venturer is considered to assume or take subject to pursuant to Section 752 of
the Code), (iii) allocations to such Joint Venturer of expenditures of the Joint
Venture described in Section 705(a)(2)(B) of the Code, and (iv) allocations of
Joint Venture loss and deduction (or items thereof), including loss or
deduction, computed for book purposes, as described in Treasury Regulation
Section 1.704-1(b)(2)(iv)(g), as set forth pursuant to Article VII of this
Agreement.
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18.2 Adjustments to Tax Basis
In the event of adjustment to the adjusted tax basis of Joint Venture
property under Code Sections 732, 734 or 743, the capital accounts of the Joint
Venturers shall be adjusted to the extent provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(m).
18.3 Income Tax Elections
In the event of a distribution of property made in the manner provided
under Section 734 of the Code, or in the event of a transfer of any Joint
Venture Interest permitted by this Agreement made in the manner provided in
Section 743 of the Code, Outback, on behalf of the Joint Venture, may, but shall
not be required to, file an election under Section 754 of the Code in accordance
with the procedures set forth in the applicable regulations promulgated
thereunder.
18.4 Audits of Income Tax Returns
(a) Appointment of Tax Matters Partner. The tax matters partner (the
"TMP"), as referred to in Code Section 6231(a)(7), for the Joint Venture shall
be Outback.
(b) Employment of Advisors. The TMP shall employ experienced tax
advisors to represent the Joint Venture in connection with any audit or
investigation of the Joint Venture by the Internal Revenue Service and in
connection with all subsequent administrative and judicial proceedings arising
out of such audit. The fees and expenses of such tax advisors shall be an
expense of the Joint Venture. It shall be the responsibility of the Joint
Venturers, at their own expense, to employ tax advisors to represent their
respective separate interests.
(c) Notice and Expenses. The TMP shall keep the Joint Venturers
reasonably informed of all administrative and judicial proceedings, as required
by the Code, and shall furnish to each Joint Venturer who so requests in writing
a copy of each notice or other communication received by the TMP from the
Internal Revenue Service (except such notices or communications as are sent
directly to such requesting Joint Venturer by the Internal Revenue Service). All
expenses incurred by the TMP in serving as TMP shall be Joint Venture expenses
and shall be paid by the Joint Venture. Any Joint Venturer has the right to
participate in such administrative proceedings relating to the determination of
Joint Venture items. Each Joint Venturer who elects to participate in such
proceedings will be responsible for any such expenses incurred by such Joint
Venturer in connection with such participation.
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<PAGE> 14
(d) Authority of Tax Matters Partner. The TMP shall have the authority
to take any and all action reasonably required as TMP, including by way of
example, any of the following: (i) enter into a settlement agreement with the
Internal Revenue Service that purports to bind the Joint Venturers other than
the TMP; (ii) file a Tax Court Petition as contemplated in Code Section 6226(a)
or Section 6228; (iii) intervene in any action as contemplated in Code Section
6226(b); (iv) file any requests for administrative adjustment contemplated in
Code Section 6227(b); or (v) enter into an agreement extending the limitations
period as contemplated by Code Section 6229(b)(1)(B).
(e) Indemnification of TMP. The Joint Venture shall indemnify the TMP
against any and all judgments, fines, amounts paid in settlement and expenses
(including reasonable attorneys' fees, whether incurred before or at trial or
during any appellate proceedings, and court costs) incurred by the TMP in any
civil, criminal or investigative proceeding in which the TMP is involved or
threatened to be involved by reason of being the TMP for the Joint Venture;
PROVIDED, HOWEVER, that the TMP shall not be indemnified under this provision
against any liability incurred by the Joint Venture or any Joint Venturer which
arises out of fraud, by willful or intentional misconduct, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of its
position as TMP.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective as of the date first above written.
RY-8, INC. [OUTBACK SUBSIDIARY]
By________________________ By__________________________
Name: Name:
Title: Title:
Outback Steakhouse, Inc., a Delaware corporation ("OSSI"), does hereby
acknowledge and irrevocably agree to perform the obligations provided for in
Section 3.2.1 regarding not becoming involved with any Pacific Rim or Euro-Asian
restaurant concept that would materially impair the viability of the Joint
Venture and Section 4.1 regarding guaranteeing up to 50% of the debts of the
Joint Venture. OSSI further irrevocably agrees to guaranty the payment
obligations of [OUTBACK SUBSIDIARY] to pay Roy's the purchase price for the Put
Percentage upon Roy's exercise of its put option(s) and provided such
acquisition by Outback is not dilutive. OSSI hereby waives any and all surety
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defenses relating to its guaranty obligations hereunder. OSSI confirms that
[OUTBACK SUBSIDIARY] is its wholly owned subsidiary and that OSSI shall be
deemed to have actual or constructive knowledge of all matters known by [OUTBACK
SUBSIDIARY] and shall be deemed to have ratified and approved all actions of
[OUTBACK SUBSIDIARY] relating to Roy's exercise of it put option(s) unless OSSI
shall expressly notify Roy's in writing of any objections it may have to any
actions by [OUTBACK SUBSIDIARY] relating to said exercise of the put option(s)
within five (5) business days after such action.
OUTBACK STEAKHOUSE, INC.
By__________________________
Name:
Title:
Roy Yamaguchi does hereby acknowledge and agree to perform his
obligations provided for in Section 3.2.1 regarding his efforts to maximize the
success of the Joint Venture and the Restaurants.
__________________________________
ROY YAMAGUCHI
15
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EXISTING HAWAII AND FRANCHISE OPERATIONS
HAWAII
Roy's Restaurant- Honolulu (Oahu)
Roy's Kahana Bar & Grill (Maui)
Roy's Nicolina Restaurant (Maui)
Roy's Poipu Bar & Grill (Kauai)
Roy's Waikoloa Bar & Grill (Big Island)
Roy's Kihei Bar & Grill*
FRANCHISES
Roy's Restaurant Guam (Guam)
Roy's at Pebble Beach (CA)
Roy's Aoyama Bar & Grill (Tokyo, Japan)
Roy's Hiroo Bar & Grill (Tokyo, Japan)
Roy's Seattle (WA)
Roy's Scottsdale (AZ)
Roy's Bonita Spring (FL)
Roy's New York (NY)
Roy's Newport Beach (CA)**
Roy's Phoenix (AZ)***
* Anticipated opening date March 2000
** Anticipated opening date in July 1999
*** Anticipated opening date December 1999
EXHIBIT "A"
16
<PAGE> 1
EXHIBIT 4.31
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
OUTBACK STEAKHOUSE, INC.,
OUTBACK STEAKHOUSE OF FLORIDA, INC.,
COBLE, INC.,
AND
MICHAEL W. COBLE
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE 1 - PLAN OF ACQUISITION....................................................................1
1.1 THE MERGER................................................................................1
1.2 ADJUSTMENTS...............................................................................2
1.3 CLOSING...................................................................................2
1.4 EXECUTION AND DELIVERY OF CLOSING DOCUMENTS...............................................2
1.5 EXECUTION AND FILING OF MERGER DOCUMENTS..................................................3
1.6 EFFECTIVENESS OF MERGER...................................................................3
1.7 FURTHER ASSURANCES........................................................................3
1.8 CERTIFICATES..............................................................................3
1.9 CLOSING OF TRANSFER BOOKS.................................................................3
1.10 FRACTIONAL SHARES.........................................................................3
1.11 ACCOUNTING TREATMENT......................................................................3
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF COBLE, INC. AND COBLE................................4
2.1 ORGANIZATION AND GOOD STANDING............................................................4
2.2 POWER AND AUTHORITY.......................................................................4
2.3 FOREIGN CORPORATION.......................................................................4
2.4 AUTHORITY AND VALIDITY....................................................................4
2.5 BINDING EFFECT............................................................................4
2.6 COMPLIANCE WITH OTHER INSTRUMENTS.........................................................5
2.7 CAPITALIZATION OF COBLE, INC..............................................................5
2.8 ABSENCE OF CERTAIN CHANGES................................................................5
2.9 TAX LIABILITIES...........................................................................6
2.10 NO UNDISCLOSED LIABILITIES................................................................7
2.11 TITLE TO PROPERTIES.......................................................................7
2.12 CONTRACTS.................................................................................7
2.13 LITIGATION AND GOVERNMENT CLAIMS..........................................................7
2.14 NO VIOLATION OF ANY INSTRUMENT............................................................7
2.15 NECESSARY APPROVALS AND CONSENTS..........................................................8
2.16 COMPLIANCE WITH LAWS......................................................................8
2.17 ACCURACY OF INFORMATION FURNISHED.........................................................8
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF COBLE................................................8
3.1 AUTHORITY AND VALIDITY....................................................................8
3.2 BINDING EFFECT............................................................................8
3.3 OWNERSHIP.................................................................................9
3.4 VOTING....................................................................................9
3.5 RESIDENCY.................................................................................9
3.6 COMPLIANCE WITH OTHER INSTRUMENTS.........................................................9
</TABLE>
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TABLE OF CONTENTS (Continued)
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF OSI AND OUTBACK......................................9
4.1 ORGANIZATION AND GOOD STANDING............................................................9
4.2 FOREIGN QUALIFICATION.....................................................................9
4.3 POWER AND AUTHORITY.......................................................................9
4.4 AUTHORITY AND VALIDITY....................................................................9
4.5 BINDING EFFECT............................................................................9
4.6 COMPLIANCE WITH OTHER INSTRUMENTS.........................................................10
4.7 CAPITALIZATION OF OSI.....................................................................10
4.8 SEC REPORTS...............................................................................10
4.9 LITIGATION AND GOVERNMENT CLAIMS..........................................................11
4.10 NECESSARY APPROVALS AND CONSENTS..........................................................11
4.11 ABSENCE OF CERTAIN CHANGES OR EVENTS......................................................11
ARTICLE 5 - JOINT COVENANTS OF COBLE, INC., COBLE, OSI AND OUTBACK.................................11
5.1 NOTICE OF ANY MATERIAL CHANGE.............................................................11
5.2 COOPERATION...............................................................................12
5.3 POST-CLOSING ADJUSTMENT...................................................................12
5.4 DISTRIBUTION AND ALLOCATIONS..............................................................12
5.5 ADDITIONAL AGREEMENTS.....................................................................13
ARTICLE 6 - COVENANTS OF COBLE, INC. AND COBLE.....................................................13
6.1 SECURITIES LAW COMPLIANCE.................................................................13
6.2 PAYMENT OF LIABILITIES....................................................................14
6.3 POOLING...................................................................................15
ARTICLE 7 - COVENANTS OF OSI AND OUTBACK...........................................................15
7.1 EMPLOYMENT AGREEMENTS.....................................................................15
7.2 ASSUMED LIABILITIES.......................................................................15
ARTICLE 8 - JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS......................................15
8.1 CONSENTS TO TRANSACTION...................................................................15
8.2 ABSENCE OF LITIGATION.....................................................................16
8.3 DISSENTER'S RIGHTS........................................................................16
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS OF COBLE, INC......................................16
9.1 COMPLIANCE................................................................................16
9.2 REPRESENTATIONS AND WARRANTIES............................................................16
9.3 MATERIAL ADVERSE CHANGES..................................................................16
ARTICLE 10 - CONDITIONS PRECEDENT TO OBLIGATIONS OF OSI AND
OUTBACK...................................................................................16
10.1 COMPLIANCE................................................................................17
10.2 REPRESENTATIONS AND WARRANTIES............................................................17
10.3 CURRENT FINANCIAL STATUS..................................................................17
10.4 MATERIAL ADVERSE CHANGES..................................................................17
10.5 POOLING...................................................................................17
</TABLE>
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TABLE OF CONTENTS (Continued)
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE 11 - INDEMNIFICATION.......................................................................17
11.1 INDEMNIFICATION BASED ON AGREEMENT........................................................17
11.2 LIMITATION................................................................................18
11.3 COOPERATION...............................................................................18
11.4 NOTICE....................................................................................18
ARTICLE 12 - MISCELLANEOUS.........................................................................18
12.1 TERMINATION...............................................................................18
12.2 EXPENSES..................................................................................19
12.3 ENTIRE AGREEMENT..........................................................................19
12.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES................................................19
12.5 COUNTERPARTS..............................................................................19
12.6 NOTICES...................................................................................20
12.7 SUCCESSORS AND ASSIGNS....................................................................20
12.8 GOVERNING LAW.............................................................................20
12.9 WAIVER AND OTHER ACTION...................................................................20
12.10 SEVERABILITY..............................................................................20
12.11 HEADINGS..................................................................................20
12.12 CONSTRUCTION..............................................................................21
12.13 JURISDICTION AND VENUE....................................................................21
12.14 ENFORCEMENT...............................................................................21
12.15 FURTHER ASSURANCES........................................................................21
12.16 EQUITABLE REMEDIES........................................................................21
EXHIBIT A
ARTICLES OF MERGER.................................................................................A-1
EXHIBIT B
DISCLOSURE SCHEDULES...............................................................................B-1
</TABLE>
iii
<PAGE> 5
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered effective as of the 28th day of June, 1999, by and among OUTBACK
STEAKHOUSE, INC., a Delaware corporation ("OSI"), OUTBACK STEAKHOUSE OF FLORIDA,
INC., a Florida corporation ("Outback"), COBLE, INC., a Georgia corporation
("COBLE, INC.") and MICHAEL W. COBLE, an individual residing in the State of
Georgia ("Coble").
W I T N E S S E T H:
WHEREAS, Outback is a wholly-owned subsidiary of OSI; and
WHEREAS, Coble is the sole owner of the issued and outstanding common
stock of COBLE, INC., and Coble is the sole director, President and is
responsible for the day-to-day operations of COBLE, INC.; and
WHEREAS, Outback and COBLE, INC. have entered into that certain Florida
limited partnership known as Outback Steakhouse of North Georgia-II, L.P.
("Partnership");
WHEREAS, the Partnership operates Outback Steakhouse restaurants in the
State of Georgia; and
WHEREAS, the Board of Directors of COBLE, INC. has approved the merger
of COBLE, INC. into Outback (the "Merger") upon the terms and conditions set
forth in this Agreement; and
WHEREAS, for federal income tax purposes it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, pursuant to the Merger, COBLE, INC. will be merged with and
into Outback and all of the outstanding shares of capital stock of COBLE, INC.
will be converted into shares of common stock, par value $.01, of OSI (the "OSI
Common Stock"); and
WHEREAS, the parties hereto desire by this Agreement to set forth the
terms and conditions upon which they are willing to consummate the Merger.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties hereto covenant and agree
as follows:
ARTICLE 1
PLAN OF ACQUISITION
1.1 THE MERGER. Subject to and upon the terms and conditions
contained herein, COBLE, INC. shall be merged with and into Outback, with
Outback being the surviving corporation, in accordance with the Articles of
Merger substantially in the form attached to this Agreement as EXHIBIT A (the
<PAGE> 6
"Merger Agreement"), which will be executed and delivered by OSI, Outback, and
COBLE, INC. prior to the Merger. As a result of the Merger, each voting and
nonvoting common share of COBLE, INC. outstanding immediately before the
Effective Date (as herein defined) shall, by virtue of the Merger and without
any further action being required by the holders thereof, be converted into and
exchanged for 98.226 shares of OSI Common Stock.
1.2 ADJUSTMENTS.
(a) Except as otherwise provided in this SECTION 1.2, the
total number of shares of OSI Common Stock to be issued pursuant to the
Merger shall be Forty-nine Thousand One Hundred One (49,113).
(b) If, between the date of this Agreement and the Closing
Date or the Effective Date, as the case may be, (i) the outstanding
shares of capital stock of COBLE, INC. shall have been changed into a
different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination, exchange of
shares, or readjustment, with a record date within such period, or a
stock dividend thereon shall be declared with a record date within such
period or (ii) COBLE, INC. shall have issued additional shares of its
capital stock, the number of shares of OSI Common Stock received in
exchange for each share of COBLE, INC.'s capital stock shall be
adjusted so that the aggregate number of shares of OSI Common Stock
received in exchange for all shares of COBLE, INC.'s capital stock
(assuming no Dissenting Shares) remains at Forty-nine Thousand One
Hundred One (49,113).
(c) If, between the date of this Agreement and the Closing
Date or the Effective Date, as the case may be, the outstanding shares
of OSI Common Stock shall have been changed into a different number of
shares or a different class by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares, or
readjustment, with a record date within such period, or a stock
dividend thereon shall be declared with a record date within such
period, the number of shares of OSI Common Stock received in exchange
for each share of capital stock of COBLE, INC. (as specified in SECTION
1.1 hereof) shall be adjusted to accurately reflect such change.
1.3 CLOSING. The closing of the transactions contemplated by this
Agreement, including the Merger (the "Closing"), shall take place at 10:00 a.m.,
Tampa time, at the offices of Outback on June 28, 1999, or on such date and at
such other time and place as is agreed upon by the parties hereto. The day on
which the Closing occurs is herein referred to as the "Closing Date". If any of
the conditions to the obligations of the parties to this Agreement have not been
satisfied or waived by the Closing Date, then the party to this Agreement that
is unable to meet such condition or conditions shall be entitled to postpone the
Closing by written notice to the other parties until such condition shall have
been satisfied (which such party shall seek to cause to happen at the earliest
practicable date) or waived, but the Closing shall occur not later than October
30, 1999, unless further extended by written agreement of the parties to this
Agreement. The parties shall use their best efforts to effectuate a timely
closing as provided in this SECTION 1.3.
1.4 EXECUTION AND DELIVERY OF CLOSING DOCUMENTS. Before the
Closing, each party shall cause to be prepared and at the Closing the parties
shall execute and deliver each agreement and instrument required by this
Agreement or the Merger Agreement to be so executed and delivered and not
theretofore accomplished. At the Closing, each party also shall execute and
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deliver such other appropriate and customary documents as the other parties
reasonably may request for the purpose of consummating the transactions
contemplated by this Agreement and the Merger Agreement. All actions taken at
the Closing shall be deemed to have been taken simultaneously at the time the
last of any such actions is taken or completed.
1.5 EXECUTION AND FILING OF MERGER DOCUMENTS. At the time of
completion of the Closing, OSI, Outback, COBLE, INC. and Coble agree to take the
following actions:
(a) to execute and deliver all documents and certificates
relating to the Merger required to be executed by them that have not
already been so executed and that are required under applicable
federal, state and local laws to be filed in order validly to
effectuate the Merger; and
(b) to cause Articles of Merger to be filed with the Secretary
of State of the State of Florida and the Secretary of State of the
State of Georgia and a Certificate of Merger to be issued by each such
officer.
1.6 EFFECTIVENESS OF MERGER. The Merger shall become effective
under the laws of Florida upon filing of the Articles of Merger with the
Secretary of State of the State of Florida and the Secretary of State of the
State of Georgia (the "Effective Date"). Such Effective Date shall be indicated
on Certificates of Merger issued by the Secretary of State of the State of
Florida and by the Secretary of State of the State of Georgia pursuant to the
provisions of Sections 607.1101-607.1107 of the Florida Business Corporation Act
(the "Florida Act") and the laws of the State of Georgia ("Georgia Law").
1.7 FURTHER ASSURANCES. After the Closing, the parties hereto
shall execute and deliver such additional documents and take such additional
actions as may reasonably be deemed necessary or advisable by any party in order
to consummate the transactions contemplated by this Agreement and by the Merger
Agreement, and to vest more fully in Outback the ownership of and the rights to
the business and assets of COBLE, INC. as existed immediately before the
Effective Date.
1.8 CERTIFICATES. As soon as practicable after the Effective Date,
OSI shall make available and each holder of capital stock of COBLE, INC. shall
be entitled to receive upon surrender of stock certificates of COBLE, INC.
representing COBLE, INC. capital stock for cancellation, certificates
representing the number of shares of OSI Common Stock into which such shares are
converted in the Merger as provided in SECTION 1.1 hereof. The OSI Common Stock
into which such COBLE, INC. capital stock is converted shall be deemed issued at
the Effective Date.
1.9 CLOSING OF TRANSFER BOOKS. At the Closing Date, the stock
transfer books of COBLE, INC. shall be closed and no transfer of capital stock
of COBLE, INC., shall thereafter be made.
1.10 FRACTIONAL SHARES. No fractional shares of OSI Common Stock
and no certificates or scrip therefor shall be issued. Instead, one whole share
of OSI Common Stock shall be issued for each fractional share of .5 or more of
one whole share and each fractional share of less than .5 of one whole share
shall be disregarded.
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1.11 ACCOUNTING TREATMENT. It is the intention of the parties
hereto that the Merger will be treated for financial reporting purposes as a
pooling of interests.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF COBLE, INC. AND COBLE
Each of COBLE, INC. and Coble, jointly and severally, represent and
warrant to OSI and Outback as follows:
2.1 ORGANIZATION AND GOOD STANDING. COBLE, INC. is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Georgia.
2.2 POWER AND AUTHORITY. COBLE, INC. has the requisite power and
authority and all material licenses and permits required by governmental
authorities to own, lease and operate its properties and assets and to carry on
its businesses as currently being conducted.
2.3 FOREIGN CORPORATION. COBLE, INC. is duly qualified or licensed
to do business and in good standing as a foreign corporation in every
jurisdiction where the failure to so qualify could have a material adverse
effect on its respective business, operations, assets or financial condition.
2.4 AUTHORITY AND VALIDITY.
(a) COBLE, INC. has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement, the
Merger Agreement and the other documents executed or to be executed by
COBLE, INC. in connection with this Agreement; and the execution,
delivery and performance by COBLE, INC. of this Agreement, the Merger
Agreement and the other documents executed or to be executed by COBLE,
INC. in connection with this Agreement have been duly authorized by all
necessary corporate action. The execution, delivery and performance by
COBLE, INC. of this Agreement, the Merger Agreement and any other
documents executed or to be executed in connection with this Agreement
and the consummation of the transactions provided for herein have been
duly authorized and approved by the board of directors and shareholders
of COBLE, INC. as required under the laws of the State of Georgia and
COBLE, INC.'s corporate governance documents.
(b) Coble has the power and authority to execute, deliver and
perform his obligations under this Agreement and the other documents
executed or to be executed by Coble in connection with this Agreement.
2.5 BINDING EFFECT. This Agreement, the Merger Agreement and the
other documents executed or to be executed by COBLE, INC. and Coble in
connection with this Agreement have been or will have been duly executed and
delivered by COBLE, INC. and Coble, and are or will be, when executed and
delivered, the legal, valid and binding obligations of each of COBLE, INC. and
Coble enforceable in accordance with their terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights; and
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(b) the availability of equitable remedies may be limited by
equitable principles of general applicability.
2.6 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the execution and
delivery by COBLE, INC. nor Coble of this Agreement and the Merger Agreement,
nor the consummation by them of the transactions contemplated hereby and
thereby, will violate, breach, be in conflict with, or constitute a default
under, or permit the termination or the acceleration of maturity of, or result
in the imposition of any lien, claim or encumbrance upon any material property
or asset of COBLE, INC. or Coble pursuant to, its certificate of incorporation,
bylaws, partnership agreement, operating agreement or other charter or
governance document, or any note, bond, indenture, mortgage, deed of trust,
evidence of indebtedness, loan or lease agreement, other agreement or instrument
(including with customers), judgment, order, injunction or decree by which
COBLE, INC. or Coble is bound, to which either of them is a party, or to which
any assets of either of them are subject; PROVIDED, HOWEVER, this SECTION 2.5
shall not apply with respect to any of the foregoing if COBLE, INC. is bound
thereby, a party thereto, or its assets subject, solely by reason of its status
as a partner in the Partnership.
2.7 CAPITALIZATION OF COBLE, INC.
(a) The authorized capital stock of COBLE, INC. consists of
Ten Thousand (10,000) common shares. There are five hundred (500)
common shares issued and outstanding, all of which are owned by Coble.
There are no other shareholders of COBLE, INC. and no other persons
with rights or options to acquire capital stock of COBLE, INC. All of
the issued and outstanding shares of capital stock of COBLE, INC. have
been duly authorized and validly issued and are fully paid and
nonassessable. There are no shares of capital stock of COBLE, INC. held
in its treasury.
(b) There are no voting trusts, shareholder agreements or
other voting arrangements to which the shareholder of COBLE, INC. is a
party.
(c) There is no outstanding subscription, contract,
convertible or exchangeable security, option, warrant, call or other
right obligating COBLE, INC. to issue, sell, exchange or otherwise
dispose of, or to purchase, redeem or otherwise acquire, shares of, or
securities convertible into or exchangeable for, capital stock of
COBLE, INC.
2.8 ABSENCE OF CERTAIN CHANGES. From December 31, 1998 to the
Closing Date, (except solely as a result of COBLE, INC.'s status as a partner in
the Partnership) COBLE, INC. has not:
(a) suffered any material adverse change in its business,
results of operations, working capital, assets, liabilities, or
condition (financial or otherwise) or the manner of conducting its
business;
(b) suffered any material damage or destruction to or loss of
its assets not covered by insurance, or any loss of suppliers or
employees;
(c) acquired or disposed of any asset, or incurred, assumed,
guaranteed, endorsed, paid or discharged any indebtedness, liability or
obligation, or subjected or permitted to be subjected any material
amount of assets to any lien, claim or encumbrance of any kind, except
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in the ordinary course of business or pursuant to agreements in force
at the date of this Agreement and identified in Item 2.8(c) of the
Disclosure Schedules;
(d) forgiven, compromised, canceled, released, waived or
permitted to lapse any material rights or claims;
(e) entered into or terminated any lease, agreement,
commitment or transaction, or agreed to or made any changes in any
leases or agreements, other than transactions and commitments entered
into in the ordinary course of business;
(f) written up, written down or written off the book value of
any assets;
(g) declared, paid or set aside for payment any dividend or
distribution with respect to its capital stock;
(h) redeemed, purchased or otherwise acquired, or sold,
granted or otherwise disposed of, directly or indirectly, any of its
capital stock or securities or any rights to acquire such capital stock
or securities, or agreed to changes in the terms and conditions of any
such rights outstanding as of the date of this Agreement;
(i) except in the ordinary course of business, increased the
compensation of any employee or paid any bonuses to any employee or
contributed to any employee benefit plan;
(j) entered into any employment, consulting, compensation or
collective bargaining agreement with any person or group, except oral
employment agreements which can be terminated at will; or
(k) entered into, adopted or amended any employee benefit plan
or severance agreements.
2.9 TAX LIABILITIES. COBLE, INC. has filed all federal, state,
county, local and foreign tax returns and reports required to be filed by them
by the date hereof, including those with respect to income, payroll, property,
withholding, social security, unemployment, franchise, excise and sales taxes;
COBLE, INC. has either paid in full all taxes that have become due as reflected
on any return or report and any interest and penalties with respect thereto or
have fully accrued on their books or have established adequate reserves for all
taxes payable but not yet due; and have made cash deposits with appropriate
governmental authorities representing estimated payments of taxes, including
income taxes and employee withholding tax obligations. No extension or waiver of
any statute of limitations or time within which to file any return has been
granted to COBLE, INC. with respect to any tax. No unsatisfied deficiency,
delinquency or default for any tax, assessment or governmental charge has been
claimed, proposed or assessed against COBLE, INC. nor has COBLE, INC. received
notice of any such deficiency, delinquency or default. COBLE, INC. has no reason
to believe that COBLE, INC. has or may have any tax liabilities other than those
reflected on the unaudited balance sheet of COBLE, INC. as of December 31, 1998,
with any notes thereto, and the related unaudited statements of income for the
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twelve months ended December 31, 1998, together with supplemental information on
COBLE, INC., each prepared and attested to by the chief financial officer of
COBLE, INC. (the "Balance Sheets") and those arising in the ordinary course of
business since the date thereof. With regard to the foregoing, COBLE, INC. has
relied on the accuracy and completeness of the Schedule K-1 provided by the
Partnership.
Coble shall have sole responsibility for filing all required tax
returns for COBLE, INC. OSI shall assist Coble in preparing income tax returns
and shall cooperate with Coble to the extent necessary therefor, and Coble shall
provide OSI with copies of all such returns at least fifteen (15) days prior to
filing.
2.10 NO UNDISCLOSED LIABILITIES. There are no liabilities or
obligations of COBLE, INC. (other than material liabilities arising solely by
reason of COBLE, INC.'s status as a partner in the Partnership) of any nature,
whether absolute, accrued, contingent or otherwise, other than liabilities or
obligations indicated in Items 2.10(a) and 2.10(b) of the Disclosure Schedules.
2.11 TITLE TO PROPERTIES. COBLE, INC. has good and marketable title
to the assets reflected in its books and records as being owned by it, (except
as they have since been affected by transactions in the ordinary course of
business and consistent with past practices) the real and personal properties
reflected in the Balance Sheets (except for assets subject to financing leases
required to be capitalized under generally accepted accounting principles, all
of which are so reflected in the Balance Sheet or notes thereto) and all assets
purchased by COBLE, INC. since the date of the Balance Sheet, in each case free
and clear of any lien, claim or encumbrance, except as reflected in the Balance
Sheet or notes thereto and in Item 2.11 of the Disclosure Schedule and except
for liens for taxes, assessments or other governmental charges not yet due and
payable.
Except for those assets acquired since the date of the Balance Sheets,
all material properties and assets owned by COBLE, INC. are properly reflected
on the applicable Balance Sheets and notes thereto.
2.12 CONTRACTS. Excluding (i) contracts and commitments between
Outback or OSI and COBLE, INC. or the Partnership, (ii) contracts and
commitments entered into by the Partnership to which Outback or OSI is a party,
(iii) contracts and commitments entered into by COBLE, INC. in the ordinary
course of the Partnership's business without violation of the provisions of the
Partnership Agreement, and (iv) contracts and commitments entered into with the
written consent of OSI or Outback, Item 2.12 of the Disclosure Schedule is a
complete and accurate list of all of the contracts and commitments (including
summaries of oral contracts) to which COBLE, INC. is a party or by which COBLE,
INC. is bound:
2.13 LITIGATION AND GOVERNMENT CLAIMS. Except as indicated in Item
2.13 of the Disclosure Schedule, there is no pending suit, claim, action or
litigation or administrative, arbitration or other proceeding or governmental
investigation or inquiry against COBLE, INC. or the Partnership or to which any
of their business or assets is subject. Except as indicated in Item 2.13 of the
Disclosure Schedule, there are no such proceedings threatened or, to the best
knowledge of COBLE, INC. or Coble, contemplated or, to the best knowledge of
COBLE, INC. or Coble, any basis for any unasserted claims (whether or not the
potential claimant may be aware of the claim) of any nature that might be
asserted against COBLE, INC. or the Partnership.
2.14 NO VIOLATION OF ANY INSTRUMENT. Except as indicated in Item
2.14 of the Disclosure Schedule, COBLE, INC. is not in violation of or default
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under nor has any event occurred that, with the lapse of time or the giving of
notice or both, would constitute a violation of or default under or permit the
termination or the acceleration of maturity of or result in the imposition of a
lien, claim or encumbrance upon any property or asset of COBLE, INC. pursuant
to, the articles or certificates of incorporation, bylaws or other chartering or
governance document of COBLE, INC. or (excluding any of the following entered
into by the Partnership and to which Outback or OSI is a signatory or to which
Outback or OSI consented in writing or which were entered into by COBLE, INC. in
the ordinary course of business without violation of the provisions of the
Partnership Agreement) any note, bond, indenture, mortgage, deed of trust,
evidence of indebtedness, loan or lease agreement, other material agreement or
instrument (including with customers), judgment, order, injunction or decree to
which COBLE, INC. is a party, by which COBLE, INC. is bound or to which any of
the assets of COBLE, INC. are subject.
2.15 NECESSARY APPROVALS AND CONSENTS. Other than (a) in connection
with or in compliance with the laws of the States of Florida and Georgia with
respect to effectuating the Merger, (b) consents required to be obtained from
applicable liquor control authorities, (c) consents required to be obtained from
lessors, and (d) under the provisions of the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, or state securities or blue sky
laws, no authorization, consent, permit or license or approval of or
declaration, registration or filing with, any person or governmental or
regulatory authority or agency is necessary for the execution and delivery by
each of COBLE, INC. and Coble of this Agreement, the Merger Agreement and the
other agreements executed or to be executed by them in connection with this
Agreement, and the consummation by COBLE, INC. and Coble of the transactions
contemplated by this Agreement and the Merger Agreement, and the ownership and
operation by Outback of the respective businesses and properties of COBLE, INC.
after the Effective Date in substantially the same manner as now operated.
2.16 COMPLIANCE WITH LAWS. Coble has no actual knowledge that
COBLE, INC. or the Partnership are not in compliance with any such laws
applicable to their respective business, where failure to so comply would have a
material adverse effect on their business, operations, properties, assets or
conditions.
2.17 ACCURACY OF INFORMATION FURNISHED. No representation or
warranty by COBLE, INC. or Coble in this Agreement nor any information in the
Financial Statements or in the Disclosure Schedule contains any untrue statement
of a material fact or omits to state any material fact that would make the
statements herein or therein, in light of the circumstances under which they
were made, false or misleading. Each of COBLE, INC. and Coble have disclosed to
OSI and Outback all facts known to them that are material to COBLE, INC.'s and
the Partnership's respective businesses, operations, financial condition or
prospects.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF COBLE
In addition to the representations and warranties contained in ARTICLE
2, Coble represents and warrants to OSI and Outback as follows:
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3.1 AUTHORITY AND VALIDITY. He has the capacity and authority to
execute, deliver and perform this Agreement and all other agreements and
documents he is executing or will execute in connection herewith or therewith.
3.2 BINDING EFFECT. This Agreement and the other documents
executed or to be executed by Coble in connection with this Agreement have been
or will have been duly executed and delivered by him and are or will be, when
executed and delivered, his legal, valid and binding obligations enforceable in
accordance with their terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by
equitable principles of general applicability.
3.3 OWNERSHIP. Coble is the sole record and beneficial shareholder
of COBLE, INC. and no other person has any rights (in any form) to acquire any
capital stock of COBLE, INC.
3.4 VOTING. He acknowledges that in his individual capacity as
shareholder and director of COBLE, INC., he has voted in favor of the execution
and delivery of this Agreement and the Merger Agreement.
3.5 RESIDENCY. Coble is, and has been at all times during the one
year period ending on the date hereof, a resident of the State of Georgia.
3.6 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the execution and
delivery by Coble of this Agreement and the Merger Agreement, nor the
consummation by him of the transactions contemplated hereby and thereby will
violate, breach, be in conflict with or constitute a default under or permit the
termination or the acceleration of maturity of or result in the imposition of
any lien, claim or encumbrance upon any material property or asset of Coble
pursuant to any note, bond, indenture, mortgage, deed of trust, evidence of
indebtedness, loan or lease agreement, other agreement or instrument (including
with customers), judgment order, injunction or decree by which Coble is bound,
to which he is a party or to which he is subject.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF OSI AND OUTBACK
OSI and Outback jointly and severally represent and warrant to COBLE,
INC. and Coble as follows:
4.1 ORGANIZATION AND GOOD STANDING. OSI and Outback are
corporations duly organized, validly existing and in good standing under the
laws of the States of Georgia and Florida, respectively.
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4.2 FOREIGN QUALIFICATION. Outback is duly qualified or licensed
to do business and in good standing as a foreign corporation in Georgia and in
every other jurisdiction where the failure to so qualify could have a material
adverse effect on its respective business, operations, assets or financial
condition.
4.3 POWER AND AUTHORITY. OSI and Outback each have the corporate
power and authority and all licenses and permits required by governmental
authorities to own, lease and operate their respective properties and assets and
to carry on their respective business as currently being conducted.
4.4 AUTHORITY AND VALIDITY. OSI and Outback each have the
corporate power and authority to execute, deliver and perform their respective
obligations under this Agreement, the Merger Agreement and the other documents
executed or to be executed by OSI and Outback in connection with this Agreement
and the execution, delivery and performance by OSI and Outback of this
Agreement, the Merger Agreement and the other documents executed or to be
executed by OSI and Outback in connection with this Agreement have been duly
authorized by all necessary corporate action.
4.5 BINDING EFFECT. This Agreement, the Merger Agreement and the
other documents executed or to be executed by OSI and Outback in connection with
this Agreement have been or will have been duly executed and delivered by OSI
and Outback and are or will be, when executed and delivered, the legal, valid
and binding obligations of OSI and Outback, enforceable in accordance with their
terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by
equitable principles of general applicability.
4.6 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the execution and
delivery by OSI and/or Outback of this Agreement, the Merger Agreement, nor the
consummation by it of the transactions contemplated hereby and thereby will
violate, breach, be in conflict with or constitute a default under or permit the
termination or the acceleration of maturity of or result in the imposition of
any lien, claim or encumbrance upon any property or asset of OSI or Outback
pursuant to, the certificate of incorporation or bylaws of OSI or Outback or any
note, bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan
or lease agreement, other agreement or instrument, judgment order, injunction or
decree by which OSI or Outback is bound, to which it is a party or to which its
assets are subject.
4.7 CAPITALIZATION OF OSI. The authorized capital stock of OSI
consists of Two Hundred Million (200,000,000) shares of Common Stock, $.01 par
value and Two Million (2,000,000) shares of Preferred Stock, $.01 par value, of
which approximately 74,991,870 shares of Common Stock and no shares of Preferred
Stock were issued and outstanding as of September 30, 1999. All of the issued
and outstanding shares of OSI Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable. The shares of OSI Common Stock to
be issued in exchange for COBLE, INC.'s capital stock at the Effective Date,
when issued and delivered, will be duly authorized, validly issued, fully paid
and nonassessable. As of the date hereof, except for (i) employee and director
stock options to acquire shares of OSI Common Stock and (ii) employee stock
ownership plans, there are no options, warrants or other rights, agreements or
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commitments outstanding obligating Outback or OSI to issue shares of its capital
stock. All of the outstanding shares of capital stock of Outback are owned by
OSI, free and clear of any lien or encumbrance.
4.8 SEC REPORTS. OSI has delivered to COBLE, INC. and Coble true
and complete copies of its (i) Annual Report on Form 10-K for the year ended
December 31, 1998; (ii) Proxy Statement used in connection with its 1998 Annual
Meeting of Shareholders; (iii) 1998 Annual Report to Shareholders; (iv) all
periodic reports, if any, on Form 8-K filed with the Securities and Exchange
Commission since December 31, 1998 to the date hereof; and (v) all Forms 10-Q,
if any, filed with the Securities and Exchange Commission since December 31,
1998 to the date hereof. Such documents and reports did not on their dates or
the date of filing, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. OSI has filed all material documents required to be filed by it
with the SEC and all such documents complied as to form with the applicable
requirements of law. Copies of all other reports filed by OSI with the SEC from
the date hereof to and including the Effective Date have been or will be
delivered to COBLE, INC. and Coble. All financial statements and schedules
included in the documents referred to in this SECTION 4.8 were prepared in
accordance with generally accepted accounting principles, applied on a
consistent basis except as noted therein and fairly present the information
purported to be shown therein.
4.9 LITIGATION AND GOVERNMENT CLAIMS. There is no pending suit,
claim, action or litigation or administrative, arbitration or other proceeding
or governmental investigation or inquiry against OSI or Outback which would,
severally or in the aggregate, have a material adverse effect on the business,
results of operations, assets or the condition, financial or otherwise, of OSI
and its subsidiaries, taken as a whole. There are no such proceedings threatened
or, to the knowledge of OSI or Outback, contemplated or any unasserted claims
(whether or not the potential claimant may be aware of the claim), which might,
severally or in the aggregate have a material adverse effect on the business,
results of operations, assets or the condition, financial or otherwise, of OSI
and its subsidiaries, taken as a whole.
4.10 NECESSARY APPROVALS AND CONSENTS. Other than (a) in connection
with or in compliance with the laws of the States of Florida and Georgia with
respect to effectuating the Merger, (b) consents required to be obtained from
applicable liquor control authorities, (c) consents required to be obtained from
lessors, and (d) under the provisions of the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, or state securities or blue sky laws, no
authorization, consent, permit or license or approval of or declaration,
registration or filing with, any person or governmental or regulatory authority
or agency is necessary for the execution and delivery by OSI and Outback of this
Agreement, the Merger Agreement and the other agreements executed or to be
executed by either of them in connection with this Agreement and the
consummation by OSI and Outback of the transactions contemplated by this
Agreement and the Merger Agreement.
4.11 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
public filings by OSI with the Securities and Exchange Commission prior to the
date hereof and the Closing Date, since December 31, 1998, there has not been
any material adverse change in the financial condition, results of operations or
the business, properties, assets or liabilities of Outback or OSI.
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ARTICLE 5
JOINT COVENANTS OF COBLE, INC., COBLE, OSI AND OUTBACK
COBLE, INC. and Coble, jointly and severally, on the one hand, and OSI
and Outback, jointly and severally on the other hand, covenant with each other
as follows:
5.1 NOTICE OF ANY MATERIAL CHANGE. Until the Effective Date, each
of COBLE, INC., Coble, OSI and Outback shall, promptly after the first notice or
occurrence thereof but prior to the Effective Date, advise the others in writing
of any event or the existence of any state of facts that:
(a) would make any of its representations and warranties in
this Agreement untrue in any material respect; or
(b) would otherwise constitute a material adverse change in
the business, results of operation, working capital, assets,
liabilities or condition (financial or otherwise) of OSI, Outback or
COBLE, INC. and their respective subsidiaries, taken as a whole. No
supplement or amendment to any Disclosure Schedule shall have any
effect for the purpose of determining the satisfaction of or compliance
with the conditions to the obligations of the parties to consummate the
Merger set forth elsewhere in this Agreement.
5.2 COOPERATION. Until the Effective Date, each of the parties
hereto shall and shall cause each of its affiliates to use its best efforts to:
(a) proceed promptly to make or give the necessary
applications, notices, requests and filings to obtain at the earliest
practicable date and, in any event, before the Closing Date, the
approvals, authorizations and consents necessary to consummate the
transactions contemplated by this Agreement;
(b) cooperate with and keep the other informed in connection
with this Agreement; and
(c) take such actions as the other parties may reasonably
request to consummate the transactions contemplated by this Agreement
and use its best efforts and diligently attempt to satisfy, to the
extent within its control, all conditions precedent to the obligations
to close this Agreement.
5.3 POST-CLOSING ADJUSTMENT. As soon as practicable after the
Closing Date, but in no event more than forty-five (45) days thereafter, OSI
shall determine and report in writing to all parties hereto:
(a) the amount of current assets of COBLE, INC. as of the
Effective Date; and
(b) the amount of all liabilities of COBLE, INC. (other than
liabilities specified in Item 6.2 of the COBLE, INC. Disclosure
Schedule to the extent assumed by Outback) which were not paid in full
prior to the Effective Date.
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Upon receipt of such report, Coble (by notice to OSI as provided
herein) shall have a period of ten (10) days in which to object in writing to
any portion or item of such report. In the event no objection is timely made,
OSI's report shall be final and binding on all parties. If timely objection is
made, the chief financial officer of OSI and Coble (and at the expense of Coble)
shall meet and attempt to agree on the items to which objection was made. If
such persons cannot agree within thirty (30) days from the date of written
objection, the items on which agreement has not been reached shall be submitted
to the Tampa, Florida office of PricewaterhouseCoopers (or other agreed upon
independent "Big Five" accounting firm) for a resolution of such items and whose
decision shall be final and binding on all parties. The fees and expenses of
PricewaterhouseCoopers (or other accounting firm) shall be paid by the
non-prevailing party.
If, as finally determined, the sum of Subsection (a) above exceeds the
sum of Subsections (b) and (c), OSI shall pay such excess to Coble within ten
(10) days of such final determination. If, as finally determined, the sum of
Subsections (b) and (c) exceeds the sum of Subsection (a), Coble shall pay such
excess to OSI within ten (10) days of the final determination.
5.4 DISTRIBUTION AND ALLOCATIONS. The parties acknowledge and
agree that notwithstanding the effective date of the Merger, Outback shall be
entitled to COBLE, INC.'s entire share of Partnership distributions of cash
flow, and shall be allocated COBLE, INC.'s shares of profit and loss, from and
after June 28, 1999.
5.5 ADDITIONAL AGREEMENTS.
(a) Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use all reasonable efforts to take or
cause to be taken, all actions and to do or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement, including using all reasonable efforts
to obtain all necessary waivers, consents and approvals, to effect all
necessary registrations and filings and to lift any injunction or other
legal bar to the Merger (and, in such case, to proceed with the Merger
as expeditiously as possible), subject, however, to the appropriate
vote of the shareholders of COBLE, INC.
(b) In case at any time after the Effective Date any further
action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and/or directors of OSI and Outback and
Coble shall take all such necessary action.
(c) Neither Outback, OSI, COBLE, INC. nor Coble shall take any
action which would jeopardize the characterization of the Merger as a
reorganization within the meaning of Section 368(a) of the Code or the
treatment of the Merger for financial reporting purposes as a pooling
of interests.
ARTICLE 6
COVENANTS OF COBLE, INC. AND COBLE
COBLE, INC. and Coble covenant and agree with OSI as follows:
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<PAGE> 18
6.1 SECURITIES LAW COMPLIANCE. Coble represents and warrants, and
covenants to Outback and OSI that:
(a) Coble has received all schedules and exhibits and the
documents furnished to COBLE, INC. pursuant to SECTION 4.8;
(b) Coble has had the opportunity to ask questions of and
receive answers from representatives of the management of OSI
concerning the terms and conditions of the transactions contemplated
hereby and to obtain all additional information that OSI possesses or
could acquire without unreasonable expense that is necessary to verify
the accuracy of information furnished to Coble.
(c) OSI and Outback have furnished him with all information
requested and full access to materials concerning OSI and Outback which
Coble and/or his advisors deemed necessary to properly evaluate the
Merger. Such information and access have been made available and
utilized to the extent Coble considers necessary and advisable in
making an informed investment decision, and Coble has consulted his own
tax advisor and understands the evaluation of such materials may
require the assistance of experts and Coble has utilized such experts
to the extent deemed necessary.
(d) Coble understands that the OSI Common Stock to be received
is an investment of a speculative nature and Coble must bear the risks
thereof for an indefinite period of time. Coble has adequate means for
providing for his needs, is able to bear the economic risk of the
investment and has no need for liquidity in the OSI Common Stock to be
received in the Merger.
(e) Coble and/or his representatives or advisors who have
acted with or on behalf of Coble and who have advised Coble in this
matter have such knowledge and experience in financial and business
matters that Coble is capable of evaluating the merits and risks of the
Merger for OSI Common Stock.
(f) Coble is participating in the Merger solely for his
account as a private investment, and Coble has no present agreement,
understanding, arrangement or intention to sell or transfer all or any
portion of the shares of OSI Common Stock to be issued in the Merger to
any other person or persons. Coble does not presently intend to enter
into any such agreement or undertaking and there are no present
circumstances which will compel Coble to sell any OSI Common Stock so
received. Coble will not sell or otherwise transfer the shares (except
for DE MINIMIS gifts of shares) unless they are registered under the
Securities Act and applicable state securities laws or, in the opinion
of OSI and its counsel, an exemption from registration is available
therefor.
(g) The investment by Coble in OSI Common Stock pursuant to
the Merger is a suitable investment for Coble given the investment
goals and objectives of Coble.
(h) Coble agrees to indemnify and hold OSI and Outback and
each of their respective officers, directors and advisors harmless
against all liability arising out of or in connection with any
purchase, resale or distribution by Coble of any OSI Common Stock
received hereby which is effected other than in strict compliance with
the terms hereof and applicable law.
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(i) Coble understands that the shares of OSI Common Stock to
be issued in the Merger will not be registered under the Securities
Act, nor any state securities laws, and such OSI Common Stock may not
be sold or transferred except in compliance with such laws. Neither OSI
nor Outback will have any obligation to register any such OSI Common
Stock.
(j) Coble understands that OSI will place an appropriate
legend on the certificate representing OSI Common Stock to be received
restricting the transfer of the shares and stop-transfer instructions
will be given to the transfer agent for the OSI Common Stock with
respect to such certificates.
(k) Coble is a natural person (i) whose net worth (the excess
of total assets over total liabilities), individually or jointly with
his spouse, exceeds $1,000,000 (inclusive of the value of home, home
furnishings and automobiles); or (ii) who had an Individual Annual
Adjusted Gross Income in excess of $200,000 in each of the two most
recent tax years or joint income with Coble's spouse in excess of
$300,000 in each of those years and reasonably expects to reach the
same income level in the current tax year.
6.2 PAYMENT OF LIABILITIES. COBLE, INC. and Coble covenant and
agree that all debts and liabilities of COBLE, INC. relating to periods prior to
the Closing Date shall be paid or satisfied in full prior to the Effective Date,
except only current liabilities and those debts and liabilities of COBLE, INC.
assumed by Outback as specified in Item 6.2 of the Disclosure Schedules.
6.3 POOLING. Coble agrees that until such time as financial
results of OSI covering at least thirty (30) days of combined operations of OSI
and COBLE, INC. subsequent to the Effective Date have been published, he will
not sell or otherwise dispose of any shares of OSI Common Stock held by him as
of the Effective Date or any of such shares thereafter acquired by him at any
time or from time to time prior to the date of such publication. OSI shall give
instructions to its transfer agent and registrar, Bank of New York, Inc., with
respect to the shares of OSI Common Stock issued pursuant to the Merger, to the
effect that no transfer of such shares shall be effected until the date on which
the requisite financial results have been published and OSI and the transfer
agent may take any action, including placing an appropriate legend on the
certificates, they deem necessary to enforce this provision.
ARTICLE 7
COVENANTS OF OSI AND OUTBACK
OSI and Outback, jointly and severally, covenant and agree with COBLE,
INC. and Coble as follows:
7.1 EMPLOYMENT AGREEMENTS. Solely with respect to the Merger, and
any consequential termination of any partnership by operation of law, Outback
agrees not to elect to terminate the Employment Agreements between the
Partnership, as employer, and the general managers of the Partnership's Outback
Steakhouse restaurants, as employees. Outback shall succeed to all rights and
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obligations of the Partnership under such Employment Agreements. Nothing
contained herein shall be construed as in any way limiting Outback's right to
terminate any such Employment Agreement as a result of any circumstance or event
other than the Merger and consequential termination of the Partnership by
operation of law.
7.2 ASSUMED LIABILITIES. OSI and Outback agree to assume and pay
the liabilities specified in Item 6.2 (subject to the amount limits specified in
Item 6.2 of the Disclosure Schedules) and to indemnify and hold harmless Coble
from any loss or liability therefor.
ARTICLE 8
JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
Except as may be waived by OSI, the obligations of COBLE, INC., Coble,
OSI and Outback to consummate the transactions contemplated by this Agreement
shall be subject to the satisfaction, on or before the Closing Date, of each of
the following conditions:
8.1 CONSENTS TO TRANSACTION. COBLE, INC., Outback and OSI shall
have received all consents or approvals and made all applications, requests,
notices and filings with, any person, governmental authority or governmental
agency required to be obtained or made in connection with the consummation of
the transactions contemplated by this Agreement. There shall have been obtained
from all state and local governments and governmental agencies all approvals and
consents necessary to enable COBLE, INC. and/or the Partnership, as applicable,
to transfer their liquor licenses and permits to Outback, to enable Outback to
assume such licenses and permits or to enable Outback to operate restaurants (of
the kind and quality customarily operated by Outback) using such permits or
licenses. Copies of all consents and approvals received by any party pursuant to
this SECTION 8.1 shall be furnished to the other party.
8.2 ABSENCE OF LITIGATION. No governmental agency or authority
shall have instituted or threatened in writing to institute, any action or
proceeding seeking to delay, restrain, enjoin or prohibit the consummation of
the transactions contemplated by this Agreement and no order, judgment or decree
by any court or governmental agency or authority shall be in effect that
enjoins, restrains or prohibits the same or otherwise would materially interfere
with the operation of the assets and business of COBLE, INC. or the Partnership
or OSI and its subsidiaries, including the surviving corporation in the Merger,
after the Closing Date.
8.3 DISSENTER'S RIGHTS. The number of shares of capital stock of
COBLE, INC. for which shareholders have exercised appraisal or dissenters'
rights under applicable law shall be a number which, in the sole and absolute
discretion of OSI, does not jeopardize the financial reporting and accounting
treatment of the Merger specified in SECTION 1.11 or is otherwise not contrary
to the best interests of Outback or OSI.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF COBLE, INC.
The obligations of COBLE, INC. and Coble to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction on or before
the Closing Date of each of the following conditions:
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9.1 COMPLIANCE. OSI and Outback shall have, or shall have caused
to be, satisfied or complied with and performed in all material respects all
terms, covenants and conditions of this Agreement to be complied with or
performed by OSI and Outback on or before the Closing Date.
9.2 REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties made by OSI and Outback in this Agreement, and in all certificates
and other documents delivered by OSI and Outback to COBLE, INC. and Coble
pursuant hereto or in connection with the transactions contemplated hereby,
shall have been true and correct in all material respects as of the date hereof
and shall be true and correct in all material respects at the Closing Date with
the same force and effect as if such representations and warranties had been
made at and as of the Closing Date, except for changes permitted or contemplated
by this Agreement.
9.3 MATERIAL ADVERSE CHANGES. Since the date of OSI's most recent
10-Q, as filed with the Securities and Exchange Commission, through the date
hereof, there shall have occurred no material adverse change in the business,
properties, assets, liabilities, results of operations or condition, financial
or otherwise, of OSI and Outback, taken as a whole.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS OF OSI AND OUTBACK
Except as may be waived by OSI and Outback, the obligations of OSI and
Outback to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions:
10.1 COMPLIANCE. COBLE, INC. and Coble shall have or shall have
caused to be satisfied or complied with and performed in all material respects
all terms, covenants and conditions of this Agreement to be complied with or
performed by any of them on or before the Closing Date.
10.2 REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties made by COBLE, INC. and/or Coble in this Agreement, the Disclosure
Schedule, and in all certificates and other documents delivered by COBLE, INC.
or Coble pursuant hereto or in connection with the transactions contemplated
hereby, shall have been true and correct in all material respects as of the date
hereof and shall be true and correct in all material respects at the Closing
Date with the same force and effect as if such representations and warranties
had been made at and as of the Closing Date, except for changes permitted or
contemplated by this Agreement.
10.3 CURRENT FINANCIAL STATUS. OSI shall have received the
unaudited financial statements of COBLE, INC. as of May 31, 1999, for the month
then ended.
10.4 MATERIAL ADVERSE CHANGES. Since December 31, 1998, there shall
have occurred no material adverse change in the business, properties, assets,
liabilities, results of operations or condition, financial or otherwise, of
COBLE, INC. or the Partnership.
10.5 POOLING. OSI shall have received a letter from Deloitte &
Touche, in form and substance satisfactory to OSI and dated not more than five
days prior to the Closing Date, to the effect that the Merger shall qualify as a
pooling of interests for financial reporting purposes.
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ARTICLE 11
INDEMNIFICATION
Coble, on the one hand, and OSI and Outback, jointly and severally, on
the other hand, agree as follows:
11.1 INDEMNIFICATION BASED ON AGREEMENT. Subject to the limitations
contained in SECTION 11.2 hereof, Coble shall indemnify and hold harmless OSI,
Outback and COBLE, INC., and OSI, Outback and COBLE, INC., jointly and
severally, shall indemnify and hold harmless Coble, against any losses, claims,
damages or liabilities to which such indemnified party may become subject,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any facts or circumstances that would
constitute a breach by the other of any representation, warranty or covenant
contained herein or in any agreement executed pursuant hereto and will reimburse
any legal or other expenses reasonably incurred by any indemnified party in
connection with investigating or defending any such loss, claim, damage,
liability or action.
In addition to the above, Coble shall indemnify OSI, Outback and COBLE,
INC., as provided in the first paragraph of this SECTION 11.1, against any loss,
claim, damage or liability arising out of (i) any tax liability of COBLE, INC.
for any period prior to and including the Effective Date and (ii) any debt of
COBLE, INC. (other than the debts specified in Item 6.2 of the Disclosure
Schedule to the extent assumed by Outback), and (iii) all claims, obligations,
causes of action and liabilities, of whatever kind or character, of any of
COBLE, INC. which arise out of or are based upon events first occurring on or
before the Effective Date, except only the liabilities assumed by Outback as
specified in Item 6.2 of the Disclosure Schedule.
11.2 LIMITATION. Coble shall have no obligation under SECTION 11.1
to indemnify OSI, Outback or COBLE, INC. for any liability, loss, claim or
damage arising out of or based upon facts or actions first occurring after the
Effective Date. All obligations of indemnity (other than those relating to tax
obligations of COBLE, INC. under SECTION 11.1 above which shall continue for the
period specified in SECTION 12.4(B) hereof) shall terminate two (2) years from
the Closing Date; PROVIDED, HOWEVER, the obligations of indemnity shall not
terminate with respect to any matter for which indemnification is claimed within
two (2) years from the Closing Date.
11.3 COOPERATION. If any claim, demand, action, suit, proceeding or
investigation arising out of or pertaining to this Agreement or the transactions
contemplated hereby is begun or asserted, whether begun or asserted before or
after the Closing Date, the parties hereto will cooperate and use their best
efforts to defend against and respond thereto.
11.4 NOTICE. An indemnified party shall give notice to the
indemnifying party or parties within ten (10) business days after actual receipt
of service or summons to appear in any action begun in respect of which
indemnity may be sought hereunder. Failure to so notify the indemnifying party
or parties shall cause the indemnified party to be liable for any damage caused
by failure to give timely notice. The indemnifying party or parties may
participate at their own expense and with their counsel in the defense of such
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action. If the indemnifying party or parties so elect within a reasonable time
after receipt of such notice, they may assume the defense of such action with
counsel chosen by the indemnifying party or parties and approved by the
indemnified party in such action, unless the indemnified party reasonably
objects to such assumption on the ground that its counsel has advised it that
there may be legal defenses available to it that are different from or in
addition to those available to the indemnifying party or parties, in which case
the indemnified party shall have the right to employ counsel approved by the
indemnifying party or parties. If the indemnifying party or parties assume the
defense of such action, the indemnifying party or parties shall not be liable
for fees and expenses of counsel for the indemnified party incurred thereafter
in connection with such action. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one counsel for the
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances unless, in the reasonable opinion of such counsel,
there is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more indemnified parties.
ARTICLE 12
MISCELLANEOUS
12.1 TERMINATION. This Agreement and the transactions contemplated
hereby may be terminated at any time on or before the Closing Date
(notwithstanding approval by the shareholders of COBLE, INC.):
(a) by mutual consent of COBLE, INC. and OSI;
(b) by OSI if there has been a material misrepresentation or
breach of warranty in the representations and warranties of COBLE, INC.
or Coble set forth herein or if there has been any material failure on
the part of COBLE, INC. or Coble to comply with their obligations
hereunder;
(c) by COBLE, INC. if there has been a material
misrepresentation or breach of warranty in the representations and
warranties of OSI or Outback set forth herein or if there has been any
material failure on the part of OSI or Outback to comply with their
obligations hereunder;
(d) by either OSI, COBLE, INC. or Coble, if the transactions
contemplated by this Agreement have not been consummated by October 30,
1999, unless such failure of consummation is due to the failure of the
terminating party to perform or observe the covenants, agreements and
conditions hereof to be performed or observed by it at or before the
Closing Date;
(e) by either OSI, or COBLE, INC. if the conditions precedent
to its obligations to close this Agreement have not been satisfied or
waived by it at or before the Closing Date; and
(f) by either COBLE, INC. or OSI if the transactions
contemplated hereby violate any nonappealable final order, decree or
judgment of any court or governmental body or agency having competent
jurisdiction.
12.2 EXPENSES. Each party hereto shall pay its own expenses
incurred in connection with this Agreement and the transactions contemplated
hereby.
12.3 ENTIRE AGREEMENT. This Agreement and the exhibits and
Disclosure Schedule hereto constitute and contain the complete agreement among
the parties with respect to the transactions contemplated hereby and supersede
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all prior agreements and understandings among the parties with respect to such
transactions. The parties hereto have not made any representation or warranty
except as expressly set forth in this Agreement, the Merger Agreement or in any
certificate or schedule delivered pursuant hereto. The obligations of any party
under any agreement executed pursuant to this Agreement shall not be affected by
this SECTION 12.3.
12.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) The representations, warranties and indemnification
obligations of OSI and Outback contained herein or in any exhibit,
certificate, document or instrument delivered pursuant to this
Agreement shall survive the Closing for a period of two years;
PROVIDED, HOWEVER, that the obligations of OSI and Outback under
ARTICLE 11 hereof shall survive for the periods provided therein.
(b) Except where otherwise specifically provided in this
Agreement, the representations, warranties and indemnification
obligations of Coble contained herein or in any exhibit, schedule,
certificate, document or instrument delivered pursuant to this
Agreement shall survive the Closing for a period of three years from
the Effective Date; PROVIDED, HOWEVER, the representations and
warranties contained in SECTION 2.9 (TAX LIABILITIES) shall survive the
Closing for a period ending four years after the filing of COBLE,
INC.'s federal income tax return for the period including the Effective
Date.
12.5 COUNTERPARTS. This Agreement may be executed in any number of
identical counterparts, each of which when so executed and delivered shall be
deemed an original and such counterparts together shall constitute only one
original.
12.6 NOTICES. All notices, demands, requests or other
communications that may be or are required to be given, served or sent by any
party to any other party pursuant to this Agreement shall be in writing and
shall be mailed by registered or certified mail, return receipt requested,
postage prepaid or transmitted by hand delivery, recognized national overnight
delivery service, telegram or telex, addressed as follows:
If to COBLE, INC. or Coble: COBLE, INC.
5070 Cameron Forest Parkway
Alpharetta, Georgia 30202
Attention: Michael W. Coble
If to OSI or Outback: OUTBACK STEAKHOUSE, INC.
550 North Reo Street, Suite 200
Tampa, Florida 33609
Attention: Joseph J. Kadow,
General Counsel
Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request or communication that is mailed, delivered
or transmitted in the manner described above shall be deemed sufficiently given,
served, sent and received for all purposes at such time as it is delivered to
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the addressee (with the return receipt, the delivery receipt, the affidavit of
messenger or (with respect to a telex) the answer back being deemed conclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
12.7 SUCCESSORS AND ASSIGNS. This Agreement and the rights,
interests and obligations hereunder shall be binding upon and shall inure to the
benefit of the parties hereto and, except as otherwise specifically provided for
herein, their respective successors and assigns.
12.8 GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws of the State of Florida without giving effect to
principles of comity or conflicts of law thereof.
12.9 WAIVER AND OTHER ACTION. This Agreement may be amended,
modified or supplemented only by a written instrument executed by the parties
against which enforcement of the amendment, modification or supplement is
sought.
12.10 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance; and in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
12.11 HEADINGS. All headings and captions in this Agreement are
intended solely for the convenience of the parties and none shall be deemed to
affect the meaning or construction of any provision hereof.
12.12 CONSTRUCTION. All references herein to the masculine, neuter
or singular shall be construed to include the masculine, feminine, neuter or
plural, where applicable.
12.13 JURISDICTION AND VENUE. The parties agree that any action
brought by either party against the other in any court, whether federal or
state, shall be brought within the State of Florida in the judicial circuit in
which OSI has its principal place of business. Each party hereby agrees to
submit to the personal jurisdiction of such courts and hereby waives all
questions of personal jurisdiction or venue for the purpose of carrying out this
provision, including, without limitation, the claim or defense therein that such
courts constitute an inconvenient forum.
12.14 ENFORCEMENT. In the event it is necessary for any party to
retain legal counsel or institute legal proceedings to enforce the terms of this
Agreement, including, without limitation, obligations upon expiration or
termination, the prevailing party shall be entitled to receive from the
non-prevailing party, in addition to all other remedies, all costs of such
enforcement including, without limitation, attorney's fees and court costs and
including appellate proceedings.
12.15 FURTHER ASSURANCES. Each party covenants and agrees to execute
and deliver, prior to or after the Merger, such further documents as may
reasonably be requested by another party to fully effectuate the transactions
provided for herein.
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12.16 EQUITABLE REMEDIES. The parties hereto acknowledge that a
refusal by a party to consummate the transactions contemplated hereby will cause
irreparable harm to the other parties, for which there may be no adequate remedy
at law. A party not in default at the time of such refusal shall be entitled, in
addition to other remedies at law or in equity, to specific performance of this
Agreement by the party that refused to consummate the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"OSI"
Attest: OUTBACK STEAKHOUSE, INC.
a Delaware corporation
By:____________________________ By: ________________________________
JOSEPH J. KADOW, Secretary ROBERT D. BASHAM, President
"Outback"
Attest: OUTBACK STEAKHOUSE OF FLORIDA, INC.,
a Florida corporation
By:____________________________ By: ________________________________
JOSEPH J. KADOW, Secretary ROBERT D. BASHAM, Chief
Operating Officer
"COBLE, INC."
Attest: COBLE, INC.
a Georgia corporation
By:____________________________ By: ________________________________
MICHAEL W. COBLE, Secretary MICHAEL W. COBLE, President
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Witness: "COBLE"
_________________________________ ________________________________________
MICHAEL W. COBLE
_________________________________
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EXHIBIT 4.32
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
OS PRIME, INC.,
AND
FLEMING PRIME STEAKHOUSE I, L.L.C.
DATED OCTOBER 1, 1999
<PAGE> 2
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
1. PURCHASE OF THE RESTAURANTS..........................................1
1.1 Purchase of the Restaurants...................................1
1.2 Estimated Purchase Price......................................2
1.3 Credits to Buyer .............................................3
1.4 Determination of Final Purchase Price.........................3
1.5 Payment of the Final Purchase Price...........................3
1.6 Adjustment for Temporary Restaurant Closing...................4
1.7 Allocation of Purchase Price..................................4
2. TRANSFER OF ASSETS ..................................................4
2.1 Definition of Purchased Assets................................4
2.2 Prorations....................................................6
2.3 Excluded Assets...............................................6
3. ASSUMPTION OF LIABILITIES............................................6
3.1 Liabilities to be Assumed.....................................7
3.2 Liabilities Not to be Assumed.................................7
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................8
4.1 General.......................................................8
4.2 Authority.....................................................9
4.3 No Violation..................................................9
4.4 Financial Statements..........................................9
4.5 Tax Matters...................................................9
4.6 Accounts Receivable..........................................10
4.7 Inventory....................................................10
4.8 Absence of Certain Changes...................................10
4.9 Absence of Undisclosed Liabilities...........................11
4.10 No Litigation................................................11
4.11 Compliance With Laws and Orders..............................11
4.12 Title to and Condition of Properties.........................12
4.13 Insurance....................................................13
4.14 Contracts and Commitments....................................13
4.15 Labor Matters................................................14
4.16 Employee Benefit Plans.......................................14
4.17 Employment Compensation......................................15
4.18 Trade Rights.................................................15
4.19 Major Suppliers..............................................15
4.20 Affiliates' Relationships to the Company.....................15
4.21 Assets Necessary to Business.................................15
4.22 No Brokers or Finders........................................15
4.23 Disclosure...................................................16
5. REPRESENTATIONS AND WARRANTIES OF BUYER.............................16
5.1 Corporate....................................................16
5.2 Authority....................................................16
5.3 No Brokers or Finders........................................16
5.4 Disclosure...................................................16
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5.5 Buyer's Cooperation...........................................16
5.6 Other Action..................................................16
6. EMPLOYEES - EMPLOYEE BENEFITS.......................................17
6.1 Affected Employees............................................17
6.2 Retained Responsibilities.....................................17
6.3 Payroll Tax...................................................17
6.4 Termination Benefits..........................................17
7. OTHER MATTERS.......................................................17
7.1 Pre-Closing Revenue and Expenses..............................17
7.2 Post Closing Revenue and Expenses.............................17
7.3 Noncompetition................................................18
7.4 Confidentiality...............................................18
7.5 Non-Solicitation..............................................18
7.6 Reasonableness of Restrictions; Reformation; Enforcement......18
7.7 Specific Performance..........................................19
8. FURTHER COVENANTS OF THE COMPANY....................................19
8.1 Access to Information and Records.............................19
8.2 Conduct of Business Pending the Closing.......................20
8.3 Change of Company's Name......................................20
8.4 Consents......................................................21
8.5 Other Action..................................................21
8.6 Disclosure....................................................21
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.........................21
9.1 Representations and Warranties True on the
Closing Date............................................21
9.2 Compliance With Agreement.....................................21
9.3 Absence of Litigation.........................................21
9.4 Consents and Approvals........................................21
9.5 Estoppel Certificates.........................................21
10. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS.......................22
10.1 Representations and Warranties True on the
Closing Date...........................................22
10.2 Compliance With Agreement.....................................22
10.3 Absence of Litigation.........................................22
11. INDEMNIFICATION.....................................................22
11.1 By the Company ...............................................22
11.2 By Buyer......................................................22
11.3 Indemnification of Third-Party Claims.........................23
11.4 Payment.......................................................23
11.5 No Waiver.....................................................24
11.6 Survival of Indemnification...................................24
12. CLOSING.............................................................24
12.1 Closing Date..................................................24
12.2 Place of Closing..............................................24
12.3 Documents to be Delivered by the Company......................24
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12.4 Documents to be Delivered by Buyer............................25
13. TERMINATION..........................................................26
13.1 Right of Termination Without Breach...........................26
13.2 Termination for Breach........................................26
14. MISCELLANEOUS........................................................26
14.1 Disclosure Schedules..........................................26
14.2 Further Assurance.............................................26
14.3 Disclosures and Announcements.................................26
14.4 Assignment; Parties in Interest...............................26
14.5 Law Governing Agreement.......................................27
14.6 Amendment and Modification....................................27
14.7 Notice........................................................27
14.8 Expenses......................................................28
14.9 Entire Agreement..............................................29
14.10 Counterparts..................................................29
14.11 Headings.....................................................29
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated October 1,
1999, and entered into by and between OS PRIME, INC., a Florida corporation
("Buyer"), and FLEMING PRIME STEAKHOUSE I, L.L.C., an Arizona limited liability
company (the "Company").
RECITALS
A. The Company is engaged in the business of developing, building,
owning and operating certain upscale steakhouse restaurants utilizing the
Fleming's Prime Steakhouse and Wine Bar concept and operating system.
B. The Company currently owns and operates a total of two Fleming's
Prime Steakhouse and Wine Bar restaurants in Newport Beach, California and
Scottsdale, Arizona and presently is scheduled to open a third Fleming's Prime
Steakhouse restaurant in La Jolla, California in or about November of 1999 (the
"Restaurants").
C. Pursuant to the provisions hereof, Buyer desires to purchase from
the Company and the Company desires to sell to Buyer substantially all of the
property and assets of the Company, including the Restaurants.
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows.
1. PURCHASE OF THE RESTAURANTS
1.1. PURCHASE OF THE RESTAURANTS.
1.1(a) PURCHASED ASSETS. Subject to the terms and conditions
of this Agreement, on the Closing Date (as defined in SECTION 12.1),
the Company shall sell, transfer, convey, assign and deliver to Buyer
(or upon Buyer's request, to an Affiliate of Buyer) and Buyer shall
purchase and accept all of the business, rights, claims and assets (of
every kind, nature, character and description, whether real, personal
or mixed, whether tangible or intangible, whether accrued, contingent
or otherwise, and wherever situated) of the Company, together with all
rights and privileges associated with such assets and with the
Restaurants and the business of the Company, other than the Excluded
Assets (as hereinafter defined) (collectively the "Purchased Assets"),
free and clear of any debts, liabilities, claims, encumbrances or
obligations other than the Assumed Liabilities, as hereafter defined.
The Purchased Assets shall include, but not be limited to, those assets
listed in ARTICLE 2 hereof. For purposes of this Agreement, the term
"Affiliate" shall mean any individual or entity (hereafter a "Person"),
directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with such Person,
as applicable. With respect to the Company, the term "Affiliate" shall
include Paul Fleming and A. William Allen III. The term "control," as
used in the immediately preceding sentence, shall mean with respect to
a corporation or limited liability company the right to exercise,
directly or indirectly, more than fifty percent (50%) of the voting
rights attributable to the controlled corporation or limited liability
company, and, with respect to any individual, partnership, trust, other
entity or association, the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of
the controlled entity.
1.1(b) LA JOLLA RESTAURANT. The Purchased Assets which relate
to the La Jolla Restaurant shall be transferred to Buyer simultaneously
with the transfer to Buyer of the alcoholic beverage license for the La
Jolla Restaurant. Seller shall, subsequent to the Closing Date,
<PAGE> 6
complete construction of the La Jolla Restaurant and pay for all
assets, expenses and other costs, including pre-opening costs,
necessary to open the La Jolla Restaurant for business.
1.2 ESTIMATED PURCHASE PRICE. On the Closing Date, the Buyer shall pay
to the Company an initial estimated purchase price ("Estimated Purchase Price")
of TWELVE MILLION DOLLARS ($12,000,000). The Estimated Purchase Price shall be
allocated as follows: $5,200,000 to the Scottsdale, Arizona Restaurant,
$5,200,000 to the Newport Beach, California Restaurant and $1,600,000 to the La
Jolla, California Restaurant.
1.2(a) CASH TO COMPANY. The FIVE MILLION TWO HUNDRED THOUSAND
DOLLARS ($5,200,000) of the Estimated Purchase Price allocated to the
Scottsdale, Arizona Restaurant shall be paid in the form of certified
or bank cashier's check payable to the order of the Company, or at the
Company's option, by wire transfer of immediately available funds to an
account designated by the Company.
1.2(b) ESCROW ACCOUNT.
(i) CASH TO ESCROW AGENT. The SIX MILLION EIGHT
HUNDRED THOUSAND DOLLARS ($6,800,000) of the Estimated
Purchase Price allocated to the Newport Beach, California
Restaurant and the La Jolla, California Restaurant shall be
delivered to Business Title Escrow as escrow agent ("Escrow
Agent") pursuant to that certain Escrow Agreement described in
SECTION 12.3(D) hereof (the "Escrow Agreement"). Funds held by
the Escrow Agent shall be held in an interest bearing account
(the "Escrow Account") approved by the Buyer and the Company
and any and all interest thereon shall be paid to the party
specified in SECTION 1.5 hereof.
(ii) PARTIAL RELEASE OF ESCROWED FUNDS. THREE MILLION
THREE HUNDRED THOUSAND DOLLARS ($3,300,000) of the Estimated
Purchase Price allocated to the Newport Beach, California
Restaurant, and any interest accrued thereon, shall be
delivered by the Escrow Agent to the Company upon receipt of
final approval from the State of California of the transfer of
the alcoholic beverage license for the Newport Beach,
California Restaurant from the Company to the Buyer. The
remaining THREE MILLION FIVE HUNDRED THOUSAND DOLLARS
($3,500,000) of the Estimated Purchase Price shall be
distributed pursuant to SECTION 1.5 hereof.
1.2(c) ALLOCATIONS. The allocations contained in this SECTION
1.2 are for escrow purposes only. Allocation of the Purchase Price for
federal income tax purposes shall be made as provided in SECTION 1.7
hereof.
1.3 ADJUSTMENT TO ESTIMATED PURCHASE PRICE.
1.3(a) CREDITS TO COMPANY. The portion of the Estimated
Purchase Price paid to the Company in cash on the Closing Date pursuant
to SECTION 1.2(a) shall be increased by the amount of the following:
(i) any security deposits paid by the Company
pursuant to any Real Property Leases transferred to the Buyer
in accordance with the terms of this Agreement; and
(ii) the actual cost to the Company of any inventory
of food and/or beverages purchased by the Company, held at the
Restaurants on the Closing Date and transferred to Buyer in
accordance with the terms of this Agreement and the inventory
of the La Jolla restaurant to be determined at a later date
pursuant to SECTION 1.3(c).
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1.3(b) CREDITS TO BUYER. Buyer shall assume and Buyer shall
receive a credit against the portion of the Estimated Purchase Price
paid to the Company in cash on the Closing Date pursuant to SECTION
1.2(A) in an amount equal to:
(i) all vacation, holiday and sick pay unpaid by the
Company as of the Closing Date attributable to any period or
partial period of employment by the Company prior to the
Closing Date, plus employee payroll taxes applicable thereto
due or to become due, for those employees of the Company who
will be employed by Buyer after the Closing Date and who have
not as of the Closing Date taken vacation, holiday or sick
time earned prior to the Closing Date; and
(ii) forty-five percent (45%) of the outstanding
amount of the credit held by Eric Jackson which may be used
toward the purchase of food and beverages at the Newport Beach
Restaurant.
(iii) the amount of unredeemed gift certificates.
1.3(c) INVOICE. In lieu of the credits provided for in
SECTIONS 1.3(a) AND 1.3(B), either party may, subsequent to the Closing
Date, invoice the other party for any item for which such party would
be entitled to a credit under SECTIONS 1.3(A) OR 1.3(B) and the other
party shall pay the undisputed amount within thirty (30) days of
receipt of the invoice.
1.4 DETERMINATION OF FINAL PURCHASE PRICE. The final purchase price
("Final Purchase Price") shall be calculated by the parties within thirty (30)
days after the La Jolla, California Restaurant has been open for business for
fifteen (15) full calendar months. The Final Purchase Price shall be equal to
five (5) times the total of the following: earnings before interest, taxes,
depreciation and amortization ("EBITDA"), calculated in accordance with
generally accepted accounting principles ("GAAP"), of the three (3) Restaurants
for the twelve (12) full, consecutive calendar months ending on the last day of
the month in which the date that the La Jolla, California Restaurant has been
open for fifteen (15) full calendar months occurs (the "Valuation Date"). The
overhead of the Company described in SECTION 3.2(C)(I), (II) AND (III) hereof
for such time period and any other overhead allocations reasonably agreed to by
the parties shall be expensed in determining EBITDA.
1.5 PAYMENT OF THE FINAL PURCHASE PRICE. On or before the fifteenth
(15th) day following the date the Final Purchase Price is calculated (such
payment date being hereinafter referred to as the "Settlement Date"):
1.5 (a) in the event the Final Purchase Price exceeds
$8,500,000, but is less than $12,000,000, the Escrow Agent shall pay:
(i) to the Company from the Escrow Account, the amount by which the
Final Purchase Price exceeds $8,500,000, plus any interest accumulated
on such excess; and (ii) to the Buyer from the Escrow Account, the
balance of the Escrow Account, plus any interest accumulated on such
balance; or
1.5(b) in the event the Final Purchase Price is equal to or
exceeds $12,000,000, the Escrow Agent shall pay to the Company all
amounts held in the Escrow Account, including any interest accumulated
thereon, and the Buyer shall pay to the Company the amount by which
the Final Purchase Price exceeds $12,000,000; or
1.5(c) in the event the Final Purchase Price is less than
$8,500,000; (i) the Escrow Agent shall pay to Buyer all amounts held
in the Escrow Account, including any interest accumulated thereon; and
(ii) and the Company shall pay to the Buyer the amount by which
$8,500,000 exceeds the Final Purchase Price.
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<PAGE> 8
All payments under this section shall be payable in the form of
certified or bank cashier's check payable to the order of the recipient, or at
the recipient's option, by wire transfer of immediately available funds to an
account designated by the recipient.
1.6 ADJUSTMENT FOR TEMPORARY RESTAURANT CLOSING. Except for de minimus
closures of not more than seven (7) days, in the event any of the Restaurants
has not been open for the twelve (12) full, consecutive calendar months
immediately preceding the Valuation Date (a "Closed Restaurant"), the Final
Purchase Price shall be determined with respect to the Restaurants other than
the Closed Restaurant and paid to the Company on the Settlement Date pursuant to
SECTION 1.5 hereof. The Final Purchase Price for the Closed Restaurant shall be
calculated as follows:
1.6(a) if the Closed Restaurant has been open for the six (6)
full, consecutive calendar months immediately preceding the Valuation
Date, the Final Purchase Price for the Closed Restaurant shall be paid
on the Settlement Date and shall be equal to five (5) times the total
of the following: the annualized EBITDA, calculated in accordance with
GAAP, for the Closed Restaurant for the six (6) full, consecutive
calendar months ending on the Valuation Date. The overhead of the
Company described in SECTION 3.2(C)(I), (II) AND (III) hereof for a
twelve month period, and any other overhead allocations reasonably
agreed by the parties shall be expensed in determining EBITDA; or
1.6(b) if the Closed Restaurant has not been open for the six
(6) full, consecutive calendar months immediately preceding the
Valuation Date, the Final Purchase Price for the Closed Restaurant
shall be paid within fifteen (15) days of the date the Closed
Restaurant has been re-opened for six (6) full, consecutive calendar
months and shall be equal to five (5) times the total of the following:
the annualized EBITDA, calculated in accordance with GAAP, for the
Closed Restaurant for such six (6) full, consecutive calendar months.
The overhead of the Company described in SECTION 3.2(C)(I), (II) AND
(III) hereof for a twelve month period, and any other overhead
allocations reasonably agreed by the parties shall be expensed in
determining EBITDA.
1.7 ALLOCATION OF PURCHASE PRICE. The aggregate Purchase Price
(including the assumption by Buyer of the Assumed Liabilities) shall be
allocated among the Purchased Assets for tax purposes in accordance with the
provisions of Section 1060 of the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations thereunder. The Company and Buyer will follow and
use such allocation in all tax returns, filings or other related reports made by
them to any governmental agencies. To the extent that disclosures of this
allocation are required to be made by the parties to the Internal Revenue
Service ("IRS"), Buyer and the Company will disclose such reports to the other
prior to filing with the IRS.
2. TRANSFER OF ASSETS
2.1 DEFINITION OF PURCHASED ASSETS. The Purchased Assets shall include,
but not be limited to, the following:
2.1(a) LEASED REAL PROPERTY. All of the leases of real
property with respect to real property leased by the Company, including
the leases (the "Real Property Leases") described on SCHEDULE 2.1(A)
with respect to the real property described thereon (the "Leased Real
Property").
2.1(b) PERSONAL PROPERTY. All machinery, equipment, vehicles,
tools, supplies, spare parts, furniture, smallwares and all other
personal property owned, utilized or held for use by the Company.
2.1(c) INVENTORY. All inventory held by the Company on the
Closing Date.
2.1(d) PERSONAL PROPERTY LEASE. The lease for the copy machine
described in SCHEDULE 2.1(D).
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<PAGE> 9
2.1(e) TRADE RIGHTS. The royalty free, perpetual license held
by the Company to use the Trade Rights associated with the Fleming's
Prime Steakhouse and Wine Bar concept and operating system in the
operation of the Restaurants, and all claims for infringement or breach
thereof. As used herein, the term "Trade Rights" shall mean and include
any and all: (i) trademark and service mark licenses or rights,
business identifiers, trade dress, service marks, trade names, and
brand names, and all goodwill associated with the foregoing; (ii)
copyrights and all other rights associated with the foregoing and the
underlying works of authorship; (iii) contracts or agreements granting
any right, title, license or privilege under the intellectual property
rights of any third party; (iv) inventions, know-how, discoveries,
improvements, designs, trade secrets, employee covenants and agreements
respecting intellectual property and non-competition and all other
types of intellectual property; (v) the right, pursuant to a perpetual,
royalty free license, to utilize the Fleming's Prime Steakhouse and
Wine Bar concept and operating system in the operation of the
Restaurants.
2.1(f) CONTRACTS. Except as otherwise specifically provided
herein, all rights in, to and under all contracts and purchase orders
(hereinafter "Contracts") of the Company disclosed in SCHEDULE 2.1(F).
To the extent that any Contract for which assignment to Buyer as
provided herein is not assignable without the consent of another party,
this Agreement shall not constitute an assignment or an attempted
assignment thereof if such assignment or attempted assignment would
constitute a breach thereof. The Company and Buyer agree to use their
reasonable best efforts (without any requirement on the part of Buyer
or Company to pay any money or, on the part of Buyer, to agree to any
change in the terms of any such Contract) to obtain the consent of such
other party to the assignment of any such Contract to Buyer in all
cases in which such consent is or may be required for such assignment.
If any such consent shall not be obtained, the Company agrees to
cooperate with Buyer in any reasonable arrangement designed to provide
for Buyer the benefits intended to be assigned to Buyer under the
relevant Contract, including enforcement at the cost and for the
account of Buyer of any and all rights of the Company against the other
party thereto arising out of the breach or cancellation thereof by such
other party or otherwise. If and to the extent that such arrangement
cannot be made, Buyer, upon notice, shall have no obligation pursuant
to SECTION 3.2 or otherwise with respect to any such Contract and any
such Contract shall not be deemed to be a Purchased Asset hereunder.
2.1(g) COMPUTER SOFTWARE. All computer source codes, programs
and other software of the Company, including all machine readable code,
printed listings of code, documentation and related property and
information of the Company.
2.1(h) LITERATURE. All menus, sales literature and promotional
literature and similar materials of the Company.
2.1(i) RECORDS AND FILES. All records, files, invoices,
supplier lists, blueprints, specifications, designs, drawings,
accounting records, business records, operating data and other data of
the Company.
2.1(j) NOTES AND ACCOUNTS RECEIVABLE. All notes, drafts and
accounts receivable of the Company.
2.1(k) LICENSES; PERMITS. All licenses, permits and approvals
of the Company to the extent the same may be assigned to Buyer.
2.1(l) GENERAL INTANGIBLES. All causes of action arising out
of occurrences before or after the Closing Date, and all other
intangible rights and assets of the Company.
5
<PAGE> 10
2.2 PRORATIONS. The following prorations relating to the Purchased
Assets will be made as of the Closing Date, with the Company liable to the
extent such items relate to any time period up to and including the Closing Date
and Buyer liable to the extent such items relate to periods subsequent to the
Closing Date. The net amount of all such prorations will be settled and paid on
the Closing Date, if possible, and if not possible then as soon as practicable
thereafter.
2.2(a) Personal property taxes, real estate taxes and
assessments, and other taxes, if any, on or with respect to the
Purchased Assets; provided that special assessments levied prior to the
Closing Date shall be paid by the Company.
2.2(b) Rents, additional rents, taxes and other items payable
by the Company under any lease, license, permit, contract or other
agreement or arrangement to be assigned to or assumed by Buyer.
2.2(c) The amount of rents, taxes and charges for sewer,
water, fuel, telephone, electricity and other utilities; provided that
if practicable, meter readings shall be taken on the applicable Closing
Date and the respective obligations of the parties determined in
accordance with such readings.
2.2(d) All other items normally adjusted in connection with
similar transactions.
If the actual expense of any of the above items for the billing period
within which the Closing Date falls is not known on the Closing Date, the
proration shall be made as soon as such actual expense becomes known. The
Company agrees to furnish Buyer with such documents and other records as shall
be reasonably requested in order to confirm all proration calculations.
2.3 EXCLUDED ASSETS. The provisions of SECTION 2.1 notwithstanding, the
Company shall not sell, transfer, assign, convey or deliver to Buyer, and Buyer
will not purchase or accept the following assets of the Company (collectively
the "Excluded Assets"):
2.3(a) CASH AND CASH EQUIVALENTS. All cash and cash
equivalents, other than petty cash balances at the Restaurants.
2.3(b) CONSIDERATION. The consideration delivered by Buyer
pursuant to this Agreement, Company's other rights under or in
connection with this Agreement, the Escrow Agreement, the Escrow
Account and any other agreements or instruments contemplated hereby or
thereby.
2.3(c) TAX CREDITS AND RECORDS. Federal, state and local
income and franchise tax credits and tax refund claims and associated
returns and records; provided however, Buyer shall have reasonable
access to such returns and records and may make excerpts therefrom and
copies thereof.
2.3(d) ORGANIZATIONAL DOCUMENTS. The Company, its Articles of
Organization, Operating Agreement, minute book and other records having
exclusively to do with the organization and capitalization of the
Company; provided however, Buyer shall have reasonable access to such
books and records and may make excerpts therefrom and copies thereof.
2.3(e) EMPLOYEE RECORDS. Any and all employee books and
records to the extent that such transfer of books and records would be
in violation of any laws.
2.3(f) CORONADO RESTAURANT. Any and all assets or Contracts
relating to the Coronado, California restaurant under development.
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<PAGE> 11
3. LIABILITIES
3.1 LIABILITIES NOT TO BE ASSUMED. As used in this Agreement, the term
"Liability" shall mean and include any direct or indirect indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, fixed or unfixed, known or unknown, asserted or
unasserted, liquidated or unliquidated, secured or unsecured. The Company agrees
to timely pay and discharge all Liabilities which relate to periods on or before
the Closing Date. Except as and to the extent specifically set forth in SECTION
3.2, Buyer is not assuming any Liabilities of the Company and all such
Liabilities shall be and remain the responsibility of the Company. Without
limiting the generality of the foregoing, Buyer is not assuming and the Company
shall not be deemed to have transferred to Buyer the following Liabilities of
the Company:
3.1(a) INCOME AND FRANCHISE TAXES. Any Liability of the
Company for Federal income taxes and any state or local income, profit
or franchise taxes (and any penalties or interest due on account
thereof).
3.1(b) INSURED CLAIMS. Any Liability insured against, to the
extent such Liability is or will be paid by an insurer.
3.1(c) LITIGATION MATTERS. Any Liability with respect to any
action, suit, proceeding, arbitration, investigation or inquiry,
whether civil, criminal or administrative ("Litigation"), whether or
not described in SCHEDULE 4.10.
3.1(d) INFRINGEMENTS. Any Liability to a third party for
infringement of such third party's Trade Rights.
3.1(e) TRANSACTION EXPENSES. Except as provided in SECTION
14.8, or elsewhere in this Agreement, all Liabilities incurred by
Company in connection with this Agreement and the transactions
contemplated herein.
3.1(f) LIABILITY FOR BREACH. Liabilities of the Company for
any breach or failure to perform any of the Company's covenants and
agreements contained in, or made pursuant to, this Agreement, or, prior
to the Closing Date, any other contract, whether or not assumed
hereunder, including breach arising from assignment of contracts
hereunder without consent of third parties.
3.1(g) LIABILITIES TO AFFILIATES. Liabilities to present or
former Affiliates, except obligations for compensation for services
rendered as an employee pursuant to plans or practices disclosed in
SCHEDULE 4.16(A).
3.1(h) VIOLATION OF LAWS OR ORDERS. Liabilities for any
violation of or failure to comply with any statute, law, ordinance,
rule or regulation (collectively, "Laws") or any order, writ,
injunction, judgment, plan or decree (collectively, "Orders") of any
court, arbitrator, department, commission, board, bureau, agency,
authority, instrumentality or other body, whether federal, state,
municipal, foreign or other (collectively, "Government Entities").
3.2 LIABILITIES TO BE ASSUMED. Subject to the terms and conditions of
this Agreement, on the Closing Date, Buyer shall assume and agree to perform and
discharge the following, and only the following Liabilities of the Company
(collectively the "Assumed Liabilities"):
3.2(a) CONTRACTUAL LIABILITIES. The Company's Liabilities
arising from events occurring after the Closing Date under and pursuant
to the following Contracts:
(i) The Real Property Leases specified in SCHEDULE
2.1(A).
(ii) All Contracts described in SCHEDULE 2.1(F); and
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<PAGE> 12
(iii) Every Contract entered into by the Company in the
ordinary course of business which does not involve
consideration or other expenditure by the Company payable or
performable on or after the Closing Date in excess of One
Thousand Dollars ($1,000) or performance over a period of more
than twelve (12) months.
The Contracts described in SECTIONS 3.2(A)(I), (II) AND (III)
above are hereinafter collectively described as the "Assumed
Contracts." The Buyer agrees to indemnify, defend and hold harmless
Paul M. Fleming, A. William Allen III and Steakhouse Concept, L.L.C.
for any Liability, including reasonable attorneys' fees, resulting from
any and all guarantees executed in connection with the Real Property
Leases assumed by the Buyer pursuant to SECTION 3.2(A)(I) above, to the
extent such liability arises out of any events first occurring
subsequent to the Closing Date.
3.2(b) LIABILITIES UNDER PERMITS AND LICENSES. The Company's
Liabilities arising from events occurring after the Closing Date under
any permits or licenses listed in SCHEDULE 3.2(B) and assigned to Buyer
at the Closing.
3.2(c) OVERHEAD LIABILITIES. The Company's obligation, after
the Closing Date, to pay:
(i) One-third (1/3) of the overhead costs and expenses
associated with the Company's Newport office located at 455
Newport Center Drive, Newport Beach, California, including,
but not limited to the salary of an accountant and
administrative assistant.
(ii) One-quarter (1/4) of the salary of A. William
Allen III.
(iii) One-half (1/2) of the salary of Rick Scott.
3.2(d) OTHER OBLIGATIONS. The obligations set forth in SECTION
1.3(B) above, to the extent of the credit received by Buyer.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer that, each of the
following is true and correct in all material respects on the date hereof except
to the extent identified in disclosure schedules referred to below in this
SECTION 4 and attached to this Agreement ("Disclosure Schedules"), shall remain
true and correct in all material respects to and including the Closing Date and
shall be unaffected by any investigation heretofore or hereafter made by Buyer,
or, except as specifically provided herein, any knowledge of Buyer, and shall
survive the closing of the transactions provided for herein for the longer of:
two (2) years from the Closing Date; or through the date the Final Purchase
Price is determined for all three Restaurants.
4.1 GENERAL.
4.1(a) ORGANIZATION. The Company is a limited liability
company duly organized, validly existing and in good standing under the
laws of the State of Arizona.
4.1(b) POWER. The Company has all requisite limited liability
company power and authority to own, operate and lease its properties,
to carry on its businesses as and where such are now being conducted,
to enter into this Agreement and the other documents and instruments to
be executed and delivered by the Company pursuant hereto and to carry
out the transactions contemplated hereby and thereby.
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4.1(c) QUALIFICATION. The Company is duly licensed or
qualified to do business as a foreign entity, and it is in good
standing, in each jurisdiction wherein the character of the properties
owned or leased by is, or the nature of its business, makes such
licensing or qualification necessary. The states in which the Company
is licensed or qualified to do business are listed in SCHEDULE 4.1(C).
4.1(d) NO SUBSIDIARIES. The Company does not own any interest
in any corporation, partnership or other entity.
4.2 AUTHORITY. The execution and delivery of this Agreement and the
other documents and instruments to be executed and delivered by the Company
pursuant hereto and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary limited liability company
action on the part of the Company. Other than as specifically provided in this
Agreement or disclosed in the Disclosure Schedules, no other or further act or
proceeding on the part of the Company is necessary to authorize this Agreement
or the other documents and instruments to be executed and delivered by the
Company pursuant hereto or the consummation of the transactions contemplated
hereby and thereby. This Agreement constitutes, and when executed and delivered,
the other documents and instruments to be executed and delivered by the Company
pursuant hereto will constitute, valid binding agreements of the Company,
enforceable in accordance with their respective terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and by general equitable principles.
4.3 NO VIOLATION. Except as set forth on SCHEDULE 4.3, neither the
execution and delivery of this Agreement or the other documents and instruments
to be executed and delivered by the Company pursuant hereto, nor the
consummation by the Company of the transactions contemplated hereby and thereby
(a) will violate any applicable Law or Order, (b) will require any
authorization, consent, approval, exemption or other action by or notice to any
Government Entity, or (c) subject to obtaining the consents referred to in
SCHEDULE 4.3, will violate or conflict with, or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or will result in the termination of, or accelerate the performance
required by, or result in the creation of any Lien (as defined in SECTION
4.12(A)) upon any of the assets of the Company under, any term or provision of
the Articles of Organization or Operating Agreement of the Company or of any
material contract, commitment, understanding, arrangement, agreement or
restriction of any kind or character to which the Company is a party or by which
the Company or any of its assets or properties may be bound or affected.
4.4 FINANCIAL STATEMENTS. Included as SCHEDULE 4.4 are true and
complete copies of the financial statements of the Company consisting of (i)
balance sheets of the Company as of December 31, for the two (2) most recent
calendar years, and the related statements of income and cash flows for the
years then ended (including the notes contained therein or annexed thereto),
which financial statements have been reported on, and are accompanied by, the
signed, unqualified opinions of Jeff Brooks & Company, independent auditors for
the Company for such years, and (ii) an unaudited balance sheet of the Company
as of June 30 of the current year (the "Recent Balance Sheet"), and the related
unaudited statements of income and cash flows for the six (6) months then ended
and for the corresponding period of the prior year (including the notes and
schedules contained therein or annexed thereto). All of such financial
statements (including all notes and schedules contained therein or annexed
thereto) are true, complete and accurate, have been prepared in accordance with
generally accepted accounting principles (except, in the case of unaudited
statements, for the absence of footnote disclosure) applied on a consistent
basis, have been prepared in accordance with the books and records of the
Company, and fairly present, in accordance with generally accepted accounting
principles, the assets, liabilities and financial position, the results of
operations and cash flows of the Company as of the dates and for the years and
periods indicated.
4.5 TAX MATTERS. Except as set forth on SCHEDULE 4.5 all state, county,
local and other tax returns required to be filed by or on behalf of the Company
have been timely filed and when filed were true and correct in all material
respects, and the taxes shown as due thereon were paid or adequately accrued.
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The Company has duly withheld and paid all taxes that it is required to withhold
and pay relating to salaries and other compensation heretofore paid to the
employees of the Company.
4.6 ACCOUNTS RECEIVABLE. All accounts receivable of the Company
reflected on the Recent Balance Sheet, and as incurred in the normal course of
business since the date thereof represent arm's length transactions actually
made in the ordinary course of business; to the best of the Company's knowledge,
are collectible (net of the reserves shown on the Recent Balance Sheet for
doubtful accounts) in the ordinary course of business without the necessity of
commencing legal proceedings; are subject to no counterclaim or setoff; and are
not in dispute.
4.7 INVENTORY. All inventory of the Company reflected on the Recent
Balance Sheet consisted of a quality and quantity usable and saleable in the
ordinary course of business, had a commercial value at least equal to the value
shown on such balance sheet and was valued in accordance with GAAP. All
inventory purchased since the date of such balance sheet consisted of a quality
and quantity usable and saleable in the ordinary course of business. All current
inventory of the Company is located on premises leased by the Company as
reflected in this Agreement.
4.8 ABSENCE OF CERTAIN CHANGES. Except as and to the extent set forth
in SCHEDULE 4.8, since the date of the Recent Balance Sheet there has not been:
4.8(a) NO ADVERSE CHANGE. Any material adverse change in the
financial condition, assets, Liabilities, business, prospects or
operations of the Company;
4.8(b) NO DAMAGE. Any material loss, damage or destruction,
whether covered by insurance or not, affecting Company's business or
properties;
4.8(c) NO INCREASE IN COMPENSATION. Other than such thereof as
has occurred in the ordinary course of business, any increase in the
compensation, salaries or wages payable or to become payable to any
employee of the Company (including, without limitation, any increase or
change pursuant to any bonus, pension, profit sharing, retirement or
other plan or commitment), or any bonus or other employee benefit
granted, made or accrued;
4.8(d) NO LABOR DISPUTES. Any labor dispute or disturbance,
other than routine individual grievances which are not material to the
business, financial condition or results of operations of the Company;
4.8(e) NO COMMITMENTS. Any material commitment or transaction
by the Company (including, without limitation, any borrowing or capital
expenditure) other than in connection with the opening of the third
Restaurant or in the ordinary course of business consistent with past
practice;
4.8(f) NO DISPOSITION OF PROPERTY. Any sale, lease or other
transfer or disposition of any properties or assets of the Company,
except in the ordinary course of business;
4.8(g) NO INDEBTEDNESS. Any indebtedness for borrowed money
incurred, assumed or guaranteed by the Company;
4.8(h) NO LIENS. Any Lien made on any of the properties or
assets of the Company other than liens for taxes not yet due and
payable;
4.8(i) NO AMENDMENT OF CONTRACTS. Any entering into, amendment
or termination by the Company of any contract, or any waiver of
material rights thereunder, other than in the ordinary course of
business;
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4.8(j) NO UNUSUAL EVENTS. Any other event or condition not in
the ordinary course of business of the Company.
4.9 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
specifically disclosed in the Recent Balance Sheet, or in SCHEDULE 4.9, the
Company does not have any Liabilities other than liabilities and obligations
incurred since the date of the Recent Balance Sheet in the ordinary course of
business and consistent with past practice and none of which has or will have a
material adverse effect on the business, financial condition or results of
operations of the Company. Except as and to the extent described in the Recent
Balance Sheet or in SCHEDULE 4.9, the Company has no knowledge of any basis for
the assertion against the Company of any Liability and to the knowledge of the
Company, there are no circumstances, conditions, happenings, events or
arrangements, contractual or otherwise, which may give rise to Liabilities,
except for liabilities and obligations incurred in the ordinary course of the
Company's business.
4.10 NO LITIGATION. Except as set forth in SCHEDULE 4.10 there is no
Litigation pending or, to the knowledge of the Company, threatened against the
Company, its managers or members (in such capacity), its business or its assets,
nor does the Company know, or have grounds to know, of any basis for any such
Litigation. SCHEDULE 4.10 also identifies all Litigation to which the Company or
its managers or members (in such capacity) have been parties since July 31,
1998. Except as set forth in SCHEDULE 4.10, neither the Company nor its business
or assets are subject to any Order of any Government Entity.
4.11 COMPLIANCE WITH LAWS AND ORDERS.
4.11(a) COMPLIANCE. Except as set forth in SCHEDULE 4.11(A),
the Company (including its operations, practices, properties and
assets) is in material compliance with all applicable Laws and Orders,
including, without limitation, those applicable to discrimination in
employment, occupational safety and health, trade practices,
competition and pricing, product warranties, zoning, building and
sanitation, employment, retirement and labor relations and product
advertising. Except as set forth in SCHEDULE 4.11(A), the Company has
not received notice of any violation or alleged violation of, and is
subject to no Liability for past or continuing violation of, any Laws
or Orders. All reports and returns required to be filed by the Company
with any Government Entity have been filed, and were accurate and
complete when filed. Without limiting the generality of the foregoing:
(i) The Company has made all required payments to its
unemployment compensation reserve accounts with the
appropriate governmental departments of the states where it is
required to maintain such accounts, and each of such accounts
has a positive balance.
(ii) The Company has delivered to Buyer copies of all
reports of the Company for the past five (5) years required
under all applicable health and safety laws and regulations.
The deficiencies, if any, noted on such reports have been
corrected.
4.11(b) LICENSES AND PERMITS. Except as set forth on SCHEDULE
4.11(B), the Company has, or will have on the Closing Date, all
licenses, permits, approvals, authorizations and consents of all
Government Entities and all certification organizations required for
the conduct of the business (as presently conducted and as proposed to
be conducted by the Company) and operation of the Restaurants. Except
as disclosed on SCHEDULE 4.11(B), all such licenses, permits,
approvals, authorizations and consents as described in SCHEDULE
4.11(B), are in full force and effect and are assignable to Buyer in
accordance with the terms hereof. Except as set forth in SCHEDULE
4.11(B), the Company (including its operations, properties and assets)
is and has been in compliance with all such permits and licenses,
approvals, authorizations and consents. This SECTION 4.11(B) shall not
apply to those licenses, permits, approvals, authorizations and
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consents related to the Company's third Restaurant, which the parties
acknowledge is not currently open and will not be open as of the
Closing Date; provided however, to the Company's knowledge, there is no
reason why the Company will not be able to obtain the necessary
licenses, permits, approvals, authorizations and consents necessary to
open such Restaurant.
4.12 TITLE TO AND CONDITION OF PROPERTIES.
4.12(a) MARKETABLE TITLE. The Company has, or will have on the
Closing Date, good and marketable title to all the Purchased Assets,
free and clear of all mortgages, liens (statutory or otherwise),
security interests, claims, pledges, licenses, equities, options,
conditional sales contracts, assessments, levies, easements, covenants,
reservations, restrictions, rights-of-way, exceptions, limitations,
charges or encumbrances of any nature whatsoever except those described
in SCHEDULE 4.12(A) and other than liens for taxes not yet due and
payable and the interests of the lessors under Real Property Leases and
Personal Property Leases (collectively, "Liens"). Except as described
on SCHEDULE 4.12(A), none of the Purchased Assets are subject to any
restrictions with respect to the transferability thereof. Except as
described on SCHEDULE 4.12(A), the Company has complete and
unrestricted power and right to sell, assign, convey and deliver the
Purchased Assets to Buyer as contemplated hereby. On the Closing Date,
Buyer will receive good and marketable title to all the Purchased
Assets, free and clear of all Liens of any nature whatsoever except
those described in SCHEDULE 4.12(A).
4.12(b) CONDITION. All tangible assets (real and personal)
constituting Purchased Assets hereunder are in good operating condition
and repair, free from any defects (except such minor defects as do not
interfere with the use thereof in the conduct of the normal operations
of the Company), have been maintained consistent with the standards
generally followed in the industry and are sufficient to carry on the
business of the Company as conducted during the preceding twelve (12)
months. All buildings and other structures constituting the
Restaurants' premises are in good condition and repair and have no
structural defects or defects affecting the plumbing, electrical,
sewerage, or heating, ventilating or air conditioning systems.
4.12(c) REAL PROPERTY. SCHEDULE 2.1(A) sets forth all real
property presently used or occupied by the Company and its Restaurants
(the "Real Property"). Except for the Company's La Jolla, California
Restaurant, there are now in full force and effect duly issued
certificates of occupancy permitting the Real Property and improvements
located thereon to be legally used and occupied as the same are now
constituted. All of the Real Property has permanent rights of access to
dedicated public highways. To the knowledge of the Company, no fact or
condition exists which would prohibit or adversely affect the ordinary
rights of access to and from the Real Property from and to the existing
highways and roads and there is no pending or threatened restriction or
denial, governmental or otherwise, upon such ingress and egress. To the
Company's knowledge, no public improvements have been commenced and to
Company's knowledge none are planned which in either case may result in
special assessments against or otherwise materially adversely affect
any Real Property. To the Company's knowledge, no portion of any of the
Real Property has been used as a landfill or for storage or landfill of
hazardous or toxic materials. The Company does not have notice or
knowledge of any (i) Order requiring repair, alteration, or correction
of any existing condition affecting any Real Property or the systems or
improvements thereat, (ii) condition or defect which could give rise to
an order of the sort referred to in "(i)" above, or (iii) underground
storage tanks, or any structural, mechanical, or other defects of
material significance affecting any Real Property or the systems or
improvements thereat (including, but not limited to, inadequacy for
normal use of mechanical systems or disposal or water systems at or
serving the Real Property).
4.13 INSURANCE. Set forth in SCHEDULE 4.13 is a complete and accurate
list of all policies of fire, liability, product liability, workers
compensation, health and other forms of insurance presently in effect with
respect to the business and properties of the Company, true and correct copies
of which have heretofore been made available to Buyer for its inspection. No
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notice of cancellation or termination has been received with respect to any such
policy, and the Company has no knowledge of any act or omission of the Company
that could result in cancellation of any such policy prior to the Closing Date.
4.14 CONTRACTS AND COMMITMENTS.
4.14(a) REAL PROPERTY LEASES. Except as set forth in SCHEDULE
2.1(a), the Company has no leases of real property other than a lease
of real property in Coronado, California, which is excluded from the
Purchased Assets pursuant to SECTION 2.3(F) hereof. The Real Property
Leases are in full force and effect, the Company is not in default of
any term, covenant or obligation under any of the Real Property Leases,
and no condition exists which, with the passage of time or giving of
notice, would constitute a default under any term, covenant or
obligation of Company under any Real Property Lease.
4.14(b) PERSONAL PROPERTY LEASES. Except as set forth in
SCHEDULE 2.1(d), the Company has no leases of personal property
involving consideration or other expenditure in excess of one thousand
dollars ($1,000) or involving performance over a period of more than
twelve (12) months except for personal property leases for dishwashers
in the Restaurants. Within sixty (60) days of the Closing Date, the
Company shall terminate such leases, purchase or otherwise acquire free
and clear title to the dishwashers and transfer ownership of the
dishwashers to Buyer as part of the Purchased Assets.
4.14(c) PURCHASE COMMITMENTS. The Company has no purchase
commitments for inventory items or supplies that, together with amounts
on hand, constitute in excess of two (2) months normal usage, or which
are at an excessive price.
4.14(d) COLLECTIVE BARGAINING AGREEMENTS. The Company is not a
party to any collective bargaining agreement with any unions, guilds,
shop committees or other collective bargaining groups.
4.14(e) LOAN AGREEMENTS. Except as set forth in SCHEDULE
4.14(e), the Company is not obligated under any loan agreement,
promissory note, letter of credit, or other evidence of indebtedness as
a signatory, guarantor or otherwise.
4.14(f) GUARANTEES. Except as disclosed on SCHEDULE 4.14(f),
the Company has not guaranteed the payment or performance of any
person, firm or corporation, agreed to indemnify any person or act as a
surety, or otherwise agreed to be contingently or secondarily liable
for the obligations of any person.
4.14(g) BURDENSOME OR RESTRICTIVE AGREEMENTS. The Company is
not a party to or bound by any agreement, deed, lease or other
instrument which is so burdensome as to materially and adversely affect
or impair the operation of the Restaurants. Without limiting the
generality of the foregoing, the Company is not a party to or bound by
any agreement requiring it to assign any interest in any trade secret
or proprietary information, or prohibiting or restricting it from
competing in any business or geographical area or soliciting customers
or otherwise restricting it from carrying on its business anywhere in
the world.
4.14(h) OTHER MATERIAL CONTRACTS. The Company does not have a
lease, license, contract or commitment of any nature involving
consideration or other expenditure in excess of one thousand dollars
($1,000), or involving performance over a period of more than twelve
(12) months, or which is otherwise individually material to the
operations of the Restaurants, except as described in SCHEDULE 4.14(H)
or in any other Disclosure Schedule.
4.14(i) NO DEFAULT. To its knowledge, the Company is not in
default under any lease, contract or commitment, nor has any event or
omission occurred which through the passage of time or the giving of
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notice, or both, would constitute a default thereunder or cause the
acceleration of any of its obligations or result in the creation of any
Lien on any of the assets owned, used or occupied by it. To the
knowledge of the Company, no third party is in default under any lease,
contract or commitment to which the Company is a party, nor has any
event or omission occurred which, through the passage of time or the
giving of notice, or both, would constitute a default thereunder or
give rise to an automatic termination, or the right of discretionary
termination, thereof.
4.15 LABOR MATTERS. The Company has not experienced any labor disputes,
union organization attempts or any work stoppage due to labor disagreements in
connection with its business; (a) the Company is in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and is not engaged in any unfair
labor practice; (b) there is no unfair labor practice charge or complaint
against the Company pending or threatened; (c) there is no labor strike,
dispute, request for representation, slowdown or stoppage actually pending or
threatened against or affecting the Company; (d) no question concerning
representation has been raised or is threatened respecting the employees of the
Company; (e) no grievance which might have a material adverse effect on the
Company, nor any arbitration proceeding arising out of or under collective
bargaining agreements, is pending and no such claim therefor exists; and (f)
there are no administrative charges or court complaints against the Company
concerning alleged employment discrimination or other employment related matters
pending or threatened before the U.S. Equal Employment Opportunity Commission or
any Government Entity, except as disclosed on SCHEDULE 4.10.
4.16 EMPLOYEE BENEFIT PLANS.
The Company has provided and/or identified each "employee benefit
plan," as defined in Section 3(3) of ERISA which (i) is subject to any provision
of ERISA and (ii) is or was at any time during the last 5 years maintained,
administered or contributed to by the Company or any affiliate (as defined in
Section 407(d)(7) of ERISA) and covers any employee or former employee of the
Company or any affiliate or under which the Company or any affiliate has any
liability. Such plans are referred to collectively herein as the "Employee
Plans." None of the Employee Plans would, individually or collectively,
constitute an "employee pension benefit plan" as defined in Section 3(2) of
ERISA, including, without limitation, a "multiemployer plan," as defined in
Section 3(37) of ERISA, or a "defined benefit plan," as defined in Section 3(35)
and subject to Title IV of ERISA, and no Employee Plan is maintained in
connection with any trust described in Section 501(c)(9) of the Code. It is
understood and agreed that Buyer is not assuming any Employee Plans or
liabilities associated therewith, and that the Company shall retain all such
Employee Plans, including all obligations deriving directly or indirectly from
sponsoring or participating in such Employee Plans.
Each Employee Plan has been maintained in compliance with its terms and
the requirements prescribed by any and all statutes, orders, rules and
regulations, including but not limited to, ERISA and the Code, which are
applicable to such Plan. No assets of the Company are or could be subject,
directly or indirectly, to any liability or lien by reason of any action or
inaction taken with respect to any Employee Plan maintained by the Company.
The Company has no liability in respect of post-retirement health and
medical benefits for retired employees of the Company or any affiliate,
determined using assumptions that are reasonable in the aggregate, over the fair
market value of any fund, reserve or other assets segregated for the purpose of
satisfying such liability (including for such purposes any fund established
pursuant to Section 401(h) of the Code). The Company has reserved its right to
amend or terminate any Employee Plan or other benefit arrangement providing
health or medical benefits in respect of any active employee of the Company
under the terms of any such plan and descriptions thereof given to employees.
With respect to any Employee Plans which are "group health plans" under Section
4980B of the Code and Section 607(l) of ERISA, there has been timely compliance
in all material respects with all requirements imposed thereunder, and under
Parts 6 and 7 of Title I of ERISA generally, so that the Company and any
affiliate have no (and will not incur any) loss, assessment, tax penalty or
other sanction with respect to any such plan.
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There has been no amendment to, written interpretation or announcement
(whether or not written) by the Company or any affiliate relating to, or change
in employee participation or coverage under, any Employee Plan which would
increase the expense of maintaining such Employee Plan above the level of the
expense incurred in respect thereof for the fiscal year ended immediately prior
to the Closing Date.
4.17 EMPLOYMENT COMPENSATION. SCHEDULE 4.17 contains a true and correct
list of all employees to whom the Company is paying compensation, including
bonuses and incentives, at an annual rate in excess of Twenty Thousand Dollars
($20,000) for services rendered or otherwise; and in the case of salaried
employees such list identifies the current annual rate of compensation for each
employee and in the case of hourly or commission employees identifies certain
reasonable ranges of rates and the number of employees falling within each such
range.
4.18 TRADE RIGHTS. In order to conduct the business of the Company, as
such is currently being conducted or proposed to be conducted, the Company does
not require the rights to any Trade Rights that it does not already have. To its
knowledge, the Company is not infringing and has not infringed any Trade Rights
of another in the operation of the business of the Company, nor is any other
person infringing the Trade Rights of the Company. The Company has not granted
any license or made any assignment of its rights in any Trade Right. The Company
does not pay any royalties or other consideration for the right to use any Trade
Rights of others. There is no Litigation pending or threatened to challenge the
Company's right, title and interest with respect to its continued use of any
Trade Rights. All Trade Rights of the Company are valid, enforceable and in good
standing, and there are no equitable defenses to enforcement based on any act or
omission of the Company.
4.19 MAJOR SUPPLIERS. SCHEDULE 4.19 contains a list of the five (5)
largest suppliers to the Company for the most recent fiscal year (determined on
the basis of the total dollar amount of purchases) showing the total dollar
amount of purchases from each such supplier during such year. The Company does
not have any knowledge or information of any facts indicating, nor any other
reason to believe, that any of the suppliers listed on SCHEDULE 4.19 will not
continue to be suppliers to the business of the Company after the Closing Date
and will not continue to supply the business with substantially the same
quantity and quality of goods at competitive prices.
4.20 AFFILIATES' RELATIONSHIPS TO THE COMPANY. Except for interests in
Fleming Prime Steakhouse II, L.L.C., STEAKHOUSE CONCEPT, L.L.C., and
OUTBACK/FLEMING'S, LLC, as of the Closing Date, no Affiliate of the Company will
have any direct or indirect interest in (i) any entity which does business with
the Company or is directly competitive with the Company's business of upscale
steakhouses with a per person check average in the $40-$55 price range, or (ii)
any property, asset or right which is used by the Company in the conduct of its
business.
4.21 ASSETS NECESSARY TO BUSINESS. The Purchased Assets include all
property and assets (except for the Excluded Assets), tangible and intangible,
and all leases, licenses and other agreements, which are necessary to permit
Buyer to carry on, or currently used or held for use in, the business of the
Company as presently conducted and as conducted immediately prior to the Closing
Date.
4.22 NO BROKERS OR FINDERS. Neither the Company nor any of its
managers, officers, employees, members or agents have retained, employed or used
any broker or finder in connection with the transaction provided for herein or
in connection with the negotiation thereof.
4.23 DISCLOSURE. No representation or warranty by the Company in this
Agreement, nor any statement, certificate, schedule, document or exhibit hereto
furnished or to be furnished by or on behalf of the Company pursuant to this
Agreement or in connection with the transactions contemplated hereby, contains
or shall contain any untrue statement of material fact or omits or shall omit a
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material fact necessary to make the statements contained therein not misleading.
All statements and information contained in any certificate or Disclosure
Schedule delivered by or on behalf of the Company shall be deemed
representations and warranties of the Company.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
Buyer represents and warrants to the Company that each of the following
is true and correct in all material respects on the date hereof, shall remain
true and correct in all material respects to and including the Closing Date,
shall be unaffected by any investigation heretofore or hereafter made by the
Company or any knowledge of the Company, and shall survive the closing of the
transactions provided for herein for the longer of: two (2) years from the
Closing Date; or through the date the Final Purchase Price is determined for all
three Restaurants.
5.1. CORPORATE.
5.1(a) ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Florida.
5.1(b) CORPORATE POWER. Buyer has all requisite corporate
power to enter into this Agreement and the other documents and
instruments to be executed and delivered by Buyer and to carry out the
transactions contemplated hereby and thereby.
5.2 AUTHORITY. The execution and delivery of this Agreement and the
other documents and instruments to be executed and delivered by Buyer pursuant
hereto and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by the Board of Directors of Buyer. No other corporate
act or proceeding on the part of Buyer or its shareholders is necessary to
authorize this Agreement or the other documents and instruments to be executed
and delivered by Buyer pursuant hereto or the consummation of the transactions
contemplated hereby and thereby. This Agreement constitutes, and when executed
and delivered, the other documents and instruments to be executed and delivered
by Buyer pursuant hereto will constitute, valid and binding agreements of Buyer,
enforceable in accordance with their respective terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and by general equitable principles.
5.3 NO BROKERS OR FINDERS. Neither Buyer nor any of its directors,
officers, employees or agents have retained, employed or used any broker or
finder in connection with the transaction provided for herein or in connection
with the negotiation thereof.
5.4 DISCLOSURE. No representation or warranty by Buyer in this
Agreement, nor any statement, certificate, schedule, document or exhibit hereto
furnished or to be furnished by or on behalf of Buyer pursuant to this Agreement
or in connection with transactions contemplated hereby, contains or shall
contain any untrue statement of material fact or omits or shall omit a material
fact necessary to make the statements contained therein not misleading.
5.5. BUYER'S COOPERATION. Buyer shall use its best efforts to cooperate
with the Company in obtaining the consents referred to in SECTION 8.4 hereof.
5.6 OTHER ACTION. The Buyer shall use its best efforts to cause the
fulfillment at the earliest practicable date of all the conditions to the
parties' obligations to consummate the transactions contemplated in this
Agreement.
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6. EMPLOYEES - EMPLOYEE BENEFITS
6.1 AFFECTED EMPLOYEES. "Affected Employees" shall mean employees of
the Company who are employed by Buyer immediately after the Closing Date.
6.2 RETAINED RESPONSIBILITIES. Subject to SECTION 1.3(B) above, the
Company agrees to satisfy, or cause its insurance carriers to satisfy, all
claims for benefits, whether insured or otherwise (including, but not limited
to, workers' compensation, life insurance, medical and disability programs),
under Company's employee benefit programs brought by, or in respect of, Affected
Employees and other employees and former employees of the Company, which claims
arise out of events occurring on or prior to the Closing Date, in accordance
with the terms and conditions of such programs or applicable workers'
compensation statutes without interruption as a result of the employment by
Buyer of any such employees after the Closing Date.
6.3 PAYROLL TAX. The Company agrees to make a clean cut-off of payroll
and payroll tax reporting with respect to the Affected Employees paying over to
the federal, state and city governments those amounts respectively withheld or
required to be withheld for periods ending on or prior to the Closing Date. The
Company also agrees to issue, by the date prescribed by IRS Regulations, Forms
W-2 for wages paid through the Closing Date. Except as set forth in this
Agreement, Buyer shall be responsible for all payroll and payroll tax
obligations after the Closing Date for Affected Employees.
6.4 TERMINATION BENEFITS. Subject to SECTION 1.3(B) above, and except
as provided in the following sentence, Buyer shall be solely responsible for,
and shall pay or cause to be paid, severance payments and other termination
benefits, if any, to Affected Employees who may become entitled to such benefits
by reason of any events occurring after the Closing Date. Subject to SECTION
1.3(B) above, and except for any severance obligations to A. William Allen III,
pursuant to his employment agreement with the Company, if any action on the part
of the Company prior to the Closing Date, or if the sale to Buyer of the
business and assets of the Company pursuant to this Agreement or the
transactions contemplated hereby, or if the failure by Buyer to hire as a
permanent employee of Buyer any employee of Company, shall directly or
indirectly result in any Liability (i) for severance payments or termination
benefits or (ii) by virtue of any state, federal or local law, such Liability
shall be the sole responsibility of the Company, and the Company shall indemnify
and hold harmless Buyer against such Liability.
7. OTHER MATTERS
7.1 PRE-CLOSING REVENUE AND EXPENSES. The Company shall be responsible
for all expenses, debts and other Liabilities of the Company and the Restaurants
arising out of or relating to periods prior to and including the Closing Date,
and shall be responsible for all costs, expenses, debts and other Liabilities
necessary to open the La Jolla Restaurant for business incurred or accrued
through the first day of business and shall be entitled to all revenue of the
Company and the Restaurants relating to periods prior to and including the
Closing Date.
7.2 POST-CLOSING REVENUE AND EXPENSES. The Buyer shall be responsible
for all expenses, debts and other Liabilities of the Restaurants arising out of
or relating to periods subsequent to the Closing Date, except that Company shall
be responsible for all costs, expenses, debts and other Liabilities necessary to
open the La Jolla Restaurant for business incurred or accrued through the first
day of business and shall be entitled to all revenue of the Restaurants relating
to periods subsequent to the Closing Date.
7.3 NONCOMPETITION. As an inducement to Buyer to execute this Agreement
and complete the transactions contemplated hereby, and in order to preserve the
goodwill associated with the business of the Company being acquired pursuant to
this Agreement, and in addition to and not in limitation of any covenants
contained in any agreement executed and delivered pursuant to SECTION 7.3
hereof, the Company agrees as follows: Except as specifically permitted pursuant
to that certain Operating Agreement of Outback/Fleming's, LLC, for a period of
three (3) years from the Closing Date, the Company and its Affiliates shall not,
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individually or jointly with others, directly or indirectly, whether for its own
account or for that of any other Person, operate, engage in, own or hold any
ownership interest in, have any interest in or lend any assistance to any
steakhouse restaurant or Person or entity engaged in a business owning,
operating or controlling steakhouse restaurants, and the Company and its
Affiliates shall not act as an officer, director, employee, partner, independent
contractor, consultant, principal, agent or in any other capacity for, nor lend
any assistance (financial or otherwise) or cooperation to, any such person or
entity; provided, however, that it shall not be a violation of this SECTION 7.3
for Company or its Affiliates to own a one percent (1%) or smaller interest in
any corporation required to file periodic reports with the Securities and
Exchange Commission so long as the Company and its Affiliates do not in any
manner provide any services or assistance to such company. For the purposes
hereof, the term "steakhouse restaurant" shall mean any restaurant for which:
(i) the word "steak" or any variation thereof is in its name; (ii) the sale of
steak or prime rib is specified in its advertising or marketing efforts; or
(iii) the sale of steak and prime rib constitutes thirty-five percent (35%) or
more of its entree sales, computed on a dollar basis.
7.4 CONFIDENTIALITY.
7.4(a) DEFINITION. For the purpose of this Agreement,
"Proprietary Information" shall include all information, whether owned,
licensed or otherwise used by or in the possession of the Company,
which reasonably would be considered proprietary or confidential to the
business of the Company including but not limited to suppliers,
customers, trade or industrial practices, marketing and technical
plans, technology, personnel, organization or internal affairs, plans
for products and ideas, recipes, menus, wine lists and proprietary
techniques and other trade secrets. Notwithstanding the foregoing,
"Proprietary Information" shall not include information which has
entered the public domain.
7.4(b) NO DISCLOSURE, USE, OR CIRCUMVENTION. The Company and
its Affiliates shall not disclose any Proprietary Information to any
third parties and will not use any Proprietary Information in the
Company's business or any affiliated business (other than in the
business of Fleming Prime Steakhouse II, L.L.C. and Outback/Fleming's,
LLC and as otherwise specifically permitted pursuant to that certain
Operating Agreement of Outback/Flemings, LLC) without the prior
written consent of the Buyer and then only to the extent specified in
that consent. Consent may be granted or withheld at the sole
discretion of the Buyer. The Company shall not contact any suppliers,
customers, employees, affiliates or associates to circumvent the
purposes of this provision.
7.4(c) MAINTENANCE OF CONFIDENTIALITY. The Company shall take
all steps reasonably necessary or appropriate to maintain the strict
confidentiality of the Proprietary Information and to assure compliance
with this Agreement.
7.5 NON-SOLICITATION. For a period two (2) years following the Closing
Date, the Company shall not offer employment to any employee of the Buyer or its
Affiliates or otherwise solicit or induce any employee of the Buyer or its
Affiliates to terminate his or her employment, nor shall the Company act as
partner, consultant, agent, owner or part owner, or in any other capacity for
any person or entity which solicits or otherwise induces any employee of the
Buyer or its Affiliates to terminate his or her employment with the Buyer.
7.6 REASONABLENESS OF RESTRICTIONS; REFORMATION; ENFORCEMENT. The
parties hereto recognize and acknowledge that the limitations contained in
SECTIONS 7.3, 7.4 AND 7.5 hereof are reasonable and properly required for the
adequate protection of the Buyer's interests. It is agreed by the parties hereto
that if any portion of the restrictions contained in SECTIONS 7.3, 7.4 AND 7.5
are held to be unreasonable, arbitrary, or against public policy, then the
restrictions shall be considered divisible, both as to the time and as to the
geographical area, with each month of the specified period being deemed a
separate period of time and each radius mile of the restricted territory being
deemed a separate geographical area, so that the lesser period of time or
geographical area shall remain effective so long as the same is not
unreasonable, arbitrary, or against public policy. The parties hereto agree that
in the event any court of competent jurisdiction determines the specified period
or the specified geographical area of the restricted territory to be
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unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is determined to be reasonable, nonarbitrary, and not
against public policy may be enforced. If any of the covenants contained herein
are violated and if any court action is instituted by the Buyer to prevent or
enjoin such violation, the period of time during which the business activities
shall be restricted, as provided in this Agreement, shall be lengthened by a
period of time equal to the period between the date of the breach of the terms
or covenants contained in this Agreement and the date on which the decree of the
court disposing of the issues upon the merits shall become final and not subject
to further appeal.
In the event it is necessary for the Buyer to initiate legal
proceedings to enforce, interpret or construe any of the covenants contained in
SECTIONS 7.3, 7.4 AND 7.5 hereof, the prevailing party in such proceedings shall
be entitled to receive from the non-prevailing party, in addition to all other
remedies, all costs, including reasonable attorneys' fees, of such proceedings
including appellate proceedings.
7.7 SPECIFIC PERFORMANCE. The parties agree that a breach of any of the
covenants contained in SECTION 7.3, 7.4 AND 7.5 hereof will cause irreparable
injury to the Buyer for which the remedy at law will be inadequate and would be
difficult to ascertain and therefore, in the event of the breach or threatened
breach of any such covenants, the Buyer shall be entitled, in addition to any
other rights and remedies it may have at law or in equity, to obtain an
injunction to restrain any threatened or actual activities in violation of any
such covenants. The parties hereby consent and agree that temporary and
permanent injunctive relief may be granted in any proceedings which might be
brought to enforce any such covenants without the necessity of proof of actual
damages, and in the event the Buyer does apply for such an injunction, that the
Buyer has an adequate remedy at law shall not be raised as a defense.
8. FURTHER COVENANTS OF THE COMPANY
The Company covenants and agrees as follows:
8.1 ACCESS TO INFORMATION AND RECORDS. During the period commencing
thirty (30) days prior to the Closing Date, the Company shall give Buyer, its
counsel, accountants and other representatives (i) access during normal business
hours to all of the properties, books, records, contracts and documents of the
Company for the purpose of such inspection, investigation and testing as Buyer
deems appropriate (and the Company shall furnish or cause to be furnished to
Buyer and its representatives all information with respect to the business and
affairs of the Company as Buyer may request); (ii) access to employees, agents
and representatives for the purposes of such meetings and communications as
Buyer reasonably desires; and (iii) access to vendors, customers, manufacturers
of its machinery and equipment, and others having business dealings with the
Company. Through the Closing Date, the Buyer and its Affiliates shall not
disclose any Proprietary Information obtained pursuant to this paragraph to any
third parties and until the Closing Date will not use any such Proprietary
Information in the Buyer's business or any affiliated business (other than in
the business of Fleming Prime Steakhouse II, L.L.C., OS Prime, Inc., and
Outback/Fleming's, LLC and as otherwise specifically permitted pursuant to that
certain Operating Agreement of Outback/Fleming's, LLC) without the prior written
consent of the Company and then only to the extent specified in that consent.
Consent may be granted or withheld at the sole discretion of the Company. The
Buyer shall not contact any suppliers, customers, employees, affiliates or
associates to circumvent the purposes of this provision. The Buyer shall take
all steps reasonably necessary or appropriate to maintain the strict
confidentiality of the Proprietary Information through the Closing Date.
8.2 CONDUCT OF BUSINESS PENDING THE CLOSING. From the date hereof until
the Closing Date, except as otherwise approved in writing by the Buyer, which
approval shall not be unreasonably withheld:
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8.2(a) NO CHANGES. The Company will, in all material respects,
carry on its business diligently and in the same manner as heretofore
and, except for the development, construction and opening of a third
Restaurant as contemplated by this Agreement, will not make or
institute any material changes in its methods of purchase, sale,
management, accounting or operation.
8.2(b) MAINTAIN ORGANIZATION. The Company will take such
action as may be necessary to maintain, preserve, renew and keep in
favor the material rights and franchises of the Company and will use
its commercially reasonable best efforts, to the extent material
hereto, to preserve the business organization of the Company intact, to
keep available to Buyer the present officers and employees, and to
preserve for Buyer its present relationships with suppliers and
customers and others having business relationships with the Company.
8.2(c) NO BREACH. The Company will not do or omit any act, or
permit any omission to act, which may cause a breach of any material
contract, commitment or obligation, or any breach of any
representation, warranty, covenant or agreement made by the Company
herein, or which would have required disclosure on SCHEDULE 4.8 had it
occurred after the date of the Recent Balance Sheet and prior to the
date of this Agreement.
8.2(d) NO MATERIAL CONTRACTS. Other than reasonable and
necessary contracts entered into in connection with opening the third
Restaurant as contemplated by this Agreement, no contract or commitment
will be entered into, by or on behalf of the Company, except contracts,
commitments, purchases or sales which are in the ordinary course of
business and consistent with past practice, are not material to the
Company (individually or in the aggregate) and would not have been
required to be disclosed in the Disclosure Schedule had they been in
existence on the date of this Agreement.
8.2(e) NO CORPORATE CHANGES. The Company shall not materially
amend its Articles of Organization or Operating Agreement or make any
changes in ownership percentages.
8.2(f) MAINTENANCE OF INSURANCE. The Company shall maintain
all of the insurance in effect as of the date hereof.
8.2(g) MAINTENANCE OF PROPERTY. The Company shall use,
operate, maintain and repair all of their property in a normal business
manner.
8.2(h) INTERIM FINANCIALS. The Company will provide Buyer with
interim monthly financial statements and other management reports as
and when they are available.
8.2(i) NO NEGOTIATIONS. The Company will not directly or
indirectly (through a representative or otherwise) solicit or furnish
any information to any prospective buyer, commence, or conduct
presently ongoing, negotiations with any other party or enter into any
agreement with any other party concerning the sale of the Company, any
Restaurants, the Company's assets or business or any part thereof or
any membership interest in the Company (an "acquisition proposal"), and
the Company shall immediately advise Buyer of the receipt of any
acquisition proposal.
8.3 CHANGE OF COMPANY'S NAME. On the Settlement Date, the Company shall
change its corporate name to a new name bearing no resemblance to its present
name so as to permit the use of its present name by Buyer (subject to any and
all rights of Outback/Fleming's, LLC thereto). Following the Closing Date, the
Company shall not, without the prior written consent of Buyer, make any use of
the name "Fleming's" or any other name confusingly similar thereto, except as
may be necessary for the Company to pay its liabilities, prepare tax returns and
other reports, and to otherwise wind up and conclude its business.
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8.4 CONSENTS. The Company will use its commercially reasonable best
efforts prior to the Closing Date to obtain all consents necessary for the
consummation of the transactions contemplated hereby.
8.5 OTHER ACTION. The Company shall use its best efforts to cause the
fulfillment at the earliest practicable date of all of the conditions to the
parties' obligations to consummate the transactions contemplated in this
Agreement.
8.6 DISCLOSURE. Through the Closing Date, the Company shall have a
continuing obligation to promptly notify Buyer in writing with respect to any
matter hereafter arising or discovered which, if existing or known at the date
of this Agreement, would have been required to be set forth or described in the
Disclosure Schedule, but no such disclosure shall cure any breach of any
representation or warranty which is inaccurate.
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer to be performed on the Closing Date
shall be subject to the satisfaction prior to or on the Closing Date of each of
the following conditions:
9.1 REPRESENTATIONS AND WARRANTIES TRUE ON THE CLOSING DATE. Each of
the representations and warranties made by the Company in this Agreement, and
the statements contained in the Disclosure Schedule or in any instrument, list,
certificate or writing delivered by the Company pursuant to this Agreement,
shall be true and correct in all material respects when made and shall be true
and correct in all material respects at and as of the Closing Date as though
such representations and warranties were made or given on and as of the Closing
Date, except for any changes permitted by the terms of this Agreement or
consented to in writing by Buyer.
9.2 COMPLIANCE WITH AGREEMENT. The Company shall have in all material
respects performed and complied with all of its agreements and obligations under
this Agreement which are to be performed or complied with by it prior to or on
the Closing Date, including the delivery of the closing documents specified in
SECTION 12.3.
9.3 ABSENCE OF LITIGATION. No material Litigation shall have been
commenced or threatened, and no material investigation by any Government Entity
shall have been commenced, against Buyer, the Company or any of the Affiliates,
officers, directors or managers of any of them, with respect to the transactions
contemplated hereby.
9.4 CONSENTS AND APPROVALS. Except as otherwise specifically provided
in this Agreement, all approvals, consents and waivers that are required to
effect the transactions contemplated hereby shall have been received, and copies
thereof shall have been delivered to Buyer on or prior to the Closing Date.
9.5 ESTOPPEL CERTIFICATES. The Company shall use its best efforts to
obtain and deliver to Buyer within thirty (30) days from the Closing Date an
estoppel certificate or status letter from the landlord under each lease of real
property which estoppel certificate or status letter will certify (i) the lease
is valid and in full force and effect; (ii) the amounts payable by the Company
under the lease and the date to which the same have been paid; (iii) whether
there are, to the knowledge of said landlord, any defaults thereunder, and, if
so, specifying the nature thereof; and (iv) that the transactions contemplated
by this Agreement will not constitute a default under the lease and that the
landlord consents to the assignment of the lease to Buyer. Buyer acknowledges
that the Newport Beach landlord is not obligated under the lease to provide an
estoppel certificate.
10. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS
Each and every obligation of the Company to be performed on the Closing
Date shall be subject to the satisfaction prior to or on the Closing Date of the
following conditions:
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10.1 REPRESENTATIONS AND WARRANTIES TRUE ON THE CLOSING DATE. Each of
the representations and warranties made by Buyer in this Agreement shall be true
and correct in all material respects when made and shall be true and correct in
all material respects at and as of the Closing Date as though such
representations and warranties were made or given on and as of the Closing Date.
10.2 COMPLIANCE WITH AGREEMENT. Buyer shall have in all material
respects performed and complied with all of Buyer's agreements and obligations
under this Agreement which are to be performed or complied with by Buyer prior
to or on the Closing Date, including the delivery of the closing documents
specified in SECTION 12.4.
10.3 ABSENCE OF LITIGATION. No material Litigation shall have been
commenced or threatened, and no material investigation by any Government Entity
shall have been commenced, against Buyer, or the Company or any of the
affiliates, officers, managers, directors or shareholders of either of them,
with respect to the transactions contemplated hereby.
11. INDEMNIFICATION
11.1 BY THE COMPANY. Subject to the terms and conditions of this
ARTICLE 11, the Company hereby agrees to indemnify, defend and hold harmless
Buyer, and its directors, officers, employees and Affiliates (hereinafter
"Buyer's Indemnitees"), from and against all Claims asserted against, resulting
to, imposed upon, or incurred by Buyer's Indemnitees or the business and assets
transferred to Buyer pursuant to this Agreement, directly or indirectly, by
reason of, arising out of or resulting from (a) the inaccuracy or breach of any
representation or warranty of the Company contained in or made pursuant to this
Agreement (regardless of whether such breach is deemed "material"); (b) the
breach of any covenant of the Company contained in this Agreement (regardless of
whether such breach is deemed "material"); or (c) any Claim against the Company,
the Purchased Assets or the business of the Company not specifically assumed by
Buyer pursuant hereto or which arises out of or relates to any event first
occurring on or prior to the Closing Date. As used in this ARTICLE 11, the term
"Claim" shall include (i) all Liabilities; (ii) all losses, damages (including,
without limitation, consequential damages), judgments, awards, settlements
approved by the Company (such approval shall not be unreasonably withheld or
delayed), costs and expenses (including, without limitation, interest (including
prejudgment interest in any litigated matter), penalties, court costs and
reasonable attorneys' fees and expenses); and (iii) all demands, claims, suits,
actions, costs of investigation, causes of action, proceedings and assessments,
whether or not ultimately determined to be valid.
11.2 BY BUYER. Subject to the terms and conditions of this ARTICLE 11,
Buyer hereby agrees to indemnify, defend and hold harmless the Company, its
Affiliates, its managers, members, officers, employees and controlling persons,
from and against all Claims asserted against, resulting to, imposed upon or
incurred by any such person, directly or indirectly, by reason of or resulting
from (a) the inaccuracy or breach of any representation or warranty of Buyer
contained in or made pursuant to this Agreement (regardless of whether such
breach is deemed "material"); (b) the breach of any covenant of Buyer contained
in this Agreement (regardless of whether such breach is deemed "material"); or
(c) all Claims of or against the Company specifically assumed by Buyer pursuant
hereto or which relate to the Purchased Assets and arise out of any event
occurring after the Closing Date.
11.3 INDEMNIFICATION OF THIRD-PARTY CLAIMS. The obligations and
liabilities of any party to indemnify any other under this ARTICLE 11 with
respect to Claims relating to third parties shall be subject to the following
terms and conditions:
11.3(a) NOTICE AND DEFENSE. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will give
the party from whom indemnification is sought (the "Indemnifying
Party") written notice of any such Claim, and the Indemnifying Party
will undertake the defense thereof by representatives chosen by it.
Failure to give such notice shall not affect the Indemnifying Party's
duty or obligations under this ARTICLE 11, except to the extent the
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Indemnifying Party is prejudiced thereby. So long as the Indemnifying
Party is defending any such Claim actively and in good faith, the
Indemnified Party shall not settle such Claim. The Indemnified Party
shall make available to the Indemnifying Party or its representatives
all records and other materials required by them and in the possession
or under the control of the Indemnified Party, for the use of the
Indemnifying Party and its representatives in defending any such Claim,
and shall in other respects give reasonable cooperation in such
defense.
11.3(b) FAILURE TO DEFEND. If the Indemnifying Party, within a
reasonable time after notice of any such Claim, fails to defend such
Claim actively and in good faith, the Indemnified Party will (upon
further notice) have the right to undertake the defense, compromise or
settlement of such Claim or consent to the entry of a judgment with
respect to such Claim, on behalf of and for the account and risk of the
Indemnifying Party, and the Indemnifying Party shall thereafter have no
right to challenge the Indemnified Party's defense, compromise,
settlement or consent to judgment.
11.3(c) INDEMNIFIED PARTY'S RIGHTS. Anything in this ARTICLE
11 to the contrary notwithstanding, (i) if there is a reasonable
probability that a Claim may materially and adversely affect the
Indemnified Party other than as a result of money damages or other
money payments, the Indemnified Party shall have the right to defend,
compromise or settle such Claim, and (ii) the Indemnifying Party shall
not, without the written consent of the Indemnified Party, settle or
compromise any Claim or consent to the entry of any judgment which does
not include as an unconditional term thereof the giving by the claimant
or the plaintiff to the Indemnified Party of a release from all
Liability in respect of such Claim.
11.4 PAYMENT. The Indemnifying Party shall promptly pay the Indemnified
Party any amount due under this ARTICLE 11, which payment may be accomplished in
whole or in part, at the option of the Indemnified Party, by the Indemnified
Party setting off any amount owed to the Indemnifying Party by the Indemnified
Party. To the extent set-off is made by an Indemnified Party in satisfaction or
partial satisfaction of an indemnity obligation under this ARTICLE 11 that is
disputed by the Indemnifying Party, upon a subsequent determination by final
judgment not subject to appeal that all or a portion of such indemnity
obligation was not owed to the Indemnified Party, the Indemnified Party shall
pay the Indemnifying Party the amount which was set off and not owed together
with interest from the date of set-off until the date of such payment at an
annual rate equal to the average annual rate in effect as of the date of the
set-off, on those three maturities of United States Treasury obligations having
a remaining life, as of such date, closest to the period from the date of the
set-off to the date of such judgment. Upon judgment, determination, settlement
or compromise of any third party Claim, the Indemnifying Party shall pay
promptly on behalf of the Indemnified Party, and/or to the Indemnified Party in
reimbursement of any amount theretofore required to be paid by it, the amount so
determined by judgment, determination, settlement or compromise and all other
Claims of the Indemnified Party with respect thereto, unless in the case of a
judgment an appeal is made from the judgment. If the Indemnifying Party desires
to appeal from an adverse judgment, then the Indemnifying Party shall post and
pay the cost of the security or bond to stay execution of the judgment pending
appeal. Upon the payment in full by the Indemnifying Party of such amounts, the
Indemnifying Party shall succeed to the rights of such Indemnified Party, to the
extent not waived in settlement, against the third party who made such third
party Claim.
11.5 NO WAIVER. The closing of the transactions contemplated by this
Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder, regardless of whether the party seeking
indemnification has knowledge of the breach, violation or failure of condition
constituting the basis of the Claim at or before the closing, and regardless of
whether such breach, violation or failure is deemed to be "material".
11.6. SURVIVAL OF INDEMNIFICATION. The indemnification obligations of
the parties contained in this ARTICLE 11 shall survive the date of this
Agreement and the Closing Date for a period of three (3) years following the
Closing Date, except that the indemnification obligations relating to the
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representations and warranties regarding tax obligations shall survive until one
(1) year after the expiration of the applicable statute of limitations for such
tax obligations.
12. CLOSING
12.1 CLOSING DATE. The closing referred to in this Agreement shall take
place on October 1, 1999 or such other date as is mutually agreed to by the
parties (the "Closing Date").
12.2 PLACE OF CLOSING. The closing shall take place at the offices of
the Company in Newport Beach, California or at such other place as the parties
hereto shall agree upon.
12.3 DOCUMENTS TO BE DELIVERED BY THE COMPANY. On the Closing Date, the
Company shall deliver to Buyer the following documents, in each case duly
executed or otherwise in proper form:
12.3(a) BILLS OF SALE. Bills of sale and such other
instruments of assignment, transfer, conveyance and endorsement as will
be sufficient in the opinion of Buyer and its counsel to transfer,
assign, convey and deliver to Buyer the Purchased Assets as
contemplated hereby.
12.3(b) COMPLIANCE CERTIFICATE. A certificate signed by the
manager of the Company that each of the representations and warranties
made by the Company in this Agreement is true and correct in all
material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made or given on
and as of the Closing Date (except for any changes permitted by the
terms of this Agreement or consented to in writing by Buyer), and that
the Company has performed and complied with all of the Company's
obligations under this Agreement which are to be performed or complied
with on or prior to the Closing Date.
12.3(c) EMPLOYMENT AGREEMENT. The Employment Agreement in
substantially the form attached hereto as EXHIBIT A, duly executed by
A. William Allen III.
12.3(d) ESCROW AGREEMENT. The Escrow Agreement in
substantially the form attached hereto as EXHIBIT B, duly executed by
an authorized representative of Company.
12.3(e) CERTIFIED RESOLUTIONS. A certified copy of the
resolutions of the managers of the Company authorizing and approving
this Agreement and the consummation of the transactions contemplated by
this Agreement.
12.3(f) INCUMBENCY CERTIFICATE. Incumbency certificates
relating to each person executing any document executed and delivered
to Buyer pursuant to the terms hereof.
12.3(g) OTHER DOCUMENTS. All other documents, instruments or
writings required to be delivered to Buyer on or prior to the Closing
Date pursuant to this Agreement and such other certificates of
authority and documents as Buyer may reasonably request.
12.4 DOCUMENTS TO BE DELIVERED BY BUYER. At the Closing, Buyer shall
deliver to the Company the following documents, in each case duly executed or
otherwise in proper form:
12.4(a) CASH PORTION OF ESTIMATED PURCHASE PRICE. A certified
or bank cashier's check (or wire transfer) as required by ARTICLE 1.
12.4(b) ASSUMPTION OF LIABILITIES. Such undertakings and
instruments of assumption as will be reasonably sufficient in the
opinion of the Company and its counsel to evidence the assumption of
Assumed Liabilities as provided for in SECTION 3.2.
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12.4(c) COMPLIANCE CERTIFICATE. A certificate signed by the
chief executive officer of Buyer that the representations and
warranties made by Buyer in this Agreement are true and correct on and
as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of the
Closing Date (except for any changes permitted by the terms of this
Agreement or consented to in writing by the Company), and that Buyer
has performed and complied with all of Buyer's obligations under this
Agreement which are to be performed or complied with on or prior to the
Closing Date.
12.4(d) EMPLOYMENT AGREEMENT. The Employment Agreement
substantially in the form attached hereto as EXHIBIT A, executed by an
authorized representative of the Buyer.
12.4(e) ESCROW AGREEMENT. The Escrow Agreement substantially
in the form attached hereto as EXHIBIT B, duly executed by an
authorized representative of the Buyer and the Escrow Agent.
12.4(f) GUARANTEE OF OBLIGATIONS. The Guarantee of
Obligations, a form of which is attached hereto as EXHIBIT C, executed
by an authorized representative of Outback Steakhouse, Inc., a Delaware
corporation and the sole shareholder of Buyer ("OSI").
12.4(g) CERTIFIED RESOLUTIONS. A certified copy of the
resolutions of the Board of Directors of Buyer authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement and a certified copy of the resolutions
of the Board of Directors of OSI authorizing the execution of the
Guarantee of Obligations.
12.4(h) INCUMBENCY CERTIFICATE. Incumbency certificates
relating to each person executing any document executed and delivered
to the Company by Buyer or OSI pursuant to the terms hereof.
12.4(i) OTHER DOCUMENTS. All other documents, instruments or
writings required to be delivered to the Company on or prior to the
Closing Date pursuant to this Agreement and such other certificates of
authority and documents as the Company may reasonably request.
13. TERMINATION
13.1 RIGHT OF TERMINATION WITHOUT BREACH.
13.1(a) MUTUAL AGREEMENT. This Agreement may be terminated
without further liability of either party at any time prior to the
closing by mutual written agreement of Buyer and the Company.
13.1(b) BY EITHER PARTY. This Agreement may be terminated
without further liability of any party, by either Buyer or the Company
if the Closing Date of the transaction contemplated in SECTION 1.1
shall not have occurred on or before November 30, 1999, provided the
terminating party has not, through breach of a representation, warranty
or covenant, prevented such closing from occurring on or before such
date.
13.2 TERMINATION FOR BREACH.
13.2(a) TERMINATION BY BUYER. This Agreement may be terminated
by Buyer if (i) there has been a material violation or breach by the
Company of any of the agreements, representations or warranties
contained in this Agreement which has not been waived in writing by
Buyer, or (ii) there has been a failure of satisfaction of a condition
to the obligations of Buyer which has not been so waived, or (iii) the
Company shall have attempted to terminate this Agreement under this
ARTICLE 13 or otherwise without grounds to do so, then Buyer may, by
written notice to the Company at any time prior to the closing that
25
<PAGE> 30
such violation, breach, failure or wrongful termination attempt is
continuing, terminate this Agreement with the effect set forth in
SECTION 13.2(C) hereof.
13.2(b) TERMINATION BY THE COMPANY. The Company may terminate
this Agreement if (i) there has been a material violation or breach by
Buyer of any of the agreements, representations or warranties contained
in this Agreement which has not been waived in writing by the Company,
or (ii) there has been a failure of satisfaction of a condition to the
obligations of the Company which has not been so waived, or (iii) Buyer
shall have attempted to terminate this Agreement under this ARTICLE 13
or otherwise without grounds to do so, then the Company may, by written
notice to Buyer at any time prior to the closing that such violation,
breach, failure or wrongful termination attempt is continuing,
terminate this Agreement with the effect set forth in SECTION 13.2.(C)
hereof.
13.2(c) EFFECT OF TERMINATION. Termination of this Agreement
pursuant to this SECTION 13.2 shall not in any way terminate, limit or
restrict the rights and remedies of any party hereto against any other
party which has violated, breached or failed to satisfy any of the
representations, warranties, covenants, agreements, conditions or other
provisions of this Agreement prior to termination hereof. Subject to
the foregoing, the parties' obligations under ARTICLE 11, SECTIONS 7.3
- 7.7 and SECTION 14.5 of this Agreement shall survive termination.
14. MISCELLANEOUS
14.1 DISCLOSURE SCHEDULES. The Disclosure Schedules shall not vary,
change or alter the language of the representations and warranties contained in
this Agreement.
14.2 FURTHER ASSURANCE. From time to time, upon request and without
further consideration, the parties will execute and deliver such documents and
take such other action as may be reasonably requested in order to consummate
more effectively the transactions contemplated hereby, including, but not
limited to, vesting in Buyer good, valid and marketable title to the business
and assets being transferred hereunder.
14.3 DISCLOSURES AND ANNOUNCEMENTS. Both the timing and the content of
all disclosure to third parties and public announcements concerning the
transactions provided for in this Agreement by the Company or Buyer shall be
subject to the approval of the other in all essential respects, except that
Company approval shall not be required as to any statements and other
information which Buyer may submit to the Securities and Exchange Commission,
NASDAQ or the stockholders of Buyer or Buyer's Affiliates, or be required to
make pursuant to any rule or regulation of the Securities and Exchange
Commission or NASDAQ, or otherwise required by law.
14.4 ASSIGNMENT; PARTIES IN INTEREST.
14.4(a) ASSIGNMENT. Except as expressly provided herein, the
rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the
other parties. Notwithstanding the foregoing, Buyer may, without
consent of any other party, cause one or more subsidiaries or
Affiliates of Buyer to carry out all or part of the transactions
contemplated hereby; provided, however, that Buyer shall, nevertheless,
remain liable for all of its obligations, and those of any such
subsidiary, to the Company hereunder.
14.4(b) PARTIES IN INTEREST. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the respective
successors and permitted assigns of the parties hereto. Nothing
contained herein shall be deemed to confer upon any other person any
right or remedy under or by reason of this Agreement.
26
<PAGE> 31
14.5 LAW GOVERNING AGREEMENT. This Agreement may not be modified or
terminated orally, and shall be construed and interpreted according to the
internal laws of the State of Delaware, excluding any choice of law rules that
may direct the application of the laws of another jurisdiction.
14.6 AMENDMENT AND MODIFICATION. Buyer and the Company may amend,
modify and supplement this Agreement in such manner as may be agreed upon by
them in writing.
14.7 NOTICE. All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered; or
(b) sent to the parties at their respective addresses indicated herein by
registered or certified U.S. mail, return receipt requested and postage prepaid,
or by private overnight mail courier service. The respective addresses to be
used for all such notices, demands or requests are as follows:
(a) If to Buyer, to:
OS Prime, Inc.
550 N. Reo Street - Suite 200
Tampa, Florida 33609
Attention: Mike O'Donnell, CEO
Facsimile: 813-281-2114
(with a copy to)
Joseph J. Kadow, Vice President and General Counsel
Outback Steakhouse, Inc.
550 N. Reo Street - Suite 200
Tampa, Florida 33609
Facsimile: 813-281-2114
or to such other person or address as Buyer shall furnish to the Company in
writing.
(b) If to the Company, to:
Fleming Prime Steakhouse I, L.L.C.
455 Newport Center Drive
Newport Beach, California 92660
Attention: A. William Allen III
Facsimile: (949) 759-9545
(with a copy to)
Ronald D. Garber, Esquire
Richman, Lawrence, Mann, Chizever & Phillips
9601 Wilshire Boulevard, Penthouse
Beverly Hills, California 90210
Facsimile: (310) 274-2831
or to such other person or address as the Company shall furnish to Buyer in
writing.
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if sent by overnight courier pursuant to this paragraph,
such communication shall be deemed delivered upon receipt; and if sent by U.S.
mail pursuant to this paragraph, such communication shall be deemed delivered as
of the date of delivery indicated on the receipt issued by the relevant postal
27
<PAGE> 32
service, or, if the addressee fails or refuses to accept delivery, as of the
date of such failure or refusal. Any party to this Agreement may change its
address for the purposes of this Agreement by giving notice thereof in
accordance with this Section. Notices sent by facsimile or other electronic
means shall not constitute notice under this Agreement.
14.8 EXPENSES. Regardless of whether or not the transactions
contemplated hereby are consummated:
14.8(a) BROKERAGE. The Company and Buyer each represent and
warrant to each other that there is no broker involved or in any way
connected with the transfer provided for herein. Buyer agrees to hold
the Company harmless from and against all claims for brokerage
commissions or finder's fees incurred through any act of Buyer in
connection with the execution of this Agreement or the transactions
provided for herein. The Company agrees to hold Buyer harmless from and
against all claims for brokerage commissions or finder's fees incurred
through any act of the Company in connection with the execution of this
Agreement or the transactions provided for herein.
14.8(b) EXPENSES TO BE SHARED EQUALLY BY THE PARTIES. The
parties shall equally share the cost of the following:
(i) TAXES ARISING FROM TRANSACTION. Any taxes
applicable to, imposed upon or arising out of the sale or
transfer of the Purchased Assets to Buyer and the other
transactions contemplated by this Agreement, including but not
limited to any transfer, use, gross receipts or documentary
stamp taxes. Buyer shall pay all retail sales taxes arising
from the transactions contemplated in this Agreement.
(ii) COST OF ESCROW. All fees and costs of the Escrow
Agent pursuant to the Escrow Agreement referred to in SECTION
12.3(d) hereof.
(iii) OTHER EXPENSES. All other costs and expenses of
third parties engaged jointly by the parties hereto in
connection with the consummation of the transactions
contemplated hereby, normally shared by the parties in similar
transactions.
14.8(c) OTHER. Except as otherwise provided herein, each of
the parties shall bear its own expenses and the expenses of its
counsel, accountants, and other agents in connection with the
transactions contemplated hereby.
14.8(d) COSTS OF LITIGATION. The parties agree that the
prevailing party in any action brought with respect to or to enforce
any right or remedy under this Agreement shall be entitled to recover
from the other party or parties all reasonable costs and expenses of
any nature whatsoever incurred by the prevailing party in connection
with such action, including without limitation reasonable attorneys'
fees and prejudgment interest.
14.9 ENTIRE AGREEMENT. This instrument and the agreements referred to
herein embody the entire agreement between the parties hereto with respect to
the transactions contemplated herein, and there have been and are no agreements,
representations or warranties between the parties other than those set forth or
provided for herein.
14.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.11 HEADINGS. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
28
<PAGE> 33
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
ATTEST: "BUYER"
OS PRIME, INC., a Florida corporation
___________________________ By:__________________________________
Joseph J. Kadow, Secretary Robert D. Basham, Co-Chairman
"COMPANY"
FLEMING PRIME STEAKHOUSE I, L.L.C.,
an Arizona limited liability company
By its manager:
STEAKHOUSE CONCEPT, L.L.C., an
Arizona limited liability company
By:__________________________________
A. William Allen III, Manager
29
<PAGE> 34
EXHIBIT A
EMPLOYMENT AGREEMENT OF A. WILLIAM ALLEN III
30
<PAGE> 35
EXHIBIT B
ESCROW AGREEMENT
31
<PAGE> 36
EXHIBIT C
GUARANTEE OF OBLIGATIONS
As an inducement to FLEMING PRIME STEAKHOUSE I, L.L.C.
("Fleming's") to execute that certain Asset Purchase Agreement of even date
herewith by and between Fleming's and OS PRIME, INC. ("OSP"), relating to the
sale of certain Fleming's Prime Steakhouse and Wine Bar restaurants by Fleming's
to OSP, the undersigned hereby agrees to be individually bound by the terms and
conditions of SECTIONS 1.2-1.6 AND 14.8 of the Asset Purchase Agreement,
including any amendments thereto whenever made (hereinafter the "Agreement"),
and unconditionally guarantee to Fleming's and its successors and assigns that
all of OSP's obligations under SECTIONS 1.2-1.6 AND 14.8 of the Agreement will
be punctually paid and performed.
Upon default by OSP and notice from Fleming's, the undersigned
will immediately make each payment and perform each obligation required of OSP
under SECTIONS 1.2-1.6 AND 14.8 of the Agreement.
In the event that it be necessary for Fleming's to enforce any
of its rights under this Guaranty, the undersigned agrees to pay to Fleming's
all costs of collection or enforcement, including reasonable attorneys' fees,
paralegals' fees, legal assistants' fees, costs and expenses, whether incurred
with respect to collection, litigation, bankruptcy proceedings, interpretation,
dispute, negotiation, trial, appeal, enforcement of any judgment based on this
Guaranty, or otherwise, whether or not a suit to collect such amounts or to
enforce such rights is brought or, if brought, is prosecuted to judgment.
IN WITNESS WHEREOF, the undersigned has signed this Guarantee
effective as of the date of the Agreement.
GUARANTOR:
ATTEST: OUTBACK STEAKHOUSE, INC., a
Delaware corporation
By: _______________________________ By: _______________________________
Joseph J. Kadow, Secretary Robert D. Basham, President
32
<PAGE> 1
EXHIBIT 4.33
OPERATING AGREEMENT
FOR
OUTBACK/FLEMING'S, LLC
A DELAWARE LIMITED LIABILITY COMPANY
THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 NOR REGISTERED NOR QUALIFIED UNDER ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE,
TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER
APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN THE OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY, SUCH QUALIFICATION AND REGISTRATION IS NOT
REQUIRED. ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS AGREEMENT IS
FURTHER SUBJECT TO OTHER RESTRICTIONS, TERMS AND CONDITIONS WHICH ARE SET FORTH
HEREIN.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I DEFINITIONS..........................................................................1
(a) "Act"................................................................................1
(b) "Affiliate"..........................................................................1
(c) "Agreement"..........................................................................1
(d) "Annual Business Plan"...............................................................1
(e) "Assignee"...........................................................................1
(f) "Bankruptcy".........................................................................2
(g) "Capital Account"....................................................................2
(h) "Capital Contribution"...............................................................2
(i) "Certificate"........................................................................2
(j) "Code"...............................................................................2
(k) "Committee Member"...................................................................2
(l) "Company.............................................................................2
(m) "Company Minimum Gain"...............................................................2
(n) "Distributable Cash".................................................................2
(o) "Economic Interest"..................................................................2
(p) "Fiscal Year"........................................................................2
(q) "Fleming's"..........................................................................2
(r) "Fleming's" Principals"..............................................................3
(s) "Majority Interest"..................................................................3
(t) "Management Committee"...............................................................3
(u) "Member".............................................................................3
(v) "Member Nonrecourse Debt"............................................................3
(w) "Member Nonrecourse Deductions"......................................................3
(x) "Membership Interest"................................................................3
(y) "Net Profits" and "Net Losses".......................................................3
(z) "Nonrecourse Liability"..............................................................3
(aa) "Outback"............................................................................3
(bb) "Percentage Interest"................................................................3
(cc) "Person".............................................................................4
(dd) "Proprietary Marks"..................................................................4
(ee) "Regulations"........................................................................4
(ff) "Restaurant".........................................................................4
(gg) "System".............................................................................4
(hh) "Tax Matters Partner"................................................................4
ARTICLE II ORGANIZATIONAL MATTERS...............................................................4
2.1 Formation............................................................................4
2.2 Name.................................................................................4
2.3 Term.................................................................................4
2.4 Office and Agent.....................................................................4
2.5 Addresses of the Members and the Management Committee................................4
2.6 Purpose and Business of the Company..................................................5
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE III CAPITAL CONTRIBUTIONS................................................................5
3.1 Nature and Amount of Contributions...................................................5
3.2 Time for Making Contributions........................................................5
3.3 Interest on Capital Contributions....................................................5
3.4 No Additional Capital Contributions..................................................5
3.5 Liability for Certain Obligations....................................................5
3.6 Documentation........................................................................6
3.7 Capital Accounts.....................................................................6
3.8 Failure to Make Contributions........................................................6
ARTICLE IV MEMBERS..............................................................................9
4.1 Limited Liability....................................................................9
4.2 Admission of Additional Members......................................................9
4.3 No Withdrawals or Resignations.......................................................9
4.4 Termination of Membership Interest...................................................9
4.5 Transactions With The Company.......................................................10
4.6 Voting Rights.......................................................................10
4.7 Meeting of Members..................................................................10
ARTICLE V MANAGEMENT AND CONTROL OF THE COMPANY...............................................10
5.1 Management of the Company by Management Committee...................................10
5.2 Appointment of Management Committee.................................................11
A. Number, Appointment and Qualifications.......................................11
B. Term of Service..............................................................11
C. Composition of Committee.....................................................11
D. Resignation..................................................................11
E. Removal......................................................................11
F. Vacancies....................................................................12
5.3 Powers of Management Committee......................................................12
A. Powers of Management Committee...............................................12
B. Annual Business Plan.........................................................12
C. Maximization of Value........................................................12
D. Limitations on Power of Management Committee.................................12
5.4 Liability of Management Committee...................................................13
5.5 Devotion of Time....................................................................13
5.6 Transactions Between the Company and a Member or Committee Member...................13
5.7 Officers............................................................................14
5.8 President...........................................................................14
ARTICLE VI ALLOCATIONS OF NET PROFITS AND NET LOSSES AND
DISTRIBUTIONS.......................................................................14
6.1 Allocations of Net Profit and Net Loss..............................................14
A. Net Loss.....................................................................14
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
<S> <C> <C>
B. Net Profit...................................................................15
6.2 Special Allocations.................................................................15
A. Minimum Gain Chargeback......................................................15
B. Chargeback of Minimum Gain Attributable to Member Nonrecourse Debt...........15
C. Nonrecourse Deductions.......................................................15
D. Member Nonrecourse Deductions................................................15
E. Qualified Income Offset......................................................15
6.3 Code Section 704(c) Allocations.....................................................16
6.4 Allocation of Net Profits and Losses and Distributions in Respect of a
Transferred Interest..............................................................16
6.5 Distributions of Distributable Cash by the Company..................................16
6.6 Form of Distribution................................................................17
6.7 Restriction on Distribution.........................................................17
6.8 Return of Distributions.............................................................17
6.9 Obligations of Members to Report Allocations........................................17
ARTICLE VII TRANSFER AND ASSIGNMENT OF INTERESTS................................................17
7.1 Transfer and Assignment of Interests................................................17
7.2 Further Restrictions on the Fleming's Principals....................................18
7.3 Further Restrictions on Transfer of Interests.......................................18
7.4 Permitted Transfers.................................................................18
7.5 Effective Date of Permitted Transfers...............................................19
7.6 Substitution of Members.............................................................19
7.7 Rights of Legal Representatives.....................................................19
7.8 No Effect to Transfers in Violation of Agreement....................................19
7.9 Right of First Refusal..............................................................20
7.10 Transfer Permitted After Failure to Elect...........................................20
7.11 Purchase and Sale Options...........................................................21
A. Options.........................................................................21
B. Exercise of Options.............................................................21
ARTICLE VIII CESSATION OF DEVELOPMENT............................................................22
8.1 Cessation of Development............................................................22
8.2 Consequences of Cessation...........................................................22
ARTICLE IX ACCOUNTING, RECORDS, REPORTING BY MEMBERS...........................................22
9.1 Books and Records...................................................................22
9.2 Delivery to Members and Inspection..................................................23
9.3 Annual Statements...................................................................23
9.4 Financial and Other Information.....................................................24
9.5 Filings.............................................................................24
9.6 Bank Accounts.......................................................................24
9.7 Accounting Decisions and Reliance on Others.........................................24
</TABLE>
iii
<PAGE> 5
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
<S> <C> <C>
9.8 Tax Matters for the Company Handled by Management Committee
and Tax Matters Partner.............................................................24
ARTICLE X DISSOLUTION AND WINDING UP..........................................................24
10.1 Dissolution.........................................................................24
10.2 Winding Up..........................................................................25
10.3 Distributions in Kind...............................................................25
10.4 Order of Payment Upon Dissolution...................................................25
10.5 Limitations on Payments Made in Dissolution.........................................25
ARTICLE XI INDEMNIFICATION AND INSURANCE.......................................................26
11.1 Indemnification of Agents...........................................................26
11.2 Insurance...........................................................................26
ARTICLE XII CONFIDENTIALITY AND NON-COMPETITION.................................................26
12.1 Noncompetition......................................................................26
12.2 Confidentiality.....................................................................27
A. Definition......................................................................27
B. No Disclosure, Use or Circumvention.............................................27
C. Maintenance of Confidentiality..................................................27
12.3 Non Solicitation....................................................................27
12.4 Reasonableness of Restrictions; Reformation; Enforcement............................28
12.5 Specific Performance................................................................28
ARTICLE XIII REPRESENTATIONS AND WARRANTIES......................................................28
13.1 Status..............................................................................29
13.2 Due Authorization...................................................................29
13.3 Other Agreements and Violations of Law..............................................29
13.4 No Litigation.......................................................................29
ARTICLE XIV MISCELLANEOUS..............................................................................29
14.1 Complete Agreement..................................................................29
14.2 Consultation with Attorney..........................................................29
14.3 Tax Consequences....................................................................29
14.4 No Assurance of Tax Benefits........................................................30
14.5 Binding Effect......................................................................30
14.6 Parties in Interest.................................................................30
14.7 Pronouns; Statutory References......................................................30
14.8 Headings............................................................................30
14.9 Interpretation......................................................................30
14.10 References to this Agreement........................................................30
14.11 Jurisdiction........................................................................30
14.12 Exhibits............................................................................30
14.13 Additional Documents and Acts.......................................................30
</TABLE>
iv
<PAGE> 6
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
<S> <C> <C>
14.14 Notices.............................................................................31
14.15 Amendments..........................................................................31
14.16 Reliance on Authority of Person Signing Agreement...................................31
14.17 Company Property....................................................................31
14.18 Multiple Counterparts...............................................................31
14.19 Attorney Fees.......................................................................31
14.20 Time is of the Essence..............................................................31
14.21 Remedies Cumulative.................................................................31
14.22 Severability........................................................................31
14.23 Partition...........................................................................31
14.24 Waiver..............................................................................31
</TABLE>
v
<PAGE> 7
OPERATING AGREEMENT
FOR
OUTBACK/FLEMING'S, LLC
A DELAWARE LIMITED LIABILITY COMPANY
This Operating Agreement is made as of October 1, 1999, by and among
the parties listed on the signature pages hereof, with reference to the
following facts:
A September 10, 1999, a Certificate of Formation for
OUTBACK/FLEMING'S, LLC, (the "Company"), a limited liability company organized
under the laws of the State of Delaware, was filed with the Delaware Secretary
of State.
B The parties desire to adopt and approve a limited liability
company operating agreement for the Company.
NOW, THEREFORE, the parties by this Agreement set forth the operating
agreement for the Company under the laws of the State of Delaware upon the terms
and subject to the conditions of this Agreement.
ARTICLE I DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings set forth below (all terms used in this Agreement that are not defined
in this ARTICLE I shall have the meanings set forth elsewhere in this
Agreement):
(a) "Act" shall mean the Delaware Limited Liability
Company Act, as the same may be amended from time to time.
(b) "Affiliate" of a Person shall mean any Person,
directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with such Person,
as applicable. The term "control," as used in the immediately preceding
sentence, shall mean with respect to a corporation or limited liability
company the right to exercise, directly or indirectly, more than fifty
percent (50%) of the voting rights attributable to the controlled
corporation or limited liability company, and, with respect to any
individual, partnership, trust, other entity or association, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of the controlled entity.
(c) "Agreement" shall mean this Operating Agreement, as
originally executed and as amended from time to time.
(d) "Annual Business Plan" shall mean the detailed
business plan for the Company prepared by the President of the Company
and approved by the Management Committee, no less often than annually,
which plan shall contain an operating budget, a capital budget, cash
flow projections, sources of cash analysis (including analysis of any
intended borrowings or financings), an operating plan (including plans
related to the strategic business plan), and detailed quantifiable
goals for the plan year.
<PAGE> 8
(e) "Assignee" shall mean the owner of an Economic
Interest who has not been admitted as a substitute Member in accordance
with ARTICLE VII.
(f) "Bankruptcy" shall mean: (a) the filing of an
application, or consent to, the appointment of a trustee, receiver, or
custodian of other assets; (b) the filing of a voluntary petition in
bankruptcy; (c) the entry of an order for relief in proceedings under
the United States Bankruptcy Code, as amended or superseded from time
to time; (d) the making of a general assignment for the benefit of
creditors; (e) the entry of an order, judgment, or decree by any court
of competent jurisdiction appointing a trustee, receiver, or custodian
of assets unless the proceedings and the person appointed are dismissed
within ninety (90) days; or (f) the failure to pay debts as the debts
become due within the meaning of Section 303(h)(1) of the United States
Bankruptcy Code, as determined by the Bankruptcy Court, or the
admission in writing of inability to pay its debts as they become due.
(g) "Capital Account" shall mean with respect to any
Member the capital account that the Company establishes and maintains
for such Member pursuant to SECTION 3.7.
(h) "Capital Contribution" shall mean the total amount of
cash and fair market value of property contributed to the capital of
the Company by the Members.
(i) "Certificate" shall mean the Certificate of Formation
for the Company originally filed with the Delaware Secretary of State
and as amended from time to time.
(j) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, the provisions of succeeding law, and to
the extent applicable, the Regulations.
(k) "Committee Member" shall mean the individuals named
to serve on the Management Committee.
(l) "Company" shall mean OUTBACK/FLEMING'S, LLC, a
Delaware limited liability company.
(m) "Company Minimum Gain" shall have the meaning
ascribed to the term "Partnership Minimum Gain" in the Regulations
Section 1.704-2(d).
(n) "Distributable Cash" shall mean the amount of cash
which the Management Committee deems available for distribution to the
Members, taking into account all debts, liabilities, and obligations of
the Company then due, and working capital and other amounts which are
described in the Annual Business Plan, and necessary for the Company's
business or to place into reserves for customary and usual claims with
respect to such business.
(o) "Economic Interest" shall mean the right to receive
distributions of the Company's assets and allocations of income, gain,
loss, deduction, credit and similar items from the Company pursuant to
this Agreement and the Act, but shall not include any other rights of a
Member, including, without limitation, the right to vote or participate
in the management of the Company.
(p) "Fiscal Year" shall mean the Company's fiscal year,
which shall be the calendar year.
(q) "Fleming's" shall mean FPSH Limited Partnership, an
Arizona limited partnership ("FPSH LP") and AWA III Steakhouses, Inc.,
a California corporation ("AWA INC"), individually and collectively.
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(r) "Fleming's Principals" shall mean Paul M. Fleming, A.
William Allen III and Rick Scott, jointly and severally.
(s) "Majority Interest" shall mean those Members who hold
at least fifty one percent (51%) of the Percentage Interests entitled
to vote.
(t) "Management Committee" shall mean collectively, those
individuals named as Committee Members of the Company pursuant to
ARTICLE V of this Agreement.
(u) "Member" shall mean each Person who (a) is an initial
signatory to this Agreement, has been admitted to the Company as a
Member in accordance with the Certificate and this Agreement or is an
Assignee who has become a Member in accordance with ARTICLE VII, and
(b) has not ceased to be a Member in accordance with ARTICLE VII, or
for any other reason.
(v) "Member Nonrecourse Debt" shall have the meaning
ascribed to the term "Partner Nonrecourse Debt" in Regulations Section
1.704-2(b)(4).
(w) "Member Nonrecourse Deductions" shall mean items of
Company loss, deduction, or Code Section 705(a)(2)(B) expenditures that
are attributable to Member Nonrecourse Debt.
(x) "Membership Interest" shall mean a Member's entire
interest in the Company including the Member's Economic Interest, the
right to vote on or participate in the management, and the right to
receive information concerning the business and affairs, of the
Company.
(y) "Net Profits" and "Net Losses" shall mean the income,
gain, loss and deductions of the Company in the aggregate or separately
stated, as appropriate, determined in accordance with the method of
accounting at the close of each Fiscal Year on the Company's
information tax return filed for federal income tax purposes.
(z) "Nonrecourse Liability" shall have the meaning set
forth in Regulations Section 1.752-1(a)(2).
(aa) "Outback" shall mean OS Prime, Inc., a Florida
corporation, and a wholly-owned subsidiary of Outback Steakhouse, Inc.
("OSI").
(bb) "Percentage Interest" shall mean the percentage ownership
interest of a Member in the Company, as such percentage may be adjusted
from time to time pursuant to the terms of this Agreement. Each
Member's Percentage Interest shall be equal to the percentage that the
Capital Contribution the Member is obligated to contribute bears to the
total Capital Contributions of all Members. For purposes of determining
Percentage Interests, the System shall have an agreed value of
$13,000,000 and the initial Percentage Interests of the Members shall
be:
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<PAGE> 10
MEMBER PERCENTAGE
INTEREST
Outback 50%
FPSH LP 37.5%
AWA INC 12.5%
(cc) "Person" shall mean an individual, partnership,
limited partnership, limited liability company, corporation, trust,
estate, association or any other entity.
(dd) "Proprietary Marks" shall mean any and all trade
names, service marks and trademarks used in connection with the System.
(ee) "Regulations" shall, unless the context clearly
indicates otherwise, mean the regulations in force as final or
temporary that have been issued by the U.S. Department of Treasury
pursuant to its authority under the Code, and any successor
regulations.
(ff) "Restaurant(s)" shall mean those certain upscale
steakhouse restaurants developed, owned and/or operated by the Company
utilizing the Fleming's Prime Steakhouse and Wine Bar concept and
operating system.
(gg) "System" shall mean the Fleming's Prime Steakhouse
and Wine Bar concept and operating system and all elements thereof
including, without limitation, recipes, operating technologies and
Proprietary Marks.
(hh) "Tax Matters Partner" (as defined in Code Section
6231) shall be Outback or its successor as designated pursuant to
SECTION 9.8.
ARTICLE II ORGANIZATIONAL MATTERS
2.1 FORMATION. The Members have formed a Delaware limited
liability company under the laws of the State of Delaware by filing the
Certificate with the Delaware Secretary of State and entering into this
Agreement, which Agreement shall be deemed effective as of the date the
Certificate was so filed. The rights and liabilities of the Members shall be
determined pursuant to the Act and this Agreement. To the extent that the rights
or obligations of any Member are different by reason of any provision of this
Agreement than they would be in the absence of such provision, this Agreement
shall, to the extent permitted by the Act, control.
2.2 NAME. The name of the Company shall be "OUTBACK/FLEMING'S,
LLC". The business of the Company may be conducted under that name or, upon
compliance with applicable laws, any other name that the Management Committee
deems appropriate or advisable. The Management Committee shall file any
fictitious name certificates and similar filings, and any amendments thereto,
that the Management Committee considers appropriate or advisable.
2.3 TERM. The term of this Agreement commenced on the filing of
the Certificate and shall continue until terminated as hereinafter provided.
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<PAGE> 11
2.4 OFFICE AND AGENT. The Company shall continuously maintain a
registered office and agent in the State of Delaware. The registered office and
agent shall be as stated in the Certificate or as otherwise determined by the
Management Committee. The principal office of the Company shall be 455 Newport
Center Drive, Newport Beach, California 92660, or as the Management Committee
may determine. The Company may also have such offices, anywhere within and
without the State of Delaware, as the Management Committee may determine from
time to time, or the business of the Company may require.
2.5 ADDRESSES OF THE MEMBERS AND THE MANAGEMENT COMMITTEE. The
respective addresses of the Members and the Committee Members are set forth on
EXHIBIT A. A Member or Committee Member may change its address upon notice
thereof to the Management Committee.
2.6 PURPOSE AND BUSINESS OF THE COMPANY. The purpose of the
Company is to engage in any lawful activity for which a limited liability
company may be organized under the Act. Notwithstanding the foregoing, without
the consent of a Majority Interest, the Company shall not engage in any business
other than the following:
A. The establishment, ownership, operation and franchising of
upscale steakhouse restaurants utilizing the System; and
B. Such other activities directly related to and in
furtherance of the foregoing business as may be necessary, advisable, or
appropriate as determined by the Management Committee.
C. This Agreement shall not be deemed or construed to create a
relationship between the Members with respect to any activities whatsoever
except for those activities required for the accomplishment of the Company's
purpose as specified in this SECTION 2.6. The Members acknowledge and agree that
upon contribution of the System and Proprietary Marks by Fleming's pursuant to
SECTION 3.1 hereof, the Company shall be the sole and exclusive owner of the
System and the Proprietary Marks and the Members shall have no right, title, or
interest in or to the System or the Proprietary Marks, except as specifically
provided in this Agreement.
ARTICLE III. CAPITAL CONTRIBUTIONS
3.1 NATURE AND AMOUNT OF CONTRIBUTIONS. The amount and nature of
the contributions of the Members are as follows:
Outback $13,000,000 cash
Fleming's All and exclusive right, title and interest
in the System (subject only to those certain
non-exclusive, transferable licenses granted
to Fleming Prime Steakhouse I, L.L.C. and
Fleming Prime Steakhouse II, L.L.C.), with a
deemed contribution value of $13,000,000.
3.2 TIME FOR MAKING CONTRIBUTIONS. The contribution of Fleming's
shall be made upon execution of this Agreement. The contribution of money by
Outback shall be made at such time(s) as the President of the Company may
request, consistent with the Annual Business Plan.
3.3 INTEREST ON CAPITAL CONTRIBUTIONS. No Member shall receive, or
be entitled to receive, interest on its contributions to the capital of the
Company. Except as otherwise provided herein, no Member shall have the right to
demand or to receive the return of all or any part of its Capital Account or of
its contributions to the capital of the Company.
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<PAGE> 12
3.4 NO ADDITIONAL CAPITAL CONTRIBUTIONS. In no event shall any
Member be obligated to make any additional capital contributions, except as
otherwise expressly provided herein.
3.5 LIABILITY FOR CERTAIN OBLIGATIONS. Fleming's Principals and
Outback covenant and agree that as to any guaranty of any debt, liability, or
obligation of the Company, including, without limitation, material long-term
obligations, such as liability as lessee under leases for Restaurant premises
and liability on loans (collectively "Obligations"), Fleming's Principals and
Outback's parent company, Outback Steakhouse, Inc., a Delaware corporation
("OSI"), shall guarantee such Obligations if required by the third party
creditor; provided however, Fleming's Principals and OSI shall each be
proportionately liable to any third party creditor for only up to fifty percent
(50%) of the outstanding balance under such Obligations and shall not be jointly
and severally liable therefor.
3.6 DOCUMENTATION. Fleming's Principals and Outback covenant and
agree that all documentation evidencing any guaranties of the Company's
material, long term obligations, including, without limitation, a Restaurant
premises lease, any promissory notes, and any lease for furniture, fixture and
equipment, shall limit the liability of each of Fleming's Principals and OSI to
proportionately fifty percent (50%) of any amounts outstanding under such
obligations and shall specifically state that Fleming's Principals and OSI shall
not be individually liable for the entire amount thereof, nor jointly and
severally liable therefor. This provision may not be waived without the
unanimous consent of all Members.
3.7 CAPITAL ACCOUNTS. The Company shall establish and maintain an
individual Capital Account for each Member in accordance with Regulations
Section 1.704-1(b)(2)(iv). If a Member transfers all or a part of its Membership
Interest in accordance with this Agreement, such Member's Capital Account
attributable to the transferred Membership Interest shall carry over to the new
owner of such Membership Interest pursuant to Regulations Section
1.704-1(b)(2)(iv)(1).
3.8 FAILURE TO MAKE CONTRIBUTIONS. If a Member does not timely
contribute capital when required, that Member shall be in default under this
Agreement. In such event, a non-defaulting Member shall send the defaulting
Member written notice of such default, giving such Member fourteen (14) days
from the date such notice is given to contribute the entire amount of its
required Capital Contribution. If the defaulting Member does not contribute its
required capital to the Company within said fourteen (14)-day period, those
non-defaulting Members who hold a majority of the Percentage Interests held by
all non-defaulting Members may elect any one or more of the following remedies:
A. One or more non-defaulting Members may advance funds
to the Company to cover those amounts that the defaulting Member fails to
contribute. Amounts that a non-defaulting Member so advances on behalf of the
defaulting Member shall become a loan due and owing from the defaulting Member
to such non-defaulting Member and bear interest at the rate of ten percent (10%)
per annum, payable monthly. All cash distributions otherwise distributable to
the defaulting Member under this Agreement shall instead be paid to the
non-defaulting Members making such advances until such advances and interest
thereon are paid in full. In any event, any such advances shall be evidenced by
a promissory note in a form reasonably acceptable to the non-defaulting Members
and be due and payable by the defaulting Member one (1) year from the date that
such advance was made. Any amounts repaid shall first be applied to costs of
collection, then to interest and thereafter to principal. Effective upon a
Member becoming a defaulting Member, each Member grants to the non-defaulting
Members who advance funds under this SECTION 3.8A a security interest in its
Membership Interest to secure its obligation to repay such advances and agrees
to execute and deliver a promissory note as described herein together with a
security agreement in a form reasonably acceptable to the non-defaulting Members
and such UCC-1 financing statements and assignments of certificates of
membership (or other documents of transfer) as such non-defaulting Members may
reasonably request.
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<PAGE> 13
B. One or more non-defaulting Members may contribute
funds to the capital of the Company to cover those amounts that the defaulting
Member fails to contribute. In such event, the Percentage Interests of all
Members shall be adjusted proportionately to reflect the cumulative total
Capital Contributions each Member has contributed or, with respect to a
non-defaulting Member, which such Member has agreed to contribute.
C. The non-defaulting Members who hold a majority of the
Percentage Interests held by all non-defaulting Members may dissolve the
Company, in which event the Company shall be wound-up, liquidated and terminated
pursuant to ARTICLE X.
D. The defaulting Member shall lose its voting and
approval rights under the Act, the Certificate and this Agreement.
E. The defaulting Member shall lose its ability to
participate in the management and operations of the Company, including, but not
limited to, the right to appoint Committee Members.
F. The Company or the non-defaulting Members may
purchase the defaulting Member's entire Membership Interest for an amount equal
to eighty percent (80%) of the Fair Market Value of the Membership Interest.
(i) DETERMINATION OF FAIR MARKET VALUE. For the
purposes of this SECTION 3.8F, the "Fair Market Value" of the Membership
Interest at issue shall be determined in the following manner:
(a) The defaulting Member and the
non-defaulting Members shall agree upon the Fair Market Value of the defaulting
Member's Membership Interest within ten (10) days following the date of the
event of default. If there is no agreement on the Fair Market Value, the
defaulting Member and the non-defaulting Members shall agree upon a mutually
acceptable appraiser within fifteen (15) days following the date of the event of
default, or, in the event such persons fail to so agree, two (2) appraisers
shall be appointed within twenty (20) days following the date of the event of
default, one by the defaulting Member, and one by the non-defaulting Members. If
the defaulting Member, on the one hand, or the non-defaulting Members, on the
other hand, fail to appoint an appraiser within the twenty (20) day period
specified herein, the sole appraiser appointed within such twenty (20) day
period shall be the sole appraiser for the purposes of determining Fair Market
Value of the defaulting Member's Membership Interest to be purchased pursuant to
this SECTION 3.8F. The defaulting Member and the non-defaulting Members shall
promptly provide notice of the name of the appraiser so appointed by such party
to the other. A third appraiser, if the initial two appraisers are appointed,
shall be appointed by the mutual agreement of the first two appraisers so
appointed, or, if such first two appraisers fail to agree upon a third appraiser
within thirty (30) days following the date of the event of default, either the
defaulting Member or the non-defaulting Members may demand the appointment of an
appraiser be made by the then director of the Regional Office of the American
Arbitration Association located nearest to the Company's principal office, in
which event the appraiser appointed thereby shall be the third appraiser. Each
of the appraisers shall submit to the defaulting Member and the non-defaulting
Members, within thirty (30) days after the final appraiser has been appointed
("Appraisal Period"), a written appraisal (the "Appraisal") of the Fair Market
Value of the defaulting Member's Membership Interest.
(b) In connection with any appraisal
conducted pursuant to this Agreement, the parties hereto agree that any
appraiser appointed hereunder shall be given full access during normal business
hours to all information required and relevant to a valuation of the defaulting
Member's Membership Interest.
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<PAGE> 14
(c) If three appraisers are appointed, the
Fair Market Value of the defaulting Member's Interest in question shall be equal
to the numerical average of three appraised determinations; provided, however,
that if the difference between any two appraisals is not more than ten percent
(10%) of the lower of the two, and the third appraisal differs by more than
twenty-five percent (25%) of the lower of the other two appraisals, the
numerical average of such two appraisals shall be determinative.
(d) Any appraiser, to be qualified to
conduct an appraisal hereunder, shall be an independent appraiser (i.e., not
affiliated with Outback, Fleming's or the Fleming's Principals), an M.A.I.
appraiser or its equivalent, and shall be reasonably competent as an expert to
appraise the value of the defaulting Member's Percentage Interest. If any
appraiser initially appointed under this Agreement shall, for any reason, be
unable to serve, a successor appraiser shall be promptly appointed in accordance
with the procedures pursuant to which the
predecessor appraiser was appointed.
Notwithstanding the foregoing, if the determination of the
Fair Market Value of the defaulting Member's Percentage Interest by appraisal is
not completed and all appraisal reports delivered as provided herein within the
Appraisal Period, then all closing, payment, and similar dates subsequent
thereto shall be automatically extended one (1) day for each day delivery of the
appraisal reports is delayed beyond the end of the Appraisal Period.
(e) The cost of the appraiser appointed by
each party shall be borne by each such party. The cost of the third appraiser,
if any, or the sole appraiser, in the event the defaulting Member and the
non-defaulting Members mutually agree upon a single appraiser, shall be borne
equally by the defaulting Member and the
non-defaulting Member.
(ii) NOTICE OF INTENT TO PURCHASE. Within thirty
(30) days after the determination of the purchase price of the defaulting
Member's Membership Interest in accordance with SECTION 3.8F(I), each
non-defaulting Member shall notify the defaulting Member in writing of its
desire to purchase a portion of the defaulting Member's Membership Interest. The
failure of any non-defaulting Member to submit a notice within the applicable
period shall constitute an election on the part of the Member not to purchase
any of the defaulting Member's Membership Interest. Each non-defaulting Member
so electing to purchase shall be entitled to purchase a portion of the
defaulting Member's Membership Interest in the same proportion that the
Membership Interest of the non-defaulting Member bears to the aggregate of the
Membership Interests of all of the non-defaulting Members electing to purchase
the defaulting Member's Interest.
(iii) ELECTION TO PURCHASE LESS THAN ALL OF THE
DEFAULTING MEMBER'S MEMBERSHIP INTEREST. If any non-defaulting Member elects to
purchase none or less than all of its pro rata share of the defaulting Member's
Membership Interest, then the non-defaulting Members may elect to purchase more
than their pro rata share. If the non-defaulting Members fail to purchase the
entire Membership Interest of the defaulting Member, the Company may purchase
any remaining share of the defaulting Member's Membership Interest. If the
non-defaulting Members and the Company do not elect to purchase all of the
defaulting Member's Membership Interest, such Membership Interest not
purchased shall be that of an Economic Interest only.
(iv) PAYMENT OF PURCHASE PRICE. The purchase price
shall be paid by the Company or the non-defaulting Members, as the case may be,
by either of the following methods, each of which may be selected separately
by the Company or the non-defaulting Members:
(a) The Company or the non-defaulting
Members shall at the closing pay in cash the total purchase price for the
defaulting Member's Membership Interest; or
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<PAGE> 15
(b) The Company or the non-defaulting
Members shall pay at the closing one-fifth (1/5) of the purchase price and the
balance of the purchase price shall be paid in four equal annual principal
installments, plus accrued interest, and be payable each year on the anniversary
date of the closing. The unpaid principal balance shall accrue interest at the
current applicable federal rate as provided in the Code for the month in which
the initial payment is made, but the Company and the non-defaulting Members
shall have the right to prepay in full or in part at any time without penalty.
The obligation of each purchasing non-defaulting Member, and the Company, as
applicable, to pay its portion of the balance due shall be evidenced by a
separate promissory note executed by the respective purchasing non-defaulting
Member or the Company, as applicable. Each such promissory note shall be in an
original principal amount equal to the portion owed by the respective purchasing
non-defaulting Member or the Company, as applicable. The promissory note
executed by each purchasing non-defaulting Member shall be secured by a pledge
of that portion of the defaulting Member's Membership Interest purchased by such
non-defaulting Member.
(v) CLOSING OF PURCHASE OF DEFAULTING MEMBER'S
MEMBERSHIP INTEREST. The closing for the sale of a defaulting Member's Interest
pursuant to this SECTION 3.8 shall be held at 10:00 a.m. at the principal office
of Company no later than sixty (60) days after the determination of the purchase
price, except that if the closing date falls on a Saturday, Sunday, or legal
holiday, then the closing shall be held on the next succeeding business day. At
the closing, the defaulting Member or such defaulting Member's legal
representative shall deliver to the Company or the non-defaulting Members an
instrument of transfer (containing warranties of title and no encumbrances)
conveying the defaulting Member's Membership Interest. The defaulting Member or
such defaulting Member's legal representative, the Company and the
non-defaulting Members shall do all things and execute and deliver all papers as
may be necessary fully to consummate such sale and purchase in accordance with
the terms and provisions of this Agreement.
(vi) PURCHASE TERMS VARIED BY AGREEMENT. Nothing
contained herein is intended to prohibit Members from agreeing upon other terms
and conditions for the purchase by the Company or any Member of the Membership
Interest of any Member in the Company.
Each Member acknowledges and agrees that (i) a default by any Member in
making a required Capital Contribution will result in the Company and the
non-defaulting Members incurring certain costs and other damages in an amount
that would be extremely difficult or impractical to ascertain and (ii) the
remedies described in this SECTION 3.8 bear a reasonable relationship to the
damages which the Members estimate may be suffered by the Company and the
non-defaulting Members by reason of the failure of a defaulting Member to make
any required Capital Contribution and the election of any or all of the above
described remedies is not unreasonable under the circumstances existing as of
the date hereof.
The election of the non-defaulting Members to pursue any remedy
provided in this SECTION 3.8 shall not be a waiver or limitation of the right to
pursue an additional or different remedy available hereunder or at law or equity
with respect to any such default.
ARTICLE IV MEMBERS
4.1 LIMITED LIABILITY. Except as expressly set forth in this
Agreement or required by law, no Member shall be personally liable for any debt,
obligation, or liability of the Company, whether that liability or obligation
arises in contract, tort, or otherwise.
4.2 ADMISSION OF ADDITIONAL MEMBERS. The Management Committee,
with the approval of a Majority Interest, may admit to the Company additional
Members. Any additional Members shall obtain Membership Interests and will
participate in the management, Net Profits, Net Losses, and distributions of the
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<PAGE> 16
Company on such terms as are determined by the Management Committee and approved
by a Majority Interest. Notwithstanding the foregoing, Assignees may only be
admitted as substitute Members in accordance with ARTICLE VII.
4.3 NO WITHDRAWALS OR RESIGNATIONS. No Member may withdraw or
resign from the Company. If a Member wrongfully withdraws or resigns as a
Member, that Member shall have no right to receive any distribution or any
payment for the fair value of its Membership Interest other than such
distributions or payments as are made to all Members pursuant to this Agreement.
4.4 TERMINATION OF MEMBERSHIP INTEREST. Upon the transfer of a
Member's Membership Interest in violation of ARTICLE VII, the Membership
Interest of such Member shall be terminated and thereafter that Member shall be
an Assignee only unless such Membership Interest shall be purchased by the
Company and/or remaining Members pursuant to the terms of SECTION 7.8. Each
Member acknowledges and agrees that such termination or purchase of a Membership
Interest upon the occurrence of any of the foregoing events is not unreasonable
under the circumstances existing as of the date hereof.
4.5 TRANSACTIONS WITH THE COMPANY. Subject to any limitations set
forth in this Agreement and with the prior approval of the Management Committee,
a Member may lend money to and transact other business with the Company. A
Member also may enter into franchise agreements (and any modifications or
renewals thereof) with the Company. Subject to other applicable law, any Member
entering into such transaction(s) with the Company has the same rights and
obligations with respect thereto as a Person who is not a Member.
4.6 VOTING RIGHTS. Except as expressly provided in this Agreement
or the Certificate, Members shall have no voting, approval or consent rights.
Except where this Agreement specifically requires a greater percentage
affirmative vote, in all matters in which a vote, approval or consent of the
Members is required, a vote, consent or approval of a Majority Interest (or, in
instances in which there are defaulting Members, non-defaulting Members who hold
a majority of the Percentage Interests held by all non-defaulting Members) shall
be sufficient to authorize or approve such act. All votes, approvals or consents
of the Members may be given or withheld, conditioned or delayed as the Members
may determine in their sole and absolute discretion.
4.7 MEETINGS OF MEMBERS. Meetings of Members may be held at such
date, time and place as the Member calling the meeting may reasonably fix from
time to time. No annual or regular meetings of Members are required. Meetings of
the Members may be called by any Member holding more than ten percent (10%) of
the Percentage Interests for the purpose of addressing any matters on which the
Members may vote. Written notice of a meeting of Members shall be sent or
otherwise given to each Member not less than seven (7) nor more than sixty (60)
days before the date of the meeting. The notice shall specify the place, date
and hour of the meeting and the general nature of the business to be transacted.
The actions taken at any meeting of Members, however called
and noticed, and wherever held, have the same validity as if taken at a meeting
duly held after regular call and notice, if a quorum is present either in person
or by proxy, and if, either before or after the meeting, each of the Members
entitled to vote, who was not present in person or by proxy, signs a written
waiver of notice or consents to the holding of the meeting or approves the
minutes of the meeting. All such waivers, consents or approvals shall be filed
with the Company records or made a part of the minutes of the meeting.
Any action that may be taken at a meeting of Members may be
taken without a meeting, if a consent in writing setting forth the action so
taken, is signed and delivered to the Company within sixty (60) days of the
record date for that action by Members having not less than the minimum number
of votes that would be necessary to authorize or take that action at a meeting
at which all Members entitled to vote on that action at a meeting were present
and voted. All such consents shall be filed with the Management Committee or the
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<PAGE> 17
secretary, if any, of the Company and shall be maintained in the Company
records. Any Member giving a written consent, or the Member's proxy holders, may
revoke the consent by a writing received by the Management Committee or
secretary, if any, of the Company before written consents of the number of votes
required to authorize the proposed action have been filed.
Unless the consents of all Members entitled to vote have been
solicited in writing, (i) notice of any Member approval of an amendment to the
Certificate or this Agreement, a dissolution of the Company, or a merger of the
Company, without a meeting by less than unanimous written consent, shall be
given at least ten (10) days before the consummation of the action authorized by
such approval, and (ii) prompt notice shall be given of the taking of any other
action approved by Members without a meeting by less than unanimous written
consent, to those Members entitled to vote who have not consented in writing.
ARTICLE V .MANAGEMENT AND CONTROL OF THE COMPANY
5.1 MANAGEMENT OF THE COMPANY BY MANAGEMENT COMMITTEE. The
business, property and affairs of the Company shall be managed exclusively by a
Management Committee consisting of five (5) individuals appointed by the Members
in accordance with SECTION 5.2A. Individuals named to the Management Committee
shall sometimes be referred to herein individually as a "Committee Member" or
collectively as "Committee Members". Except for situations in which the approval
of the Members is required by this Agreement, the Management Committee shall
have full, complete and exclusive authority, power, and discretion to manage and
control the business, property and affairs of the Company, to make all decisions
regarding those matters and to perform any and all other acts or activities
customary or incident to the management of the Company's business, property and
affairs.
5.2 APPOINTMENT OF MANAGEMENT COMMITTEE
A. NUMBER, APPOINTMENT AND QUALIFICATIONS. The Company
shall initially have five (5) Committee Members. For so long as the following
are Members, Outback shall name two (2) Committee Members, FPSH LP shall name
one (1) Committee Member, AWA INC shall name one (1) Committee Member, and the
fifth Committee Member (the "Wise Man") shall be named by unanimous consent of
the other four (4) Committee Members. Subject to SECTION 3.8E, if any of the
foregoing cease to be a Member, the right the Member has to appoint Committee
Members shall be transferred to the successor of such Member if such successor
is admitted as a substitute Member. The Wise Man must be (i) independent and not
employed by or have any ownership interest in or licensing or a franchise
relationship with either Member (or its Affiliates), and (ii) possess not less
than ten (10) years of full-time executive level management experience in one or
more casual, fine dining restaurants having at least ten (10) stores under his
or her control or such other qualifications as Outback and Fleming's may agree.
(i) TERM OF SERVICE. Each Committee Member (other
than the Wise Man) will serve until his or her death or withdrawal from the
Management Committee, or until his or her removal from the Management Committee
by the Member who appointed him or her. The Wise Man shall serve a one (1) year
term and shall be elected annually by written consent of all of the Committee
Members other than the Wise Man.
(ii) Management Committee:
<TABLE>
<CAPTION>
"FPSH LP APPOINTEE" "AWA INC APPOINTEE" "OUTBACK APPOINTEES"
------------------- ------------------- --------------------
<S> <C> <C>
Paul M. Fleming A. William Allen III Chris Sullivan
Michael O'Donnell
</TABLE>
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<PAGE> 18
The Wise Man shall be appointed within ninety (90) days of execution of this
Agreement.
(iii) RESIGNATION. A Committee Member may resign at
any time by giving written notice to the Members. The resignation of a Committee
Member shall take effect upon receipt of that notice or at such later time as
shall be specified in the notice. Unless otherwise specified in the notice, the
acceptance of the resignation shall not be necessary to make it effective.
(iv) REMOVAL. The Wise Man may be removed at any
time, with or without cause, by written consent of three (3) of the four (4)
Committee Members other than the Wise Man. Outback Appointees to the Management
Committee may be removed only by Outback, with or without cause. FPSH LP's
Appointee to the Management Committee may be removed only by FPSH LP, with or
without cause. AWA INC's Appointee to the Management Committee may be removed
only by AWA INC, with or without cause.
(v) VACANCIES. Vacancies on the Management
Committee shall be filled by the Member who originally appointed the vacating
Committee Member, or, in the case of the Wise Man, by vote or written consent of
all other Committee Members.
5.3 POWERS OF MANAGEMENT COMMITTEE.
A. POWERS OF MANAGEMENT COMMITTEE. Without limiting the
generality of SECTION 5.1, but subject to SECTION 5.3D and to the limitations
set forth elsewhere in this Agreement, the Management Committee shall have all
necessary powers to manage and carry out the purposes, business, property, and
affairs of the Company, including, without limitation, the power to exercise on
behalf and in the name of the Company all of the powers of a natural person,
including, without limitation, the power to:
(i) Authorize the execution and delivery of any
agreement;
(ii) Acquire, purchase, lease, renovate, improve,
alter, rebuild, demolish, replace, and own real property and any other property
or assets that the Management Committee determines is necessary or appropriate
or in the interest of the business of the Company, and to acquire options for
the purchase of any such property;
(iii) Sell, exchange, lease, or otherwise dispose of
the real property and other property and assets owned by the Company, or any
part thereof, or any interest therein;
(iv) Sue on, defend, or compromise any and all
claims or liabilities in favor of or against the Company; submit any or all such
claims or liabilities to arbitration; and confess a judgment against the Company
in connection with any litigation in which the Company is involved (other than
relating to the Management Committee); and
(v) Retain legal counsel, auditors, and other
professionals in connection with the Company business and to pay therefor such
remuneration as the Management Committee may determine.
B. ANNUAL BUSINESS PLAN. At least sixty (60) days prior
to the commencement of each Fiscal Year, the President shall submit to the
Management Committee for its approval, the Annual Business Plan for the Company.
The President and Management Committee shall at all times use their best efforts
to operate the Company in conformity with the Annual Business Plan.
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C MAXIMIZATION OF VALUE. The Management Committee shall
from time to time evaluate in good faith and present to the Members all options
available to the Company to maximize the value of each Member's Percentage
Interest in the Company, such as, but not limited to, an initial public
offering, strategic sale, or merger into OSI.
D LIMITATIONS ON POWER OF MANAGEMENT COMMITTEE.
(i) LIMITATIONS ON ACTS OF MANAGEMENT COMMITTEE.
Except as otherwise required in this Agreement, the Management Committee shall
act by majority vote. The Management Committee shall not have authority
hereunder to cause the Company to engage in the following without first
obtaining the affirmative vote or written consent of a Majority Interest (or
such greater Percentage Interest as is set forth below) of the Members:
(a) The operation of any Restaurant other
than in conformity with the operating procedures established pursuant to, or in
accordance with, the System;
(b) The sale, exchange or other
disposition of all, or substantially all, of the Company's assets occurring as
part of a single transaction or plan, or in multiple transactions over a six (6)
month period, except in the orderly liquidation and winding up of the business
of the Company upon its duly authorized dissolution;
(c) The borrowing of money from any party
in excess of $25,000, the issuance of evidences of indebtedness in connection
therewith, the refinancing, increase in the amount of, modification, amendment,
or changing of the terms, or extension of the time for the payment of any
indebtedness or obligation of the Company, and securing such indebtedness by
mortgage, deed of trust, pledge, security interest, or other lien on Company
assets;
(d) The merger of the Company with a
corporation, another limited liability company or limited partnership which is
not an Affiliate of the Company or of any of the Members; provided in no event
shall a Member be required to become a general partner in a merger with a
limited partnership without its express written consent;
(e) The merger of the Company with any
general partnership, or with a corporation, limited liability company or limited
partnership which is an Affiliate of the Company or any of the Members, shall
require the affirmative vote or written consent of Members owning a ninety
percent (90%) Percentage Interest;
(f) The admission of any person as a
Member, or the establishment of different classes of Members;
(g) An alteration of the primary purpose or
business of the Company as set forth in SECTION 2.6;
(h) The lending of money by the Company to
any Committee Member, Member, or officer;
(i) Any act which would make it impossible
to carry on the ordinary business of the Company;
(j) The declaration of Bankruptcy on behalf
of the Company;
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(k) The payment of any amount in violation of this
Agreement; and
(l) Any other transaction described in this
Agreement as requiring the vote, consent, or approval of the Members.
(ii) LIMITATION ON EXECUTION OF DOCUMENTS. No Committee
Member may execute any document on behalf of the Company without the prior
authorization of the Management Committee as provided in this SECTION 5.3.
Michael P. O'Donnell and A. William Allen III shall be the initial Committee
Members authorized to execute documents on behalf of the Company.
5.4 LIABILITY OF MANAGEMENT COMMITTEE. The Committee Members shall
not be liable to the Company or to any Member for any loss or damage sustained
by the Company or any Member, unless the loss or damage shall have been the
result of fraud, deceit, gross negligence, reckless or intentional misconduct,
breach of fiduciary duty, a knowing violation of law by a Committee Member or a
breach of the Committee Member's obligations under this Agreement, in which
event such Committee Member shall be so liable.
5.5 DEVOTION OF TIME. The Committee Members are not obligated to
devote all of their time or business efforts to the affairs of the Company. The
Committee Members shall devote whatever time, effort, and skill as they deem
appropriate for the operation of the Company.
5.6 TRANSACTIONS BETWEEN THE COMPANY AND COMMITTEE MEMBER.
Notwithstanding that it may constitute a conflict of interest, a Committee
Member may engage in any transaction (including, without limitation, the
purchase, sale, lease, or exchange of any property or the rendering of any
service) with the Company so long as the terms and conditions of such
transaction, on an overall basis, are fair and reasonable to the Company and are
at least as favorable to the Company as those that are generally available from
Persons capable of similarly performing them and in similar transactions between
parties operating at arm's length, and provided that a majority of the Committee
Members having no interest in such transaction affirmatively vote or consent in
writing to approve the transaction.
5.7 OFFICERS. The Management Committee may appoint officers at any
time. The officers of the Company shall include a President and such other
officers as the Management Committee deems necessary and appropriate. The
officers shall serve at the pleasure of the Management Committee, subject to (a)
all rights, if any, of an officer under an employment contract, and (b) the
right of a Majority Interest to remove any officer. The Management Committee may
determine a reasonable compensation to be paid to each officer so appointed. Any
individual may hold any number of offices. The officers shall exercise such
powers and perform such duties as specified in this Agreement and as shall be
determined from time to time by the Management Committee.
5.8 PRESIDENT. All decisions as to the day to day operations of
the Company shall be made by the President. The President shall execute an
Employment Agreement acceptable to the President and the Management Committee.
The initial President shall be A. William Allen III. The President shall not,
without the approval of the Management Committee (or the Members if such power
is retained by the Members pursuant to this Agreement):
(i) Confess a judgment against the Company;
(ii) Admit any person as a Member;
(iii) Declare Bankruptcy on behalf of the Company;
(iv) Enter into any lease of real or personal property;
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(v) Enter into any loan transaction or incur any
indebtedness of the Company in excess of $25,000;
(vi) Execute any franchise agreement;
(vii) Purchase any real property; or
(viii) Undertake any such other matter(s) as may be agreed
upon by the Management Committee.
ARTICLE VI ALLOCATIONS OF NET PROFITS AND NET LOSSES AND DISTRIBUTIONS
6.1 ALLOCATIONS OF NET PROFIT AND NET LOSS
A. NET LOSS. Net Loss shall be allocated first to
Outback in an amount equal to Outback's positive Capital Account balance, and
then to the Members in proportion to their Percentage Interests. Notwithstanding
the previous sentence, loss allocations to a Member shall be made only to the
extent that such loss allocations will not create a deficit Capital Account
balance for that Member in excess of an amount, if any, equal to such Member's
share of Company Minimum Gain. Any loss not allocated to a Member because of the
foregoing provision shall be allocated to the other Members (to the extent the
other Members are not limited in respect of the allocation of losses under this
SECTION 6.1A). Any loss reallocated under this SECTION 6.1A shall be taken into
account in computing subsequent allocations of income and losses pursuant to
this ARTICLE VI, so that the net amount of any item so allocated and the income
and losses allocated to each Member pursuant to this ARTICLE VI, to the extent
possible, shall be equal to the net amount that would have been allocated to
each such Member pursuant to this ARTICLE VI if no reallocation of losses had
occurred under this SECTION 6.1A.
B. NET PROFIT. Net Profit shall be allocated to the
Members in proportion to their Percentage Interests.
6.2 SPECIAL ALLOCATIONS. Notwithstanding SECTION 6.1:
A. MINIMUM GAIN CHARGEBACK. If there is a net decrease
in Company Minimum Gain during any Fiscal Year, each Member shall be specially
allocated items of Company income and gain for such Fiscal Year (and, if
necessary, in subsequent fiscal years) in an amount equal to the portion of such
Member's share of the net decrease in Company Minimum Gain that is allocable to
the disposition of Company property subject to a Nonrecourse Liability, which
share of such net decrease shall be determined in accordance with Regulations
Section 1.704-2(g)(2). Allocations pursuant to this SECTION 6.2A shall be made
in proportion to the amounts required to be allocated to each Member under this
SECTION 6.2A. The items to be so allocated shall be determined in accordance
with Regulations Section 1.704-2(f). This SECTION 6.2A is intended to comply
with the minimum gain chargeback requirement contained in Regulations Section
1.704-2(f) and shall be interpreted consistently therewith.
B. CHARGEBACK OF MINIMUM GAIN ATTRIBUTABLE TO MEMBER
NONRECOURSE DEBT. If there is a net decrease in Company Minimum Gain
attributable to a Member Nonrecourse Debt, during any Fiscal Year, each Member
who has a share of the Company Minimum Gain attributable to such Member
Nonrecourse Debt (which share shall be determined in accordance with Regulations
Section 1.704-2(i)(5)) shall be specially allocated items of Company income and
gain for such Fiscal Year (and, if necessary, in subsequent Fiscal Years) in an
amount equal to that portion of such Member's share of the net decrease in
Company Minimum Gain attributable to such Member Nonrecourse Debt that is
allocable to the disposition of Company property subject to such Member
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Nonrecourse Debt (which share of such net decrease shall be determined in
accordance with Regulations Section 1.704-2(i)(5)). Allocations pursuant to this
SECTION 6.2B shall be made in proportion to the amounts required to be allocated
to each Member under this SECTION 6.2B. The items to be so allocated shall be
determined in accordance with Regulations Section 1.704-2(i)(4). This SECTION
6.2B is intended to comply with the minimum gain chargeback requirement
contained in Regulations Section 1.704-2(i)(4) and shall be
interpreted consistently therewith.
C. NONRECOURSE DEDUCTIONS. Any nonrecourse deductions
(as defined in Regulations Section 1.704-2(b)(1)) for any Fiscal Year or other
period shall be specially allocated to the Members in proportion to their
Percentage Interests.
D. MEMBER NONRECOURSE DEDUCTIONS. Those items of Company
loss, deduction, or Code Section 705(a)(2)(B) expenditures which are
attributable to Member Nonrecourse Debt for any Fiscal Year or other period
shall be specially allocated to the Member who bears the economic risk of loss
with respect to the Member Nonrecourse Debt to which such items are attributable
in accordance with Regulations Section 1.704-2(i).
E. QUALIFIED INCOME OFFSET. If a Member unexpectedly
receives any adjustments, allocations, or distributions described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), or any other event creates a
deficit balance in such Member's Capital Account in excess of such Member's
share of Company Minimum Gain, items of Company income and gain shall be
specially allocated to such Member in an amount and manner sufficient to
eliminate such excess deficit balance as quickly as possible. Any special
allocations of items of income and gain pursuant to this SECTION 6.2E shall be
taken into account in computing subsequent allocations of income and gain
pursuant to this ARTICLE VI so that the net amount of any item so allocated and
the income, gain, and losses allocated to each Member pursuant to this ARTICLE
VI to the extent possible, shall be equal to the net amount that would have been
allocated to each such Member pursuant to the provisions of this ARTICLE VI if
such unexpected adjustments, allocations, or distributions had not occurred.
6.3 CODE SECTION 704(C) ALLOCATIONS. Notwithstanding any other
provision in this ARTICLE VI, in accordance with Code Section 704(c) and the
Regulations promulgated thereunder, income, gain, loss, and deduction with
respect to any property contributed to the capital of the Company shall, solely
for tax purposes, be allocated among the Members so as to take account of any
variation between the adjusted basis of such property to the Company for federal
income tax purposes and its fair market value on the date of contribution.
Allocations pursuant to this SECTION 6.3 are solely for purposes of federal,
state and local taxes. As such, they shall not affect or in any way be taken
into account in computing a Member's Capital Account or share of profits,
losses, or other items of distributions pursuant to any provision of this
Agreement.
6.4 ALLOCATION OF NET PROFITS AND LOSSES AND DISTRIBUTIONS IN
RESPECT OF A TRANSFERRED INTEREST. If any Economic Interest is transferred, or
is increased or decreased by reason of the admission of a new Member or
otherwise, during any Fiscal Year of the Company, Net Profit or Net Loss for
such Fiscal Year shall be assigned pro rata to each day in the particular period
of such Fiscal Year to which such item is attributable (i.e., the day on or
during which it is accrued or otherwise incurred) and the amount of each such
item so assigned to any such day shall be allocated to the Member or Assignee
based upon its respective Economic Interest at the close of such day.
However, for the purpose of accounting convenience and
simplicity, the Company shall treat a transfer of, or an increase or decrease
in, an Economic Interest which occurs at any time during a semi-monthly period
(commencing with the semi-monthly period including the date hereof) as having
been consummated on the last day of such semi-monthly period, regardless of when
during such semi-monthly period such transfer, increase, of decrease actually
occurs (i.e., sales and dispositions made during the first fifteen (15) days of
any month will be deemed to have been made on the 15th day of the month).
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Notwithstanding any provision above to the contrary, gain or
loss of the Company realized in connection with a sale or other disposition of
any of the assets of the Company shall be allocated solely to the parties
owning Economic Interests as of the date such sale or other disposition occurs.
6.5 DISTRIBUTIONS OF DISTRIBUTABLE CASH BY THE COMPANY.
A. Subject to applicable law and any limitations
contained in this Agreement, unless the Company has ceased development of new
Restaurants, as defined in SECTION 8.1, all Distributable Cash of the Company
shall be retained by the Company and used for development of new Restaurants,
except that the Company shall, if Distributable Cash is available, distribute to
each Member cash in an amount equal to thirty-five percent (35%) of the Net
Profits, if any, allocated to such Member. Upon the request of FPSH LP or AWA
INC the Company shall distribute up to an additional ten percent (10%) of the
Net Profits, if any, allocated to such Member; provided however the amount of
any such excess distribution shall be a loan to the Member(s) receiving such
excess distribution. All such loans shall bear interest at the rate of eight
percent (8%) per annum, shall be secured by a first priority security interest
in the debtor Member's Membership Interest, and shall be repaid in full (with
all accrued interest) on the earlier of: (i) five (5) years from the date of the
loan, or (ii) any transfer by the debtor Member of any portion of the debtor
Member's Membership Interest. FPSH LP and AWA INC shall have no right to receive
excess distribution loans once the Company has opened its twentieth (20th)
restaurant. The Management Committee shall make the distributions specified in
this section, not less than once each calendar quarter based on estimated year
to date Net Profits. Distributions for the last calendar quarter of the Fiscal
Year shall be adjusted to reflect any under or over estimating of year to date
Net Profits during prior calendar quarters.
B. In the event the Company has ceased development of
new Restaurants as defined in SECTION 8.1, distributions shall be made in
accordance with SECTION 8.2D.
C. Subject to SECTION 8.2 AND ARTICLE X, all other
distributions to Members shall be made in accordance with their Percentage
Interests.
D All distributions shall be made only to the Persons
who, according to the books and records of the Company, are the holders of
record of the Economic Interests in respect of which such distributions are made
on the actual date of distribution. Subject to SECTION 6.8, neither the Company
nor any Management Committee shall incur any liability for making distributions
in accordance with this SECTION 6.5.
6.6 FORM OF DISTRIBUTION. Except as provided in SECTION 8.2 and
SECTION 10.4, a Member, regardless of the nature of the Member's Capital
Contribution, has no right to demand and receive any distribution from the
Company in any form other than cash. Except as provided in SECTION 10.4, no
Member may be compelled to accept from the Company a distribution of any asset
in kind in lieu of a proportionate distribution of money being made to other
Members and no Member may be compelled to accept a distribution of any asset in
kind.
6.7 RESTRICTION ON DISTRIBUTIONS. No distribution shall be made
if, after giving effect to the distribution, all liabilities of the Company,
other than liabilities to Members on account of their Membership Interests and
liabilities for which the recourse of creditors is limited to specified property
of the Company, exceed the fair value of the assets of the Company, except that
the fair value of property that is subject to a liability for which the recourse
of creditors is limited shall be included in the assets of the Company only to
the extent that the fair value of that property exceeds that liability.
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6.8 RETURN OF DISTRIBUTIONS. A Member who receives a distribution
in violation of SECTION 6.7, and who knew at the time of the distribution that
the distribution violated SECTION 6.7, shall be liable to the Company for the
amount of the distribution. A Member who receives a distribution in violation of
SECTION 6.7, and who did not know at the time of the distribution that the
distribution violated SECTION 6.7, shall not be liable for the amount of the
distribution. A Member who receives a distribution shall have no liability for
the amount of the distribution after the expiration of three (3) years from the
date of the distribution unless an action to recover the distribution from such
Member is commenced prior to the expiration of said three (3)-year period and an
adjudication of liability against such Member is made in the said action.
6.9 OBLIGATIONS OF MEMBERS TO REPORT ALLOCATIONS. The Members are
aware of the income tax consequences of the allocations made by this ARTICLE VI
and hereby agree to be bound by the provisions of this ARTICLE VI in reporting
their shares of Company income and loss for income tax purposes.
ARTICLE VII. TRANSFER AND ASSIGNMENT OF INTERESTS
7.1 TRANSFER AND ASSIGNMENT OF INTERESTS.
A GENERAL RESTRICTION. Except as otherwise provided in
this ARTICLE VII, until such time as any Member exercises its purchase or put
option pursuant to SECTION 7.11 hereof, a Member shall not be entitled to
transfer, assign, convey, sell, encumber or in any way alienate all or any part
of its Membership Interest (collectively, "transfer") except with the prior
written consent of all Members, which consent may be given or withheld,
conditioned or delayed, as the Members may determine in their sole and absolute
discretion. Without limiting the generality of the foregoing, the sale or
exchange of at least fifty percent (50%) of the voting stock of a Member, if a
Member is a corporation, or the transfer of an interest or interests of at least
fifty percent (50%) in the capital or profits of a Member (whether accomplished
by the sale or exchange of interests or by the admission of new partners or
members), if a Member is a partnership or limited liability company, or the
cumulative transfer of such interests in a Member which effectively equal the
foregoing (including transfer of interests followed by the incorporation of a
Member and subsequent stock transfers, or transfers of stock followed by the
liquidation of a Member and subsequent transfers of interests) will be deemed to
constitute an assignment of a Membership Interest subject to this ARTICLE VII;
provided that transfers among the Fleming's Principals shall be exempt from
these requirements. After the consummation of any transfer of any part of a
Membership Interest, the Membership Interest so transferred shall continue to be
subject to the terms and provisions of this Agreement and any further transfers
shall be required to comply with all the terms and provisions of this Agreement.
B IMPROPER TRANSFERS. Transfers in violation of this
ARTICLE VII shall only be effective to the extent set forth in SECTION 7.8.
C TERMINATION OF RESTRICTIONS. Upon exercise of a
purchase or put option by any Member pursuant to SECTION 7.11 hereof, all
restrictions on transfers of Membership Interests, pursuant to SECTION 7.1A AND
7.2 hereof shall be of no further force or effect.
7.2 FURTHER RESTRICTIONS ON THE FLEMING'S PRINCIPALS. Fleming's
and the Fleming's Principals acknowledge and agree that Outback has entered into
this Agreement in reliance on the personal skill and character of the Fleming's
Principals.
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A. AWA INC, A. William Allen III and Rick Scott hereby
represent and warrant to Outback that A. William Allen III (together with his
wife or through a trust controlled by them) and Rick Scott are the sole
shareholders and sole directors of AWA INC. The ownership of all of the capital
stock of AWA INC by A. William Allen III and Rick Scott is a material inducement
to Outback entering into this Agreement. Except as provided in SECTION 7.4, A.
William Allen III and Rick Scott hereby covenant and agree that they shall not,
in any manner, transfer, alienate or encumber any of the capital stock, or other
voting or ownership interest, in AWA INC without the prior written consent of
Outback, which consent may be granted or denied in Outback's sole discretion.
Further, AWA INC, A. William Allen III and Rick Scott hereby covenant and agree
that they shall not in any manner allow any action to be taken that would result
in A. William Allen III, individually, having insufficient voting power to
control all matters submitted to a vote of AWA INC's shareholders.
B. FPSH LP, PKCR, LLC ("PKCR") and Paul M. Fleming
hereby represent and warrant to Outback that trusts established for the benefit
of Paul M. Fleming, his spouse and children are the sole members of PKCR and
PKCR is the sole general partner of FPSH LP. The ownership of all of the general
partnership interests of FPSH LP by PKCR and ownership of all of the membership
interests in PKCR by trusts established for the benefit of Paul M. Fleming, his
spouse and children are material inducements to Outback entering into this
Agreement. Except as provided in SECTION 7.4, Paul M. Fleming hereby covenants
and agrees that he shall not, in any manner, transfer, alienate or encumber any
of the membership interests, or other voting or ownership interest, in PKCR
without the prior written consent of Outback, which consent may be granted or
denied in Outback's sole discretion and PKCR hereby covenants and agrees that it
shall not, in any manner, transfer, alienate or encumber any of its partnership
or other ownership or voting interest in FPSH LP without the prior written
consent of Outback which consent may be granted or denied at Outback's sole
discretion FPSH LP, PKCR and Paul M. Fleming covenant and agree that at all
times Paul M. Fleming, individually, or in his capacity as trustee, shall have
sole power to determine all matters submitted to a vote of FPSH LP's partners
and PKCR's members.
7.3 FURTHER RESTRICTIONS ON TRANSFER OF INTERESTS. In addition to
other restrictions found in this Agreement, no Member shall transfer all or any
part of its Membership Interest:
A. Without compliance with all federal and state
securities law, and
B. If the Membership Interest to be transferred, when
added to the total of all other Membership Interests transferred in the
preceding twelve (12) consecutive months prior thereto, would cause the tax
termination of the Company under Code Section 708(b)(1)(B).
7.4 PERMITTED TRANSFERS.
A. A Membership Interest may be transferred to any other
Member, subject to compliance with SECTION 7.2 AND 7.3, and without the prior
written consent of the other Members as required by SECTION 7.1.
B. Subject to the restrictions of SECTION 7.3: Paul M.
Fleming and PKCR may make bona fide gifts of interests in PKCR or FPSH LP to
Paul M. Fleming's family members, or to one or more trusts for the benefit of
his family members, for estate planning purposes provided that Paul M. Fleming
retains at least a fifty-one percent (51%) ownership and voting interest in PKCR
and PKCR remains the sole general partner of FPSH LP; and A. William Allen III
and Rick Scott may make bona fide gifts of interests in AWA INC to their family
members, or to one or more trusts for the benefit of family members, for estate
planning purposes provided that they collectively retain at least a fifty-one
percent (51%) ownership and voting interest in AWA INC.
7.5 EFFECTIVE DATE OF PERMITTED TRANSFERS. Any permitted transfer
of all or any portion of a Membership Interest or an Economic Interest shall be
effective as of the date provided in SECTION 6.4 following the date upon which
the requirements of SECTIONS 7.1, 7.2 and 7.3 have been met. The Management
Committee shall provide the Members with written notice of such transfer as
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promptly as possible after the requirements of SECTIONS 7.1, 7.2 and 7.3 have
been met. Any transferee of a Membership Interest shall take subject to the
restrictions on transfer imposed by this Agreement.
7.6 SUBSTITUTION OF MEMBERS. An Assignee shall have the right to
become a substitute Member only if (i) the requirements of SECTIONS 7.1, 7.2 AND
7.3 hereof are met, (ii) the Assignee executes an instrument satisfactory to the
Management Committee accepting and adopting the terms and provisions of this
Agreement, and (iii) the Assignee pays any reasonable expenses in connection
with its admission as a new Member. The admission of an Assignee as a substitute
Member shall not result in the release of the Member who assigned the Membership
Interest from any liability that such Member may have to the Company.
7.7 RIGHTS OF LEGAL REPRESENTATIVES. If a Member who is an
individual dies or is adjudged by a court of competent jurisdiction to be
incompetent to manage the Member's person or property, the Member's executor,
administrator, guardian, conservator, or other legal representative may exercise
all of the Member's rights for the purpose of settling the Member's estate or
administering the Member's property, including any power the Member has under
the Certificate or this Agreement to give an Assignee the right to become a
Member. If a Member is a corporation, trust, or other entity and is dissolved or
terminated, the powers of that Member may be exercised by its legal
representative or successor.
7.8 NO EFFECT TO TRANSFERS IN VIOLATION OF AGREEMENT. Upon any
transfer of a Membership Interest in violation of this ARTICLE VII, the
remaining Members shall have the right to Purchase the transferred Membership
Interest as provided in SECTION 3.8F of this Agreement. In the event such
Membership Interest is not purchased by the remaining Members, such transferee
shall only be entitled to become an Assignee and thereafter shall only receive
the share of the Company's Net Profits, Net Losses and distributions of the
Company's assets to which the transferor of such Economic Interest would
otherwise be entitled. The transferee shall have no right to vote or participate
in the management of the business, property and affairs of the Company or to
exercise any rights of a Member. Notwithstanding the immediately preceding
sentences, if, in the determination of the Management Committee, a transfer in
violation of this ARTICLE VII would cause the tax termination of the Company
under Code Section 708(b)(1)(B), the transfer shall be null and void and the
purported transferee shall not become either a Member or an Assignee.
Upon and contemporaneously with any transfer (whether arising
out of an attempted charge upon that Member's Economic Interest by judicial
process, a foreclosure by a creditor of the Member or otherwise) of a Member's
Economic Interest which does not at the same time transfer the balance of the
rights associated with the Membership Interest transferred by the Member
(including, without limitation, the rights of the Member to vote or participate
in the management of the business, property and affairs of the Company), the
Company shall purchase from the Member, and the Member shall sell to Company for
a purchase price of one hundred dollars ($100), all remaining rights and
interests retained by the Member that immediately before the transfer were
associated with the transferred Economic Interest. Such purchase and sale shall
not, however, result in the release of the Member from any liability to the
Company as a Member.
Each Member acknowledges and agrees that the right of the
Company to purchase such rights and interests from a Member who transfers a
Membership Interest in violation of this ARTICLE VII is not unreasonable under
the circumstances existing as of the date hereof.
7.9 RIGHTS OF FIRST REFUSAL.
A. MUTUAL RIGHTS. Until any Member exercises its
purchase or put option pursuant to SECTION 7.11 hereof, except for transfers
pursuant to SECTIONS 3.8F, 4.4, 7.4B OR 7.11, but subject to SECTIONS 7.1, 7.2
AND 7.3, if a Member (or any shareholder of AWA INC or any partner of FPSH LP or
member of PKCR) (each a "Transferor") desires to transfer all or any part of
his, hers, or its Membership Interest (or, in the case of a shareholder of AWA
INC any capital stock or other voting or ownership interest in AWA INC, in the
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case of a partner of FPSH LP any partnership interests in FPSH LP, or in the
case of a member of PKCR any membership interest in PKCR) to any person or
entity, the Transferor shall, prior to any such Transfer, give the Management
Committee written notice of such desire ("Notice of Transfer"), which notice
shall specify the Membership Interest to be transferred (for purposes of SECTION
7.9A AND 7.9B, "Membership Interest" shall also mean, in the case of a
shareholder of AWA INC, any capital stock or other voting or ownership interest
in AWA INC, in the case of a partner of FPSH LP any partnership interest in FPSH
LP, or in the case of a member of PKCR any membership interest in PKCR), the
identity of the proposed transferee, the purchase price for the Membership
Interest and the terms for payment of said price, including the treatment of
Company liabilities and the Transferor's liability therefore ("Purchase Price").
Any purported Notice of Transfer that does not comply with the requirements of
this SECTION 7.9A shall be null and void and of no effect hereunder. The
Management Committee shall immediately notify the Members of such Notice of
Transfer. Upon receipt of a proper Notice of Transfer, the other Members shall
thereupon have the right to acquire the Transferor's entire Membership Interest
or such portion of the Transferor's Membership Interest as is specified in the
Notice of Transfer, on terms identical to the Purchase Price or proportionately
identical if the Members elect to purchase the entire Membership Interest of the
Transferor. In the event the Purchase Price contains terms that the other
Members cannot reasonably duplicate, the Members shall have the right to
substitute the reasonable cash equivalent thereof. The other Members shall have
the right to purchase the Transferor's Membership Interest, or portion thereof,
in proportion to the other Member's Percentage Interests or in such other
proportions as the other Members agree.
B. OUTBACK'S RIGHTS. Upon exercise by any Member of a
purchase or put option pursuant to SECTION 7.11, the rights granted to the
Members other than Outback under SECTION 7.9A shall terminate and be of no
further force or effect and subsequent thereto, except for transfers pursuant to
SECTIONS 3.8F, 4.4 OR 7.4B, but subject to SECTIONS 7.1, 7.2, 7.3 AND 7.11, if,
at any time a Member other than Outback (or any shareholder of AWA INC or any
partner of FPSH LP or member of PKCR) (each a "Transferor"), desires to transfer
all or any part of his, hers, or its Membership Interest (or, in the case of a
shareholder of AWA INC any capital stock or other voting or ownership interest
in AWA INC, in the case of a partner of FPSH LP any partnership interests in
FPSH LP, or in the case of a member of PKCR any membership interest in PKCR) to
any person or entity, the Transferor shall, prior to any such Transfer, give
Outback Notice of Transfer, which notice shall specify the Membership Interest
to be transferred, the identity of the proposed transfer, and the Purchase
Price. Any purported Notice of Transfer that does not comply with the
requirements of this SECTION 7.9B shall be null and void and of no effect
hereunder. Upon receipt of a proper Notice of Transfer, Outback shall thereupon
have the right to acquire the Transferor's entire Membership Interest or such
portion of the Transferor's Membership Interest as is specified in the Notice of
Transfer, on terms identical to the Purchase Price or proportionately identical
if Outback elects to purchase the entire Membership Interest of the Transferor.
In the event the Purchase Price contains terms that Outback cannot reasonably
duplicate, Outback shall have the right to substitute the reasonable cash
equivalent thereof.
C. EXERCISE OF RIGHTS.
(i) The purchasing Member(s) shall exercise the
right of first refusal contained herein by mailing written notice thereof
("Notice of Election") to the Transferor within forty (40) days of mailing of
the Notice of Transfer. In the event no purchasing Member(s) mail a Notice of
Election to the Transferor within said 40-day period, the purchase option
contained herein shall lapse (except as otherwise provided in SECTION 7.10). In
the event a Member timely exercises the purchase option contained herein, such
Member shall mail written notice to the Transferor of whether the Member has
elected to purchase the entire Membership Interest of the Transferor or such
portion as was specified in the Notice of Transfer, if less; such notice to be
mailed within ten (10) days of the mailing of the Notice of Election.
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(ii) The closing for any purchase hereunder shall
be consummated and closed in the Company's principal office on a date and at a
time designated by the purchasing Member in a notice to the Transferor, provided
such consummation and closing date shall occur within ninety-five (95) days from
the date of mailing of the Notice of Election. At such closing, the Transferor
shall execute and deliver all documents and instruments as are necessary and
appropriate, in the opinion of counsel for the Company, to effectuate the
transfer of the Transferor's Membership Interest in accordance with the terms of
the Notice of Transfer and the purchasing Member shall deliver the Purchase
Price.
7.10 TRANSFER PERMITTED AFTER FAILURE TO ELECT. Subject to SECTION
7.1, 7.2 AND 7.3, in the event a Member does not elect pursuant to SECTION 7.9
to exercise the purchase option specified therein, or in the event the closing
for any purchase pursuant to SECTION 7.9 does not occur within the time limits
specified therein, then the Transferor shall be free to transfer the exact
portion of his, her, or its Membership Interest as was specified in the Notice
of Transfer to the person or entity identified in the Notice of Transfer in
exchange for the exact Purchase Price as was specified in the Notice of
Transfer; PROVIDED, HOWEVER, that the closing and consummation of such transfer
shall occur within one hundred thirty (130) days after the date of mailing of
the Notice of Transfer and provided further that such transfer must comply with
all other requirements of this ARTICLE VII. In the event such transfer is not so
closed and consummated within such period, the purchase option granted in
SECTION 7.9 shall again be exercisable and the Transferor shall make no Transfer
of any portion of his Membership Interest, or any right, title or interest
therein, until such Transferor has again complied with all terms and provisions
of this ARTICLE VII. In the event a Member does not elect pursuant to SECTION
7.9 to exercise the purchase option contained therein and the Transferor makes a
permitted Transfer in compliance with the terms and provisions of this ARTICLE
VII, then the person or entity to whom such Membership Interest is transferred
shall nevertheless acquire such Membership Interest subject to the restriction
imposed on such Membership Interest under this ARTICLE VII as to further
transfers of such Membership Interest, and provided further that any such
transferee shall agree in writing to be bound by all terms and provisions of
this Agreement.
7.11 PURCHASE AND SALE OPTIONS.
A. OPTIONS.
(i) PURCHASE OPTIONS. At any time during the one
(1) year period commencing upon the opening of the Company's twentieth (20th)
Restaurant, Outback shall have the right to purchase:
(a) from FPSH LP, and FPSH LP shall have
the obligation to sell to Outback, a Percentage Interest in the Company equal to
thirty percent (30%) of all Percentage Interests in the Company; and
(b) from AWA INC and AWA INC shall have
the obligation to sell to Outback, a Percentage Interest in the Company equal to
ten percent (10%) of all Percentage Interests in the Company.
(ii) PUT OPTION. At any time during the one (1)
year period commencing upon the opening of the Company's twentieth (20th)
Restaurant:
(a) FPSH LP shall have the right to sell
to Outback and Outback shall have the obligation to buy, a Percentage Interest
in the Company equal to thirty (30%) of all Percentage Interests in the Company;
and
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(b) AWA INC shall have the right to sell
to Outback and Outback shall have the obligation to buy, a Percentage Interest
in the Company equal to ten percent (10%) of all Percentage Interests in the
Company.
(iii) The purchase price to be paid by Outback for
the Percentage Interests purchased shall be made in two installments (an initial
payment and a final payment) and calculated as follows:
(a) the initial payment shall be equal to
the Company's annualized after tax net income with respect to all Restaurants
open for eighteen (18) months or more on the date of exercise of the option, for
the twelve (12) months immediately preceding exercise of the purchase or put
option, calculated in accordance with generally accepted accounting principals
("GAAP") (assuming a tax rate equal to OSI's tax rate) multiplied by the
Percentage Interest purchased by Outback and multiplied by seventy five percent
(75%) of OSI's pro forma price/earnings multiple for the twelve (12) months
immediately following the exercise of the purchase or put option; provided,
however, the initial payment shall not be less than five (5) times the Company's
annualized earnings before interest, taxes, depreciation and amortization with
respect to all Restaurants open for eighteen (18) months or more, for the twelve
(12) months immediately preceding the exercise of the purchase or put option,
calculated in accordance with GAAP, multiplied by the Percentage Interest
purchased; and
(b) the final payment shall be equal to
the Company's annualized after tax net income, with respect to any of the
Company's Restaurants opened for business prior to the date of exercise of the
Option, but open for less than eighteen (18) months on the date of exercise of
the option, for the twelve (12) months immediately preceding the Valuation Date
(as defined below), calculated in accordance with GAAP (assuming a tax rate
equal to OSI's tax rate) multiplied by the Percentage Interest purchased by
Outback and multiplied by seventy five percent (75%) of OSI's pro forma
price/earnings multiple for the twelve (12) months immediately following the
Valuation Date; provided, however, the final payment shall not be less than five
(5) times the Company's annualized earnings before interest, taxes, depreciation
and amortization with respect to any of the Company's Restaurant opened for
business prior to the date of exercise of the option, but open for less than
eighteen (18) months on the date of exercise of the option, for the twelve (12)
months immediately preceding the Valuation Date, calculated in accordance with
GAAP, multiplied by the Percentage Interest purchased. For the purposes hereof,
the "Valuation Date" shall be the date on which the Company's last Restaurant,
that was open on the date of exercise of the option, has been open for eighteen
(18) months.
In determining OSI's pro forma price/earnings multiple for the
following twelve months, (i) OSI's price shall be equal to the weighted average
(based on volume) of OSI's common stock closing price on the NASDAQ National
Market System for the thirty (30) trading days immediately preceding exercise of
the purchase or put option or the Valuation Date, as applicable, and (ii) OSI's
earnings for the twelve months following exercise of the purchase or put option
or the Valuation Date, as applicable, shall be equal to the consensus earnings
per share estimate for such period as reported by First Call. No purchase price
shall be paid for any Restaurant opened for business after the date of exercise
of the option.
B. EXERCISE OF OPTION.
(i) EXERCISE NOTICE. Outback's purchase options,
as described in SECTION 7.11(A)(I)(A) AND (B) may be exercised independently.
FPSH LP's and AWA INC's put options as described in SECTION 7.11(A)(II)(A) AND
(B) may be exercised independently. Upon the exercise of a purchase option or
put option, the exercising Member shall give the other Members written notice
thereof. The written notice (the "Exercise Notice") shall state the purchase
price, a detailed explanation of the valuation methodology and supporting
information utilized in arriving at said purchase price. The other Member shall
have a period of thirty (30) days in which to agree to the purchase price or
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assert any challenges to the calculation of the purchase price. If the Members
cannot agree on the purchase price calculation forty-five (45) days from receipt
of the Exercise Notice, the calculation shall be determined by the Company's
independent certified public accountants.
(ii) CLOSING OF OPTION EXERCISE. The closing for
the purchase by Outback pursuant to this SECTION 7.11 shall be held at 10:00
a.m. at the principal office of Company no later than thirty (30) days after the
determination of the initial payment, except that if the closing date falls on a
Saturday, Sunday, or legal holiday, then the closing shall be held on the next
succeeding business day. At the closing, the selling Member(s) shall deliver to
Outback an instrument of transfer (containing warranties of title and no
encumbrances) conveying the Percentage Interest(s) sold. The selling Member(s)
and Outback shall do all things and execute and deliver all papers as may be
necessary fully to consummate such sale and purchase in accordance with the
terms and provisions of this Agreement.
(iii) PAYMENT OF PURCHASE PRICE. Outback shall pay
the initial payment in cash at closing and the final payment in cash within
thirty (30) days of the determination of the final payment.
ARTICLE VIII. CESSATION OF DEVELOPMENT
8.1 CESSATION OF DEVELOPMENT. For purposes of this Agreement the
Company shall be deemed to have ceased development if the Company has not, in
any period of eighteen (18) consecutive months, opened a new Restaurant or
executed a lease or purchase contract for a new Restaurant.
8.2 CONSEQUENCES OF CESSATION. If the Company ceases development,
the Company shall continue in existence and:
A. All rights to further development of the Fleming's
Prime Steakhouse concept, including the System, shall be distributed and
assigned to Fleming's,
B. All existing Company Restaurants and all restaurants
utilizing the System owned and operated by OSI or any of its Affiliates, shall
receive a perpetual, royalty free license to use the Fleming's Prime Steakhouse
concept and System,
C. The Company shall remain entitled to continue to
collect royalties for the use of the System from any franchisee of the Company
utilizing the System on the date of cessation, and
D. All Distributable Cash shall be distributed to the
Members in accordance with their Percentage Interests no less frequently than
quarterly.
ARTICLE IX. ACCOUNTING, RECORDS, REPORTING BY MEMBERS
9.1 BOOKS AND RECORDS. The books and records of the Company shall
be kept, and the financial position and the results of its operations recorded,
in accordance with the accounting methods followed for federal income tax
purposes. The books and records of the Company shall reflect all the Company
transactions and shall be appropriate and adequate for the Company's business.
The Company shall maintain at its principal office all of the following:
A. A current list of the full name and last known
business or residence address of each Member and Assignee set forth in
alphabetical order, together with the Capital Contributions, Capital Account and
Percentage Interest of each Member and Assignee;
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B. A current list of the full name and business or
residence address of each Committee Member;
C. A copy of the Certificate and any and all amendments
thereto together with executed copies of any powers of attorney pursuant to
which the Certificate or any amendments thereto have been executed;
D. Copies of the Company's federal, state, and local
income tax or information returns and reports, if any, for the six (6) most
recent taxable years;
E. A copy of this Agreement and any and all amendments
thereto together with executed copies of any powers of attorney pursuant to
which this Agreement or any amendments thereto have been executed;
F. Copies of the financial statements of the Company, if
any, for the six (6) most recent Fiscal Years; and
G. The Company's books and records as they relate to the
internal affairs of the Company for at least the current and past four (4)
Fiscal Years.
9.2 DELIVERY TO MEMBERS AND INSPECTION.
A. Upon the request of any Member or Assignee, President
shall promptly deliver to the requesting Member or Assignee, at the expense of
the Company, a copy of the information required to be maintained under SECTION
9.1.
B. Each Member, Committee Member and Assignee has the
right, upon reasonable request for purposes reasonably related to the interest
of the Person as Member, Committee Member or Assignee, to:
(i) inspect and copy during normal business hours
any of the Company records described in SECTION 9.1;
(ii) obtain from the Management Committee, promptly
after their becoming available, a copy of the Company's federal, state, and
local income tax or information returns for each Fiscal Year; and
(iii) receive a monthly income statement of the
Company and a balance sheet of the Company as of the end of that period. The
statement and balance sheet shall be delivered or mailed to the Members within
twenty (20) days after the end of each such period.
C. Any request, inspection or copying by a Member or
Assignee under this SECTION 9.2 may be made by that Person or that Person's
agent or attorney.
9.3 ANNUAL STATEMENTS.
A. The Management Committee shall cause an annual report
to be sent to each of the Members not later than ninety (90) days after the
close of the Fiscal Year. The report shall contain a balance sheet as of the end
of the Fiscal Year and an income statement and statement of changes in financial
position for the Fiscal Year. Such financial statements shall be accompanied by
the report thereon, if any, of the independent accountants engaged by the
Company or, if there is no report, the certificate of the Management Committee
that the financial statements were prepared without audit from the books and
records of the Company.
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B. The Management Committee shall cause to be prepared
at least annually, at Company expense, information necessary for the preparation
of the Members' and Assignees' federal and state income tax returns. The
Management Committee shall send or cause to be sent to each Member or Assignee
within sixty (60) days after the end of each taxable year such information as is
necessary to complete federal and state income tax or information returns, and a
copy of the Company's federal, state, and local income tax or information
returns for that year.
9.4 FINANCIAL AND OTHER INFORMATION. The Management Committee
shall provide such financial and other information relating to the Company or
any other Person in which the Company owns, directly or indirectly, an equity
interest, as a Member may request.
9.5 FILINGS. The Management Committee, at Company expense, shall
cause the income tax returns for the Company to be prepared and timely filed
with the appropriate authorities. The Management Committee, at Company expense,
shall also cause to be prepared and timely filed, with appropriate federal and
state regulatory and administrative bodies, amendments to, or restatements of,
the Certificate and all reports required to be filed by the Company with those
entities under the Act or other then current applicable laws, rules, and
regulations. If a Committee Member is required by the Act to execute or file any
document fails, after demand, to do so within a reasonable period of time or
refuses to do so, any other Committee Member or Member may prepare, execute and
file that document.
9.6 BANK ACCOUNTS. The Management Committee shall maintain the
funds of the Company in one or more separate bank accounts in the name of the
Company, and shall not permit the funds of the Company to be commingled in any
fashion with the funds of any other Person.
9.7 ACCOUNTING DECISIONS AND RELIANCE ON OTHERS. All decisions as
to accounting matters, except as otherwise specifically set forth herein, shall
be made by the Management Committee. The Management Committee may rely upon the
advice of its accountants as to whether such decisions are in accordance with
accounting methods followed for federal income tax purposes.
9.8 TAX MATTERS FOR THE COMPANY HANDLED BY MANAGEMENT COMMITTEE
AND TAX MATTERS PARTNER. The Management Committee shall from time to time cause
the Company to make such tax elections it deems to be in the best interests of
the Company and the Members. The Tax Matters Partner shall represent the Company
(at the Company's expense) in connection with all examinations of the Company's
affairs by tax authorities, including resulting judicial and administrative
proceedings, and shall expend the Company funds for professional services and
costs associated therewith. The Tax Matters Partner shall oversee the Company
tax affairs in the overall best interests of the Company but shall not have the
right to agree to extend any statute of limitations without the approval of a
Majority Interest. If for any reason the Tax Matters Partner can no longer serve
in that capacity or ceases to be a Member, as the case may be, a Majority
Interest may designate another Member to be Tax Matters Partner.
ARTICLE X. DISSOLUTION AND WINDING UP
10.1 DISSOLUTION. The Company shall be dissolved, its assets shall
be disposed of, and its affairs wound up on the first to occur of the following:
A. The agreement of three (3) of the four (4) Committee
Members other than the Wise Man to terminate the Company;
B. The entry of a decree of judicial dissolution;
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C. The vote of non-defaulting Members holding a majority
of the Percentage Interests held by all non-defaulting Members pursuant to
SECTION 3.8C;
D. The sale of all or substantially all of the assets of
Company.
Except for the foregoing, the Company shall not dissolve on the
occurrence of any other event.
10.2 WINDING UP. Upon the occurrence of any event specified in
SECTION 10.1, the Company shall continue solely for the purpose of winding up
its affairs in an orderly manner, liquidating its assets, and satisfying the
claims of its creditors. The Management Committee shall be responsible for
overseeing the winding up and liquidation of Company, shall take full account of
the liabilities of Company and assets, shall, subject to SECTION 10.4, either
cause its assets to be sold or distributed, and if sold as promptly as is
consistent with obtaining the fair market value thereof, shall cause the
proceeds therefrom, to the extent sufficient therefor, to be applied and
distributed as provided in SECTION 10.4. The Persons winding up the affairs of
the Company shall give written notice of the commencement of winding up by mail
to all known creditors and claimants whose addresses appear on the records of
the Company. The Management Committee or Members winding up the affairs of the
Company shall not be entitled to compensation for such services.
10.3 DISTRIBUTIONS IN KIND. Except for a distribution of the System
to Fleming's pursuant to SECTION 8.2 OR 10.4 any non-cash asset distributed to
one or more Members shall first be valued at its fair market value to determine
the Net Profit or Net Loss that would have resulted if such asset were sold for
such value, such Net Profit or Net Loss shall then be allocated pursuant to
ARTICLE VI, and the Members' Capital Accounts shall be adjusted to reflect such
allocations. The amount distributed and charged to the Capital Account of each
Member receiving an interest in such distributed asset shall be the fair market
value of such interest (net of any liability secured by such asset that such
Member assumes or takes subject to). The fair market value of such asset shall
be determined by the Management Committee or by the Members or if any Member
objects by an independent appraiser (any such appraiser must be recognized as an
expert in valuing the type of asset involved) selected by the Management
Committee or liquidating trustee and approved by the Members.
10.4 ORDER OF PAYMENT UPON DISSOLUTION. After determining that all
known debts and liabilities of the Company, including, without limitation, debts
and liabilities to Members who are creditors of the Company, have been paid or
adequately provided for, the remaining assets shall be distributed as follows:
A. Upon dissolution of the Company (other than in
connection with a sale of all or substantially all of the Company's assets to a
third party and other than in connection with a termination resulting from one
Member's purchase of all or part of the other Member's Membership Interest) the
System shall be distributed to Fleming's, as valued at its deemed contribution
value, and all other assets of the Company shall be liquidated. All other
proceeds from liquidation of the Company assets shall be distributed (i) to
Outback until Outback shall have received an amount equal to Outback's Capital
Contributions, and (ii) thereafter to the Members in accordance with their
positive Capital Account balances after giving effect to the allocation of Net
Profit or Net Loss resulting from such liquidation. Such liquidating
distributions shall be made by the end of the Company's taxable year in which
the Company is liquidated, or, if later, within ninety (90) days after the date
of such liquidation.
B. Upon dissolution of the Company in connection with a
sale of all or substantially all of the Company's assets to a third party all
proceeds from liquidation of the Company's assets shall be distributed to the
Members in accordance with their positive Capital Account balances after giving
effect to the allocation of Net Profit or Net Loss resulting from such
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liquidation, it being the intent of the Members that distributions shall be the
same as if distributed pursuant to Percentage Interests. Such liquidating
distributions shall be made by the end of the Company's taxable year in which
the Company is liquidated, or, if later, within ninety (90) days after the date
of such liquidation.
10.5 LIMITATIONS ON PAYMENTS MADE IN DISSOLUTION. Except for the
liability of the Management Committee pursuant to SECTION 5.4 or as otherwise
specifically provided in this Agreement, each Member shall only be entitled to
look solely at the assets of the Company for the return of its Capital
Contributions and positive Capital Account balance and shall have no recourse
for its Capital Contribution, positive Capital Account balance and/or share of
Net Profits (upon dissolution or otherwise) against the Management Committee or
any other Member.
ARTICLE XI. INDEMNIFICATION AND INSURANCE
11.1 INDEMNIFICATION OF AGENTS. Unless the Committee Members may be
liable to the Company for any event described in SECTION 5.4, the Company shall
defend and indemnify any Member or Committee Member and may indemnify any other
Person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by reason of the
fact that it is or was a Member, Committee Member, officer, employee or other
agent of the Company or that, being or having been such a Member, Committee
Member, officer, employee or agent, it is or was serving at the request of the
Company as a manager, member, director, officer, employee or other agent of
another limited liability company, corporation, partnership, joint venture,
trust or other enterprise (all such persons being referred to hereinafter as an
"agent"), to the fullest extent permitted by applicable law in effect on the
date hereof and to such greater extent as applicable law may hereafter from time
to time permit. The Management Committee shall be authorized, on behalf of the
Company, to enter into indemnity agreements from time to time with any Person
entitled to be indemnified by the Company hereunder, upon such terms and
conditions as the Management Committee deems appropriate in its business
judgment.
11.2 INSURANCE. The Company shall have the power to purchase and
maintain insurance on behalf of any Person who is or was an agent of the Company
against any liability asserted against such Person and incurred by such Person
in any such capacity, or arising out of such Person's status as an agent,
whether or not the Company would have the power to indemnify such Person against
such liability under the provisions of SECTION 11.1 or under applicable law.
ARTICLE XII. CONFIDENTIALITY AND NON-COMPETITION
12.1 NONCOMPETITION.
A. Subject to SUBSECTION C below, so long as FPSH LP and
AWA INC are Members and with respect to each of them for three (3) years
thereafter, they, the Fleming's Principals (and their respective Affiliates)
shall not, individually or jointly with others, directly or indirectly, whether
for their own account or for that of any other Person, operate, engage in, own
or hold any ownership interest in, have any interest in or lend any assistance
to any steakhouse restaurant, or Person or entity engaged in a business owning,
operating or controlling steakhouse restaurants, other than the Company's
Restaurants and six Fleming's Prime Steakhouse restaurants currently owned or
under development by Fleming Prime Steakhouse I, L.L.C. ("FPSI") and Fleming
Prime Steakhouse II, L.L.C. ("FPSII"), and shall not act as an officer,
director, employee, partner, independent contractor, consultant, principal,
agent, or in any other capacity for, nor lend any assistance (financial or
otherwise) or cooperation to any such steakhouse restaurant or Person or entity.
The restriction contained herein shall be deemed to apply to A. William Allen
III and Rick Scott for so long as AWA INC is a Member and for three (3) years
thereafter and to Paul M. Fleming for so long as FPSH LP is a Member and for
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three (3) years thereafter. For the purposes of this SECTION 12.1, the term
"steakhouse restaurant" shall mean any restaurant for which: (i) the word
"steak" or any variation thereof is in its name; or (ii) the sale of steak or
prime rib is specified in its advertising or marketing efforts; or (iii) the
sale of steak and prime rib constitutes thirty five percent (35%) or more of its
entree sales, computed on a dollar basis.
B. Subject to SUBSECTION D below, so long as Outback is
a Member, and for a period of one (1) year thereafter, Outback (and its
Affiliates) shall not, individually or jointly with others, directly or
indirectly, whether for its own account or for that of any other Person,
operate, engage in, own or hold any ownership interest in, have any interest in
or lend any assistance to: any steakhouse restaurant having a per person check
average between $40.00 and $55.00, or Person or entity engaged in a business
owning, operating or controlling steakhouse restaurants, having a per person
check average between $40.00 and $55.00, other than the Company's Restaurants,
franchisees of the Company, and the Restaurants currently owned or under
development by Outback, FPSI or FPSII.
C. In the event the Company has ceased development, as
defined in ARTICLE VIII and the System has been distributed and assigned back to
Fleming's, then the restrictions on FPSH LP, AWA INC, Paul M. Fleming, Rick
Scott and A. William Allen III contained in paragraph (A) hereof shall not apply
and instead FPSH LP, AWA INC, Paul M. Fleming, Rick Scott and A. William Allen
III and their respective Affiliates, shall not for a period of three (3) years
from the date of assignment of the System back to Fleming's, individually or
jointly with others, directly or indirectly, whether for their own account or
for that of any other Person, operate, engage in, own or hold any ownership
interest in, have any interest in or lend any assistance to, and shall not act
as an officer, director, employee, partner, independent contractor, consultant,
principal, agent, or in any other capacity for, nor lend any assistance
(financial or otherwise) or cooperation to: (i) any steakhouse restaurant with a
per person average check between $40 and $55 or Person or entity engaged in a
business owning, operating or controlling steakhouse restaurants with a per
person average check between $40 and $55 and located within 30 miles of any
restaurant operating and utilizing the System on the date of cessation; or (ii)
any steakhouse restaurant , wherever located, with a per person average check
below $40 or more than $55.
D. In the event the Company has ceased development, as
defined in ARTICLE VIII and the System has been distributed and assigned back to
Fleming's, then the restrictions on Outback (and its Affiliates) contained in
paragraph (B) hereof shall not apply and instead Outback (and its Affiliates)
shall not, for a period of one (1) year from the date of assignment of the
System back to Fleming's, individually or jointly with others, directly or
indirectly, whether for its own account or for that of any other Person,
operate, engage in, own or hold any ownership interest in, have any interest in
or lend any assistance to: any steakhouse restaurant having a per person check
average between $40.00 and $55.00, or Person or entity engaged in a business
owning, operating or controlling steakhouse restaurants, having a per person
check average between $40.00 and $55.00, other than the Company's Restaurants,
franchisees of the Company, and the Restaurants currently owned or under
development by Outback, FPSI or FPSII.
E. None of the restrictions in this SECTION 12.1 shall
be interpreted to apply to Paul M. Fleming's ownership interest in any Z' Tejas
or Roaring Fork restaurants as those restaurants are currently operated.
12.2 CONFIDENTIALITY.
A. DEFINITION. For the purpose of this Agreement,
"Proprietary Information" shall include all information designated by any
Member, either orally or in writing, as confidential or proprietary, or which
reasonably would be considered proprietary or confidential to the business
contemplated by this Agreement, including but not limited to suppliers,
customers, trade or industrial practices, marketing and technical plans,
technology, personnel, organization or internal affairs, plans for products and
ideas, recipes, menus, wine lists and proprietary techniques and other trade
secrets. Notwithstanding the foregoing, "Proprietary Information" shall not
29
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include information which (i) has entered the public domain or became known
other than due to a breach of any obligation of confidentiality owed to the
owner of such information; (ii) was known prior to the disclosure of such
information; (iii) became known to the recipient from a source other than a
Member or its Affiliate, provided there was no breach of an obligation of
confidentiality owed to said Member or its Affiliate; or (iv) was independently
developed by the party receiving such information.
B. NO DISCLOSURE, USE, OR CIRCUMVENTION. No Member or
its Affiliates shall disclose any Proprietary Information to any third parties
(other than existing or permitted franchisees) and will not use any Proprietary
Information in that Member's or Affiliate's business or any affiliated business
without the prior written consent of the other Member, and then only to the
extent specified in that consent. Consent may be granted or withheld at the sole
discretion of any Member. No Member shall contact any suppliers, customers,
employees, affiliates or associates to circumvent the purposes of this
provision.
C. MAINTENANCE OF CONFIDENTIALITY. Each Member shall
take all steps reasonably necessary or appropriate to maintain the strict
confidentiality of the Proprietary Information and to assure compliance with
this Agreement.
12.3 NON SOLICITATION. During the term of this Agreement and, with
respect to each Member, for a period two (2) years following the earlier of (A)
the date that the Member transfers all of its Membership Interest in the Company
or (B) the dissolution of the Company pursuant to ARTICLE X, the Member shall
not offer employment to any employee of the Company or of a Member, or their
Affiliates, or otherwise solicit or induce any employee of any of them to
terminate their employment, nor shall any of the Fleming's Principals act as an
officer, director, employee, partner, independent contractor, consultant,
principal, agent, proprietor, owner or part owner, or in any other capacity, for
any person or entity which solicits or otherwise induces any employee of the
Company or of a Member, or their Affiliates, to terminate their employment with
such entity.
12.4 REASONABLENESS OF RESTRICTIONS; REFORMATION; ENFORCEMENT. The
parties hereto recognize and acknowledge that the geographical and time
limitations contained in SECTION 12.1, 12.2 AND 12.3 hereof are reasonable and
properly required for the adequate protection of the Company's and Members'
interests. It is agreed by the parties hereto that if any portion of the
restrictions contained in SECTION 12.1, 12.2 OR 12.3 are held to be
unreasonable, arbitrary, or against public policy, then the restrictions shall
be considered divisible, both as to the time and to the geographical area, with
each month of the specified period being deemed a separate period of time and
each radius mile or other portion of the restricted territory being deemed a
separate geographical area, so that the longest period of time and largest
geographical area shall remain effective so long as the same is not
unreasonable, arbitrary, or against public policy. The parties hereto agree that
in the event any court of competent jurisdiction determines the specified period
or the specified geographical area of the restricted territory to be
unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is the longest period of time and largest geographical
area determined to be reasonable, nonarbitrary, and not against public policy
may be enforced. If any of the covenants contained herein are violated and if
any court action is instituted by the Company or a Member to prevent or enjoin
such violation, then the period of time during which the business activities
shall be restricted, as provided in this Agreement, shall be lengthened by a
period of time equal to the period between the date of the breach of the terms
or covenants contained in this Agreement and the date on which the decree of the
court disposing of the issues upon the merits shall become final and not subject
to further appeal.
In the event it is necessary for the Company or a Member to initiate
legal proceedings to enforce, interpret or construe any of the covenants
contained in SECTION 12.1, 12.2 OR 12.3 hereof, the prevailing party in such
proceedings shall be entitled to receive from the non-prevailing party, in
addition to all other remedies, all costs, including reasonable attorneys' fees,
of such proceedings including appellate proceedings.
30
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12.5 SPECIFIC PERFORMANCE. The parties agree that a breach of any
of the covenants contained SECTION 12.1, 12.2 AND 12.3 hereof will cause
irreparable injury to the Company or a Member for which the remedy at law will
be inadequate and would be difficult to ascertain and therefore, in the event of
the breach or threatened breach of any such covenants, the Company or injured
Member shall be entitled, in addition to any other rights and remedies it may
have at law or in equity, to obtain an injunction to restrain any threatened or
actual activities in violation of any such covenants. The parties hereby consent
and agree that temporary and permanent injunctive relief may be granted in any
proceedings which might be brought to enforce any such covenants without the
necessity of proof of actual damages, and in the event the Company or Member
does apply for such an injunction, that the Company or Member has an adequate
remedy at law shall not be raised as a defense. ARTICLE XIII. REPRESENTATIONS
AND WARRANTIES
Each Member warrants and represents to the other Members (each of which
warranties and representations shall be deemed to be a continuing warranty and
representation and covenant that such warranties and representations shall
remain true and correct at all times during the term of the Company) that:
13.1 STATUS. If an entity, such Member is duly organized, validly
existing and in good standing under the laws of its state of formation, and each
has the power under its organizational documents and adequate authority to
execute, deliver, and perform this Agreement which upon such execution and
delivery will be a legal, valid, and binding obligation of such party
enforceable in accordance with its terms (subject only to the application of
bankruptcy, reorganization, insolvency or other similar laws regarding the
rights of creditors generally and the exercise of judicial discretion in
equity).
13.2 DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement by a Member who is an entity have been duly authorized by all
requisite corporate, partnership or other organizational action of such party
and, as of the date hereof, do not require the consent or approval of any person
that has not been obtained and are not in contravention of or in conflict with
any term or provision of the organizational documents of such party.
13.3 OTHER AGREEMENTS AND VIOLATIONS OF LAW. The execution,
delivery and performance of this Agreement by such Member will not breach or
constitute a default under any agreement, indenture, undertaking or other
instrument to which such party or any affiliate of such party is a party or by
which any of such persons or any of their respective properties may be bound or
affected, which breach or default would have a materially adverse effect on the
financial condition of such Member or on the financial condition, properties or
operations of the Company. Other than as contemplated by this Agreement such
execution, delivery, and performance will not result in the creation or
imposition of (or the obligation to create or impose) any lien or encumbrance on
any of the Company property nor, to the knowledge of such party, constitute or
result in the violation of any law.
13.4 NO LITIGATION. There is no litigation or administrative or
other proceeding or tax audit pending, or, to the knowledge of such Member,
threatened against or affecting such Member, or any of its affiliates, or any of
their respective properties, which, if determined adversely, would have a
materially adverse effect on the financial condition, properties or operations
of the Company. As of the date hereof, neither such Member, nor, to the
knowledge of such Member, any affiliate of such Member is in default with
respect to any order, writ, injunction, decree or demand of any court of other
governmental or regulatory authority which might in any way adversely affect the
Company.
ARTICLE XIV. MISCELLANEOUS
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14.1 COMPLETE AGREEMENT. This Agreement and the Certificate
constitute the complete and exclusive statement of agreement among the Members
with respect to the subject matter herein and therein and replace and supersede
all prior written and oral agreements or statements by and among the Members or
any of them. No representation, statement, condition or warranty not contained
in this Agreement or the Certificate will be binding on the Members or
Management Committee or have any force or effect whatsoever. To the extent that
any provision of the Certificate conflicts with any provision of this Agreement,
the Certificate shall control.
14.2 CONSULTATION WITH ATTORNEY. Each Member has been advised to
consult with its own attorney regarding all legal matters concerning an
investment in the Company and the tax consequences of participating in the
Company, and has done so, to the extent it considers necessary.
14.3 TAX CONSEQUENCES. Each Member acknowledges that the tax
consequences to it of investing in the Company will depend on its particular
circumstances, and neither the Company, the Management Committee, the Members,
nor the partners, shareholders, members, agents, officers, directors, employees,
Affiliates, or consultants of any of them will be responsible or liable for the
tax consequences to him or her of an investment in the Company. It will look
solely to, and rely upon, its own advisers with respect to the tax consequences
of this investment.
14.4 NO ASSURANCE OF TAX BENEFITS. Each Member acknowledges that
there can be no assurance that the Code or the Regulations will not be amended
or interpreted in the future in such a manner so as to deprive the Company and
the Members of some or all of the tax benefits they might now receive, nor that
some of the deductions claimed by the Company or the allocations of items of
income, gain, loss, deduction, or credit among the Members may not be challenged
by the Internal Revenue Service.
14.5 BINDING EFFECT Subject to the provisions of this Agreement
relating to transferability, this Agreement will be binding upon and inure to
the benefit of the Members, and their respective successors and assigns.
14.6 PARTIES IN INTEREST. Except as expressly provided in the Act,
nothing in this Agreement shall confer any rights or remedies under or by reason
of this Agreement on any Persons other than the Members and their respective
successors and assigns nor shall anything in this Agreement relieve or discharge
the obligation or liability of any third person to any party to this Agreement,
nor shall any provision give any third person any right of subrogation or action
over or against any party to this Agreement.
14.7 PRONOUNS; STATUTORY REFERENCES. All pronouns and all
variations thereof shall be deemed to refer to the masculine, feminine, or
neuter, singular or plural, as the context in which they are used may require.
Any reference to the Code, the Regulations, the Act or other statutes or laws
will include all amendments, modifications, or replacements of the specific
sections and provisions concerned.
14.8 HEADINGS. All headings herein are inserted only for
convenience and ease of reference and are not to be considered in the
construction or interpretation of any provision of this Agreement.
14.9 INTERPRETATION. In the event any claim is made by any Member
relating to any conflict, omission or ambiguity in this Agreement, no
presumption or burden of proof or persuasion shall be implied by virtue of the
fact that this Agreement was prepared by or at the request of a particular
Member or its counsel.
14.10 REFERENCES TO THIS AGREEMENT. Numbered or lettered articles,
sections and subsections herein contained refer to articles, sections and
subsections of this Agreement unless otherwise expressly stated.
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14.11 JURISDICTION. Each Member hereby consents to the exclusive
jurisdiction of the state and federal courts sitting in Delaware in any action
on a claim arising out of, under or in connection with this Agreement or the
transactions contemplated by this Agreement. Each Member further agrees that
personal jurisdiction over him or her may be effected by service of process by
registered or certified mail addressed as provided in SECTION 14.14 of this
Agreement, and that when so made shall be as if served upon him or her
personally within the Member's state of residence.
14.12 EXHIBITS All Exhibits attached to this Agreement are
incorporated and shall be treated as if set forth herein.
14.13 ADDITIONAL DOCUMENTS AND ACTS. Each Member agrees to execute
and deliver such additional documents and instruments and to perform such
additional acts as may be necessary or appropriate to effectuate, carry out and
perform all of the terms, provisions, and conditions of this Agreement and the
transactions contemplated hereby.
14.14 NOTICES.
A. All notices required or permitted shall be in writing
and may be communicated in person or by mail. Notice shall be deemed to be
delivered when deposited in the United States mail addressed to the respective
Member at its mailing address as designated in the records of the Membership,
with postage thereon prepaid, registered or certified mail, return receipt
requested, or if personally delivered, when received. Notices to a dissolved or
bankrupt Member shall be delivered in the same manner to the last known address
of its registered agent or receiver, as the case may be.
B. While all notices, demands and requests shall be
effective as provided in SECTION 14.4A above, the time period in which a
response to any such notice, demand or request must be given shall commence to
run from the date of receipt appearing on the return receipt or other evidence
of delivery of the notice, and the time period in which a response to a demand
or request must be given shall commence to run from the date of receipt on the
return receipt or other evidence of delivery of the notice. Rejection or other
refusal to accept or the inability to deliver because of changed address of
which no notice was given shall be deemed to be receipt of the notice, demand or
request sent.
C. By giving to the other Members at least thirty (30)
days' prior written notice thereof, each Member and its successors and assigns
shall have the right from time to time and at any time during the term of this
Agreement to change their addresses and each shall have the right to specify as
its address any other address within the United States of America.
14.15 AMENDMENTS. All amendments to this Agreement will be in
writing and signed by all of the Members.
14.16 RELIANCE ON AUTHORITY OF PERSON SIGNING AGREEMENT If a Member
is not a natural person, neither the Company nor any Member will: (A) be
required to determine the authority of the individual signing this Agreement to
make any commitment or undertaking on behalf of such entity or to determine any
fact or circumstance bearing upon the existence of the authority of such
individual, or (B) be responsible for the application or distribution of
proceeds paid or credited to individuals signing this Agreement on behalf of
such entity.
33
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14.17 COMPANY PROPERTY. All property contributed to the Company or
acquired with Company funds shall be held and titled in the name of the Company
and not individually by or for any Member.
14.18 MULTIPLE COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
14.19 ATTORNEY FEES. In the event that any dispute between the
Company and the Members or among the Members should result in litigation or
arbitration, the prevailing party in such dispute shall be entitled to recover
from the other party all reasonable fees, costs and expenses of enforcing any
right of the prevailing party, including without limitation, reasonable
attorneys' fees and expenses, all of which shall be deemed to have accrued upon
the commencement of such action and shall be paid whether or not such action is
prosecuted to judgment. Any judgment or order entered in such action shall
contain a specific provision providing for the recovery of attorney fees and
costs incurred in enforcing such judgment and an award of prejudgment interest
from the date of the breach at the maximum rate of interest allowed by law. For
the purposes of this Section: (a) attorney fees shall include, without
limitation, fees incurred in the following: (1) postjudgment motions; (2)
contempt proceedings; (3) garnishment, levy, and debtor and third party
examinations; (4) discovery; and (5) bankruptcy litigation and (b) prevailing
party shall mean the party who is determined in the proceeding to have prevailed
or who prevails by dismissal, default or otherwise.
14.20 TIME IS OF THE ESSENCE. All dates and times in this Agreement
are of the essence.
14.21 REMEDIES CUMULATIVE. The remedies under this Agreement are
cumulative and shall not exclude any other remedies to which any person may be
lawfully entitled.
14.22 SEVERABILITY. Each article, section, subsection, and lesser
section of this Agreement constitutes a separate and distinct undertaking,
covenant or provision hereof. In the event that any provision of this Agreement
shall be determined to be invalid or unenforceable, such provision shall be
deemed limited by construction in scope and effect to the minimum extent
necessary to render the same valid and enforceable, and, in the event such a
limiting construction is impossible, such invalid or unenforceable provision
shall be deemed severed from this Agreement, but every other provision of this
Agreement shall remain in full force and effect.
14.23 PARTITION. The Members hereby agree that no Members, nor any
successor in interest of any Members, shall have the right to have Company
assets partitioned, or to file a complaint or institute any proceedings of law
or equity to have a Company asset partitioned, and each Member, on behalf of
itself, its successors and assigns, hereby waives any such rights.
14.24 WAIVER. The failure of any Member to insist upon strict
performance of a covenant hereunder or any obligation hereunder shall not be a
waiver of such Member's right to demand compliance therewith in the future.
34
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All of the Members of OUTBACK/FLEMING'S, LLC, a Delaware limited
liability company, have executed this Agreement, effective as of the date
written above.
ATTEST MEMBERS:
"OUTBACK"
OS PRIME, INC.,
a Florida corporation
By:____________________________ By:_________________________________
Joseph J. Kadow, Secretary Robert D. Basham, Co-Chairman
"FPSH LP"
FPSH LIMITED PARTNERSHIP, an Arizona
limited partnership
By its general partner:
PKCR, LLC, an Arizona limited
liability company
By:__________________________________
Paul M. Fleming, Manager
"AWA INC"
AWA III STEAKHOUSES, INC, a
California corporation
By:_______________________________ By:__________________________________
Print Name:_______________________ Its:_________________________________
Its: Secretary
35
<PAGE> 42
EXHIBIT A
ADDRESSES
OF MEMBERS AND COMMITTEE MEMBERS
<TABLE>
<CAPTION>
MEMBER ADDRESS
<S> <C>
OS PRIME, INC. 550 North Reo Street, Suite 200
Tampa, Florida 33609
FPSH LIMITED PARTNERSHIP 7150 E. Camelback Road, Suite 239
Scottsdale, Arizona 85251
AWA III STEAKHOUSES, INC. 455 Newport Center Drive
Newport Beach, California 92660
COMMITTEE MEMBER ADDRESS
A. William Allen III 455 Newport Center Drive
Newport Beach, California 92660
Paul M. Fleming 7150 E. Camelback Road, Suite 239
Scottsdale, Arizona 85251
Michael O'Donnell 550 N. Reo Street, Suite 200
Tampa, Florida 33609
Chris Sullivan 550 N. Reo Street, Suite 200
Tampa, Florida 33609
[Wise Man to be named]
-----------------------------------------------------------------
-----------------------------------------------------------------
</TABLE>
36
<PAGE> 43
CONSENT OF OUTBACK STEAKHOUSE, INC.
The undersigned, the sole shareholder OS PRIME, INC., which is a member
in OUTBACK/FLEMING'S, LLC, a Delaware limited liability company hereby agrees to
be bound by and comply with the provisions of that certain Operating Agreement
of OUTBACK/FLEMING'S, LLC (the "Agreement") applicable to it in its capacity as
the parent of OS PRIME, INC. or as otherwise provided in the Agreement.
DATED this _____ day of __________, 1999.
ATTEST OUTBACK STEAKHOUSE, INC.,
a Delaware corporation
By:_______________________ By:_____________________________
Joseph J. Kadow, Secretary Robert D. Basham, Chief Operating Officer
37
<PAGE> 44
CONSENT OF AWA III STEAKHOUSES, INC. SHAREHOLDERS
Rick Scott and A. William Allen III (together with his wife or a trust
controlled by them), being all of the shareholders in AWA III STEAKHOUSES, INC.
which is a member in OUTBACK/FLEMING'S, LLC, a Delaware limited liability
company, hereby agree to be bound by, and comply with the provisions of that
certain Operating Agreement of OUTBACK/FLEMING'S, LLC (the "Agreement")
applicable to them in their individual capacity, as shareholders of AWA III
STEAKHOUSE, INC., or as "Fleming's Principals" (as such term is defined in the
Agreement) or as otherwise provided in the Agreement.
DATED this _____ day of __________, 1999.
WITNESSES:
__________________________________ _________________________________
A. WILLIAM ALLEN III
__________________________________
__________________________________ _______________________________
RICK SCOTT
__________________________________
38
<PAGE> 45
CONSENT OF PAUL M. FLEMING
PAUL M. FLEMING being the sole manager of PKCR, LLC ("PKCR") the sole
general partner of FPSH LIMITED PARTNERSHIP which is a member in
OUTBACK/FLEMING'S, LLC, a Delaware limited liability company, hereby agrees to
be bound by, and comply with the provisions of that certain Operating Agreement
of OUTBACK/FLEMING'S, LLC (the "Agreement") applicable to him in his individual
capacity, as the sole manager of PKCR, and as a "Fleming's Principal" (as such
term is defined in the Agreement) or as otherwise provided in the Agreement.
DATED this _____ day of __________, 1999.
WITNESSES:
__________________________________ _______________________________
PAUL M. FLEMING
__________________________________
39
<PAGE> 46
CONSENT OF PKCR , LLC
PKCR, LLC, the sole general partner of FPSH LIMITED PARTNERSHIP which is a
member in OUTBACK/FLEMING'S LLC (the "Company"), a Delaware limited liability
company, hereby agrees to be bound by and comply with the provisions of that
certain Operating Agreement of OUTBACK/FLEMING'S, LLC (the "Agreement")
applicable to it individually and as a partner in FPSH LIMITED PARTNERSHIP, or
as otherwise provided in the Agreement.
PKCR, LLC, an Arizona limited liability company
By:__________________________________________
Paul M. Fleming, Manager
40
<PAGE> 1
EXHIBIT 4.34
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
OUTBACK STEAKHOUSE, INC.
OUTBACK STEAKHOUSE OF FLORIDA, INC.
CHARLES ANGELOPULOS
ANTHONY ATHANAS, JR.
DONALD W. BURTON
ARTHUR COLLIAS
PETER LYNCH
J. BRIAN MCCARTHY
JOHN F. DOYLE
KEVIN P. HARRON
TEDESCO STEAKHOUSE, INC.
KPH, INC.
TEDESCO-KPH PARTNERSHIP
AND
THE LIMITED PARTNERSHIPS
INDICATED ON SCHEDULE I
ATTACHED HERETO
DATED: NOVEMBER 30, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE I - DEFINITIONS...........................................................................................2
ARTICLE II - PLAN OF ACQUISITION..................................................................................4
2.1 The Merger......................................................................................4
2.2 Adjustments.....................................................................................4
2.3 Closing.........................................................................................4
2.4 Execution and Delivery of Closing Documents.....................................................5
2.5 Execution and Filing of Merger Documents........................................................5
2.6 Effectiveness of Merger.........................................................................5
2.7 Further Assurances..............................................................................5
2.8 Dissenters' Rights..............................................................................5
2.9 Certificates....................................................................................6
2.10 Closing of Transfer Books.......................................................................6
2.11 Fractional Shares...............................................................................6
2.12 Accounting Treatment............................................................................6
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF ENTITIES..........................................................6
3.1 Organization and Good Standing..................................................................6
3.2 Foreign Qualification...........................................................................7
3.3 Power and Authority.............................................................................7
3.4 Authority and Validity..........................................................................7
3.5 Binding Effect..................................................................................7
3.6 Compliance with Other Instruments...............................................................7
3.7 Capitalization of Corporations..................................................................8
3.8 Composition of TKPH and Partnerships............................................................8
3.9 Financial Statements and Records................................................................8
3.10 Absence of Certain Changes......................................................................9
3.11 Tax Liabilities.................................................................................9
3.12 No Undisclosed Liabilities.....................................................................10
3.13 Title to Properties............................................................................10
3.14 Contracts......................................................................................10
3.15 Employees; Employee Benefit Plans..............................................................11
3.16 Litigation and Government Claims...............................................................12
3.17 No Violation of Any Instrument.................................................................12
3.18 Necessary Approvals and Consents...............................................................12
3.19 Compliance With Laws...........................................................................12
3.20 No Further Rights..............................................................................12
3.21 Accuracy of Information Furnished..............................................................13
3.22 Real Property..................................................................................13
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS..................................................14
4.1 Authority and Validity.........................................................................14
4.2 Binding Effect.................................................................................14
4.3 Ownership......................................................................................14
4.4 Voting.........................................................................................15
4.5 Residency......................................................................................15
4.6 Compliance with Other Instruments..............................................................15
4.7 Status as S Corporation........................................................................15
4.8 Securities Laws Representations and Warranties.................................................15
4.9 Refinancing of Manchester Debt.............................................................16
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS (Continued)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF OSI AND OUTBACK....................................................16
5.1 Organization and Good Standing.................................................................17
5.2 Foreign Qualification..........................................................................17
5.3 Power and Authority............................................................................17
5.4 Authority and Validity.........................................................................17
5.5 Binding Effect.................................................................................17
5.6 Compliance with Other Instruments..............................................................17
5.7 Capitalization of OSI..........................................................................17
5.8 SEC Report.....................................................................................18
5.9 Litigation and Government Claims...............................................................18
5.10 Necessary Approvals and Consents...............................................................18
5.11 Absence of Certain Changes or Events...........................................................18
ARTICLE VI - JOINT COVENANTS OF THE ENTITIES, THE SHAREHOLDERS, OSI AND OUTBACK..................................18
6.1 Notice of any Material Change..................................................................19
6.2 Cooperation....................................................................................19
6.3 Termination of Agreements......................................................................19
6.4 Additional Agreements..........................................................................19
ARTICLE VII - COVENANTS OF THE ENTITIES AND THE SHAREHOLDERS.....................................................20
7.1 Access; Confidentiality........................................................................20
7.2 Shareholders' Consent..........................................................................20
7.3 Conduct of Business Prior to Closing Date......................................................20
7.4 Securities Law Compliance; Restrictions on Shares..............................................21
7.5 Pooling........................................................................................22
7.6 Current Financial Statements...................................................................22
7.7 Agreements of Shareholders.....................................................................22
ARTICLE VIII - COVENANTS OF OSI AND OUTBACK......................................................................22
8.1 Mandatory Registration of OSI Common Stock.....................................................23
8.2 Registration Procedures........................................................................24
8.3 Expenses of Registration.......................................................................24
8.4 Adjustments in Number of Shares................................................................24
8.5 Transferees....................................................................................24
8.6 Employment Agreements..........................................................................24
ARTICLE IX - JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS...................................................25
9.1 Consents to Transaction........................................................................25
9.2 Absence of Litigation..........................................................................25
9.3 Dissenter's Rights.............................................................................25
9.4 HSR Act........................................................................................25
ARTICLE X - CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ENTITIES..................................................25
10.1 Compliance.....................................................................................25
10.2 Representations and Warranties.................................................................25
10.3 Opinion........................................................................................26
10.4 Material Adverse Changes.......................................................................26
10.5 Certificates...................................................................................26
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS (Continued)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RTICLE XI - CONDITIONS PRECEDENT TO OBLIGATIONS OF OSI AND OUTBACK..............................................26
11.1 Compliance.....................................................................................26
11.2 Representations and Warranties.................................................................26
11.3 Securities Law Compliance......................................................................26
11.4 Opinions.......................................................................................27
11.5 Current Financial Status.......................................................................27
11.6 Material Adverse Changes.......................................................................27
11.7 Pooling........................................................................................27
11.8 Certificates...................................................................................27
ARTICLE XII - INDEMNIFICATION....................................................................................27
12.1 Securities Laws Indemnification................................................................27
12.2 Indemnification Based on Agreement.............................................................28
12.3 Cooperation....................................................................................28
12.4 Notice.........................................................................................29
ARTICLE XIII - MISCELLANEOUS.....................................................................................30
13.1 Termination....................................................................................30
13.2 Expenses.......................................................................................30
13.3 Entire Agreement...............................................................................31
13.4 Survival of Representations and Warranties.....................................................31
13.5 Counterparts...................................................................................31
13.6 Notices........................................................................................31
13.7 Successors and Assigns.........................................................................32
13.8 Governing Law..................................................................................32
13.9 Waiver and Other Action........................................................................32
13.10 Severability...................................................................................32
13.11 Headings.......................................................................................32
13.12 Construction...................................................................................32
13.13 Jurisdiction and Venue.........................................................................32
13.14 Enforcement....................................................................................32
13.15 Further Assurances.............................................................................32
13.16 Equitable Remedies.............................................................................33
EXHIBIT A - AGREEMENT, PLAN, AND ARTICLES OF MERGER.............................................................A-1
EXHIBIT 11.4 - OPINION OF COUNSEL - TESTA HURWITZ & THIBEAULT, LLP
EXHIBIT B - DISCLOSURE SCHEDULES................................................................................B-1
SCHEDULE I - THE RESTAURANTS, THE FRANCHISEES, AND THE EQUITY OWNERS...........................................SI-1
</TABLE>
iii
<PAGE> 5
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is made and entered into as
of the 30th day of November, 1999, by and among OUTBACK STEAKHOUSE, INC., a
Delaware corporation ("OSI"); OUTBACK STEAKHOUSE OF FLORIDA, INC., a Florida
corporation ("Outback"); CHARLES ANGELOPULOS ("Angelopulos"), ANTHONY ATHANAS,
JR. ("Athanas"), DONALD W. BURTON ("Burton"), ARTHUR COLLIAS ("Collias"), PETER
LYNCH ("Lynch"), J. BRIAN McCARTHY ("McCarthy"), JOHN F. DOYLE ("Doyle"), KEVIN
P. HARRON ("Harron"), TEDESCO STEAKHOUSE, INC., a Massachusetts corporation
("Tedesco"), KPH, Inc., a Massachusetts corporation ("KPH"), TEDESCO-KPH
PARTNERSHIP, a Massachusetts general partnership organized under the
Massachusetts Uniform Partnership Act ("TKPH"), and the limited partnerships
indicated on SCHEDULE I (each individually a "Partnership" and collectively the
"Partnership").
W I T N E S S E T H:
WHEREAS, Outback is a wholly owned subsidiary of OSI; and
WHEREAS, Angelopulos, Athanas, Burton, Collias, Lynch, McCarthy and
Doyle each of whom is identified on SCHEDULE I as a Shareholder, are the only
shareholders of Tedesco; and
WHEREAS, Harron, identified on Schedule I as a Shareholder, is the sole
shareholder of KPH; and
WHEREAS, Tedesco and KPH are the sole partners of TKPH with Tedesco
owning a ninety percent (90%) partnership interest in TKPH and KPH owning a ten
percent (10%) partnership interest in TKPH; and
WHEREAS, TKPH is the sole general partner of each Partnership; and
WHEREAS, the partners of each Partnership and their respective
partnership interests are as set forth on SCHEDULE I; and
WHEREAS, each Partnership operates an OUTBACK STEAKHOUSE restaurant (at
the address specified on SCHEDULE I) as a franchisee of Outback pursuant to an
OUTBACK STEAKHOUSE Restaurant Franchise Agreement between Outback and such
Partnership; and
WHEREAS, the Boards of Directors of Tedesco and KPH have approved the
Merger of Tedesco and KPH into Outback, with Outback as the surviving
corporation, upon the terms and conditions set forth in this Agreement; and
WHEREAS, it is intended that each Merger qualify as a reorganization
for federal income tax purposes within the meaning of Section 368(a) of the Code
and is intended to qualify as a pooling of interests for financial reporting
purposes; and
WHEREAS, pursuant to the Merger, Tedesco and KPH will each be merged
with and into Outback, with Outback as the surviving corporation, and all of the
outstanding shares of capital stock of Tedesco and KPH will be converted into
shares of OSI Common Stock; and
WHEREAS, the parties desire by this Agreement to set forth the terms
and conditions upon which they are willing to consummate the Merger.
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants and agreements contained herein, the parties hereto covenant and agree
as follows:
<PAGE> 6
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms (used in singular or
in plural form where the context indicates) shall have the meanings designated
below:
1.1 "AGREEMENT" means this Agreement and Plan of Reorganization,
including all exhibits and schedules attached hereto.
1.2 "CLOSING" means when the parties shall have executed and
delivered each agreement and instrument required by this Agreement or the Merger
Agreement to be so executed and delivered and not theretofore accomplished,
together with such other appropriate and customary documents as the other
parties reasonably may request for the purpose of consummating the transactions
contemplated by this Agreement.
1.3 "CLOSING DATE" means the actual day on which the Closing
occurs.
1.4 "CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
1.5 "CORPORATION" or "CORPORATIONS" means Tedesco and KPH
individually and collectively.
1.6 "CURRENT FINANCIAL STATEMENTS" means the unaudited balance
sheet of each Entity as of October 31, 1999, with any notes thereto, and the
related unaudited statements of income for the ten months ended October 31,
1999, together with supplemental information on each Entity, each prepared and
attested to by the chief financial officer of such Entity.
1.7 "DISCLOSURE SCHEDULES" means the schedules and agreements
attached hereto as composite Exhibit B.
1.8 ""DISSENTING SHARES" means shares of capital stock of a
Corporation whose holder demands appraisal of those shares under State Law or
who has demanded and perfected the right, if any, for appraisal of those shares
of stock in accordance with the provisions of State Law, and as of the Effective
Date has not withdrawn or lost such right to such appraisal.
1.9 "EFFECTIVE DATE" means the date the Merger Agreement is filed
with or declared effective by the appropriate governmental authority of each of
the State of the State of Florida and the states of incorporation of the
Corporations.
1.10 "EMPLOYEE BENEFIT PLAN" means any stock option, stock
purchase, stock appreciation right, bonus, deferred compensation, excess
benefits, profit sharing, pension, thrift, savings, stock bonus, employee stock
ownership plan, retirement, supplemental retirement benefit, major medical, long
term disability, hospitalization, insurance, or other plan, arrangement,
commitment, employment agreement or trust, or practice applicable to the
Entities providing employee, consultant, or executive benefits to any person.
1.11 "ENTITIES" means and includes TKPH, each Corporation and each
Partnership, individually and collectively, identified on SCHEDULE I.
1.12 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
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1.13 "FINANCIAL STATEMENTS" means (i) the Current Financial
Statements; and (ii) the consolidated audited balance sheets of the Entities as
of December 31, 1998, December 31, 1997, and December 31, 1996, with any notes
thereto and the related audited statements of income, stockholders' or partners'
equity and cash flows for the years then ended with any notes thereto together
with supplemental information for each Entity, as audited by Deloitte and
Touche, certified public accountants.
1.14 "INDIVIDUAL ANNUAL ADJUSTED GROSS INCOME" means the "adjusted
gross income" as reported for federal income tax purposes, less any income
attributable to a spouse or to property owned by a spouse and increased by the
following amounts (but not including any amounts attributed to a spouse or to
property owned by a spouse): (i) the amount of any tax-exempt interest income
received; (ii) the amount of losses claimed as a limited partner in a limited
partnership; (iii) any deduction claimed for depreciation; and (iv) any amount
by which income from long-term capital gains has been reduced in arriving at
adjusted gross income pursuant to the provisions of Section 1202 of the Code or
comparable provisions.
1.15 "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
1.16 "MERGER" means the statutory merger of each Corporation into
Outback with Outback as the surviving corporation.
1.17 "MERGER AGREEMENT" means the form of Agreement, Plan, and
Articles of Merger in the form attached to this Agreement as EXHIBIT A.
1.18 "OSI" means OUTBACK STEAKHOUSE, INC., a Delaware corporation,
whose principal business address is 2202 N. Westshore Boulevard, 5th Floor,
Tampa, Florida 33609.
1.19 "OSI COMMON STOCK" means shares of Common Stock, par value
$.01, of OSI.
1.20 "OUTBACK" means OUTBACK STEAKHOUSE OF FLORIDA, INC., a Florida
corporation and a wholly owned subsidiary of OSI, whose principal business
address is 550 North Reo Street, Suite 200, Tampa, Florida 33609.
1.21 "PARTNERSHIP INTEREST" means the ownership interest of a
partner in a Partnership's profits and losses, other items of income, gain,
losses, deductions, expenses, and credits, and distributions of net cash
receipts at any particular time, including the right of such partner to any and
all benefits to which a partner may be entitled under the Partnership's
partnership agreement.
1.22 "PARTNERSHIP" means and includes each Partnership listed on
SCHEDULE I, individually and collectively.
1.23 "PROPRIETOR" means each person designated on SCHEDULE I as the
Proprietor of the restaurant owned by a Partnership and who holds a 10%
Partnership Interest in such Partnership.
1.24 "RESTAURANT" means the OUTBACK STEAKHOUSE restaurant owned and
operated by a Partnership as a franchisee of Outback at the location specified
on SCHEDULE I.
1.25 "SECURITIES ACT" means the Securities Act of 1933, as amended.
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<PAGE> 8
1.26 "SHAREHOLDERS" means those persons designated on SCHEDULE I as
the holders of capital stock of the Corporations.
1.27 "STATE LAW" means the laws of the States of Massachusetts,
Connecticut, New Hampshire and Rhode Island.
ARTICLE II
PLAN OF ACQUISITION
2.1 THE MERGER. Subject to and upon the terms and conditions
contained herein, the Corporations shall be merged with and into Outback, with
Outback being the surviving corporation, in accordance with the Merger Agreement
attached hereto as EXHIBIT A which shall be executed and delivered by OSI,
Outback, and each Corporation prior to the Merger. By virtue of the Merger and
without any further action being required by the Shareholders, (i) all capital
stock of Tedesco outstanding immediately before the Effective Date shall be
converted into and exchanged for Two Million Thirty Thousand Four Hundred
(2,030,400) shares of OSI Common Stock, subject to statutory appraisal rights;
and (ii) all capital stock of KPH outstanding immediately before the Effective
Date shall be converted into and exchanged for Two Hundred Twenty FiveThousand
Six Hundred (225,600) shares of OSI Common Stock, subject to statutory appraisal
rights.
2.2 ADJUSTMENTS.
(a) If, between the date of this Agreement and the
Effective Date, (i) the outstanding shares of capital stock of a
Corporation shall be changed into a different number of shares or a
different class by reason of any reclassification, recapitalization,
split up, combination, exchange of shares, or readjustment, with a
record date within such period, or a stock dividend thereon shall be
declared with a record date within such period or (ii) a Corporation
shall issue additional shares of its capital stock, the number of
shares of OSI Common Stock received in exchange for each share of such
Corporation's capital stock shall be adjusted so that the aggregate
number of shares of OSI Common Stock as specified in SECTION 2.1
received in exchange for all shares of such Corporation's capital stock
(assuming no Dissenting Shares) remains unchanged.
(b) If, between the date of this Agreement and the
Effective Date, as the case may be, the outstanding shares of OSI
Common Stock shall have been changed into a different number of shares
or a different class by reason of any reclassification,
recapitalization, split up, combination, exchange of shares, or
readjustment, with a record date within such period, or a stock
dividend thereon shall be declared with a record date within such
period, the number of shares of OSI Common Stock received in exchange
for each share of capital stock of each Corporation (as specified in
SECTION 2.1 hereof) shall be equitably adjusted to reflect such change.
2.3 CLOSING. The Closing shall take place at the offices of
Outback at 10:00 a.m., Tampa time, on the Effective Date, or on such date and at
such other time and place as is agreed upon by the parties hereto. If any of the
conditions to the obligations of the parties to this Agreement have not been
satisfied or waived by the Closing Date, then the party to this Agreement that
is unable to meet such condition or conditions shall be entitled to postpone the
Closing by written notice to the other parties until such condition shall have
been satisfied or waived (which such party shall seek to cause to happen at the
earliest practicable date), but the Closing shall occur not later than November
30, 1999, unless further extended by written agreement of the parties to this
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<PAGE> 9
Agreement. The parties shall use their best efforts to effectuate a timely
Closing as provided in this SECTION 2.3.
2.4 EXECUTION AND DELIVERY OF CLOSING DOCUMENTS. Before the
Closing, each party shall cause to be prepared, and at the Closing the parties
shall execute and deliver, each agreement and instrument required by this
Agreement or the Merger Agreement to be so executed and delivered and not
theretofore accomplished. At the Closing, each party also shall execute and
deliver such other appropriate and customary documents as the other parties
reasonably may request for the purpose of consummating the transactions
contemplated by this Agreement and the Merger Agreement. All actions taken at
the Closing shall be deemed to have been taken simultaneously at the time the
last of any such action is taken or completed.
2.5 EXECUTION AND FILING OF MERGER DOCUMENTS. At the Closing, OSI,
Outback, the Entities and the Shareholders agree to take the following actions:
(a) to execute and deliver all documents and certificates
relating to the Merger required to be executed by them that have not
already been so executed and that are required under applicable
federal, state, and local laws to be filed in order validly to
effectuate the Merger, and the transfer of the Restaurants to Outback;
and
(b) to cause the Merger Agreement to be filed with the
appropriate governmental officer of both the State of Florida and the
state under which each Corporation is organized and a Certificate of
Merger to be issued by each such officer.
2.6 EFFECTIVENESS OF MERGER. The Merger shall become effective
upon the filing of the Merger Agreement with the appropriate governmental
officer of the State of Florida and the states in which each Corporation was
incorporated.
2.7 FURTHER ASSURANCES. After the Closing, the parties hereto
shall execute and deliver such additional documents and take such additional
actions as reasonably may be deemed necessary or advisable by any party in order
to consummate the transactions contemplated by this Agreement and by the Merger
Agreement, and to vest more fully in Outback the ownership of and the rights to
the Restaurants and assets of the Partnerships and the Corporations, as it or
they existed immediately before the Effective Date.
2.8 DISSENTERS' RIGHTS. Notwithstanding any provision of this
Agreement to the contrary, any Dissenting Shares shall not be converted into,
exchanged for, or represent a right to receive OSI Common Stock, but the holder
shall only be entitled to such rights as are granted by State Law. If a
Shareholder who demands appraisal of his shares under State Law shall
effectively withdraw or lose (through failure to perfect or otherwise) the right
to appraisal, then, as of the Effective Date or the occurrence of such event,
whichever last occurs, those Shareholder's shares shall be converted into or
exchanged and represent only the right to receive OSI Common Stock as provided
in ARTICLE II, upon the surrender of the certificate or certificates
representing those shares. The Corporations shall give OSI (a) prompt notice of
any written demands for appraisal of any shares of capital stock, attempted
withdrawals of such demands and any other instruments served pursuant to State
Law received by it relating to Shareholders' rights of appraisal and (b) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under State Law. No Corporation shall, except with the prior
written consent of OSI, voluntarily make any payment with respect to any demands
for appraisals of capital stock of such Corporation, offer to settle or settle
any such demands or approve any withdrawal of any such demands. Notwithstanding
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<PAGE> 10
any contrary provision of this Agreement, Outback and OSI shall have the right
to terminate this Agreement and be released from all obligations hereunder if
Outback and OSI, in their sole and absolute discretion, determine that
Shareholders of any Corporation have demanded appraisal or dissenter's rights in
amounts which jeopardize the accounting treatment specified in SECTION 2.12 or
otherwise is not in the best interests of Outback or OSI.
2.9 CERTIFICATES. At the Closing each Shareholder shall surrender
for cancellation his certificates representing capital stock of a Corporation.
As soon as practicable after the Effective Date, OSI shall cause to be delivered
to each Shareholder certificates representing the number of shares of OSI Common
Stock into which the shares of capital stock of the Corporation are converted
pursuant to the Merger as provided in SECTION 2.1 hereof. For all purposes under
the Securities Act and State Law governing the issuance of securities, the OSI
Common Stock issued to the Shareholders shall be deemed issued as of the
Effective Date.
2.10 CLOSING OF TRANSFER BOOKS. At the Closing Date, each
Corporation's and each Partnership's transfer books shall be closed and no
transfer of capital stock of any Corporation or Partnership Interests in any
Partnership shall thereafter be made.
2.11 FRACTIONAL SHARES. No fractional shares of OSI Common Stock
and no certificates or scrip therefor shall be issued. Instead, one whole share
of OSI Common Stock shall be issued for each fractional share of .5 or more of
one whole share, and each fractional share of less than .5 of one whole share
shall be disregarded.
2.12 ACCOUNTING TREATMENT. It is the intention of the parties
hereto that the Merger will be treated for financial reporting purposes as a
pooling of interests.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ENTITIES
Each Entity represents and warrants to OSI and Outback as follows:
3.1 ORGANIZATION AND GOOD STANDING. Each Corporation is a
corporation duly organized, validly existing, and in good standing under the
laws of the Commonwealth of Massachusetts. Each Partnership is duly and validly
formed and validly existing as a limited partnership under the law of the state
of its formation. TKPH is a partnership duly and validly formed and validly
existing as a partnership under the laws of the Commonwealth of Massachusetts.
Each Corporation has provided, or will provide prior to Closing, OSI and Outback
with a current certificate of legal existence and good standing (dated within
the last 30 days), issued by the Massachusetts Secretary of State. Each
Partnership has provided OSI and Outback with a current certificate of legal
existence (dated within the last 30 days) issued by the appropriate official of
the Partnerships' state of formation. Each Corporation has provided, or will
provide prior to Closing, Outback and OSI with a true and correct copy of its
articles of organization, together with all amendments thereto, under a
certificate issued by the Massachusetts Secretary of State, and a true and
correct copy of its bylaws, under a certificate issued by the President of the
Corporation certifying same and also certifying that, other than as noted, no
amendments to the articles of organization or bylaws have been or will be made
prior to Closing. TKPH has provided, or will provide prior to Closing, Outback
and OSI with a true and correct copy of its partnership agreement under a
certificate issued by the partners of TKPH certifying same and also certifying
that, other than as noted, no amendments to the partnership agreement have been
or will be made prior to Closing. Each Partnership has provided, or will provide
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<PAGE> 11
prior to Closing, Outback and OSI with a true and correct copy of its
certificate of limited partnership together with all amendments thereto, under a
certificate issued by the appropriate official of its state of formation, and a
true and correct copy of its partnership agreement, under a certificate issued
by the general partner of the Partnership certifying same and also certifying
that, other than as noted, no amendments to the certificate of limited
partnership or partnership agreement have been or will be made prior to Closing.
3.2 FOREIGN QUALIFICATION. Each Entity is duly qualified,
registered or licensed to do business and is in good standing as a foreign
corporation or partnership in every jurisdiction where the character of its
properties owned or held under lease or the nature of its business make such
qualification, registration or license necessary and except where the failure to
so qualify, register or be licensed could not, individually or in the aggregate,
have a material adverse effect on its business, operations, assets or financial
condition. Each Entity has provided, or will provide prior to Closing, OSI and
Outback with a current certificate of foreign registration and/or good standing
(dated within the last 30 days), issued by the state(s) under which such Entity
has qualified to do business as a foreign corporation or partnership.
3.3 POWER AND AUTHORITY. Each Partnership has the requisite power
and authority and all licenses and permits required by governmental authorities
to own, lease, and operate its properties and assets and to carry on the
business of its Restaurant as currently being conducted.
3.4 AUTHORITY AND VALIDITY. Each Entity has power and authority to
execute, deliver and perform its obligations under this Agreement, the Merger
Agreement and the other documents executed or to be executed by it in connection
with this Agreement; and the execution, delivery and performance by each Entity
of this Agreement, the Merger Agreement and the other documents executed or to
be executed by it in connection with this Agreement have been duly authorized by
all necessary corporate or partnership action, subject to receiving Shareholder
approval. The execution, delivery and performance by each Entity of this
Agreement, the Merger Agreement and any other documents executed or to be
executed in connection with this Agreement and the consummation of the
transactions provided for herein have been, or will have been prior to Closing,
duly authorized and approved by the Entity's board of directors, Shareholders,
or general partners, as applicable, as required under State Law and its
corporate or partnership governance documents.
3.5 BINDING EFFECT. This Agreement, the Merger Agreement, and the
other documents executed or to be executed by the Entities in connection with
this Agreement have been or will have been duly executed and delivered by the
Entities, and are or will be, when executed and delivered, the legal, valid and
binding obligations of the Entities enforceable in accordance with their terms
except that (a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights; and (b) the availability of equitable
remedies may be limited by equitable principles of general applicability.
3.6 COMPLIANCE WITH OTHER INSTRUMENTS. Except as set forth in ITEM
3.6 of the Disclosure Schedules, neither the execution and delivery by any
Entity of this Agreement, the Merger Agreement, or any other documents executed
or to be executed by any Entity, nor the consummation by them of the
transactions contemplated hereby or thereby, will violate, breach, be in
conflict with, or constitute a default under, or permit the termination or the
acceleration of the maturity, or result in the imposition, of any lien, claim or
encumbrance upon any material property or asset of any Entity pursuant to an
Entity's articles of incorporation, bylaws, partnership agreement, operating
agreement or other charter or governance document, or pursuant to any note,
bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan or
lease agreement, other agreement or instrument (including with customers),
judgment, order, injunction or decree by which any Entity is bound, to which any
of them is a party, or to which any asset of any of them is subject.
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3.7 CAPITALIZATION OF CORPORATIONS.
(a) The authorized capital stock of each Corporation, and the
number and class of all issued and outstanding shares of capital stock
of each Corporation is as specified on ITEM 3.7(A) of the Disclosure.
All of the issued and outstanding shares of each Corporation are owned
beneficially and of record by the persons and in the amounts specified
on SCHEDULE I. There are no other holders of record of the capital
stock of either Corporation and, except as set forth on ITEM 3.7(A) of
the Disclosure Schedules, no other person possesses any rights or
options to acquire capital stock of any Corporation. All of the issued
and outstanding shares of capital stock of each Corporation have been
duly authorized and validly issued and are fully paid and
nonassessable. There are no shares of capital stock of either
Corporation held in their respective treasuries.
(b) Except as indicated in ITEM 3.7 of the Disclosure
Schedules, there are no voting trusts, shareholder agreements, or other
voting arrangements among the Shareholders.
(c) Except as indicated in ITEM 3.7 of the Disclosure
Schedules, there is no outstanding subscription, contract, convertible
or exchangeable security, option, warrant, call or other right
obligating either Corporation to issue, sell, exchange or otherwise
dispose of, or to purchase, redeem or otherwise acquire, shares of, or
securities convertible into or exchangeable for, capital stock of such
Corporation.
3.8 COMPOSITION OF TKPH AND PARTNERSHIPS.
(a) Tedesco and KPH are the only partners of TKPH. Tedesco
owns beneficially and of record a ninety percent (90%) Partnership
Interest in TPKH. KPH owns beneficially and of record a ten percent
(10%) Partnership Interest in TKPH.
(b) All Partnership Interests in the Partnerships are owned by
TKPH and the Proprietors named and in the percentages indicated on
SCHEDULE I. There are no other partners of any Partnership and no other
person, other than Outback, possesses rights to acquire any interest in
any Partnership. TKPH owns beneficially and of record ninety percent
(90%) of the Partnership Interests in each Partnership, and the
Proprietor of the OUTBACK STEAKHOUSE restaurant owned by such
Partnership owns the remaining ten percent (10%) Partnership Interests.
(c) Except for the rights of first refusal contained in the
partnership agreement of TKPH and each Partnership and the OUTBACK
STEAKHOUSE Restaurant Franchise Agreements, there is no outstanding
contract, agreement, option or other right obligating the Partnership
to issue, sell, exchange or otherwise transfer any interest in any
Partnership.
3.9 FINANCIAL STATEMENTS AND RECORDS. The Entities delivered to
OSI true, correct and complete copies of the Financial Statements. The Financial
Statements present fairly the assets, liabilities and financial position of the
Entities as of the dates thereof and the results of operations for the periods
then ended, in conformity with generally accepted accounting principles (except
for the absence of footnotes to the Current Financial Statements), applied on a
consistent basis through the periods so ended. Since formation of each Entity,
there has been no change in accounting principles applicable to, or methods of
accounting utilized by such Entity. The books and records of the Entities have
been and are being maintained in accordance with good business practice, reflect
only valid transactions, are correct and complete in all material respects and
accurately reflect in all material respects the basis for the financial position
and results of operations of the Entities set forth in the Financial Statements.
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3.10 ABSENCE OF CERTAIN CHANGES. Except as indicated in ITEM 3.10
of the Disclosure Schedules), since the date of the Current Financial
Statements, no Entity has:
(a) suffered any material adverse change in its business,
results of operations, working capital, assets, liabilities, or
condition (financial or otherwise) or the manner of conducting its
business, except for a notification from the Commonwealth of
Massachusetts Department of Revenue dated November 4, 1999 with respect
to the nonpayment of certain corporate excise taxes, a copy of which
has been provided to OSI;
(b) suffered any material damage or destruction to or loss of
its assets not covered by insurance, or any loss of suppliers or
employees;
(c) acquired or disposed of any asset, or incurred, assumed,
guaranteed, endorsed, paid or discharged any indebtedness, liability or
obligation, or subjected or permitted to be subjected any material
amount of assets to any lien, claim or encumbrance of any kind, except
in the ordinary course of business;
(d) forgiven, compromised, canceled, released, waived or
permitted to lapse any material rights or claims;
(e) entered into or terminated any lease, agreement,
commitment or transaction, or agreed to or made any changes in any
leases or agreements, other than transactions and commitments entered
into in the ordinary course of business;
(f) written up, written down, or written off the book value of
any assets;
(g) declared, paid, or set aside for payment any dividend or
distribution with respect to its capital stock or partnership
interests;
(h) redeemed, purchased, or otherwise acquired, or sold,
granted or otherwise disposed of, directly or indirectly, any of its
capital stock or securities or any rights to acquire such capital stock
or securities, or agreed to changes in the terms and conditions of any
such rights outstanding as of the date of this Agreement;
(i) except in the ordinary course of business, increased the
compensation of any employee or paid any bonuses to any employee or
contributed to any Employee Benefit Plan; provided however, the
Entities may pay severance payments in a cumulative, aggregate amount
not to exceed Two Hundred Fifty Thousand Dollars ($250,000) to
employees of TKPH;
(j) entered into any employment, consulting, compensation or
collective bargaining agreement with any person or group, except oral
employment agreements which can be terminated at will; or
(k) entered into, adopted or amended any Employee Benefit Plan
or severance agreements.
3.11 TAX LIABILITIES. Other than with respect to corporate excise
taxes at the state level (including penalties and interest) which may be
assessed on the Entities in an aggregate amount not to exceed Four Hundred
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Thousand Dollars ($400,000) (the "Corporate Excise Taxes"), each Entity has
filed all federal, state, county, local and foreign tax returns and reports
required to be filed by it, including those with respect to income, payroll,
property, withholding, social security, unemployment, franchise, state liquor,
restaurant, excise, and sales and use taxes and has provided Outback and OSI
with copies of such returns and reports for the three-year period preceding the
Effective Date; each Entity has caused each such return or report to be
completed accurately; each Entity has either paid in full all taxes that have
become due and any interest and penalties with respect thereto or has fully
accrued on its books or has established adequate reserves for all taxes payable
to and including the Effective Date but not yet due; and each Entity has made
cash deposits with appropriate governmental authorities representing estimated
payments of taxes, including income taxes and employee withholding tax
obligations. Except as indicated on ITEM 3.11 of the Disclosure Schedules, no
extension or waiver of any statute of limitations or time within which to file
any return has been granted the Entity with respect to any tax. No unsatisfied
deficiency, delinquency or default for any tax, assessment or governmental
charge has been claimed, proposed or assessed against the Entity nor has the
Entity received notice of any such deficiency, delinquency or default. No Entity
has reason to believe that it has or may have any tax liabilities other than
those reflected on the Current Financial Statements, those arising in the
ordinary course of business since the date thereof, or the Corporate Excise
Taxes.
The Shareholders shall have sole responsibility for filing all required tax
returns for the Entities for all periods ending on or prior to the Effective
Date, for paying all income taxes for such periods and for paying all other
taxes for such periods in excess of (i) the reserves contained in the Current
Financial Statements, and (ii) the Corporate Excise Taxes. OSI and Outback shall
assist the Shareholders in preparing income tax returns and shall cooperate with
the Shareholders to the extent necessary therefor and the Shareholders shall
provide OSI with copies of all returns for the Entities at least fifteen (15)
days prior to filing.
3.12 NO UNDISCLOSED LIABILITIES. There are no liabilities or
obligations of any Entity of any nature, whether absolute, accrued, contingent
or otherwise other than:
(a) liabilities stated on the Current Financial Statements;
and
(b) liabilities and obligations which have been incurred since
the date of the Current Financial Statements in the ordinary course of
business consistent with past practices; and
(c) liability for the Corporate Excise Taxes.
3.13 TITLE TO PROPERTIES. Each Entity has good and marketable title
to (a) the tangible assets reflected in its books and records as being owned by
it (except as such assets have since been affected by transactions in the
ordinary course of business and consistent with past practices); (b) the real
and personal properties reflected in the Current Financial Statements (except
for assets subject to financing leases required to be capitalized under
generally accepted accounting principles, all of which are so reflected in the
Current Financial Statements or notes thereto); and (c) all assets purchased by
it since the date of the Current Financial Statements; in each case free and
clear of any lien, claim or encumbrance, except as reflected in the Current
Financial Statements or notes thereto and in ITEM 3.13 of the Disclosure
Schedules and except for liens for taxes, assessments or other governmental
charges not yet due and payable. Except for those assets acquired since the date
of the Current Financial Statements, all material properties and assets owned by
the Entities are properly reflected on the applicable Current Financial
Statements and notes thereto.
3.14 CONTRACTS. Excluding OUTBACK STEAKHOUSE Restaurant Franchise
Agreements, ITEM 3.14 of the Disclosure Schedules is a complete and accurate
list of all of the following categories of contracts and commitments (including
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summaries of oral contracts) to which each Entity is a party or by which each
Entity is bound:
(a) contracts with any labor union, benefit plans or
contracts, and employment, consulting or similar contracts, including
confidentiality agreements;
(b) leases, whether as lessor or lessee, loan agreements,
mortgages, indentures, instruments of indebtedness or commitments in
each case involving indebtedness for borrowed money or money loaned to
others, and guaranty or suretyship, performance bond, indemnification
or contribution agreements involving obligations;
(c) contracts with suppliers that involve aggregate payments
of more than One Thousand Dollars ($1,000) and which cannot be
terminated without penalty with 30 days' or less prior notice;
(d) marketing and advertising contracts;
(e) insurance policies; and
(f) other contracts not made in the ordinary course of
business or that are material to the operations, business or financial
condition of any Entity.
Each Entity has furnished or made available accurate and complete
copies of the foregoing contracts and agreements to OSI. All such contracts are
valid, binding and enforceable in accordance with their terms except that: (i)
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights; and (ii) the availability of equitable remedies may
be limited by equitable principles of general application.
3.15 EMPLOYEES; EMPLOYEE BENEFIT PLANS. The Entities have no
Employee Benefit Plans other than those indicated in ITEM 3.15 of the Disclosure
Schedules. Except as set forth on ITEM 3.15 of the Disclosure Schedules, there
has not been (a) any material failure by any Entity to operate any Employee
Benefit Plans substantially in accordance with its provisions and in compliance
with the rules and regulations governing such Employee Benefit Plan, including,
but not limited to, rules and regulations promulgated by the Department of
Labor, the Pension Guaranty Corporation, and the Department of Treasury pursuant
to ERISA or the Code, and the Equal Employment Opportunity Commission pursuant
to the Age Discrimination in Employment Act; or (b) any failure by any Entity to
pay or properly accrue on the Financial Statements all reasonably anticipated
material obligations of such Entity, whether arising by operation of law, by
contract, by past custom or practice, or otherwise, for salaries, vacation, and
holiday pay, bonuses, and other employee compensation and benefits which were
payable to its officers, directors, or other employees. Except as set forth on
ITEM 3.15 of the Disclosure Schedules, there has not occurred any material
accumulated funding deficiency within the meaning of ERISA or any material
liability to the Pension Benefit Guaranty Corporation established under ERISA,
in connection with any Employee Benefit Plan established or maintained by or on
behalf of an Entity for the benefit of the employees of such Entity, or any
other person, or any prohibited transaction (as defined in Section 4975 of the
Code and as defined in Section 406 of ERISA) by any Employee Benefit Plan
established or maintained by or on behalf of an Entity, or any trust thereunder,
or by any trustee or administrator thereof, that would subject an Entity or any
such Employee Benefit Plan, trust, trustee, or administrator, or any party
dealing with any such Employee Benefit Plan or trust, to any material tax or
penalty on prohibited transactions imposed by said Section 4975 or any failure
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to comply with the provisions of Title I of ERISA that would subject an Entity
or any such Employee Benefit Plan, trust, trustee, or administrator, or any
party dealing with any such Employee Benefit Plan or trust to any material fine,
penalty, tax or liability.
3.16 LITIGATION AND GOVERNMENT CLAIMS. Except as indicated in ITEM
3.16 of the Disclosure Schedules, there are no pending suits, claims, actions or
litigation or administrative, arbitration or other proceedings or governmental
investigations or inquiries against any Entity or to which any of its businesses
or assets are subject. Except as indicated in ITEM 3.16 of the Disclosure
Schedules, to the best knowledge any Entity, there are no such proceedings
threatened or contemplated.
3.17 NO VIOLATION OF ANY INSTRUMENT. Except as indicated in ITEM
3.17 of the Disclosure Schedules, no Entity is in violation of or default under
nor has any event occurred that, with the passage of time or the giving of
notice or both, would constitute a violation of or default under or permit the
termination of, or the acceleration of maturity of, or result in the imposition
of, a lien, claim or encumbrance upon any property or asset of any Entity,
pursuant to its articles or certificates of incorporation, bylaws, partnership
agreement, operating agreement or other charter or governance document, or
pursuant to any note, bond, indenture, mortgage, deed of trust, evidence of
indebtedness, loan or lease agreement, other material agreement or instrument
(including OUTBACK STEAKHOUSE Restaurant Franchise Agreements), judgment, order,
injunction or decree to which any Entity is a party, or by which any Entity is
bound, or to which its assets are subject.
3.18 NECESSARY APPROVALS AND CONSENTS. Other than (a) in connection
with or in compliance with State Law with respect to effectuating the Merger;
(b) consents required to be obtained from applicable liquor control authorities;
(c) consents required to be obtained from lessors; (d) approvals under the HSR
Act; and (e) applicable provisions of the Securities Act, the Securities
Exchange Act of 1934, as amended, or state securities or blue sky laws; no
authorization, consent, permit or license or approval of or declaration,
registration or filing with, any person or governmental or regulatory authority
or agency is necessary for the execution and delivery by the Entities and the
Shareholders of this Agreement, the Merger Agreement and the other agreements
executed or to be executed by them in connection with this Agreement, and the
consummation by the Entities and the Shareholders of the transactions
contemplated by this Agreement and the Merger Agreement, and the ownership and
operation by Outback of the respective businesses and properties of the Entities
after the Effective Date in substantially the same manner as now operated.
3.19 COMPLIANCE WITH LAWS. Each Entity is in compliance with all
laws applicable to its business, including, without limitation, all applicable
ERISA and labor laws, except where failure to so comply would not have a
material adverse effect on its business, operations, properties, assets or
conditions. Further, the Shareholders have no actual knowledge that any Entity
is not in compliance with any such laws applicable to its business, where
failure to so comply would have a material adverse effect on its business,
operations, properties, assets or conditions. The operations of each Restaurant
conforms in all respects with all applicable ordinances, regulations, and zoning
laws and all applicable requirements of federal, state, and local governmental
and regulatory authorities.
3.20 NO FURTHER RIGHTS. Except as specifically provided herein,
after the Merger, no Entity or Shareholder will have any rights, contractual or
otherwise, to develop, own, manage, franchise or operate OUTBACK STEAKHOUSE
restaurants. The parties acknowledge that Outback intends to enter into
management agreements with Harron whereby Harron will receive management fees
for supervision of the Restaurants currently owned by the Entities and limited
partnership agreements with Harron for the development of additional OUTBACK
STEAKHOUSE restaurants.
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3.21 ACCURACY OF INFORMATION FURNISHED. No representation or
warranty by any Entity or Shareholder contained in this Agreement nor any
information in the Financial Statements or in the Disclosure Schedules contains
any untrue statement of a material fact or omits to state any material fact that
would make the statements herein or therein, in light of the circumstances under
which they were made, false or misleading.
3.22 REAL PROPERTY
(a) TITLE; CONDITION OF IMPROVEMENTS. Each Entity owns fee
simple title to or holds a valid leasehold in the real property where
the Restaurants are located. The Restaurant building and the other
improvements located therein are in a good state of repair, and no
appropriate maintenance has been delayed or deferred. The Shareholders
shall indemnify and hold Outback and OSI harmless from the cost of any
extraordinary repairs which are identified by Outback in writing within
six months of the Effective Date following the Effective Date, and the
Shareholders assume the joint and several burden and shall pay for all
costs of extraordinary repairs to the improvements during such period.
For purposes of this SECTION 3.22(A) "extraordinary repairs" means
repairs that (i) are not properly considered part of normal, on-going
maintenance, (ii) cost in excess of Five Thousand Dollars ($5,000.00)
for any individual Entity, and (iii) are not attributable to the acts
of Outback subsequent to the Closing, (iv) are not caused by acts of
God, (v) are not the responsibility of the landlord of the property
pursuant to the lease agreement for the premises, and (vi) would not be
covered by the type of property insurance required to be carried by
SECTION 11.2 of the Franchise Agreements.
(b) HAZARDOUS WASTE MATERIALS. Each Entity represents and
warrants that the operations of the Restaurants have not resulted in a
release of hazardous waste materials at the real property on which the
Restaurants are located, the real property on which the Restaurants are
located has not and will not be used for the disposal or storage of
hazardous waste materials by the Entities, and the Entities have no
knowledge of any storage or disposal of hazardous waste materials by
any third parties. Subject to SECTION 12.2 and the limits on indemnity
contained therein, the Shareholders agree to defend, indemnify and hold
harmless Outback and OSI from and against any and all claims, demands,
judgments, damages, actions, causes of action, injuries, administrative
orders, consent agreements and orders, liabilities, penalties, costs
and expenses of any kind whatsoever, including claims arising out of
loss of life, injury to persons, property or business or damage to
natural resources in connection with the activities of the Shareholders
or the Entities, or accident or event caused by any act or omission of
the Shareholders or the Entities which: (i) arises out of the actual,
alleged or threatened discharge, dispersal, release, storage,
treatment, generation, disposal or escape of pollutants or other toxic
or hazardous substances, including any solid, liquid, gaseous or
thermal irritant or contaminant, including smoke, vapor, soot fumes,
acids, alkalis, chemicals and waste (including materials to be
recycled, reconditioned or reclaimed); or (ii) actually or allegedly
arises out of the use or inclusion of any product, material or process
containing chemicals, or the failure to detect the existence or
proportion of chemicals in the soil, air, surface water or groundwater,
or the performance or failure to perform the abatement of any pollution
source or the replacement or removal of any soil, water, surface water
or ground water containing chemicals. Subject to SECTION 12.2 and the
limits on indemnity contained therein, each Shareholder shall bear, pay
and discharge when and as the same become due and payable, any and all
such judgments or claims for damages, penalties or otherwise against
the Shareholders, the Entities, Outback, or OSI, shall hold Outback and
OSI harmless from those judgments or claims, and shall assume the
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burden and expense of defending all suits, administrative proceedings
and negotiations of any description with any and all persons, political
subdivisions or government agencies arising out of any of the
occurrences set forth above.
(c) LEASEHOLDS. With respect to leased real property, to the
best knowledge of the Entities, each landlord has fully performed all
obligations of such landlord, no obligations remain unperformed except
for normal and customary maintenance obligations. Neither the landlords
nor the Entities are in default under their leases, nor has any event
occurred that, with the passage of time or the giving of notice or
both, would constitute a default thereunder by either an Entity or a
landlord. Neither the landlords nor the Entities have any claim or
dispute with the other.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders represent and warrant to OSI and Outback as follows:
4.1 AUTHORITY AND VALIDITY. They have the capacity and authority
to execute, deliver and perform this Agreement and all other agreements and
documents they are executing or will execute in connection herewith or
therewith.
4.2 BINDING EFFECT. This Agreement and the other documents
executed or to be executed by the Shareholders in connection with this Agreement
have been or will have been duly executed and delivered by him and are or will
be, when executed and delivered, their legal, valid and binding obligations
enforceable in accordance with their terms except that:
(a) enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited
by equitable principles of general applicability.
4.3 OWNERSHIP.
(a) The Shareholders are the sole record and beneficial
owners of the Corporations' capital stock in the amounts specified on
ITEM 4.3 of the Disclosure Schedules, and no other person has any
rights (in any form) to acquire any capital stock of any of the
Corporations (other than Fleet Bank under the Entities' credit
facility).
(b) The Corporations are the sole partners of TKPH, with
Tedesco owning a ninety percent (90%) partnership Interest in TKPH and
KPH owning a ten percent (10%) partnership Interest in TKPH.
(c) TKPH and the Proprietors indicated on ITEM 4.3 of the
Disclosure Schedules are the only Partners of the Partnerships. Except
for Outback under the OUTBACK STEAKHOUSE Restaurant Franchise
Agreement, no other person has any interest in the Partnerships nor any
rights (in any form) to acquire any interest in any of the
Partnerships.
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4.4 VOTING. The Shareholders acknowledge that they have voted in
favor of the execution and delivery of this Agreement and the Merger Agreement
in their individual capacities as Shareholders and directors of the
Corporations.
4.5 RESIDENCY. The Shareholders are, and have been at all times
during the one year ending on the date hereof, residents of the state indicated
in their residential address on SCHEDULE I of this Agreement.
4.6 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the execution and
delivery by the Shareholders of this Agreement and the Merger Agreement, nor the
consummation by them of the transactions contemplated hereby and thereby will
violate, breach, be in conflict with or constitute a default under or permit the
termination or the acceleration of maturity of or result in the imposition of
any lien, claim or encumbrance upon any material property or asset of any of the
Shareholders pursuant to any note, bond, indenture, mortgage, deed of trust,
evidence of indebtedness, loan or lease agreement, other agreement or instrument
(including with customers), judgment order, injunction or decree by which any
Shareholder is bound, to which he is a party or to which he is subject.
4.7 STATUS AS S CORPORATION. Tedesco Steakhouse, Inc. has validly
elected to be taxed as an S corporation for federal income tax purposes for all
periods since its inception to the date hereof. KPH, Inc. has validly elected to
be taxed as an S corporation for federal income tax purposes for all periods
since January 1, 1996. Such S elections have not been terminated, revoked or
cancelled prior to the Effective Date. Until the Effective Date, such S
elections shall remain in full force and effect.
4.8 SECURITIES LAWS REPRESENTATIONS AND WARRANTIES. Each
Shareholder represents and warrants, as of the date hereof, the Closing Date,
and the Effective Date that:
(a) OSI and Outback have furnished him with all information
requested and full access to materials concerning OSI and Outback which
the Shareholder and/or his advisors deemed necessary to properly
evaluate the Merger. Such information and access have been made
available and utilized to the extent the Shareholder considers
necessary and advisable in making an informed investment decision, and
each Shareholder has consulted his own tax advisor and understands the
evaluation of such materials may require the assistance of experts and
each Shareholder has utilized such experts to the extent deemed
necessary.
(b) The Shareholder understands that the OSI Common Stock to
be received is an investment of a speculative nature and the
Shareholder must bear the risks thereof for an indefinite period of
time. The Shareholder has adequate means for providing for its or his
needs, is able to bear the economic risk of the investment and has no
need for liquidity in the OSI Common Stock to be received in the
Merger.
(c) The Shareholder and/or his representatives or advisors who
have acted with or on behalf of the Shareholders and who have advised
the Shareholder in this matter have such knowledge and experience in
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financial and business matters that the Shareholders are capable of
evaluating the merits and risks of the Merger for OSI Common Stock.
(d) The Shareholder is participating in the Merger solely for
the account of the Shareholder as a private investment, and the
Shareholder has no present agreement, understanding, arrangement or
intention to sell or transfer all or any portion of the shares of OSI
Common Stock to be issued in the Merger to any other person or persons.
The Shareholder does not presently intend to enter into any such
agreement or undertaking and there are no present circumstances which
will compel the Shareholder to sell any OSI Common Stock so received.
(e) The investment by the Shareholder in OSI Common Stock
pursuant to the Merger is a suitable investment for the Shareholder
given the investment goals and objectives of the Shareholder.
(f) The Shareholder agrees to indemnify and hold OSI and
Outback and each of their respective officers, directors and advisors
harmless against all liability arising out of or in connection with any
purchase, resale or distribution by the Shareholder of any OSI Common
Stock received hereby which is effected other than in strict compliance
with the terms hereof and applicable law.
(g) The Shareholder understands that the shares of OSI Common
Stock to be issued in the Merger will not be registered under the
Securities Act, nor any state securities laws, and such OSI Common
Stock may not be sold or transferred except in compliance with such
laws. The Shareholder understands that the shares of OSI Common Stock
issued to the Shareholders in the Merger will be subject to the limited
registration rights described herein and the Shareholder agrees to the
terms hereof. Such rights shall be personal to the Shareholder and
shall automatically terminate with respect to any shares of OSI Common
Stock which the Shareholder assigns or transfers, upon attachment or
seizure by or for the benefit of any creditors of the Shareholder, or
upon the occurrence of any other event which results in a succession to
the ownership of any such OSI Common Stock by operation of law, except
such rights shall inure to the benefit of the estate or heirs of a
deceased Shareholder. Neither OSI nor Outback will have any obligation
to register any such OSI Common Stock other than as provided in ARTICLE
VIII hereof.
(h) The Shareholder is a natural person (i) whose net worth
(the excess of total assets over total liabilities), individually or
jointly with his spouse, exceeds $1,000,000 (inclusive of the value of
home, home furnishings and automobiles); or (ii) who had an Individual
Annual Adjusted Gross Income in excess of $200,000 in each of the two
most recent tax years or joint income with the Shareholder's spouse in
excess of $300,000 in each of those years and reasonably expects to
reach the same income level in the current tax year; or (iii) is an
officer or director of one or more of the Corporations.
4.9 REFINANCING OF MANCHESTER DEBT. The parties acknowledge that
Tedesco Realty Group, Inc., a Connecticut corporation owned by the Shareholders
("TRG") is the owner of the land in Manchester, Connecticut on which one of the
Restaurants is located ("Connecticut Land"). The parties further acknowledge
that Six Hundred Fifty Thousand Dollars ($650,000) was drawn under the Entities'
Fleet Bank credit facility and used by TRG for the purpose of refinancing
indebtedness on the Land in November, 1997. Prior to the Closing Date the
Shareholders shall refinance the Land in a manner that does not constitute a
liability of any Entity and shall solely from the proceeds of such refinancing,
reduce the Entities' Fleet Bank credit facility by not less than Six Hundred
Fifteen Thousand Dollars ($615,000).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF OSI AND OUTBACK
OSI and Outback jointly and severally represent and warrant to the
Entities and the Shareholders as follows:
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5.1 ORGANIZATION AND GOOD STANDING. OSI and Outback are
corporations duly organized, validly existing and in good standing under the
laws of the States of Delaware and Florida, respectively.
5.2 FOREIGN QUALIFICATION. Each of OSI and Outback is duly
qualified or licensed to do business and in good standing as a foreign
corporation in every jurisdiction where the failure to so qualify could have a
material adverse effect on their respective business, operations, assets or
financial condition.
5.3 POWER AND AUTHORITY. OSI and Outback each have the corporate
power and authority and all licenses and permits required by governmental
authorities to own, lease and operate their respective properties and assets and
to carry on their respective business as currently being conducted.
5.4 AUTHORITY AND VALIDITY. OSI and Outback each have the
corporate power and authority to execute, deliver and perform their respective
obligations under this Agreement, the Merger Agreement and the other documents
executed or to be executed by OSI and Outback in connection with this Agreement
and the execution, delivery and performance by OSI and Outback of this
Agreement, the Merger Agreement and the other documents executed or to be
executed by OSI and Outback in connection with this Agreement have been duly
authorized by all necessary corporate action.
5.5 BINDING EFFECT. This Agreement, the Merger Agreement and the
other documents executed or to be executed by OSI and Outback in connection with
this Agreement have been or will have been duly executed and delivered by OSI
and Outback and are or will be, when executed and delivered, the legal, valid
and binding obligations of OSI and Outback, enforceable in accordance with their
terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights; and
(b) the availability of equitable remedies may be limited by
equitable principles of general applicability.
5.6 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the execution and
delivery by OSI and/or Outback of this Agreement, the Merger Agreement, nor the
consummation by them of the transactions contemplated hereby and thereby will
violate, breach, be in conflict with or constitute a default under or permit the
termination or the acceleration of maturity of or result in the imposition of
any lien, claim or encumbrance upon any property or asset of OSI or Outback
pursuant to, the certificate of incorporation or bylaws of OSI or Outback or any
note, bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan
or lease agreement, other agreement or instrument, judgment order, injunction or
decree by which OSI or Outback is bound, to which it is a party or to which its
assets are subject.
5.7 CAPITALIZATION OF OS. The authorized capital stock of OSI
consists of Two Hundred Million (200,000,000) shares of Common Stock, $.01 par
value and Two Million (2,000,000) shares of Preferred Stock, $.01 par value, of
which approximately Seventy-Four Million Two Hundred Fifty-Five Thousand and
Forty-Seven (74,255,047) shares of Common Stock and no shares of Preferred Stock
were issued and outstanding as of August 31, 1999. All of the issued and
outstanding shares of OSI Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable and are free from any preemptive
rights. The shares of OSI Common Stock to be issued in exchange for the
Corporation's capital stock at the Effective Date, when issued and delivered,
will be duly authorized, validly issued, fully paid and nonassessable. As of the
date hereof, except for (i) employee and director stock options to acquire
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shares of OSI Common Stock, (ii) employee stock ownership plans, and (iii)
agreements with joint venture partners and other franchisees of Outback for
transactions similar to the Merger, there are no options, warrants or other
rights, agreements or commitments outstanding obligating Outback or OSI to issue
shares of its capital stock. All of the outstanding shares of capital stock of
Outback are owned by OSI, free and clear of any lien or encumbrance.
5.8 SEC REPORT. OSI has delivered to the Entities and the
Shareholders true and complete copies of (i) OSI Annual Report on Form 10-K,
Proxy Statement and Annual Report to Shareholders for the year ended December
31, 1998 and (ii) all periodic reports, if any, on Form 8-K and Form 10-Q filed
with the Securities and Exchange Commission since December 31, 1998 to the date
hereof. Such documents and reports did not on their dates or the date of filing,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. OSI has
filed all material documents required to be filed by it with the SEC and all
such documents complied as to form in all material respects with the applicable
requirements of law. All financial statements and schedules included in the
documents referred to in this SECTION 5.8 were prepared in accordance with
generally accepted accounting principles, applied on a consistent basis except
as noted therein and fairly present the information purported to be shown
therein.
5.9 LITIGATION AND GOVERNMENT CLAIMS. There is no pending suit,
claim, action or litigation or administrative, arbitration or other proceeding
or governmental investigation or inquiry against OSI or Outback or to which
their assets are subject, which would, severally or in the aggregate, have a
material adverse effect on the business, results of operations, assets or the
condition, financial or otherwise, of OSI and its subsidiaries, taken as a
whole. There are no such proceedings threatened or, to the knowledge of OSI or
Outback, contemplated or any unasserted claims (whether or not the potential
claimant may be aware of the claim), which might, severally or in the aggregate
have a material adverse effect on the business, results of operations, assets or
the condition, financial or otherwise, of OSI and its subsidiaries, taken as a
whole.
5.10 NECESSARY APPROVALS AND CONSENTS. Other than (a) in connection
with or in compliance with the laws of the State of Florida with respect to
effectuating the Merger, (b) consents required to be obtained from applicable
liquor control authorities, (c) approval under the HSR Act, and (d) consents
required to be obtained from lessors, no authorization, consent, permit or
license or approval of or declaration, registration or filing with, any person
or governmental or regulatory authority or agency is necessary for the execution
and delivery by OSI and Outback of this Agreement, the Merger Agreement and the
other agreements executed or to be executed by either of them in connection with
this Agreement and the consummation by OSI and Outback of the transactions
contemplated by this Agreement and the Merger Agreement, including the issuance
of the OSI Common Stock to the Shareholders in connection with the Merger.
5.11 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
public filings by OSI with the Securities and Exchange Commission prior to the
date hereof and the Closing Date, since December 31, 1998, there has not been
any material adverse change in the financial condition, results of operations or
the business, properties, assets or liabilities of Outback or OSI.
ARTICLE VI
JOINT COVENANTS OF THE ENTITIES,
THE SHAREHOLDERS, OSI AND OUTBACK
The Entities and the Shareholders, jointly and severally, on the one
hand, and OSI and Outback, jointly and severally on the other hand, covenant
with each other as follows:
6.1 NOTICE OF ANY MATERIAL CHANGE. Until the Effective Date, the
Entities, the Shareholders, OSI and Outback shall, promptly after the first
notice or occurrence thereof but prior to the Effective Date, advise the others
in writing of any event or the existence of any state of facts that:
(a) would make any of its representations and warranties in
this Agreement untrue in any material respect; or
(b) would otherwise constitute a material adverse change in
the business, results of operation, working capital, assets,
liabilities or condition (financial or otherwise) of OSI, Outback or
the Entities and their respective subsidiaries, taken as a whole. No
supplement or amendment to any Disclosure Schedule shall have any
effect for the purpose of determining the satisfaction of or compliance
with the conditions to the obligations of the parties to consummate the
Merger set forth elsewhere in this Agreement.
6.2 COOPERATION. Until the Effective Date, the parties hereto
shall and shall cause each of their affiliates to use its best efforts to:
(a) proceed promptly to make or give the necessary
applications, notices, requests and filings to obtain at the earliest
practicable date and, in any event, before the Closing Date, the
approvals, authorizations and consents necessary to consummate the
transactions contemplated by this Agreement;
(b) cooperate with and keep the other informed in connection
with this Agreement; and
(c) take such actions as the other parties may reasonably
request to consummate the transactions contemplated by this Agreement
and use their best efforts and diligently attempt to satisfy, to the
extent within its control, all conditions precedent to the obligations
to close this Agreement.
6.3 TERMINATION OF AGREEMENTS. At the Effective Date all existing
development agreements and franchise agreements between Outback, as franchisor,
and any Entity or Shareholder, as franchisee, shall be, without further action
by any party, terminated; PROVIDED, HOWEVER, no party (or other person bound
thereby) shall be released from the post termination covenants regarding
confidentiality, noncompetition, and nonsolicitation contained in Article VI of
the OUTBACK STEAKHOUSE Restaurant Franchise Agreement nor be released with
respect to acts and events occurring prior to such termination in any agreement
or guaranty executed by a Shareholder pursuant to an OUTBACK STEAKHOUSE
Restaurant Franchise Agreement.
6.4 ADDITIONAL AGREEMENTS.
(a) Subject to the terms and conditions herein provided, the
parties hereto agree to use all reasonable efforts to take or cause to
be taken, all actions and to do or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement, including using all reasonable efforts to obtain all
necessary waivers, consents and approvals, to effect all necessary
registrations and filings and to lift any injunction or other legal bar
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to the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible), subject, however, to the appropriate vote
of the Shareholders.
(b) In case at any time after the Effective Date any further
action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and/or directors of OSI and Outback and
the Shareholders shall take all such necessary action.
(c) Neither Outback or OSI nor any Entity or Shareholder shall
take any action which would jeopardize the characterization of each
Merger as a reorganization within the meaning of Section 368(a) of the
Code or the treatment of each Merger for financial reporting purposes
as a pooling of interests.
ARTICLE VII
COVENANTS OF THE ENTITIES AND THE SHAREHOLDERS
Each Entity and Shareholder covenants and agrees with OSI as follows:
7.1 ACCESS; CONFIDENTIALITY. During the period pending the Closing
Date, the Entities shall afford to OSI and to OSI officers, employees,
accountants, counsel and other authorized representatives, full access during
regular business hours to their assets, properties, books, contracts,
commitments and records and will furnish or use their best efforts to cause
representatives to furnish promptly to OSI such additional financial and
operating data and other documents and information (certified if requested and
reasonably susceptible to certification) relating to their respective businesses
and properties as OSI or its duly authorized representatives may from time to
time reasonably request. OSI shall cause all information obtained by it or its
representatives pursuant to this Agreement or in connection with the negotiation
hereof to be treated as proprietary and confidential (other than information
that is a matter of public knowledge or is already known by OSI) and shall not
use in its business or for any other purpose or disclose or knowingly permit
others to use or disclose, any such information in a manner detrimental to the
Entities or the Shareholders and, if for any reason the transactions
contemplated by this Agreement are not consummated, will return all such
information to the Entities. As soon as practicable after the Effective Date,
the Shareholders shall deliver to Outback all books and records of the Entities.
7.2 SHAREHOLDERS' CONSENT. Each Corporation shall use its best
efforts to obtain Shareholder approval for the Merger. The Board of Directors
shall recommend that the Shareholders of such Corporation vote in favor of and
approve the Merger and the adoption of this Agreement.
7.3 CONDUCT OF BUSINESS PRIOR TO CLOSING DATE. From the date
hereof to the Effective Date, the Entities and the Shareholders shall:
(a) conduct the business operations of the Restaurants and
Entities in the ordinary and usual course of business consistent with
past and current practices and shall use their best efforts to maintain
and preserve intact their business organizations and goodwill, to
retain the services of their key officers and employees and to maintain
satisfactory relationships with suppliers, distributors and others
having business relationships with them;
(b) confer on a regular and frequent basis with one or more
representatives of OSI to report material operational matters and the
general status of ongoing operations;
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(c) notify OSI of any emergency or other change in the normal
course of the Entities' business and of any governmental complaints,
investigations or hearings (or communications indicating that the same
may be contemplated) if such emergency, change, complaint,
investigation or hearing would be material to any of the Entities'
business or properties including, without limitation, complaints,
investigations or hearings relating to any liquor licenses or permits
held by any of the Entities or to the transfer to or assumption by
Outback of such licenses or permits;
(d) not solicit or authorize any person to solicit or
encourage, directly or indirectly, any inquiry or proposal for the
acquisition of all or any material part of the capital stock of any
Corporation or Partnership Interests, the assets or business of any of
the Entities, or for the merger or other acquisition of any of the
Entities with or by any other person or entity or enter into
negotiations for any such proposal or provide any person with
information or assistance in furtherance of any such inquiry or
proposal, other than the transactions contemplated by this Agreement,
and shall promptly notify OSI orally and in writing of all inquiries or
proposals received with respect to such matters; and
(e) take no action (or fail to take any action) which would
cause or permit their representations and warranties contained in this
Agreement to be untrue in any material respect at the Effective Date.
7.4 SECURITIES LAW COMPLIANCE; RESTRICTIONS ON SHARES. At the
Closing, the Shareholders shall obtain and deliver to Outback and OSI the
written agreement of each Shareholder (except that OSI acknowledges and agrees
that the Shareholders shall not be required and may not be able to obtain an
agreement from Shareholders who exercise their dissenter's rights under
applicable State Law), wherein such Shareholder shall: (i) acknowledge receipt
of this Agreement and all schedules and exhibits and the documents furnished to
the Entities and the Shareholders pursuant to SECTION 5.8 and the opportunity to
ask questions of and receive answers from representatives of the management of
OSI concerning the terms and conditions of the transactions contemplated hereby
and to obtain all additional information that OSI possesses or could acquire
without unreasonable expense that is necessary to verify the accuracy of
information furnished to him and (ii) acknowledge and agree that:
(a) the shares of OSI Common Stock to be received by him as a
result of the Merger have not been registered under the Securities Act
or any applicable state securities law;
(b) the Shareholder is acquiring the shares of OSI Common
Stock to be received by him as a result of the Merger for his own
account and not with a view to the distribution or resale thereof and
will not sell or otherwise transfer the shares unless they are
registered under the Securities Act and applicable state securities
laws or, in the opinion of OSI and its counsel, an exemption from
registration is available therefor;
(c) in view of the foregoing, such Shareholder understands
that he is at economic risk with respect to his investment in the
shares so received in the Merger;
(d) OSI will place an appropriate legend on the certificate
representing OSI Common Stock to be received restricting their transfer
and stop transfer instructions will be given to the transfer agent for
the OSI Common Stock with respect to such certificates; and
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(e) warrants to OSI that he is an accredited investor and will
provide such information as may be requested by OSI in order for OSI to
verify that such Shareholder is an accredited investor for purposes of
Regulation D promulgated under the Securities Act.
7.5 POOLING. At the Closing Date, the Shareholders shall obtain
and deliver to Outback and OSI the written agreement of each Shareholder that,
until such time as financial results of OSI covering at least thirty (30) days
of combined operations of OSI and the Entities subsequent to the Effective Date
have been published, he will not sell or otherwise dispose of any shares of OSI
Common Stock held by him as of the Effective Date or any of such shares
thereafter acquired by him at any time or from time to time prior to the date of
such publication. OSI shall give instructions to its transfer agent and
registrar, Bank of New York, Inc., with respect to the shares of OSI Common
Stock issued pursuant to the Merger, to the effect that no transfer of such
shares shall be effected until the date on which the requisite financial results
have been published and OSI and the transfer agent may take any action,
including placing an appropriate legend on the certificates, they deem necessary
to enforce this provision. OSI shall use its best efforts to publish such
financial results on or before January 31, 2000.
7.6 CURRENT FINANCIAL STATEMENTS. Within fifteen (15) days of the
Effective Date, the Shareholders shall furnish to OSI the unaudited balance
sheets of each Entity as of November 30, 1999, and the related unaudited
statements of income for the period then ended, certified by their respective
chief financial officer. The Entities and the Shareholders shall be deemed to
make the same representations and warranties, as appropriate, regarding such
financial statements as are made in SECTION 3.9 hereof.
7.7 AGREEMENTS OF SHAREHOLDERS. At the Closing the Shareholders
shall deliver to Outback the written agreement of each Shareholder in form and
substance acceptable to Outback whereby such person:
(a) agrees to waive any right of first refusal or other option
to purchase shares in any of the Corporations; and
(b) agrees to maintain the confidentiality of all information
regarding the OUTBACK STEAKHOUSE System; and
(c) agrees not to solicit any employees of Outback, its
franchisees or affiliates; and
(d) agrees not to compete with Outback in the casual dining
steakhouse restaurant business for a period of two years following the
Effective Date; and
(e) makes representations and warranties to Outback and OSI,
and covenants and agreements, identical to those provided for in
SECTION 4.8 and SECTION 7.4; provided however, that any Shareholder may
own not more than five percent (5%) of any class of securities of any
corporation that is publicly traded so long as such ownership is for
investment purposes only.
ARTICLE VIII
COVENANTS OF OSI AND OUTBACK
OSI and Outback, jointly and severally, covenant and agree with the
Shareholders as follows:
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8.1 MANDATORY REGISTRATION OF OSI COMMON STOCK.
(a) The Shareholders, by vote of the Shareholders who own a
majority of the OSI Common Stock received by all of the Shareholders
pursuant to the Merger, shall have the right to require OSI, by written
notice to OSI at any time after January 1, 2000 and prior to February
1, 2000 to cause a registration statement to be filed under the
Securities Act, as then in effect or under any similar federal statute
then in effect, to be effected as soon as practicable, but not later
than January 15, 2000, with respect to all or any portion of the OSI
Common Stock then held by the Shareholders and specified in such notice
(hereinafter, collectively the "Registrable Shares") and OSI will use
its best reasonable efforts to cause such registration statement as may
be so requested to be effective at the earliest date on which the
Shareholders may sell shares of OSI Common Stock without jeopardizing
the accounting treatment of the Merger as a pooling of interests, and
to be kept effective for a period (not to exceed forty-five (45) days)
as would permit or facilitate, to the extent so requested, the sale and
distribution of the Registrable Shares, including, without limitation,
appropriate related registration or qualification under applicable
state securities or "blue sky" laws; PROVIDED, HOWEVER, that the
maximum number of Registrable Shares under this SECTION 8.1(A) shall be
a number of shares equal to twenty-five percent (25%) of the total
number of shares of OSI Common Stock issued pursuant to the Merger,
allocated among the Shareholders in such amounts as they shall
unanimously agree in writing.
(b) Notwithstanding the foregoing, OSI shall not be required
to effect any registration, qualification or compliance under this
SECTION 8.1 if and to the extent, in the opinion of counsel for OSI
(which opinion shall also be addressed to the Shareholders requesting
registration of Registrable Shares), the proposed public offering or
transfer of the number of Registered Shares, as to which registration
is requested, is exempt from registration under the Securities Act and
the securities laws of the states in which the Registrable Shares are
to be sold or transferred and the Registrable Shares would not
constitute restricted securities in the hands of the purchaser or
transferee.
(c) OSI shall be entitled to postpone the filing or
effectiveness of any registration statement otherwise required to be
prepared and filed by OSI pursuant to this SECTION 8.1, for a
reasonable period of time, but not in excess of ninety (90) days (a
"Blackout Period"), if any executive officer of OSI determines that in
such executive officer's reasonable judgment and good faith that the
registration and distribution of the Registrable Shares would
materially interfere with any pending financing, acquisition, or
corporate reorganization or other corporate development involving OSI
or any of its subsidiaries or would require premature disclosure
thereof and promptly gives the Shareholders holding the Registrable
Shares written notice of such determination containing a general
statement of the reasons for such postponement and an approximation of
the anticipated delay; PROVIDED, HOWEVER, that the aggregate number of
days included in all Blackout Periods during any consecutive twelve
(12) months during the shall not exceed one hundred eighty (180) days;
and PROVIDED, FURTHER, HOWEVER, that a period of at least thirty (30)
days shall elapse between the termination of any Blackout Period and
the commencement of the immediately succeeding Blackout Period. If OSI
shall so postpone the filing of a registration statement the
Shareholders holding the Registrable Shares shall have the right to
withdraw the request for registration by giving written notice from the
holders of a majority of the Registrable Shares to OSI within twenty
(20) days after receipt of the notice of postponement (and, in the
event of such withdrawal, such request shall not be counted for
purposes of determining the number of, or required timing for, requests
for registration to which the holders of the Registration Shares are
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entitled pursuant to SECTION 8.1(A) or for purposes of determining the
number of days that the registration statement is kept effective..
(d) Notwithstanding the foregoing, OSI shall not be required
by this SECTION 8.1 to register Registrable Shares under the Securities
Act or under any state securities law at any time after the date one
year following the Effective Date (or such other date as coincides with
the expiration of the general holding period requirement under Rule
144, should the general holding period requirement of Rule 144 or any
successor rule be modified), if OSI is then and has been throughout
such period, current in all filings required to comply with the current
public information requirement of Rule 144.
8.2 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by OSI pursuant to SECTION 8.1, OSI will:
(a) keep each holder of Registrable Shares advised in writing
at the initiation of proceedings of each registration, qualification or
compliance and as to the completion thereof;
(b) furnish each holder of Registrable Shares with such number
of prospectuses, including a preliminary prospectus and such other
documents as may be reasonably requested; and
(c) keep such registration, qualification or compliance
effective until all sales or distributions contemplated in connection
therewith are completed; PROVIDED, HOWEVER, that OSI shall not be
obligated to keep such registration, qualification or compliance
effective for more than forty-five (45) days.
8.3 EXPENSES OF REGISTRATION. All expenses incurred in connection
with any registration, qualification or compliance effected by OSI pursuant to
this ARTICLE VIII, including, without limitation, all registration and filing
fees, fees and expenses of complying with securities and blue sky laws, printing
expenses, fees and disbursements of counsel for OSI and all expenses of any
special audits incidental to or required by such registration (collectively, the
"Registration Expenses") shall be borne by OSI. Each holder of Registrable
Shares shall be responsible for all fees and disbursements of counsel retained
by such holders to provide necessary opinions or otherwise and for the costs of
any special audits of any Entity incidental to or required for such
registration.
8.4 ADJUSTMENTS IN NUMBER OF SHARES. If the outstanding shares of
OSI Common Stock shall have been changed into a different number of shares or a
different class by reason of any reclassification, recapitalization, split up,
combination, exchange of shares or readjustment, or a stock dividend thereon
shall be declared, with a record date subsequent to the Effective Date and prior
to the sale of all Registrable Shares, the number of Registrable Shares shall be
adjusted to accurately reflect such change.
8.5 TRANSFEREES. The rights of the Shareholders under SECTION 8.1
are personal to each Shareholder and shall not inure to the benefit of any other
Shareholder nor any transferee or assignee of a Shareholder's OSI Common Stock;
PROVIDED, HOWEVER, such rights shall inure to the benefit of donees of BONA FIDE
gifts who are members of the donor's immediate family.
8.6 EMPLOYMENT AGREEMENTS. Solely with respect to the Merger, and
any consequential termination of any Entity by operation of law, Outback agrees
not to elect to terminate the Employment Agreements between any of the Entities,
as employer, and the Proprietors of the Entities' OUTBACK STEAKHOUSE
restaurants, as employees. Outback shall succeed to all rights and obligations
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of the Entities under such Employment Agreements. Nothing contained herein shall
be construed as in any way limiting Outback's right to terminate any such
Employment Agreement as a result of any circumstance or event other than the
Merger and consequential termination of any Entity by operation of law.
ARTICLE IX
JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
Except as may be waived by OSI or the Shareholders, the obligations of
the Entities, the Shareholders, OSI and Outback to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or
before the Closing Date, of each of the following conditions:
9.1 CONSENTS TO TRANSACTION. Except for such consents and
approvals as have been expressly waived in writing by OSI on or prior to the
Closing Date, the Entities, Outback and OSI shall have received all consents or
approvals and made all applications, requests, notices and filings with, any
person, governmental authority or governmental agency required to be obtained or
made in connection with the consummation of the transactions contemplated by
this Agreement. There shall have been obtained from all state and local
governments and governmental agencies all approvals and consents necessary to
enable the Entities to transfer their liquor licenses and permits to Outback, to
enable Outback to assume such licenses and permits or to enable Outback to
operate restaurants (of the kind and quality customarily operated by Outback)
using such permits or licenses. Copies of all consents and approvals received by
any party pursuant to this SECTION 9.1 shall be furnished to the other party.
9.2 ABSENCE OF LITIGATION. No governmental agency or authority
shall have instituted or threatened in writing to institute, any action or
proceeding seeking to delay, restrain, enjoin or prohibit the consummation of
the transactions contemplated by this Agreement and no order, judgment or decree
by any court or governmental agency or authority shall be in effect that
enjoins, restrains or prohibits the same or otherwise would materially interfere
with the operation of the assets and business of the Entities or OSI and its
subsidiaries, including the surviving corporation in the Merger, after the
Closing Date.
9.3 DISSENTER'S RIGHTS. The number of shares of capital stock of
the Corporations for which Shareholders have exercised appraisal or dissenters'
rights under State Law shall be a number which, in the sole and absolute
discretion of OSI, does not jeopardize the financial reporting and accounting
treatment of the Merger specified in SECTION 2.12 or is otherwise not contrary
to the best interests of Outback or OSI.
9.4 HSR ACT. The waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or have been terminated.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ENTITIES
Except as may be waived by the Entities and the Shareholders, the
obligations of the Entities and the Shareholders to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction on or before
the Closing Date of each of the following conditions:
10.1 COMPLIANCE. OSI and Outback shall have, or shall have caused
to be, satisfied or complied with and performed in all material respects all
terms, covenants and conditions of this Agreement to be complied with or
performed by OSI and Outback on or before the Closing Date.
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10.2 REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties made by OSI and Outback in this Agreement, and in all certificates
and other documents delivered by OSI and Outback to the Entities and the
Shareholders pursuant hereto or in connection with the transactions contemplated
hereby, shall have been true and correct in all material respects as of the date
hereof and shall be true and correct in all material respects at the Closing
Date with the same force and effect as if such representations and warranties
had been made at and as of the Closing Date, except for changes permitted or
contemplated by this Agreement.
10.3 OPINION. The Entities and the Shareholders shall have received
the opinion of counsel for OSI and Outback, dated as of the Closing Date, in
form and substance reasonably satisfactory to the Entities and the Shareholders
and their counsel, as to the matters specified in SECTIONS 5.1, 5.2, 5.3, 5.4,
5.5, and 5.7 and, to the knowledge of such counsel, as to the matters specified
in SECTIONS 5.6, 5.9, and 5.10.
10.4 MATERIAL ADVERSE CHANGES. Since the date of this Agreement,
there shall have occurred no material adverse change in the business,
properties, assets, liabilities, results of operations or condition, financial
or otherwise, of OSI and Outback, taken as a whole.
10.5 CERTIFICATES. The Entities and the Shareholders shall have
received a certificate or certificates, executed on behalf of OSI by the Chief
Executive Officer, the President or the Chief Financial Officer of OSI, to the
effect that the conditions contained in SECTION 9.1 and SECTION 9.2 hereof with
respect to matters therein relating to OSI and in SECTIONS 10.1, 10.2 and 10.4
hereof, have been satisfied and shall have received the Certificate attached
hereto as EXHIBIT 10.5.
ARTICLE XI
CONDITIONS PRECEDENT TO OBLIGATIONS OF OSI AND OUTBACK
Except as may be waived by OSI and Outback, the obligations of OSI and
Outback to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions:
11.1 COMPLIANCE. The Entities and the Shareholders shall have or
shall have caused to be satisfied or complied with and performed in all material
respects all terms, covenants and conditions of this Agreement to be complied
with or performed by any of them on or before the Closing Date.
11.2 REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties made by the Entities and/or the Shareholders in this Agreement, the
Disclosure Schedules, and in all certificates and other documents delivered by
the Entities or the Shareholders pursuant hereto or in connection with the
transactions contemplated hereby, shall have been true and correct in all
material respects as of the date hereof and shall be true and correct in all
material respects at the Closing Date with the same force and effect as if such
representations and warranties had been made at and as of the Closing Date,
except for changes permitted or contemplated by this Agreement.
11.3 SECURITIES LAW COMPLIANCE. Stock in the Merger, in the opinion
of Baker & Hostetler, counsel for OSI, shall be exempt from registration or
qualification under the Securities Act and all applicable state securities laws.
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11.4 OPINIONS. OSI shall have received the opinion of counsel for the
Entities, dated as of the Closing Date, in the form attached hereto as EXHIBIT
11.4.
11.5 CURRENT FINANCIAL STATUS. OSI shall have received the Financial
Statements specified in SECTION 7.6.
11.6 MATERIAL ADVERSE CHANGES. Since the date of the Current Financial
Statements there shall have occurred no material adverse change in the business,
properties, assets, liabilities, results of operations or condition, financial
or otherwise, of any of the Entities.
11.7 POOLING. OSI shall have received a letter from
PriceWaterhouseCooper, in form and substance satisfactory to OSI and dated not
more than five days prior to the Closing Date, to the effect that the Merger
shall qualify as a pooling of interests for financial reporting purposes.
11.8 CERTIFICATES. OSI shall have received a certificate or
certificates, executed on behalf of each Entity by the President of the Entity,
and by the Shareholders to the effect that the conditions in SECTIONS 9.1 and
9.2 with respect to matters therein relating to the Entities, and/or the
Shareholders, and SECTIONS 11.1, 11.2 and 11.6 hereof, have been satisfied.
ARTICLE XII
INDEMNIFICATION
The Shareholders, jointly and severally, on the one hand, and OSI and
Outback, jointly and severally, on the other hand, agree as follows:
12.1 SECURITIES LAWS INDEMNIFICATION. With respect to each Shareholder
participating in a registration pursuant to SECTION 8.1:
(a) OSI shall indemnify, to the extent permitted by law, the
Shareholders against all losses, claims, damages, liabilities or
expenses which arise out of or are based upon any untrue or alleged
untrue statement of material fact contained in any registration
statement (including any post effective amendment or supplement
thereto), prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in any written
information furnished to OSI by the Shareholders for use therein or by
the failure of a Shareholder to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after
OSI has furnished the Shareholders with a sufficient number of copies
of the same.
(b) Notwithstanding any contrary provision of this Agreement,
as a condition to receiving the registration rights provided for in
SECTION 8.1 hereof, the Shareholders, severally, not jointly, shall
indemnify in writing, to the extent permitted by law, OSI, its
directors and officers and each person who controls OSI (within the
meaning of Section 15 of the Securities Act and Section 20 of the
Securities Exchange Act of 1934 as amended) against any losses, claims,
damages, liabilities and expenses which arise out of or are based upon
any untrue or alleged omission of a material fact required to be stated
in the registration statement or prospectus or any amendment thereof or
supplement thereto or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or
omission is contained in any written information furnished by such
Shareholder for inclusion in the registration statement except that the
Shareholders shall not be required to so indemnify Outback or OSI if
such shareholder shall have furnished to Outback or OSI not less than
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five (5) business days prior to the registration statement becoming
effective, written information correcting such material misstatement or
omission and Outback or OSI shall have failed to include such
information in an amendment or supplement to the prospectus.
12.2 INDEMNIFICATION BASED ON AGREEMENT. Subject to the provisions of
SECTION 13.4, the Shareholders, jointly and severally, shall indemnify and hold
harmless OSI, Outback and the Entities, and OSI, Outback and the Entities,
jointly and severally, shall indemnify and hold harmless the Shareholders,
against any losses, claims, damages, liabilities or expenses to which such
indemnified party may become subject, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) arise out of or are
based upon any facts or circumstances that would constitute a breach by the
other (and in the case of the Shareholders' indemnification obligations a breach
by any Entity) of any representation, warranty or covenant contained herein or
in any agreement or certificate executed pursuant hereto and will reimburse any
legal or other expenses reasonably incurred by any indemnified party in
connection with investigating or defending any such loss, claim, damage,
liability or action (collectively "Damages").
In addition to the above, the Shareholders, jointly and severally,
shall indemnify OSI, Outback and the Entities, as provided in the first
paragraph of this SECTION 12.2, against any Damages arising out of any tax
liability of any of the Entities for any period prior to the Effective Date
except only the tax liabilities specified on the Current Financial Statements
and the Corporate Excise Taxes. The Shareholders shall have no obligation under
SECTION 12.2 to indemnify OSI, Outback or the Entities for any liability, loss,
claim or damage arising out of or based upon events first occurring on or after
the Effective Date. OSI and Outback shall indemnify the Shareholders against any
loss, claim, damage or liability arising out of or based upon events first
occurring after the Effective Date.
Notwithstanding any contrary provision hereof (A) OSI, Outback and the
Entities shall not be entitled to indemnification by the Shareholders under this
SECTION 12.2 for Damages until the cumulative, aggregate amount of Damages
incurred exceeds Fifty Thousand Dollars ($50,000); provided, however, this
provision shall not apply to (i) Corporate Excise Taxes in excess of $400,000,
or (ii) legal and accounting fees liability in excess of $300,000, and (B) the
cumulative, aggregate liability of the Shareholders for their indemnification
obligations under this SECTION 12.2 (other than for tax liabilities of the
Entities for periods prior to the Effective Date, but not the Corporate Excise
Taxes) shall be limited to Twelve Million Dollars ($12,000,000). Once the
Shareholders have expended (on a cumulative, aggregate basis), Twelve Million
Dollars ($12,000,000) in satisfaction of their indemnification obligations under
this SECTION 12.2 (other than for tax liabilities of the Entities for periods
prior to the Effective Date, but not the Corporate Excise Taxes), the
Shareholders shall be released from any further indemnification obligations and
any liability for Damages incurred by OSI, Outback or the Entities under SECTION
12.2.
12.3 COOPERATION. If any claim, demand, action, suit, proceeding or
investigation arising out of or pertaining to this Agreement or the transactions
contemplated hereby is begun or asserted, whether begun or asserted before or
after the Closing Date, the parties hereto will cooperate and use their best
efforts to defend against and respond thereto.
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12.4 NOTICE.
(a) An indemnified party shall give notice to the indemnifying
party or parties within ten (10) business days after actual receipt of
service or summons to appear in any action or any other notice of a
claim subject to indemnification under this Agreement. Failure to so
notify the indemnifying party or parties shall cause the indemnified
party to be liable for any expenses caused by failure to give timely
notice. The indemnifying party or parties may participate at their own
expense and with their counsel in the defense of such action. If the
indemnifying party or parties so elect within a reasonable time after
receipt of such notice, they may assume the defense of such action with
counsel chosen by the indemnifying party or parties and approved by the
indemnified party in such action, unless the indemnified party
reasonably objects to such assumption on the ground that its counsel
has advised it that there may be legal defenses available to it that
are different from or in addition to those available to the
indemnifying party or parties, in which case the indemnified party
shall have the right to employ counsel approved by the indemnifying
party or parties. If the indemnifying party or parties assume the
defense of such action, the indemnifying party or parties shall not be
liable for fees and expenses of counsel for the indemnified party
incurred thereafter in connection with such action. In no event shall
the indemnifying party or parties be liable for the fees and expenses
of more than one counsel for the indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances unless, in the reasonable opinion of such counsel, there
is, under applicable standards of professional conduct, a conflict on
any significant issue between the positions of any two or more
indemnified parties.
(b) An indemnifying party shall give notice to the indemnified
party or parties within ten (10) business days after actual receipt of
service or summons to appear in any action or any other notice of a
claim subject to indemnification under this Agreement. Failure to so
notify the indemnified party or parties shall cause the indemnifying
party to be liable for any expenses caused by failure to give timely
notice. The indemnified party or parties may participate at their own
expense and with their counsel in the defense of such action. If the
indemnified party or parties so elect within a reasonable time after
receipt of such notice, they may assume the defense of such action with
counsel chosen by the indemnified party or parties and approved by the
indemnifying party in such action, unless the indemnifying party
reasonably objects to such assumption on the ground that its counsel
has advised it that there may be legal defenses available to it that
are different from or in addition to those available to the indemnified
party or parties, in which case the indemnifying party shall have the
right to employ counsel approved by the indemnified party or parties.
If the indemnified party or parties assume the defense of such action,
the indemnified party or parties shall not be liable for fees and
expenses of counsel for the indemnifying party incurred thereafter in
connection with such action. In no event shall the indemnified party or
parties be liable for the fees and expenses of more than one counsel
for the indemnifying parties in connection with any one action or
separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances unless, in
the reasonable opinion of such counsel, there is, under applicable
standards of professional conduct, a conflict on any significant issue
between the positions of any two or more indemnifying parties.
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<PAGE> 33
ARTICLE XIII
MISCELLANEOUS
13.1 TERMINATION. This Agreement and the transactions contemplated
hereby may be terminated at any time on or before the Closing Date
(notwithstanding approval by the Shareholders of any Corporation):
(a) by mutual consent of the Entities and OSI;
(b) by OSI if there has been a material misrepresentation or
breach of warranty in the representations and warranties of the
Entities or the Shareholders set forth herein or if there has been any
material failure on the part of the Entities or the Shareholders to
comply with their obligations hereunder;
(c) by the Entities if there has been a material
misrepresentation or breach of warranty in the representations and
warranties of OSI or Outback set forth herein or if there has been any
material failure on the part of OSI or Outback to comply with their
obligations hereunder;
(d) by either OSI, the Entities or the Shareholders, if the
transactions contemplated by this Agreement have not been consummated
by November 30, 1999, unless such failure of consummation is due to the
failure of the terminating party to perform or observe the covenants,
agreements and conditions hereof to be performed or observed by it at
or before the Closing Date;
(e) by either OSI, the Entities or the Shareholders if the
conditions precedent to its obligations to close this Agreement have
not been satisfied or waived by it at or before the Closing Date unless
such failure to satisfy conditions precedent is due to the failure of
the terminating party to use its best efforts to satisfy such
conditions; and
(f) by either the Entities, the Shareholders or OSI if the
transactions contemplated hereby violate any nonappealable final order,
decree or judgment of any court or governmental body or agency having
competent jurisdiction.
In the event this Agreement is terminated pursuant to this SECTION
13.1, this Agreement shall be of no further force and effect and no party hereto
shall have any further liability to any other party hereto, except pursuant to
the provisions of this Agreement which by their terms expressly survive any
termination hereof. Notwithstanding the foregoing, in the event Outback and OSI
terminate this Agreement pursuant to the provisions of SECTION 13.1(B) above,
Outback and OSI may, at their option, proceed at law or in equity to enforce its
rights under this Agreement, including the right of specific performance (which
right is hereby specifically granted by the Shareholders and the Entities
notwithstanding that neither Outback nor OSI shall not have granted the
Shareholders the reciprocal right to demand or enforce specific performance by
Outback or OSI), and to recover damages, losses and out-of-pocket expenses
incurred by Outback and OSI in connection herewith. All amounts recoverable by
Outback and OSI shall include their costs and attorneys' fees, including fees
and costs on appeal, incurred in defending against or determining responsibility
for a claim whether or not suit or action has been instituted.
13.2 EXPENSES. Each party hereto shall pay its own expenses incurred in
connection with this Agreement and the transactions contemplated hereby.
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<PAGE> 34
13.3 ENTIRE AGREEMENT. This Agreement and the Exhibits and Disclosure
Schedules hereto constitute and contain the complete agreement among the parties
with respect to the transactions contemplated hereby and supersede all prior and
contemporaneous agreements and understandings among the parties with respect to
such transactions. The parties hereto have not made any representation or
warranty except as expressly set forth in this Agreement, the Merger Agreement
or in any certificate or schedule delivered pursuant hereto. The obligations of
any party under any agreement executed pursuant to this Agreement shall not be
affected by this SECTION 13.3.
13.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) The representations, warranties, covenants and
indemnification obligations of OSI and Outback contained herein or in
any exhibit, certificate, document or instrument delivered pursuant to
this Agreement shall survive the Closing for a period of two years;
PROVIDED, HOWEVER, that the obligations of OSI and Outback under
ARTICLE VIII and ARTICLE XII hereof shall survive for the periods
provided therein and the obligations relating to any taxes or tax
liability (including with respect to the tax certificate delivered
pursuant to SECTION 10.5) shall survive until the statute of
limitations for such tax liability has expired.
(b) Except where otherwise specifically provided in this
Agreement, the representations, warranties and covenants of the
Entities and the Shareholders, and the covenants and indemnification
obligations of the Shareholders contained herein or in any exhibit,
schedule, certificate, document or instrument delivered pursuant to
this Agreement shall survive the Closing for a period of two years from
the Effective Date; PROVIDED, HOWEVER, the representations, covenants
and warranties contained in SECTION 3.11 and SECTION 4.7 and the
Shareholders' indemnification obligations with respect to any tax
liabilities shall survive the Closing until the statute of limitations
for such tax liability has expired.
13.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and such counterparts together shall constitute only one original.
13.6 NOTICES. All notices, demands, requests or other communications
that may be or are required to be given, served or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be mailed
by registered or certified mail, return receipt requested, postage prepaid or
transmitted by hand delivery, recognized national overnight delivery service,
telegram or telex, addressed as follows:
IF TO SHAREHOLDER OR ENTITIES: Tedesco Steakhouse, Inc.
99 S. Bedford Street, Suite 204
Burlington, MA 01803
Attn: John Doyle
WITH A COPY TO: Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attn: Kevin M. Barry
30
<PAGE> 35
IF TO OSI OR OUTBACK: Outback Steakhouse, Inc.
2202 N. Westshore Boulevard, 5th Floor
Tampa, Florida 33607
Attn: Joseph J. Kadow
Vice President and General Counsel
Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request or communication that is mailed, delivered
or transmitted in the manner described above shall be deemed sufficiently given,
served, sent and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt, the affidavit of
messenger or (with respect to a telex) the answer back being deemed conclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
13.7 SUCCESSORS AND ASSIGNS. This Agreement and the rights, interests
and obligations hereunder shall be binding upon and shall inure to the benefit
of the parties hereto and, except as otherwise specifically provided for herein,
their respective successors and assigns.
13.8 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida without giving effect to
principles of comity or conflicts of law thereof.
13.9 WAIVER AND OTHER ACTION. This Agreement may be amended, modified
or supplemented only by a written instrument executed by the parties against
which enforcement of the amendment, modification or supplement is sought.
13.10 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remainder of this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision were never a part hereof; the
remaining provisions hereof shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance; and in lieu of such illegal, invalid or unenforceable provision,
there shall be added automatically as part of this Agreement, a provision as
similar in its terms to such illegal, invalid or unenforceable provision as may
be possible and be legal, valid and enforceable.
13.11 HEADINGS. All headings and captions in this Agreement are
intended solely for the convenience of the parties and none shall be deemed to
affect the meaning or construction of any provision hereof.
13.12 CONSTRUCTION. All references herein to the masculine, neuter or
singular shall be construed to include the masculine, feminine, neuter or
plural, where applicable.
13.13 JURISDICTION AND VENUE. The parties agree that any action brought
by either party against the other in any court, whether federal or state, shall
be brought within the State of Florida in the judicial circuit in which OSI has
its principal place of business. Each party hereby agrees to submit to the
personal jurisdiction of such courts and hereby waives all questions of personal
jurisdiction or venue for the purpose of carrying out this provision, including,
without limitation, the claim or defense therein that such courts constitute an
inconvenient forum.
13.14 ENFORCEMENT. In the event it is necessary for any party to retain
legal counsel or institute legal proceedings to enforce the terms of this
Agreement, including, without limitation, obligations upon expiration or
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<PAGE> 36
termination, the prevailing party shall be entitled to receive from the
nonprevailing party, in addition to all other remedies, all costs of such
enforcement including, without limitation, attorney's fees and court costs and
including appellate proceedings.
13.15 FURTHER ASSURANCES. Each party covenants and agrees to execute
and deliver, prior to or after the Merger, such further documents as may
reasonably be requested by another party to fully effectuate the transactions
provided for herein.
13.16 EQUITABLE REMEDIES. The parties hereto acknowledge that a refusal
by a party to consummate the transactions contemplated hereby will cause
irreparable harm to the other parties, for which there may be no adequate remedy
at law. A party not in default at the time of such refusal shall be entitled, in
addition to other remedies at law or in equity, to specific performance of this
Agreement by the party that refused to consummate the transactions contemplated
hereby.
BALANCE OF THIS PAGE INTENTIONALLY BLANK
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<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"OSI"
Attest: OUTBACK STEAKHOUSE, INC.
a Delaware corporation
By:_______________________________ By: _______________________________
JOSEPH J. KADOW ROBERT S. MERRITT
Title: Secretary Title: Senior Vice President
"Outback"
Attest: OUTBACK STEAKHOUSE OF FLORIDA, INC., a
Florida corporation
By:_______________________________ By: _______________________________
JOSEPH J. KADOW ROBERT S. MERRITT
Title: Secretary Title: Senior Vice President
33
<PAGE> 38
Attest: TEDESCO STEAKHOUSE, INC., a
Massachusetts corporation
__________________________________ By: _______________________________
BRIAN MCCARTHY CHARLES ANGELOPULOS
Title: Clerk Title: President
By: _______________________________
ARTHUR COLLIAS
Title: Treasurer
Attest: KPH, INC., a Massachusetts corporation
__________________________________ By: _______________________________
KEVIN P. HARRON KEVIN P. HARRON
Title: Clerk Title: President and Treasurer
Attest: TEDESCO-KPH PARTNERSHIP, a
Massachusetts general partnership,
for itself and as general partner of
and on behalf of the Partnerships
indicated on Schedule I attached
hereto:
By: ITS GENERAL PARTNERS
Attest: TEDESCO STEAKHOUSE, INC., a
Massachusetts corporation
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<PAGE> 39
__________________________________ By: _______________________________
BRIAN MCCARTHY CHARLES ANGELOPULOS
Title: Clerk Title: President
By: _______________________________
ARTHUR COLLIAS
Title: Treasurer
Attest: KPH, INC., a Massachusetts corporation
__________________________________ By: _______________________________
KEVIN P. HARRON KEVIN P. HARRON
Title: Clerk Title: President and Treasurer
35
<PAGE> 40
EXHIBIT B
DISCLOSURE SCHEDULES
36
<PAGE> 1
EXHIBIT 10.25
$125,000,000.00
CREDIT AGREEMENT
dated as of
December 21, 1999
among
OUTBACK STEAKHOUSE, INC.,
The Banks Listed Herein,
WACHOVIA BANK, N.A.,
as Agent,
WACHOVIA SECURITIES, INC.,
as Sole Arranger,
SUNTRUST BANK, TAMPA BAY,
as Syndication Agent
and
SOUTHTRUST BANK, NATIONAL ASSOCIATION,
as Documentation Agent
<PAGE> 2
CREDIT AGREEMENT
AGREEMENT dated as of December 21, 1999 among OUTBACK
STEAKHOUSE, INC., the BANKS listed on the signature pages hereof, WACHOVIA BANK,
N.A., as Agent, SUNTRUST BANK, TAMPA BAY, as Syndication Agent, and SOUTHTRUST
BANK, NATIONAL ASSOCIATION, as Documentation Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. The terms as defined in this
Section 1.01 shall, for all purposes of this Agreement and any amendment hereto
(except as herein otherwise expressly provided or unless the context otherwise
requires), have the meanings set forth herein:
"Adjusted Cash Flow" means for any period the sum of: (i)
EBITDA for such period, and (ii) all payment obligations of the Borrower and its
Consolidated Subsidiaries for such period under all operating leases and rental
agreements, all determined with respect to the Borrower and its Consolidated
Subsidiaries on a consolidated basis for such period and in accordance with
GAAP.
"Adjusted Fixed Charges" for any period means the sum of (i)
Consolidated Interest Expense for such period, and (ii) all payment obligations
of the Borrower and its Consolidated Subsidiaries for such period under all
operating leases and rental agreements.
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 2.06(c).
"Affiliate" of any Person means (i) any other Person which
directly, or indirectly through one or more intermediaries, controls such
Person, (ii) any other Person which directly, or indirectly through one or more
intermediaries, is controlled by or is under common control with such Person, or
(iii) any other Person of which such Person owns, directly or indirectly, 20% or
more of the common stock or equivalent equity interests. As used herein, the
term "control" means possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" means Wachovia Bank, N.A., a national banking
association organized under the laws of the United States of America, in its
capacity as agent for the Banks hereunder, and its successors and permitted
assigns in such capacity.
<PAGE> 3
"Agent's Letter Agreement" means that certain letter
agreement, dated as of October 11, 1999, between the Borrower, Wachovia
Securities, Inc., as Arranger and the Agent relating to the structure of the
Loans, and certain fees from time to time payable by the Borrower to Wachovia
Securities, Inc., as Arranger and the Agent, together with all amendments and
modifications thereto.
"Agreement" means this Credit Agreement, together with all
amendments and supplements hereto.
"Anniversary Date" means December 21, 2000 and each
anniversary of the Closing Date thereafter.
"Applicable Facility Fee Rate" has the meaning set forth in
Section 2.07(a).
"Applicable Margin" has the meaning set forth in Section
2.06(a).
"Arranger" means Wachovia Securities, Inc., in its capacity as
arranger under the Agent's Letter Agreement.
"Assignee" has the meaning set forth in Section 9.07(c).
"Assignment and Acceptance" means an Assignment and Acceptance
executed in accordance with Section 9.07(c) in the form attached hereto as
Exhibit J.
"Authority" has the meaning set forth in Section 8.02.
"Bank" means each bank listed on the signature pages hereof as
having a Commitment, and its successors and assigns.
"Base Rate" means for any Base Rate Loan for any day, the rate
per annum equal to the higher as of such day of (i) the Prime Rate, or (ii)
one-half of one percent above the Federal Funds Rate for such day. For purposes
of determining the Base Rate for any day, changes in the Prime Rate and the
Federal Funds Rate shall be effective on the date of each such change.
"Base Rate Loan" means a Loan which bears or is to bear
interest at a rate based upon the Base Rate.
"Borrower" means Outback Steakhouse, Inc., a Delaware
corporation, and its successors and permitted assigns.
"Borrowing" means a borrowing hereunder consisting of Loans
made to the Borrower at the same time by, in the case of a Syndicated Borrowing,
the Banks, or, in the case of a Money Market Borrowing, one or more of the
Banks, in each case pursuant to Article II. A Borrowing is a "Syndicated
2
<PAGE> 4
Borrowing" if such Loans are Syndicated Loans or a "Money Market Borrowing" if
such Loans are Money Market Loans. A Borrowing is a "Base Rate Borrowing" if
such Loans are Base Rate Loans or a "Euro-Dollar Borrowing" if such Loans are
Euro-Dollar Loans.
"Capital Stock" means any nonredeemable capital stock of the
Borrower or any Consolidated Subsidiary (to the extent issued to a Person other
than the Borrower), whether common or preferred.
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. ss.9601 et seq. and its implementing
regulations and amendments.
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability Information System established pursuant to CERCLA.
"Change of Law" shall have the meaning set forth in Section
8.02.
"Closing Certificate" has the meaning set forth in Section
3.01(e).
"Closing Date" means December 21, 1999.
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor Federal tax code. Any reference to any provision of the Code shall
also be deemed to be a reference to any successor provision or provisions
thereof.
"Collateral Agency Agreement " means the Collateral Agency
Agreement dated as of even date herewith among the Collateral Agent, the Banks,
the Borrower and the Guarantors, substantially in the form attached hereto as
EXHIBIT I.
"Collateral Agent" means Wachovia Bank, N.A., a national
banking association organized under the laws of the United States of America, in
its capacity as collateral agent for the Secured Parties under the Pledge
Agreement, the Guaranty, and the Collateral Agency Agreement.
"Commitment" means, with respect to each Bank, (i) the amount
set forth opposite the name of such Bank on the signature pages hereof, or (ii)
as to any Bank which enters into an Assignment and Acceptance (whether as
transferor Bank or as Assignee thereunder), the amount of such Bank's Commitment
after giving effect to such Assignment and Acceptance, in each case as such
amount may be reduced from time to time pursuant to Sections 2.08 and 2.09.
"Company Owned Restaurants" means each restaurant that
satisfies the following requirements: (1) the Borrower or a Consolidated
Subsidiary that is a Guarantor has a direct ownership interest in the entity
that owns such restaurant; and (2) the entity that owns and operates such
restaurant is organized as a partnership or limited liability company in which
3
<PAGE> 5
the Borrower or a Consolidated Subsidiary that is a Guarantor: (a) is a general
partner or managing member; and (b) holds no less than a 51% ownership interest.
"Compliance Certificate" has the meaning set forth in Section
5.01(c).
"Consolidated Interest Expense" for any period means interest,
whether expensed or capitalized, in respect of Debt of the Borrower or any of
its Consolidated Subsidiaries outstanding during such period.
"Consolidated Net Income" means, for any period, the Net
Income of the Borrower and its Consolidated Subsidiaries determined on a
consolidated basis, but excluding (i) extraordinary items and (ii) any equity
interests of the Borrower or any Subsidiary in the unremitted earnings of any
Person that is not a Subsidiary.
"Consolidated Net Worth" means, at any time, Stockholders'
Equity, as set forth or reflected on the most recent consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries, prepared in accordance with
GAAP.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which, in accordance with GAAP, would be
consolidated with those of the Borrower in its consolidated financial statements
as of such date.
"Consolidated Total Assets" means, at any time, the total
assets of the Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis, as set forth or reflected on the most recent consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries, prepared in
accordance with GAAP.
"Consolidated Total Debt" means at any date the Debt of the
Borrower and its Consolidated Subsidiaries, determined on a consolidated basis
as of such date.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee under capital
leases, (v) all obligations of such Person to reimburse any bank or other Person
in respect of amounts payable under a banker's acceptance, (vi) all Redeemable
Preferred Stock of such Person (in the event such Person is a corporation),
(vii) all obligations (absolute or contingent) of such Person to reimburse any
bank or other Person in respect of amounts paid under a letter of credit or
similar instrument, (viii) all Debt of others secured by a Lien on any asset of
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<PAGE> 6
such Person, whether or not such Debt is assumed by such Person, (ix) all Debt
of others Guaranteed by such Person, (x) Synthetic Lease Indebtedness; (xi) all
indebtedness, liabilities and obligations of such Person in connection with or
arising from asset securitizations, including, without limitation,
Securitization Facility Attributed Debt; and (xii) all obligations of such
Person with respect to interest rate protection agreements, foreign currency
exchange agreements or other hedging agreements (valued as the termination value
thereof computed in accordance with a method approved by the International Swap
Dealers Association and agreed to by such Person in the applicable hedging
agreement, if any).
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived in writing, become an Event of Default.
"Default Rate" means, with respect to any Syndicated Loan,
Money Market Loan or Swing Line Loan, on any day, the sum of 2% plus the then
highest interest rate (including the Applicable Margin) which may be applicable
to any Syndicated Loan, Money Market Loan or Swing Line Loan hereunder
(irrespective of whether any such type of Loans are actually outstanding
hereunder).
"Depreciation and Amortization" means for any period the sum
of all depreciation and amortization expenses of the Borrower and its
Consolidated Subsidiaries for such period, as determined in accordance with
GAAP.
"Development Joint Venture" means an entity that satisfies the
following requirements: (1) the Borrower or a Consolidated Subsidiary that is a
Guarantor has a direct ownership interest in such entity; (2) the Borrower or a
Consolidated Subsidiary that is a Guarantor holds at least a 50% ownership
interest in such entity; and (3) neither the Borrower nor any Consolidated
Subsidiary, individually or with another Consolidated Subsidiary or the
Borrower, has agreed to be responsible for more than 50% of the obligations,
liabilities or costs of such entity.
"Dollars" or "$" means dollars in lawful currency of the
United States of America.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in Georgia are authorized or
required by law to close.
"Domestic Subsidiary" means any Subsidiary which is organized
under the laws of any state or territory of the United States of America.
"EBITDA" means for any period the sum of: (a) Consolidated Net
Income, plus (b) the amount deducted in determining Consolidated Net Income for
such period for (i) taxes on income, (ii) Consolidated Interest Expense, and
(iii) Depreciation and Amortization, all determined with respect to the Borrower
and its Consolidated Subsidiaries on a consolidated basis for such period and in
accordance with GAAP. In determining EBITDA for any period, (i) any Consolidated
Subsidiary acquired during such period by the Borrower or any other Consolidated
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<PAGE> 7
Subsidiary shall be included on a pro forma, historical basis as if it had been
a Consolidated Subsidiary during such entire period, (ii) any amounts which
would be included in a determination of EBITDA for such period with respect to
assets acquired during such period by the Borrower or any Consolidated
Subsidiary shall be included in the determination of EBITDA for such period and
the amount thereof shall be calculated on a pro forma, historical basis as if
such assets had been acquired by the Borrower or such Consolidated Subsidiary
prior to the first day of such period, (iii) any Consolidated Subsidiary sold
during such period by the Borrower or any other Consolidated Subsidiary shall be
excluded as if it had not been a Consolidated Subsidiary at any time during such
period, and (iv) any amounts which would be otherwise included in a
determination of EBITDA for such period with respect to assets sold or otherwise
disposed of during such period by the Borrower or any Consolidated Subsidiary
shall be excluded in the determination of EBITDA for such period and the amount
excluded shall be calculated as if such assets had been sold or otherwise
disposed of by the Borrower or such Consolidated Subsidiary prior to the first
day of such period.
"Environmental Authority" means any foreign, federal, state,
local or regional government that exercises any form of jurisdiction or
authority under any Environmental Requirement.
"Environmental Authorizations" means all licenses, permits,
orders, approvals, notices, registrations or other legal prerequisites for
conducting the business of the Borrower or any Subsidiary required by any
Environmental Requirement.
"Environmental Judgments and Orders" means all judgments,
decrees or orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
decree or order.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment, including, without limitation, ambient air, surface water,
groundwater or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"Environmental Liabilities" means any liabilities, whether
accrued, contingent or otherwise, arising from and in any way associated with
any Environmental Requirements.
"Environmental Notices" means notice from any Environmental
Authority or by any other person or entity, of possible or alleged noncompliance
with or liability under any Environmental Requirement, including without
limitation any complaints, citations, demands or requests from any Environmental
Authority or from any other person or entity for correction of any violation of
6
<PAGE> 8
any Environmental Requirement or any investigations concerning any violation of
any Environmental Requirement.
"Environmental Proceedings" means any judicial or
administrative proceedings arising from or in any way associated with any
Environmental Requirement.
"Environmental Releases" means releases as defined in CERCLA
or under any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement
relating to health, safety or the environment and applicable to the Borrower,
any Subsidiary or the Properties, including but not limited to any such
requirement under CERCLA or similar state legislation and all federal, state and
local laws, ordinances, regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor law and the regulations
promulgated and rulings issued thereunder. Any reference to any provision of
ERISA shall also be deemed to be a reference to any successor provision or
provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business Day on
which dealings in Dollar deposits are carried out in the London interbank
market.
"Euro-Dollar Loan" means a Loan which bears or is to bear
interest at a rate based upon the London Interbank Offered Rate.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.06.
"Event of Default" has the meaning set forth in Section 6.01.
"Existing Credit Agreement" means that certain Credit
Agreement dated August 22, 1997 by and between the Borrower, Outback Steakhouse
of Florida, Inc., Carrabba's Italian Grill, Inc., the lenders identified therein
and Barnett Bank, N.A., as agent.
"Facility Fee Determination Date" has the meaning set forth in
Section 2.07(a).
"Facility Fee Payment Date" means each March 31, June 30,
September 30 and December 31.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the next higher 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if the day for which
such rate is to be determined is not a Domestic Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next preceding
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<PAGE> 9
Domestic Business Day as so published on the next succeeding Domestic Business
Day, and (ii) if such rate is not so published for any day, the Federal Funds
Rate for such day shall be the average rate charged to Wachovia on such day on
such transactions as determined by the Agent.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"Foreign Subsidiary" means any Wholly Owned Subsidiary which
is not a Domestic Subsidiary.
"GAAP" means generally accepted accounting principles applied
on a basis consistent with those which, in accordance with Section 1.02, are to
be used in making the calculations for purposes of determining compliance with
the terms of this Agreement.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to provide collateral security, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part), PROVIDED that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Guarantors" shall mean collectively: (a) all Material
Domestic Subsidiaries existing on the Closing Date; and (b) all Material
Domestic Subsidiaries acquired, formed or otherwise in existence after the
Closing Date.
"Guaranty" means the Guaranty Agreement executed by each of
the Guarantors substantially in the form of Exhibit H hereto, either as
originally executed or as it may be from time to time supplemented, modified,
amended, renewed, extended or restated from time to time.
"Hazardous Materials" includes, without limitation, (a) solid
or hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, 42 U.S.C. ss.6901 et seq. and its implementing regulations and amendments,
or in any applicable state or local law or regulation, (b) any "hazardous
substance", "pollutant" or "contaminant", as defined in CERCLA, or in any
applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including crude oil or any fraction thereof,
(d) toxic substances, as defined in the Toxic Substances Control Act of 1976, or
in any applicable state or local law or regulation and (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
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and Rodenticide Act of 1975, or in any applicable state or local law or
regulation, as each such Act, statute or regulation may be amended from time to
time.
"Indemnity Subrogation and Contribution Agreement" means the
Indemnity, Subrogation and Contribution Agreement to be entered into among the
Borrower, the Guarantors the Pledgor Subsidiaries and the Collateral Agent,
substantially in the form attached hereto as EXHIBIT G, as modified, amended,
supplemented or restated from time to time.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the first, second, third or sixth month
thereafter, as the Borrower may elect in the applicable Notice of Borrowing;
PROVIDED that:
(a) any Interest Period (subject to clause (c) below) which
would otherwise end on a day which is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall, subject
to clause (c) below, end on the last Euro-Dollar Business Day of the appropriate
subsequent calendar month; and
(c) no Interest Period may be selected which begins before the
Termination Date and would otherwise end after the Termination Date.
(2) with respect to each Swing Line Borrowing, the period commencing on the date
of such Borrowing and ending up to 30 days thereafter, as the Borrower may elect
in the applicable Notice of Borrowing; PROVIDED that:
(a) any Interest Period (subject to clause (b) below) which
would otherwise end on a day which is not a Domestic Business Day shall be
extended to the next succeeding Domestic Business Day; and
(b) no Interest Period may be selected which begins before the
Termination Date and would otherwise end after the Termination Date.
(3) with respect to each Base Rate Borrowing, the period commencing on the date
of such Borrowing and ending 30 days thereafter; PROVIDED that:
(a) any Interest Period (subject to clause (b) below) which
would otherwise end on a day which is not a Domestic Business Day shall be
extended to the next succeeding Domestic Business Day; and
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<PAGE> 11
(b) no Interest Period may be selected which begins before the
Termination Date and would otherwise end after the Termination Date.
(4) with respect to each Money Market Borrowing, the period commencing on the
date of such Borrowing and ending 7 to 180 days thereafter, as the Borrower may
indicate in the applicable Money Market Quote Request; PROVIDED that:
(a) any Interest Period (subject to clause (b) below) which
would otherwise end on a day which is not a Domestic Business Day shall be
extended to the next succeeding Domestic Business Day; and
(b) no Interest Period may be selected which begins before the
Termination Date and would otherwise end after the Termination Date.
"Investment" means any investment in any Person, whether by
means of purchase or acquisition of obligations or securities of such Person,
capital contribution to such Person, loan or advance to such Person, making of a
time deposit with such Person, Guarantee or assumption of any obligation of such
Person or otherwise.
"Lending Office" means, as to each Bank, its office located at
its address set forth on the signature pages hereof (or identified on the
signature pages hereof as its Lending Office) or such other office as such Bank
may hereafter designate as its Lending Office by notice to the Borrower and the
Agent.
"Lien" means, with respect to any asset, any mortgage, deed to
secure debt, deed of trust, lien, pledge, charge, security interest, security
title, preferential arrangement which has the practical effect of constituting a
security interest or encumbrance, servitude or encumbrance of any kind in
respect of such asset to secure or assure payment of a Debt or a Guarantee,
whether by consensual agreement or by operation of statute or other law, or by
any agreement, contingent or otherwise, to provide any of the foregoing. For the
purposes of this Agreement, the Borrower or any Subsidiary shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"Loan" means a Syndicated Loan, Swing Line Loan or a Money
Market Loan and "Loans" means Syndicated Loans, Swing Line Loans or Money Market
Loans, or any or all of them, as the context shall require.
"Loan Documents" means this Agreement, the Notes, the
Guaranty, the Pledge Agreement, the Collateral Agency Agreement, any other
document evidencing, relating to or securing the Loans, and any other document
or instrument delivered from time to time in connection with this Agreement, the
Notes, the Guaranty, the Pledge Agreement, the Collateral Agency Agreement or
the Loans, as such documents and instruments may be amended or supplemented from
time to time.
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"Loan Parties" means collectively the Borrower and each
Subsidiary of the Borrower that is now or hereafter a party to any of the Loan
Documents.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.06.
"Margin Stock" means "margin stock" as defined in Regulation
G, T, U or X of the Board of Governors of the Federal Reserve System, as in
effect from time to time, together with all official rulings and interpretations
issued thereunder.
"Material Adverse Effect" means, with respect to any event,
act, condition or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, or governmental investigation or
proceeding), whether singly or in conjunction with any other event or events,
act or acts, condition or conditions, occurrence or occurrences, whether or not
related, a material adverse change in, or a material adverse effect upon, any of
(a) the financial condition, operations, business, properties or prospects of
the Borrower and its Consolidated Subsidiaries taken as a whole, (b) the rights
and remedies of the Agent or the Banks under the Loan Documents, or the ability
of the Borrower to perform its obligations under the Loan Documents to which it
is a party, as applicable, or (c) the legality, validity or enforceability of
any Loan Document.
"Material Domestic Subsidiaries" means each Domestic
Subsidiary with total assets of $20,000,000 or more; provided that in the event
that, at any time, the total assets of all Domestic Subsidiaries which are not
then Guarantors (the "Non-Guarantor Domestic Subsidiaries"), in the aggregate,
is equal to or greater than $60,000,000, the Borrower shall so notify the Agent
and promptly thereafter (but in any event within 30 days after the date thereof)
shall cause any such Non-Guarantor Domestic Subsidiary which has total assets
equal to or greater than $12,000,000 to take the actions and deliver the
documents required by Section 5.22 and thereafter such Subsidiaries shall be
"Guarantors." On the Closing Date, the Material Domestic Subsidiaries are:
Outback Steakhouse of Florida, Inc.; Carrabba's Italian Grill, Inc.; Outback
Steakhouse International, Inc.; OS Capital, Inc.; OS Pacific, Inc.; OS Prime,
Inc.; and Outback Sports, LLC.
"Money Market Loan" means a Loan which bears or is to bear
interest at a Money Market Rate.
"Money Market Notes" means promissory notes of the Borrower,
substantially in the form of EXHIBIT B hereto, evidencing the obligation of the
Borrower to repay the Money Market Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto and "Money
Market Note" means any one of such Money Market Notes.
"Money Market Quote" means an offer by a Bank to make a Money
Market Loan in accordance with Section 2.03(c).
"Money Market Quote Request" has the meaning set forth in
Section 2.03(b).
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"Money Market Rate" has the meaning set forth in Section
2.03(c)(ii)(C).
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"Net Income" means, as applied to any Person for any period,
the aggregate amount of net income of such Person, after taxes, for such period,
as determined in accordance with GAAP.
"Net Proceeds of Capital Stock/Conversion of Debt" means any
and all proceeds (whether cash or non-cash) or other consideration received by
the Borrower or a Consolidated Subsidiary in respect of the issuance of Capital
Stock (including, without limitation, the aggregate amount of any and all Debt
converted into Capital Stock), after deducting therefrom all reasonable and
customary costs and expenses incurred by the Borrower or such Consolidated
Subsidiary directly in connection with the issuance of such Capital Stock.
"Note" means a Syndicated Note, Swing Line Note or a Money
Market Note and "Notes" means Syndicated Notes, Swing Line Notes or Money Market
Notes, or any or all of them, as the context shall require.
"Notice of Borrowing" has the meaning set forth in Section
2.02.
"Obligations" means the collective reference to all
indebtedness, obligations and liabilities to the Banks, the Swing Line Lender,
the Agent or the Collateral Agent existing on the date of this Agreement or
arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, of the Loan
Parties under this Agreement or any other Loan Document.
"Officer's Certificate" has the meaning set forth in Section
3.01(f).
"Participant" has the meaning set forth in Section 9.07(b).
"Participating Subsidiary" means any Subsidiary of the
Borrower that is a participant in a Permitted Securitization.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" means the acquisition of: (I) shares
of capital stock or other equity interests of any Person by the Borrower or any
Subsidiary of the Borrower if: (A) immediately after giving effect to such
acquisition (i) such Person is a Consolidated Subsidiary; (ii) the Borrower
controls such Person directly or indirectly through a Subsidiary; and (iii) no
Default shall have occurred and be continuing; (B) the line or lines of business
engaged in by such Person are similar to the lines of business engaged in by the
Borrower and its Subsidiaries on the Closing Date; and (C) such acquisition is
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<PAGE> 14
made on a negotiated basis with the approval of the Board of Directors of the
Person to be acquired; and (D) such acquisition is permitted under Section 5.23;
and (II) all or substantially all of the assets of a Person if: (A) the assets
acquired by the Borrower or such Subsidiary of the Borrower, shall be used in a
line of business similar to the lines of business engaged in by the Borrower and
its Subsidiaries on the Closing Date; (B) no Default shall have occurred and be
continuing; and (C) such acquisition is permitted under Section 5.23.
"Permitted Securitization" means any financing program
providing for the sale or transfer of Securitization Assets by the Borrower or
its Participating Subsidiaries, in transactions purporting to be sales (and
treated as sales for GAAP purposes): (1) to one or more limited purpose
financing companies, special purpose entities and/or other financial
institutions; (2) in each case, on a nonrecourse basis as to the Borrower and
the Participating Subsidiaries subject to Standard Securitization Undertakings;
and (3) in each case, for the fair market value of the Securitization Assets
sold or transferred, including cash in an amount at least equal to 75% of the
fair market value thereof, as determined in accordance with GAAP (for purposes
of this definition a Purchase Money Note shall be deemed to be cash).
"Person" means an individual, a corporation, a limited
liability company, a partnership (including without limitation, a joint
venture), an unincorporated association, a trust or any other entity or
organization, including, but not limited to, a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and is either (i) maintained by a member
of the Controlled Group for employees of any member of the Controlled Group or
(ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding 5 plan years made contributions.
"Pledge Agreement" means the Pledge Agreement executed by the
Borrower and the other Loan Parties thereto pursuant to Section 5.22 of the
Credit Agreement in favor of the Collateral Agent, for the ratable benefit of
the Banks, substantially in the form attached hereto as Exhibit K, as modified,
amended, supplemented or restated from time to time.
"Pledged Stock and Related Collateral" means, collectively,
all of the property (including capital stock) in which Liens are purported to be
granted pursuant to the Pledge Agreement as security for the Obligations.
"Pledgor Subsidiary" has the meaning set forth in SECTION
5.22.
"Prime Rate" refers to that interest rate so denominated and
set by Wachovia from time to time as an interest rate basis for borrowings. The
Prime Rate is but one of several interest rate bases used by Wachovia. Wachovia
lends at interest rates above and below the Prime Rate.
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"Priority Debt" means (a) any Debt of the Borrower secured by
any Lien permitted pursuant to Section 5.08(k), and (b) any Debt of any
Subsidiary that is not a Guarantor; PROVIDED, HOWEVER, that Priority Debt shall
not include (i) any Debt owed by any Subsidiary to the Borrower or any Wholly
Owned Subsidiary, and (ii) any Debt incurred to refinance any Debt of any
Subsidiary outstanding on the Closing Date to the extent the amount of Debt so
incurred is not in excess of the amount of Debt refinanced.
"Properties" means all real property owned, leased or
otherwise used or occupied by the Borrower or any Subsidiary, wherever located.
"Purchase Money Note" means a promissory note of a Receivables
Subsidiary evidencing a line of credit, which may be irrevocable, from the
Borrower or any Subsidiary of the Borrower in connection with a Permitted
Securitization to a Receivables Subsidiary which note shall be repaid from cash
available to the Receivables Subsidiary, other than amounts required to be
established as reserves pursuant to agreements, amounts paid to investors in
respect of interest, principal and other amounts owing to such investors and
amounts paid in connection with the purchase of newly generated receivables.
"Quotation Date" has the meaning set forth in Section 2.03(b).
"Rate Determination Date" has the meaning set forth in Section
2.06(a).
"Receivables Subsidiary" means a special purpose, bankruptcy
remote Wholly Owned Subsidiary of the Borrower which may be formed for the sole
and exclusive purpose of engaging in activities in connection with the purchase,
sale and financing of Securitization Assets in connection with and pursuant to a
Permitted Securitization.
"Redeemable Preferred Stock" of any Person means any preferred
stock issued by such Person which is at any time prior to the Termination Date
either (i) mandatorily redeemable (by sinking fund or similar payments or
otherwise) or (ii) redeemable at the option of the holder thereof.
"Reported Net Income" means, for any period, the Net Income of
the Borrower and its Consolidated Subsidiaries determined on a consolidated
basis.
"Required Banks" means at any time Banks having at least 51%
of the aggregate amount of the Commitments or, if the Commitments are no longer
in effect, Banks holding at least 51% of the aggregate outstanding principal
amount of the Notes; provided that if such requirement is satisfied by no more
than two Banks, the term "Required Banks" shall mean Banks having at least 66
2/3% of the aggregate amount of the Commitments or, if the Commitments are no
longer in effect, Banks holding at least 66 2/3% of the aggregate outstanding
principal amount of the Notes.
"Secured Parties" shall have the meaning set forth in the
Pledge Agreement.
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"Securitization Assets" means all accounts receivable (whether
now existing or arising in the future) and other assets of the Borrower or any
of its Participating Subsidiaries which are sold or transferred pursuant to a
Permitted Securitization, and any assets related thereto, including without
limitation (i) all collateral given by any of the foregoing, (ii) all contracts
and all guarantees (but not by the Borrower or any of its Subsidiaries) or other
obligations directly related to any of the foregoing, (iii) other related assets
including those set forth in the Securitization Documents, and (iv) proceeds of
all of the foregoing.
"Securitization Documents" shall mean all documentation
relating to any Permitted Securitization.
"Securitization Facility Attributed Debt" at any time shall
mean, without duplication, the aggregate net outstanding amount theretofore paid
to the Receivables Subsidiary, the Borrower or Participating Subsidiaries in
respect of the Securitization Assets sold or transferred by it in connection
with a Permitted Securitization (it being the intent of the parties that the
amount of Securitization Facility Attributed Debt at any time outstanding
approximate as closely as possible the principal amount of Debt which would be
outstanding at such time under the Permitted Securitization if the same were
structured as a secured lending agreement rather than a purchase agreement).
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Borrower or any
Subsidiary of the Borrower which are reasonably customary in an accounts
receivable securitization.
"Stockholders' Equity" means, at any time, the shareholders'
equity of the Borrower and its Consolidated Subsidiaries, as set forth or
reflected on the most recent consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries prepared in accordance with GAAP, BUT EXCLUDING any
Redeemable Preferred Stock of the Borrower or any of its Consolidated
Subsidiaries. Shareholders' equity generally would include, but not be limited
to (i) the par or stated value of all outstanding Capital Stock, (ii) capital
surplus, (iii) retained earnings, and (iv) various deductions such as (A)
purchases of treasury stock, (B) valuation allowances, (C) receivables due from
an employee stock ownership plan, (D) employee stock ownership plan debt
guarantees, and (E) translation adjustments for foreign currency transactions.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Borrower.
"Swing Line Borrowing" means a Swing Line Loan made to the
Borrower by the Swing Line Lender pursuant to Article II.
"Swing Line Lender" means Wachovia Bank, N.A.
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"Swing Line Loan" means a loan made by the Swing Line Lender
pursuant to Section 2.14 hereof.
"Swing Line Note" means the promissory note of the Borrower,
substantially in the form of Exhibit C hereto, evidencing the obligation of the
Borrower to repay the Swing Line Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto.
"Syndicated Loan" means a Base Rate Loan or a Euro-Dollar Loan
and Syndicated Loans means Base Rate Loans or Euro-Dollar Loans, or any or all
of them, as the context shall require.
"Syndicated Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing the obligation of the
Borrower to repay the Syndicated Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto and "Syndicated
Note" means any one of such Syndicated Notes.
"Synthetic Lease Indebtedness" means the aggregate principal
amount of all indebtedness incurred in connection with any Synthetic Lease
Transaction which is secured, supported or serviced, directly or indirectly, by
any payments made by the Borrower or any Subsidiary.
"Synthetic Lease Transaction" means any transaction involving
a synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product, where such transaction is
considered borrowed money indebtedness for tax purposes but is classified as an
operating lease in accordance with GAAP, and in respect of which transaction any
Synthetic Lease Indebtedness is issued or incurred.
"Taxes" has the meaning set forth in Section 2.12(c).
"Termination Date" means December 21, 2002, as such
Termination Date may be extended pursuant to Section 2.05(b).
"Third Parties" means all lessees, sublessees, licensees and
other users of the Properties, excluding those users of the Properties in the
ordinary course of the Borrower's business and on a temporary basis.
"Total Unused Commitments" means at any date, an amount equal
to: (i) the aggregate amount of the Commitments of all of the Banks at such
time, less (ii) the aggregate outstanding principal amount of the Loans of all
of the Banks at such time.
"Transferee" has the meaning set forth in Section 9.07(d).
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"Unused Commitment" means at any date, with respect to any
Bank, an amount equal to its Commitment less the aggregate outstanding principal
amount of its Loans.
"Usage Margin" means, with respect to any Euro-Dollar Loan, an
amount equal to (1) zero percent (0%) if on the date such Euro-Dollar Loan is
advanced hereunder to the Borrower the aggregate principal amount of all Loans
(including the Euro-Dollar Loans to be advanced on such date) outstanding on
such day is less than an amount equal to 33 1/3% of the aggregate Commitments on
such day; and (2) one-eighth of one percent (.125%) if on the date such
Euro-Dollar Loan is advanced hereunder to the Borrower the aggregate principal
amount of all Loans (including the Euro-Dollar Loans to be advanced on such
date) outstanding on such day is equal to or greater than an amount equal to 33
1/3% of the aggregate Commitments on such day.
"Wachovia" means Wachovia Bank, N.A., a national banking
association and its successors.
"Wholly Owned Subsidiary" means any Subsidiary all of the
shares of capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the Borrower.
"Y2K Plan" has the meaning set forth in Section 4.19.
"Year 2000 Compliant and Ready" means that (A) the Borrower=s
and its Subsidiaries= hardware and software systems with respect to the
operation of its business and its general business plan will: (i) handle date
information involving any and all dates before, during and/or after January 1,
2000, including accepting input, providing output and performing date
calculations in whole or in part; (ii) operate, accurately without interruption
on and in respect of any and all dates before, during and/or after January 1,
2000 and without any change in performance; (iii) store and provide date input
information without creating any ambiguity as to the century and; (B) the
Borrower has developed alternative plans to ensure business continuity in the
event of the failure of any or all of items (i) through (iii) above.
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS. Unless
otherwise specified herein, all terms of an accounting character used herein
shall be interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants or otherwise
required by a change in GAAP) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Banks, unless with respect to any such change concurred in by the
Borrower's independent public accountants or required by GAAP, in determining
compliance with any of the provisions of this Agreement or any of the other Loan
Documents: (i) the Borrower shall have objected to determining such compliance
on such basis at the time of delivery of
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such financial statements, or (ii) the Required Banks shall so object in writing
within 30 days after the delivery of such financial statements, in either of
which events such calculations shall be made on a basis consistent with those
used in the preparation of the latest financial statements as to which such
objection shall not have been made (which, if objection is made in respect of
the first financial statements delivered under Section 5.01 hereof, shall mean
the financial statements referred to in Section 4.04).
SECTION 1.03. USE OF DEFINED TERMS. All terms defined in this
Agreement shall have the same meanings when used in any of the other Loan
Documents, unless otherwise defined therein or unless the context shall
otherwise require.
SECTION 1.04. TERMINOLOGY. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; the singular shall include the plural and the plural
shall include the singular. Titles of Articles and Sections in this Agreement
are for convenience only, and neither limit nor amplify the provisions of this
Agreement.
SECTION 1.05. REFERENCES. Unless otherwise indicated,
references in this Agreement to "Articles", "Exhibits", "Schedules", and
"Sections" are references to articles, exhibits, schedules and sections hereof.
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS TO MAKE SYNDICATED LOANS. Each Bank
severally agrees, on the terms and conditions set forth herein, to make
Syndicated Loans to the Borrower from time to time before the Termination Date;
PROVIDED that, immediately after each such Syndicated Loan is made, the
aggregate outstanding principal amount of Syndicated Loans by such Bank
(together with, in the case of the Swing Line Lender, the aggregate principal
amount of all Swing Line Loans) shall not exceed the amount of its Commitment,
PROVIDED FURTHER that the aggregate principal amount of all Syndicated Loans,
together with the aggregate principal amount of all Money Market Loans and Swing
Line Loans, at any one time outstanding shall not exceed the aggregate amount of
the Commitments of all of the Banks at such time. Each Syndicated Borrowing
under this Section that is a Euro-Dollar Borrowing shall be in an aggregate
principal amount of $5,000,000 or any larger multiple of $1,000,000 and each
Syndicated Borrowing under this Section that is a Base Rate Borrowing shall be
in an aggregate principal amount of $1,000,000 or any larger multiple of
$500,000 (except that any such Syndicated Borrowing may be in the aggregate
amount of the Unused Commitments) and shall be made from the several Banks
ratably in proportion to their respective Commitments. Within the foregoing
limits, the Borrower may borrow under this Section, repay or, to the extent
permitted by Section 2.10, prepay Syndicated Loans and reborrow under this
Section at any time before the Termination Date.
SECTION 2.02. METHOD OF BORROWING SYNDICATED LOANS. (a) The
Borrower shall give the Agent notice in the form attached hereto as Exhibit L (a
"Notice of Borrowing") prior to 11:00 A.M. (Atlanta, Georgia time) on the
Domestic Business Day of each
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Base Rate Borrowing and at least 3 Euro-Dollar Business Days before each
Euro-Dollar Borrowing, specifying:
(i) the date of such Syndicated Borrowing, which
shall be a Domestic Business Day in the case of a Base Rate
Borrowing or a Euro-Dollar Business Day in the case of a
Euro-Dollar Borrowing,
(ii) the aggregate amount of such Syndicated
Borrowing,
(iii) whether the Syndicated Loans comprising such
Syndicated Borrowing are to be Base Rate Loans or Euro-Dollar
Loans, and
(iv) in the case of a Euro-Dollar Borrowing, the
duration of the Interest Period applicable thereto, subject to
the provisions of the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the Agent shall
promptly notify each Bank of the contents thereof and of such Bank's ratable
share of such Syndicated Borrowing and such Notice of Borrowing shall not
thereafter be revocable by the Borrower.
(c) Not later than 1:00 p.m. (Atlanta, Georgia time) on the
date of each Syndicated Borrowing, each Bank shall (except as provided in
subsection (d) of this Section) make available its ratable share of such
Syndicated Borrowing, in Federal or other funds immediately available in
Atlanta, Georgia, to the Agent at its address referred to in or specified
pursuant to Section 9.01. Unless the Agent determines that any applicable
condition specified in Article III has not been satisfied, the Agent will make
the funds so received from the Banks available to the Borrower at the Agent's
aforesaid address. Unless the Agent receives notice from a Bank, at the Agent's
address referred to in Section 9.01, no later than 4:00 P.M. (local time at such
address) on the Domestic Business Day before the date of a Syndicated Borrowing
stating that such Bank will not make a Syndicated Loan in connection with such
Syndicated Borrowing, the Agent shall be entitled to assume that such Bank will
make a Syndicated Loan in connection with such Syndicated Borrowing and, in
reliance on such assumption, the Agent may (but shall not be obligated to) make
available such Bank's ratable share of such Syndicated Borrowing to the Borrower
for the account of such Bank. If the Agent makes such Bank's ratable share
available to the Borrower and such Bank does not in fact make its ratable share
of such Syndicated Borrowing available on such date, the Agent shall be entitled
to recover such Bank's ratable share from such Bank or the Borrower (and for
such purpose shall be entitled to charge such amount to any account of the
Borrower maintained with the Agent), together with interest thereon for each day
during the period from the date of such Syndicated Borrowing until such sum
shall be paid in full at a rate per annum equal to the rate at which the Agent
determines that it obtained (or could have obtained) overnight Federal funds to
cover such amount for each such day during such period, PROVIDED that any such
payment by the Borrower of such Bank's ratable share and interest thereon shall
be without prejudice to any rights that the Borrower may have against such Bank.
If such Bank shall repay to the Agent such corresponding amount, such amount so
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repaid shall constitute such Bank's Syndicated Loan included in such Syndicated
Borrowing for purposes of this Agreement.
(d) If any Bank makes a new Syndicated Loan hereunder on a day
on which the Borrower is to repay all or any part of an outstanding Syndicated
Loan from such Bank, such Bank shall apply the proceeds of its new Syndicated
Loan to make such repayment and only an amount equal to the difference (if any)
between the amount being borrowed and the amount being repaid shall be made
available by such Bank to the Agent as provided in subsection (c) of this
Section, or remitted by the Borrower to the Agent as provided in Section 2.12,
as the case may be.
(e) Notwithstanding anything to the contrary contained in this
Agreement, no Euro-Dollar Borrowing may be made if there shall have occurred a
Default or an Event of Default, which Default or Event of Default shall not have
been cured or waived in writing.
(f) In the event that a Notice of Borrowing fails to specify
whether the Loans comprising such Borrowing are to be Base Rate Loans or
Euro-Dollar Loans, such Loans shall be made as Base Rate Loans. If the Borrower
is otherwise entitled under this Agreement to repay any Loans maturing at the
end of an Interest Period applicable thereto with the proceeds of a new
Borrowing, and the Borrower fails to repay such Loans using its own moneys and
fails to give a Notice of Borrowing in connection with such new corresponding
Borrowing, a new Borrowing shall be deemed to be made on the date such Loans
mature in an amount equal to the principal amount of the Loans so maturing, and
the Loans comprising such new Borrowing shall be Base Rate Loans.
(g) Notwithstanding anything to the contrary contained herein,
(i) there shall not be more than 8 different Interest Periods for both
Euro-Dollar Loans and Money Market Loans outstanding at the same time (for which
purpose Interest Periods described in different numbered clauses of the
definition of the term "Interest Period" shall be deemed to be different
Interest Periods even if they are coterminous) and (ii) the proceeds of any Base
Rate Borrowing shall be applied first to repay the unpaid principal amount of
all Base Rate Loans (if any) outstanding immediately before such Base Rate
Borrowing.
SECTION 2.03. MONEY MARKET LOANS. (a) In addition to making
Syndicated Borrowings, the Borrower may, as set forth in this Section, request
the Banks to make offers to make Money Market Loans to the Borrower. The Banks
may, but shall have no obligation to, make such offers and the Borrower may, but
shall have no obligation to, accept any such offers in the manner set forth in
this Section, provided that:
(i) there may be no more than 8 different Interest
Periods for both Euro-Dollar Loans and Money Market Loans
outstanding at the same time (for which purpose Interest
Periods described in different numbered clauses of the
definition of the term "Interest Period" shall be deemed to be
different Interest Periods even if they are coterminous); and
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(ii) the aggregate principal amount of all Money
Market Loans, together with the aggregate principal amount of
all Syndicated Loans and Swing Line Loans, at any one time
outstanding shall not exceed the aggregate amount of the
Commitments of all of the Banks at such time.
(b) When the Borrower wishes to request offers to make Money
Market Loans, it shall give the Agent (which shall promptly notify the Banks)
notice substantially in the form of EXHIBIT E hereto (a "Money Market Quote
Request") so as to be received no later than 11:00 A.M. (Atlanta, Georgia time)
two Domestic Business Days prior to the date of the Money Market Borrowing
proposed therein (or such other time and date as the Borrower and the Agent,
with the consent of the Required Banks, may agree), specifying:
(i) the proposed date of such Money Market Borrowing,
which shall be a Domestic Business Day (the "Quotation Date");
(ii) the aggregate amount of such Money Market
Borrowing, which shall be at least $5,000,000 (and in larger
multiples of $1,000,000) but shall not cause the limits
specified in Section 2.03(a) to be violated; and
(iii) the duration of the Interest Period applicable
thereto, which shall be 7 to 180 days.
The Borrower may request offers to make Money Market Loans for
up to three different Interest Periods in a single Money Market Quote Request;
provided that the request for each separate Interest Period shall be deemed to
be a separate Money Market Quote Request for a separate Money Market Borrowing.
Except as otherwise provided in the immediately preceding sentence, the Borrower
shall not deliver a Money Market Quote Request more frequently than once every 5
Domestic Business Days.
(c) (i) Each Bank may, but shall have no obligation to, submit
a Money Market Quote containing an offer to make a Money Market Loan in response
to any Money Market Quote Request; provided that, if the Borrower's request
under Section 2.03(b) specified more than one Interest Period, such Bank may,
but shall have no obligation to, make a single submission containing a separate
offer for each such Interest Period and each such separate offer shall be deemed
to be a separate Money Market Quote. Each Money Market Quote must be submitted
to the Agent not later than 10:00 A.M. (Atlanta, Georgia time) on the Quotation
Date (or such other time and date as the Borrower and the Agent, with the
consent of the Required Banks, may agree); PROVIDED that any Money Market Quote
submitted by Wachovia may be submitted, and may only be submitted, if Wachovia
notifies the Borrower of the terms of the offer contained therein not later than
9:45 A.M. (Atlanta, Georgia time) on the Quotation Date. Subject to Section
6.01, any Money Market Quote so made shall be irrevocable except with the
written consent of the Agent given on the instructions of the Borrower.
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(ii) Each Money Market Quote shall be in
substantially the form of EXHIBIT F hereto and shall specify:
(A) the proposed date of the Money Market
Borrowing and the duration of the Interest Period
therefor, which shall be 7 to 180 days;
(B) the maximum principal amount of the
Money Market Loan which the quoting Bank is willing
to make for the applicable Interest Period, which
principal amount (x) may be greater than or less than
the Commitment of the quoting Bank, (y) shall be at
least $5,000,000 or a larger multiple of $1,000,000,
and (z) may not exceed the principal amount of the
Money Market Borrowing for which offers were
requested;
(C) the rate of interest per annum (rounded,
if necessary, to the nearest 1/100th of 1%) (the
"Money Market Rate") offered for each such Money
Market Loan; and
(D) the identity of the quoting Bank.
Unless otherwise agreed by the Agent and the Borrower, no Money Market Quote
shall contain qualifying, conditional or similar language or propose terms other
than or in addition to those set forth in the applicable Money Market Quote
Request (other than setting forth the maximum principal amount of the Money
Market Loan which the quoting Bank is willing to make for the applicable
Interest Period).
(d) The Agent shall as promptly as practicable after the Money
Market Quote is submitted (but in any event not later than 10:30 A.M. (Atlanta,
Georgia time)) notify the Borrower of the terms (i) of any Money Market Quote
submitted by a Bank that is in accordance with Section 2.03(c) and (ii) of any
Money Market Quote that amends, modifies or is otherwise inconsistent with a
previous Money Market Quote submitted by such Bank with respect to the same
Money Market Quote Request. Any such subsequent Money Market Quote shall be
disregarded by the Agent unless such subsequent Money Market Quote is submitted
solely to correct a manifest error in such former Money Market Quote. The
Agent's notice to the Borrower shall specify (A) the maximum aggregate principal
amount of the Money Market Borrowing for which offers have been received and (B)
the maximum principal amount and Money Market Rates so offered by each Bank
(identifying the Bank that made each Money Market Quote).
(e) Not later than 11:00 A.M. (Atlanta, Georgia time) on the
Quotation Date (or such other time and date as the Borrower and the Agent, with
the consent of the Required Banks, may agree), the Borrower shall notify the
Agent of its acceptance or nonacceptance of the offers so notified to it
pursuant to Section 2.03(d) and the Agent shall promptly notify each Bank that
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has submitted a Money Market Quote. In the case of acceptance, such notice shall
specify the aggregate principal amount of offers for each Interest Period that
are accepted. The Borrower may accept any Money Market Quote in whole or in part
(provided that any Money Market Quote accepted in part from any Bank shall not
be less than the amount set forth in the Money Market Quote of such Bank as the
minimum principal amount of the Money Market Loan such Bank was willing to make
for the applicable Interest Period); PROVIDED that:
(i) the aggregate principal amount of each Money
Market Borrowing may not exceed the applicable amount set
forth in the related Money Market Quote Request;
(ii) the aggregate principal amount of each Money
Market Borrowing shall be at least $5,000,000 (and in larger
multiples of $1,000,000) but shall not cause the limits
specified in Section 2.03(a) to be violated;
(iii) acceptance of offers may only be made in
ascending order of Money Market Rates; and
(iv) the Borrower may not accept any offer where the
Agent has advised the Borrower that such offer fails to comply
with Section 2.03(c)(ii) or otherwise fails to comply with the
requirements of this Agreement (including, without limitation,
Section 2.03(a)).
If offers are made by two or more Banks with the same Money Market Rates for a
greater aggregate principal amount than the amount in respect of which offers
are accepted for the related Interest Period, the principal amount of Money
Market Loans in respect of which such offers are accepted shall be allocated by
the Borrower among such Banks as nearly as possible (in multiples of $100,000)
in proportion to the aggregate principal amount of such offers. Determinations
by the Borrower of the amounts of Money Market Loans shall be conclusive in the
absence of manifest error.
(f) Any Bank whose offer to make any Money Market Loan has
been accepted shall, not later than 12:00 P.M. (Atlanta, Georgia time) on the
Quotation Date, make the amount of such Loan available to the Agent at its
address referred to in Section 9.01 in immediately available funds. The amount
so received by the Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Borrower on such date by depositing the
same, in immediately available funds, in an account of such Borrower maintained
with Wachovia.
(g) Notwithstanding anything to the contrary contained herein,
any Bank (a "Granting Lender") may grant to a special purpose funding vehicle
(an "SPC") the option to fund all or any part of any Money Market Loan that such
Granting Lender would otherwise be obligated to fund pursuant to this Agreement;
PROVIDED THAT (i) nothing herein shall constitute a commitment by any SPC to
fund any Money Market Loan, and (ii) if an SPC elects not to exercise such
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option or otherwise fails to fund all or any part of such Money Market Loan, the
Granting Lender shall be obligated to fund such Money Market Loan pursuant to
the terms hereof. The funding of a Money Market Loan by an SPC hereunder shall
utilize the Commitment of the Granting Lender to the same extent, and as if,
such Money Market Loan were funded by such Granting Lender. Each party hereto
agrees that no SPC shall be liable for any indemnity or payment under this
Agreement for which a Bank would otherwise be liable for so long as, and to the
extent, the Granting Lender provides such indemnity or makes such payment.
Notwithstanding anything to the contrary contained in this Agreement, any SPC
may disclose on a confidential basis any non-public information relating to its
funding of Money Market Loans to any rating agency, commercial paper dealer or
provider of any surety or guarantee to such SPC. This Section may not be amended
without the prior written consent of each Granting Lender, all or any part of
whose Money Market Loan is being funded by an SPC at the time of such amendment.
SECTION 2.04. NOTES. (a) The Syndicated Loans of each Bank
shall be evidenced by a single Syndicated Note payable to the order of such Bank
for the account of its Lending Office in an amount equal to the original
principal amount of such Bank's Commitment.
(b) The Money Market Loans made by any Bank to the Borrower
shall be evidenced by a single Money Market Note payable to the order of such
Bank for the account of its Lending Office.
(c) The Swing Line Loans made by the Swing Line Lender to the
Borrower shall be evidenced by a single Swing Line Note payable to the order of
the Swing Line Lender.
(d) Upon receipt of each Bank's Notes pursuant to Section
3.01, the Agent shall deliver such Notes to such Bank. Each Bank shall record,
and prior to any transfer of its Notes shall endorse on the schedule forming a
part thereof appropriate notations to evidence, the date, amount and maturity
of, and effective interest rate for, each Loan made by it, the date and amount
of each payment of principal made by the Borrower with respect thereto and
whether, in the case of such Bank's Syndicated Note, such Syndicated Loan is a
Base Rate Loan or Euro-Dollar Loan, and such schedule shall constitute
rebuttable presumptive evidence of the principal amount owing and unpaid on such
Bank's Notes; PROVIDED that the failure of any Bank to make, or any error in
making, any such recordation or endorsement shall not affect the obligation of
the Borrower hereunder or under the Notes or the ability of any Bank to assign
its Notes. Each Bank is hereby irrevocably authorized by the Borrower so to
endorse its Notes and to attach to and make a part of any Note a continuation of
any such schedule as and when required.
SECTION 2.05. MATURITY OF LOANS. (a) Each Loan included in any
Borrowing shall mature, and the principal amount thereof shall be due and
payable, on the last day of the Interest Period applicable to such Borrowing.
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(b) Upon written request of the Borrower, which shall be in
writing and delivered to the Agent on a Domestic Business Day not more than 60,
nor fewer than 45, days prior to the first and second Anniversary Date, the
Banks and the Agent in their sole and absolute discretion may (but shall not be
obligated to) extend the then effective Termination Date for a period of 365
days; provided that in no event shall the Termination Date be extended to a date
later than December 21, 2004. In connection with any such extension request,
each Bank shall undertake a BONA FIDE credit analysis of the Borrower utilizing
current information on the financial condition of the Borrower and trends in the
financial performance of the Borrower and in the industry or industries in which
the Borrower operates. The terms of any extension of the Termination Date shall
be independently negotiated among the Borrower, the Banks and the Agent at the
time of the extension request, PROVIDED that the terms of the extension may be
the same as those in effect prior to any extension should the Borrower, the
Banks and the Agent so agree; provided, FURTHER, that should the terms of the
extension be other than those in effect prior to the extension, then the Loan
Documents shall be amended to the extent necessary to incorporate any such
different terms. In the event that a Bank chooses to extend the Termination Date
for such a 365 day period, notice shall be given by such Bank to the Borrower
and the Agent not more than 30, nor fewer than 15, days prior to the Anniversary
Date immediately succeeding the date on which Borrower's request was made;
PROVIDED that the Termination Date shall not be extended with respect to any of
the Banks unless the Required Banks are willing to extend the Termination Date
and either (i) the Banks willing to extend the Termination Date shall on the
Anniversary Date immediately succeeding the date on which Borrower's request was
made purchase ratable assignments (without any obligation to do so) from each
Bank (a "Terminating Bank") that has not elected to extend the Termination Date
(in the form of an Assignment and Acceptance) of the Terminating Bank's
Commitment in accordance with their respective percentage of the remaining
aggregate amount of the Commitments; PROVIDED that such remaining Banks shall be
provided such opportunity (which opportunity shall allow such Banks at least
five Domestic Business Days in which to make a decision) prior to the Borrower
finding another bank pursuant to the immediately succeeding clause (ii); and
PROVIDED, FURTHER, that should any of the remaining Banks elect not to purchase
such an assignment, then such other remaining Banks shall be entitled to
purchase an assignment on the Anniversary Date immediately succeeding the date
on which Borrower's request was made from any Terminating Bank which includes
the ratable interest that was otherwise available to such non-purchasing
remaining Bank or Banks, as the case may be, (ii) the Borrower shall find
another bank or banks, as the case may be, acceptable to the Agent, willing to
accept an assignment from any such Terminating Bank effective on the Anniversary
Date immediately succeeding the date on which Borrower's request was made (in
the form of an Assignment and Acceptance) in an amount equal to the Commitments
of any such Terminating Banks; (iii) the Borrower shall reduce the aggregate
amount of the Commitments effective on the Anniversary Date immediately
succeeding the date on which Borrower's request was made in an amount equal to
the Commitments of any such Terminating Banks; or (iv) on or before the
Anniversary Date immediately succeeding the date on which Borrower's request was
made, the Borrower, the Administrative Agent and the Banks willing to extend the
Termination Date shall enter into an amendment to this Agreement extending the
Termination Date with respect to the Banks willing to extend the Termination
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Date and providing that no Borrowing shall be made under this Agreement from a
Terminating Bank that matures after the Termination Date in effect prior to such
amendment.
SECTION 2.06. INTEREST RATES. (a) "Applicable Margin" shall be
determined quarterly based upon the ratio of Consolidated Total Debt (calculated
as of the last day of each Fiscal Quarter) to EBITDA (calculated as of the last
day of each Fiscal Quarter for the Fiscal Quarter then ended and the immediately
preceding three Fiscal Quarters), as follows:
RATIO OF CONSOLIDATED
TOTAL DEBT TO EBITDA BASE RATE LOANS EURO-DOLLAR LOANS
Greater than 1.5 0% .95%
Greater than 1.0 but
equal to or less than 1.5 0% .70%
Less than or equal to 1.0 0% .575%
The Applicable Margin shall be determined effective as of the date (herein, the
"Rate Determination Date") which is 60 days after the last day of the Fiscal
Quarter as of the end of which the foregoing ratio is being determined, based on
the quarterly financial statements for such Fiscal Quarter, and the Applicable
Margin so determined shall remain effective from such Rate Determination Date
until the date which is 60 days after the last day of the Fiscal Quarter in
which such Rate Determination Date falls (which latter date shall be a new Rate
Determination Date); PROVIDED that (i) for the period from and including the
Closing Date to but excluding the Rate Determination Date next following the
Closing Date, the Applicable Margin shall be (A) 0% for Base Rate Loans, and (B)
.575% for Euro-Dollar Loans, (ii) in the case of any Applicable Margin
determined for the fourth and final Fiscal Quarter of a Fiscal Year, the Rate
Determination Date shall be the date which is 120 days after the last day of
such final Fiscal Quarter and such Applicable Margin shall be determined based
upon the annual audited financial statements for the Fiscal Year ended on the
last day of such final Fiscal Quarter, and (iii) if on any Rate Determination
Date the Borrower shall have failed to deliver to the Banks the financial
statements required to be delivered pursuant to Section 5.01(a) or Section
5.01(b) with respect to the Fiscal Year or Fiscal Quarter, as the case may be,
most recently ended prior to such Rate Determination Date, then for the period
beginning on such Rate Determination Date and ending on the earlier of (A) the
date on which the Borrower shall deliver to the Banks the financial statements
to be delivered pursuant to Section 5.01(b) with respect to such Fiscal Quarter
or any subsequent Fiscal Quarter, or (B) the date on which the Borrower shall
deliver to the Banks annual financial statements required to be delivered
pursuant to Section 5.01(a) with respect to the Fiscal Year which includes such
Fiscal Quarter or any subsequent Fiscal Year, the Applicable Margin shall be
determined as if the ratio of Consolidated Total Debt to EBITDA was more than
1.5 at all times during such period. Any change in the Applicable Margin on any
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Rate Determination Date shall result in a corresponding change, effective on and
as of such Rate Determination Date, in the interest rate applicable to each
Syndicated Loan outstanding on such Rate Determination Date; provided, that: (i)
for Euro-Dollar Loans, changes in Applicable Margin shall only be effective for
Interest Periods commencing on or after the Rate Determination Date; and (ii) no
Applicable Margin shall be decreased pursuant to this Section 2.06 if a Default
is in existence on the Rate Determination Date.
(b) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made until it
becomes due, at a rate per annum equal to the Base Rate for such day plus the
Applicable Margin. Such interest shall be payable for each Interest Period on
the last day thereof. Any overdue principal of and, to the extent permitted by
applicable law, overdue interest on any Base Rate Loan (excluding a Swing Line
Loan) shall bear interest, payable on demand, for each day until paid in full at
a rate per annum equal to the Default Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the sum of: (1) the Applicable Margin,
plus (2) the Usage Margin, plus (3) the applicable Adjusted London Interbank
Offered Rate for such Interest Period; PROVIDED that if any Euro-Dollar Loan
shall, as a result of clause (1)(c) of the definition of Interest Period, have
an Interest Period of less than one month, such Euro-Dollar Loan shall bear
interest during such Interest Period at the rate applicable to Base Rate Loans
during such period. Such interest shall be payable for each Interest Period on
the last day thereof and, if such Interest Period is longer than 3 months, at
intervals of 3 months after the first day thereof. Any overdue principal of and,
to the extent permitted by applicable law, overdue interest on any Euro-Dollar
Loan shall bear interest, payable on demand, for each day until paid in full at
a rate per annum equal to the Default Rate.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100th of 1%) by dividing (i) the
applicable London Interbank Offered Rate for such Interest Period by (ii) 1.00
minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any
Euro-Dollar Loan means for the Interest Period of such Euro-Dollar Loan the rate
per annum determined on the basis of the rate for deposits in Dollars of amounts
equal or comparable to the principal amount of such Euro-Dollar Loan offered for
a term comparable to such Interest Period, which rate appears on the display
designated as Page "3750" of the Telerate Service (or such other page as may
replace page 3750 of that service or such other service or services as may be
nominated by the British Banker's Association for the purpose of displaying
London Interbank Offered Rates for U.S. dollar deposits) determined as of 1:00
p.m. New York City time, 2 Euro-Dollar Business Days prior to the first day of
such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in respect of "Eurocurrency liabilities" (or in
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respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which includes loans by a
non-United States office of any Bank to United States residents). The Adjusted
London Interbank Offered Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Dollar Reserve Percentage.
(d) Each Money Market Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the Money Market Rate for such Loan quoted
by the Bank making such Loan in accordance with Section 2.03. Such interest
shall be payable for such Interest Period on the last day thereof and, if such
Interest Period is longer than 90 days, at intervals of 90 days after the first
day thereof. Any overdue principal of and, to the extent permitted by law,
overdue interest on any Money Market Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the Default Rate.
(e) The Agent shall determine each interest rate applicable to
the Loans hereunder. The Agent shall give prompt notice to the Borrower and the
Banks by telecopy of each rate of interest so determined, and its determination
thereof shall be conclusive in the absence of manifest error.
(f) After the occurrence and during the continuance of a
Default, the principal amount of the Loans (excluding any Swing Line Loans)
(and, to the extent permitted by applicable law, all accrued interest thereon)
may, at the election of the Required Banks, bear interest at the Default Rate;
provided, however, that automatically whether or not the Required Banks elect to
do so, any overdue principal of and, to the extent permitted by law, overdue
interest on any Loan (excluding any Swing Line Loans) shall bear interest
payable on demand, for each day until paid at a rate per annum equal to the
Default Rate. After the occurrence and during the continuance of a Default, the
principal amount of the Swing Line Loans (and, to the extent permitted by
applicable law, all accrued interest thereon) may, at the election of the Swing
Line Lender, bear interest at the Default Rate.
(g) Each Swing Line Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the Base Rate. Such interest shall be
payable for such Interest Period on the last day thereof. Any overdue principal
of and, to the extent permitted by applicable law, overdue interest on the Swing
Line Loans may, at the election of the Swing Line Lender, bear interest, payable
on demand, for each day until paid at a rate per annum equal to the Default
Rate.
SECTION 2.07. FEES. (a) The Borrower shall pay to the Agent
for the ratable account of each Bank a facility fee equal to the product of: (i)
the aggregate of the daily average amounts of such Bank's Commitment, times (ii)
a per annum percentage equal to the Applicable Facility Fee Rate. Such facility
fee shall accrue from and including the Closing Date to and including the
Termination Date. Facility fees shall be payable quarterly in arrears on the
first Facility Fee Payment Date following each Facility Fee Determination Date
and on the Termination Date; provided that should the Commitments be terminated
at any time prior to the Termination Date for any
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reason, the entire accrued and unpaid facility fee shall be paid on the date of
such termination. The "Applicable Facility Fee Rate" shall be determined
quarterly based upon the ratio of Consolidated Total Debt (calculated as of the
last day of each Fiscal Quarter) to EBITDA (calculated as of the last day of
each Fiscal Quarter for the Fiscal Quarter then ended and the immediately
preceding three Fiscal Quarters) as follows:
RATIO OF CONSOLIDATED APPLICABLE
TOTAL DEBT TO EBITDA FACILITY FEE RATE
Greater than 1.5 .25%
Greater than 1.0
but equal to or less than 1.5 .20%
Less than or equal to 1.0 .175%
The Applicable Facility Fee Rate shall be determined effective as of the date
(herein, the "Facility Fee Determination Date") which is 60 days after the last
day of the Fiscal Quarter as of the end of which the foregoing ratio is being
determined, based on the quarterly financial statements for such Fiscal Quarter,
and the Applicable Facility Fee Rate so determined shall remain effective from
such Facility Fee Determination Date until the date which is 60 days after the
last day of the Fiscal Quarter in which such Facility Fee Determination Date
falls (which latter date shall be a new Facility Fee Determination Date);
PROVIDED that (i) for the period from and including the Closing Date to but
excluding the Facility Fee Determination Date next following the Closing Date,
the Applicable Facility Fee Rate shall be .175%; (ii) in the case of any
Applicable Facility Fee Rate determined for the fourth and final Fiscal Quarter
of a Fiscal Year, the Facility Fee Determination Date shall be the date which is
120 days after the last day of such final Fiscal Quarter and such Applicable
Facility Fee Rate shall be determined based upon the annual audited financial
statements for the Fiscal Year ended on the last day of such final Fiscal
Quarter, and (iii) if on any Facility Fee Determination Date the Borrower shall
have failed to deliver to the Banks the financial statements required to be
delivered pursuant to Section 5.01(a) or Section 5.01(b) with respect to the
Fiscal Year or Fiscal Quarter, as the case may be, most recently ended prior to
such Facility Fee Determination Date, then for the period beginning on such
Facility Fee Determination Date and ending on the earlier of (A) the date on
which the Borrower shall deliver to the Banks the financial statements to be
delivered pursuant to Section 5.01(b) with respect to such Fiscal Quarter or any
subsequent Fiscal Quarter, and (B) the date on which the Borrower shall deliver
to the Banks annual financial statements required to be delivered pursuant to
Section 5.01(a) with respect to the Fiscal Year which includes such Fiscal
Quarter or any subsequent Fiscal Year, the Applicable Facility Fee Rate shall be
determined as if the ratio of Consolidated Total Debt to EBITDA was more than
1.5 at all times during such period.
(b) The Borrower shall pay to the Agent, for the account and
sole benefit of the Agent, such fees and other amounts at such times as set
forth in the Agent's Letter Agreement.
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SECTION 2.08. OPTIONAL TERMINATION OR REDUCTION OF
COMMITMENTS. The Borrower may, upon at least 3 Domestic Business Days' notice to
the Agent, terminate at any time, or proportionately reduce from time to time by
an aggregate amount of at least $5,000,000 or any larger multiple of $1,000,000,
the Commitments; provided, however, no such termination or reduction shall be in
an amount greater than the Total Unused Commitments on the date of such
termination or reduction. If the Commitments are terminated in their entirety,
all accrued fees (as provided under Section 2.07) shall be payable on the
effective date of such termination.
SECTION 2.09. MANDATORY REDUCTION AND TERMINATION OF
COMMITMENTS. The Commitments shall terminate on the Termination Date and any
Loans then outstanding (together with accrued interest thereon) shall be due and
payable on such date.
SECTION 2.10. OPTIONAL PREPAYMENTS. (a) The Borrower may, upon
at least 1 Domestic Business Day's notice to the Agent, prepay any Base Rate
Borrowing in whole at any time, or from time to time in part in amounts
aggregating at least $1,000,000, or any larger multiple of $500,000, by paying
the principal amount to be prepaid together with accrued interest thereon to the
date of prepayment. Each such optional prepayment shall be applied to prepay
ratably the Base Rate Loans of the several Banks included in such Base Rate
Borrowing.
(b) Except as provided in Section 8.02, the Borrower may not
prepay all or any portion of the principal amount of any Euro-Dollar Loan or any
Money Market Loan prior to the last day of an Interest Period applicable
thereto, unless such prepayment is accompanied by the amount due with respect
thereto under Section 8.05(a).
(c) The Borrower may prepay any Swing Line Loan in whole at
any time, or from time to time in part in amounts aggregating at least $100,000
or any larger multiple thereof by paying the principal amount to be prepaid
together with accrued interest thereon to the date of prepayment.
(d) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the contents thereof and
of such Bank's ratable share of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.11. MANDATORY PREPAYMENTS. On each date on which the
Commitments are reduced or terminated pursuant to Section 2.08 or Section 2.09,
the Borrower shall repay or prepay such principal amount of the outstanding
Loans, if any (together with interest accrued thereon and any amounts due under
Section 8.05(a)), as may be necessary so that after such payment the aggregate
unpaid principal amount of the Loans does not exceed the aggregate amount of the
Commitments as then reduced. Each such payment or prepayment shall be applied to
repay or prepay ratably the Loans
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of the several Banks; PROVIDED that such prepayment shall be applied, first, to
Syndicated Loans outstanding on the date of such prepayment (in direct order of
maturity) and then, to the extent necessary, to Money Market Loans outstanding
on the date of such prepayment (in direct order of maturity).
SECTION 2.12. GENERAL PROVISIONS AS TO PAYMENTS. (a) The
Borrower shall make each payment of principal of, and interest on, the Loans and
of commitment fees hereunder, not later than 11:00 A.M. (Atlanta, Georgia time)
on the date when due, in Federal or other funds immediately available in
Atlanta, Georgia, to the Agent at its address referred to in Section 9.01. The
Agent will promptly distribute to each Bank its ratable share of each such
payment received by the Agent for the account of the Banks.
(b) Whenever any payment of principal of, or interest on, the
Base Rate Loans or the Money Market Loans or of fees shall be due on a day which
is not a Domestic Business Day, the date for payment thereof shall be extended
to the next succeeding Domestic Business Day. Whenever any payment of principal
of, or interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(c) All payments of principal, interest and fees and all other
amounts to be made by the Borrower pursuant to this Agreement with respect to
any Loan or fee relating thereto shall be paid without deduction for, and free
from, any tax, imposts, levies, duties, deductions, or withholdings of any
nature now or at anytime hereafter imposed by any governmental authority or by
any taxing authority thereof or therein excluding in the case of each Bank,
taxes imposed on or measured by its net income, and franchise taxes imposed on
it, by the jurisdiction under the laws of which such Bank is organized or any
political subdivision thereof and, in the case of each Bank, taxes imposed on
its income, and franchise taxes imposed on it, by the jurisdiction of such
Bank's applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, imposts, levies, duties, deductions or withholdings of any
nature being "Taxes"). In the event that the Borrower is required by applicable
law to make any such withholding or deduction of Taxes with respect to any Loan
or fee or other amount, the Borrower shall pay such deduction or withholding to
the applicable taxing authority, shall promptly furnish to any Bank in respect
of which such deduction or withholding is made all receipts and other documents
evidencing such payment and shall pay to such Bank additional amounts as may be
necessary in order that the amount received by such Bank after the required
withholding or other payment shall equal the amount such Bank would have
received had no such withholding or other payment been made. If no withholding
or deduction of Taxes are payable in respect of any Loan or fee relating
thereto, the Borrower shall furnish any Bank, at such Bank's request, a
certificate from each applicable taxing authority or an opinion of counsel
acceptable to such Bank, in either case stating that such payments are exempt
from or not subject to withholding or deduction of Taxes. If the Borrower fails
to provide such original or certified copy of a receipt evidencing payment of
Taxes or certificate(s) or opinion of counsel of exemption, the Borrower hereby
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agrees to compensate such Bank for, and indemnify them with respect to, the tax
consequences of the Borrower's failure to provide evidence of tax payments or
tax exemption.
In the event any Bank receives a refund of any Taxes paid by
the Borrower pursuant to this Section 2.12, it will pay to the Borrower the
amount of such refund promptly upon receipt thereof; PROVIDED, HOWEVER, if at
any time thereafter it is required to return such refund, the Borrower shall
promptly repay to it the amount of such refund.
Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 2.12 shall be applicable with respect to any Participant,
Assignee or other Transferee, and any calculations required by such provisions
(i) shall be made based upon the circumstances of such Participant, Assignee or
other Transferee, and (ii) constitute a continuing agreement and shall survive
the termination of this Agreement and the payment in full or cancellation of the
Notes.
SECTION 2.13. COMPUTATION OF INTEREST AND FEES. Interest on
Base Rate Loans shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day but excluding the
last day). Interest on Euro-Dollar Loans and interest on Money Market Loans
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed, calculated as to each Interest Period from and including
the first day thereof to but excluding the last day thereof. Facility fees and
any other fees payable hereunder shall be computed on the basis of a year of 360
days and paid for the actual number of days elapsed (including the first day but
excluding the last day).
SECTION 2.14. SWING LINE LOANS. (a) The Borrower may prior to
the Termination Date, as set forth in this Section, request the Swing Line
Lender to make, and the Swing Line Lender prior to the Termination Date will
make, Swing Line Loans to the Borrower, in an aggregate principal amount at any
one time outstanding, not exceeding $5,000,000, provided that:
(i) there may be no more than four (4) different Interest
Periods for Swing Line Loans outstanding at the same time;
(ii) the aggregate principal amount of all Swing Line Loans,
together with the aggregate outstanding principal amount of all
outstanding Loans, at any one time outstanding shall not at any one
time exceed the aggregate amount of the Commitments of all of the Banks
at such time; and
(iii) the aggregate principal amount of all Swing Line Loans,
together with all outstanding Loans made by the Swing Line Lender, at
any one time outstanding shall not exceed the Commitment of the Swing
Line Lender.
(b) When the Borrower wishes to request a Swing Line Loan, it
shall give the Agent notice substantially in the form of Exhibit M hereto (a
"Swing Line Loan Request") so as to be received no later than 11:00 A.M.
(Atlanta, Georgia time) on or before the date of the proposed Swing Line
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Borrowing proposed therein (or such other time and date as the Borrower and the
Swing Line Lender may agree), specifying:
(i) the proposed date of such Swing Line Borrowing, which
shall be a Domestic Business Day (the "Borrowing Date");
(ii) the aggregate amount of such Swing Line Borrowing, which
shall be at least $500,000 (or in larger multiples of $100,000) but
shall not cause the limits specified in Section 2.14(a) to be violated;
and
(iii) the duration of the Interest Period applicable thereto,
which shall be 1 to 30 days.
The Borrower may request Swing Line Loans for up to two (2)
different Interest Periods in a single Swing Line Loan Request; provided that
the request for each separate Interest Period shall be deemed to be a separate
Swing Line Loan Request for a separate Swing Line Borrowing. Except as otherwise
provided in the immediately preceding sentence, the Borrower shall not deliver a
Swing Line Loan Request more frequently than once every 3 Domestic Business
Days.
(c) The Swing Line Lender shall make the amount of such Swing
Line Loan available to the Borrower on such date by depositing the same, in
immediately available funds, in an account of such Borrower maintained with the
Swing Line Lender.
(d) Subject to the limitations contained in this Agreement,
the Borrower may borrow under this Section 2.14, prepay and reborrow under this
Section 2.14 at any time before the Termination Date. Each Swing Line Loan
included in any Swing Line Borrowing shall mature, and the principal amount
thereof shall be due and payable, on the first to occur of: (i) the last day of
the Interest Period applicable to such Swing Line Borrowing; or (ii) the
Termination Date;
(e) At any time, upon the request of the Swing Line Lender,
each Bank other than the Swing Line Lender shall, on the third Domestic Business
Day after such request is made, purchase a participating interest in Swing Line
Loans in an amount equal to its ratable share (based upon its respective
Commitment) of such Swing Line Loans. On such third Domestic Business Day, each
Bank will immediately transfer to the Swing Line Lender, in immediately
available funds, the amount of its participation. Whenever, at any time after
the Swing Line Lender has received from any such Bank its participating interest
in a Swing Line Loan, the Agent receives any payment on account thereof, the
Agent will distribute to such Bank its participating interest in such amount
(appropriately adjusted, in the case of interest payments, to reflect the period
of time during which such Bank's participating interest was outstanding and
funded); PROVIDED, HOWEVER, that in the event that such payment received by the
Agent is required to be returned, such Bank will return to the Agent any portion
thereof previously distributed by the Agent to it. Each Bank's obligation to
purchase such participating interests shall be absolute and unconditional and
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shall not be affected by any circumstance, including, without limitation: (i)
any set-off, counterclaim, recoupment, defense or other right which such Bank or
any other Person may have against the Swing Line Lender requesting such purchase
or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default or an Event of Default or the termination of the
Commitments, provided that no Bank shall be required to purchase a participating
interest in any Swing Line Loan first advanced after the Swing Line Lender has
actual knowledge of an Event of Default; (iii) any adverse change in the
condition (financial or otherwise) of the Borrower or any other Person; (iv) any
breach of this Agreement by the Borrower or any other Bank, provided that no
Bank shall be required to purchase a participating interest in any Swing Line
Loan, if the aggregate outstanding principal amount of all Swing Line Loans
exceeds $5,000,000; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
(f) Notwithstanding anything contained in this Agreement to
the contrary, the Swing Line Loan facility contained in this Section 2.14 shall
terminate immediately upon: (i) Wachovia's removal or resignation as Agent; or
(ii) termination of the Commitments (whether at maturity or otherwise).
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. CONDITIONS TO FIRST BORROWING. The Borrower
shall satisfy the following conditions on the Closing Date:
(a) receipt by the Agent from each of the parties hereto of a
duly executed counterpart of this Agreement signed by such party;
(b) receipt by the Agent of a duly executed Syndicated Note, a
duly executed Swing Line Note and a duly executed Money Market Note for the
account of each Bank complying with the provisions of Section 2.04;
(c) receipt by the Agent of the opinions (together with any
opinions of local counsel relied on therein) of Baker & Hostetler, LLP, counsel
for the Loan Parties and Joseph J. Kadow, General Counsel of the Borrower, dated
as of the Closing Date, covering the matters set forth in Exhibits D-1 and D-2
hereto and covering such additional matters relating to the transactions
contemplated hereby as the Agent or any Bank may reasonably request;
(d) receipt by the Agent of an opinion of Womble Carlyle
Sandridge & Rice, PLLC, special counsel for the Agent, dated as of the Closing
Date, substantially in the form of Exhibit N hereto and covering such additional
matters relating to the transactions contemplated hereby as the Agent may
reasonably request;
(e) receipt by the Agent of a certificate (the "Closing
Certificate"), dated as of the Closing Date, substantially in the form of
Exhibit O hereto, signed by a principal financial officer of the Borrower and
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each Loan Party, to the effect that (i) no Default has occurred and is
continuing on the Closing Date, and (ii) the representations and warranties of
the Loan Parties contained in the Loan Documents are true on and as of the
Closing Date;
(f) receipt by the Agent of all documents which the Agent or
any Bank may reasonably request relating to the existence of each Loan Party,
the corporate authority for and the validity of each Loan Document to which it
is a party, and any other matters relevant hereto, all in form and substance
satisfactory to the Agent, including without limitation a certificate of
incumbency of such Loan Party (the "Officer's Certificate"), signed by the
Secretary or an Assistant Secretary of such Loan Party, substantially in the
form of Exhibit P hereto, certifying as to the names, true signatures and
incumbency of the officer or officers of such Loan Party authorized to execute
and deliver the Loan Documents to which it is a party, and certified copies of
the following items: (i) such Loan Party's Certificate of Incorporation, (ii)
such Loan Party's Bylaws, (iii) a certificate of the Secretary of State of the
State of such Loan Party's organization as to the good standing of such Loan
Party as a corporation, and (iv) the action taken by the Board of Directors of
such Loan Party authorizing such Loan Party's execution, delivery and
performance of this Agreement, the Notes and the other Loan Documents to which
such Loan Party is a party;
(g) receipt by the Collateral Agent of the Guaranty, duly
executed by each Guarantor;
(h) receipt by the Agent of (i) the Collateral Agency
Agreement, duly executed by each Loan Party which is party thereto, and (ii) the
Indemnity, Subrogation and Contribution Agreement, duly executed by each Loan
Party which is a party thereto;
(i) receipt by the Collateral Agent of the Pledge Agreement,
if applicable, duly executed by each Loan Party which is a party thereto;
(j) receipt by the Collateral Agent of certificates
representing shares, if applicable, of all capital stock pledged under the
Pledge Agreement to the Collateral Agent, accompanied by instruments of transfer
and stock powers endorsed in blank, together with evidence satisfactory to the
Collateral Agent that such capital stock has been duly and validly pledged
thereunder to the Collateral Agent for the ratable benefit of the Banks and is
subject to no other Lien other than the Lien created under the Pledge Agreement
to secure the Obligations;
(k) receipt by the Agent and the Banks of evidence that all
fees due and payable to the Agent and the Banks on the Closing Date have been
paid in full;
(l) receipt by the Agent of evidence satisfactory to the Agent
that the Existing Credit Agreement has been terminated and any and all
indebtedness of the Borrower thereunder has been repaid in full;
(m) such other documents or items as the Agent, the Banks or
their counsel may reasonably request.
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SECTION 3.02. CONDITIONS TO ALL BORROWINGS. The obligation of
each Bank to make a Loan on the occasion of each Borrowing is subject to the
satisfaction of the following conditions:
(a) either (i) receipt by the Agent of Notice of Borrowing as
required by Section 2.02 (if such Borrowing is a Syndicated Borrowing), (ii)
compliance with the provisions of Section 2.03 (if such Borrowing is a Money
Market Borrowing); or (iii) compliance with the provisions of Section 2.14, in
the case of a Swing Line Loan;
(b) the fact that, immediately before and after such
Borrowing, no Default shall have occurred and be continuing;
(c) the fact that the representations and warranties of the
Borrower contained in Article IV of this Agreement shall be true on and as of
the date of such Borrowing; and
(d) the fact that the representations and warranties of the
Loan Parties contained in the Guaranty and the Pledge Agreement shall be true on
and as of the date of such Borrowing; and
(e) the fact that, immediately after such Borrowing (i) the
aggregate outstanding principal amount of the Syndicated Loans of each Bank
(together with, in the case of the Swing Line Lender, the aggregate outstanding
principal amount of all Swing Line Loans) will not exceed the amount of its
Commitment and (ii) the aggregate outstanding principal amount of the Loans will
not exceed the aggregate amount of the Commitments of all of the Banks as of
such date.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the truth and accuracy of the
facts specified in clauses (b), (c) and (d) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. CORPORATE EXISTENCE AND POWER. The Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, is duly qualified to transact business
in every jurisdiction where, by the nature of its business, such qualification
is necessary, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.
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SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by the Loan Parties of
this Agreement, the Notes and the other Loan Documents (i) are within the Loan
Parties' organizational powers, (ii) have been duly authorized by all necessary
organizational action, (iii) require no action by or in respect of, or filing
with, any governmental body, agency or official, (iv) do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the certificate of incorporation, operating agreement or by-laws of any Loan
Party or of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Borrower or any of its Subsidiaries, and (v) do not
result in the creation or imposition of any Lien on any asset of the Borrower or
any of its Subsidiaries, except in favor of the Collateral Agent, the Agent and
the Banks as provided in the Loan Documents.
SECTION 4.03. BINDING EFFECT. This Agreement constitutes a
valid and binding agreement of the Borrower enforceable in accordance with its
terms, and the Notes and the other Loan Documents, when executed and delivered
in accordance with this Agreement, will constitute valid and binding obligations
of each of the Loan Parties that are a party thereto enforceable in accordance
with their respective terms, PROVIDED that the enforceability hereof and thereof
is subject in each case to general principles of equity and to bankruptcy,
insolvency and similar laws affecting the enforcement of creditors' rights
generally.
SECTION 4.04. FINANCIAL INFORMATION. (a) The consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of December
31, 1998 and the related consolidated statements of income, shareholders' equity
and cash flows for the Fiscal Year then ended, reported on by
PricewaterhouseCoopers, LLP, copies of which have been delivered to each of the
Banks, and the unaudited consolidated financial statements of the Borrower for
the interim period ended September 30, 1999, copies of which have been delivered
to each of the Banks, fairly present, in conformity with GAAP, the consolidated
financial position of the Borrower and its Consolidated Subsidiaries as of such
dates and their consolidated results of operations and cash flows for such
periods stated.
(b) Since December 31, 1998 there has been no event, act,
condition or occurrence having a Material Adverse Effect.
SECTION 4.05. LITIGATION. There is no action, suit or
proceeding pending, or to the knowledge of the Borrower threatened, against or
affecting the Borrower or any of its Subsidiaries before any court or arbitrator
or any governmental body, agency or official which could have a Material Adverse
Effect or which in any manner draws into question the validity or enforceability
of, or could impair the ability of any Loan Party to perform its obligations
under, this Agreement, the Notes or any of the other Loan Documents.
SECTION 4.06. COMPLIANCE WITH ERISA. (a) The Borrower and each
member of the Controlled Group have fulfilled their obligations under the
minimum funding standards of ERISA and the Code with respect to each Plan and
are in compliance in all material respects
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with the presently applicable provisions of ERISA and the Code, and have not
incurred any liability to the PBGC or a Plan under Title IV of ERISA.
(b) Neither the Borrower nor any member of the Controlled
Group is or ever has been obligated to contribute to any Multiemployer Plan.
SECTION 4.07. TAXES. There have been filed on behalf of the
Borrower and its Subsidiaries all Federal, state and local income, excise,
property and other tax returns which are required to be filed by them and all
taxes due pursuant to such returns or pursuant to any assessment received by or
on behalf of the Borrower or any Subsidiary have been paid. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of taxes or other governmental charges are, in the opinion of the
Borrower, adequate. United States income tax returns of the Borrower and its
Subsidiaries have been examined and closed through the Fiscal Year ended
December 31, 1997.
SECTION 4.08. SUBSIDIARIES. Each of the Borrower's
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, is duly qualified
to transact business in every jurisdiction where, by the nature of its business,
such qualification is necessary, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. As of the Closing Date, the Borrower has no
Subsidiaries except those Subsidiaries listed on SCHEDULE 4.08. Each Compliance
Certificate delivered by the Borrower pursuant to SECTION 5.01(C) sets forth the
complete name and jurisdiction of the incorporation of each Subsidiary of the
Borrower created, formed or acquired during the time period covered by the
financial statements applicable to such Compliance Certificate. SCHEDULE 4.08
and such Compliance Certificates accurately set forth each such Subsidiary's
complete name and jurisdiction of incorporation.
SECTION 4.09. NOT AN INVESTMENT COMPANY. Neither the Borrower
nor any of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 4.10 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the
Borrower nor any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
SECTION 4.11. OWNERSHIP OF PROPERTY; LIENS. Each of the
Borrower and its Consolidated Subsidiaries has title to its properties
sufficient for the conduct of its business, and none of such property is subject
to any Lien except as permitted in Section 5.08.
SECTION 4.12. NO DEFAULT. Neither the Borrower nor any of its
Consolidated Subsidiaries is in default under or with respect to any agreement,
instrument or undertaking to which it is a party or by
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which it or any of its property is bound which could have or cause a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
SECTION 4.13. FULL DISCLOSURE. All information heretofore
furnished by the Borrower to the Agent or any Bank for purposes of or in
connection with this Agreement or any transaction contemplated hereby is, and
all such information hereafter furnished by the Borrower to the Agent or any
Bank will be, true, accurate and complete in every material respect or based on
reasonable estimates on the date as of which such information is stated or
certified. The Borrower has disclosed to the Banks in writing any and all facts
which could have or cause a Material Adverse Effect.
SECTION 4.14. ENVIRONMENTAL MATTERS. (a) Neither the Borrower
nor any Subsidiary is subject to any Environmental Liability which could have or
cause a Material Adverse Effect and neither the Borrower nor any Subsidiary has
been designated as a potentially responsible party under CERCLA or under any
state statute similar to CERCLA. None of the Properties has been identified on
any current or proposed (i) National Priorities List under 40 C.F.R. ss. 300,
(ii) CERCLIS list or (iii) any list arising from a state statute similar to
CERCLA.
(b) No Hazardous Materials have been or are being used,
produced, manufactured, processed, treated, recycled, generated, stored,
disposed of, managed or otherwise handled at, or shipped or transported to or
from the Properties or are otherwise present at, on, in or under the Properties,
or, to the best of the knowledge of the Borrower, at or from any adjacent site
or facility, except for Hazardous Materials, such as cleaning solvents,
pesticides and other materials used, produced, manufactured, processed, treated,
recycled, generated, stored, disposed of, and managed or otherwise handled in
minimal amounts in the ordinary course of business in compliance with all
applicable Environmental Requirements.
(c) The Borrower, and each of its Subsidiaries and Affiliates,
has procured all Environmental Authorizations necessary for the conduct of its
business, and is in compliance with all Environmental Requirements in connection
with the operation of the Properties and the Borrower's, and each of its
Subsidiary's and Affiliate's, respective businesses.
SECTION 4.15. COMPLIANCE WITH LAWS. The Borrower and each
Subsidiary is in compliance with all applicable laws, including, without
limitation, all Environmental Laws, except where any failure to comply with any
such laws would not, alone or in the aggregate, have a Material Adverse Effect.
SECTION 4.16. CAPITAL STOCK. All Capital Stock, debentures,
bonds, notes and all other securities of the Borrower and its Subsidiaries
presently issued and outstanding are validly and properly issued in accordance
with all applicable laws, including, but not limited to, the "Blue Sky" laws of
all applicable states and the federal securities laws. The issued shares of
Capital Stock of the Borrower's Wholly Owned Subsidiaries are owned by the
Borrower free and clear of any Lien or adverse claim, except
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for the Liens provided in the Pledge Agreement. At least a majority of the
issued shares of capital stock of each of the Borrower's other Subsidiaries
(other than Wholly Owned Subsidiaries) is owned by the Borrower free and clear
of any Lien or adverse claim, except for the Liens provided in the Pledge
Agreement.
SECTION 4.17. MARGIN STOCK. Neither the Borrower nor any of
its Subsidiaries is engaged principally, or as one of its important activities,
in the business of purchasing or carrying any Margin Stock, and no part of the
proceeds of any Loan will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock, or be used for any purpose which violates, or which is inconsistent with,
the provisions of Regulations T, U or X of the Board of Governors of the Federal
Reserve System..
SECTION 4.18. INSOLVENCY. After giving effect to the execution
and delivery of the Loan Documents and the making of the Loans under this
Agreement, the Borrower will not be "insolvent," within the meaning of such term
as used in O.C.G.A. ss. 18-2-22 or as defined in ss. 101 of Title 11 of the
United States Code or Section 2 of the Uniform Fraudulent Transfer Act, or any
other applicable state law pertaining to fraudulent transfers, as each may be
amended from time to time, or be unable to pay its debts generally as such debts
become due, or have an unreasonably small capital to engage in any business or
transaction, whether current or contemplated.
SECTION 4.19. YEAR 2000 PLAN. The Borrower's and its
Subsidiaries' software and hardware systems which impact or affect in any way
the business operations of the Borrower and its Subsidiaries are Year 2000
Compliant and Ready.
SECTION 4.20. INSURANCE. The Borrower and each of its
Subsidiaries maintains (either in the name of the Borrower or in such
Subsidiary's own name), with financially sound and reputable insurance
companies, insurance on all its Property in at least such amounts and against at
least such risks as are usually insured against in the same general area by
companies of established repute engaged in the same or similar business.
SECTION 4.21. JOINT VENTURES/PARTNERSHIPS. The Borrower agrees
to provide to the Agent annually, simultaneously with providing the information
required pursuant to Section 5.01(a), a then current list of all joint ventures
and partnerships in which the Borrower or a Subsidiary is a partner or venturer
(referred to herein collectively as the "Joint Ventures") and the percentage
ownership in each such Joint Venture owned by the Borrower or any Subsidiary.
Schedule 4.21 accurately sets forth the complete name and jurisdiction of
organization of each Joint Venture in which the Borrower or any Subsidiary owns
an Investment on the Closing Date. Except for Company Owned Restaurants and
Development Joint Ventures, neither the Borrower nor any Subsidiary is a general
partner in any Joint Venture, other than a Subsidiary that is a corporation, the
sole assets of which consist of its interest in such Joint Venture.
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ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable under any Note remains unpaid:
5.01. INFORMATION. The Borrower will deliver to each of the
Banks:
(a) as soon as available and in any event within 90 days after
the end of each Fiscal Year, a consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as of the end of such Fiscal Year and the related
consolidated statements of income, shareholders' equity and cash flows for such
Fiscal Year, setting forth in each case in comparative form the figures for the
previous fiscal year, all certified by PricewaterhouseCoopers, LLP or other
independent public accountants of nationally recognized standing, with such
certification to be free of exceptions and qualifications not acceptable to the
Required Banks;
(b) as soon as available and in any event within 45 days after
the end of each of the first 3 Fiscal Quarters of each Fiscal Year, a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
of the end of such Fiscal Quarter and the related statement of income and
statement of cash flows for such Fiscal Quarter and for the portion of the
Fiscal Year ended at the end of such Fiscal Quarter, setting forth in each case
in comparative form the figures for the corresponding Fiscal Quarter and the
corresponding portion of the previous Fiscal Year, all certified (subject to
normal year-end adjustments) as to fairness of presentation, GAAP and
consistency by the chief financial officer or the chief accounting officer of
the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate,
substantially in the form of Exhibit Q (a "Compliance Certificate"), of the
chief financial officer or the chief accounting officer of the Borrower (i)
setting forth in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements of Sections 5.03
through 5.08, inclusive, 5.11 and 5.26 on the date of such financial statements,
(ii) identifying the complete name and jurisdiction of incorporation of each
Subsidiary of the Borrower created, formed or acquired during the time period
covered by such financial statements; (iii) identifying the Domestic
Subsidiaries; and (iv) stating whether any Default exists on the date of such
certificate and, if any Default then exists, setting forth the details thereof
and the action which the Borrower is taking or proposes to take with respect
thereto;
(d) simultaneously with the delivery of each set of annual
financial statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements to the effect
that nothing has come to their attention to cause them to believe that any
Default existed on the date of such financial statements;
(e) within 5 Domestic Business Days after the Borrower becomes
aware of the occurrence of any Default, a certificate of the chief financial
officer or the chief accounting officer of the Borrower setting forth the
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details thereof and the action which the Borrower is taking or proposes to take
with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of
the Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and annual, quarterly or monthly
reports which the Borrower shall have filed with the Securities and Exchange
Commission;
(h) if and when the Borrower or any member of the Controlled
Group (i) gives or is required to give notice to the PBGC of any "reportable
event" (as defined in Section 4043 of ERISA) with respect to any Plan which
might constitute grounds for a termination of such Plan under Title IV of ERISA,
or knows that the plan administrator of any Plan has given or is required to
give notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives notice
of complete or partial withdrawal liability under Title IV of ERISA, a copy of
such notice; or (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate or appoint a trustee to administer any Plan, a copy of
such notice;
(i) promptly after the Borrower knows of the commencement
thereof, notice of any litigation, dispute or proceeding involving a claim
against the Borrower and/or any Subsidiary for $1,000,000 or more in excess of
amounts covered in full by applicable insurance; and
(j) from time to time such additional information regarding
the financial position or business of the Borrower and its Subsidiaries as the
Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. INSPECTION OF PROPERTY, BOOKS AND RECORDS. The
Borrower will (i) keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries in conformity with
GAAP shall be made of all dealings and transactions in relation to its business
and activities; and (ii) permit, and will cause each Subsidiary to permit,
representatives of any Bank at such Bank's expense prior to the occurrence of an
Event of Default and at the Borrower's expense after the occurrence of an Event
of Default to visit and inspect any of their respective properties, to examine
and make abstracts from any of their respective books and records and to discuss
their respective affairs, finances and accounts with their respective officers,
employees and independent public accountants. The Borrower agrees to cooperate
and assist in such visits and inspections, in each case at such reasonable times
and as often as may reasonably be desired.
SECTION 5.03. RATIO OF CONSOLIDATED TOTAL DEBT TO EBITDA. At
the end of each Fiscal Quarter commencing with the Fiscal Quarter ending
December 31, 1999, the ratio of Consolidated Total Debt determined for the
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Fiscal Quarter then ending to EBITDA for the Fiscal Quarter then ending and the
immediately preceding three Fiscal Quarters will not at any time exceed 2.00 to
1.00.
SECTION 5.04. MINIMUM CONSOLIDATED NET WORTH. Consolidated Net
Worth will at no time be less than $435,000,000 plus the sum of (i) 25% of the
cumulative Reported Net Income of the Borrower and its Consolidated Subsidiaries
during any period after December 31, 1998 (taken as one accounting period),
calculated quarterly but excluding from such calculations of Reported Net Income
for purposes of this clause (i) any quarter in which the Consolidated Net Income
of the Borrower and its Consolidated Subsidiaries is negative, and (ii) 100% of
the cumulative Net Proceeds of Capital Stock/Conversion of Debt received during
any period after December 31, 1998, calculated quarterly.
SECTION 5.05. ADJUSTED FIXED CHARGE COVERAGE RATIO. At the end
of each Fiscal Quarter, commencing with the Fiscal Quarter ending December 31,
1999, the ratio of Adjusted Cash Flow for the Fiscal Quarter then ended and the
immediately preceding three Fiscal Quarters to Adjusted Fixed Charges for the
Fiscal Quarter then ended and the immediately preceding three Fiscal Quarters,
shall be equal to or exceed 3.5 to 1.00 at all times.
SECTION 5.06. LOANS OR ADVANCES. Neither the Borrower nor any
of its Subsidiaries shall make loans or advances to any Person except: (i) loans
or advances to employees not exceeding One Million and no/100 Dollars
($1,000,000.00) in the aggregate outstanding made in the ordinary course of
business and consistently with practices existing on December 31, 1998; (ii)
deposits required by government agencies or public utilities; (iii) loans or
advances to Wholly Owned Subsidiaries that are Guarantors made in the ordinary
course of business and consistently with practices existing on December 31,
1998; (iv) loans or advances to Company Owned Restaurants made in the ordinary
course of business and consistently with practices existing on December 31,
1998; (v) loans or advances to Development Joint Ventures for purposes of
funding the obligations of the Borrower or a Consolidated Subsidiary that is a
Guarantor to such Development Joint Ventures, made in the ordinary course of
business and consistently with practices existing on December 31, 1998; and (vi)
loans or advances made in the ordinary course of business and consistently with
practices existing on December 31, 1998, provided that the aggregate outstanding
principal amount of the loans and advances made under this Section 5.06(vi),
together with any and all Investments made under Section 5.07(vi) shall not
exceed, in the aggregate, ten percent (10%) of Consolidated Net Worth; provided
that after giving effect to the making of any loans, advances or deposits
permitted by clause (i), (ii), (iii), (iv), (v) or (vi) of this Section, no
Default shall have occurred and be continuing.
SECTION 5.07. INVESTMENTS. Neither the Borrower nor any of its
Subsidiaries shall make Investments in any Person except as permitted by Section
5.06 and except Investments in (i) direct obligations of the United States
Government maturing within one year, (ii) certificates of deposit issued by a
commercial bank whose credit is satisfactory
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to the Agent, (iii) commercial paper rated A-1 or the equivalent thereof by
Standard & Poor's Corporation or P-1 or the equivalent thereof by Moody's
Investors Service, Inc. and in either case maturing within 270 days after the
date of acquisition, (iv) Company Owned Restaurants made in the ordinary course
of business and consistently with practices existing on December 31, 1998, (v)
Development Joint Ventures in satisfaction of the obligations of the Borrower or
a Consolidated Subsidiary that is a Guarantor to such Development Joint
Ventures, made in the ordinary course of business and consistently with
practices existing on December 31, 1998, (vi) the stock or other equity
interests of any other Person (excluding Investments existing on the Closing
Date) provided that the aggregate amount expended, assumed or incurred by the
Borrower and the Subsidiaries of the Borrower in connection with such Investment
does not exceed, when aggregated with the total amount expended, assumed or
incurred by the Borrower and the Subsidiaries in connection with all such other
Investments under this Section 5.07(vi), together with the aggregate outstanding
principal amount of the loans and advances made under Section 5.06(vi), ten
percent (10%) of Consolidated Net Worth at the time of such Investment, (vii)
Investments of the Borrower and its Subsidiaries existing on the Closing Date,
(viii) Investments in Permitted Acquisitions, (ix) obligations issued or
unconditionally guaranteed by a state or municipality having a rating of AA or
better from Standard & Poor's Corporaiton or Aa or better from Moody's Investors
Service, Inc., (x) obligations of a corporation having a rating of AA or better
from Standard & Poor's Corporation or Aa or better from Moody's Investors
Service, Inc., (xi) money market funds that invest exclusively in the
investments described in Subsections 5.07(i), (ii), (iii), (ix), (x) and (xii),
and/or (xii) tender bonds the payment of the principal of and interest on which
is fully supported by a letter of credit issued by a United States bank whose
long-term certificates of deposit are rated at least AA or the equivalent
thereof by Standard & Poor's Corporation and AA or the equivalent thereof by
Moody's Investors Service, Inc.
SECTION 5.08. NEGATIVE PLEDGE. Neither the Borrower nor any
Consolidated Subsidiary will create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal amount not
exceeding $5,000,000.00;
(b) any Lien existing on any asset of any corporation at the
time such corporation becomes a Consolidated Subsidiary and not created in
contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed
for the purpose of financing all or any part of the cost of acquiring or
constructing such asset, PROVIDED that such Lien attaches to such asset
concurrently with or within 18 months after the acquisition or completion of
construction thereof;
(d) any Lien on any asset of any corporation existing at the
time such corporation is merged or consolidated with or into the Borrower or a
Consolidated Subsidiary and not created in contemplation of such event;
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(e) any Lien existing on any asset prior to the acquisition
thereof by the Borrower or a Consolidated Subsidiary and not created in
contemplation of such acquisition;
(f) Liens securing Debt owing by any Subsidiary to the
Borrower;
(g) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by any of the
foregoing clauses of this Section, PROVIDED that (i) such Debt is not secured by
any additional assets, and (ii) the amount of such Debt secured by any such Lien
is not increased;
(h) Liens incidental to the conduct of its business or the
ownership of its assets which (i) do not secure Debt and (ii) do not in the
aggregate materially detract from the value of its assets or materially impair
the use thereof in the operation of its business;
(i) Liens on Securitization Assets sold or transferred
pursuant to a Permitted Securitization;
(j) any Lien on Margin Stock; and
(k) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt (other than indebtedness represented by the Notes) in
an aggregate principal amount at any time outstanding not to exceed 10% of
Consolidated Net Worth.
SECTION 5.09. MAINTENANCE OF EXISTENCE. The Borrower shall,
and shall cause each Subsidiary to, maintain its corporate existence and carry
on its business in substantially the same manner and in substantially the same
fields as such business is now carried on and maintained.
SECTION 5.10. DISSOLUTION. Neither the Borrower nor any of its
Subsidiaries shall suffer or permit dissolution or liquidation either in whole
or in part or redeem or retire any shares of stock of any Subsidiary, except
through corporate reorganization to the extent permitted by Section 5.11.
SECTION 5.11. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. The
Borrower will not, nor will it permit any Subsidiary to, consolidate or merge
with or into, or sell, lease or otherwise transfer all or any substantial part
of its assets to, any other Person, or discontinue or eliminate any business
line or segment, PROVIDED that (a) the Borrower may merge with another Person if
(i) such Person was organized under the laws of the United States of America or
one of its states, (ii) the Borrower is the corporation surviving such merger
and (iii) immediately after giving effect to such merger, no Default shall have
occurred and be continuing, (b) Subsidiaries of the Borrower may merge with one
another, and (c) the foregoing limitation on the sale, lease or other transfer
of assets and on the discontinuation or elimination of a business line or
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segment shall not prohibit, during any Fiscal Quarter, a transfer of assets or
the discontinuance or elimination of a business line or segment (in a single
transaction or in a series of related transactions) unless the aggregate assets
to be so transferred or utilized in a business line or segment to be so
discontinued, when combined with all other assets transferred, and all other
assets utilized in all other business lines or segments discontinued, during
such Fiscal Quarter and the immediately preceding three Fiscal Quarters,
constituted more than 15% of Consolidated Total Assets at the end of the fourth
Fiscal Quarter immediately preceding such Fiscal Quarter.
SECTION 5.12. USE OF PROCEEDS. No portion of the proceeds of
the Loans will be used by the Borrower or any Subsidiary (i) in connection with,
either directly or indirectly, any tender offer for, or other acquisition of,
stock of any corporation with a view towards obtaining control of such other
corporation (other than a Permitted Acquisition), (ii) directly or indirectly,
for the purpose, whether immediate, incidental or ultimate, of purchasing or
carrying any Margin Stock, or (iii) for any purpose in violation of any
applicable law or regulation.
SECTION 5.13. COMPLIANCE WITH LAWS; PAYMENT OF TAXES. The
Borrower will, and will cause each of its Subsidiaries and each member of the
Controlled Group to, comply with applicable laws (including but not limited to
ERISA), regulations and similar requirements of governmental authorities
(including but not limited to PBGC), except where the necessity of such
compliance is being contested in good faith through appropriate proceedings
diligently pursued. The Borrower will, and will cause each of its Subsidiaries
to, pay promptly when due all taxes, assessments, governmental charges, claims
for labor, supplies, rent and other obligations which, if unpaid, might become a
lien against the property of the Borrower or any Subsidiary, except liabilities
being contested in good faith by appropriate proceedings diligently pursued and
against which, if requested by the Agent, the Borrower shall have set up
reserves in accordance with GAAP.
SECTION 5.14. INSURANCE. The Borrower will maintain, and will
cause each of its Subsidiaries to maintain (either in the name of the Borrower
or in such Subsidiary's own name), with financially sound and reputable
insurance companies, insurance on all its Property in at least such amounts and
against at least such risks as are usually insured against in the same general
area by companies of established repute engaged in the same or similar business.
SECTION 5.15. CHANGE IN FISCAL YEAR. The Borrower will not
change its Fiscal Year without the consent of the Required Banks.
SECTION 5.16. MAINTENANCE OF PROPERTY. The Borrower shall, and
shall cause each Subsidiary to, maintain all of its properties and assets in
good condition, repair and working order, ordinary wear and tear excepted.
SECTION 5.17. ENVIRONMENTAL NOTICES. The Borrower shall
furnish to the Banks and the Agent prompt written notice of all Environmental
Liabilities, pending, threatened or anticipated Environmental Proceedings,
Environmental Notices, Environmental Judgments and Orders, and Environmental
Releases at, on, in, under or in any way affecting the
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Properties or any adjacent property, and all facts, events, or conditions that
could lead to any of the foregoing.
SECTION 5.18. ENVIRONMENTAL MATTERS. The Borrower and its
Subsidiaries will not, and will not permit any Third Party to, use, produce,
manufacture, process, treat, recycle, generate, store, dispose of, manage at, or
otherwise handle or ship or transport to or from the Properties any Hazardous
Materials except for Hazardous Materials such as cleaning solvents, pesticides
and other similar materials used, produced, manufactured, processed, treated,
recycled, generated, stored, disposed, managed or otherwise handled in minimal
amounts in the ordinary course of business in compliance with all applicable
Environmental Requirements.
SECTION 5.19. ENVIRONMENTAL RELEASE. The Borrower agrees that
upon the occurrence of an Environmental Release at or on any of the Properties
it will act immediately to investigate the extent of, and to take appropriate
remedial action to eliminate, such Environmental Release, whether or not ordered
or otherwise directed to do so by any Environmental Authority.
SECTION 5.20 JOINT VENTURES/PARTNERSHIPS. Except for Company
Owned Restaurants and Development Joint Ventures, the Borrower shall not become
a general partner in any general or limited partnership or joint venture, or
permit any of its Subsidiaries to do so, other than any Subsidiary that is a
corporation and the sole assets of which consist of its interest in such
partnership or joint venture.
SECTION 5.21 TRANSACTIONS WITH AFFILIATES. Neither the
Borrower nor any of its Subsidiaries shall enter into, or be a party to, any
transaction with any Affiliate of the Borrower or such Subsidiary (which
Affiliate is not the Borrower or a Subsidiary), except as permitted by law and
in the ordinary course of business and pursuant to reasonable terms which are
fully disclosed to the Agent and the Banks, consented to in writing by the
Required Banks, and are no less favorable to Borrower or such Subsidiary than
would be obtained in a comparable arm's length transaction with a Person which
is not an Affiliate.
SECTION 5.22 SUBSIDIARIES. (a) The Borrower shall cause any
Person which becomes a Material Domestic Subsidiary after the Closing Date to
become a party to, and agree to be bound by the terms of, the Guaranty pursuant
to an instrument in form and substance satisfactory to the Agent executed and
delivered to the Collateral Agent within ten (10) Domestic Business Days after
the day on which such Person became a Material Domestic Subsidiary. The Borrower
shall also cause the items specified in Section 3.01(c) and (f) to be delivered
to the Collateral Agent concurrently with the instrument referred to above,
modified appropriately to refer to such instrument and such Material Domestic
Subsidiary.
(b) The Borrower shall, or shall cause any Subsidiary (the
"Pledgor Subsidiary") to, pledge 66 2/3% of the shares of capital stock owned by
the Borrower or such Pledgor Subsidiary in any Person which becomes a Foreign
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Subsidiary after the Closing Date pursuant to a pledge agreement in form and
substance substantially identical to the Pledge Agreement attached hereto as
Exhibit K within ten (10) Domestic Business Days after the day on which such
Person became a Foreign Subsidiary and shall deliver to the Collateral Agent
such shares of capital stock together with stock powers executed in blank. The
Borrower shall also cause the items specified in Section 3.01(c) and (f) to be
delivered to the Agent concurrently with the pledge agreement referred to above,
modified appropriately to refer to such pledge agreement and such Foreign
Subsidiary.
(c) Once any Subsidiary becomes a Material Domestic Subsidiary
and therefore becomes a party to the Guaranty in accordance with Section 3.01(g)
or Section 5.22(a) or any shares of capital stock of a Foreign Subsidiary are
pledged to the Collateral Agent in accordance with Sections 3.01(i), Section
3.01(j) or Section 5.22(b), such Material Domestic Subsidiary (including,
without limitation, all initial Material Domestic Subsidiaries) thereafter shall
remain a party to the Guaranty and the shares of capital stock in such Foreign
Subsidiary (including, without limitation, all initial Foreign Subsidiaries)
shall remain subject to the pledge to the Collateral Agent, as the case may be,
even if such Subsidiary thereafter ceases to be a Material Domestic Subsidiary
or Foreign Subsidiary, as the case may be; provided that if a Material Domestic
Subsidiary or Foreign Subsidiary ceases to be a Subsidiary of the Borrower as a
result of the Borrower's transfer or sale of one hundred percent (100%) of the
capital stock of such Subsidiary in accordance with and to the extent permitted
by the terms of Section 5.11, the Agent and the Banks agree to release such
Subsidiary from the Guaranty and release the shares of capital stock of such
Subsidiary from the Pledge Agreement.
SECTION 5.23 ACQUISITIONS. The Borrower will not, nor will it
permit any Subsidiary to purchase, lease or otherwise acquire (in a single
transaction or in a series of transactions), directly or indirectly: (i) all or
any substantial part of the assets or stock of any other Person; (ii) a business
line or segment of any other Person; or (iii) control of any other Person,
unless such purchase, lease or acquisition constitutes a Permitted Acquisition.
SECTION 5.24. PERMITTED SECURITIZATIONS. The Borrower will
not, and will not permit any of its Subsidiaries to, enter into or consummate
any financing program providing for the sale or transfer of Securitization
Assets by the Borrower or any Subsidiary unless such financing program
constitutes a "Permitted Securitization" as defined in Section 1.01.
SECTION 5.25 RESTRICTIONS AFFECTING SUBSIDIARIES. The Borrower
will not create, incur, permit or suffer to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon the ability
or right of any Subsidiary to pay dividends or other distributions with respect
to any shares of its capital stock or to make or repay loans or advances to the
Borrower or any other Subsidiary; PROVIDED that the foregoing shall not apply to
restrictions or conditions imposed by law.
SECTION 5.26 LIMITATION ON PRIORITY DEBT. The Borrower shall
not permit the outstanding principal amount of Priority Debt to exceed, in the
aggregate, more than 10% of Consolidated Net Worth at any time.
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ARTICLE VI
DEFAULTS
SECTION 6.01. EVENTS OF DEFAULT. If one or more of the
following events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of
any Loan or shall fail to pay any interest on any Loan within five Domestic
Business Days after such interest shall become due, or shall fail to pay any fee
or other amount payable hereunder within five Domestic Business Days after such
fee or other amount becomes due; or
(b) the Borrower or any Subsidiary shall fail to observe or
perform any covenant contained in Sections 5.02(ii), 5.03 to 5.12, inclusive, or
Section 5.15 or 5.20 to 5.26, inclusive; or
(c) any Loan Party shall fail to observe or perform any
covenant or agreement contained or incorporated by reference in any Loan
Document (other than those covered by clause (a) or (b) above) for thirty days
after the earlier of (i) the first day on which such Loan Party has knowledge of
such failure or (ii) written notice thereof has been given to the Borrower by
the Agent at the request of any Bank; or
(d) any representation, warranty, certification or statement
made or deemed made by any Loan Party in any Loan Document or in any
certificate, financial statement or other document delivered pursuant to any
Loan Document shall prove to have been incorrect or misleading in any material
respect when made (or deemed made); or
(e) the Borrower or any Subsidiary shall fail to make any
payment in respect of Debt outstanding (other than the Notes) in an aggregate
principal amount in excess of $10,000,000 when due or within any applicable
grace period; or
(f) any event or condition shall occur which results in the
acceleration of the maturity of Debt outstanding of the Borrower or any
Subsidiary in an aggregate principal amount in excess of $10,000,000 or the
mandatory prepayment or purchase of such Debt by the Borrower (or its designee)
or such Subsidiary (or its designee) prior to the scheduled maturity thereof, or
enables (or, with the giving of notice or lapse of time or both, would enable)
the holders of such Debt or any Person acting on such holders' behalf to
accelerate the maturity thereof or require the mandatory prepayment or purchase
thereof prior to the scheduled maturity thereof, without regard to whether such
holders or other Person shall have exercised or waived their right to do so; or
(g) the Borrower, any Loan Party or any Subsidiary shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall consent
to any such relief or to the appointment of or taking possession by any such
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official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail
generally, or shall admit in writing its inability, to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing; or
(h) an involuntary case or other proceeding shall be commenced
against the Borrower, any Loan Party or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of 60 days; or an order for relief shall be entered against the Borrower,
any other Loan Party or any Subsidiary under the federal bankruptcy laws as now
or hereafter in effect; or
(i) the Borrower or any member of the Controlled Group shall
fail to pay when due any material amount which it shall have become liable to
pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to
terminate a Plan or Plans shall be filed under Title IV of ERISA by the
Borrower, any member of the Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any such Plan or Plans or a proceeding shall be instituted by a
fiduciary of any such Plan or Plans to enforce Section 515 or 4219(c)(5) of
ERISA and such proceeding shall not have been dismissed within 30 days
thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any such Plan or Plans must be
terminated; or
(j) one or more judgments or orders for the payment of money
in an aggregate amount in excess of $500,000 shall be rendered against the
Borrower or any Subsidiary and such judgment or order shall continue unsatisfied
and unstayed for a period of 30 days; or
(k) a federal tax lien shall be filed against the Borrower or
any Subsidiary under Section 6323 of the Code or a lien of the PBGC shall be
filed against the Borrower or any Subsidiary under Section 4068 of ERISA and in
either case such lien shall remain undischarged for a period of 25 days after
the date of filing; or
(l) (i) any Person or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934) of 30% or more of the outstanding shares of the voting stock of the
Borrower; or (ii) as of any date a majority of the Board of Directors of the
Borrower consists of individuals who were not either (A) directors of the
Borrower as of the corresponding date of the previous year, (B) selected or
nominated to become directors by the Board of Directors of the Borrower of which
a majority consisted of individuals described in clause (A), or (C) selected or
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nominated to become directors by the Board of Directors of the Borrower of which
a majority consisted of individuals described in clause (A) and individuals
described in clause (B); or
(m) if any provision of this Agreement, any Note, the
Guaranty, the Pledge Agreement or the Indemnity Subrogation and Contribution
Agreement shall for any reason cease to be valid and binding on any Loan Party,
or any Loan Party shall deny or disaffirm its obligations thereunder; or
(n) if the Pledge Agreement shall for any reason cease to
create a valid and perfected first priority security interest in any of the
Pledged Stock and Related Collateral purported to be encumbered thereby; or
(o) any event of default shall occur and be continuing under
the Pledge Agreement or Guaranty and such event of default continues beyond any
applicable cure or grace period provided therein.
then, and in every such event, the Agent shall (i) if requested by the Required
Banks, by notice to the Borrower terminate the Commitments and they shall
thereupon terminate, (ii) if requested by the Swing Line Lender, by notice to
the Borrower terminate the Swing Line facility set forth in Section 2.14, and
(iii) if requested by the Required Banks, by notice to the Borrower declare the
Notes (together with accrued interest thereon) and all other amounts payable
hereunder and under the other Loan Documents to be, and the Notes (together with
all accrued interest thereon) and all other amounts payable hereunder and under
the other Loan Documents shall thereupon become, immediately due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower; PROVIDED that if any Event of Default
specified in clause (g) or (h) above occurs with respect to the Borrower,
without any notice to the Borrower, any Guarantor or any other act by the Agent
or the Banks, the Commitments and the Swing Line facility set forth in Section
2.14 shall thereupon automatically terminate and the Notes (together with
accrued interest thereon) and all other amounts payable hereunder and under the
other Loan Documents shall automatically become immediately due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower. Notwithstanding the foregoing, the Agent
shall have available to it all other remedies at law or equity, and shall
exercise any one or all of them at the request of the Required Banks.
SECTION 6.02. NOTICE OF DEFAULT. The Agent shall give notice
to the Borrower of any Default under Section 6.01(c) promptly upon being
requested to do so by any Bank and shall thereupon notify all the Banks thereof.
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ARTICLE VII
THE AGENT
SECTION 7.01. APPOINTMENT, POWERS AND IMMUNITIES. Each Bank
hereby irrevocably appoints and authorizes the Agent to act as its agent
hereunder and under the other Loan Documents with such powers as are
specifically delegated to the Agent by the terms hereof and thereof, together
with such other powers as are reasonably incidental thereto. The Agent: (a)
shall have no duties or responsibilities except as expressly set forth in this
Agreement and the other Loan Documents, and shall not by reason of this
Agreement or any other Loan Document be a trustee for any Bank; (b) shall not be
responsible to the Banks for any recitals, statements, representations or
warranties contained in this Agreement or any other Loan Document, or in any
certificate or other document referred to or provided for in, or received by any
Bank under, this Agreement or any other Loan Document, or for the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or any other document referred to or provided for herein
or therein or for any failure by the Borrower to perform any of its obligations
hereunder or thereunder; (c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder or under any other Loan Document
except to the extent requested by the Required Banks, and then only on terms and
conditions satisfactory to the Agent, and (d) shall not be responsible for any
action taken or omitted to be taken by it hereunder or under any other Loan
Document or any other document or instrument referred to or provided for herein
or therein or in connection herewith or therewith, except for its own gross
negligence or willful misconduct. The Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it with reasonable care. The
provisions of this Article VII are solely for the benefit of the Agent and the
Banks, and the Borrower shall not have any rights as a third party beneficiary
of any of the provisions hereof. In performing its functions and duties under
this Agreement and under the other Loan Documents, the Agent shall act solely as
agent of the Banks and does not assume and shall not be deemed to have assumed
any obligation towards or relationship of agency or trust with or for the
Borrower. The duties of the Agent shall be ministerial and administrative in
nature, and the Agent shall not have by reason of this Agreement or any other
Loan Document a fiduciary relationship in respect of any Bank.
SECTION 7.02. RELIANCE BY AGENT. The Agent shall be entitled
to rely upon any certification, notice or other communication (including any
thereof by telephone, telefax, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper Person
or Persons, and upon advice and statements of legal counsel, independent
accountants or other experts selected by the Agent. As to any matters not
expressly provided for by this Agreement or any other Loan Document, the Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder and thereunder in accordance with instructions signed by the Required
Banks, and such instructions of the Required Banks in any action taken or
failure to act pursuant thereto shall be binding on all of the Banks.
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SECTION 7.03. DEFAULTS. The Agent shall not be deemed to have
knowledge of the occurrence of a Default or an Event of Default (other than the
non-payment of principal of or interest on the Loans) unless the Agent has
received notice from a Bank or the Borrower specifying such Default or Event of
Default and stating that such notice is a "Notice of Default". In the event that
the Agent receives such a notice of the occurrence of a Default or an Event of
Default, the Agent shall give prompt notice thereof to the Banks. The Agent
shall give each Bank prompt notice of each non-payment of principal of or
interest on the Loans, whether or not it has received any notice of the
occurrence of such non-payment. The Agent shall (subject to Section 9.05) take
such action with respect to such Default or Event of Default as shall be
directed by the Required Banks, provided that, unless and until the Agent shall
have received such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interests of
the Banks.
SECTION 7.04. RIGHTS OF AGENT AND ITS AFFILIATES AS A BANK.
With respect to any Loan made by Wachovia or an Affiliate of Wachovia, such
Affiliate and Wachovia in their capacity as a Bank hereunder shall have the same
rights and powers hereunder as any other Bank and may exercise the same as
though it were not an Affiliate of Wachovia (or in Wachovia's case, acting as
the Agent), and the term "Bank" or "Banks" shall, unless the context otherwise
indicates, include such Affiliate of Wachovia or Wachovia in its individual
capacity. Such Affiliate and Wachovia may (without having to account therefor to
any Bank) accept deposits from, lend money to and generally engage in any kind
of banking, trust or other business with the Borrower (and any of its
Affiliates) as if they were not an Affiliate of the Agent or the Agent,
respectively; and such Affiliate and Wachovia may accept fees and other
consideration from the Borrower (in addition to any agency fees and arrangement
fees heretofore agreed to between the Borrower and Wachovia) for services in
connection with this Agreement or any other Loan Document or otherwise without
having to account for the same to the Banks.
SECTION 7.05. INDEMNIFICATION. Each Bank severally agrees to
indemnify the Agent, to the extent the Agent shall not have been reimbursed by
the Borrower, ratably in accordance with its Commitment, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including, without limitation, counsel fees and disbursements)
or disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of this Agreement or any other Loan Document or any other documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby (excluding, unless an Event of Default has occurred and is continuing,
the normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or any such other documents; PROVIDED, HOWEVER, that no Bank shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent. If any indemnity furnished to the
Agent for any purpose shall, in the opinion of the Agent, be insufficient or
become impaired, the Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished.
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SECTION 7.06. CONSEQUENTIAL DAMAGES. THE AGENT SHALL NOT BE
RESPONSIBLE OR LIABLE TO ANY BANK, THE BORROWER OR ANY OTHER PERSON OR ENTITY
FOR ANY PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A
RESULT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
SECTION 7.07. PAYEE OF NOTE TREATED AS OWNER. The Agent may
deem and treat the payee of any Note as the owner thereof for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
shall have been filed with the Agent and the provisions of Section 9.07(c) have
been satisfied. Any requests, authority or consent of any Person who at the time
of making such request or giving such authority or consent is the holder of any
Note shall be conclusive and binding on any subsequent holder, transferee or
assignee of that Note or of any Note or Notes issued in exchange therefor or
replacement thereof. Each Bank acknowledges that each Person designated as an
"Arranger," a "Documentation Agent" or a "Syndication Agent" shall have no
right, duty or responsibility, and shall incur no liability under this Agreement
or any other Loan Document in its capacity as an "Arranger," a "Documentation
Agent" or a "Syndication Agent."
SECTION 7.08. NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank
agrees that it has, independently and without reliance on the Agent or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own credit analysis of the Borrower and decision to enter into this
Agreement and that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Loan
Documents. The Agent shall not be required to keep itself (or any Bank) informed
as to the performance or observance by the Borrower of this Agreement or any of
the other Loan Documents or any other document referred to or provided for
herein or therein or to inspect the properties or books of the Borrower or any
other Person. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Agent hereunder or under
the other Loan Documents, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the affairs,
financial condition or business of the Borrower or any other Person (or any of
their Affiliates) which may come into the possession of the Agent.
SECTION 7.09. FAILURE TO ACT. Except for action expressly
required of the Agent hereunder or under the other Loan Documents, the Agent
shall in all cases be fully justified in failing or refusing to act hereunder
and thereunder unless it shall receive further assurances to its satisfaction by
the Banks of their indemnification obligations under Section 7.05 against any
and all liability and expense which may be incurred by the Agent by reason of
taking, continuing to take, or failing to take any such action.
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SECTION 7.10. RESIGNATION OR REMOVAL OF AGENT. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving notice thereof to the Banks and the Borrower and
the Agent may be removed at any time with or without cause by the Required
Banks. Upon any such resignation or removal, the Required Banks shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Banks and shall have accepted such appointment within
30 days after the retiring Agent's notice of resignation or the Required Banks'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent. Any successor Agent shall be a bank which has
a combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article VII
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Agent hereunder.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01. BASIS FOR DETERMINING INTEREST RATE INADEQUATE
OR UNFAIR. If on or prior to the first day of any Interest Period:
(a) the Agent determines that deposits in Dollars (in the
applicable amounts) are not being offered in the relevant market for such
Interest Period, or
(b) the Required Banks advise the Agent that the London
Interbank Offered Rate as determined by the Agent will not adequately and fairly
reflect the cost to such Banks of funding the relevant type of Euro-Dollar Loans
for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, the obligations of the Banks to make
the type of Euro-Dollar Loans specified in such notice shall be suspended.
Unless the Borrower notifies the Agent at least 2 Domestic Business Days before
the date of any Euro-Dollar Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such date, such borrowing
shall instead be made as a Base Rate Borrowing.
SECTION 8.02. ILLEGALITY. If, after the date hereof, the
adoption of any applicable law, rule or regulation, or any change in any
existing or future law, rule or regulation, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof (any
such authority, bank or agency being referred to as an "Authority"
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and any such event being referred to as a "Change of Law"), or compliance by any
Bank (or its Lending Office) with any request or directive (whether or not
having the force of law) of any Authority shall make it unlawful or impossible
for any Bank (or its Lending Office) to make, maintain or fund its Euro-Dollar
Loans and such Bank shall so notify the Agent, the Agent shall forthwith give
notice thereof to the other Banks and the Borrower, whereupon until such Bank
notifies the Borrower and the Agent that the circumstances giving rise to such
suspension no longer exist, the obligation of such Bank to make Euro-Dollar
Loans shall be suspended. Before giving any notice to the Agent pursuant to this
Section, such Bank shall designate a different Lending Office if such
designation will avoid the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. If such Bank
shall determine that it may not lawfully continue to maintain and fund any of
its outstanding Euro-Dollar Loans to maturity and shall so specify in such
notice, the Borrower shall immediately prepay in full the then outstanding
principal amount of each Euro-Dollar Loan of such Bank, together with accrued
interest thereon and any amount due such Bank pursuant to Section 8.05(a).
Concurrently with prepaying each such Euro-Dollar Loan, the Borrower shall
borrow a Base Rate Loan in an equal principal amount from such Bank (on which
interest and principal shall be payable contemporaneously with the related
Euro-Dollar Loans of the other Banks), and such Bank shall make such a Base Rate
Loan.
SECTION 8.03. INCREASED COST AND REDUCED RETURN. (a) If after
the date hereof, a Change of Law or compliance by any Bank (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any Authority:
(i) shall subject any Bank (or its Lending Office) to
any tax, duty or other charge with respect to its Euro-Dollar
Loans, its Notes or its obligation to make Euro-Dollar Loans,
or shall change the basis of taxation of payments to any Bank
(or its Lending Office) of the principal of or interest on its
Euro-Dollar Loans or any other amounts due under this
Agreement in respect of its Euro-Dollar Loans or its
obligation to make Euro-Dollar Loans (except for changes in
the rate of tax on the overall net income of such Bank or its
Lending Office imposed by the jurisdiction in which such
Bank's principal executive office or Lending Office is
located); or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including,
without limitation, any such requirement imposed by the Board
of Governors of the Federal Reserve System, but excluding with
respect to any Euro-Dollar Loan any such requirement included
in an applicable Euro-Dollar Reserve Percentage) against
assets of, deposits with or for the account of, or credit
extended by, any Bank (or its Lending Office); or
(iii) shall impose on any Bank (or its Lending
Office) or on the London interbank market any other condition
affecting its Euro-Dollar Loans, its Notes or its obligation
to make Euro-Dollar Loans;
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and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Euro-Dollar Loan, or to reduce
the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Notes with respect thereto, by an
amount deemed by such Bank to be material, then, within 15 days after demand by
such Bank (with a copy to the Agent), the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such increased
cost or reduction.
(b) If any Bank shall have determined that after the date
hereof the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any existing or future law, rule or regulation, or
any change in the interpretation or administration thereof, or compliance by any
Bank (or its Lending Office) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any Authority, has or would
have the effect of reducing the rate of return on such Bank's capital as a
consequence of its obligations hereunder to a level below that which such Bank
could have achieved but for such adoption, change or compliance (taking into
consideration such Bank's policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within 15
days after demand by such Bank, the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent
of any event of which it has knowledge, occurring after the date hereof, which
will entitle such Bank to compensation pursuant to this Section and will
designate a different Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the judgment of
such Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
(d) The provisions of this Section 8.03 shall be applicable
with respect to any Participant, Assignee or other Transferee, and any
calculations required by such provisions shall be made based upon the
circumstances of such Participant, Assignee or other Transferee.
SECTION 8.04. BASE RATE LOANS SUBSTITUTED FOR EURO-DOLLAR
LOANS. If (i) the obligation of any Bank to make or maintain Euro-Dollar Loans
has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded
compensation under Section 8.03, and the Borrower shall, by at least 5
Euro-Dollar Business Days' prior notice to such Bank through the Agent, have
elected that the provisions of this Section shall apply to such Bank, then,
unless and until such Bank notifies the Borrower that the circumstances giving
rise to such suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank as
Euro-Dollar Loans shall be made instead as Base Rate Loans (in all cases
interest and principal on such Loans shall be payable contemporaneously with the
related Euro-Dollar Loans of the other Banks), and
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(b) after each of its Euro-Dollar Loans has been repaid, all
payments of principal which would otherwise be applied to repay such Euro-Dollar
Loans shall be applied to repay its Base Rate Loans instead.
In the event that the Borrower shall elect that the provisions of this Section
shall apply to any Bank, the Borrower shall remain liable for, and shall pay to
such Bank as provided herein, all amounts due such Bank under Section 8.03 in
respect of the period preceding the date of conversion of such Bank's Loans
resulting from the Borrower's election.
SECTION 8.05. COMPENSATION. Upon the request of any Bank,
delivered to the Borrower and the Agent, the Borrower shall pay to such Bank
such amount or amounts as shall compensate such Bank for any loss, cost or
expense incurred by such Bank as a result of:
(a) any payment or prepayment (pursuant to Section 2.10,
Section 2.11, Section 8.02 or otherwise) of a Euro-Dollar Loan or a Money Market
Loan on a date other than the last day of an Interest Period for such
Euro-Dollar Loan or Money Market Loan, as the case may be;
(b) any failure by the Borrower to prepay a Euro-Dollar Loan
or a Money Market Loan on the date for such prepayment specified in the relevant
notice of prepayment hereunder;
(c) any failure by the Borrower to borrow a Euro-Dollar Loan
on the date for the Euro-Dollar Borrowing of which such Euro-Dollar Loan is a
part specified in the applicable Notice of Borrowing delivered pursuant to
Section 2.02; or
(d) any failure by the Borrower to borrow a Money Market Loan
(with respect to which the Borrower has accepted a Money Market Quote) on the
date for the Money Market Borrowing of which such Money Market Loan is a part
specified in the applicable Money Market Quote Request delivered pursuant to
Section 2.03;
such compensation to include, without limitation, an amount equal to the excess,
if any, of (x) the amount of interest which would have accrued on the amount so
paid or prepaid or not prepaid or borrowed for the period from the date of such
payment, prepayment or failure to prepay or borrow to the last day of the then
current Interest Period for such Euro-Dollar Loan (or, in the case of a failure
to prepay or borrow, the Interest Period for such Euro-Dollar Loan which would
have commenced on the date of such failure to prepay or borrow) at the
applicable rate of interest for such Euro-Dollar Loan provided for herein over
(y) the amount of interest (as reasonably determined by such Bank) such Bank
would have paid on (i) deposits in Dollars of comparable amounts having terms
comparable to such period placed with it by leading banks in the London
interbank market.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission or similar writing) and shall be given to such party at its address
or telecopy number set forth on the signature pages hereof or such other address
or telecopy number as such party may hereafter specify for the purpose by notice
to each other party. Each such notice, request or other communication shall be
effective (i) if given by telecopier, when such telecopy is transmitted to the
telecopy number specified in this Section and the telecopy machine used by the
sender provides a written confirmation that such telecopy has been so
transmitted or receipt of such telecopy transmission is otherwise confirmed,
(ii) if given by mail, 72 hours after such communication is deposited in the
mails with first class postage prepaid, addressed as aforesaid, and (iii) if
given by any other means, when delivered at the address specified in this
Section; PROVIDED that notices to the Agent under Article II or Article VIII
shall not be effective until received.
SECTION 9.02. NO WAIVERS. No failure or delay by the Agent or
any Bank in exercising any right, power or privilege hereunder or under any Note
or other Loan Document shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.03. EXPENSES; DOCUMENTARY TAXES; INDEMNIFICATION.
(a) The Borrower shall pay (i) all out-of-pocket expenses of the Agent,
including fees and disbursements of special counsel for the Agent, in connection
with the preparation of this Agreement and the other Loan Documents, any waiver
or consent hereunder or thereunder or any amendment hereof or thereof or any
Default or alleged Default hereunder or thereunder and (ii) if a Default occurs,
all out-of-pocket expenses incurred by the Agent or any Bank, including fees and
disbursements of counsel, in connection with such Default and collection and
other enforcement proceedings resulting therefrom, including out-of-pocket
expenses incurred in enforcing this Agreement and the other Loan Documents.
(b) The Borrower shall indemnify the Agent and each Bank
against any transfer taxes, documentary taxes, assessments or charges made by
any Authority by reason of the execution and delivery of this Agreement or the
other Loan Documents.
(c) The Borrower shall indemnify the Agent, the Banks and each
Affiliate thereof and their respective directors, officers, employees and agents
from, and hold each of them harmless against, any and all losses, liabilities,
claims or damages to which any of them may become subject, insofar as such
losses, liabilities, claims or damages arise out of or result from any actual or
proposed use by the Borrower of the proceeds of any extension of credit by any
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Bank hereunder or breach by the Borrower of this Agreement or any other Loan
Document or from investigation, litigation (including, without limitation, any
actions taken by the Agent or any of the Banks to enforce this Agreement or any
of the other Loan Documents) or other proceeding (including, without limitation,
any threatened investigation or proceeding) relating to the foregoing, and the
Borrower shall reimburse the Agent and each Bank, and each Affiliate thereof and
their respective directors, officers, employees and agents, upon demand for any
expenses (including, without limitation, legal fees) incurred in connection with
any such investigation or proceeding; but excluding any such losses,
liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified.
SECTION 9.04. SETOFFS; SHARING OF SET-OFFS. (a) The Borrower
hereby grants to each Bank, as security for the full and punctual payment and
performance of the obligations of the Borrower under this Agreement, a
continuing lien on and security interest in all deposits and other sums credited
by or due from such Bank to the Borrower or subject to withdrawal by the
Borrower; and regardless of the adequacy of any collateral or other means of
obtaining repayment of such obligations, each Bank may at any time upon or after
the occurrence of any Event of Default, and without notice to the Borrower, set
off the whole or any portion or portions of any or all such deposits and other
sums against such obligations, whether or not any other Person or Persons could
also withdraw money therefrom.
(b) Each Bank agrees that if it shall, by exercising any right
of set-off or counterclaim or otherwise, receive payment of a proportion of the
aggregate amount of principal and interest owing with respect to the Syndicated
Notes held by it which is greater than the proportion received by any other Bank
in respect of the aggregate amount of all principal and interest owing with
respect to the Syndicated Notes held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the
Syndicated Notes held by the other Banks owing to such other Banks, and/or such
other adjustments shall be made, as may be required so that all such payments of
principal and interest with respect to the Syndicated Notes held by the Banks
owing to such other Banks shall be shared by the Banks pro rata; PROVIDED that
(i) nothing in this Section shall impair the right of any Bank to exercise any
right of set-off or counterclaim it may have and to apply the amount subject to
such exercise to the payment of indebtedness (including, without limitation,
Money Market Loans) of the Borrower other than its indebtedness under the
Syndicated Notes, and (ii) if all or any portion of such payment received by the
purchasing Bank is thereafter recovered from such purchasing Bank, such purchase
from each other Bank shall be rescinded and such other Bank shall repay to the
purchasing Bank the purchase price of such participation to the extent of such
recovery together with an amount equal to such other Bank's ratable share
(according to the proportion of (x) the amount of such other Bank's required
repayment to (y) the total amount so recovered from the purchasing Bank) of any
interest or other amount paid or payable by the purchasing Bank in respect of
the total amount so recovered. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a participation in a
Syndicated Note, whether or not acquired pursuant to the foregoing arrangements,
may exercise rights of set-off or counterclaim and other rights with respect to
such participation as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.
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<PAGE> 63
SECTION 9.05. AMENDMENTS AND WAIVERS. (a) Any provision of
this Agreement, the Notes or any other Loan Documents may be amended or waived
if, but only if, such amendment or waiver is in writing and is signed by the
Borrower and the Required Banks (and, if the rights or duties of the Agent are
affected thereby, by the Agent); PROVIDED that no such amendment or waiver
shall, unless signed by all the Banks, (i) change the Commitment of any Bank or
subject any Bank to any additional obligation, (ii) except in accordance with
Section 2.05(b), change the principal of or reduce the rate of interest on any
Loan or any fees hereunder or any of the Obligations (as defined in the
Guaranty) under the Guaranty, (iii) except in accordance with Section 2.05(b),
change the date fixed for any payment of principal of or interest on any Loan or
any fees hereunder or any of the Obligations (as defined in the Guaranty) under
the Guaranty, (iv) change the amount of principal, or reduce the amount of
interest or fees due on any date fixed for the payment thereof under this
Agreement, the Notes or any other Loan Documents, (v) change the percentage of
the Commitments or of the aggregate unpaid principal amount of the Notes, or the
percentage of Banks, which shall be required for the Banks or any of them to
take any action under this Section or any other provision of this Agreement or
modify the definition of Required Banks, (vi) change the manner of application
of any payments made under this Agreement, the Guaranty or the Notes, (vii)
release or substitute all or any substantial part of the Pledged Stock and
Related Collateral held as security for the Loans or any of the Obligations, or
(viii) release, discharge or terminate any guaranty given to support payment of
the Loans (including without limitation the Guaranty); provided further that no
such amendment or waiver shall, unless signed by the Swing Line Lender, change
any provision of this Agreement (including without limitation Section 2.14)
relating to the Swing Line Loans.
(b) The Borrower will not solicit, request or negotiate for or
with respect to any proposed waiver or amendment of any of the provisions of
this Agreement unless each Bank shall be informed thereof by the Borrower and
shall be afforded an opportunity of considering the same and shall be supplied
by the Borrower with sufficient information to enable it to make an informed
decision with respect thereto. Executed or true and correct copies of any waiver
or consent effected pursuant to the provisions of this Agreement shall be
delivered by the Borrower to each Bank forthwith following the date on which the
same shall have been executed and delivered by the requisite percentage of
Banks. The Borrower will not, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, to any Bank (in its capacity as such) as consideration for or as an
inducement to the entering into by such Bank of any waiver or amendment of any
of the terms and provisions of this Agreement unless such remuneration is
concurrently paid, on the same terms, ratably to all such Banks.
SECTION 9.06. MARGIN STOCK COLLATERAL. Each of the Banks
represents to the Agent and each of the other Banks that it in good faith is
not, directly or indirectly (by negative pledge or otherwise), relying upon any
Margin Stock as collateral in the extension or maintenance of the credit
provided for in this Agreement.
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<PAGE> 64
SECTION 9.07. SUCCESSORS AND ASSIGNS. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns; provided that the Borrower
may not assign or otherwise transfer any of its rights under this Agreement.
(b) Any Bank may at any time sell to one or more Persons (each
a "Participant") participating interests in any Loan owing to such Bank, any
Note held by such Bank, any Commitment hereunder or any other interest of such
Bank hereunder. In the event of any such sale by a Bank of a participating
interest to a Participant, such Bank's obligations under this Agreement shall
remain unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any such Note for all purposes
under this Agreement, and the Borrower and the Agent shall continue to deal
solely and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement. In no event shall a Bank that sells a
participation be obligated to the Participant to take or refrain from taking any
action hereunder except that such Bank may agree that it will not (except as
provided below), without the consent of the Participant, agree to (i) the change
of any date fixed for the payment of principal of or interest on the related
Loan or Loans, (ii) the change of the amount of any principal, or the reduction
of any interest or fees due on any date fixed for the payment thereof with
respect to the related Loan or Loans, (iii) the change of the principal of the
related Loan or Loans, (iv) any reduction in the rate at which either interest
is payable thereon or (if the Participant is entitled to any part thereof)
commitment fee is payable hereunder from the rate at which the Participant is
entitled to receive interest or commitment fee (as the case may be) in respect
of such participation, (v) the release or substitution of all or any substantial
part of the Pledged Stock and Related Collateral held as security for the Loans,
or (vi) the release of any guaranty given to support payment of the Loans. Each
Bank selling a participating interest in any Loan, Note, Commitment or other
interest under this Agreement shall, within 10 Domestic Business Days of such
sale, provide the Borrower and the Agent with written notification stating that
such sale has occurred and identifying the Participant and the interest
purchased by such Participant. The Borrower agrees that each Participant shall
be entitled to the benefits of Article VIII with respect to its participation in
Loans outstanding from time to time.
(c) Any Bank may at any time assign to one or more banks or
financial institutions (each an "Assignee") all, or a proportionate part of all,
of its rights and obligations under this Agreement, the Notes and the other Loan
Documents, and such Assignee shall assume all such rights and obligations,
pursuant to an Assignment and Acceptance in the form attached hereto as Exhibit
J, executed by such Assignee, such transferor Bank and the Agent (and, in the
case of: (i) an Assignee that is not then a Bank or an Affiliate of a Bank; and
(ii) an assignment not made during the existence of a Default or an Event of
Default, by the Borrower); provided that (i) no interest may be sold by a Bank
pursuant to this paragraph (c) unless the Assignee shall agree to assume ratably
equivalent portions of the transferor Bank's Commitment, (ii) the amount of the
Commitment being assigned pursuant to such assignment shall be equal to
$10,000,000 (or any larger multiple of $1,000,000) (except that any such
assignment may be in the aggregate amount of the Commitment of the transferor
Bank), (iii) no interest may be sold by a Bank pursuant to this paragraph (c) to
any Assignee that is not then a Bank or an Affiliate of a Bank without the
consent of the Borrower, which consent shall not be unreasonably withheld,
provided that the Borrower's consent shall not be necessary with respect to any
assignment made during the existence of a Default or an Event of Default; (iv) a
63
<PAGE> 65
Bank may not have more than two (2) Assignees that are not then Banks (or
affiliates of a Bank) at any one time, and (v) no interest may be sold by a Bank
pursuant to this paragraph (c) to any Assignee that is not then a Bank or an
Affiliate of a Bank, without the consent of the Agent, which consent shall not
be unreasonably withheld, provided, that although the Agent's consent may not be
necessary with respect to an Assignee that is then a Bank or an Affiliate of a
Bank, no such assignment shall be effective until the conditions set forth in
the following sentence are satisfied. Upon (A) execution of the Assignment and
Acceptance by such transferor Bank, such Assignee, the Agent and (if applicable)
the Borrower, (B) delivery of an executed copy of the Assignment and Acceptance
to the Borrower and the Agent, (C) payment by such Assignee to such transferor
Bank of an amount equal to the purchase price agreed between such transferor
Bank and such Assignee, and (D) payment to the Agent by the assigning Bank of a
processing and recordation fee of $1,000, if the assignee is then a Bank or
affiliate of a Bank or $3,500 if the assignee is not then a Bank or an affiliate
of a Bank, such Assignee shall for all purposes be a Bank party to this
Agreement and shall have all the rights and obligations of a Bank under this
Agreement (including, without limitation, the rights of a Bank under Section
2.03) to the same extent as if it were an original party hereto with a
Commitment as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding extent,
and no further consent or action by the Borrower, the Banks or the Agent shall
be required. Upon the consummation of any transfer to an Assignee pursuant to
this paragraph (c), the transferor Bank, the Agent and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to each of
such Assignee and such transferor Bank.
(d) Subject to the provisions of Section 9.08, the Borrower
authorizes each Bank to disclose to any Participant, Assignee or other
transferee (each a "Transferee") and any prospective Transferee any and all
financial and other information in such Bank's possession concerning the
Borrower which has been delivered to such Bank by the Borrower pursuant to this
Agreement or which has been delivered to such Bank by the Borrower in connection
with such Bank's credit evaluation prior to entering into this Agreement.
(e) No Transferee shall be entitled to receive any greater
payment under Section 8.03 than the transferor Bank would have been entitled to
receive with respect to the rights transferred, unless such transfer is made
with the Borrower's prior written consent or by reason of the provisions of
Section 8.02 or 8.03 requiring such Bank to designate a different Lending Office
under certain circumstances or at a time when the circumstances giving rise to
such greater payment did not exist.
(f) Anything in this Section 9.07 to the contrary
notwithstanding, any Bank may assign and pledge all or any portion of the Loans
and/or obligations owing to it to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and Operating Circular issued by such
Federal Reserve Bank, provided that any payment in respect of such assigned
Loans and/or obligations made by the Borrower to the assigning and/or pledging
Bank in accordance with the terms of this Agreement shall satisfy the Borrower's
64
<PAGE> 66
obligations hereunder in respect of such assigned Loans and/or obligations to
the extent of such payment. No such assignment shall release the assigning
and/or pledging Bank from its obligations hereunder.
SECTION 9.08. CONFIDENTIALITY. Each Bank agrees to exercise
its best efforts to keep any information delivered or made available by the
Borrower to it which is clearly indicated to be confidential information,
confidential from anyone other than persons employed or retained by such Bank
who are or are expected to become engaged in evaluating, approving, structuring
or administering the Loans; PROVIDED, HOWEVER, that nothing herein shall prevent
any Bank from disclosing such information (i) to any other Bank, (ii) upon the
order of any court or administrative agency, (iii) upon the request or demand of
any regulatory agency or authority having jurisdiction over such Bank, (iv)
which has been publicly disclosed, (v) to the extent reasonably required in
connection with any litigation to which the Agent, any Bank or their respective
Affiliates may be a party, (vi) to the extent reasonably required in connection
with the exercise of any remedy hereunder, (vii) to such Bank's legal counsel,
Affiliates and independent auditors and (viii) to any actual or proposed
Participant, Assignee or other Transferee of all or part of its rights hereunder
which has agreed in writing to be bound by the provisions of this Section 9.08.
SECTION 9.09. REPRESENTATION BY BANKS. Each Bank hereby
represents that it is a commercial lender or financial institution which makes
loans in the ordinary course of its business and that it will make its Loans
hereunder for its own account in the ordinary course of such business; PROVIDED,
HOWEVER, that, subject to Section 9.07, the disposition of the Note or Notes
held by that Bank shall at all times be within its exclusive control.
SECTION 9.10. OBLIGATIONS SEVERAL. The obligations of each
Bank hereunder are several, and no Bank shall be responsible for the obligations
or commitment of any other Bank hereunder. Nothing contained in this Agreement
and no action taken by the Banks pursuant hereto shall be deemed to constitute
the Banks to be a partnership, an association, a joint venture or any other kind
of entity. The amounts payable at any time hereunder to each Bank shall be a
separate and independent debt, and each Bank shall be entitled to protect and
enforce its rights arising out of this Agreement or any other Loan Document and
it shall not be necessary for any other Bank to be joined as an additional party
in any proceeding for such purpose.
SECTION 9.11. SURVIVAL OF CERTAIN OBLIGATIONS. Sections
8.03(a), 8.03(b), 8.05 and 9.03, and the obligations of the Borrower thereunder,
shall survive, and shall continue to be enforceable notwithstanding, the
termination of this Agreement and the Commitments and the payment in full of the
principal of and interest on all Loans.
SECTION 9.12. GEORGIA LAW. This Agreement and each Note shall
be construed in accordance with and governed by the law of the State of Georgia.
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<PAGE> 67
SECTION 9.13. SEVERABILITY. In case any one or more of the
provisions contained in this Agreement, the Notes or any of the other Loan
Documents should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby and
shall be enforced to the greatest extent permitted by law.
SECTION 9.14. INTEREST. In no event shall the amount of
interest due or payable hereunder or under the Notes exceed the maximum rate of
interest allowed by applicable law, and in the event any such payment is
inadvertently made to any Bank by the Borrower or inadvertently received by any
Bank, then such excess sum shall be credited as a payment of principal, unless
the Borrower shall notify such Bank in writing that it elects to have such
excess sum returned forthwith. It is the express intent hereof that the Borrower
not pay and the Banks not receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may legally be paid by the Borrower
under applicable law.
SECTION 9.15. INTERPRETATION. No provision of this Agreement
or any of the other Loan Documents shall be construed against or interpreted to
the disadvantage of any party hereto by any court or other governmental or
judicial authority by reason of such party having or being deemed to have
structured or dictated such provision.
SECTION 9.16. CONSENT TO JURISDICTION. The Borrower (a)
submits to personal jurisdiction in the State of Georgia, the courts thereof and
the United States District Courts sitting therein, for the enforcement of this
Agreement, the Notes and the other Loan Documents, (b) waives any and all
personal rights under the law of any jurisdiction to object on any basis
(including, without limitation, inconvenience of forum) to jurisdiction or venue
within the State of Georgia for the purpose of litigation to enforce this
Agreement, the Notes or the other Loan Documents, and (c) agrees that service of
process may be made upon it in the manner prescribed in Section 9.01 for the
giving of notice to the Borrower. Nothing herein contained, however, shall
prevent the Agent from bringing any action or exercising any rights against any
security and against the Borrower personally, and against any assets of the
Borrower, within any other state or jurisdiction.
SECTION 9.17. COUNTERPARTS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 9.18. FLORIDA TAXES. In connection with this
transaction there may or may not be due certain documentary stamp taxes and/or
intangible taxes imposed by the State of Florida (the "Florida Taxes"). In
addition to (and not in limitation of) the indemnification with respect to tax
liabilities set forth herein, the Borrower agrees to indemnify the Agent and
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<PAGE> 68
each Bank, their directors, officers, agents and employees from and against any
and all liability, damage, loss, cost, expense or reasonable attorney fees which
may accrue to or be sustained by the Agent, a Bank or their directors, officers,
agents or employees on account of or arising from any claim or action raised by,
filed or brought by or in the name of any Florida governmental or administrative
department with respect to non-payment of the Florida Taxes against the Agent, a
Bank, or any of their directors, officers, agents or employees.
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<PAGE> 69
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, under seal, by their respective authorized
officers as of the day and year first above written.
OUTBACK STEAKHOUSE, INC.
By: ________________________________(SEAL)
Robert S. Merritt, Treasurer
Outback Steakhouse, Inc.
2202 North Westshore Blvd., 5th Floor
Tampa, Florida 33607
Attention: Robert S. Merritt
Senior Vice President, Chief Financial Officer
and Treasurer
Telecopy number: (813) 286-2247
Telephone number: (813) 282-1225
with a copy to:
Outback Steakhouse, Inc.
2202 North Westshore Blvd., 5th Floor
Tampa, Florida 33607
Attention: Joseph J. Kadow
Vice President, General Counsel and Secretary
Telecopy number: (813) 281-2114
Telephone number: (813) 282-1225
[The remainder of this page intentionally left blank.]
68
<PAGE> 70
COMMITMENTS WACHOVIA BANK, N.A., as Agent and
$34,500,000 as a Bank
Swing Line Commitment
$5,000,000.00
By: _______________________________ (SEAL)
Lynn E. Culbreath, Senior Vice President
LENDING OFFICE
Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Manager, Syndicate Loan Services
Telecopy number: (404) 332-5144
Telephone number: (404) 332-4008
with a copy to:
Wachovia Bank, N.A.
100 North Tampa Street, Suite 4100
Tampa, Florida 33602
Attention: Lynn E. Culbreath
Senior Vice President
Telecopy number: (813) 226-1411
Telephone number: (813) 226-1499
[The remainder of this page intentionally left blank.]
69
<PAGE> 71
$25,000,000 SUNTRUST BANK, TAMPA BAY
By:_________________________ (SEAL)
Title:
LENDING OFFICE
SunTrust Bank, Tampa Bay
401 East Jackson Street, 20th Floor
Tampa, Florida 33602
Attention: Bill Krueger
Telecopy number:813-224-2833
Telephone number:813-224-2895
[The remainder of this page intentionally left blank.]
70
<PAGE> 72
$25,000,000 SOUTHTRUST BANK, NATIONAL ASSOCIATION
By:___________________________ (SEAL)
Title:
LENDING OFFICE
SouthTrust Bank, National Association
420 North 20th Street
Birmingham, Alabama 35203
Attention: Florida Corporate Banking
Telecopy number: 727-898-5419
Telephone number:813-226-0605
[The remainder of this page intentionally left blank.]
71
<PAGE> 73
$16,500,000 THE HUNTINGTON NATIONAL BANK
By:_________________________ (SEAL)
Title:
LENDING OFFICE
The Huntington National Bank
601 North Ashley Drive, 3rd Floor
Tampa, Florida 33602
Attention: David Austin
Telecopy number: 813-224-0666
Telephone number:813-224-0678
[The remainder of this page intentionally left blank.]
72
<PAGE> 74
$12,000,000 HIBERNIA NATIONAL BANK
By:___________________________ (SEAL)
Title:
LENDING OFFICE
Hibernia National Bank
US Corporate Division at Hibernia
313 Carondelet Street
New Orleans, Louisiana 70130
Attention: Laura Watts
Telecopy number: 504-533-5344
Telephone number: 504-533-2029
[The remainder of this page intentionally left blank.]
73
<PAGE> 75
$12,000,000 BANK OF AMERICA, N.A., d/b/a NATIONSBANK,
N.A.
By:___________________________ (SEAL)
Title:
LENDING OFFICE
Bank of America, N.A., d/b/a NationsBank, N.A.
101 East Kennedy Blvd., 5th Floor
Tampa, Florida 33602
Attention: Joe Caballero
Telecopy number: (813) 225-8575
Telephone number: (813) 225-8545
TOTAL COMMITMENTS:
$125,000,000.00
74
<PAGE> 1
Exhibit 13.01
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
At December 31,1999, Outback Steakhouse, Inc. and Affiliates (the "Company") had
476 domestic and 2 international Outback Steakhouse restaurants in which it had
a direct ownership interest ("Company owned" restaurants), 95 domestic and 31
international Outback Steakhouse restaurants operated by unaffiliated
franchisees, and one domestic and six international Outback Steakhouse
restaurants operated by joint ventures in which the Company had a 45% ownership
interest ("Development Joint Venture"). The system also included 56 Company
owned Carrabba's Italian Grills ("Carrabba's") and 16 Carrabba's operated by
joint ventures in which the Company had a 45% ownership interest. During 1999
the Company entered into agreements with Roy's Restaurants ("Roy's") and
Fleming's Prime Steakhouse and Wine Bar ("Fleming's") to develop restaurants
worldwide. Related to these agreements the Company added three wholly owned
Fleming's to the system.
All of the Company owned restaurants are organized as partnerships in which
the Company is a general partner. The Company's ownership interests range from
51% to 90%, and the minority interests are owned by the restaurant managers and
area operating partners. The results of operations of Company owned restaurants
are included in the consolidated operating results of the Company. The portion
of the income attributable to the minority interests of restaurant managers and
area operating partners is eliminated in the line item in the Company's
Consolidated Statements of Income entitled "Elimination of minority partners'
interest."
The Development Joint Venture restaurants are organized as general
partnerships in which the Company owns 50% of the partnership and its joint
venture partner owns 50%. The restaurant manager of each restaurant owned by a
Development Joint Venture purchases a 10% interest in the restaurant he or she
manages. The Company is responsible for 50% of the costs of new restaurants
operated as Development Joint Ventures and the Company's joint venture partner
is responsible for the other 50%. The income derived from restaurants operated
as Development Joint Ventures is presented in the line item "(Income) loss from
operations of unconsolidated affiliates" in the Company's Consolidated
Statements of Income.
The Company derives no direct income from the operations of franchised
restaurants other than initial franchise fees and royalties, which are included
in the Company's other revenues.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
95 $ 827,000 95 $ 745,108 95 $0.78 95 $57,554
96 $1,077,000 96 $ 959,460 96 $0.94 96 $71,847
97 $1,368,000 97 $1,186,895 97 $0.84+ $1.06+ 97 $62,774+ $79,703+
98 $1,668,000 98 $1,402,611 98 $1.22* $1.28* 98 $94,683* $99,563*
99 $1,992,000 99 $1,646,013 99 $1.55+ $1.59+ 99 $122,398+ $125,914+
SYSTEM-WIDE SALES COMPANY REVENUES DILUTED REVENUES NET INCOME
in Thousands of Dollars in Thousands of Dollars Per Share In Thousands of Dollars
</TABLE>
+ Net income and earnings per share amounts for 1999 and 1997 are depicted
before and after the "Provision for impaired assets and restaurant
closings." See Note 15 of Notes to Consolidated Financial Statements.
* Net income and earnings per share amounts for 1998 are depicted before and
after the "Cumulative Effect of Change in Accounting Principle."
See Note 13 of Notes to Consolidated Financial Statements.
Note: All applicable per share data has been restated to reflect the
retroactive effect of a three-for-two stock split effective March 2,
1999.
See Note 8 of Notes to Consolidated Financial Statements.
Note: Amounts have been restated to reflect the merger discussed in Notes 1,
11 and 16 or Notes to Consolidated Financial Statement.
1
<PAGE> 2
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, (i) the percentages
which the items in the Company's Consolidated Statements of Income bear to total
revenues or restaurant sales, as indicated, and (ii) selected operating data:
<TABLE>
<CAPTION>
STATEMENTS OF INCOME DATA (1): YEARS ENDED DECEMBER 31,
1999 1998 1997
<S> <C> <C> <C>
Revenues:
Restaurant sales 99.2% 99.3% 99.4%
Other revenues 0.8 0.7 0.6
------ ------ ------
Total revenues 100.0 100.0 100.0
------ ------ ------
Costs and expenses:
Cost of sales (2) 38.0 39.0 38.5
Labor and other related (2) 23.7 23.5 23.8
Other restaurant operating (2) 21.3 21.4 22.1
General and administrative 3.9 3.8 3.8
Provision for impaired assets and restaurant closings 0.3 2.2
(Income) loss from operations of unconsolidated
affiliates (3) (0.1)
Income from operations 13.5 12.8 10.2
Other income (expense), net (0.2) (0.1)
Interest income (expense) 0.1 (0.1) (0.2)
Income before elimination of minority partners'
interest and provision for income taxes 13.4 12.6 9.9
Elimination of minority partners' interest 1.8 1.6 1.7
------ ------ ------
Income before provision for income taxes 11.6 11.0 8.2
Pro forma provision for income taxes (4) 4.2 3.9 2.9
------ ------ ------
Pro forma income before cumulative effect
of a change in accounting principle (4) 7.4 7.1 5.3
Cumulative effect of a change in accounting
principle (net of income taxes) (0.3)
------ ------ ------
Pro forma net income (4) 7.4% 6.8% 5.3%
====== ====== ======
SYSTEM-WIDE RESTAURANT SALES (MILLIONS OF DOLLARS):
OUTBACK STEAKHOUSES
Company owned - domestic and international $1,492 $1,274 $1,081
Domestic franchised and joint venture 267 200 145
International franchised and joint venture 60 48 20
------ ------ ------
1,819 1,522 1,246
------ ------ ------
CARRABBA'S ITALIAN GRILLS
Company owned 138 119 98
Joint venture 32 27 24
------ ------ ------
170 146 122
------ ------ ------
FLEMING'S PRIME STEAKHOUSE AND WINE BARS
Company owned 3
------ ------ ------
SYSTEM-WIDE TOTAL $1,992 $1,668 $1,368
====== ====== ======
NUMBER OF RESTAURANTS (AT END OF PERIOD):
OUTBACK STEAKHOUSES
Company owned - domestic and international 478 436 384
Domestic franchised and joint venture 96 81 61
International franchised and joint venture 37 23 14
------ ------ ------
611 540 459
------ ------ ------
CARRABBA'S ITALIAN GRILLS
Company owned 56 52 49
Joint venture 16 12 11
------ ------ ------
72 64 60
------ ------ ------
FLEMING'S PRIME STEAKHOUSE AND WINE BARS
Company owned 3
------ ------ ------
SYSTEM-WIDE TOTAL 686 604 519
====== ====== ======
</TABLE>
(1) Amounts have been restated to reflect the merger discussed in Notes 1, 11
and 16 of Notes to Consolidated Financial Statements. (2) As a percentage of
restaurant sales. (3) Percentages are less than 1/10(th) of one percent of total
revenues.(4) Amounts are pro forma. See Note 16 of Notes to Consolidated
Financial Statements.
2
<PAGE> 3
FISCAL YEARS 1999, 1998 AND 1997
On November 30, 1999, the Company completed a merger with its New England
franchisee ("Tedesco") pursuant to an Agreement and Plan of Reorganization. This
merger has been accounted for using the pooling of interests method of
accounting, and accordingly, all historical financial information has been
restated to reflect the merger.
REVENUES.
Total revenues increased by 17.4% in 1999 as compared with 1998, and by 18.2% in
1998 as compared with 1997. The increases in 1999 and 1998 were primarily
attributable to the opening of new restaurants, increased same store customer
counts and menu price increases. Outback Steakhouse and Carrabba's are not
considered separate reportable segments for purposes of SFAS No. 131,
however differences in certain operating ratios are discussed in this section in
order to enhance the Financial Statement users understanding of the Company's
results of operation and its changes in financial condition. The following table
sets forth additional information regarding year to year changes in revenues:
<TABLE>
<CAPTION>
AVERAGE UNIT VOLUMES: 1999 1998 1997
<S> <C> <C> <C>
Outback Steakhouse $3,278,000 $3,156,000 $3,059,000
Carrabba's 2,615,000 2,368,000 2,134,000
OPERATING WEEKS:
Outback Steakhouse 23,602 20,801 18,175
Carrabba's 2,777 2,579 2,396
PER PERSON AVERAGE CHECKS:
Outback Steakhouse $ 17.52 $ 17.10 $ 16.76
Carrabba's 18.71 17.47 17.14
YEAR TO YEAR SAME STORE PERCENTAGE CHANGE:
SALES:
Outback Steakhouse 5.21% 5.20% (0.11%)
Carrabba's 8.39% 8.80% 10.08%
CUSTOMER COUNTS:
Outback Steakhouse 2.69% 3.00% 0.04%
Carrabba's 1.91% 4.30% 11.75%
</TABLE>
COSTS AND EXPENSES. Cost of sales, consisting of food and beverage costs,
decreased by 1.0% of restaurant sales to 38.0% in1999 as compared with 39.0% in
1998. The decrease was attributable to commodity cost decreases in beef,
produce, and dairy products, particularly butter, and higher menu prices. Cost
of sales increased by 0.5% of restaurant sales to 39.0% in 1998 as compared with
38.5% in 1997. The increase was attributable to commodity cost increases,
particularly butter, shrimp and produce, which was partially offset by a
decrease in meat costs and higher menu prices.
Labor and other related expenses include all direct and indirect labor costs
incurred in operations. Labor and other related expenses increased as a
percentage of restaurant sales by 0.2% to 23.7% in 1999 as compared with 23.5%
in 1998. The increase resulted from higher hourly wage rates for kitchen staff
resulting from a competitive labor market, partially offset by higher comparable
store revenues. Labor and other related expenses as a percentage of restaurant
sales decreased by 0.3% to 23.5% in 1998 as compared with 23.8% in 1997.The
decrease resulted from higher average unit volumes at Outback Steakhouse and
Carrabba's, partially offset by higher hourly wage rates which are a result of a
competitive labor market and the effect of the increase in the federal minimum
wage.
Other operating expenses include all other unit-level operating costs, the
major components of which are operating supplies, rent, repairs and maintenance,
advertising, utilities, depreciation and amortization and other occupancy costs.
A substantial portion of these expenses are fixed or indirectly variable. Other
operating expenses as a percentage of total revenues decreased by 0.1%, to 21.3%
in 1999, as compared with 21.4% in 1998. The decrease resulted from higher
average unit volumes for both Outback Steakhouse and Carrabba's during the year
which reduces the fixed and indirectly variable costs as a percentage of
revenues. These costs as a percentage of total revenues decreased by 0.7%, to
21.4% in 1998, as compared with 22.1%in 1997.The decrease resulted from higher
average unit volumes for both Outback Steakhouse and Carrabba's during the year
which reduces the fixed and indirectly variable costs as a percentage of
revenues.
General and administrative expenses increased by $10,310,000 to $64,067,000
in 1999 as compared with $53,757,000 in 1998. The increase resulted from an
increase in salary expenses related to higher restaurant management training
costs, an increase in overall administrative costs associated with operating
additional Outback Steakhouses and costs associated with the development of new
restaurant formats and other affiliated businesses.
3
<PAGE> 4
General and administrative expenses increased by $8,599,000 to $53,757,000 in
1998 as compared with $45,158,000 in 1997. This increase resulted from
additional staffs employed to manage Outback Steakhouse international
franchising operations, an increase in salary expenses related to higher
restaurant management training costs, and an increase in overall administrative
costs associated with operating additional Outback Steakhouses.
PROVISION FOR IMPAIRED ASSETS AND RESTAURANT CLOSINGS. In the fourth quarter
of 1999, the Company recorded a pre-tax charge to earnings of $5,493,000 which
includes approximately $3,617,000 for the write down of impaired assets and
$1,876,000 related to restaurant closings, severance and other costs. The write
down primarily related to Carrabba's restaurant properties and assets of
ancillary businesses. In the fourth quarter of 1997, the Company recorded a
pre-tax charge to earnings of $26,001,000 which includes approximately
$23,113,000 for the write down of certain impaired assets and $2,888,000 related
to restaurant closings, severance and other costs. The write down primarily
related to Carrabba's restaurant properties, nine of which were closed during
the fourth quarter of 1997 (See Notes 2 and 15 of Notes to Consolidated
Financial Statements). The Company intends to continue developing the Carrabba's
concept in markets where it has demonstrated success. See "Liquidity and Capital
Resources" for a discussion of the Company's expansion strategy.
(INCOME) LOSS FROM OPERATIONS OF UNCONSOLIDATED AFFILIATES. (Income) loss
from operations of unconsolidated affiliates represents the Company's portion of
net income or loss from Carrabba's and Outback Steakhouses operated as
Development Joint Ventures. Income from Development Joint Ventures was
$1,089,000 in 1999 compared with income of $514,000 in 1998. This increase was
primarily attributable to the increases in average unit volumes and improved
operating margins at Carrabba's joint venture restaurants and to the increase in
the number of Outback Steakhouses operating as Development Joint Ventures.
Income from Development Joint Ventures was $514,000 in 1998 compared with a loss
of $467,000 in 1997. This increase was attributable to the increases in
average unit volumes and improved operating margins at Carrabba's joint venture
restaurants.
INCOME FROM OPERATIONS. As a result of the increase in revenues, the changes
in the relationship between revenues and expenses discussed above, the opening
of new restaurants, and the provision for impaired assets and restaurant
closings in 1999 and 1997, income from operations increased by $42,936,000
to$222,643,000 in 1999, as compared with $179,707,000 in 1998,and increased by
$59,581,000 to $179,707,000 in 1998,as compared with $120,126,000 in 1997.
OTHER INCOME (EXPENSE), NET. Other income (expense), net represents the
income and expenses from non-restaurant businesses. Net other expenses increased
to $3,042,000 in 1999 compared with $1,870,000 in 1998. The increase in the net
expense is related primarily to increases in administrative, promotional and
development costs associated with the growth of the non-restaurant businesses.
INTEREST INCOME (EXPENSE). Interest income was $1,416,000 in 1999 as
compared with interest expense of $1,357,000 in 1998 and $2,847,000 in 1997. The
year to year changes in interest income and interest expense resulted from
changes in borrowing needs as funds were expended to finance the construction of
new restaurants, fluctuations in interest rates on the Company's lines of
credit, the use of excess cash flow from operations to pay down the balance on
the lines of credit in 1999 and a lower average outstanding balance in 1998 as
compared with 1997. (See Note 6 of Notes to Consolidated Financial Statements.)
<TABLE>
<CAPTION>
<S> <C> <C>
95 $ 40,102 95 $ 377,810 95 $ 267,719
96 $ 49,850 96 $ 479,561 96 $ 343,686
97 $ 70,492 97 $ 603,568 97 $ 437,382
98 $ 38,966 98 $ 718,918 98 $ 548,440
99 $ 1,519 99 $ 852,282 99 $ 692,965
LONG-TERM DEBT TOTAL ASSETS STOCKHOLDERS' EQUITY
in Thousands of Dollars in Thousands of Dollars in Thousands of Dollars
</TABLE>
4
<PAGE> 5
ELIMINATION OF MINORITY PARTNERS' INTEREST. This line item represents the
portion of income from operations included in consolidated operating results
attributable to the ownership interests of restaurant managers and area
operating partners in Company owned restaurants. As a percentage of revenues,
these costs were 1.8%, 1.6%, and 1.7% in 1999, 1998 and 1997, respectively. The
increase in this ratio from 1998 to 1999 reflected the increase in overall
restaurant operating margins partially offset by the decreases in minority
partners ownership interests resulting from the purchase of minority interest in
the Company's Colorado, West Florida and Georgia markets in 1999. The decrease
in the ratio from 1997 to 1998 reflected changes in overall restaurant operating
margins and decreases in minority partners' ownership interests resulting from
the purchase of minority interests in the Company's Indiana and Kentucky markets
in the second quarter of 1998 and the South Florida, Houston, Detroit,
Washington D.C. and Carolina markets in the fourth quarter of 1997 (See Note 11
of Notes to Consolidated Financial Statements).
PRO FORMA PROVISION FOR INCOME TAXES. The pro forma provision for income
taxes, in all three years presented reflected expected income taxes at the
federal statutory rate and state income tax rates, net of the federal benefit.
The pro forma provision includes earnings attributable to Tedesco which had
previously elected to be taxed under Subchapter S of the Internal Revenue Code
(See Note 9 of the Notes to Consolidated Financial Statements). The pro forma
effective tax rate was 36.0% in 1999, 35.5% in 1998, and 35.4% in 1997. The
changes in the pro forma effective rates resulted from the increase or decrease
in the FICA tip credit the Company was able to utilize in the respective years.
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE (NET OF INCOME TAXES).
The cumulative effect of a change in accounting principle is the result of the
Company's early adoption of Statement of Position 98-5, "Reporting on the Costs
of Start-up Activities." The cumulative effect of the change (net of income
taxes), for 1998 was approximately $4,880,000. Basic and diluted earnings per
share were both reduced by $0.06 during 1998 due to the impact of the change.
PRO FORMA NET INCOME AND EARNINGS PER COMMON SHARE. Pro forma net income for
1999 was $122,398,000, an increase of 29.3% over pro forma net income of
$94,683,000 in 1998. Pro forma net income for 1997 was $62,774,000. Pro forma
diluted earnings per common share increased to $1.55 for 1999 from $1.22 in
1998, an increase of 27.0%. Pro forma diluted earnings per common share
increased to $1.22 in 1998 from $0.84 in 1997.
LIQUIDITY AND CAPITAL RESOURCES
The following table presents a summary of the Company's cash flows for the last
three fiscal years (in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net cash provided by operating activities $192,662 $187,472 $128,256
Net cash used in investing activities (127,700) (109,178) (113,797)
Net cash (used in) provided by financing activities (56,374) (34,418) 8,842
Net increase in cash $ 8,588 $ 43,876 $ 23,301
</TABLE>
The Company requires capital principally for the development of Company owned
and Development Joint Venture restaurants. Capital expenditures totalled
approximately $116,746,000, $108,148,000, and $117,464,000 in 1999, 1998 and
1997, respectively. The Company either leases its restaurants under operating
leases for periods ranging from five to twenty years (including renewal
periods) or purchases free standing restaurants where it is cost effective. As
of December 31, 1999, there were approximately 226 restaurants developed on land
which was owned by the Company. (See Note 10 of Notes to Consolidated Financial
Statements.)
During 1999, the Company formed joint ventures to develop Outback
Steakhouses in Brazil and the Philippines. The Company also entered into
agreements to develop and operate Roy's restaurants and Fleming's. Under the
terms of the Fleming's agreement, the Company purchased three existing Fleming's
for $12,000,000 and committed to the first $13,000,000 of future development
costs.
The Company has two uncollateralized lines of credit totalling $132,500,000.
Approximately $4,136,000 is committed for the issuance of letters of credit,
some of which are to collateralize loans made by the bank to certain
franchisees.
The Company is the guarantor of an uncollateralized line of credit that
permits borrowing of up to $25,000,000 for one of its franchisees. At December
31, 1999, the borrowings totalled approximately $19,220,000. (See Note 6 of
Notes to Consolidated Financial Statements.)
The Company is the guarantor of $8,333,000 of a $60,000,000 note for an
unconsolidated affiliate in which the Company has an 18.5% equity interest. At
December 31, 1999, the outstanding balance was approximately $16,828,000. (See
Note 6 of Notes to Consolidated Financial Statements.)
EXPANSION STRATEGY
The Company's goal is to add new restaurants to the Outback system in each of
2000 and 2001, primarily through the development of 35 to 45 Company owned
restaurants, 5 to 10 domestic franchised restaurants and 20 to 30 international
restaurants each year, of which 2 to 3 will be Company owned, 2 to 3 will be
Development Joint Venture restaurants primarily in Brazil and Asia and 16 to 24
will be franchised restaurants. The Company also intends to add 6 to 8
Carrabba's, the majority of which will be Company owned
5
<PAGE> 6
restaurants, in each of 2000 and 2001. The Company also intends to add 2 to 3
Fleming's and 3 to 5 Roy's to the system in 2000. The Company estimates that its
capital expenditures for the development of new restaurants will be
approximately $150 million in each of 2000 and 2001 and intends to finance this
development with cash flows from operations and the revolving line of credit
referred to above. The Company anticipates that 75% to 85% of the Company owned
restaurants to be opened in 2000 will be free-standing units.
A variety of factors could cause the actual results and experience to differ
from the anticipated results referred to in the previous paragraph. The
Company's forward looking statements regarding its development schedule for new
restaurant openings are subject to a number of risk factors including:
(i) Ability to obtain appropriate real estate sites at acceptable prices;
(ii) Ability to obtain all required governmental permits including zoning
approvals and liquor licenses on a timely basis;
(iii) Impact of government moratoriums or approval processes which could
result in significant delays;
(iv) Ability to obtain all necessary contractors and subcontractors;
(v) Union activities such as picketing and hand billing which could delay
construction; and/or
(vi) Weather and acts of God beyond the Company's control resulting in
construction delays.
INSURANCE
The Company retains direct liability for the first $200,000 of all individual
workers compensation claims prior to 1999 and general liability claims, and
$230,000 of all individual health insurance claims. Claims in excess of these
amounts are paid for by the respective insurance company. The Company records a
liability for all unresolved claims at the anticipated cost to the Company at
the end of the period based on the estimates provided by a third party
administrator and insurance company.
YEAR 2000 ISSUE
Many software applications and operational programs written in the past were not
designed to recognize calendar dates beginning in the Year 2000. The failure of
such applications or systems to properly recognize the dates beginning in
the Year 2000 could result in miscalculations or system failures which could
result in an adverse effect on the Company's operations.
The Company instituted a Year 2000 task force which has initiated a
comprehensive project to prepare its information technology ("IT") systems and
non-IT systems for the Year 2000. The project included identification and
assessment of software, hardware and equipment that could potentially be
affected by the Year 2000 issue, remedial action and further testing
procedures. As of December 31, 1999, the Company had spent approximately
$600,000 in connection with addressing the year 2000 issue.
In assessing the risks presented by the Year 2000 compliance issues, the
task force identified potential worst case scenarios involving failure of the IT
and non-IT systems. As of March 2000, the Company did not experience material
disruption or other significant problems in its IT and non-IT systems. In
addition, as of the same date, the Company is not aware of any material Year
2000 compliance issues relating to IT and non-IT systems of third party business
partners with which the Company maintains material relationships. In addition,
the task force continues to monitor systems used by the Company and maintains
contact with third party businesses with which the Company has material
relationships with respect to Year 2000 compliance and any Year 2000 issues that
may arise at a later date. The task force will develop contingency plans
relating to ongoing Year 2000 issues at the time such issues are identified and
such plans are deemed necessary.
Based on the upgrades, remedial measures and the normal functioning to date
of the IT and non-IT systems, management does not foresee significant risks
associated with its Year 2000 compliance efforts. However, there can be no
assurance that the Company or any third party business partners will not have
ongoing Year 2000 compliance issues that may have an adverse effect on the
Company.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from changes in interest rates on debt and
changes in commodity prices.
The Company's exposure to interest rate risk relates to its $125,000,000
revolving line of credit with its bank. Borrowings under the agreement bear
interest at rates ranging from 57.5 to 95 basis points over the 30, 60, 90, or
180 London Interbank Offered Rate. At December 31, 1999, the Company did not
have an outstanding balance on its lines of credit. At December 31, 1998, there
was $35,683,000 outstanding on the line of credit.
Many food products purchased by the Company and its franchisees are affected
by commodity pricing and are, therefore, subject to unpredictable price
volatility. Extreme changes in commodity prices and/or long-term changes could
affect the Company adversely. The Company expects that in most cases the Company
could pass increased commodity prices through to its consumers via increases in
menu prices. From time to time, competitive circumstances could limit menu price
flexibility, and in those cases margins would be negatively impacted by
increased commodity prices.
IMPACT OF INFLATION
The Company has not operated in a highly inflationary period and does not
believe that inflation has had a material effect on sales or expenses during the
last three years other than labor costs. The Company's restaurant operations are
subject to federal and state minimum wage laws governing such matters as working
conditions, overtime and tip credits. Significant numbers of the Company's food
service and preparation personnel are paid at rates related to the federal
minimum wage and, accordingly, increases in the minimum wage have increased the
Company's labor costs in the last two years. To the extent permitted by
competition, the Company has mitigated increased costs by increasing menu prices
and may continue to do so if deemed necessary in future years.
6
<PAGE> 1
Exhibit 13.02
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of Outback Steakhouse, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, stockholders' equity and cash flows present
fairly, in all material respects, the financial position of Outback Steakhouse,
Inc. and Affiliates (the "Company") at December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the two years in
the period year ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States. These financial statements
are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provides a reasonable basis for the opinion expressed
above. The consolidated financial statements of the Company as of December 31,
1997 and for the year then ended were audited by other independent accountants
whose report dated February 20, 1998, expressed an unqualified opinion on those
consolidated statements.
As discussed in Note 13 of Notes to the Consolidated Financial Statements,
the Company changed its method of accounting for the costs of start-up
activities in 1998.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Tampa, FL
February 16, 2000
7
<PAGE> 2
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ASSETS DECEMBER 31,
1999 1998
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 92,623 $ 84,035
Inventories 26,088 19,917
Other current assets 24,500 19,248
--------- ---------
Total current assets 143,211 123,200
PROPERTY, FIXTURES AND EQUIPMENT, NET 607,028 538,379
ASSETS HELD FOR DISPOSAL 3,385
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES, NET 21,272 9,229
DEFERRED INCOME TAXES 3,265
OTHER ASSETS 80,771 41,460
--------- ---------
$ 852,282 $ 718,918
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 33,974 $ 37,808
Sales taxes payable 10,354 8,923
Accrued expenses 29,628 32,659
Unearned revenue 45,188 36,516
Income taxes payable 10,166
Current portion of long-term debt 1,625 1,694
--------- ---------
Total current liabilities 130,935 117,600
DEFERRED INCOME TAXES 4,659
LONG-TERM DEBT 1,519 38,966
OTHER LONG-TERM LIABILITIES 4,500 4,000
--------- ---------
Total liabilities 141,613 160,566
COMMITMENTS AND CONTINGENCIES (Notes 6 and 10)
INTEREST OF MINORITY PARTNERS IN CONSOLIDATED PARTNERSHIPS 17,704 9,912
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value, 200,000 shares authorized;
77,519 and 77,077 shares issued; and 77,404 and 76,218
outstanding as of December 31, 1999 and 1998, respectively 775 771
Additional paid-in capital 194,251 177,734
Retained earnings 501,384 380,760
--------- ---------
696,410 559,265
Less treasury stock, 115 shares and 859 shares at December 31, 1999
and 1998, respectively, at cost (3,445) (10,825)
--------- ---------
Total stockholders' equity 692,965 548,440
--------- ---------
$ 852,282 $ 718,918
========= =========
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
8
<PAGE> 3
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
<S> <C> <C> <C>
1999 1998 1997
REVENUES
Restaurant sales $ 1,632,720 $ 1,392,587 $ 1,179,211
Other revenues 13,293 10,024 7,684
----------- ----------- -----------
TOTAL REVENUES 1,646,013 1,402,611 1,186,895
----------- ----------- -----------
COSTS AND EXPENSES
Cost of sales 620,249 543,770 453,826
Labor and other related 387,006 327,261 281,233
Other operating 347,644 298,630 260,084
General and administrative 64,067 53,757 45,158
Provision for impaired assets and restaurant closings 5,493 26,001
(Income) loss from operations of unconsolidated affiliates (1,089) (514) 467
----------- ----------- -----------
1,423,370 1,222,904 1,066,769
----------- ----------- -----------
INCOME FROM OPERATIONS 222,643 179,707 120,126
OTHER INCOME (EXPENSE), NET (3,042) (1,870)
INTEREST INCOME (EXPENSE) 1,416 (1,357) (2,847)
----------- ----------- -----------
INCOME BEFORE ELIMINATION OF MINORITY PARTNERS' INTEREST
AND PROVISION FOR INCOME TAXES 221,017 176,480 117,279
ELIMINATION OF MINORITY PARTNERS' INTEREST 29,770 21,914 19,882
----------- ----------- -----------
INCOME BEFORE PROVISION FOR INCOME TAXES 191,247 154,566 97,397
PROVISION FOR INCOME TAXES 66,924 53,638 33,749
----------- ----------- -----------
INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE
IN ACCOUNTING PRINCIPLE 124,323 100,928 63,648
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
(NET OF INCOME TAXES) (4,880)
----------- ----------- -----------
NET INCOME $ 124,323 $ 96,048 $ 63,648
=========== =========== ===========
BASIC EARNINGS PER SHARE
Income before cumulative effect of a change in accounting principle $ 1.61 $ 1.33 $ 0.86
Cumulative effect of change in accounting principle (net of income taxes) (0.06)
----------- ----------- -----------
Net income $ 1.61 $ 1.27 $ 0.86
=========== =========== ===========
Basic weighted average number of common shares outstanding 77,089 75,702 74,007
=========== =========== ===========
DILUTED EARNINGS PER COMMON SHARE
Income before cumulative effect of a change in accounting principle $ 1.57 $ 1.30 $ 0.85
Cumulative effect of change in accounting principle (net of income taxes) (0.06)
----------- ----------- -----------
Net income $ 1.57 $ 1.24 $ 0.85
=========== =========== ===========
Diluted weighted average number of common shares outstanding 79,197 77,484 75,014
=========== =========== ===========
PRO FORMA (unaudited) (See Notes 9 and 16):
PRO FORMA PROVISION FOR INCOME TAXES 68,849 55,003 34,623
----------- ----------- -----------
PRO FORMA INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE
IN ACCOUNTING PRINCIPLE 122,398 99,563 62,774
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
(NET OF INCOME TAXES) (4,880)
----------- ----------- -----------
PRO FORMA NET INCOME $ 122,398 $ 94,683 $ 62,774
=========== =========== ===========
PRO FORMA BASIC EARNINGS PER SHARE
Pro forma income before cumulative effect of a change
in accounting principle $ 1.59 1.31 $ 0.85
Cumulative effect of change in accounting principle (net of income taxes) (0.06)
----------- ----------- -----------
Pro forma net income $ 1.59 $ 1.25 $ 0.85
=========== =========== ===========
PRO FORMA DILUTED EARNINGS PER COMMON SHARE
Pro forma income before cumulative effect of a change
in accounting principle $ 1.55 $ 1.28 $ 0.84
Cumulative effect of change in accounting principle (net of income taxes) (0.06)
----------- ----------- -----------
Pro forma net income $ 1.55 $ 1.22 $ 0.84
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
9
<PAGE> 4
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON COMMON ADDITIONAL RETAINED TREASURY
STOCK SHARES STOCK AMOUNT PAID-IN CAPITAL EARNINGS STOCK TOTAL
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 74,270 $ 743 $113,364 $229,579 $343,686
Issuance of common stock 1,861 19 44,539 44,558
Distributions (610) (610)
Purchase of treasury stock (1,103) $(13,900) (13,900)
Net income 63,648 63,648
------ ----- -------- -------- -------- --------
Balance, December 31, 1997 75,028 762 157,903 292,617 (13,900) 437,382
Issuance of common stock 946 9 19,112 19,121
Distributions (2,639) (2,639)
Purchase of treasury stock (300) (6,345) (6,345)
Reissuance of treasury stock 544 719 (5,266) 9,420 4,873
Net income 96,048 96,048
------ ----- -------- -------- -------- --------
Balance, December 31, 1998 76,218 771 177,734 380,760 (10,825) 548,440
Issuance of common stock 442 4 16,230 16,234
Distributions (2,522) (2,522)
Purchase of treasury stock (239) (7,230) (7,230)
Reissuance of treasury stock 983 287 (1,177) 14,610 13,720
Net income 124,323 124,323
------ ----- -------- -------- -------- --------
Balance, December 31, 1999 77,404 $ 775 $194,251 $501,384 $ (3,445) $692,965
====== ===== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
10
<PAGE> 5
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 124,323 $ 96,048 $ 63,648
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 47,865 38,873 33,131
Amortization 3,525 1,898 13,104
Provision for impaired assets and restaurant closings 5,493 26,001
Cumulative effect of change in accounting principle 4,880
Minority partners' interest in consolidated partnerships' income 29,770 21,914 19,882
(Income) loss from operations of unconsolidated affiliates (1,089) (514) 467
Change in assets and liabilities:
(Increase) decrease in inventories (6,171) 779 (3,794)
Increase in other current assets (5,252) (3,623) (6,393)
Increase in other assets (25,754) (7,820) (17,066)
(Decrease) increase in accounts payable, sales taxes payable
and accrued expenses (7,310) 21,962 1,375
Increase in unearned revenue 8,672 8,697 5,685
Increase in income taxes payable 10,166
Increase (decrease) in other long-term liabilities 500 (500) 1,500
Increase (decrease) in deferred income taxes 7,924 4,878 (9,284)
--------- --------- ---------
Net cash provided by operating activities 192,662 187,472 128,256
--------- --------- ---------
Cash flows from investing activities:
Capital expenditures $(116,746) $(108,148) $(117,464)
Payments from unconsolidated affiliates 220 1,596 4,808
Distributions to unconsolidated affiliates (1,470) (690) (438)
Investments in and advances to unconsolidated affiliates, net (9,704) (1,936) (703)
--------- --------- ---------
Net cash used in investing activities (127,700) (109,178) (113,797)
--------- --------- ---------
Cash flows from financing activities:
Adjustments from stock transactions $ 13,292 $ 19,121 $ 22,940
Proceeds from issuance of long-term debt 1,013 39,424
Proceeds from minority partners' contributions 1,250 5,525 1,675
Distributions to minority partners' and stockholders (38,755) (24,952) (21,068)
Repayments of long-term debt (37,516) (32,231) (20,229)
Payments for purchase of treasury stock (7,230) (6,345) (13,900)
Proceeds from reissuance of treasury stock 12,585 3,451
--------- --------- ---------
Net cash (used in) provided by financing activities (56,374) (34,418) 8,842
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 8,588 43,876 23,301
Cash and cash equivalents at the beginning of the year 84,035 40,159 16,858
--------- --------- ---------
Cash and cash equivalents at the end of the year $ 92,623 $ 84,035 $ 40,159
========= ========= =========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 491 $ 2,476 $ 4,013
Cash paid for income taxes 41,572 40,170 35,710
Supplemental disclosures of non-cash items:
Purchase of minority partners' interest $ 17,082 $ 1,647 $ 21,168
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
11
<PAGE> 6
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - Outback Steakhouse, Inc. and Affiliates (the
"Company") develops and operates casual dining restaurants primarily in the
United States. The Company's restaurants are generally organized as
partnerships, with the Company as the general partner.
Profits and losses of each partnership are shared based on respective
partnership interest percentages, as are cash distributions and capital
contributions with exceptions defined in the management agreement.
Additional Outback Steakhouse restaurants in which the Company has no
direct investment are operated under franchise agreements.
The Company completed its merger with its New England franchisee
("Tedesco") on November 30, 1999. This merger was accounted for under the
pooling of interests method of accounting; and accordingly, all historical
information has been restated to reflect the merger.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the accounts and operations of the Company and affiliated partnerships
in which the Company is a general partner and owns more than a 50% interest.
All material balances and transactions between the consolidated entities have
been eliminated.
The unconsolidated affiliates are accounted for using the equity
method.
RECLASSIFICATION - Certain amounts shown in the 1997 and 1998
consolidated financial statements have been re-classified to conform with the
1999 presentation. These reclassifications did not have any effect on total
assets, total liabilities, stockholders' equity or net income.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimated.
CASH AND CASH EQUIVALENTS - Cash equivalents consist of investments
which are readily convertible to cash with an original maturity date of three
months or less.
INVENTORIES - Inventories consist of food and beverages, and are
stated at the lower of cost (first-in, first-out) or market. The Company will
periodically make advance purchases of various inventory items to ensure
adequate supply or to obtain favorable pricing. At December 31, 1999 and 1998,
inventories included advance purchases of approximately $7,692,000 and
$3,543,000, respectively.
PREOPENING COSTS - Prior to the adoption of Statement of Position
98-5,"Reporting on the Costs of Start-up Activities" during 1998 which requires
that preopening and other start-up costs be expensed as incurred rather than
capitalized, preopening costs, consisting of training costs and other direct
costs related to new restaurant openings, were amortized primarily over twelve
months. Accordingly, all further preopening costs have been expensed in the
period incurred.
GOODWILL - Goodwill is included in the line item entitled "Other
Assets" in the Company's Consolidated Balance Sheets and is amortized using the
straight line method from 5 to 20 years. On an annual basis, the Company
reviews the recoverability of goodwill based primarily upon an analysis of
undiscounted cash flows as compared to the carrying value.
UNEARNED REVENUES - Unearned revenues primarily represent the
Company's liability for gift certificates, which have been sold but not yet
redeemed, recorded at the anticipated redemption value. When gift certificates
are redeemed, the Company recognizes restaurant sales and reduces the related
deferred liability.
PROPERTY, FIXTURES AND EQUIPMENT - Property, fixtures and equipment
are stated at cost, net of accumulated depreciation. Depreciation is computed
on the straight-line method over the following estimated useful lives:
Buildings and building
improvements.............................. 20 to 31.5 years
Furniture and fixtures .................... 7 years
Equipment.................................. 2 to 15 years
Leasehold improvements..................... 5 to 20 years
Periodically, the Company evaluates the recoverability of the net
carrying value of its property, fixtures and equipment by estimating its fair
value which is generally measured by discounting expected future cash flows at
the same rate the Company utilizes to evaluate potential investments. The
Company estimates fair value based on the best information available making the
appropriate estimates, judgements and projections that are considered
necessary. The fair value is compared to the carrying amount in the
consolidated financial statements. A deficiency in fair value relative to the
carrying amount is an indication of the need to reduce the carrying value of
the assets. If the total of future undiscounted cash flows were less than the
carrying amount of the property, fixtures and equipment, the carrying amount is
written down to the estimated fair value, and a loss resulting from value
impairment is recognized by a charge to earnings.
12
<PAGE> 7
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONSTRUCTION IN PROGRESS - The Company capitalizes all direct costs
incurred to construct its restaurants. Upon opening, these costs are
depreciated and charged to expense based upon their property classification.
The amount of interest capitalized in connection with restaurant construction
was approximately $850,000 and $1,800,000 in 1998 and 1997, respectively.
REVENUE RECOGNITION - The Company records revenues from normal
recurring sales upon the performance of services. Revenue from the sales of
franchises are recognized as income when the Company has substantially
performed all of its material obligations under the franchise agreement.
Continuing royalties, which are a percentage of net sales of franchised
restaurants, are accrued as income when earned.
ADVERTISING COSTS - The Company's policy is to report advertising
costs as expenses in the periods in which the costs are incurred. The total
amounts charged to advertising expense were approximately $54,320,000,
$49,540,000 and $37,943,000 in 1999, 1998 and 1997, respectively.
INCOME TAXES - The Company uses the asset and liability method which
recognizes the amount of current and deferred taxes payable or refundable at
the date of the financial statements as a result of all events that have been
recognized in the consolidated financial statements as measured by the
provisions of enacted tax laws.
The minority partners' interest in affiliated partnerships includes no
provision or liability for income taxes as any tax liability related thereto is
the responsibility of the individual minority partners.
STOCK BASED COMPENSATION - The Company accounts for stock based
compensation under the intrinsic value method of accounting for stock based
compensation and has disclosed pro forma net income and earnings per share
amounts using the value based method prescribed by SFAS No. 123.
EARNINGS PER COMMON SHARE - Earnings per common share are computed in
accordance with SFAS No.128 "Earnings Per Share," which requires companies to
present basic earnings per share and diluted earnings per share. Basic earnings
per share are computed by dividing net income by the weighted average number of
shares of common stock outstanding during the year. Diluted earnings per common
share are computed by dividing net income by the weighted average number of
shares of common stock outstanding and dilutive options outstanding during the
year. All applicable share and per share data have been restated to reflect the
retroactive effect of a three-for-two stock split effective on March 2, 1999.
RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARD - In June 1998, the
Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 133 "Accounting for Derivative Instruments
and Hedging Activities." SFAS No. 133 defines derivative instruments and
requires that these items be recognized as assets or liabilities in the
statement of financial position. This statement is effective for financial
statements issued for periods beginning January 1, 2000. However, SFAS No. 137
defers the effective date for one year to January 1, 2001. As of December 31,
1999 the Company does not have any derivative instruments.
2. ASSETS HELD FOR DISPOSAL
In November 1997, the Company closed nine of its 68 Carrabba's locations. The
"Assets Held For Disposal" recorded in the Company's Consolidated Balance
Sheets include the property, fixtures, and equipment related to the nine
locations at the lower of cost or fair market value less estimated selling
costs. The loss resulting from the deficiency in fair value relative to the
carrying value of the assets is included in the line item in the Company's
Consolidated Statements of Income entitled "Provision for impaired assets and
restaurant closings." Operating losses included in the Company's operating
results attributable to the nine locations were $1,780,000 in 1997.
3. OTHER CURRENT ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
<S> <C> <C>
Other current assets consisted of the following (in thousands):
Deposits (including income tax deposits) $ 1,253 $ 1,395
Accounts receivable 6,116 4,920
Accounts receivable franchisees 6,291 4,449
Prepaid expenses 9,444 6,532
Other current assets 1,396 1,952
------- -------
$24,500 $19,248
======= =======
</TABLE>
13
<PAGE> 8
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
<S> <C> <C>
Property, fixtures and equipment consisted of the following (in thousands):
Land $ 120,978 $ 111,961
Buildings and building improvements 289,261 249,486
Furniture and fixtures 72,452 60,622
Equipment 168,705 139,034
Leasehold improvements 115,340 102,652
Construction in progress 19,495 8,554
Accumulated depreciation (179,203) (133,930)
--------- ---------
$ 607,028 $ 538,379
========= =========
</TABLE>
5. OTHER ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
<S> <C> <C>
Other assets consisted of the following (in thousands):
Intangible assets, net (consisting primarily of goodwill) $ 61,508 $ 29,900
Other assets 19,263 11,560
--------- --------
$ 80,771 $ 41,460
========= ========
</TABLE>
6. LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
<S> <C> <C>
Long-term debt consisted of the following (in thousands):
Notes payable to banks, collateralized by property, fixtures and equipment,
interest at rates ranging from 8.02% to 9.9% at December 31, 1999 and 1998 $ 647 $ 3,106
Note payable to corporation, collateralized by real estate, interest at 9.0% 119 229
Other notes payable, uncollateralized, interest at rates ranging from 5.63% to 7.99% 2,378 1,642
Revolving line of credit, interest at rates ranging from 5.56% to 5.57%
at December 31, 1998 35,683
------- -------
3,144 40,660
Less current portion 1,625 1,694
------- -------
Long-term debt $ 1,519 $38,966
======= =======
</TABLE>
During 1999, the Company refinanced its uncollateralized revolving line of
credit which permits borrowing up to a maximum of $125,000,000 at 57.5 basis
points over the 30, 60, 90 or 180 day London Interbank Offered Rate (LIBOR)
(5.82% to 6.13% at December 31,1999 and 5.06% to 5.07% at December 31, 1998).
At December 31, 1999 and 1998, the unused portion of the revolving line of
credit was $125,000,000 and $89,317,000, respectively. The line includes a
credit facility fee of 17.5 basis points. The line matures in December 2002.
The revolving line of credit contains certain restrictions and
conditions as defined in the agreement which requires the Company to maintain:
tangible net worth of $435,000,000, a fixed charge coverage at a minimum of 3.5
to 1.0,and a maximum total debt to EBITDA ratio of 2.0 to 1.0.At December 31,
1999, the Company was in compliance with all of the above debt covenants.
The Company has a $7,500,000 uncollateralized line of credit bearing
interest at rates ranging from 50 to 75 basis points over LIBOR. Approximately
$4,136,000 of the line of credit is committed for the issuance of letters of
credit, $1,036,000 of which is to collateralize loans made by the bank to
certain franchisees.
The Company is the guarantor of an uncollateralized line of credit
which permits borrowing of up to $25,000,000, maturing in March 2002, for one
of its franchisees. At December 31,1999 and 1998, the outstanding balance was
approximately $19,220,000 and $13,811,000, respectively.
The Company is the guarantor of $8,333,000 of a $60,000,000 note for
an unconsolidated affiliate in which the Company has an 18.5% equity interest.
At December 31, 1999, the outstanding balance was approximately $16,828,000.
The aggregate payments of long-term debt outstanding at December
31,1999, for the next four years subsequent to 2000, are summarized as follows:
2001-$547,000; 2002-$524,000; 2003- $377,000; 2004-$71,000.
The carrying amount of long-term debt approximates fair value.
14
<PAGE> 9
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. ACCRUED EXPENSES
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
<S> <C> <C>
Accrued expenses consisted of the following (in thousands):
Accrued payroll and other compensation $11,132 $11,699
Accrued advertising 1,149 3,142
Accrued rent 1,934 1,672
Accrued insurance 7,837 6,712
Accrued ESOP contribution 1,484 964
Accrued property taxes 5,078 4,516
Other 1,014 3,954
------- -------
$29,628 $32,659
======= =======
</TABLE>
8. STOCKHOLDERS' EQUITY
During 1997, the Company repurchased 1,103,250 shares of its Common Stock, $.01
par value, for an aggregate purchase price of $13,900,000. During 1998, the
Company repurchased 300,000 shares of its Common Stock, $.01 par value for an
aggregate purchase price of $6,345,000. During 1999, the Company repurchased
239,000 shares of its Common Stock, $.01 par value, for an aggregate purchase
price of $7,230,000. Repurchased shares are carried as Treasury Stock on the
Consolidated Balance Sheets and are recorded at cost. During 1999 and 1998, the
Company reissued approximately 983,000 and 544,000 shares of treasury stock,
respectively, that had a cost of approximately $14,610,000 and $9,420,000,
respectively.
Distributions in the Consolidated Statements of Stockholders Equity
represent distributions to Subchapter S Corporation shareholders of Tedesco
prior to the merger in 1999.
On March 2, 1999, a three-for-two split of the Company's Common Stock
was effected through distribution of one additional share for every two shares
already issued. All applicable share and per share data have been restated to
give retroactive effect to the stock split.
9. INCOME TAXES
<TABLE>
<CAPTION>
Provision for income taxes consisted of the following (in thousands):
YEARS ENDED DECEMBER 31,
1999 1998 1997
<S> <C> <C> <C>
Federal:
Current $ 46,656 $ 37,936 $ 31,010
Deferred 11,146 5,197 (3,572)
-------- -------- ---------
57,802 43,133 27,438
-------- -------- ---------
State:
Current 7,363 9,261 6,664
Deferred 1,759 1,244 (353)
-------- -------- ---------
9,122 10,505 6,311
-------- -------- ---------
$ 66,924 $ 53,638 $ 33,749
======== ======== =========
</TABLE>
The Company's effective tax rate differs from the federal
statutory rate for the following reasons:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1999 1998 1997
<S> <C> <C> <C>
Income taxes at federal statutory rate 35.0% 35.0% 35.0%
State taxes, net of federal benefit 3.3 4.0 4.0
Earnings not subject to corporate income taxes (1.2) (0.8) (0.7)
Other, net (2.1) (3.5) (3.6)
-------- -------- ---------
Total 35.0% 34.7% 34.7%
======== ======== =========
</TABLE>
The income tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
<S> <C> <C>
Deferred income tax assets (in thousands):
Insurance reserves $ 6,737 $ 3,708
Advertising expense reserves 1,164 956
Intangibles 13,285 14,250
Other, net 852 438
-------- -------
22,038 19,352
-------- -------
Deferred income tax liabilities (in thousands):
Depreciation 26,697 16,087
-------- -------
26,697 16,087
-------- -------
Net deferred tax (liability) asset $ (4,659) $ 3,265
======== =======
</TABLE>
15
<PAGE> 10
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. INCOME TAXES (CONTINUED)
As discussed in Notes 11 and 16, in all periods presented, the Company's net
income included earnings attributable to Tedesco. Tedesco had elected under
Subchapter S of the Internal Revenue Code to have their shareholders pay any
federal income tax due on their earnings. Although Tedesco's income prior to
the merger is included in the Company's consolidated financial statements, the
Company is not required to pay income taxes on the income since they are the
responsibility of the Tedesco shareholders.
10. COMMITMENTS AND CONTINGENCIES AND RELATED PARTY TRANSACTIONS
OPERATING LEASES - The Company leases restaurant and office facilities
and certain equipment under operating leases having terms expiring between 2000
and 2014. The restaurant facility leases primarily have renewal clauses of five
to 20 years exercisable at the option of the Company. Certain of these leases
require the payment of contingent rentals based on a percentage of gross
revenues, as defined by the terms of the applicable lease agreement. Total
rental expense for the years ended December 31, 1999, 1998 and 1997 was
approximately $27,015,000, $23,430,000 and $20,857,000, respectively, and
included contingent rent of approximately $2,902,000, $2,391,000 and
$2,392,000, respectively.
Future minimum lease payments on operating leases (including leases
for restaurants scheduled to open in 2000), are as follows (in thousands):
2000 $ 26,296
2001 24,519
2002 22,521
2003 20,156
2004 17,901
Thereafter 51,233
--------
Total minimum lease payments $162,626
========
During 1998, the Company leased/chartered an airplane from a
Corporation owned by two officers/directors of the Company. Airplane
lease/charter payments for the year ended December 31, 1998 totalled
approximately $90,000. On December 23, 1998, the Company purchased, at fair
market value, an aircraft from a corporation owned by two officers/ directors
of the Company for a purchase price of $1,350,000. During 1999, the Company
purchased, at original price, an 18% ownership interest in a motor speedway for
$592,000 from a partnership in which three officers/directors are partners. The
investment is included in the line item in the Company's Consolidated Balance
Sheets entitled "Investments in and advances to unconsolidated affiliates."
During 1999, the Company formed joint ventures to develop Outback
Steakhouses in Brazil and the Philippines. The Company also entered into
agreements to develop and operate Roy's restaurants and Fleming's. Under the
terms of the Fleming's agreement, the Company purchased three existing
Fleming's for $12,000,000 and committed to the first $13,000,000 of future
development costs.
The Company is subject to legal proceedings claims and liabilities
which arise in the ordinary course of business. In the opinion of management,
the amount of the ultimate liability with respect to those actions will not
materially affect the Company's financial position or results of operations and
cash flows.
The Company retains direct liability for the first $200,000 of all
individual workers compensation claims prior to 1999 and general liability
claims and $230,000 of all individual health insurance claims.
11. BUSINESS COMBINATIONS
On November 30, 1999, the Company issued 2,256,000 shares of Common
Stock for all of the outstanding shares of its New England franchisee (Tedesco)
which owned 17 Outback Steakhouses in Connecticut, Massachusetts, New
Hampshire, and Rhode Island. The merger was accounted for by the
pooling-of-interest method using historical amounts and the financial
statements presented herein have been restated to give retroactive effect to
the merger for all periods presented.
During 1999, the Company issued approximately 160,000 shares of Common
Stock to 3 area operating partners for all of the outstanding interests in 25
Outback Steakhouses in Colorado, Georgia and West Florida.
On April 1, 1998, the Company issued approximately 80,250 shares of
Common Stock to one area operating partner for the outstanding interest in
Outback Steakhouses in Indiana and Kentucky.
On October1,1997, the Company issued approximately 1,153,500 shares of
Common Stock to five area operating partners for all of the outstanding
interests in 69 Outback Steakhouses in Maryland, Michigan, New Jersey, North
Carolina, Pennsylvania, South Florida, South Carolina, Texas and Virginia.
The acquisitions of the area operating partner's interests were
accounted for by the purchase method and the related goodwill is included in
the line item entitled "Other Assets" in the Company's Consolidated Balance
Sheets.
16
<PAGE> 11
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. STOCK OPTION AND OTHER BENEFIT PLANS
The Company's amended and Restated Stock Option Plan (the "Stock Option Plan")
was approved by the shareholders of the Company in April 1992, and has
subsequently been amended as deemed appropriate by the Company's Board of
Directors or shareholders. There are currently 22,500,000 shares of the
Company's Common Stock which may be issued and sold upon exercise of stock
options ("Options"). The term of Options granted is determined by the Board of
Directors and optionees generally vest in the Options over a five year period.
The purpose of the Stock Option Plan is to attract competent
personnel, to provide long-term incentives to Directors and key employees, and
to discourage employees from competing with the Company.
Options under the Stock Option Plan may be Options which qualify under
Section 422 of the Internal Revenue Code ("Incentive Stock Options") or Options
which do not qualify under Section 422 ("Nonqualified Options"). To date, the
Company has only issued Nonqualified Options. The term of Options granted is
generally 5 years and the price generally cannot be less than the fair market
value of the shares covered by the Option.
To provide long term incentives to its restaurant managers, the
Company periodically grants them options to purchase its common stock. The
Stock Option Committee estimates the fair market value of the grants by using a
three month weighted average stock price to eliminate the daily trading
increases and decreases in the stock price. This averaging method may result in
option grants that are above or below the closing price as of the exact grant
date. The Company believes that the averaging of the price is a more fair
method of determining fair market value for long term incentives. Compensation
expense results if the exercise price of these options is less than the market
price on the date of grant.
At December 31, 1999, cumulative total Options to purchase 16,693,000
shares of the Company's Common Stock had been granted to employees of the
Company at prices ranging from $0.19 to $37.94 per share which was the
estimated fair market value at the time of each grant. As of December 31, 1999,
Options for approximately 1,789,000 shares were exercisable.
Options to purchase 3,619,385, 1,433,013 and 2,188,563 of the
Company's Common Stock were issued to employees during1999,1998, and1997 with
exercise prices ranging from $20.05 to $37.94, $19.28 to $26.71 and $14.30 to
$18.43 for each respective period.
Activity in the Company's Stock Option Plan was:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES EXERCISE PRICE
<S> <C> <C>
OUTSTANDING AT
December 31, 1996 7,366,161 $ 14.09
Granted 2,188,563 15.76
Exercised (696,344) 7.37
Forfeited (92,098) 19.79
----------
Outstanding at
December 31, 1997 8,766,282 15.11
Granted 1,433,013 23.03
Exercised (1,407,063) 11.77
Forfeited (75,969) 19.41
----------
Outstanding at
December 31, 1998 8,716,263 16.96
Granted 3,619,385 26.60
Exercised (1,192,550) 12.85
Forfeited (80,323) 19.00
----------
Outstanding at
December 31, 1999 11,062,775 20.59
==========
</TABLE>
Had the compensation cost for the Company's Stock Option Plan been determined
based on the fair value at the grant dates for awards under the plan consistent
with SFAS No. 123, the Company's net income and earnings per share on a pro
forma basis would have been (in thousands, except per share data):
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998 1997
<S> <C> <C> <C>
Net income $ 119,294 $ 87,184 $ 56,939
Basic earnings per
common share $ 1.55 $ 1.15 $ 0.77
Diluted earnings per
common share $ 1.51 $ 1.13 $ 0.76
</TABLE>
The preceding pro forma results were calculated with the use of the
Black Scholes option-pricing model. The following assumptions were used for the
years ended December 31, 1999, 1998, 1997, respectively: (1) risk-free interest
rates of 6.36%, 5.30%, and 5.45%; (2) dividend yield of 0.0% in all three
periods presented; (3) expected lives of 3.5 years in all three periods
presented; and (4) volatility of36%, 40%, and 25%. Results may vary depending
on the assumptions applied within the model.
Tax benefits resulting from the exercise of non-qualified stock
options reduced taxes currently payable by $9,153,000 and $7,864,000 in 1999
and 1998, respectively. The tax benefits are credited to additional paid in
capital.
The Company has a qualified defined contribution 401(K) plan covering
substantially all full-time employees, except officers and certain highly
compensated employees. Assets of this plan are held in trust for the sole
benefit of the employees.
17
<PAGE> 12
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. ADOPTION OF STATEMENT OF POSITION 98-5, "REPORTING ON THE COSTS OF
START-UP ACTIVITIES."
The Company adopted the new accounting standard, Statement of Position 98-5,
"Reporting on the Costs of Start-up Activities," which requires that
pre-opening and other start-up costs be expensed as incurred rather than
capitalized. The adoption was made effective as of the beginning of the
Company's 1998 fiscal year. As a result of the adoption, the Company expenses
start-up cost as incurred rather than through future amortization. The
cumulative effect of the change in accounting principle, which was
approximately $4,880,000 net of income taxes or $0.06 per share diluted, was
recorded as a one-time charge in the Company's 1998 Financial Statements.
14. SEGMENT REPORTING
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The Company operates restaurants under
three brands that have similar investment criteria and economic and operating
characteristics and are considered one reportable operating segment. Management
does not believe that the Company has any material reporting segments.
15. PROVISION FOR IMPAIRED ASSETS AND RESTAURANT CLOSINGS
In the fourth quarter of 1999, the Company recorded a pre-tax charge to earnings
of $5,493,000 which includes approximately $3,617,000 for the write down of
impaired assets, and $1,876,000 related to restaurant closings, severance and
other costs. The write down primarily related to Carrabba's restaurant
properties and assets of ancillary businesses.
In the fourth quarter of 1997, the Company recorded a provision of $26,001,000,
which includes approximately $23,113,000 for the write down of certain impaired
assets and $2,888,000 related to restaurant closings, severance and other
costs.
In accordance with SFAS 121, the Company identified certain long-lived
assets which are held and used in the Carrabba's restaurants as impaired. An
impairment was recognized when the future undiscounted cash flows of certain
assets were estimated to be less than the assets' related carrying value. As
such, the carrying values were written down to the Company's estimates of fair
value. Fair value was estimated utilizing the best information available making
whatever estimates, judgments, and projections were considered necessary.
16. PRO FORMA EARNINGS AND EARNINGS PER SHARE
As discussed in Note 9, no income tax expense has been provided in the
Company's historical consolidated financial statements on income attributable
to Tedesco as discussed in Note 11. Pro forma net income includes an adjustment
to increase the provision for income taxes to reflect the anticipated tax as if
Tedesco had not elected to be taxed under Subchapter S of the Internal Revenue
Code.
The Company adopted the provisions of SFAS No. 128 "Earnings Per
Share," during the fourth quarter of 1997, as required. The new standard
specifies the computation, presentation, and disclosure requirements for
earnings per share. The following table represents the computation of basic and
diluted earnings per common share as required by SFAS No. 128 (in thousands,
except per share data).
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1999 1998 1997
<S> <C> <C> <C>
Pro forma (unaudited) net income $122,398 $94,683 $62,774
Basic weighted average number of common shares outstanding 77,089 75,702 74,007
Basic earnings per common share $ 1.59 $ 1.25 $ 0.85
Effect of dilutive stock options 2,108 1,782 1,007
Diluted weighted average number of common shares outstanding 79,197 77,484 75,014
Diluted earnings per common share $ 1.55 $ 1.22 $ 0.84
</TABLE>
Diluted earnings per common share excludes antidilutive stock options of
approximately 844,400, 727,500 and 4,147,500 during 1999, 1998, and 1997,
respectively.
18
<PAGE> 13
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (SEE NOTES 9 AND 16)
The following table presents selected quarterly financial data for the periods
indicated (in thousands, except per (share data).
<TABLE>
<CAPTION>
1999 March 31 June 30 September 30 December 31
<S> <C> <C> <C> <C>
Revenues $391,896 $417,515 $410,003 $426,599
Income from operations 52,898 59,261 55,304 55,180
Income before provision for income taxes 45,265 50,238 48,087 47,657
Net income 29,196 32,478 32,196 30,453
Pro forma net income 28,743 31,901 31,684 30,070
Basic earnings per share
Net income 0.38 0.42 0.42 0.39
Pro forma net income 0.38 0.41 0.41 0.39
Diluted earnings per share
Net income 0.37 0.41 0.40 0.39
Pro forma net income 0.37 0.40 0.40 0.38
1998 March 31 June 30 September 30 December 31
Revenues $334,628 $353,386 $352,363 $362,234
Income from operations 42,257 46,340 45,010 46,100
Income before provision for income taxes 35,607 39,617 38,596 40,746
Income before change in accounting principle 23,196 25,867 25,502 26,363
Net income 18,316 25,867 25,502 26,363
Pro forma net income 17,980 25,434 25,120 26,149
Basic earnings per share
Income before change in accounting principle 0.31 0.34 0.34 0.35
Net income 0.24 0.34 0.34 0.35
Pro forma net income 0.24 0.34 0.33 0.34
Diluted earnings per share
Income before change in accounting principle 0.30 0.33 0.33 0.34
Net income 0.24 0.33 0.33 0.34
Pro forma net income 0.23 0.33 0.32 0.34
</TABLE>
19
<PAGE> 1
Exhibit 13.03
The Common Stock of the Company is traded in the over-the-counter market and is
quoted on the NASDAQ National Market System under the symbol OSSI. The
following table sets forth, for the fiscal years ended December 31, 1997, 1998,
and 1999, the high and low per share prices of the Company's Common Stock as
reported by NASDAQ after giving effect to the March 1999 stock split. See Note
8 of Notes to Consolidated Financial Statements.
<TABLE>
<CAPTION>
1997 High Low
<S> <C> <C>
First Quarter 18.59 12.17
Second Quarter 16.92 11.92
Third Quarter 19.17 14.59
Fourth Quarter 21.59 16.59
1998
First Quarter 26.37 18.67
Second Quarter 26.75 23.00
Third Quarter 28.09 15.92
Fourth Quarter 26.79 15.59
1999
First Quarter 34.25 22.75
Second Quarter 39.75 31.50
Third Quarter 40.13 24.06
Fourth Quarter 27.50 19.81
</TABLE>
The Company has never paid a cash dividend on its Common Stock. As a condition
of the Company's line of credit agreement the Company is currently restricted
from paying dividends, other than in the form of partnership distributions,
without the consent of two thirds of its lenders.
As of March 2,2000 there were approximately 1,971 registered shareholders of
record of the Company's Common Stock.
REPORTS ON FORM 10-K
A copy of the Company's annual report to the Securities and Exchange Commission
on Form 10-K will be furnished to any shareholder without charge upon written
request. Address to Investor Relations Department at: Outback Steakhouse, Inc.,
2202 North Westshore Blvd., 5th Floor, Tampa, Florida 33607.
Stock Transfer Agent and Registrar: Bank of New York, 101 Barclay
Street, 12 West, New York, NY 10286. Requests for changes and updates in
shareholder records can be made to the Bank of New York Customer Service
Department at 800-524-4458.
Independent Accountants: PricewaterhouseCoopers LLP, Tampa, Florida
<PAGE> 2
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
COMPANY NEWS
The Company's news releases, including quarterly earnings announcements, are
available through Company News-On-Call. To receive a faxed copy of recent news
releases, call 1-800-758-5804. Enter the Outback six digit code of 673313 and
the requested release will be faxed within minutes of inquiry. This service is
available 24 hours a day, 7 days a week. For additional Company information,
visit the Company's website at www.outback.com.
ANNUAL MEETING
The annual meeting of shareholders will be held on Thursday, April 27, 2000 at
10:00 a.m. Tampa time at the Tampa Bay Performing Arts Center Playhouse, 1010
MacInnes Place North, Tampa, Florida 33602.
OFFICERS Address for all officers: 2202 N. Westshore Blvd., 5th Floor, Tampa,
FL 33607
<TABLE>
<CAPTION>
OUTBACK STEAKHOUSE, INC. OUTBACK STEAKHOUSE OUTBACK STEAKHOUSE (CON'T) CARRABBA'S ITALIAN GRILL
<S> <C> <C> <C>
Chris T. Sullivan Paul E. Avery Lindon Richardson Steven T. Shlemon
Chairman of the Board and President Vice President, Design Vice President and
Chief Executive Officer Director of Operations
Steve Erickson Dennis J. Rouse
Robert D. Basham Regional Vice President, Vice President, Real Estate OUTBACK INTERNATIONAL
President and Chief Operations and Development Hugh H. Connerty, Jr.
Operating Officer President
Benjamin Novello Nancy Schneid
J. Timothy Gannon Regional Vice President, Vice President, Marketing OUTBACK SPORTS
Sr. Vice President Operations William E. Horne
Steven C. Stanley Chairman
Robert S. Merritt Mark Wibel Vice President,
Sr. Vice President, Regional Vice President, Construction OUTBACK CATERING
Chief Financial Officer Operations Sam Tancredi
and Treasurer Irene Wenzel President
Lauren C. Cooper Vice President, Purchasing
Joseph J. Kadow Vice President and ROY'S
Vice President, General Controller Russ Bendel
Counsel and Secretary President
Trudy I. Cooper
Michael P. O'Donnell Vice President, FLEMING'S PRIME
CEO, New Concepts Training and Development STEAKHOUSE AND WINE BARS
A. William Allen, III
Carl W. Sahlsten President
Sr. Vice President of Real
Estate and Development ZAZARAC
John Cooper
President
</TABLE>
BOARD OF DIRECTORS
<TABLE>
<S> <C> <C> <C>
Chris T. Sullivan Paul Avery W.R. "Max" Carey, Jr. Lee Roy Selmon
Chairman of the Board President, Outback President, Corporate Associate Athletic Director
Chief Executive Officer Steakhouse of Florida, Inc. Resource Development University of South Florida
Robert D. Basham John A. Brabson, Jr. Edward L. Flom Debbie Fields Rose
President and Chief President, Brabson Former Chairman and Founder and Former
Operating Officer Investments, Inc. Chief Executive Officer, Chairperson,
Florida Steel Corporation Mrs. Fields Cookies
J. Timothy Gannon Charles H. Bridges
Sr. Vice President Former Chairman and Nancy Schneid Toby S. Wilt
Chief Executive Officer, Vice President, Marketing President, TSW
Robert S. Merritt Francois L. Schwartz, Inc. Investment Company
Sr. Vice President,
Chief Financial Officer
and Treasurer
</TABLE>
<PAGE> 1
EXHIBIT 13.04
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and
Stockholders of Outback Steakhouse, Inc.
Tampa, Florida
We have audited the accompanying consolidated statements of income, of
stockholders' equity, and of cash flows of Outback Steakhouse, Inc. and
Affiliates (the "Company") for the year ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the results of operations of the Company and its cash flows
for the year ended December 31, 1997 in conformity with generally accepted
accounting principles.
/s/ Deloitte & Touche LLP
- ----------------------------
Deloitte & Touche LLP
Certified Public Accountants
Tampa, Florida
February 20, 1998
<PAGE> 1
EXHIBIT 21.1
OUTBACK STEAKHOUSE, INC.
A DELAWARE CORPORATION
WHOLLY OWNED SUBSIDIARIES
MARCH 29, 2000
Outback Steakhouse of Florida, Inc.
a Florida corporation
2202 North Westshore Boulevard
5th Floor
Tampa, Florida 33607
Carrabba's Italian Grill, Inc.
a Florida corporation
2202 North Westshore Boulevard
5th Floor
Tampa, Florida 33607
Outback Steakhouse International, Inc.
a Florida corporation
2202 North Westshore Boulevard
5th Floor
Tampa, Florida 33607
OS Pacific, Inc.
a Florida corporation
2202 North Westshore Boulevard
5th Floor
Tampa, Florida 33607
OS Prime, Inc.
a Florida corporation
2202 North Westshore Boulevard
5th Floor
Tampa, Florida 33607
Outback Sports, LLC
a Delaware limited liability company
2202 North Westshore Boulevard
5th Floor
Tampa, Florida 33607
<PAGE> 1
EXHIBIT 23.01
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Outback Steakhouse, Inc.
Tampa, Florida
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-79103) of Outback Steakhouse, Inc. of our report
dated February 16, 2000 relating to the Consolidated Financial Statements which
appears in the Annual Report to Shareholders, which is incorporated in this
Annual Report on Form 10-K.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Tampa, Florida
March 29, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND RELATED CONSOLIDATED STATEMENT OF INCOME OF
OUTBACK STEAKHOUSE, INC. AND AFFILIATES AS OF AND FOR THE YEAR ENDED DECEMBER
31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 92,623
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 24,500
<CURRENT-ASSETS> 143,211
<PP&E> 786,231
<DEPRECIATION> 179,203
<TOTAL-ASSETS> 852,282
<CURRENT-LIABILITIES> 130,935
<BONDS> 1,519
0
0
<COMMON> 775
<OTHER-SE> 692,190
<TOTAL-LIABILITY-AND-EQUITY> 852,282
<SALES> 1,632,720
<TOTAL-REVENUES> 1,646,013
<CGS> 620,249
<TOTAL-COSTS> 1,354,899
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 191,247
<INCOME-TAX> 66,924
<INCOME-CONTINUING> 124,323
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 124,323
<EPS-BASIC> 1.61
<EPS-DILUTED> 1.57
</TABLE>
