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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION
14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
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BERTUCCI'S, INC.
(NAME OF SUBJECT COMPANY [ISSUER])
NERC ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
NE RESTAURANT COMPANY, INC.
(BIDDER)
COMMON STOCK, PAR VALUE $0.005 PER SHARE
(TITLE OF CLASS OF SECURITIES)
086063 10 4
(CUSIP NUMBER OF CLASS OF SECURITIES)
DENNIS PEDRA
PRESIDENT
NE RESTAURANT COMPANY, INC.
80A TURNPIKE ROAD
WESTBOROUGH, MASSACHUSETTS 01581
(508) 870-9200
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF BIDDER)
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WITH A COPY TO:
DAVID L. FINKELMAN, ESQ.
STROOCK & STROOCK & LAVAN LLP
180 MAIDEN LANE
NEW YORK, NEW YORK 10038-4982
(212) 806-5400
CALCULATION OF FILING FEE
Transaction valuation: $92,731,758* Amount of filing fee:
- -------- $18,546.36**
* For purposes of calculating the filing fee only. This amount assumes the
purchase of (i) 8,478,621 outstanding shares of Common Stock, par value
$0.005 per share (the "Shares") of Issuer and (ii) 352,975 Shares issuable
pursuant to outstanding stock options, in each case at a purchase price of
$10.50 per Share, net to the seller in cash, without interest thereon.
** The amount of the filing fee, calculated in accordance with Rule 0-11(d) of
the Securities Exchange Act of 1934, as amended, equals 1/50th of one
percent of the aggregate value of the shares to be purchased.
[_]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: Not applicable. Filing Party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
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CUSIP NO. 086063 10 4
14D-1
1.
Name of Reporting Persons S.S. or I.R.S.
Identification No. of Above Persons:
NERC Acquisition Corp.*
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2.
Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [_]
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3.
SEC Use Only
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4.
Sources of Funds
BK, OO, AF
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5.
Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
[_]
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6.
Citizenship or Place of Organization
Massachusetts
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7.
Aggregate Amount Beneficially Owned by Each Reporting
Person
None
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8.
Check if the Aggregate Amount in Row 7 Excludes
Certain Shares
[X]
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9.
Percent of Class Represented by Amount in Row 7
0%
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10.
Type of Reporting Person
CO
* Has not yet received I.R.S. Identification No.
2
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CUSIP NO. 086063 10 4
14D-1
1.
Name of Reporting Persons S.S. or I.R.S.
Identification No. of Above Persons:
NE Restaurant Company, Inc. (I.R.S. Identification No.
06-1311266)
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2.
Check the Appropriate Box if a Member of a Group
(a) [X]
(b) [_]
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3.
SEC Use Only
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4.
Sources of Funds
BK, OO, AF
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5.
Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
[_]
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6.
Citizenship or Place of Organization
Delaware
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7.
Aggregate Amount Beneficially Owned by Each Reporting
Person
430,000 Shares
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8.
Check if the Aggregate Amount in Row 7 Excludes
Certain Shares
[_]
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9.
Percent of Class Represented by Amount in Row 7
4.8%
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10.
Type of Reporting Person
CO
3
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This Tender Offer Statement on Schedule 14D-1 (the "Statement"), relates to
the offer by NERC Acquisition Corp. ("Purchaser"), a Massachusetts corporation
and a wholly-owned subsidiary of NE Restaurant Company, Inc., a Delaware
corporation ("Parent"), to purchase all of the outstanding shares of Common
Stock, par value $0.005 per share (the "Shares"), of Bertucci's, Inc., a
Massachusetts corporation (the "Company"), at a purchase price of $10.50 per
Share, net to the seller in cash, without interest thereon.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Bertucci's, Inc., a Massachusetts
corporation. The address of the Company's principal executive offices is 14
Audubon Road, Wakefield, Massachusetts 01880.
(b) The information set forth in the "Introduction" of the Offer to Purchase
annexed hereto as Exhibit (a)(1) (the "Offer to Purchase") is incorporated
herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares") of the
Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (g) This Statement is being filed by Purchaser and Parent. The
information set forth in Section 9 ("Certain Information Concerning Purchaser
and Parent") of the Offer to Purchase and Schedule I thereto is incorporated
herein by reference.
(e) and (f) During the last five years, neither Purchaser nor Parent, nor,
to the best knowledge of Purchaser and Parent, any persons controlling
Purchaser or Parent, or any of the persons listed on Schedule I to the Offer
to Purchase, (i) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which any such person was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introduction, Section 9 ("Certain
Information Concerning Purchaser and Parent"), Section 11 ("Background of the
Offer; Contacts with the Company") and Section 12 ("Purpose of the Offer and
the Merger; The Merger Agreement; Other Agreements; Plans for the Company;
Other Matters") of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction, Section 11
("Background of the Offer; Contacts with the Company") and Section 12
("Purpose of the Offer and the Merger; The Merger Agreement; Other Agreements;
Plans for the Company; Other Matters") of the Offer to Purchase is
incorporated herein by reference.
(f)-(g) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Nasdaq Quotation and Exchange Act Registration") of the
Offer to Purchase is incorporated herein by reference.
4
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ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the Introduction and Section 9 ("Certain
Information Concerning Purchaser and Parent") of the Offer to Purchase is
incorporated herein by reference.
(b) The information set forth in Section 9 ("Certain Information Concerning
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction and Section 9 ("Certain
Information Concerning Purchaser and Parent"), Section 11 ("Background of the
Offer; Contacts with the Company") and Section 12 ("Purpose of the Offer and
the Merger; The Merger Agreement; Other Agreements; Plans for the Company;
Other Matters") of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning
Purchaser and Parent") of the Offer to Purchase and the Consolidated Financial
Statements of Parent attached hereto as Exhibit (g) are incorporated herein by
reference.
The incorporation by reference herein of the above-referenced financial
information does not constitute an admission that such information is material
to a decision by a stockholder of the Company whether to sell, tender or hold
Shares being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(c) The information set forth in the Introduction and Section 15
("Certain Legal Matters; Regulatory Approvals") of the Offer to Purchase is
incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Nasdaq Quotation and Exchange Act Registration") and
Section 15 ("Certain Legal Matters; Regulatory Approvals") of the Offer to
Purchase is incorporated herein by reference.
(e) The information set forth in Section 15 ("Certain Legal Matters;
Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated May 20, 1998.
(2) Letter of Transmittal.
(3) Notice of Guaranteed Delivery.
(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
other Nominees.
(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and other Nominees.
5
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(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(7) Summary Advertisement as published on May 20, 1998.
(8) Text of Press Release issued by the Company and Parent dated May 14,
1998.
(9) Text of Press Release issued by Parent dated May 20, 1998.
(b) Not applicable.
(c)(1) Agreement and Plan of Merger, dated as of May 13, 1998, by and among
the Company, Parent and Purchaser.
(2) Tender and Voting Agreement, dated as of May 13, 1998, by and among
Parent, Purchaser and Joseph Crugnale.
(3) Litigation Settlement Agreement, dated as of May 13, 1998, by and
among the Company, Parent, Purchaser, Ten Ideas, Inc., Ten Ideas
Acquisition Corp. and Joseph Crugnale.
(4) Confidentiality Agreement, dated as of April 6, 1998, by and between
Parent and the Company.
(d) Not applicable.
(e) Not applicable.
(f) None.
(g) Consolidated Financial Statements of Parent.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this Statement is true, complete and correct.
NE Restaurant Company, Inc.
Dated: May 20, 1998 /s/ Paul V. Hoagland
By: _________________________________
PAUL V. HOAGLAND
EXECUTIVE VICE PRESIDENT
NERC Acquisition Corp.
/s/ Paul V. Hoagland
By: _________________________________
PAUL V. HOAGLAND
EXECUTIVE VICE PRESIDENT
7
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
(a)(1) Offer to Purchase, dated May 20, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement as published on May 20, 1998.
(a)(8) Text of Press Release issued by the Company and Parent dated May
14, 1998.
(a)(9) Text of Press Release issued by Parent dated May 20, 1998.
(c)(1) Agreement and Plan of Merger, dated as of May 13, 1998, by and
among the Company, Parent and Purchaser.
(c)(2) Tender and Voting Agreement, dated as of May 13, 1998, by and
among Parent, Purchaser and Joseph Crugnale.
(c)(3) Litigation Settlement Agreement, dated as of May 13, 1998, by and
among the Company, Parent, Purchaser, Ten Ideas, Inc., Ten Ideas
Acquisition Corp. and Joseph Crugnale.
(c)(4) Confidentiality Agreement, dated as of April 6, 1998, by and
between Parent and the Company.
(g) Consolidated Financial Statements of Parent.
</TABLE>
8
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EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BERTUCCI'S, INC.
AT
$10.50 NET PER SHARE
BY
NERC ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
NE RESTAURANT COMPANY, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JUNE 17, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER BY AND
AMONG BERTUCCI'S, INC. (THE "COMPANY"), NE RESTAURANT COMPANY, INC. ("PARENT")
AND NERC ACQUISITION CORP. ("PURCHASER"). THE BOARD OF DIRECTORS OF THE
COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN
AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN
THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT THE
COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES (AS DEFINED
HEREIN).
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES, WHICH, TOGETHER WITH THE SHARES THEN BENEFICIALLY OWNED BY PARENT OR
PURCHASER, REPRESENT AT LEAST 90% OF ALL OUTSTANDING SHARES (DETERMINED ON A
FULLY DILUTED BASIS ON THE EXPIRATION DATE (AS DEFINED HEREIN)), (II) PARENT
AND PURCHASER HAVING OBTAINED SUFFICIENT FINANCING TO FUND THE PURCHASE OF
SHARES TENDERED IN THE OFFER, CONSUMMATE THE MERGER, REFINANCE CERTAIN
EXISTING INDEBTEDNESS OF THE COMPANY AND OF PARENT AND TO PAY ALL RELATED FEES
AND EXPENSES AND (III) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER
APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR
BEEN TERMINATED. THE OFFER ALSO IS SUBJECT TO CERTAIN OTHER CONDITIONS WHICH
ARE SET FORTH IN SECTION 14.
_______________
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions set forth in the Letter
of Transmittal and (A) mail or deliver it, together with the certificate(s)
representing tendered Shares and any other required documents to the
Depositary (as defined herein) or (B) tender such Shares pursuant to the
procedures for book-entry transfer set forth in Section 3 or (ii) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee
to effect the transaction for such stockholder. A stockholder whose Shares are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if such stockholder desires to tender such Shares.
A stockholder who desires to tender Shares, and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer described in this Offer to
Purchase on a timely basis, may tender such Shares by following the procedures
for guaranteed delivery set forth herein.
Questions and requests for assistance may be directed to the Information
Agent (as such term is defined herein) at its address and telephone number set
forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal or other tender offer materials
may be obtained from the Information Agent. Stockholders may also contact
their brokers, dealers, commercial banks and trust companies for assistance
concerning the Offer.
_______________
The Information Agent for the Offer is:
D.F. KING & CO., INC.
May 20, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
INTRODUCTION............................................................. 1
THE TENDER OFFER......................................................... 3
1. Terms of the Offer................................................... 3
2. Acceptance for Payment and Payment for Shares........................ 5
3. Procedures for Tendering Shares...................................... 6
4. Withdrawal Rights.................................................... 9
5. Certain United States Federal Income Tax Consequences................ 9
6. Price Range of Shares................................................ 10
7. Effect of the Offer on the Market for the Shares; Nasdaq Quotation
and Exchange Act Registration........................................ 11
8. Certain Information Concerning the Company........................... 12
9. Certain Information Concerning Purchaser and Parent.................. 14
10. Source and Amount of Funds........................................... 16
11. Background of the Offer; Contacts With the Company................... 19
12. Purpose of the Offer and the Merger; The Merger Agreement; Other
Agreements; Plans for the Company; Other Matters..................... 22
13. Dividends and Distributions.......................................... 33
14. Certain Conditions of the Offer...................................... 33
15. Certain Legal Matters; Regulatory Approvals.......................... 35
16. Fees and Expenses.................................................... 37
17. Miscellaneous........................................................ 38
Schedule I--Information Relating to Directors and Executive Officers of
Parent and Purchaser.................................................. I-1
Schedule II--Transactions in Shares During the Past 60 Days by Parent and
Purchaser............................................................. II-1
</TABLE>
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To the Holders of Shares of Common
Stock of Bertucci's, Inc.:
INTRODUCTION
NERC Acquisition Corp. ("Purchaser"), a Massachusetts corporation and a
wholly-owned subsidiary of NE Restaurant Company, Inc., a Delaware corporation
("Parent"), hereby offers to purchase all outstanding shares (the "Shares") of
common stock, par value $0.005 per share (the "Common Stock"), of Bertucci's,
Inc., a Massachusetts corporation (the "Company"), at a purchase price of
$10.50 per Share, net to the seller in cash, without interest thereon (the
"Offer Price"), upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the
"Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer. However, any tendering stockholder or other payee who fails to complete
and sign the Substitute Form W-9 included in the Letter of Transmittal may be
subject to a required backup federal income tax withholding of 31% of the
gross proceeds payable to such stockholder or other payee pursuant to the
Offer. See Section 3. Purchaser will pay all fees and expenses of D.F. King &
Co., Inc., which is acting as Information Agent (the "Information Agent"), and
United States Trust Company of New York, which is acting as Depositary (the
"Depositary"), incurred in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY APPROVED
THE OFFER AND THE MERGER (AS DEFINED BELOW) AND DETERMINED THAT THE TERMS OF
THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. THE FACTORS
CONSIDERED BY THE BOARD OF DIRECTORS OF THE COMPANY IN ARRIVING AT ITS
DECISION TO APPROVE THE OFFER AND THE MERGER AND TO RECOMMEND THAT
STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES ARE
DESCRIBED IN THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE
14D-9 (THE "SCHEDULE 14D-9") WHICH IS BEING MAILED TO STOCKHOLDERS OF THE
COMPANY HEREWITH.
The Company's financial advisor, NationsBanc Montgomery Securities LLC
("NationsBanc Montgomery"), has delivered its opinion dated May 13, 1998 that,
as of such date, and subject to the conditions and limitations set forth
therein, the consideration to be received by holders of Shares in the Offer
and the Merger is fair, from a financial point of view. Such opinion is set
forth in full as an Annex to the Schedule 14D-9.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of May 13, 1998 (the "Merger Agreement"), among Parent, Purchaser and the
Company pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, a merger (the "Merger") will be
effected under the terms of which either: (i) in the event that Parent and
Purchaser acquire, pursuant to the Offer or otherwise, less than 90% of the
outstanding Shares, Purchaser will be merged with and into the Company, with
the Company surviving the Merger; or (ii) in the event that Parent and
Purchaser acquire, pursuant to the Offer or otherwise, 90% or more of the
outstanding Shares, and Parent determines to use the "short-form" merger
procedure described below, the Company will be merged with and into Purchaser,
with Purchaser surviving the Merger (the entity surviving either of the
transactions described in clauses (i) and (ii) of this sentence being
hereinafter referred to as, the "Surviving Corporation"). Irrespective of how
the Merger is structured, the Surviving Corporation will be a wholly-owned
subsidiary of Parent. In the Merger, each outstanding Share (other than Shares
held by stockholders who properly demand their appraisal rights under
1
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Massachusetts law, Shares held in the Company's treasury and Shares owned by
Parent or Purchaser) will be converted into the right to receive in cash,
without interest, the cash price per Share paid pursuant to the Offer (the
"Merger Consideration"). See Section 12.
The Merger is subject to a number of conditions, including the approval by
stockholders of the Company, if such approval is required by applicable law.
Under the terms of the financing commitment obtained by Parent and Purchaser
for the Interim Facility (as defined in Section 10) of $90 million of debt
financing for the transactions contemplated by the Merger Agreement as
described in Section 10, it is a condition to Parent borrowing thereunder that
(i) concurrently with the funding of the Offer, at least 90% of the
outstanding Shares shall be acquired by Purchaser and (ii) both the funding of
the Offer and the consummation of the Merger occur on the same date. See
Section 10. Therefore, the Merger Agreement provides that the Offer is
conditioned upon, among other things, the satisfaction of the Minimum
Condition described below and that if the Minimum Condition is satisfied,
Parent, at its request, may cause the Company to be merged into Purchaser
pursuant to the "short-form" merger provisions of the Massachusetts Business
Corporation Law (the "MBCL"), without a meeting of stockholders of the
Company, on the same day as the purchase of and payment for Shares is made by
Purchaser pursuant to the Offer. In such event, stockholders of the Company
(other than Parent and Purchaser and stockholders who properly demand their
appraisal rights under Massachusetts law) will receive the Merger
Consideration for each Share held on the date of the Merger. Purchaser has
reserved the right in its sole discretion to waive any of the conditions to
the Offer, including the Minimum Condition, provided that no such waiver of
the Minimum Condition shall decrease the Minimum Condition to less than 66
2/3% of the Shares outstanding on a fully diluted basis. However, Purchaser
does not intend to waive the Minimum Condition unless the above-described
conditions in the financing commitment for the Interim Facility are also
waived by the lenders thereunder. If the Minimum Condition is so waived by
Purchaser, a vote of the Company's stockholders will be required under the
MBCL and a significantly longer period of time will be required to effect the
Merger. See Section 12.
In connection with the execution of the Merger Agreement, Parent and
Purchaser entered into a Tender and Voting Agreement, dated as of May 13, 1998
(the "Tender and Voting Agreement"), with Joseph Crugnale, the Company's
Founder, Chairman of the Board, President and Chief Executive Officer. Mr.
Crugnale beneficially owns an aggregate of 2,174,772 Shares (which Shares
represent approximately 24.4% of the Shares outstanding and approximately
23.06% of the Shares outstanding on a fully diluted basis). Pursuant to the
Tender and Voting Agreement, Mr. Crugnale has agreed to validly tender
pursuant to the Offer and not withdraw all Shares which are beneficially owned
by him prior to the Expiration Date.
The Merger Agreement and the Tender and Voting Agreement are more fully
described in Section 12.
The Minimum Condition. Consummation of the Offer is conditioned upon, among
other things, there being validly tendered and not withdrawn prior to the
expiration of the Offer that number of Shares, which, together with the Shares
then beneficially owned by Parent or Purchaser, represent at least 90% of all
outstanding Shares (determined on a fully diluted basis on the Expiration Date
(as defined in Section 1)) (the "Minimum Condition").
In the Merger Agreement, the Company represented that on May 13, 1998 it had
issued and outstanding 8,908,621 Shares and outstanding stock options to
purchase an aggregate of 521,050 Shares. For purposes of the Offer, "fully
diluted basis" assumes that only 352,975 Shares subject to stock options with
exercise prices at or below the Offer Price and that are vested or that will
vest as a result of the transactions contemplated by the Merger Agreement are
presently exercisable. Of the Shares outstanding, Parent owns 430,000 Shares
or approximately 4.8% of the Shares outstanding and approximately 4.56% of the
Shares outstanding on a fully diluted basis. The Shares beneficially owned by
Parent were acquired in open market purchases. See Schedule II which sets
forth transactions in the Shares effected during the past 60 days by Parent,
Purchaser and their affiliates.
BASED ON THE FOREGOING, THE MINIMUM CONDITION WILL BE SATISFIED IF AT LEAST
7,905,437 SHARES (INCLUDING THE 2,174,772 SHARES SUBJECT TO THE TENDER AND
VOTING AGREEMENT) ARE VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE
EXPIRATION DATE. The actual number of Shares required to be tendered to
satisfy the Minimum
2
<PAGE>
Condition will depend upon the actual number of Shares outstanding on the date
Purchaser accepts Shares for payment pursuant to the Offer.
The Financing Condition. Purchaser's obligation to purchase Shares pursuant
to the Offer is conditioned upon, among other things, sufficient financing
being obtained by Parent and Purchaser to fund the purchase of Shares tendered
in the Offer, consummate the Merger, refinance certain existing indebtedness
of the Company and of Parent and to pay all related fees and expenses of the
transaction pursuant to the terms of the financing commitments described in
Section 10 ("Source and Amount of Funds") or such other terms as Parent and
the Company shall agree or as are not materially more onerous than as set
forth in such commitments (the "Financing Condition"). Parent and Purchaser
have agreed to use commercially reasonable efforts to satisfy the Financing
Condition.
As described in Section 10, Parent has obtained a commitment for an Interim
Facility of $90 million of debt financing for the transactions contemplated by
the Merger Agreement. However, as more fully discussed in Section 10, Parent
and Purchaser expect to obtain such $90 million of debt financing through a
private placement pursuant to Rule 144A ("Rule 144A") promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), of $90 million
principal amount of senior unsecured notes (the "Senior Notes"). Therefore, it
is Parent's intention not to borrow under the Interim Facility unless the sale
of the Senior Notes pursuant to Rule 144A cannot be consummated prior to the
expiration of the Offer. ACCORDINGLY, IF THE SALE OF THE SENIOR NOTES PURSUANT
TO RULE 144A HAS NOT BEEN CONSUMMATED ON OR PRIOR TO THE INITIAL EXPIRATION
DATE, PURCHASER INTENDS TO EXTEND THE EXPIRATION DATE FROM TIME TO TIME FOR A
PERIOD NOT TO EXTEND BEYOND JULY 31, 1998 UNTIL THE SALE OF THE SENIOR NOTES
HAS BEEN CONSUMMATED AND THE OTHER CONDITIONS TO THE OFFER HAVE BEEN SATISFIED
OR WAIVED.
Certain other conditions to consummation of the Offer are described in
Section 14. Purchaser expressly reserves the right, in its sole discretion, to
waive any one or more of the conditions to the Offer. See Section 14.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not withdrawn in accordance with
Section 4. The term "Expiration Date" means 12:00 midnight, New York City
time, on Wednesday, June 17, 1998, unless and until Purchaser, in its sole
discretion, shall have extended the period of time during which the Offer is
open, in which event the term "Expiration Date" shall mean the latest time and
date at which the Offer, as so extended by Purchaser, shall expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition and the Financing Condition. See Section 14. If any or all
of such conditions are not satisfied prior to the Expiration Date, Purchaser
expressly reserves the right, in its sole discretion, at any time and from
time to time, to (i) decline to purchase any of the Shares tendered and
terminate the Offer, subject to the terms of the Merger Agreement, (ii) waive
any of the conditions to the Offer (including the Minimum Condition, provided
that no such waiver of the Minimum Condition shall decrease the Minimum
Condition to less than 66 2/3%), to the extent permitted by applicable law and
the provisions of the Merger Agreement, and, subject to complying with the
applicable rules and regulations of the Securities and Exchange Commission
(the "Commission"), purchase all Shares validly tendered, (iii) subject to the
terms of the Merger Agreement, extend the Offer and, subject to the right of
stockholders to withdraw Shares until the Expiration Date, retain the Shares
which will have been tendered during the period or periods for which the Offer
is extended or (iv) subject to the terms of the Merger Agreement, amend the
Offer.
Subject to the terms of the Merger Agreement, Purchaser expressly reserves
the right, in its sole discretion, at any time or from time to time, and
regardless of whether or not any of the events set forth in Section 14
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hereof shall have occurred or shall have been determined by Purchaser to have
occurred (i) to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any Shares, by
giving oral or written notice of such extension to the Depositary and (ii)
except as indicated below, to amend the Offer in any respect by giving oral or
written notice of such amendment to the Depositary. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY PURCHASER FOR THE
TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN
MAKING SUCH PAYMENT.
Purchaser has agreed in the Merger Agreement that it will not, without the
prior written consent of the Company (i) decrease the price per Share payable
in the Offer, (ii) decrease the maximum number of Shares to be purchased in
the Offer, (iii) impose conditions to the Offer in addition to those set forth
in Section 14, (iv) change the conditions to the Offer in any material respect
adverse to the Company, (v) except as provided in the next sentence, extend
the Offer, (vi) change the form of consideration payable in the Offer or (vii)
amend any other term of the Offer in a manner adverse to the holders of the
Shares. Notwithstanding the foregoing, pursuant to the Merger Agreement,
Purchaser may, without the consent of the Company, (i) extend the Offer beyond
any scheduled expiration date for a period not to extend beyond July 31, 1998,
if at any scheduled expiration date of the Offer, any of the conditions to
Purchaser's obligation to accept for payment, and pay for, Shares (including,
with respect to the Financing Condition, the consummation of the sale of the
Senior Notes) shall not be satisfied or waived, until such time as such
conditions are satisfied or waived and (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Commission
or the staff thereof applicable to the Offer.
The rights reserved by Purchaser as set forth above are in addition to
Purchaser's rights to terminate the Offer pursuant to Section 14. Any
extension, amendment or termination will be followed as promptly as
practicable by public announcement thereof, the announcement in the case of an
extension to be made no later than 9:00 a.m., New York City time, on the next
business day (as defined below) after the previously scheduled Expiration Date
in accordance with the public announcement requirements of Rule 14e-1(d) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Subject
to applicable law (including, without limitation, Rules 14d-4(c) and 14d-6(d)
under the Exchange Act, which require that material changes in the information
published, sent or given in connection with the Offer be promptly disseminated
to stockholders in a manner reasonably designed to inform stockholders of such
changes) and without limiting the manner in which Purchaser may choose to make
any public announcement, Purchaser shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a press release to the Dow Jones News Service.
If Purchaser extends the Offer (whether before or after its acceptance for
payment of Shares), is delayed in its payment for Shares or is unable to pay
for Shares pursuant to the Offer for any reason, then, without prejudice to
Purchaser's rights under the Offer, the Depositary may retain tendered Shares
on behalf of Purchaser, and such Shares may not be withdrawn except to the
extent tendering stockholders are entitled to withdrawal rights as described
in Section 4. However, the ability of Purchaser to delay the payment for
Shares which Purchaser has accepted for payment is limited by Rule 14e-1(c)
under the Exchange Act, which requires that a bidder pay the consideration
offered or return the securities deposited by or on behalf of holders of
securities promptly after the termination or withdrawal of such bidder's
offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials (including any
public announcement as set forth above) and extend the Offer to the extent
required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The
minimum period during which the Offer must remain open following material
changes in the terms of the Offer or information concerning the Offer, other
than a change in price or a change in percentage of securities sought, will
depend upon the facts and circumstances, including the relative materiality of
the changes in the terms or information. With respect to a change in price or
a change in the percentage of securities sought, a minimum period of ten
business days is generally required to allow for adequate dissemination to
stockholders and investor response. If, prior to the Expiration Date,
Purchaser should decide to increase the price per Share being offered in the
Offer, such increase will be applicable to all stockholders whose Shares are
accepted for payment pursuant to the Offer and, if at the time notice of any
such
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increase is first published, sent or given to holders of such Shares, the
Offer is scheduled to expire at any time earlier than the period ending on the
tenth business day from and including the date that such notice is first so
published, sent or given, the Offer will be extended at least until the
expiration of such ten business day period. The Merger Agreement provides
that, without the Company's prior written consent, Purchaser will not decrease
the price or number of Shares sought in the Offer. As used in this Offer to
Purchase, the term "business day" has the meaning set forth in Rule 14d-1
under the Exchange Act.
The Company has provided Purchaser with its list of stockholders and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal and, if required, other relevant materials will be mailed to
record holders of Shares and will be furnished to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the Company's stockholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will purchase, by accepting for payment, and will pay
for, all Shares validly tendered prior to the Expiration Date (and not
properly withdrawn in accordance with Section 4) promptly after the Expiration
Date. Any determination concerning the satisfaction of such terms and
conditions shall be within the sole discretion of Purchaser and such
determination shall be final and binding on all tendering stockholders. See
Sections 1 and 14.
Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of, or, payment for, Shares in order to comply in whole
or in part with any applicable law, including, without limitation, The Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations thereunder (the "HSR Act"). Any such delays will be effected in
compliance with Rule 14e-1(c) under the Exchange Act (relating to a bidder's
obligation to pay for or return tendered securities promptly after the
termination or withdrawal of such bidder's offer). In all cases, payment for
Shares tendered and accepted for payment pursuant to the Offer will be made
only after timely receipt by the Depositary of (i) certificates for (or a
timely Book-Entry Confirmation (as defined below) with respect to) such
Shares, (ii) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, together with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message (as defined
below), and (c) any other documents required by the Letter of Transmittal. THE
PER SHARE CONSIDERATION PAID TO ANY STOCKHOLDER PURSUANT TO THE OFFER WILL BE
THE HIGHEST PER SHARE CONSIDERATION PAID TO ANY OTHER STOCKHOLDER PURSUANT TO
THE OFFER.
Parent expects to file soon their Notification and Report Form with respect
to the Offer under the HSR Act. The waiting period under the HSR Act with
respect to the Offer will expire at 11:59 p.m., New York City time, on the
fifteenth day after the date Parent's form is filed, unless early termination
of the waiting period is granted. Before such time, however, the Antitrust
Division of the United States Department of Justice (the "Antitrust Division")
or the United States Federal Trade Commission (the "FTC") may extend the
waiting period by requesting additional information or documentary material
from Parent. If such request is made, such waiting period will expire at 11:59
p.m., New York City time, on the tenth calendar day after substantial
compliance by Parent with such request. See Section 15 hereof for additional
information concerning the HSR Act and applicability of the antitrust laws to
the Offer.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment. Payment for
Shares accepted pursuant to the Offer will be made by deposit of the aggregate
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to such tendering stockholders. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY PURCHASER FOR THE
TENDERED SHARES,
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REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If, for any reason whatsoever, Purchaser is delayed in its acceptance for
payment of or payment for any Shares tendered pursuant to the Offer, or
Purchaser is unable to accept for payment or pay for Shares tendered pursuant
to the Offer, then, without prejudice to Purchaser's rights under the Offer
(but subject to compliance with Rule 14e-1(c) under the Exchange Act, which
requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after termination or withdrawal of the tender
offer), the Depositary may, nevertheless, on behalf of Purchaser, retain
tendered Shares and such Shares may not be withdrawn except to the extent that
under the Offer tendering stockholders are entitled to exercise and duly
exercise withdrawal rights as described in Section 4.
If any tendered Shares are not purchased pursuant to the Offer, certificates
for any such Shares will be returned, without expense to the tendering
stockholder (or, in the case of Shares tendered by book-entry transfer into
the Depositary's account at a Book-Entry Transfer Facility (as defined below)
pursuant to the procedure set forth in Section 3, such Shares will be credited
to an account maintained at such Book-Entry Transfer Facility), as promptly
practicable as after the expiration or termination of the Offer.
Purchaser reserves the right to transfer or assign, in whole at any time or
in part from time to time, to one or more of its affiliates or the affiliates
of Parent the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering stockholders to receive payment for Shares validly
tendered and accepted for payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES.
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (i) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, together with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents, must be received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase prior to the Expiration
Date and either the certificates for tendered Shares must be received by the
Depositary at one of its addresses or such Shares must be delivered pursuant
to the procedure for book-entry transfer described below (and a Book-Entry
Confirmation must be received by the Depositary), in each case, prior to the
Expiration Date, or (ii) the tendering stockholder must comply with the
guaranteed delivery procedures described below.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company and the Philadelphia Depository
Trust Company (the "Book-Entry Transfer Facilities") for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in any of the Book-Entry Transfer
Facilities' systems may make book-entry transfer of Shares by causing a Book-
Entry Transfer Facility to transfer such Shares into the Depositary's account
at a Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for transfer. However, although delivery of Shares may
be effected through book-entry transfer at a Book-Entry Transfer Facility, the
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or, in the case of
a book-entry transfer, an Agent's Message, and any other required documents,
must, in any case, be transmitted to and received by the Depositary at one of
its addresses set forth on the back cover of this Offer to Purchase prior to
the Expiration Date, or the tendering stockholder must comply with the
guaranteed delivery procedures described below. The confirmation of a book-
entry transfer of Shares into the Depositary's account at a Book-Entry
Transfer Facility as described above is referred to herein as a "Book-Entry
Confirmation." DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry
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Transfer Facility has received an express acknowledgment from the participant
in such Book-Entry Transfer Facility tendering the Shares that such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that Purchaser may enforce such agreement against the
participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL
BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING,
IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY
IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED,
IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE
TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant
in any of the Book Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (ii) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in
the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on the
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal.
If the certificates for Shares are registered in the name of a person other
than the signer of the Letter of Transmittal or if payment is to be made, or
certificates for Shares not accepted for payment or not tendered are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates must be endorsed or accompanied by
appropriate stock powers, in either case, signed exactly as the names of the
registered holders appear on the certificates, with the signatures on the
certificates or stock powers guaranteed as described above. See Instructions 1
and 5 of the Letter of Transmittal.
If the certificates for Shares are forwarded separately to the Depositary, a
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, must accompany each such delivery.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser herewith, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the certificates for (or a Book-Entry Confirmation with respect to)
all tendered Shares, in proper form for transfer together with a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed,
together with any required signature guarantees (or, in the case of a book-
entry transfer, an Agent's Message) and any other required documents are
received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day
on which the Nasdaq National Market (the "Nasdaq National Market") operated
by the National Association of Securities Dealers, Inc. (the "NASD") is
open for business.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by telegram, facsimile transmission or mail, to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the
Notice of Guaranteed Delivery.
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Notwithstanding any other provisions hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and (c) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders may be paid at different
times depending upon when certificates for Shares or Book-Entry Confirmations
with respect to such Shares are actually received by the Depositary. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY
PURCHASER FOR THE TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING SUCH PAYMENT.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment as Proxy. By executing a Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's attorneys-in-fact and proxies, in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of such stockholder's rights with respect to the Shares tendered by
such stockholder and accepted for payment by Purchaser (and any and all non-
cash dividends, distributions, rights or other securities issued or issuable
in respect of such Shares on or after the date of this Offer to Purchase). All
such proxies shall be considered coupled with an interest in the tendered
Shares. Such appointment will be effective if, when and only to the extent
that Purchaser accepts such Shares for payment pursuant to the Offer as
provided herein. Upon such acceptance for payment, all prior powers of
attorney, proxies and consents given by such stockholder with respect to such
Shares and other securities or rights will, without further action, be
revoked, and no subsequent powers of attorney, proxies, consents or
revocations may be given (and, if given, will not be deemed effective). The
designees of Purchaser will thereby, with respect to the Shares and other
securities or rights for which the appointment is effective, be empowered to
exercise all voting and other rights with respect to such Shares or other
securities or rights, including, without limitation, in respect of any annual,
special, adjourned or postponed meeting of the Company's stockholders, actions
by written consent in lieu of any such meeting or otherwise, as they in their
sole discretion deem proper. Purchaser reserves the right to require that, in
order for Shares to be deemed validly tendered, immediately upon Purchaser's
acceptance for payment of such Shares, Purchaser must be able to exercise full
voting, consent and other rights with respect to such Shares and other
securities or rights, including voting at any meeting of stockholders then
scheduled.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by Purchaser, in its sole discretion, and its determination
will be final and binding on all parties. Purchaser reserves the absolute
right to reject any or all tenders of Shares determined by it not to be in
proper form or if the acceptance for payment of, or payment for, such Shares
may, in the opinion of Purchaser's counsel, be unlawful. Purchaser also
reserves the absolute right, in its sole discretion, subject to the provisions
of the Merger Agreement, to waive any of the conditions of the Offer or any
defect or irregularity in any tender with respect to Shares of any particular
stockholder, whether or not similar defects or irregularities are waived in
the case of other stockholders. No tender of Shares will be deemed to have
been validly made until all defects and irregularities have been cured or
waived. None of Parent, Purchaser, the Depositary, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure to give any
such notification. Purchaser's interpretation of the terms and conditions of
the Offer (including the Letter of Transmittal and the instructions thereto)
will be final and binding.
Backup Withholding. In order to avoid "backup withholding" of Federal income
tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalty of perjury that such number is
correct and that such stockholder is not subject to backup
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withholding. If a stockholder does not provide such stockholder's correct TIN
or fails to provide the certifications described above, the Internal Revenue
Service (the "IRS") may impose a penalty on such stockholder and payment of
cash to such stockholder pursuant to the Offer may be subject to backup
withholding of 31%. All stockholders surrendering Shares pursuant to the Offer
should complete and sign the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary
to avoid backup withholding (unless an applicable exemption exists and is
proved in a manner satisfactory to Purchaser and the Depositary). Certain
stockholders (including, among others, all corporations and certain foreign
individuals and entities) are not subject to backup withholding. Noncorporate
foreign stockholders should complete and sign the main signature form and a
Form W-8, Certificate of Foreign Status, a copy of which may be obtained from
the Depositary, in order to avoid backup withholding. See the Letter of
Transmittal.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn pursuant to the procedures set forth below at any time prior
to the Expiration Date and, unless theretofore accepted for payment and paid
for by Purchaser pursuant to the Offer, may also be withdrawn at any time
after July 18, 1998.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder, if different from that of the person who tendered such Shares. If
certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then prior to the physical release of such
certificates, the serial numbers shown on such certificates must also be
submitted to the Depositary, and, unless such Shares have been tendered by an
Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been tendered pursuant
to the procedure for book-entry transfer as set forth in Section 3, any notice
of withdrawal must also specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with such withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not to be validly tendered for purposes of
the Offer. However, withdrawn Shares may be rendered by following one of the
procedures described in Section 3 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
and its determination will be final and binding. None of Parent, Purchaser,
the Depositary, the Information Agent or any other person will be under any
duty to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local or foreign tax laws. The tax
consequences of such receipt may vary depending upon, among other things, the
particular circumstances of the stockholder.
In general, a stockholder who receives cash for Shares pursuant to the Offer
or the Merger will recognize gain or loss for federal income tax purposes
equal to the difference between the amount of cash received in exchange for
the Shares sold and such stockholder's adjusted tax basis in such Shares.
Provided that the Shares constitute capital assets in the hands of the
stockholder, such gain or loss will be capital gain or loss, and any capital
gain will be subject to a maximum tax rate of 28% if the stockholder is an
individual and has held the Shares for more than one year at the time of sale,
and a maximum rate of 20% if the stockholder is an individual and at the time
of disposition has held the Shares for more than 18 months. Gain or loss will
be calculated
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separately for each block of Shares (i.e., Shares acquired at the same time
and price) exchanged pursuant to the Offer or the Merger.
A STOCKHOLDER (OTHER THAN CERTAIN EXEMPT STOCKHOLDERS) WHO TENDERS SHARES
MAY BE SUBJECT TO 31% BACKUP WITHHOLDING UNLESS THE STOCKHOLDER PROVIDES HIS
OR HER TIN AND CERTIFIES UNDER PENALTY OF PERJURY THAT SUCH NUMBER IS CORRECT
AND THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING. A STOCKHOLDER
WHO DOES NOT FURNISH HIS OR HER TIN MAY BE SUBJECT TO A PENALTY IMPOSED BY THE
INTERNAL REVENUE SERVICE. EACH STOCKHOLDER SHOULD COMPLETE AND SIGN THE
SUBSTITUTE FORM W-9 INCLUDED AS PART OF THE LETTER OF TRANSMITTAL SO AS TO
PROVIDE THE INFORMATION AND CERTIFICATION NECESSARY TO AVOID BACKUP
WITHHOLDING.
If backup withholding applies, the payor is required to withhold 31% from
payments. This is not an additional tax; the amount of the backup withholding
can be credited against the tax liability of the person subject to the backup
withholding. If backup withholding results in an overpayment of tax, a refund
can be obtained upon filing an income tax return.
THE DISCUSSION OF UNITED STATES FEDERAL INCOME TAX CONSEQUENCES SET FORTH
ABOVE IS FOR GENERAL INFORMATION ONLY AND IS BASED ON EXISTING LAW AS OF THE
DATE OF THIS OFFER TO PURCHASE. THIS DISCUSSION MAY NOT BE APPLICABLE TO
CERTAIN TYPES OF STOCKHOLDERS, INCLUDING STOCKHOLDERS WHO ACQUIRED SHARES
PURSUANT TO THE EXERCISE OF STOCK OPTIONS OR OTHERWISE AS COMPENSATION OR WHO
HOLD THEIR SHARES AS PART OF A "CONVERSION TRANSACTION," AS DEFINED IN SECTION
1258(C) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),
INDIVIDUALS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES AND FOREIGN
ENTITIES, OR ENTITIES THAT ARE OTHERWISE SUBJECT TO SPECIAL TAX TREATMENT
UNDER THE CODE (SUCH AS INSURANCE COMPANIES, TAX-EXEMPT ENTITIES, DEALERS IN
SECURITIES AND REGULATED INVESTMENT COMPANIES). STOCKHOLDERS OF THE COMPANY
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM OF THE OFFER AND THE MERGER (INCLUDING THE APPLICABILITY
AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS, AND POSSIBLE
CHANGES IN SUCH TAX LAWS, WHICH MAY HAVE RETROACTIVE EFFECT).
6. PRICE RANGE OF SHARES.
The Shares are traded in the over-the-counter market and prices are quoted
on the Nasdaq National Market under the symbol "BERT." The following table
sets forth, for the periods indicated, the high and low sale price per Share
as reported by the Nasdaq National Market and as reported in published
financial sources.
<TABLE>
<CAPTION>
SALES PRICE
----------------
HIGH LOW
--------- ------
<S> <C> <C>
Fiscal 1996:
Fiscal Quarter Ended April 20, 1996.......................... $ 6 $4 1/2
Fiscal Quarter Ended July 13, 1996........................... 7 1/4 4 7/8
Fiscal Quarter Ended October 5, 1996......................... 5 3/8 4 1/4
Fiscal Quarter Ended December 28, 1996....................... 6 1/8 4 1/2
Fiscal 1997:
Fiscal Quarter Ended April 19, 1997.......................... 6 5/8 5
Fiscal Quarter Ended July 19, 1997........................... 7 1/16 5 1/4
Fiscal Quarter Ended October 4, 1997......................... 7 5 3/8
Fiscal Quarter Ended December 27, 1997....................... 6 13/16 5 3/4
Fiscal 1998:
Fiscal Quarter Ended April 18, 1998.......................... 10 6
Fiscal Quarter through May 19, 1998.......................... 10 9/32 9 5/8
</TABLE>
10
<PAGE>
On May 13, 1998, the last full trading day before the first public
announcement of the execution of the Merger Agreement, the last reported sales
price of the Shares on the Nasdaq National Market was $9 7/8 per Share. On May
19, 1998, the last full trading day before commencement of the Offer, the last
reported sales price of the Shares on the Nasdaq National Market was $10 3/16
per Share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE
SHARES.
The Company has not paid cash dividends on its Common Stock to date and does
not plan to pay cash dividends to its stockholders in the foreseeable future.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ QUOTATION AND
EXCHANGE ACT REGISTRATION.
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and could reduce the number of
holders of Shares, which could adversely affect the liquidity and market value
of the remaining Shares held by the public.
The Shares are currently included in the Nasdaq National Market. Depending
upon the number of Shares purchased pursuant to the Offer, the Shares may no
longer meet the requirements of the NASD for continued inclusion in the Nasdaq
National Market (the top tier of the Nasdaq Stock Market), which requires that
an issuer have at least 200,000 publicly held shares, held by at least 400
stockholders or 300 stockholders of round lots, with a market value of at
least $1,000,000 and have net tangible assets of at least $1,000,000,
$2,000,000 or $4,000,000, depending on profitability levels during the
issuer's four most recent fiscal years. If these standards are not met, the
Shares might nevertheless continue to be included in The Nasdaq Stock Market
with quotations published in the Nasdaq's "additional list" or in one of the
"local lists," but if the number of holders of the Shares were to fall below
300, or if the number of publicly held Shares were to fall below 100,000 or
there were not at least two registered and active market-makers for the
Shares, the NASD's rules provide that the Shares would no longer be
"qualified" for reporting in The Nasdaq Stock Market and The Nasdaq Stock
Market would cease to provide any quotations. Shares held directly or
indirectly by directors, officers or beneficial owners of more than 10% of the
Shares are not considered as being publicly held for this purpose. According
to the Company, as of May 13, 1998, there were approximately 641 holders of
record of Shares and 8,908,621 Shares were outstanding. If, as a result of the
purchase of Shares pursuant to the Offer, the Shares no longer meet the
requirements of the NASD for inclusion in the Nasdaq National Market or in any
other tier of The Nasdaq Stock Market and the Shares are no longer included in
the Nasdaq National Market or in any other tier of The Nasdaq Stock Market, as
the case may be, the market for the Shares could be adversely affected.
In the event that the Shares no longer meet the requirements of the NASD for
quotation through any tier of The Nasdaq Stock Market, it is possible that the
Shares would continue to trade in the over-the-counter market and that price
quotations would be reported by other sources. The extent of the public market
for the Shares and the availability of such quotations would however, depend
upon such factors as the number of holders of Shares remaining at such time,
the interests in maintaining a market in Shares on the part of securities
firms, the possible termination of registration of the Shares under the
Exchange Act, as described below, and other factors.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are not listed on a national
securities exchange, quoted on an automated inter-dealer quotation system or
held by 300 or more holders of record. Termination of registration of the
Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to it stockholders and to the
Commission and would make certain provisions of the Exchange Act no longer
applicable to the Company, such as the short-swing profit recovery provisions
of Section 16(b) of the Exchange Act, the requirement of furnishing a proxy
statement in connection with stockholders' meetings pursuant to Section 14(a)
of the Exchange Act and the related requirement of furnishing an annual report
to stockholders, and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going-private" transactions. Furthermore, the ability of,
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act may be impaired or eliminated. Purchaser
intends to seek to cause the Company to apply for termination of registration
of the Shares under the Exchange Act as soon after consummation of the Offer
as the requirements for such termination are met.
11
<PAGE>
If registration of the Shares is not terminated prior to the Merger, then
the Shares will cease to be reported on The Nasdaq Stock Market and the
registration of the Shares under the Exchange Act will be terminated following
consummation of the Merger.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), which has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. Depending upon factors similar
to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for purposes of the margin regulations of the Federal
Reserve Board, and therefore could no longer be used as collateral for loans
made by brokers. In any event, the Shares will cease to be "margin securities"
if registration of the Shares under the Exchange Act is terminated.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
General. The information concerning the Company contained in this Offer to
Purchase, including financial information, has been taken from or is based
upon publicly available documents and records on file with the Commission and
other public sources. Neither Parent nor Purchaser assumes any responsibility
for the accuracy or completeness of the information concerning the Company
contained in such documents and records or for any failure by the Company to
disclose events which may have occurred or may affect the significance or
accuracy of any such information but which are unknown to Parent or Purchaser.
The Company is a Massachusetts corporation with its principal executive
offices located at 14 Audubon Road, Wakefield, Massachusetts 01880. The
following description of the Company's business has been taken from the
Company's Annual Report on Form 10-K for the fiscal year ended December 27,
1997 (the "Company's 1997 10-K"). As of fiscal year end December 27, 1997,
Bertucci's operated a chain of 84 full-service, Italian restaurants under the
"Bertucci's Brick Oven Pizzeria" name in the Northeastern and Mid-Atlantic
regions and the Chicago, Illinois and Atlanta, Georgia, metropolitan areas.
The restaurants' menu features original-recipe gourmet pizza prepared in brick
ovens and other high-quality, moderately-priced Italian food. In addition,
Bertucci's also operates Sal and Vinnie's Sicilian Steakhouse, which was
opened in the first quarter of 1997 in Norwood, Massachusetts. For the year
ended December 27, 1997, the average check per customer at Bertucci's
restaurants, including beverages, was approximately $7.40 for lunch and
approximately $9.95 for dinner.
Selected Financial Information. Set forth below is certain selected
consolidated financial information with respect to the Company excerpted or
derived from the (i) audited financial information of the Company contained in
the Company's 1997 10-K and (ii) unaudited financial information of the
Company as of and for the 16 week periods ended April 18, 1998 and April 19,
1997 that was furnished to Parent and Purchaser by the Company. More
comprehensive financial information is included in the Company's 1997 10-K and
other documents filed with the Commission, and the following information is
qualified in its entirety by reference to the Company's 1997 10-K and other
documents, including the financial information and related notes contained
therein. The Company's 1997 10-K and such other documents maybe inspected and
copies may be obtained from the offices of the Commission or the Nasdaq
National Market in the manner set forth below under "Available Information."
12
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED PERIOD ENDED
----------------------------------------------------- -----------------------------
DECEMBER 30, 1995 DECEMBER 28, 1996 DECEMBER 27, 1997 APRIL 19, 1997 APRIL 18, 1998
(52 WEEKS) (52 WEEKS) (52 WEEKS) (16 WEEKS) (16 WEEKS)
----------------- ----------------- ----------------- -------------- --------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA AND NUMBER OF RESTAURANTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $120,260 $128,044 $136,720 $ 40,337 $ 43,956
Cost and expenses:
Cost of sales......... 31,060 32,484 34,102 10,118 10,925
Operating expenses.... 60,673 65,986 71,652 20,944 23,165
General and
administrative
expenses............. 8,239 7,720 8,828 2,432 3,097
Depreciation and
amortization......... 9,083 8,781 8,626 2,719 2,789
Taxes other than
income............... 6,268 6,633 6,990 2,181 2,370
Restaurant closing
expense.............. 5,336 -- -- -- --
-------- -------- -------- -------- --------
Total costs and
expenses........... 120,659 121,604 130,198 38,395 42,346
-------- -------- -------- -------- --------
Operating (loss)
income................. (399) 6,440 6,522 1,942 1,610
Interest expense, net... 1,253 1,297 1,037 367 299
Interest income......... 21 15 32 3 1
-------- -------- -------- -------- --------
(Loss) income before
income tax (benefit)
expense ............. (1,631) 5,158 5,517 1,579 1,312
Income tax (benefit)
expense ............... (745) 1,933 2,009 576 476
-------- -------- -------- -------- --------
Net (loss) income..... $ (886) $ 3,225 $ 3,508 $ 1,003 $ 836
======== ======== ======== ======== ========
(Loss) earnings per
common share--basic.... $ (0.10) $ 0.37 $ 0.40 $ 0.11 $ 0.09
======== ======== ======== ======== ========
(Loss) earnings per
common share--diluted.. $ (0.10) $ 0.36 $ 0.39 $ 0.11 $ 0.09
======== ======== ======== ======== ========
RESTAURANT OPERATING
DATA:
Average sales per
restaurant open for
full period............ $ 1,673 $ 1,671 $ 1,712 $ 1,680 $ 1,685
Percentage change in
average sales per
restaurant open for
full period............ (8.4)% (0.1)% 2.5% (1.2)% 0.3%
Percentage change in
comparable restaurant
sales.................. (2.0)% 1.0% 2.5% 1.0% 3.2%
Number of restaurants:
Restaurants open at
beginning of period.. 67 76 80 80 85
Restaurants opened.... 9 7 5 1 --
Restaurants closed.... -- (3) -- -- --
-------- -------- -------- -------- --------
Total restaurants
open at end of
period............. 76 80 85 81 85
======== ======== ======== ======== ========
<CAPTION>
AT
-----------------------------------------------------------------------------------
DECEMBER 30, 1995 DECEMBER 28, 1996 DECEMBER 27, 1997 APRIL 19, 1997 APRIL 18, 1998
----------------- ----------------- ----------------- -------------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital
(deficit).............. $ (5,258) $ (2,857) $ (3,740) $ (3,296) $ (2,303)
Total assets............ 98,938 102,528 105,516 101,899 104,843
Long-term debt,
including current
portion................ 19,438 18,438 13,500 16,438 13,500
Shareholders' equity.... 64,092 67,538 71,371 68,610 72,280
</TABLE>
Available Information. The Company is subject to the informational and
reporting requirements of the Exchange Act and is required to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning
the Company's directors
13
<PAGE>
and officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities, any material interests of such persons in
transactions with the Company and other matters is required to be disclosed in
proxy statements distributed to the Company's stockholders and filed with the
Commission. These reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission
located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and also should be available for inspection and copying at prescribed rates at
the following regional offices of the Commission: Seven World Trade Center,
New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can be obtained from
the Public Reference Section of the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Commission also
maintains a site on the world wide web at http://www.sec.gov that contains
reports, proxy statements and other information regarding companies that file
electronically with the Commission. Reports, proxy statements and other
information concerning the Company should also be available for inspection at
the offices of the Nasdaq National Market, 1735 K Street, N.W., Washington,
D.C. 20006.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT.
Purchaser. Purchaser is a newly incorporated Massachusetts corporation
organized in connection with the Offer and the Merger and has not carried on
any activities other than in connection with the Offer and Merger. The
principal executive offices of Purchaser are located at 80A Turnpike Road,
Westborough, Massachusetts 01581. Purchaser is a wholly owned subsidiary of
Parent. Until immediately prior to the time that Purchaser will purchase
Shares pursuant to the Offer, it is not expected that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incidental to its formation and capitalization and the transactions
contemplated by the Offer and the Merger. Due to the fact that Purchaser is
newly formed and has minimal assets and capitalization, no meaningful
financial information regarding Purchaser is available.
Parent. Parent, a Delaware corporation, is a privately owned operator of two
distinct restaurant concepts: Chili's Grill and Bar ("Chili's") and On The
Border ("OTB") restaurants. As of April 21, 1998, Parent operated 33
restaurants, including 31 Chili's and 2 OTB's in five New England states.
Parent develops and operates its restaurants under agreements with Brinker
International, Inc., franchisor of Chili's and OTB.
Both Chili's and OTB restaurants are full-service restaurants, featuring
substantial portions of high quality food at modest prices accompanied by
quick, efficient and friendly table service designed to minimize guest waiting
time and facilitate table turnover.
Chili's restaurants feature a casual atmosphere and a limited menu of
Southwestern style food items, including a variety of hamburgers, fajitas,
chicken, steak and seafood entrees and sandwiches, barbecued ribs, salads,
appetizers and desserts, all prepared fresh daily according to recipes
specified by Chili's. Emphasis is placed on serving substantial portions of
quality food at modest prices. The average check per guest is $10.75. Each
Chili's restaurant has a fully licensed bar serving beer, wine and cocktails.
OTB restaurants feature a casual yet unique atmosphere and a menu of broadly
appealing Tex-Mex food items, including a wide variety of authentic fajitas,
chicken, steak, shrimp, barbecued ribs, enchiladas, burritos and Mexican
specialties, all prepared fresh daily according to recipes specified by OTB.
There is a luncheon menu as well as a full dinner menu. The average check per
guest is $11.43.
Set forth below is (i) certain selected consolidated financial information
with respect to Parent as of and for the years ended December 31, 1995, 1996
and 1997 which has been derived from audited consolidated financial statements
of Parent and (ii) certain unaudited consolidated financial information as of
and for the three months ended March 31, 1997 and 1998 which has been derived
from unaudited consolidated financial statements of Parent. Results for the
three months ended March 31, 1998 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1998. More
comprehensive financial information is included in the historical consolidated
financial statements of Parent filed as an exhibit to the Tender Offer
Statement on Schedule 14D-1 relating to the Offer (the "Schedule 14D-1") filed
with the Commission by Parent and Purchaser and incorporated in their entirety
herein by reference. Such exhibit may be examined and copies may be obtained
at the places and in the manner set forth under "Available Information" in
Section 8. The following summary is qualified in its entirety by reference to
such financial statements.
14
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
------------------------------------- --------------------------------
1995 1996 1997(1) 1997 1998(1)
----------- ----------- ----------- -------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $60,300,069 $70,094,027 $81,363,751 $18,045,014 $ 21,298,113
Cost and expenses:
Cost of sales......... 18,095,226 21,203,336 23,383,851 5,297,115 6,008,114
Operating expenses.... 30,101,147 34,267,183 40,931,889 9,074,654 10,890,339
General and
administrative
expenses............. 3,448,949 3,678,875 4,206,862 973,852 1,100,161
Deferred rent,
depreciation and
amortization......... 3,200,140 3,679,095 3,910,946 1,012,196 966,338
Taxes other than
income............... 2,871,328 3,207,253 3,828,798 931,445 1,026,152
----------- ----------- ----------- -------------- --------------
Total costs and
expenses........... 57,716,790 66,035,742 76,262,346 17,289,262 19,991,104
----------- ----------- ----------- -------------- --------------
Operating income........ 2,583,279 4,058,285 5,101,405 755,752 1,307,009
----------- ----------- ----------- -------------- --------------
Interest expense, net... 462,756 1,053,432 1,917,605 294,456 900,092
----------- ----------- ----------- -------------- --------------
Income before income
tax expense.......... 2,120,523 3,004,853 3,183,800 461,296 406,917
Income tax expense...... 699,338 1,046,407 1,083,470 147,899 120,454
----------- ----------- ----------- -------------- --------------
Net income............ $ 1,421,185 $ 1,958,446 $ 2,100,330 $313,397 $ 286,463
=========== =========== =========== ============== ==============
Earnings per common
share--basic........... $ 0.71 $ 0.98 $ 1.22 $0.16 $ 0.22
=========== =========== =========== ============== ==============
Earnings per common
share--diluted......... $ 0.71 $ 0.98 $ 1.22 $0.16 $ 0.22
=========== =========== =========== ============== ==============
RESTAURANT OPERATING
DATA:
Average sales per
restaurant open for
full period............ $ 2,588,600 $ 2,517,900 $ 2,613,700 $2,380,000 $ 2,635,000
Percentage change in
average sales per
restaurant open for
full period............ (1.3)% (2.7)% 3.8% (2.0)% 10.7%
Percentage change in
comparable restaurant
sales.................. (1.6)% (0.4)% 2.7% (1.6)% 8.5%
Number of restaurants:
Restaurants open at
beginning of period.. 19 26 30 30 32
Restaurants opened.... 7 4 2 1 1
Restaurants closed.... 0 0 0 0 0
----------- ----------- ----------- -------------- --------------
Total restaurants
open at end of
period............. 26 30 32 31 33
=========== =========== =========== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, AT MARCH 31,
--------------------------------------- --------------------------
1995 1996 1997(1) 1997 1998(1)
------------ ----------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital
(deficit).............. $ (4,523,966) $(4,995,937) $ (8,405,564) $ (4,407,246) $ (3,202,841)
Total assets............ 27,847,692 34,340,024 37,336,826 34,031,246 41,846,610
Long-term debt,
including current
portion................ 11,570,000 15,272,950 37,908,338 15,631,573 43,413,046
Stockholders' equity.... 7,498,800 9,457,246 (13,106,854) 9,768,288 (12,820,391)
</TABLE>
- --------
(1) In August 1997, Parent paid a dividend and return of capital distribution
to its stockholders aggregating $16,670,000 and repurchased shares of its
common stock at a cost of $8,261,000; these transactions were funded from
the proceeds of mortgage loans totaling $24,250,000.
15
<PAGE>
The name, citizenship, business address, present principal occupation or
employment and five-year employment history for each of the directors and
executive officers of Purchaser and Parent are set forth in Schedule I hereto.
Schedule II hereto sets forth transactions in the Shares effected during the
past 60 days by Parent, Purchaser and their affiliates. In addition to the
transactions listed on Schedule II, prior to March 21, 1998, Parent purchased
269,000 Shares in open market purchases and, on March 8, 1998, Dennis Pedra,
President and Chief Executive Officer of Parent, purchased 5,000 Shares in
open market purchases at a price of $7.88 per Share. Except as set forth in
this Offer to Purchase and Schedule II hereto, none of Parent, Purchaser or,
to the best knowledge of Parent or Purchaser, any of the persons listed in
Schedule I hereto or any associate or majority owned subsidiary of Parent,
Purchaser or any of the persons so listed, beneficially owns or has the right
to acquire, directly or indirectly, any Shares, and none of Parent or
Purchaser or, to the best knowledge of Parent or Purchaser, any of the other
persons or entities, referred to above, or any of the respective directors,
executive officers or subsidiaries of any of the foregoing has effected any
transaction in the Shares during the past 60 days.
Except as set forth in this Offer to Purchase, none of Parent or Purchaser
or, to the best knowledge of Parent or Purchaser, any of the persons listed in
Schedule I hereto has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company,
including, without limitation, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any securities of the
Company, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss, or the giving or withholding of
proxies. Except as set forth in this Offer to Purchase, none of Parent or
Purchaser or, to the best knowledge of Parent or Purchaser, any of the persons
listed in Schedule I hereto, has had any transactions with the Company or any
of its executive officers, directors or affiliates that would require
reporting under the rules of the Commission.
Except as set forth in this Offer to Purchase, since January 1, 1995, there
have been no contacts, negotiations or transactions between Parent or
Purchaser, or their respective subsidiaries, or, to the best knowledge of
Parent or Purchaser, any of the persons listed in Schedule I hereto, on the
one hand, and the Company or its executive officers, directors or affiliates,
on the other hand, concerning a merger, consolidation or acquisition, tender
offer or other acquisition of securities, election of directors or a sale or
other transfer of a material amount of assets.
10. SOURCE AND AMOUNT OF FUNDS.
Purchaser's obligation to purchase Shares pursuant to the offer is
conditioned upon, among other things, sufficient financing being obtained by
Parent and Purchaser to consummate the transactions contemplated by the Merger
Agreement pursuant to the terms of the financing commitments described below
or such other terms as Parent and the Company shall agree or as are not
materially more onerous than as set forth in such commitments, Parent and
Purchaser have agreed to use commercially reasonable efforts to so obtain such
financing.
The amount required to fund the purchase of Shares tendered in the Offer,
consummate the Merger, refinance certain existing indebtedness of the Company
and of Parent and to pay all related fees and expenses of the transaction, is
estimated to be approximately $128.8 million. Purchaser plans to obtain the
necessary funds through capital contributions or advances made by Parent.
Parent expects to obtain $38.8 million of such funds through the private
placement of shares of common stock of Parent. Parent has received
unconditional subscription agreements from certain of the existing
stockholders of Parent for an aggregate of at least $21.5 million of such
shares and an unconditional subscription agreement from JP Acquisition Fund
II, L.P. ("JPAF") for $18.5 million of such shares. JPAF is a private
investment fund of which an affiliate of Jacobson Partners serves as general
partner. Mr. Benjamin Jacobson, the Chairman of the Board of Parent, is the
Managing General Partner of Jacobson Partners, a New York City firm that
sponsors various private investment funds. Mr. Jacobson leads an investor
group that owns a majority of the shares of capital stock of Parent. Parent
and Purchaser expect to obtain the balance of $90 million of such funds
through the private placement under Rule 144A of $90 million
16
<PAGE>
principal amount of senior unsecured notes (the "Senior Notes") described
below through Chase Securities, Inc. ("CSI") and BancBoston Securities Inc.
("BBSI") (the "Rule 144A Offering"). Parent has engaged CSI and BBSI to
provide capital markets and other financial advisory services in connection
with the initial financing of the Offer and the Merger and to serve as initial
purchasers of the Senior Notes in the Rule 144A Offering. However, under the
terms of such engagement, neither CSI nor BBSI is obligated to place or
purchase the Senior Notes or otherwise provide any financing.
Parent also has received a written commitment described below from The Chase
Manhattan Bank ("Chase") and BankBoston, N.A. ("BankBoston") (collectively,
the "Banks") for the provision of a senior credit facility (the "Interim
Facility") for the transactions contemplated by the Merger Agreement in an
amount of at least $90 million as interim financing if Parent is unable to
issue prior to July 31, 1998 at least $90 million principal amount of the
Senior Notes in the Rule 144A Offering. Under the terms of the Merger
Agreement, either the Company or Parent may terminate the Merger Agreement if
the Offer has not been consummated by July 31, 1998. It is Parent's intention
not to borrow under the Interim Facility unless the sale of the Senior Notes
pursuant to the Rule 144A Offering cannot be consummated prior to the
expiration of the Offer. Accordingly, if the sale of the Senior Notes in the
Rule 144A Offering has not been consummated on or prior to the initial
Expiration Date, Purchaser intends to extend the Expiration Date from time to
time, for a period not to extend beyond July 31, 1998, until the sale of the
Senior Notes has been consummated and the other conditions to the Offer have
been satisfied or waived.
Senior Notes. It is currently anticipated that the Senior Notes will mature
ten years from the date of issuance. Interest on the Senior Notes will be at a
fixed rate to be mutually agreed upon as of the date of issuance based upon
then prevailing market conditions. The Senior Notes will not be redeemable for
a period of five years from issuance, except that up to 35% of the Senior
Notes may be redeemed, at a premium equal to the interest rate on the Senior
Notes, with the proceeds of the issuance of equity securities of Parent.
Thereafter, the Senior Notes will be redeemable at Parent's option, in whole
or in part, at any time and from time to time, at a premium to the principal
amount which shall decline to zero on the ninth anniversary of the date of
issuance. The Senior Notes will be senior obligations of Parent ranking pari
passu in right of payment with all other senior indebtedness of Parent. Upon
the occurrence of a "Change of Control," Parent will be required to offer to
purchase the Senior Notes at 101% of face amount plus accrued interest to the
purchase date.
It is also currently anticipated that the indenture governing the Senior
Notes will contain certain covenants typical for securities of this type,
including covenants limiting the ability of Parent to incur additional
indebtedness, make certain restricted payments, effect certain sales of
assets, effect mergers and consolidations, engage in transactions with
affiliates, permit restrictions of the ability of subsidiaries to make
distributions on their capital stock and engage in certain other transactions,
or grant liens or security interests on its assets.
Parent will be required to file with the Commission and use its best efforts
to cause to become effective a registration statement for the Senior Notes
under the Securities Act within certain specified periods of time.
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO PURCHASE ANY OF THE SENIOR NOTES.
Interim Facility. As noted above, the Banks have issued to Parent a
commitment letter, dated May 13, 1998 (the "Commitment Letter"), pursuant to
which the Banks have committed, subject to certain conditions discussed below,
to provide Parent with the Interim Facility in the amount of $90 million if
Parent is unable to issue the full amount of the Senior Notes at or prior to
the time the Offer and the Merger are consummated (the "Closing Date"). The
commitments of Chase and BankBoston in respect of the Interim Facility are
several and not joint. Although the Banks are committed to provide the entire
amount of the Interim Facility, the Commitment Letter provides that the Banks
intend to syndicate the Interim Facility to a group of financial institutions
(together with the Banks, the "Lenders") identified by the Banks in
consultation with Parent.
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Borrowings pursuant to the Interim Facility will be available solely to fund
the purchase of Shares pursuant to the Offer, to consummate the Merger, to
refinance certain existing indebtedness of the Company and of Parent and to
pay related fees and expenses, and will be senior unsecured indebtedness of
Parent.
Borrowings under the Interim Facility will bear interest at a rate per annum
equal to the Adjusted LIBOR (as described below) plus a spread (the "Spread").
If the initial loans by the Banks to Parent in the aggregate principal amount
of $90 million (the "Initial Loans") are not repaid in full within specified
periods following the date on which the Offer and the Merger are consummated
(the "Closing Date"), the Spread will increase by specified amounts (subject
to specified minimum and maximum rates) until the date that is twelve months
following the Closing Date (the "Initial Loan Maturity Date"). As used herein,
"Adjusted LIBOR" means the rate (adjusted for statutory reserve requirements
for eurocurrency liabilities) for eurodollar deposits for a three-month period
appearing on Page 3750 of the Dow Jones Markets screen. In addition, Parent
has agreed to pay commitment and drawdown fees and other fees customary for
financings of this nature.
Borrowings under the Interim Facility will mature on the Initial Loan
Maturity Date. If the Initial Loan has not been previously repaid in full on
or prior to the Initial Loan Maturity Date, the Lender in respect of such
Initial Loan will have the option at any time to receive Exchange Notes in
exchange for such Initial Loan having terms similar to those that would govern
a high-yield senior note issue, but modified to include additional terms
customary in interim facilities. The interest rate applicable to the Exchange
Notes and any Initial Loans outstanding after the Initial Loan Maturity Date
will initially equal a fixed rate determined pursuant to a specified formula,
but thereafter will be subject to increases in a manner comparable to that
applicable to the Initial Loans. The maturity of the Exchange Notes shall be,
and that of any Initial Loans that are not exchanged for Exchange Notes shall
automatically be extended to, the tenth anniversary of the Closing Date.
The commitment to make available the Interim Facility will be subject to the
negotiation and execution of definitive loan documents containing
representations and warranties, covenants and events of default which are
typical for this type of transaction. In addition, the commitment to make
available the Interim Facility is subject to the satisfaction of a number of
other conditions to borrowing, including, among other things: (a) concurrently
with the funding of the Offer, at least 90% of the Shares outstanding shall
have been acquired by Purchaser and that both the funding of the Offer and the
consummation of the Merger shall occur on the same day, (b) Parent shall have
received cash proceeds of at least $38.8 million from the issuance of common
equity to existing stockholders of Parent and affiliates of Jacobson Partners,
(c) there not occurring or becoming known to the Banks any change, occurrence
or development since December 27, 1997 that could reasonably be expected to
have a material adverse effect on the business, operations, property or
condition (financial or otherwise) of Parent, the Company and their respective
subsidiaries, taken as a whole (a "Material Adverse Effect"), (d) there not
having occurred a material disruption of or material adverse change in
financial, banking or capital market conditions, (e) the Banks' satisfaction
that prior to and during the syndication of the Interim Facility there shall
be no competing offering, placement or arrangement of any debt securities
(other than the Senior Notes) or bank financing by or on behalf of Parent, the
Company or any of their respective subsidiaries, (f) the Banks' reasonable
satisfaction in all material respects with the structure, terms, schedule and
other aspects of the Offer and the Merger and any related transactions (in
each case to the extent relating to matters not disclosed, or material changes
in matters disclosed, to the Banks prior to May 13, 1998) including (i) any
material amendments, waivers or other modifications to the Merger Agreement,
(ii) the terms of any other material agreements to be entered into in
connection with the Offer and the Merger and any related transactions, and
(iii) all material legal, tax and accounting matters relating to the Offer and
the Merger and any related transactions (it being understood that the Merger
Agreement as in effect on May 13, 1998 and the structure and terms of the
Offer and the Merger as described therein are acceptable to the Banks), (g)
the continuing accuracy in all material respects of the representations and
warranties of the parties to the Merger Agreement relating to the Offer and
the Merger and the satisfaction of all conditions contained therein (without
waiver or amendment), (h) there shall not have occurred any change, occurrence
or development since December 27, 1997 which, in the reasonable opinion of the
Banks, could have a Material Adverse Effect on (i) the Offer and the Merger,
(ii) the ability of
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Parent, the Company and their subsidiaries to perform their obligations under
the financing agreements or (iii) the rights and remedies of the Lenders, (i)
all governmental approvals and third party approvals (other than landlords'
consents and liquor license approvals the absence of which could not
reasonably be expected to have a Material Adverse Effect) necessary or
advisable in connection with the Offer and the Merger, the financing
contemplated by the Commitment Letter and the continuing operations of Parent
and its subsidiaries shall have been obtained and be in full force and effect,
(j) CSI and BBSI shall have been given a reasonable period of time to complete
the documentation and marketing for the sale of the Senior Notes consistent
with then existing market conditions, but in no event fewer than 40 days from
the date of the Merger Agreement, (k) Parent shall have delivered a
preliminary Rule 144A Offering Memorandum with respect to the Senior Notes
satisfactory to CSI and BBSI at least 20 days prior to the Closing Date, (l)
the Lenders shall be satisfied that pro forma EBITDA (as defined in the
Commitment Letter) of the Company and Parent on a consolidated basis for the
latest twelve month period for which relevant financial information is
available shall equal at least $24.4 million and (m) the other conditions set
forth or referred to in the Commitment Letter.
The total amount of funds used to purchase the 430,000 Shares currently
beneficially owned by Parent was approximately $3,435,000 (including
commissions), the source of which was borrowings under Parent's existing
credit facility with BankBoston.
It is anticipated that borrowings for the transactions contemplated by the
Merger Agreement described above will be repaid from funds generated
internally by Parent (including, after the Merger, funds generated by the
Company), or other sources, including the proceeds of the sale of debt or
equity securities or the sale of assets. No decisions have been made
concerning the repayment of such borrowings and decisions will be based on
Parent's review from time to time of the advisability of particular actions,
as well as on prevailing interest rates and financial and other economic
conditions.
Other than as set forth above, no agreements, arrangements or commitments
relating to financing for the Offer and the Merger have been executed or made.
If and when definitive agreements relating to the sale of the Senior Notes or
the Interim Facility are executed, copies thereof will be filed as exhibits in
amendments to the Schedule 14D-1 and Purchaser will disseminate to
stockholders of the Company a description of such agreements and/or
commitments, and will extend the Offer, in each case if and to the extent
required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act or otherwise.
See Section 1.
11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
On February 13, 1998, the Company issued a press release announcing that it
had entered into a definitive merger agreement with a group led by the
Company's Founder, President and Chief Executive Officer, Joseph Crugnale,
pursuant to which Ten Ideas, Inc., a corporation formed by Mr. Crugnale for
purposes of the merger, would acquire all of the outstanding Shares (other
than Shares then owned by Mr. Crugnale) for a purchase price of $8.00 per
Share in cash. The press release noted that such price represented a premium
of approximately 30% over the then current stock price for the Shares. The
press release further stated that a Special Committee of independent directors
of the Company (the "Special Committee") had been formed to evaluate and
consider the offer made by Mr. Crugnale and that the Special Committee had
engaged NationsBanc Montgomery as its financial advisor in connection with the
transaction which was subject to, among other conditions, approval by the
stockholders of the Company. Thereafter, the Company filed with the Commission
a copy of the Agreement and Plan of Merger dated February 13, 1998 (the "Ten
Ideas Merger Agreement") among the Company, Ten Ideas, Inc. and Ten Ideas
Acquisition Corp. as an exhibit to its Current Report on Form 8-K dated
February 13, 1998.
Parent has for some time considered a strategy of growth through
acquisitions of other restaurant chains and, accordingly, reviewed the
publicly available information concerning the Company, including the Ten Ideas
Merger Agreement. Parent concluded that a business combination of the Company
and Parent would represent an excellent strategic fit and determined to seek
to acquire the Company.
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Thereafter, between March 12 and March 25, 1998, Parent acquired an
aggregate of 430,000 Shares in open market transactions at prices ranging from
$7.8017 to $7.96875 per Share. Such Shares constitute approximately 4.8% of
the presently outstanding Shares.
In late March 1998, Dennis Pedra, the President and Chief Executive Officer
of Parent, telephoned Mr. Crugnale to arrange a meeting with Mr. Crugnale and
Mr. Benjamin Jacobson, the Chairman of the Board of Parent and the Managing
General Partner of Jacobson Partners. On March 30, 1998, Messrs. Pedra and
Jacobson met at the Company's offices with Mr. Crugnale and his legal counsel
and two other executive officers of the Company. At such meeting, Mr. Jacobson
advised Mr. Crugnale that Parent intended to propose the acquisition of the
Company in a merger transaction pursuant to which holders of Shares would
receive $10.50 per Share in cash. Mr. Crugnale advised that if Parent desired
to proceed with such proposal, it should submit it in writing to counsel for
the Special Committee.
On March 31, 1998, Parent submitted its proposal to counsel for the Special
Committee by a letter addressed to the Board of Directors of the Company
proposing that the Company and Parent enter into a merger agreement pursuant
to which each stockholder of the Company would receive $10.50 net in cash for
each Share outstanding and otherwise containing terms and conditions
substantially the same as those contained in the Ten Ideas Merger Agreement
without imposing any additional material obligations on the Company. In its
letter, Parent noted that it had obtained a letter from a leading investment
banking firm (a copy of which was enclosed with Parent's letter) to the effect
that such firm was highly confident of arranging debt financing of at least
$90 million which, together with equity capital committed by stockholders of
Parent and an investment partnership managed by Jacobson Partners, would be
sufficient to consummate the transaction. In its letter, Parent noted that its
$10.50 per Share offer represented a premium of 31.3% over the Ten Ideas'
offer of $8.00 per Share and a 75.0% premium over the last reported sale price
of $6.00 per Share on February 13, 1998, the last trading date before public
announcement of the execution of the Ten Ideas Merger Agreement.
On Friday, April 3, 1998, a telephone conference was held in which Mr.
Jacobson, Mr. Pedra, counsel for Parent, a representative of NationsBanc
Montgomery and counsel for the Special Committee participated. The
representatives of the Special Committee advised that the Special Committee
had reviewed Parent's proposal and was appreciative of the $10.50 per Share
price offered, but was concerned with the lack of certainty regarding Parent's
financing arrangements and the time that might be required to conclude the
proposed Merger. In particular, the Special Committee was concerned with the
fact that the "highly confident" letter was not a commitment and was also
subject to numerous conditions, including a satisfactory due diligence review
of the Company and completion of the investment banking firm's due diligence
investigation of Parent. Parent's representatives explained that the due
diligence could be accomplished within a short time frame of no more than two
weeks after access to the Company's books and records and executive personnel
was made available. After further discussion, counsel for the Special
Committee said that the Company would facilitate accelerated due diligence by
Parent and its financing source, subject to negotiation of a satisfactory
confidentiality agreement, and requested that Parent's counsel prepare and
submit a draft of a proposed merger agreement between Parent and the Company.
On Friday, April 3, 1998, prior to the telephone conference described in the
preceding paragraph, Parent issued a press release announcing that it had
submitted to the Company's Board of Directors its merger proposal at a cash
purchase price of $10.50 per Share for each Share other than the approximately
4.8% of the outstanding Shares owned by Parent and that it had obtained a
letter from a leading investment banking firm to the effect that such firm was
highly confident of arranging debt financing of at least $90 million for the
transaction which, when combined with equity capital committed by stockholders
of Parent and an investor group led by Jacobson Partners, would be sufficient
to consummate the transaction. The press release stated that Parent was
awaiting a response to its proposal from the Special Committee. Later that
day, the Company issued a press release confirming its receipt of the proposal
from Parent and noting that the letter from the investment banking firm was
conditional upon, among other things: (i) the absence of material change in
the business, financial condition and prospects of Parent or the Company; (ii)
satisfactory completion of due diligence investigation of the
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Company and Parent; and (iii) satisfactory market conditions for new issuances
of high-yield debt securities and in the securities market in general. The
Company's release further stated that the Company was evaluating Parent's
proposal and was not in a position to comment further until that process was
complete.
On Wednesday, April 8, 1998, Parent entered into a Confidentiality
Agreement, dated as of April 6, 1998 (the "Confidentiality Agreement"), with
the Company. The Confidentiality Agreement included standstill provisions
which are described below under Section 12 ("Purpose of the Offer and the
Merger; The Merger Agreement; Other Agreements; Plans for the Company; Other
Matters").
On Thursday, April 9, 1998, counsel for Parent submitted a draft of the
Merger Agreement to counsel for the Special Committee embodying the terms of
Parent's proposal.
Between April 8, 1998 and April 22, 1998, Parent, its counsel, the
investment banking firm that issued the "highly confident" letter and its
counsel, conducted a due diligence investigation of the Company, including a
review of certain of the Company's significant contracts and leases and site
visits at the Company's principal executive offices.
On Thursday, April 23, 1998, in advance of a meeting of the Special
Committee scheduled to be held the next day, Parent submitted to NationsBanc
Montgomery and counsel for the Special Committee a copy of a revised "highly
confident" letter from the investment banking firm that eliminated the due
diligence condition that the Special Committee had found objectionable. Parent
also advised that it had received signed subscription agreements for the
purchase of an aggregate of $40 million of shares of capital stock of Parent,
of which $21.5 million was from existing stockholders of Parent and $18.5
million was from JPAF, a private investment fund managed by an affiliate of
Jacobson Partners. Copies of such subscription agreements were thereafter
furnished to counsel for the Special Committee.
On Monday, April 27, 1998, counsel for the Special Committee advised counsel
for Parent that, at its meeting on April 24th, the Special Committee had
reviewed the above-described financing documents that had been submitted by
Parent, but had taken no action on Parent's proposal in view of the Special
Committee's continued concern as to the lack of certainty of Parent's ability
to complete the proposed merger due to the facts that (i) its proposed debt
financing was not committed and (ii) under Massachusetts law where the Company
is incorporated, a favorable vote of holders of two-thirds of the outstanding
Shares would be required to approve the proposed merger and the Special
Committee did not know if Mr. Crugnale, who held approximately 24.4% of the
outstanding Shares, would vote in favor of the proposed merger. Counsel for
the Special Committee said that the Special Committee was encouraging Parent
to discuss with Mr. Crugnale his willingness to vote for and otherwise support
the proposed merger, or, if such support could not be assured, that Parent
either (i) make a good faith deposit in the amount of $2.25 million (the sum
of the $1.5 million termination fee and the $750,000 maximum expense
reimbursement obligation which would become payable to Ten Ideas, Inc. if the
Company entered into a merger agreement with Parent), which deposit would be
forfeited if Parent failed to satisfy the Financing Condition or (ii) obtain
committed bridge financing for the Merger.
On Tuesday, April 28, 1998, counsel for Parent advised counsel for the
Special Committee that Parent was unwilling to make such good faith deposit or
incur the cost of obtaining committed bridge financing unless Mr. Crugnale
agreed to support the Merger and suggested that the Special Committee should
either obtain Mr. Crugnale's support or approve and recommend proceeding with
the Merger without such support. In the course of this conversation, counsel
for the Special Committee suggested that Parent modify the transaction to
provide for a first-step cash tender offer to all stockholders of the Company
at the $10.50 per Share price to be followed by a second-step merger
transaction at the same price.
On Wednesday, April 29, 1998, counsel for the Special Committee advised
counsel for Parent that the Special Committee desired to resolve the matter
promptly and had scheduled a meeting for Tuesday, May 5, 1998 and intended to
reach a conclusion and make a final recommendation with respect to Parent's
proposal at that meeting.
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Thereafter, a representative of NationsBanc Montgomery arranged for a
meeting on Friday, May 1, 1998, in Boston among Mr. Jacobson, Mr. Crugnale and
the representative of NationsBanc Montgomery to discuss Mr. Crugnale's support
for Parent's proposal. At that meeting, Mr. Jacobson and Mr. Crugnale reached
an understanding that Mr. Crugnale would support Parent's proposal if (i) the
transaction was modified to provide for a first-step cash tender offer to all
stockholders of the Company for all of the outstanding Shares at the $10.50
per Share price, to be followed by a second-step merger transaction at the
same price and (ii) Parent arranged for committed bridge financing to be
available if the private placement of the Senior Notes pursuant to Rule 144A
could not be completed by the expiration of the tender offer. Mr. Jacobson
also agreed that Parent would acknowledge the payment by the Company of the
termination fee and expense reimbursement obligations of the Company in the
amounts provided for in the Ten Ideas Merger Agreement and agree not to
challenge such payment. Mr. Crugnale's support of the modified proposal would
include his entering into an agreement with Parent to tender all of the Shares
beneficially owned by him in the tender offer and agree to vote his shares, if
necessary, in favor of the second-step merger and his support of the
transaction with the Company's management and his assistance in facilitating a
smooth transition.
On Monday, May 4, 1998, counsel for Parent submitted a revised draft of the
Merger Agreement providing for the first-step tender offer and a draft of the
Tender and Voting Agreement to counsel for the Special Committee and counsel
for Mr. Crugnale. On Wednesday, May 6, 1998, representatives of Parent and its
counsel met in Boston with a representative of NationsBanc Montgomery, counsel
for the Special Committee, Mr. Crugnale and his counsel, to negotiate the
terms of the Merger Agreement and the Tender and Voting Agreement. At such
meeting, Parent also agreed that if the transaction was consummated, it would
not cause the Company to settle the pending Stockholder Litigations described
below in Section 15 unless, as part of the settlement, the Company obtained
from the plaintiffs therein an unconditional release in favor of Mr. Crugnale,
Ten Ideas, Inc. and Ten Ideas Acquisition Corp.
Thereafter, between May 7 and May 13, 1998, the parties continued to
negotiate the terms of the Merger Agreement, the Tender and Voting Agreement
and the Litigation Settlement Agreement described below in Section 12 and
Parent negotiated and obtained the Commitment Letter from Chase and
BankBoston. Late in the day on Wednesday, May 13, 1998, the Board of Directors
of the Company met and received the recommendation of the Special Committee in
favor of the proposed transaction and NationsBanc Montgomery rendered its oral
opinion to the Board of Directors to the effect that the consideration to be
received by the holders of Shares pursuant to the Offer and the Merger is
fair, from a financial point of view, to the holders of Shares, and the Board
of Directors approved the Merger Agreement. Later that evening, the Merger
Agreement, the Tender and Voting Agreement and the Litigation Settlement
Agreement were finalized and executed by the respective parties thereto. On
Thursday, May 14, 1998, prior to the commencement of trading on the Nasdaq
National Market, the Company and Parent issued a joint press release
announcing the execution of the Merger Agreement and the principal terms and
conditions thereof.
On May 20, 1998, Purchaser commenced the Offer.
12. PURPOSE OF THE OFFER AND THE MERGER; THE MERGER AGREEMENT; OTHER
AGREEMENTS; PLANS FOR THE COMPANY; OTHER MATTERS.
Purpose of the Offer and the Merger
The purpose of the Offer and the Merger is to acquire control of, and the
entire equity interest in, the Company. The Offer, as the first step in the
acquisition of the Company, is intended to facilitate the acquisition of all
the outstanding Shares. As discussed above in Section 10, it is a condition to
Parent borrowing under the Interim Facility that (i) concurrently with the
funding of the Offer, at least 90% of the outstanding Shares shall be acquired
by Purchaser and (ii) both the funding of the Offer and the consummation of
the Merger occur on the same date. Accordingly, if the Minimum Condition and
the other conditions to the Offer are satisfied or waived, Purchaser intends,
pursuant to the Merger Agreement, to consummate the Merger on the date of the
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funding of the Offer pursuant to the "short-form" merger procedure described
below under "The Merger Agreement--Short-Form Merger," without any action or
vote on the part of the Company's stockholders.
The Merger Agreement
The Merger. The Merger Agreement provides that, following consummation of
the Offer and following the satisfaction or waiver of the conditions described
below under "Conditions to the Merger", and in accordance with Massachusetts
law, either (i) in the event that Parent and Purchaser acquire, pursuant to
the Offer or otherwise, less than 90% of the outstanding Shares, Purchaser
will be merged with and into the Company with the Company surviving the Merger
or (ii) in the event Parent and Purchaser acquire, pursuant to the Offer or
otherwise, 90% or more of the outstanding Shares, and Parent determines to use
the "short-form" merger procedure described below under "Short-Form Merger,"
the Company will be merged with and into Purchaser, with Purchaser surviving
the Merger. In either case, upon consummation of the Merger, each outstanding
Share (other than Shares held by stockholders who properly demand their
appraisal rights under Massachusetts law, Shares held in the Company's
treasury and Shares owned by Parent or Purchaser) will be converted into the
right to receive the cash price per Share paid pursuant to the Offer, without
interest thereon.
Vote Required to Approve Merger. Under the MBCL, the approval of the Board
of Directors of the Company and the affirmative vote of the holders of two-
thirds of the outstanding Shares are required to adopt and approve the Merger
Agreement and the transactions contemplated thereby. The Company has
represented in the Merger Agreement that the Board of Directors of the Company
has unanimously approved the Merger Agreement, the Offer and the Merger and
the other transactions contemplated thereby as required under the MBCL.
Therefore, unless the Merger is consummated pursuant to the "short-form"
merger provisions under the MBCL described below under "Short-Form Merger" (in
which case no further corporate action by the stockholders of the Company will
be required to complete the Merger), the only remaining required corporate
action of the Company will be the approval of the Merger Agreement and the
transactions contemplated thereby by the affirmative vote of the holders of
two-thirds of the outstanding Shares. In the event that Parent and Purchaser
acquire in the aggregate at least two-thirds of the outstanding Shares, the
vote of no other stockholder of the Company will be required to approve the
Merger and the Merger Agreement.
Short-Form Merger. Section 82 of the MBCL provides that, if a corporation
owns at least 90% of the outstanding shares of each class of stock of another
corporation, the corporation holding such stock may merge such other
corporation into itself without any action or vote on the part of the
stockholders by vote of its directors (a "short-form merger"). In the event
that Parent, Purchaser or their affiliates acquire, pursuant to the Offer or
otherwise, at least 90% of the outstanding Shares, then, at the election of
Parent, a short-form merger may be effected without any approval of the
stockholders of the Company by a vote of the Board of Directors of Purchaser,
subject to compliance with the provisions of Section 82 of the MBCL. Even if
Parent and Purchaser do not own 90% of the outstanding Shares following
consummation of the Offer, Parent and Purchaser may seek to purchase
additional shares in the open market or otherwise in order to reach the 90%
threshold and employ a short-form merger. The per Share consideration paid for
any Shares so acquired may be greater or less than that paid in the Offer.
Accordingly, if as a result of the Offer or otherwise, Parent and Purchaser
acquire at least 90% of the outstanding Shares, Purchaser may, and intends to,
effect the Merger without approval of any other stockholder of the Company.
Stockholders' Meeting. Pursuant to the Merger Agreement, following the
expiration of the Offer, the Company will promptly take all action necessary
in accordance with applicable law and its Restated Articles of Organization
and Restated By-laws to duly call, give notice of, and convene a meeting of
its stockholders (the "Stockholders' Meeting") to consider and vote upon the
adoption and approval of the Merger Agreement and the Merger and all actions
contemplated thereby which require approval and adoption by the Company's
stockholders, unless the Merger may be effected as a "short-form merger" as
described above under "Short-Form Merger." The Merger Agreement provides that
the Company will, if required by applicable law to consummate the Merger,
prepare and file with the Commission a preliminary proxy or information
statement (the "Proxy Statement") and will use its commercially reasonable
best efforts to respond to the comments of
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the Commission concerning the Proxy Statement and to cause the Proxy Statement
to be mailed to the Company's stockholders, in each case as soon as reasonably
practicable. The Company will cause to be included as an exhibit to the Proxy
Statement, the fairness opinion of NationsBanc Montgomery. Parent has agreed
to cause all of the shares of capital stock of the Company held by Parent
and/or Purchaser to be voted, either in person or by proxy, in favor of the
adoption and approval of the Merger Agreement and the Merger at the
Stockholders' Meeting.
Conditions to the Merger. The Merger Agreement provides that the respective
obligation of Parent, Purchaser and the Company to effect the Merger is
subject to the satisfaction or waiver on or prior to the closing date of the
Merger (the "Closing Date") of the following conditions, any and all of which
may be waived, in whole or in part, jointly by Parent and the Company to the
extent permitted by applicable law: (i) the Merger shall have been adopted and
approved by the affirmative vote of the holders of two-thirds of the
outstanding Shares, if required under applicable law, (ii) all filings
required to be made prior to the time at which the Merger becomes effective
(the "Effective Time") with, and all consents (other than the consent of any
licensing board or agency governing the sale of alcoholic beverages ("Liquor
License Consents") and the consent of any landlord (or of any other person) at
any location leased by the Company or any of its subsidiaries ("Landlord
Consents")), approvals, permits and authorizations required to be obtained
prior to the Effective Time from, any third party or any governmental agency,
board or regulatory authority, domestic or foreign (each, a "Governmental
Entity"), in connection with the execution and delivery of the Merger
Agreement and the consummation of the transactions contemplated thereby by the
Company, Parent and Purchaser, and which, either individually or in the
aggregate, if not obtained would have a Company Material Adverse Effect (as
defined below) or would prevent consummation of the Merger, shall have been
made or obtained (as the case may be), (iii) no temporary restraining order,
judgment, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect; provided,
however, that the parties invoking this condition shall use their best efforts
to have any such order or injunction vacated and (iv) Purchaser shall have
purchased Shares pursuant to the Offer, provided this condition shall be
deemed to be satisfied if Purchaser fails to accept for payment and pay for
Shares in violation of the Offer.
For purposes of this description of the Merger Agreement, "Company Material
Adverse Effect" means a material adverse effect upon (i) the business, assets,
properties, condition (financial or otherwise) or results of operations of the
Company and its subsidiaries taken as a whole, or (ii) the transactions
contemplated by the Merger Agreement or the legality or validity of the Merger
Agreement.
The obligations of Parent and Purchaser to effect the Merger are further
subject to the satisfaction, or waiver by Parent, on or prior to the Closing
Date, of the following conditions: (i) the representations and warranties of
the Company contained in the Merger Agreement that are qualified by
materiality shall be true and correct and such representations and warranties
of the Company that are not so qualified shall be true and correct in all
material respects, in each case as of the date of the Merger Agreement and as
of the Closing Date as though made on and as of the Closing Date, except to
the extent such representations and warranties speak as of an earlier date,
except for changes permitted or contemplated by the Merger Agreement, and
except, in the case of any such breach, where such breach would not have,
individually or in the aggregate, a Company Material Adverse Effect or
materially and adversely affect the financing described in Section 10 (the
"Financing") or the ability of Parent and Purchaser to consummate the Offer
and the Merger, (ii) Parent shall have received an officers' certificate
signed on behalf of the Company to such effect, (iii) on or prior to the
Effective Time, Parent and/or Purchaser shall have received all of the
necessary consents (other than Liquor License Consents and Landlord Consents)
or approvals of Governmental Entities and all third parties in connection with
the execution and delivery of the Merger Agreement and the consummation of the
Merger and the other transactions contemplated thereby, unless the failure to
obtain such consent or approval would not have a Company Material Adverse
Effect nor have a material adverse effect on the Financing.
The obligations of the Company to effect the Merger are further subject to
the satisfaction, or waiver by the Company, on or prior to the Closing Date,
of the following conditions: (i) the representations and warranties of
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Parent and Purchaser contained in the Merger Agreement that are qualified by
materiality shall be true and correct and such representations and warranties
of Parent and Purchaser that are not so qualified shall be true and correct in
all material respects, in each case as of the date of the Merger Agreement and
as of the Closing Date as though made on and as of the Closing Date, except to
the extent such representations and warranties speak as of an earlier date and
except for changes permitted or contemplated by the Merger Agreement, and
except, in the case of any such breach, where such breach would not,
individually or in the aggregate, materially and adversely affect the
Financing or the ability of Parent and Purchaser to consummate the Offer and
the Merger, (ii) the Company shall have received an officers' certificate
signed on behalf of Parent to such effect and (iii) at or prior to the
Effective Time, NationsBanc Montgomery shall not have withdrawn its fairness
opinion.
Other Offers. Pursuant to the Merger Agreement, the Company has agreed not
to, nor to authorize or permit any of its representatives to, directly or
indirectly, (i) solicit, initiate or knowingly encourage any Third Party (as
defined below) with respect to the submission of any Acquisition Proposal (as
defined below) or (ii) participate in any discussions or negotiations
regarding, or furnish to any Third Party any non-public information with
respect to, or take any other action to facilitate any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to lead to,
any Acquisition Proposal; provided, however, that the foregoing shall not
prohibit the Board of Directors of the Company (or, if applicable, the Special
Committee) from: (i) furnishing information to, or entering into discussions
or negotiations with, any Third Party in connection with an unsolicited bona
fide Acquisition Proposal by such Third Party if, and to the extent that, the
Board of Directors of the Company (or the Special Committee), after
consultation with independent legal counsel (who may be the Company's
regularly engaged independent counsel), determines in good faith that such
action is required for the Board of Directors of the Company to comply with
its fiduciary obligations to stockholders under applicable law; (ii)
withdrawing or modifying its recommendation of the Merger Agreement, the
Offer, the Merger and the other transactions contemplated by the Merger
Agreement following receipt of a bona fide unsolicited Acquisition Proposal if
the Board of Directors of the Company (or the Special Committee), after
consultation with independent legal counsel (who may be the Company's
regularly engaged independent counsel), determines in good faith that such
action is necessary for the Board of Directors of the Company to comply with
its fiduciary duties to stockholders under applicable law; or (iii) making to
the Company's stockholders any recommendation and making any related filing
with the Commission as required by Rule 14e-2 and 14d-9 under the Exchange
Act, with respect to any tender offer, or taking any other legally required
action (including, without limitation, the making of public disclosures as may
be necessary or advisable under applicable securities laws); and provided
further, however, that, in the event of an exercise of the Company's or its
Board of Directors' (or the Special Committee's) rights under clause (i), (ii)
or (iii) above, notwithstanding anything contained in the Merger Agreement to
the contrary, such failure shall not constitute a breach of the Merger
Agreement by the Company. The Company shall provide immediate written notice
to Parent of the receipt of any such Acquisition Proposal and of the Company's
intention to furnish information to, or enter into discussions or negotiations
with, such person or entity. For purposes of the Merger Agreement, (i)
"Acquisition Proposal" means any proposal with respect to a merger,
consolidation, share exchange, tender offer or similar transaction involving
the Company, or any purchase or other acquisition of all or any significant
portion of the assets of the Company, or any equity interest in the Company,
other than the transactions contemplated by the Merger Agreement and (ii)
"Third Party" means any corporation, partnership, person or other entity or
"group" (as defined in Section 13(d)(3) of the Exchange Act) other than
Parent, Purchaser or any affiliates of Parent or Purchaser and their
respective directors, officers, employees, representatives and agents.
Termination of the Merger Agreement; Fees. The Merger Agreement may be
terminated and abandoned at any time prior to the Effective Time, whether
before or after approval of the Merger by the stockholders of the Company: (a)
by mutual written consent of Parent and the Company; or (b) by either Parent
or the Company if (i) Parent or Purchaser shall have failed to commence the
Offer within five business days following the date of the Merger Agreement or
the Offer shall have terminated or expired in accordance with its terms
without Parent or Purchaser having purchased any Shares pursuant to the Offer,
or (ii) the Offer has not been consummated by July 31, 1998, or (iii) any
change to the Offer is made in contravention of certain provisions of the
Merger
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Agreement; or (c) by either Parent or the Company if: (i) upon a vote at the
Stockholders' Meeting, or any adjournment thereof, the adoption and approval
of the Merger Agreement and the Merger by the stockholders of the Company, as
required by Massachusetts law, the Company's Restated Articles of Organization
or the terms of the Merger Agreement, shall not have been obtained; or (ii)
the Merger shall not have been consummated on or before October 31, 1998,
provided that the failure to consummate the Merger is not attributable to the
failure of the terminating party to fulfill its obligations pursuant to the
Merger Agreement; or (iii) there shall be any law or regulation (other than a
law or regulation relating to the issuance or transfer of any licenses or
permits of any licensing board or agency governing the sale of alcoholic
beverages) that makes consummation of the Offer or the Merger illegal or
otherwise prohibited, or any judgment, injunction, order or decree enjoining
or otherwise restraining Purchaser from purchasing Shares pursuant to the
Offer or Purchaser or the Company from consummating the Merger is entered and
such judgment, injunction, order or decree shall become final and
nonappealable; or (d) by the Company, immediately after payment to Purchaser
of the fee and expense reimbursement described in the following paragraph, if
prior to the purchase of Shares pursuant to the Offer, (i) the Board of
Directors shall have withdrawn or modified in a manner adverse to Parent or
Purchaser its approval or recommendation of the Offer, the Merger Agreement or
the Merger in order to permit the Company to execute an Acquisition Proposal
providing for the acquisition of the Company by a Third Party as determined by
the Board of Directors in good faith after consultation with independent legal
counsel (who may be the Company's regularly engaged independent counsel) that
such action is required for the Board of Directors of the Company to comply
with its fiduciary obligations to stockholders under applicable law, or (ii)
the fairness opinion of NationsBanc Montgomery shall have been withdrawn; or
(e) by Parent, if the Board of Directors of the Company shall have approved an
Acquisition Proposal or withdrawn or modified (including by amendment of the
Schedule 14D-9), in a manner adverse to Parent or Purchaser, the Board of
Director's recommendation of the Merger Agreement, the Offer, the Merger and
the other transactions contemplated by the Merger Agreement; or (f) by Parent,
if any of the conditions set forth in the third full paragraph under
"Conditions to the Merger" shall have become incapable of fulfillment, and
shall not have been waived by Parent, or if the Company shall breach in any
material respect any of its representations, warranties or obligations under
the Merger Agreement and such breach shall not have been cured in all material
respects or waived and the Company shall not have provided reasonable
assurance that such breach will be cured in all material respects on or before
the Closing Date, but only if such breach, singly or together with all other
such breaches, constitutes a failure of the conditions contained in the third
full paragraph under "Conditions to the Merger" as of the date of such
termination; or (g) by the Company, if any of the conditions set forth in the
fourth full paragraph under "Conditions to the Merger" shall have become
incapable of fulfillment, and shall not have been waived by the Company, or if
Parent or Purchaser shall breach in any material respect any of their
respective representations, warranties or obligations under the Merger
Agreement and such breach shall not have been cured in all material respects
or waived and Parent or Purchaser, as the case may be, shall not have provided
reasonable assurance that such breach will be cured in all material respects
on or before the Closing Date, but only if such breach, singly or together
with all other such breaches, constitutes a failure of the conditions
contained in the fourth full paragraph under "Conditions to the Merger" as of
the date of such termination; provided, however, that the party seeking
termination pursuant to clause (f) or (g) above is not in breach of any of its
material representations, warranties, covenants or agreements contained in the
Merger Agreement.
Pursuant to the Merger Agreement, if the Merger Agreement is terminated
pursuant to clause (d) or (e) of the preceding paragraph, pursuant to clause
(f) of the preceding paragraph as a result of a willful breach by the Company,
or pursuant to clause (g) of the preceding paragraph as a result of the
withdrawal or modification of NationsBanc Montgomery's fairness opinion, then
the Company shall (provided that neither Parent nor Purchaser is then in
material breach of its obligations under the Merger Agreement) promptly pay to
Parent in cash an amount equal to the aggregate out-of-pocket costs and
reasonable expenses of Parent and Purchaser in connection with the Merger
Agreement and the transactions contemplated thereby, up to an aggregate amount
not to exceed $750,000, including, without limitation, commitment, appraisal
and other fees relating to the Financing and the reasonable fees and
disbursements of accountants, attorneys and investment bankers, whether
retained by Parent or by any other person (collectively, "Expenses"). In
addition to any required payment of Expenses, if the Merger Agreement is
terminated pursuant to clause (d) or (e) of the preceding paragraph, or
pursuant to clause
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(f) of the preceding paragraph as a result of a willful breach by the Company,
then the Company shall (provided that neither Parent nor Purchaser is then in
material breach of its obligations under the Merger Agreement) promptly pay to
Parent the sum of $1,500,000 in cash (the "Termination Fee"). The sum of the
Expenses and the Termination Fee, if any, are referred to in the Merger
Agreement as the "Termination Amount." The rights of Parent to receive the
Termination Amount shall be in lieu of any damages remedy or claim by Parent
or Purchaser against the Company for termination of the Merger Agreement
pursuant to clause (d) or (e), clause (f) in the event of a willful breach by
the Company or pursuant to clause (g) as a result of the Company's reliance on
the condition that, at or prior to the Effective Time, NationsBanc Montgomery
shall not have withdrawn its fairness opinion. Notwithstanding the foregoing,
if the Merger Agreement is terminated pursuant to clause (g) as a result of
the Company's reliance on such condition at a time when Parent is ready,
willing and able (other than as a result of an inability to consummate the
Financing solely because of the withdrawal of NationsBanc Montgomery's
fairness opinion) to proceed with the transactions contemplated by the Merger
Agreement but for the withdrawal of such fairness opinion, and within one year
after such termination, the Company enters into an agreement relating to an
Acquisition Proposal with a person other than Parent or Purchaser or their
affiliates and associates, or the Company's Board of Directors recommends or
resolves to recommend to the Company's stockholders approval and acceptance of
such an Acquisition Proposal, then, upon the entry into such agreement or the
making of such recommendation or resolution, the Company shall pay to Parent
the Termination Fee.
Conduct of the Company's Business Until the Effective Time. Pursuant to and
except as contemplated by the Merger Agreement, during the period from the
date of the Merger Agreement to the Effective Time, the Company has agreed to
operate, and cause each subsidiary to operate, its business in the ordinary
course of business. Without limiting the generality of the foregoing, during
the period from the date of the Merger Agreement to the Effective Time, except
as expressly contemplated by the Merger Agreement, the Company has agreed not
to, without the prior written consent of Parent:
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of
the Company's outstanding capital stock, (y) split, combine or reclassify
any of its outstanding capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of, or in substitution for,
shares of its outstanding capital stock, or (z) purchase, redeem or
otherwise acquire any shares of outstanding capital stock or any rights,
warrants or options to acquire any such shares;
(ii) issue, sell, grant, pledge or otherwise encumber any shares of its
capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares,
voting securities or convertible securities, including under the Company's
1992 Employee Stock Purchase Plan (the "ESPP"), except for the issuance of
Shares upon exercise of Company Stock Options (as defined below)
outstanding prior to the date of the Merger Agreement and disclosed
therein, or take any action that would make the Company's representations
and warranties set forth in the Merger Agreement not true and correct in
all material respects;
(iii) amend its Restated Articles of Organization or Restated By-laws or
the comparable charter or organizational documents of any of its
subsidiaries;
(iv) acquire any business or any corporation, partnership, joint venture,
association or other business organization or division thereof (or any
interest therein), or form any subsidiaries;
(v) sell or otherwise dispose of any of its substantial assets, except in
the ordinary course of business;
(vi) make any capital expenditures, enter into leases or agreements for
new locations, or make other commitments with respect thereto, except
capital expenditures, leases, agreements or commitments (i) set forth on
the disclosure schedule to the Merger Agreement (the "Disclosure
Schedule"), or (ii) not exceeding $100,000 in the aggregate as the Company
may, in its discretion, deem appropriate;
(vii) (x) incur any indebtedness for borrowed money or guaranty any such
indebtedness of another person, other than (A) borrowings in the ordinary
course under existing lines of credit (or under any refinancing of such
existing lines), (B) indebtedness owing to, or guaranties of indebtedness
owing to, the
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Company or (C) in connection with the Financing, or (y) make any loans or
advances to any other person, other than routine advances to employees;
(viii) except as disclosed in the Disclosure Schedule, grant or agree to
grant to any employee any increase in wages or bonus, severance, profit
sharing, retirement, deferred compensation, insurance or other compensation
or benefits, or establish any new compensation or benefit plans or
arrangements, or amend or agree to amend any such existing plans, except as
may be required under existing agreements or in the ordinary course of
business consistent with past practices;
(ix) merge, amalgamate or consolidate with any other person or entity in
any transaction, sell all or substantially all of its business or assets,
or acquire all or substantially all of the business or assets of any other
person or entity;
(x) except as contemplated in the Disclosure Schedule, enter into or
amend any employment, consulting, severance or similar agreement with any
person or amend the engagement letter with NationsBanc Montgomery;
(xi) change its accounting policies in any material respect, except as
required by generally accepted accounting principles;
(xii) except as described in the Disclosure Schedule, enter into any
material contract, agreement or commitment (other than purchase agreements
for food and beverages and restaurant supplies entered into in the ordinary
course of business) not otherwise permitted in the Merger Agreement,
including, without limitation, any contract, agreement or commitment
involving expenditures by the Company or any of its subsidiaries in excess
of $50,000 or which is not terminable by the Company upon giving 30 days or
less prior written notice; or
(xiii) commit or agree to take any of the foregoing actions.
The Company, Parent and Purchaser shall not take any action that would, or
that could reasonably be expected to, result in (i) any of the representations
and warranties of such party set forth in the Merger Agreement that are
qualified as to materiality becoming untrue, (ii) any of such representations
and warranties that are not so qualified becoming untrue in any material
respect or (iii) any of the conditions of the Offer set forth in Section 14 or
of the Merger set forth above under "Conditions to the Merger" not being
satisfied.
The Company's Board of Directors. Effective upon the purchase of and payment
for Shares by Purchaser pursuant to the Offer such that Purchaser shall own at
least a majority of the Shares and from time to time thereafter, Parent shall
be entitled to designate up to such number of directors, rounded up to the
next whole number, on the Board of Directors that equals the product of (i)
the total number of directors on the Board of Directors (giving effect to any
increase in the number of directors in accordance with the Merger Agreement)
multiplied by (ii) the percentage that the number of Shares owned by Parent,
Purchaser and their affiliates bears to the total number of Shares outstanding
on a primary basis, and the Company shall take all action necessary to cause
Parent's designees to be elected or appointed to the Board of Directors,
including, without limitation, increasing the number of directors and/or
securing the resignations of such number of incumbent directors as is
necessary to enable Parent's designees to be elected to the Board of Directors
and to cause Parent's designees to be so elected. At such times, the Company
will use its best efforts to cause individuals designated by Parent to
constitute the same percentage as such individuals represent on the Board of
Directors of (x) each committee of the Board of Directors, (y) each board of
directors of each subsidiary of the Company and (z) each committee of each
such board. Notwithstanding the foregoing, until the Effective Time, the
Company shall use its best efforts to ensure that not less than two persons
who are directors on the date of the Merger Agreement shall remain as members
of the Board of Directors (the "Continuing Directors") until the Effective
Time. In the event there is only one Continuing Director, such Continuing
Director shall have the right to designate a person, who is acceptable to
Parent, to become a Continuing Director.
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The Company's obligations to appoint designees to the Board of Directors
shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions required
pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations
in accordance with the Merger Agreement, including mailing to the stockholders
as part of the Schedule 14D-9 the information required by such Section 14f-1,
as is necessary to enable Parent's designees to be elected to the Board of
Directors. Parent will supply to the Company in writing and be solely
responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
For purposes of the Merger Agreement, "affiliate" shall mean, as to any
person, any other person that would be deemed to be an "affiliate" of such
person as that term is defined in Rule 12b-2 under the Exchange Act.
Following the election or appointment of Parent's designees in accordance
with the Merger Agreement and prior to the Effective Time, any amendment of
the Merger Agreement, any termination of the Merger Agreement by the Company,
any extension by the Company of the time for the performance of any of the
obligations or other acts of Parent or Purchaser, any consent of the Company
contemplated by the Merger Agreement, any waiver of any of the Company's
rights thereunder, any amendment to the Company's Restated Articles of
Organization or any action taken by the Company that materially adversely
affects the interests of the stockholders of the Company with respect to the
transactions contemplated by the Merger Agreement, will require the
concurrence of a majority of the Continuing Directors.
Stock Options. Pursuant to the Merger Agreement, as of the Effective Time,
each outstanding, unexercised stock option to purchase Shares (a "Company
Stock Option") issued under the Company's Amended and Restated 1987 Stock
Option Plan (the "1987 Plan"), the 1989 Time Accelerated Restricted Stock
Option Plan (the "TARSOP"), the 1993 Stock Option Plan for Non-Employee
Directors (the "Director Plan") and the 1997 Stock Option Plan (the "1997
Plan") (collectively, the "Company Stock Option Plans") shall terminate and be
canceled and each holder of a Company Stock Option shall be entitled to
receive, in consideration therefor, a cash payment from the Company (which
payment shall be made as soon as practicable after the Effective Time) equal
to the product of (a) the excess, if any, of (x) the price per Share offered
pursuant to the Offer over (y) the per Share exercise price of such Company
Stock Option, times (b) the number of Eligible Shares (as defined below)
subject to such Company Stock Option. Such cash payment shall be net of any
required withholding taxes. The term "Eligible Shares" shall mean, (i) with
respect to any Company Stock Option granted under the 1987 Plan, the number of
Shares subject to such option as to which such option shall then be vested and
exercisable as of the Effective Date, and (ii) with respect to any Company
Stock Option granted under the TARSOP, the Director Plan or the 1997 Plan, the
aggregate number of Shares that shall then be subject to such option. The
Company's obligation to make any such cash payment (1) shall be subject to the
obtaining of any necessary consents of optionees to the cancellation of such
Company Stock Options, in form and substance satisfactory to Parent, and (2)
shall not require any action which violates any of the Company Stock Option
Plans. As of the Effective Time, each of the Company Stock Option Plans and
the ESPP shall terminate and be of no further force or effect, and the Company
shall take such action as shall be necessary to ensure, to Parent's reasonable
satisfaction, that no holder of a Company Stock Option or participant in the
ESPP will have any right to acquire any interest under the Company Stock
Option Plans or the ESPP in the Surviving Corporation.
Indemnification. From and after the Effective Time, Parent shall cause the
Surviving Corporation to indemnify and hold harmless each person who is now,
at any time has been or who becomes prior to the Effective Time a
"Director/officer" of the Company (as defined in Article 7 of the Company's
Restated By-laws ("Article 7")), and their heirs and personal representatives
(the "Indemnified Parties"), against any and all "Expenses" (as defined in
Article 7) incurred in connection with any "Proceeding" (as defined in Article
7) arising out of or pertaining to any action or omission occurring prior to
the Effective Time (including, without limitation, any Proceeding which arises
out of or relates to the transactions contemplated by the Merger Agreement),
to the full extent permitted under Massachusetts law and the Surviving
Corporation's Restated By-laws in effect as of the Effective Date or under any
indemnification agreement in effect as of the date of the Merger Agreement.
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Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the Company (which will not
survive consummation of the Effective Time) relating to, among other things,
(i) the Company's and its subsidiaries' due organization, power, standing and
similar corporate matters; (ii) the Company's and its subsidiaries' capital
structure; (iii) authorization, execution, delivery and enforceability of the
Merger Agreement and related matters; (iv) governmental authorizations
required in connection with the transactions contemplated by the Merger
Agreement; (v) documents filed by the Company with the Commission and the
accuracy of information contained therein; (vi) preparation of financial
statements in accordance with generally accepted accounting principles applied
on a consistent basis; (vii) absence of certain adverse changes or events;
(viii) compliance with applicable laws; (ix) litigation pending or threatened
against the Company or any of its subsidiaries; (x) accuracy of information
supplied by the Company for use in documents relating to the Offer and the
Merger; (x) brokers' and financial advisors' fees; and (xi) tax and employee
benefits matters.
Additional Agreements. The Merger Agreement provides that, subject to the
conditions and other agreements set forth in the Merger Agreement, each of
Parent, Purchaser and the Company will use commercially reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by the Merger Agreement. Each of
the Company and Parent has agreed in the Merger Agreement to make as promptly
as practicable all filings required to be made with, and seek all consents,
approvals, permits and authorizations required to be obtained from, any third
parties or Governmental Entities in connection with the Merger Agreement,
including any filing necessary under the HSR Act and any Liquor License
Consent or Landlord Consent.
Amendments; Waivers. The Merger Agreement provides that, subject to the
applicable provisions of the MBCL and certain provisions of the Merger
Agreement, any provision of the Merger Agreement may be amended or waived
prior to the Effective Time if such amendment or waiver is in writing and
signed, in the case of any amendment, by the Company, Parent and Purchaser, or
in the case of a waiver, by the party against whom the waiver is to be
effective.
The foregoing summary of certain provisions of the Merger Agreement is
qualified in its entirety by reference to the Merger Agreement, which is
incorporated herein by reference, and a copy of which has been filed as an
exhibit to the Schedule 14D-1. The Merger Agreement may be examined and copies
may be obtained at the places and in the manner set forth under "Available
Information" in Section 8.
Other Agreements
Tender and Voting Agreement. Pursuant to the Tender and Voting Agreement,
Mr. Crugnale agreed: (i) to tender pursuant to the Offer all of the Owned
Shares (as defined below) (which definition includes all Shares acquired by
Mr. Crugnale after May 13, 1998), no later than three days prior to the
initial expiration of the Offer; (ii) to vote the Owned Shares in favor of the
adoption of the Merger Agreement and the approval of the Merger, and against
any action or agreement that would adversely affect the Company's performance
under the Merger Agreement or tend to impair the consummation of the
transactions contemplated therein; (iii) to appoint Parent as Mr. Crugnale's
proxy to vote the Owned Shares in connection with the Merger Agreement and the
Merger, to take effect immediately upon Mr. Crugnale's breach of his voting
covenants; (iv) not to enter into any contract or understanding to convey any
interest in or to the Owned Shares, or grant any proxy with respect to the
Owned Shares, or deposit the Owned Shares into any voting trust, or subject
the Owned Shares to any voting agreement, except that the Selling Stockholder
may transfer any or all of the Owned Shares to a "Permitted Transferee" (as
defined in the Tender and Voting Agreement), if such Permitted Transferee
agrees to be bound by the terms of the Tender and Voting Agreement; and (v)
not to solicit or initiate any Acquisition Proposal or other offer from any
person or, except in his capacity as a director or officer of the Company to
the extent permitted by the Merger Agreement (as described above under "The
Merger Agreement--Other Offers"), engage in discussions or negotiations
relating thereto (all of which shall collectively be referred to herein as
"Crugnale's Restrictions").
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On May 13, 1998, Mr. Crugnale was the beneficial owner of an aggregate of
2,174,772 Shares (the "Owned Shares"), constituting approximately 24.4% of the
Shares outstanding and approximately 23.06% of the Shares outstanding on a
fully diluted basis.
The Tender and Voting Agreement, and Mr. Crugnale's obligations thereunder,
terminate upon the earlier of (i) the consummation of the Merger; (ii) the
termination of the Offer without any Shares having been purchased pursuant
thereto; (iii) the termination of the Merger Agreement in accordance with its
terms, except that Crugnale's Restrictions shall survive for a period of six
months after such termination, if (A) at the time of such termination of the
Merger Agreement there is pending an unsolicited bona fide Acquisition
Proposal by a third party that has been publicly announced and (B) such
termination was not effected by the Company due to the breach of the Merger
Agreement by Parent or Purchaser, or terminated by Parent and/or Purchaser due
to the failure to satisfy the Financing Condition (the "Extension
Conditions"); and (iv) unless the Extension Conditions are satisfied, July 31,
1998. In addition, the Tender and Voting Agreement provides that,
notwithstanding the provisions of the Merger Agreement regarding Acquisition
Proposals, if Parent or Purchaser proposes to the Company (or its Board of
Directors or any committee thereof), or publicly proposes, that (i) the Offer
Price be reduced, (ii) the July 31, 1998 date fixed in the Merger Agreement,
after which either the Company or Parent may terminate such Agreement, be
extended, or (iii) the Minimum Condition be increased, the Tender and Voting
Agreement shall be terminated. The termination of the Tender and Voting
Agreement under any circumstances is deemed to constitute an effective
withdrawal by Mr. Crugnale of any Owned Shares he may tender, without the
obligation of satisfying the otherwise applicable procedural requirements for
causing a withdrawal.
The Tender and Voting Agreement contains representations and warranties of
the Selling Stockholder regarding his unencumbered title to the Owned Shares
and his authority and capacity to enter into and be bound by, and perform in
accordance with, the terms of the Tender and Voting Agreement.
The foregoing summary of certain provisions of the Tender and Voting
Agreement is qualified in its entirety by reference to the Tender and Voting
Agreement, which is incorporated herein by reference, and a copy of which has
been filed as an exhibit to the Schedule 14D-1. The Tender and Voting
Agreement may be examined and copies may be obtained at the places and in the
manner set forth under "Available Information" in Section 8.
Litigation Settlement Agreement. The Company, Ten Ideas, Inc., Ten Ideas
Acquisition Corp., Parent, Purchaser and Mr. Crugnale entered into a
Litigation Settlement Agreement dated as of May 13, 1998 (the "Litigation
Settlement Agreement"), relating to the Stockholder Litigation (as defined in
Section 15), and a certain termination fee provided for in the Ten Ideas
Merger Agreement. The Litigation Settlement Agreement contains an agreement
among the Company, Parent and Purchaser that Ten Ideas, Inc., Ten Ideas
Acquisition Corp. and Mr. Crugnale may continue to participate in the defense
or settlement of each of the Stockholder Litigations (and any consolidation
thereof), in accordance with the provisions of the Merger Agreement relating
to indemnification of "Directors/officers" as described above under "The
Merger Agreement--Indemnification." The Litigation Settlement Agreement also
acknowledges the payment by the Company to Ten Ideas, Inc. of a termination
fee of $1,500,000 and up to $750,000 in reimbursement of Ten Ideas' documented
expenses pursuant to the Ten Ideas Merger Agreement, and provides that the
Company, Parent and Purchaser shall not (i) contest the propriety of, or the
obligation to make, such payments or (ii) seek to recover any or all of such
termination fee.
The foregoing summary of certain provisions of the Litigation Settlement
Agreement is qualified in its entirety by reference to the Litigation
Settlement Agreement, which is incorporated herein by reference, and a copy of
which has been filed as an exhibit to the Schedule 14D-1. The Litigation
Settlement Agreement may be examined and copies may be obtained at the places
and in the manner set forth under "Available Information" in Section 8.
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Confidentiality Agreement. In connection with negotiations relating to the
Offer (see Section 11 hereof), and as a condition to the Company providing any
non-public information to Parent, the Company and Parent entered into the
Confidentiality Agreement, which provides generally that Parent and its
representatives will keep confidential any non-public information furnished to
them by the Company. The Confidentiality Agreement also contains "standstill"
provisions which prohibit Parent from: (i) acquiring or agreeing to acquire in
any manner any securities or property of the Company, except pursuant to a
cash tender offer for all of the issued and outstanding Shares, at a price not
less than $10.50 per Share (a "Qualified Tender Offer"), or commencing a
tender or exchange offer for any securities of the Company that is not a
Qualified Tender Offer, for a period of two years from the date of the
Confidentiality Agreement; (ii) soliciting or hiring as an employee any
officer of the Company or any of its subsidiaries, or any other employee of
the Company with whom Parent came in contact in connection with the
consideration of a transaction with the Company, for a period of two years
from the date of the Confidentiality Agreement; or (iii) soliciting any area
or regional manager that comes to the attention of Parent as a result of
Parent's consideration of a transaction with the Company, who has not been in
contact with Parent, for a period of one year from the date of the
Confidentiality Agreement.
The foregoing summary of certain provisions of the Confidentiality Agreement
is qualified in its entirety by reference to the Confidentiality Agreement,
which is incorporated herein by reference, and a copy of which has been filed
as an exhibit to the Schedule 14D-1. The Confidentiality Agreement may be
examined and copies may be obtained at the places and in the manner set forth
under "Available Information" in Section 8.
Plans for the Company
Parent is conducting a detailed review of the Company and its assets,
corporate and administrative structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and reserves the
right to make such changes therein as it deems necessary or desirable,
consistent with reasonable operating practices. Such changes could include,
among other things, changes in the Company's business, restaurant locations,
corporate and administrative structure, marketing strategies, capitalization,
management or dividend policy.
Except as indicated in this Offer to Purchase, neither Purchaser nor Parent
has any present plans or proposals that would result in an extraordinary
corporate transaction, such as a merger, reorganization, liquidation or sale
or transfer of assets, involving the Company or any of its subsidiaries, or
any material changes in the Company's capitalization, dividend policy,
corporate and administrative structure or business or composition of its
management or personnel.
Other Matters
Appraisal Rights. Holders of Shares do not have appraisal rights as a result
of the Offer. However, if the Merger is consummated, the Surviving Corporation
will mail a notice to holders of outstanding Shares on the Effective Date, and
such holders will have certain rights pursuant to the provisions of Sections
85 through 98, inclusive, of the MBCL to dissent and demand appraisal of their
Shares. Under Sections 85 through 98, inclusive, of the MBCL, dissenting
stockholders who comply with the applicable statutory procedures will be
entitled to receive a judicial determination of the fair value of their Shares
(exclusive of any element of value arising from the accomplishment or
expectation of the Merger) and to receive payment of such fair value in cash,
together with a fair rate of interest, if any. Any such judicial determination
of the fair value of Shares could be based upon factors other than, or in
addition to, the price per Share to be paid in the Merger or the market value
of the Shares. The values so determined could be more or less than the price
per Share to be paid in the Merger.
The foregoing summary of Sections 85 through 98, inclusive, of the MBCL does
not purport to be complete and is qualified in its entirety be reference to
Sections 85 through 98, inclusive, of the MBCL. Failure to follow the steps
required by Sections 85 through 98, inclusive, of the MBCL for perfecting
appraisal rights may result in the loss of such rights.
Going Private Transactions. The Merger would have to comply with any
applicable federal law operative at the time of its consummation. The
Commission has adopted Rule 13e-3 under the Exchange Act which is
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applicable to certain "going private" transactions. Purchaser does not believe
that Rule 13e-3 will be applicable to the Merger unless the Merger is
consummated more than one year after the termination of the Offer. If
applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating
to the fairness of the Merger and the consideration offered to minority
stockholders in such transaction be filed with the Commission and distributed
to minority stockholders before the consummation of the Merger.
13. DIVIDENDS AND DISTRIBUTIONS.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two succeeding paragraphs, and
nothing herein shall constitute a waiver by Purchaser or Parent of any of its
rights under the Merger Agreement or a limitation of remedies available to
Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.
If, on or after May 13, 1998, the Company should (a) split, combine or
otherwise change the Shares or its capitalization, (b) acquire currently
outstanding Shares or otherwise cause a reduction in the number of outstanding
Shares or (c) issue or sell additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options to acquire, any of the foregoing, other than
Shares issued pursuant to the exercise of Company Stock Options outstanding as
of the date of the Merger Agreement, then, subject to the provisions of
Section 14 below, Purchaser, in its sole discretion, may make such adjustments
as it deems appropriate in the Offer Price and other terms of the Offer,
including, without limitation, the number or type of securities offered to be
purchased.
If, on or after May 13, 1998, the Company should declare or pay any cash
dividend on the Shares or other distribution on the Shares, or issue with
respect to the Shares any additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to stockholders of record on a date prior
to the transfer of the Shares purchased pursuant to the Offer to Purchaser or
its nominee or transferee on the Company's stock transfer records, then,
subject to the provisions of Section 14 below, (a) the Offer Price may, in the
sole discretion of Purchaser, be reduced by the amount of any cash dividend or
cash distribution and (b) the whole of any such noncash dividend, distribution
or issuance to be received by the tendering stockholders will (i) be received
and held by the tendering stockholders for the account of Purchaser and will
be required to be promptly remitted and transferred by each tendering
stockholder to the Depositary for the account of Purchaser, accompanied by
appropriate documentation of transfer, or (ii) at the direction of Purchaser,
be exercised for the benefit of Purchaser, in which case the proceeds of such
exercise will promptly be remitted to Purchaser. Pending such remittance and
subject to applicable law, Purchaser will be entitled to all rights and
privileges as owner of any such noncash dividend, distribution, issuance or
proceeds and may withhold the entire Offer Price or deduct from the Offer
Price the amount or value thereof, as determined by Purchaser in its sole
discretion.
14. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer or the Merger Agreement,
and in addition to (and not in limitation of) Purchaser's rights to extend and
amend the Offer at any time in its sole discretion (subject to the provisions
of the Merger Agreement), Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the Commission,
including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares after the termination or
withdrawal of the Offer), to pay for any Shares, and may terminate the Offer,
if (i) the Minimum Condition has not been satisfied, (ii) the Financing
Condition has not been satisfied, (iii) the applicable waiting period under
the HSR Act shall not have
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expired or been terminated or (iv) at any time on or after May 13, 1998 and
prior to the acceptance for payment of or payment for Shares, any of the
following conditions shall occur and be continuing:
(a) there shall be instituted or pending any action or proceeding before
any domestic court, government or Governmental Entity, other than by Parent
or Purchaser, a stockholder of Parent or Purchaser or any person affiliated
with Parent or Purchaser, (i) challenging or seeking to make illegal, to
delay materially or otherwise to restrain or prohibit the making of the
Offer, the acceptance for payment of or payment for some of or all the
Shares by Purchaser or the consummation by Purchaser of the Merger, (ii)
seeking to restrain or prohibit Parent's or the Company's ownership or
operation (or that of its respective subsidiaries or affiliates) of all or
any material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or of Parent and its subsidiaries, taken as
a whole, (iii) seeking to compel Parent or the Company to sell or otherwise
dispose of, or hold separate (through the establishment of a trust or
otherwise) any material assets or categories of assets or businesses of any
of the Company and its subsidiaries, taken as a whole, or Parent or any of
Parent's affiliates, taken as a whole, (iv) seeking to prohibit or impose
material limitations on the ability of Parent or any of its subsidiaries or
affiliates effectively to exercise full rights of ownership of the Shares
(including, without limitation, the right to vote any Shares acquired or
owned by Parent or any of its subsidiaries or affiliates on all matters
properly presented to the Company's stockholders), or seeking to prohibit
Parent or any of its subsidiaries from effectively controlling in any
material respect the business and operations of the Company and its
subsidiaries, taken as a whole, (v) seeking to require divestiture by
Parent or any of its subsidiaries or affiliates of any Shares or seeking to
obtain from the Company, Parent or Purchaser by reason of any of the
transactions contemplated by the Offer or the Merger Agreement any damages
that are material to the Company and its subsidiaries, taken as a whole, or
Parent and its subsidiaries, taken as a whole, or (vi) that otherwise, in
the reasonable judgment of Parent, is likely to materially adversely affect
the Company and its subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, provided that, in any such case, Parent
shall have used its best efforts to defeat or have vacated such action or
proceeding and shall have failed to do so; or
(b) there shall be any action taken, or any statute, rule, regulation,
injunction, interpretation, judgment, order or decree enacted, enforced,
promulgated, issued or deemed applicable to Parent or any of its
subsidiaries or to the Company or any of its subsidiaries or the Offer or
the Merger, by any court, government or Governmental Entity, other than the
application of the waiting period provision of the HSR Act to the Offer or
the Merger, and other than a law or regulation relating to the issuance or
transfer of any licenses or permits of any licensing board or agency
governing the sale of alcoholic beverages, that, in the reasonable judgment
of Parent, is likely, directly or indirectly, to result in any of the
consequences referred to in clauses (i) through (vi) of paragraph (a)
above; or
(c) any change, event, occurrence or circumstance shall have occurred in
the business, operations, assets or condition (financial or otherwise) of
the Company or any of its subsidiaries, relating to a period commencing
after April 18, 1998, that in the reasonable judgment of Parent, is likely
to have a Company Material Adverse Effect; or
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange,
which suspension or limitation shall continue for at least three
consecutive trading days, (ii) any decline in either the Dow Jones
Industrial Average or the Standard and Poor's 500 Index by an amount in
excess of 25%, measured from May 13, 1998, (iii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iv) a commencement of a war or armed hostilities or other national
or international calamity directly or indirectly involving the United
States which would reasonably be expected to have a material adverse impact
on the capital markets of the United States, or (v) in the case of any of
the foregoing existing on the date of this Agreement, a material
acceleration, escalation or worsening thereof; or
(e) the Company shall have breached or failed to perform in any material
respect any of its covenants or agreements under the Merger Agreement, or
any of the representations and warranties of the Company set forth in the
Merger Agreement that are qualified as to materiality shall not be true and
correct and any of the representations and warranties without such
qualification shall not be true and correct in any material
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respect, in each case when made, except, in the case of any such breach,
where such breach would not have, individually or in the aggregate, a
Company Material Adverse Effect or materially and adversely affect the
Financing or the ability of Parent and Purchaser to consummate the Offer
and the Merger; or
(f) the Merger Agreement shall have been terminated in accordance with
its terms; or
(g) any Third Party (other than Joseph Crugnale or a "Permitted
Transferee" (as defined in the Tender and Voting Agreement) under the
Tender and Voting Agreement) acquires beneficial ownership of 15% or more
of the outstanding Shares; or
(h) a tender offer or exchange offer for more than 33 1/3% of the Shares
shall have been made or publicly proposed by a Third Party for a price in
excess of the Merger Consideration; or
(i) the Board of Directors of the Company withdraws or modifies in a
manner adverse to Purchaser or Parent its approval or recommendation of the
Offer, this Agreement or the Merger or recommends or approves an
Acquisition Proposal by a Third Party;
which, in the reasonable judgment of Parent, in any such case, and regardless
of the circumstances giving rise to any such condition, makes it inadvisable
to proceed with the Offer and/or with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Purchaser regardless of the circumstances giving rise
to such condition or may be waived by Purchaser in whole or in part at any
time and from time to time in its sole discretion. The failure by Purchaser or
any Affiliate of Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a
waiver with respect to any other facts and circumstances and each such right
shall be deemed an ongoing right that may be asserted at any time and from
time to time.
15. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
General. Except as described in this Section 15, based on neither a review
of publicly available filings made by the Company with the Commission and
other publicly available information concerning the Company, neither Purchaser
nor Parent is aware of any license or regulatory permit that appears to be
material to the business of the Company and its subsidiaries, taken as a
whole, that might be adversely affected by Purchaser's acquisition of Shares
(and the indirect acquisition of the stock of the Company's subsidiaries) as
contemplated herein or of any approval or other action by a domestic or
foreign governmental, administrative or regulatory agency or authority that
would be required for the acquisition and ownership of the Shares (and the
indirect acquisition of the stock of the Company's subsidiaries) by Purchaser
as contemplated herein. Should any such approval or other action be required,
Purchaser and Parent presently contemplate that such approval or other action
will be sought, except as described below under "State Takeover Laws." While,
except as otherwise described in this Offer to Purchase, Purchaser does not
presently intend to delay the acceptance for payment of or payment for Shares
tendered pursuant to the Offer pending the outcome of any such matter, there
can be no assurance that any such approval or other action, if needed, would
be obtained or would be obtained without substantial conditions or that
failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of or other substantial
conditions complied with in the event that certain parts of the Company's
business might not have to be disposed of or other substantial conditions
complied with in the event that such approvals were not obtained or such other
actions were not taken or in order to obtain any such approval or other
action. If certain types of adverse action are taken with respect to the
matters discussed below, Purchaser could decline to accept for payment or pay
for any Shares tendered. See Section 14 for certain conditions to the Offer,
including conditions with respect to governmental actions.
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State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable
to attempts to acquire securities of corporations that are incorporated or
have assets, stockholders, executive offices or places of business in such
states. In Edgar v. MITE Corp., the Supreme Court of the United States held
that the Illinois Business Takeover Act, which involved state securities laws
that made the takeover of certain corporations more difficult, imposed a
substantial burden on interstate commerce and therefore was unconstitutional.
In CTS Corp. v. Dynamics Corp. of America, however, the Supreme Court of the
United States held that a state may, as a matter of corporate law and, in
particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining stockholders, provided
that such laws were applicable only under certain conditions. Subsequently, a
number of Federal courts ruled that various state takeover statutes were
unconstitutional insofar as they apply to corporations incorporated outside
the state of enactment.
Except as described here, Purchaser has not attempted to comply with any
state takeover statutes in connection with the Offer or the Merger. Purchaser
reserves the right to challenge the validity or applicability of any state law
allegedly applicable to the Offer or the Merger and nothing in this Offer to
Purchase nor any action taken in connection herewith is intended as a waiver
of that right. If it is asserted that any state takeover statute is applicable
to the Offer or the Merger and if an appropriate court does not determine that
it is inapplicable or invalid as applied to the Offer or the Merger, Purchaser
might be required to file certain information with, or to receive approvals
from, the relevant state authorities, and Purchaser might be unable to accept
for payment or pay for Shares tendered pursuant to the Offer or be delayed in
continuing or consummating the Offer or the Merger. In such case, Purchaser
might not be obligated to accept for payment or pay for any Shares tendered.
See Section 14.
Massachusetts Statutes. Chapter 110F of the Massachusetts General Laws (the
"MGL") (the "Business Combination Statute") in general, prohibits any business
combination between a widely held Massachusetts corporation and an interested
stockholder for three years after that person becomes an interested (i.e., 5%)
stockholder unless: (a) prior to the date that person becomes an interested
stockholder, the board of directors of the corporation approved either the
business combination or the transaction which resulted in the stockholder
becoming an interested stockholder; (b) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owns at least 90% of the voting stock, excluding shares
held by directors, officers and employee stock plans in which employee
participants do not have the right to determine confidentially whether shares
held by the plan will be tendered in a tender or exchange offer; or (c) on or
subsequent to the time the stockholder becomes an interested stockholder, the
board of directors of the corporation and holders of two-thirds of the shares
of voting stock not held by the interested stockholder approve the business
combination.
Chapter 110D of the MGL (the "Control Share Acquisition Statute") provides,
in general, that shares of a widely-held Massachusetts corporation acquired in
a Control Share Acquisition (as defined in the Control Share Acquisition
Statute) will not have voting rights unless, among other things, voting rights
for such shares are approved by a vote of stockholders of the corporation, not
including those holding such shares. Excluded from the definition of "Control
Share Acquisition" is, among other things, an acquisition by tender offer or
merger pursuant to a merger agreement to which the Massachusetts corporation
is a party.
Chapter 110C of the MGL (the "Take-Over Bid Statute") imposes certain
procedural requirements and prohibitions in connection with a Take-Over Bid
(as defined in the Take-Over Bid Statute).
THE COMPANY HAS TAKEN ALL NECESSARY STEPS TO RENDER THE BUSINESS COMBINATION
STATUTE, THE CONTROL SHARE ACQUISITION STATUTE AND THE TAKE-OVER BID STATUTE
INAPPLICABLE TO THE ACQUISITION OF SHARES IN THE OFFER OR THE MERGER.
The foregoing description of the MGL, including the description of the
Business Combination Statute, the Control Share Acquisition Statute and the
Take-Over Bid Statute, is not necessarily complete and is qualified in its
entirety by reference to the MGL.
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Antitrust Compliance. Under the HSR Act and the rules that have been
promulgated thereunder by the FTC, certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division and the FTC and certain waiting period requirements have been
satisfied.
Parent expects to file soon a Notification and Report Form with respect to
the Offer under the HSR Act. The waiting period under the HSR Act with respect
to the Offer will expire at 11:59 p.m., New York City time, on the fifteenth
day after the date Parent's form is filed, unless early termination of the
waiting period is granted. Before such time, however, the Antitrust Division
or the FTC may extend the waiting period by requesting additional information
or documentary material from Parent. If such request is made, such waiting
period will expire at 11:59 p.m., New York City time, on the tenth calendar
day after substantial compliance by Parent with such request. Thereafter, the
waiting period may be extended only by court order or with Purchaser's
consent. The waiting period will not be affected either by the failure of the
Company (as opposed to Parent and Purchaser) to file a Notification and Report
form or to comply with any request for additional information or materials
issued by the FTC or the Antitrust Division.
The Merger would not require an additional filing under the HSR Act if
Purchaser owns 50% or more of the Shares outstanding at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares
by Purchaser pursuant to the Offer. At any time before or after the purchase
of Shares pursuant to the Offer by Purchaser, the FTC or the Antitrust
Division could take such action under the antitrust laws as it deems necessary
or desirable in the public interest, including seeking to enjoin the purchase
of Shares pursuant to the Offer or seeking the divestiture of Shares purchased
by Purchaser or the divestiture of substantial assets of Parent, the Company
or their respective subsidiaries. Private parties, as well as state
governments, may also bring legal action under the antitrust laws under
certain circumstances. Based upon an examination of information available to
Purchaser relating to the businesses in which Parent, the Company and their
respective subsidiaries are engaged, Parent and Purchaser believe that the
Offer will not violate the antitrust laws. Nevertheless, there can be no
assurance that a challenge to the Offer on antitrust grounds will not be made
or, if such a challenge is made, of the results thereof. See Section 14 for
certain conditions to the Offer, including conditions with respect to
litigation and certain governmental actions.
Stockholder Litigations. After the announcement of the merger contemplated
by the Ten Ideas Merger Agreement (the "Ten Ideas Merger"), three purported
class action lawsuits captioned (i) Keith Jamison v. Joseph Crugnale, Robert
L. Lestina, Jr., James Westra, E. Bulkeley Griswold, Allen J. Steinmetz and
Bertucci's, Inc., (ii) Marietta Brewster v. Joseph Crugnale, Robert L.
Lestina, Jr., James Westra, E. Bulkeley Griswold, Allen J. Steinmetz and
Bertucci's, Inc. and (iii) Sandra Weiss v. Bertucci's, Inc., Joseph Crugnale,
Robert L. Lestina, James Westra, Bulkeley E. Griswald and Allen J. Steinmetz
were filed in February 1998 in Massachusetts Superior Court against the
Company and its Board of Directors in connection with the Ten Ideas Merger
(the "Stockholder Litigations"). The plaintiffs claimed that the Ten Ideas
Merger was, or consummation thereof would have been, wrongful, unfair and in
breach of the individual defendants' fiduciary duties. The plaintiffs alleged
that the price per Share in the Ten Ideas Merger was grossly inadequate, the
Ten Ideas Merger would have been consummated without an auction of the Company
or other market check, and that the defendants possessed non-public
information concerning the condition and prospects of the Company. The
plaintiffs in the Stockholder Litigations seek preliminary and permanent
injunctive relief against the Ten Ideas Merger, unspecified monetary damages
and other relief. To date, the plaintiffs have not filed a motion for a
preliminary injunction or other preliminary relief.
16. FEES AND EXPENSES.
Purchaser has retained D.F. King & Co., Inc. to act as the Information Agent
and United States Trust Company of New York to act as Depositary in connection
with the Offer. The Information Agent may contact holders of Shares by mail,
telephone, facsimile, telegraph and personal interviews and may request
brokers,
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dealers and other nominees of stockholders to forward materials relating to
the Offer to beneficial owners of Shares. The Depositary has not been retained
to make solicitations or recommendations in its role as the Depositary. The
Information Agent and the Depositary each will receive reasonable and
customary compensation for their services, be reimbursed for certain
reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith.
Purchaser will not pay any fees or commission to any broker or any other
person (other than the Information Agent and the Depositary) for soliciting
tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks
and trust companies will, upon request, be reimbursed by Purchaser for
customary mailing and handling expenses incurred by them in forwarding
offering materials to their customers.
17. MISCELLANEOUS.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. Neither Purchaser nor Parent is aware of any jurisdiction
in which the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. To the extent Purchaser or
Parent becomes aware of any state law that would limit the class of offerees
in the Offer, Purchaser will amend the Offer and, depending on the timing of
such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall
be deemed to be made on behalf of Purchaser by one or more registered brokers
or dealers which are licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR PARENT NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
Parent and Purchaser have filed with the Commission the Schedule 14D-1,
together with exhibits, pursuant to Rule 14d-3 under the Exchange Act,
furnishing certain additional information with respect to the Offer and may
file amendments thereto. In addition, the Company has filed the Schedule 14D-9
pursuant to Rule 14d-9 under the Exchange Act, together with the exhibits
setting forth its recommendation with respect to the Offer and the reasons for
such recommendation and furnishing such additional related information. Such
Schedules and any amendments thereto, including exhibits, may be inspected at,
and copies may be obtained from, the same places and in the same manner as set
forth in Section 8 (except that such material will not be available at the
regional offices of the Commission).
NERC Acquisition Corp.
May 20, 1998
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SCHEDULE I
INFORMATION RELATING TO DIRECTORS AND
EXECUTIVE OFFICERS OF PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name, current business address, citizenship and the present
principal occupation or employment and material occupations, positions,
offices or employment for the past five years of each director and executive
officer of Parent. Unless otherwise indicated (i) all occupations, offices or
positions of employment listed opposite and individual's name have been or
were held by such individual during the course of the past five years, (ii)
the business address is 80A Turnpike Road, Westborough, Massachusetts 01581,
and (iii) each of the persons listed below is a United States citizen.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT; MATERIAL POSITIONS
NAME AND ADDRESS HELD DURING THE PAST FIVE YEARS
________________ ____________________________________________________
<C> <S>
Dennis Pedra................ President, Chief Executive Officer and a Director of
Parent (1991-present)
Paul V. Hoagland............ Executive Vice President, Chief Financial Officer
and a Director of Parent (1991-present)
Rick Barbrick............... Vice President of Operations for Chili's (January
1998-present); Senior Director of Operations (1992-
1997)
Richmond Brittingham........ Director of Operations (1992-1998)
Gary Schwab................. Vice President and Controller (1991-present)
Benjamin R. Jacobson........ Managing General Partner of Jacobson Partners (a
c/o Jacobson Partners partnership formed for direct equity investments)
595 Madison Avenue (1989-present); Chairman of the Board of Parent
New York, New York 10022
Stephen F. Mandel, Jr....... Managing Director, Portfolio Manager and
c/o Lone Pine Capital LLC Consumer/Retail Analyst of Lone Pine Capital LLC (a
2 Greenwich Plaza hedge fund) (July 1997-present); Senior managing
Greenwich, Connecticut director of, and consumer analyst at, Tiger
06830 Management Corporation (1990-July 1997); Director of
Parent
James J. Morgan............. Retired; President and Chief Executive Officer of
c/o Jacobson Partners Philip Morris U.S.A. (December 1994-November 1997);
595 Madison Avenue Senior Vice President, Marketing of Philip Morris
New York, New York 10022 U.S.A. (April 1993-December 1994); Corporate Vice
President, Marketing Planning, of the Philip Morris
Companies Inc. (1990-April 1993); Director of Parent
David A. Roosevelt.......... Associate at Jacobson Partners (October 1996-
c/o Jacobson Partners present); Principal of General Gas Company (natural
595 Madison Avenue gas marketing company) (June 1995-October 1996);
New York, New York 10022 Financial Analyst, Account Management Group at
Blackrock Financial Management (July 1993-June
1995); Director of Parent
2. DIRECTOR AND EXECUTIVE OFFICERS OF PURCHASER. The following table sets
forth the name and position with Purchaser of the director and each executive
officer of Purchaser. For additional information regarding such persons, see
paragraph 1 above.
<CAPTION>
NAME POSITIONS WITH PURCHASER
____ ____________________________________________________
<C> <S>
Dennis Pedra................ President, Treasurer, Clerk and a Director of
Purchaser
Paul V. Hoagland............ Executive Vice President, Assistant Treasurer and
Chief Financial Officer of Purchaser
Benjamin R. Jacobson........ Chairman of the Board of Purchaser
David A. Roosevelt.......... Director of Purchaser
</TABLE>
I-1
<PAGE>
SCHEDULE II
TRANSACTIONS IN SHARES DURING THE PAST 60 DAYS
BY PARENT AND PURCHASER
<TABLE>
<CAPTION>
TRANSACTION DATE SHARES ACQUIRED PRICE PER SHARE*
---------------- --------------- ----------------
<S> <C> <C>
3/23/98 30,000 $7.96875
3/24/98 92,700 $7.96875
3/25/98 38,300 $7.96875
</TABLE>
- --------
* All prices are exclusive of commissions.
II-1
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for the
Shares and any other required documents should be sent by each stockholder of
the Company or such stockholder's broker, dealer, commercial bank, trust
company or other nominee to the Depositary as follows:
The Depositary for the Offer is:
UNITED STATES TRUST COMPANY OF NEW YORK
By Registered or By Overnight Courier: By Hand:
Certified Mail: United States Trust Company United States Trust
United States Trust of New York Company
Company 770 Broadway, 13th Floor of New York
of New York New York, New York 10003 111 Broadway, Lower
P.O. Box 844 Attn: Corporate Trust Services Level
Attn: Corporate Trust Attn: Corporate Trust
Services Services
Cooper Station New York, New York 10006
New York, New York
10276-0844
By Facsimile:
(212) 420-6152
(For Eligible Institutions Only)
Confirm by Telephone:
(800) 548-6565
Questions and requests for assistance may be directed to the Information
Agent as set forth below. Additional copies of the Offer to Purchase, the
Letter of Transmittal and all other tender offer materials may be obtained
from the Information Agent and will be furnished promptly at Purchaser's
expense. Stockholders may also contact their brokers, dealers, commercial
banks or trust companies for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
(212) 269-5550 (call collect)
or
(800) 714-3310
<PAGE>
Exhibit (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
BERTUCCI'S, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED MAY 20, 1998
BY
NERC ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
NE RESTAURANT COMPANY, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JUNE 17, 1998, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
UNITED STATES TRUST COMPANY OF NEW YORK
By Registered or By Overnight Courier: By Hand:
Certified Mail: United States Trust United States Trust Company
Company of New York
United States Trust of New York 111 Broadway, Lower Level
Company 770 Broadway, 13th Attn: Corporate Trust
of New York Floor Services
P.O. Box 844 New York, New York New York, New York 10006
Attn: Corporate Trust 10003
Services Attn: Corporate Trust
Cooper Station Services
New York, New York
10276-0844
By Facsimile:
(212) 420-6152
(For Eligible
Institutions Only)
Confirm by Telephone:
(800) 548-6565
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
- -------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED
HOLDER(S)
EXACTLY AS NAME(S) APPEAR(S) ON STOCK
CERTIFICATE(S) SHARE(S) TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ----------------------------------------------------------------------------------------------
TOTAL NUMBER OF NUMBER
CERTIFICATE SHARES REPRESENTED OF SHARES
NUMBER(S)(1) BY CERTIFICATE(S)(1) TENDERED(2)
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
<S> <C> <C> <C>
TOTAL SHARES
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by stockholders tendering by book-entry transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares being
delivered to the Depositary are being tendered. See Instruction 4.
<PAGE>
This Letter of Transmittal is to be used either if certificates for Shares
(as defined below) are to be forwarded herewith or, unless an Agent's Message
(as defined in Section 3 of the Offer to Purchase dated May 20, 1998 (the
"Offer to Purchase")) is utilized, if delivery of Shares is to be made by
book-entry transfer to the account maintained by United States Trust Company
of New York (the "Depositary") at The Depository Trust Company or Philadelphia
Depository Trust Company (each, a "Book-Entry Transfer Facility" and,
collectively, the "Book-Entry Transfer Facilities") pursuant to the procedures
set forth in Section 3 of the Offer to Purchase. Stockholders whose
certificates for Shares are not immediately available or who cannot deliver
confirmation of a book-entry transfer of their Shares into the Depositary's
account at a Book-Entry Transfer Facility ("Book-Entry Confirmation") and all
other documents required hereby to the Depositary on or prior to the
Expiration Date (as defined in the Offer to Purchase), must tender their
Shares according to the guaranteed delivery procedures set forth in Section 3
of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-
ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: ____________________________________________
Check box of applicable Book-Entry Transfer Facility:
[_]The Depository Trust Company
[_]Philadelphia Depository Trust Company
Account Number: ___________________________________________________________
Transaction Code Number: ___________________________________________________
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY (AS DEFINED IN THE OFFER TO PURCHASE) PREVIOUSLY SENT
TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owners(s): ___________________________________________
Window Ticket Number (if available): _______________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution that Guaranteed Delivery: ______________________________
If delivered by book-entry transfer, check box of applicable Book-Entry
Transfer Facility:
[_]The Depository Trust Company
[_]Philadelphia Depository Trust Company
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS.
Ladies and Gentlemen:
The undersigned hereby tenders to NERC Acquisition Corp., a Massachusetts
corporation ("Purchaser") and wholly-owned subsidiary of NE Restaurant
Company, Inc., a Delaware corporation ("Parent"), the above described shares
of common stock, par value $0.005 per share (the "Shares"), of Bertucci's,
Inc., a Massachusetts corporation (the "Company") at a purchase price of
$10.50 per Share, net to the seller in cash, without interest thereon (the
"Offer Price"), upon the terms and subject to the conditions set forth in the
Offer to Purchase and in this Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer"),
receipt of which is hereby acknowledged.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms and subject to the conditions
of the Offer (including, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), the undersigned hereby sells,
assigns, and transfers to, or upon the order of, Purchaser all right, title
and interest in and to all the Shares that are being tendered hereby (and any
and all other Shares or other securities or rights issued or issuable in
respect thereof on or after May 13, 1998) and irrevocably constitutes and
appoints the Depositary the true and lawful agent and attorney-in-fact of the
undersigned, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to the full
extent of the undersigned's rights with respect to such Shares (and any other
Shares or securities or rights) to (a) deliver certificates for such Shares
(and any such other Shares or securities or rights), or transfer ownership of
such Shares (and any such other Shares or securities or rights) on the account
books maintained by a Book-Entry Transfer Facility, together, in any such
case, with all accompanying evidences of transfer and authenticity to, or upon
the order of, Purchaser upon receipt by the Depositary, as the undersigned's
agent, of the purchase price (adjusted, if appropriate, as provided in the
Offer to Purchase), (b) present such Shares (and any such other Shares or
securities or rights) for transfer on the books of the Company and (c) receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any other such Shares or securities or rights), all in accordance
with the terms of the Offer.
The undersigned hereby irrevocably appoints Dennis Pedra and Paul V.
Hoagland, and each of them, and any other designee(s) of Purchaser, the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to the full extent of such stockholder's rights with respect to
tendered Shares (and any and all other non-cash dividends, distributions,
rights and other securities issued or issuable in respect thereof on or after
May 13, 1998), to vote at any annual, special, adjourned or postponed meeting
of the Company's stockholders or otherwise in such manner as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper with respect to, to execute any written consent concerning any matter
as each such attorney-in-fact and proxy or his substitute in his sole
discretion deems proper with respect to, and to otherwise act as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper with respect to, the Shares tendered hereby that have been accepted for
payment by Purchaser prior to the time any such action is taken, and with
respect to which the undersigned is entitled to vote. This power of attorney
and proxy is coupled with an interest in the Shares tendered hereby, is
irrevocable and is granted in consideration of, and is effective when, if and
to the extent that Purchaser accepts such Shares for payment pursuant to the
Offer. Such acceptance for payment shall revoke, without further action, all
prior powers of attorney, proxies and consents granted by the undersigned at
any time with respect to such Shares (and any such other Shares or other
securities or rights), and no subsequent powers of attorney, proxies, consents
or revocations may be given (and, if given, will be not be deemed effective)
with respect thereto by the undersigned. The undersigned acknowledges that in
order for Shares to be deemed validly tendered, immediately upon the
acceptance for payment of such Shares, Purchaser or Purchaser's designee must
be able to exercise full voting, consent and other rights which inure to a
record and beneficial holder with respect to such Shares and other securities
or rights.
3
<PAGE>
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any and all other Shares or other securities or rights issued or
issuable in respect thereof on or after May 13, 1998), and that, when the same
are accepted for payment by Purchaser, Purchaser will acquire good, marketable
and unencumbered title thereto, free and clear of all liens, restrictions,
charges and encumbrances and the same will not be subject to any adverse
claim. The undersigned, upon request, will execute and deliver any signature
guarantee or additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete or confirm the sale, assignment and
transfer of the Shares tendered hereby (and any and all such other Shares or
other securities or rights).
All authority conferred or agreed pursuant to this Letter of Transmittal
shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
of the procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the
undersigned and Purchaser upon the terms and subject to the conditions of the
Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates
for Shares not tendered or accepted for payment in the name(s) of the
undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
certificates for Shares not tendered or accepted for payment (and accompanying
documents, as appropriate) to the undersigned at the address shown below the
undersigned's signature. In the event that both the Special Delivery
Instructions and the Special Payment Instructions are completed, please issue
the check for the purchase price and/or return any certificates for Shares not
tendered or accepted for payment (and accompanying documents, as appropriate)
in the name of, and deliver such check and/or return such certificates (and
accompanying documents, as appropriate) to the person or persons so indicated.
Unless otherwise indicated herein under "Special Payment Instructions," please
credit any Shares tendered herewith by book-entry transfer that are not
accepted for payment by crediting the account at the Book-Entry Transfer
Facility designated above. The undersigned recognizes that Purchaser has no
obligation pursuant to the "Special Payment Instructions" to transfer any
Shares from the name of the registered holder thereof if Purchaser does not
accept for payment any of the Shares so tendered.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7)
(SEE INSTRUCTIONS 1, 5, 6, AND 7)
To be completed ONLY if To be completed ONLY if
certificates for Shares not certificates for Shares not
tendered or not purchased and/or tendered or not purchased and/or
the check for the purchase price the check for the purchase price
of Shares purchased are to be of Shares purchased are to be
issued in the name of someone mailed or delivered to someone
other than the undersigned or if other than the undersigned or to
Shares delivered by book-entry the undersigned at an address
transfer which are not purchased other than that indicated above.
are to be returned by credit to
an account maintained at a Book-
Entry Transfer Facility other
than that designated above.
Mail or deliver [_] check and/or
[_] certificates to:
Name: ___________________________
Issue [_] check and/or [_] (PLEASE PRINT)
certificates to:
Address: ________________________
Name: ___________________________ _________________________________
(PLEASE PRINT) _________________________________
(INCLUDE ZIP CODE)
Address: ________________________
_________________________________
_________________________________
(INCLUDE ZIP CODE)
_________________________________ _________________________________
(TAX IDENTIFICATION OR SOCIAL (TAX IDENTIFICATION OR SOCIAL
SECURITY NO.) SECURITY NO.)
[_]Credit unpurchased Shares
delivered by book-entry
transfer to the Book-Entry
Transfer Facility account set
forth below:
Check appropriate box:
[_]The Depository Trust Company
[_]Philadelphia Depository Trust
Company
_________________________________
(ACCOUNT NUMBER)
5
<PAGE>
IMPORTANT:
STOCKHOLDERS SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
________________________________________________________________
________________________________________________________________
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated: ______________ , 1998
(Must be signed by the registered holder(s) exactly as name(s)
appear(s) on certificate(s) for the Shares or on a security
position listing or by person(s) authorized to become
registered holder(s) by certificates and documents transmitted
herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative
capacity, please provide the following information. See
Instruction 5.)
Name(s): _______________________________________________________
________________________________________________________________
________________________________________________________________
(PLEASE PRINT)
Capacity (full title): _________________________________________
________________________________________________________________
________________________________________________________________
Address: _______________________________________________________
________________________________________________________________
________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: ___________________________________
Tax Identification or Social Security No.: _____________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: __________________________________________
Name and Title: ________________________________________________
(PLEASE PRINT)
Name of Firm: __________________________________________________
Address: _______________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: ___________________________________
Dated: ______________ , 1998
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Instruction includes
any participant in any of the Book-Entry Transfer Facilities' systems whose
name appears on a security position listing as the owner of the Shares) of
Shares tendered herewith, unless each such registered holder has completed
either the box entitled "Special Delivery Instructions" or the box entitled
"Special Payment Instructions" on this Letter of Transmittal or (ii) if such
Shares are tendered for the account of a financial institution (including most
commercial banks, savings and loan associations and brokerage houses) that is
a participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (each, an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Certificates. This Letter of
Transmittal is to be completed by stockholders either if certificates are to
be forwarded herewith or, unless an Agent's Message (as defined herein) is
utilized, if delivery of Shares is to be made pursuant to the procedures for
delivery by book-entry transfer set forth in Section 3 of the Offer to
Purchase. For a stockholder validly to tender Shares pursuant to the Offer,
either (a) a Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, together with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents, must be received by the Depositary at one of its addresses
set forth herein prior to the Expiration Date and either the certificates for
tendered Shares must be received by the Depositary at one of such addresses or
Shares must be delivered pursuant to the procedures described herein (and a
Book-Entry Confirmation must be received by the Depositary), in each case,
prior to the Expiration Date, or (b) the tendering stockholder must comply
with the guaranteed delivery procedures described below and in Section 3 of
the Offer to Purchase. If a stockholder's certificates for such Shares are not
immediately available or time will not permit all required documents to reach
the Depositary prior to the Expiration Date, or the procedure for book-entry
transfer cannot be completed on a timely basis, such stockholder's Shares may
nevertheless be tendered by properly completing and duly executing the Notice
of Guaranteed Delivery pursuant to the guaranteed delivery procedures set
forth in Section 3 of the Offer to Purchase. Pursuant to such procedures, (i)
such tender must be made by or through an Eligible Institution, (ii) a
properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by Purchaser, must be received by the
Depositary prior to the Expiration Date and (iii) in the case of a guarantee
of Shares, the certificates for (or a Book-Entry Confirmation with respect to)
all tendered Shares, in proper form for transfer, together with a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed,
together with any required signature guarantee(s) or, in the case of a book-
entry transfer, an Agent's Message, and any other required documents, must be
received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day on
which the Nasdaq National Market operated by the National Association of
Securities Dealers, Inc. is open for business. If certificates for such Shares
are forwarded separately to the Depositary, a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, must accompany each such delivery. The term
"Agent's Message" means a message, transmitted by a Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of a Book-
Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of this Letter of Transmittal and that
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL
BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING,
IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY
IS BY MAIL, PROPERLY INSURED REGISTERED MAIL WITH RETURN RECEIPT REQUESTED IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
7
<PAGE>
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution
of this Letter of Transmittal (or a facsimile thereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
signed schedule attached hereto.
4. Partial Tenders. (Not applicable to stockholders who tender by book-entry
transfer.) If fewer than all the Shares evidenced by any certificate submitted
are to be tendered, fill in the number of Shares which are to be tendered in
the box entitled "Description of Shares to be Tendered." In such case, new
certificate(s) for the remainder of the Shares that were evidenced by the old
certificate(s) will be sent to the registered holder, unless otherwise
provided in the appropriate box on this Letter of Transmittal, as soon as
practicable after the Expiration Date. All Shares represented by certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly to the name(s) as
written on the face of the certificate(s) without alteration, enlargement or
any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of
a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsement of certificates or
separate stock powers is required unless payment or certificates for Shares
not tendered or purchased are to be issued to a person other than the
registered owner(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares listed, the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear on the certificates. Signatures on
such certificates or stock powers must be guaranteed by an Eligible
Institution.
6. Stock Transfer Taxes. Except as set forth in this Instruction 6,
Purchaser will pay or cause to be paid any stock transfer taxes with respect
to the transfer and sale of purchased Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made, or if
certificates for Shares not tendered or purchased are to be registered in the
name of any person other than the registered holder, or if tendered
certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any stock transfer taxes
(whether imposed on the registered holder or such person) payable on account
of the transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. Special Payment and Delivery Instructions. If a check and/or certificates
for unpurchased Shares are to be issued in the name of a person other than the
signer of this Letter of Transmittal or if a check is to be sent and/or such
certificates are to be returned to someone other than the signer of this
Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed.
Stockholders tendering Shares by book-entry transfer may request that Shares
not purchased be credited to such
8
<PAGE>
account maintained at a Book-Entry Transfer Facility as such stockholder may
designate hereon. If no such instructions are given, such Shares not purchased
will be returned by crediting the account at the Book-Entry Transfer Facility
designated above.
8. Requests for Assistance or Additional Copies. Requests for assistance may
be directed to the Information Agent (as defined in the Offer to Purchase) at
its address set forth below. Additional copies of the Offer to Purchase, this
Letter of Transmittal, the Notice of Guaranteed Delivery and the Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 may
be obtained from the Information Agent at the address set forth below or from
your broker, dealer, commercial bank or trust company.
9. Waiver of Conditions. Purchaser expressly reserves the right, in its sole
discretion, at any time and from time to time, to waive any of the conditions
to the Offer, including the Minimum Condition (as defined in the Offer to
Purchase), provided that no such waiver of the Minimum Condition shall
decrease the Minimum Condition to less than 66 2/3%), to the extent permitted
by applicable laws and the provisions of the Merger Agreement (as defined in
the Offer to Purchase), in the case of any Shares tendered.
10. Substitute Form W-9. Subject to the availability of an exemption, each
tendering stockholder is required to provide the Depositary with a correct
Taxpayer Identification Number ("TIN") on the Substitute Form W-9, which is
provided under "Important Tax Information" below, and to certify under
penalties of perjury that such number is correct and that such stockholder is
not subject to backup withholding. If a tendering stockholder has been
notified by the Internal Revenue Service that such stockholder is subject to
backup withholding, such stockholder must cross out item (2) of the
Certification box of the Substitute Form W-9, unless such stockholder has
since been notified by the Internal Revenue Service that such stockholder is
no longer subject to backup withholding. Failure to provide the information on
the Substitute Form W-9 may subject the tendering stockholder to 31% federal
income tax withholding with respect to any payments received pursuant to the
Offer. If the tendering stockholder has not been issued a TIN and has applied
for one or intends to apply for one in the near future, such stockholder
should write "Applied For" in the space provided for the TIN in Part 1 of the
Substitute Form W-9, check the box in Part 3 of the Substitute Form W-9 and
sign and date the Substitute Form W-9. Such a stockholder must also complete
the Certificate of Awaiting Taxpayer Identification Number, which is provided
below. Notwithstanding that "Applied For" is written in Part 1 and the
Certificate of Awaiting Taxpayer Identification Number is completed, the
Depositary will withhold 31% on all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary. However, such withheld
amount will be refunded to such stockholder if a certified TIN is provided to
the Depositary within 60 days.
11. Lost, Destroyed or Stolen Certificates. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary. The stockholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES,
OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER
REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY AT ONE OF ITS ADDRESSES
SET FORTH HEREIN PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR
TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED
PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE
EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES
FOR GUARANTEED DELIVERY.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under United States federal income tax law, unless an exemption applies (as
described below), a stockholder whose tendered Shares are accepted for payment
is required by law to provide the Depositary with such stockholder's correct
TIN on Substitute Form W-9 below. If such stockholder is an individual, the
TIN is generally such stockholder's social security number. If the Depositary
is not provided with the correct TIN, the stockholder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, payments that
are made to such stockholder with respect to Shares purchased pursuant to the
Offer may be subject to backup withholding of 31%.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to these backup withholding
and reporting requirements. Noncorporate foreign stockholders should sign and
complete the main signature form and a Form W-8, Certificate of Foreign
Status, a copy of which may be obtained from the Depositary, in order to avoid
backup withholding. Exempt stockholders, other than noncorporate foreign
stockholders, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9
to the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies with respect to a stockholder, the Depositary
is required to withhold 31% of any payments made to such stockholder. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld.
If withholding results in an overpayment of taxes, a refund may be obtained
from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying (a) that the TIN provided on the
Substitute Form W-9 is correct and (b) that such stockholder is not subject to
backup withholding because (i) such stockholder is exempt from backup
withholding, (ii) such stockholder has not been notified by the Internal
Revenue Service that such stockholder is subject to backup withholding as a
result of a failure to report all interest or dividends or (iii) such
stockholder has been notified by the Internal Revenue Service that such
stockholder is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares tendered hereby. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report. If the tendering stockholder
has not been issued a TIN and has applied for a number or intends to apply for
a number in the near future, the stockholder should write "Applied For" in the
space provided for the TIN in Part 1 of the Substitute Form W-9, check the box
in Part 3 of the Substitute Form W-9 and sign and date the Substitute Form W-
9. Such a stockholder must also complete the Certificate of Awaiting Taxpayer
Identification Number, which is provided below. Notwithstanding that "Applied
For" is written in Part 1 and the Certificate of Awaiting Taxpayer
Identification Number is completed, the Depositary will withhold 31% of all
payments of the purchase price to such stockholder until a TIN is provided to
the Depositary. However, such withheld amount will be refunded to such
stockholder if a certified TIN is provided to the Depositary within 60 days.
10
<PAGE>
PAYER'S NAME: UNITED STATES TRUST COMPANY OF NEW YORK
PART 1--PLEASE PROVIDE YOUR ____________________
TIN IN THE BOX AT RIGHT Social security number
AND CERTIFY BY SIGNING or
AND DATING BELOW
SUBSTITUTE
FORM W-9
_______________________
DEPARTMENT OF Employer identification
THE TREASURY number
INTERNAL _____________________________________________________
REVENUE SERVICE PART 2--CERTIFICATION--Under PART 3 --Awaiting
penalties of perjury, I TIN [_]
certify that:
PAYER'S REQUEST FOR
TAXPAYER IDENTIFICATION (1) The number shown on this
NUMBER (TIN) form is my correct
taxpayer identification
number (or I am waiting
for a number to be
issued to me) and
(2) I am not subject to
backup withholding
because (a) I am exempt
from backup withholding,
(b) I have not been
notified by the Internal
Revenue Service (the
"IRS") that I am subject
to backup withholding as
a result of a failure to
report all interest or
dividends, or (c) the
IRS has notified me that
I am no longer subject
to backup withholding.
_____________________________________________________
CERTIFICATION INSTRUCTIONS--You must cross out
item (2) in Part 2 above if you have been notified
by the IRS that you are subject to backup
withholding because of underreporting interest or
dividends on your tax return. However, if after
being notified by the IRS that you are subject to
backup withholding you receive another
notification from the IRS stating that you are no
longer subject to backup withholding, do not cross
out item (2).
________________________________________________________________________________
SIGNATURE ____________________________________ DATE ________________ , 1998
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO
THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
11
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECK THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or
delivered an application to receive a taxpayer identification number to
the appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver such an
application in the near future. I understand that if I do not provide a
taxpayer identification number to the Depositary, 31% of all reportable
payments made to me will be withheld, but that such withheld amount shall
be refunded to me if I provide the Depositary with my taxpayer
identification number within 60 days.
Signature ____________________________________ Date ________________, 1998
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent as set forth below:
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(212) 269-5550 (Call Collect)
or
(800) 714-3310
12
<PAGE>
Exhibit (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
BERTUCCI'S, INC.
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to tender Shares (as defined below) pursuant to the Offer (as
defined below) if (i) certificates for shares of common stock, par value
$0.005 per share (the "Shares"), of Bertucci's, Inc., a Massachusetts
corporation (the "Company"), are not immediately available; (ii) time will not
permit all required documents to reach United States Trust Company of New
York, as Depositary (the "Depositary"), prior to the Expiration Date (as
defined in the Offer to Purchase, dated May 20, 1998 (the "Offer to
Purchase")); or (iii) the procedure for delivery by book-entry transfer cannot
be completed on a timely basis. This Notice of Guaranteed Delivery may be
delivered by hand or transmitted by telegram, facsimile transmission or mail,
to the Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
UNITED STATES TRUST COMPANY OF NEW YORK
By Registered or By Overnight Courier: By Hand:
Certified Mail:
United States Trust United States Trust
United States Trust Company Company
Company of New York of New York
of New York 770 Broadway, 13th Floor 111 Broadway, Lower
P.O. Box 844 New York, New York 10003 Level
Attn: Corporate Trust Attn: Corporate Trust Attn: Corporate Trust
Services Services Services
Cooper Station New York, New York 10006
New York, New York
10276-0844
By Facsimile:
(212) 420-6152
(For Eligible
Institutions Only)
Confirm by Telephone:
(800) 548-6565
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL
NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to NERC Acquisition Corp., a Massachusetts
corporation and a wholly-owned subsidiary of NE Restaurant Company, Inc., a
Delaware corporation, upon the terms and subject to the conditions set forth
in the Offer to Purchase and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer"), receipt of which is hereby acknowledged, the number of Shares
indicated below pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
Number of Shares: ___________________ Signature(s): _______________________
Name(s) of Record Holder(s): ________ _____________________________________
_____________________________________ Dated: ______________________ , 1998
Please Type or Print
Address(es): ________________________ If Shares will be tendered by book_
_____________________________________ entry transfer, check one box and
Zip Code provide account number
Area Code and Tel. No.: _____________
Certificate No(s). (if available): __ [_]The Depository Trust Company
Share Certificates: _________________ [_]Philadelphia Depository Trust
Company
Account Number: _____________________
_____________________________________
<PAGE>
GUARANTEE
(Not To Be Used For Signature Guarantee)
The undersigned, a firm which is a participant in the Security Transfer
Agents Medallion Program, the New York Stock Exchange Medallion Signature
Guarantee Program or the Stock Exchange Medallion Program (each, an "Eligible
Institution"), hereby (a) represents that the tender of Shares effected hereby
complies with Rule 14e-4 under the Securities Exchange Act of 1934, as
amended, and (b) guarantees delivery to the Depositary, at one of its
addresses set forth above, of certificates representing the Shares tendered
hereby in proper form for transfer, or confirmation of book-entry transfer of
such Shares into the Depositary's accounts at The Depository Trust Company or
Philadelphia Depository Trust Company, in each case with delivery of a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees, and any other
required documents, within three Nasdaq National Market trading days after the
date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and the
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm: _________________________________________________________________
Authorized Signature: _________________________________________________________
Title: ________________________________________________________________________
Address: ______________________________________________________________________
______________________________________________________________________________
Zip Code
Area Code and Tel. No.: _______________________________________________________
Dated: _________________________________________________________________ , 1998
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
Exhibit (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
BERTUCCI'S, INC.
AT
$10.50 NET PER SHARE
BY
NERC ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
NE RESTAURANT COMPANY, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JUNE 17, 1998, UNLESS THE OFFER IS EXTENDED.
May 20, 1998
To Brokers, Dealers, Commercial Banks, Trust Companies And Other Nominees:
We have been engaged by NERC Acquisition Corp., a Massachusetts corporation
("Purchaser") and a wholly-owned subsidiary of NE Restaurant Company, Inc., a
Delaware corporation ("Parent"), to act as Information Agent in connection
with Purchaser's offer to purchase all outstanding shares of common stock, par
value $0.005 per share (the "Shares"), of Bertucci's, Inc., a Massachusetts
corporation (the "Company"), or such lesser number of Shares which, together
with the Shares then beneficially owned by Parent or Purchaser, represent at
least 90% of all outstanding Shares (determined on a fully diluted basis on
the Expiration Date (as defined in the Offer to Purchase, dated May 20, 1998
(the "Offer to Purchase")). Purchaser is tendering for all outstanding Shares
at a purchase price of $10.50 per Share, net to the seller in cash, without
interest thereon (the "Offer Price"), upon the terms and subject to the
conditions set forth in the Offer to Purchase and in the Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer").
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, or who hold
Shares registered in their own names, we are enclosing the following
documents:
1. The Offer to Purchase;
2. A letter from the President and Chairman of the Company and the
Solicitation/Recommendation Statement on Schedule 14D-9 of the Company;
3. The Letter of Transmittal to be used by holders of Shares for your
use in tendering Shares pursuant to the Offer and for the information of
your clients (facsimile copies of the Letter of Transmittal may be used to
tender Shares);
4. A form of letter which may be sent to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee,
with space provided for obtaining such clients' instructions with regard to
the Offer;
5. A Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available or if time will not
permit all required documents to reach the Depositary by the Expiration
Date or if the procedure for book-entry transfer cannot be completed on a
timely basis;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. A return envelope addressed to the Depositary.
<PAGE>
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES WHICH, TOGETHER WITH THE SHARES THEN BENEFICIALLY OWNED BY PARENT OR
PURCHASER REPRESENT AT LEAST 90% OF ALL OUTSTANDING SHARES (DETERMINED ON A
FULLY DILUTED BASIS ON THE EXPIRATION DATE). THE OFFER IS ALSO SUBJECT TO
OTHER TERMS AND CONDITIONS CONTAINED IN THE OFFER TO PURCHASE. SEE SECTION 14
OF THE OFFER TO PURCHASE.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for all Shares which
are validly tendered prior to the Expiration Date and not theretofore properly
withdrawn when, as and if Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment pursuant to
the Offer. Payment for Shares purchased pursuant to the Offer will in all
cases be made only after timely receipt by the Depositary of certificates for
such Shares, or timely confirmation of a book-entry transfer of such Shares
into the Depositary's account at The Depository Trust Company or Philadelphia
Depository Trust Company, pursuant to the procedures described in Section 3 of
the Offer to Purchase, a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined in the Offer to Purchase), and any other required documents.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Information Agent and the Depositary) for
soliciting tenders of Shares pursuant to the Offer. Purchaser will, however,
upon request, reimburse brokers, dealers, commercial banks and trust companies
for customary mailing and handling expenses incurred by you in forwarding the
enclosed materials to your clients.
Purchaser will pay or cause to be paid all stock transfer taxes payable on
the transfer of Shares to it, except as otherwise provided in Instruction 6 of
the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 17, 1998, UNLESS THE OFFER IS
EXTENDED.
In order to take advantage of the Offer, a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, and any other required documents, should be
sent to the Depositary, and certificates representing the tendered Shares
should be delivered or such Shares should be tendered by book-entry transfer,
all in accordance with the Instructions set forth in the Letter of Transmittal
and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents prior to the expiration
of the Offer, a tender may be effected by following the guaranteed delivery
procedures specified under Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
the undersigned at our address and telephone number set forth on the back
cover page of the Offer to Purchase. Additional copies of the enclosed
materials may be obtained from the undersigned or from brokers, dealers,
commercial banks or trust companies.
Very truly yours,
D.F. KING & CO., INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS AN AGENT OF PARENT, PURCHASER, THE DEPOSITARY OR THE
INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU
OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY
OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED AND THE
STATEMENTS CONTAINED THEREIN.
2
<PAGE>
Exhibit (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BERTUCCI'S, INC.
AT
$10.50 NET PER SHARE
BY
NERC ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
NE RESTAURANT COMPANY, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JUNE 17, 1998, UNLESS THE OFFER IS EXTENDED.
May 20, 1998
To Our Clients:
Enclosed for your consideration is the Offer to Purchase, dated May 20, 1998
(the "Offer to Purchase"), and the Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "Offer")
relating to an offer by NERC Acquisition Corp., a Massachusetts corporation
("Purchaser") and a wholly-owned subsidiary of NE Restaurant Company, Inc., a
Delaware corporation ("Parent"), to purchase all outstanding shares of common
stock, par value $0.005 per share (the "Shares"), of Bertucci's, Inc., a
Massachusetts corporation (the "Company"), or such lesser number of Shares
which, together with the Shares then beneficially owned by Parent or
Purchaser, represent at least 90% of all outstanding Shares (determined on a
fully diluted basis on the Expiration Date (as defined in the Offer to
Purchase)). Purchaser is tendering for all outstanding Shares at a purchase
price of $10.50 per Share, net to the seller in cash, without interest thereon
(the "Offer Price"), upon the terms and subject to the conditions set forth in
the Offer to Purchase.
If a stockholder desires to tender Shares pursuant to the Offer and the
certificate(s) for such stockholder's Shares are not immediately available or
time will not permit all required documents to reach the Depositary prior to
the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered
according to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase. See Instruction 2 of the Letter of Transmittal. Delivery of
documents to a Book-Entry Transfer Facility (as defined in the Offer to
Purchase) in accordance with the Book-Entry Transfer Facility's procedures
does not constitute delivery to the Depositary. A tender of such Shares can be
made only by us as the holder of record and pursuant to your instructions. The
Letter of Transmittal is furnished to you for your information only and cannot
be used by you to tender Shares held by us for your account.
Accordingly, we request instructions as to whether you wish to tender any or
all of such Shares held by us for your account, pursuant to the terms and
conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $10.50 per Share, net to you in cash without
interest.
2. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Wednesday, June 17, 1998, unless the Offer is extended.
3. The Board of Directors of the Company, by unanimous vote of all of the
directors, has approved the Merger Agreement (as defined in the Offer to
Purchase) and the transactions contemplated thereby and determined that
each of the Offer and the Merger (as defined in the Offer to Purchase), is
fair to, and in the best interest of, the stockholders of the Company.
4. The Offer is being made for all outstanding Shares.
<PAGE>
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which, together with the Shares then beneficially owned by Parent or
Purchaser, represent at least 90% of all outstanding Shares (determined on
a fully diluted basis on the Expiration Date).
6. Stockholders who tender Shares will not be obligated to pay brokerage
commissions, solicitation fees or, except as set forth in Instruction 6 of
the Letter of Transmittal, stock transfer taxes on the purchase of Shares
by Purchaser pursuant to the Offer.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. Neither Purchaser nor Parent is aware of any jurisdiction
in which the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. To the extent Purchaser or
Parent becomes aware of any state law that would limit the class of offerees
in the Offer, Purchaser will amend the Offer and, depending on the timing of
such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall
be deemed to be made on behalf of Purchaser by one or more registered brokers
or dealers which are licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please complete,
sign and return to us the form set forth below. An envelope to return your
instructions to us is enclosed. Your instructions to us should be forwarded in
ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer. If you authorize the tender of your Shares, all such
Shares will be tendered unless otherwise specified on the instruction form set
forth below.
----------------
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK OF BERTUCCI'S, INC.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer to
Purchase, dated May 20, 1998, and the Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the
"Offer"), relating to the offer by NERC Acquisition Corp., a Massachusetts
corporation ("Purchaser") and a wholly-owned subsidiary of NE Restaurant
Company, Inc., a Delaware corporation, to purchase all outstanding shares of
common stock, par value $0.005 per share (the "Shares"), of Bertucci's, Inc.,
a Massachusetts corporation (the "Company").
2
<PAGE>
This will instruct you to tender to Purchaser the number of Shares indicated
below (or if no number is indicated below, all Shares) held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
Dated: _______________________ , 1998 SIGN HERE
_____________________________________
Number of Shares to be Tendered*: _____________________________________
Signature(s)
_________________________________
_____________________________________
Account Number: _________________ _____________________________________
Please Print Name(s) Here
_____________________________________
_____________________________________
Address(es)
_____________________________________
_____________________________________
Area Code and Telephone Number(s)
_____________________________________
_____________________________________
Tax Identification or Social
________ Security Number(s)
* Unless otherwise indicated, it will be assumed that all of your Shares held
by us for your account are to be tendered.
3
<PAGE>
Exhibit (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.-- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- ----------------------------------- -----------------------------------
<TABLE>
<CAPTION>
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------
<S> <C>
1. An individual The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one
of the
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of a The minor(2)
minor
(Uniform Gift to Minors
Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor,
guardian or committee or incompetent
for a designated ward, person(3)
minor, or incompetent
person
7.a The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
- --------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
---
<S> <C>
9. A valid trust, estate, The legal entity
or pension trust (Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
---
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a Social Security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your Social Security number or
Employer identification number (if you have one).
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number (for business and
all other entities), at the local office to the Social Security Administration
or the Internal Revenue Service (the "IRS") and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual retirement
plan, or a custodial account under section 403(b)(7) of the Code, if the
account satisfies the requirements of section 401(f)(2) of the Code.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a) of the Code.
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
. A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441
of the Code.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
. Section 401(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
. Payments described in section 6049(b)(5) of the Code to nonresident
aliens.
. Payments on tax-free covenant bonds under section 1451 of the Code.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt Payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT
TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A of the Code and the Treasury regulations promulgated
thereunder.
PRIVACY ACT NOTICE.--Section 6109 of the Code requires most recipients of
dividend, interest, or other payments to give taxpayer identification numbers
to payers who must report the payments to the IRS. The IRS uses the numbers
for identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold
31% of taxable interest, dividend, and certain other payments to a payee who
does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.-- If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to a reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.-- Falsifying certifications
or affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE IRS.
<PAGE>
Exhibit (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase, dated May
20, 1998, and the related Letter of Transmittal. The Offer is not being made
to (nor will tenders be accepted from or on behalf of) holders of Shares
residing in jurisdictions in which the making of the Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities, blue sky
or other laws require the Offer to be made by a licensed broker
or dealer, the Offer shall be deemed to be made on behalf of
Purchaser by one or more registered brokers or dealers
which are licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BERTUCCI'S, INC.
AT
$10.50 NET PER SHARE
BY
NERC ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
NE RESTAURANT COMPANY, INC.
NERC Acquisition Corp., a Massachusetts corporation ("Purchaser") and a
wholly-owned subsidiary of NE Restaurant Company, Inc., a Delaware corporation
("Parent"), is offering to purchase all outstanding shares of Common Stock, par
value $0.005 per share (the "Shares"), of Bertucci's, Inc., a Massachusetts
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated May 20, 1998 (the "Offer to Purchase"),
and in the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"), at a purchase price
of $10.50 per Share, net to the seller in cash, without interest thereon.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JUNE 17, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES, WHICH, TOGETHER WITH THE SHARES THEN BENEFICIALLY OWNED BY PARENT OR
PURCHASER, REPRESENT AT LEAST 90% OF ALL OUTSTANDING SHARES (DETERMINED ON A
FULLY DILUTED BASIS ON THE EXPIRATION DATE (AS DEFINED BELOW)), (II) PARENT AND
PURCHASER HAVING OBTAINED SUFFICIENT FINANCING TO FUND THE PURCHASE OF SHARES
TENDERED IN THE OFFER, CONSUMMATE THE MERGER (AS DEFINED BELOW), REFINANCE
CERTAIN EXISTING INDEBTEDNESS OF THE COMPANY AND OF PARENT AND TO PAY ALL
RELATED FEES AND EXPENSES AND (III) ANY WAITING PERIOD UNDER THE HART-SCOTT-
RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS
THEREUNDER APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING
EXPIRED OR BEEN TERMINATED.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of May 13, 1998 (the "Merger Agreement"), by and among the Company,
Purchaser and Parent, which provides for the making of the Offer and, following
consummation of the Offer and the satisfaction or waiver of certain conditions,
the merger of Purchaser with and into the Company (the "Merger"), with the
Company surviving the Merger as a wholly-owned
<PAGE>
subsidiary of Parent. At the effective time of the Merger, each outstanding
Share (other than Shares held by stockholders who properly demand their
appraisal rights under Massachusetts law, Shares held in the Company's treasury
and Shares owned by Parent or Purchaser) will be converted into the right to
receive in cash, without interest, the cash price per Share paid pursuant to the
Offer.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER
AND THE MERGER REFERRED TO HEREIN AND DETERMINED THAT THE TERMS OF THE OFFER AND
THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS
AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn if, as, and when Purchaser gives oral or written notice to the
Depositary (as defined in the Offer to Purchase) of Purchaser's acceptance of
such Shares for payment. Payment for Shares purchased pursuant to the Offer
will be made by the deposit of the aggregate purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving such payment from Purchaser and transmitting such payment to
tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST TO BE PAID ON THE
PURCHASE PRICE OF THE SHARES BE PAID BY PURCHASER FOR THE TENDERED SHARES,
REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT. In all cases, payment for
Shares tendered and accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates for (or a timely
Book-Entry Confirmation (as defined in Section 3 of the Offer to Purchase) with
respect to) such Shares, (ii) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined in Section 3 of the Offer to Purchase), and (iii) any other documents
required by the Letter of Transmittal.
The term "Expiration Date" means 12:00 midnight, New York City time, on
Wednesday, June 17, 1998, unless and until Purchaser, in its sole discretion,
shall have extended the period of time during which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date at which
the Offer, as so extended by Purchaser, shall expire. Subject to the terms of
the Merger Agreement, Purchaser expressly reserves the right, in its sole
discretion, at any time or from time to time, and regardless of whether or not
any of the events set forth in Section 14 of the Offer to Purchase shall have
occurred or shall have been determined by Purchaser to have occurred (i) to
extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any Shares, by giving oral or
written notice of such extension to the Depositary and (ii) except as indicated
in the Offer to Purchase, to amend the Offer in any respect by giving oral or
written notice of such amendment to the Depositary. Any such extension will be
followed by a public announcement thereof no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
Tenders of Shares made pursuant to the Offer are irrevocable, provided
that Shares tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date and, unless theretofore accepted for payment and paid for by
Purchaser pursuant to the Offer, may be withdrawn at any time after July 18,
1998. For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of the addresses set forth on the back cover of the Offer to
Purchase and must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder, if different from that of the person who tendered such Shares. If
certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then prior to the physical release of such
certificates, the serial numbers shown on such certificates must also be
submitted to the Depositary as aforesaid, and, unless such Shares have been
tendered by an Eligible Institution (as defined in Section 3 of the Offer to
Purchase), the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedure
for book-entry transfer set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at the
appropriate Book-Entry Transfer Facility (as defined in Section 3 of the Offer
to Purchase) to be credited with such withdrawn Shares and must otherwise comply
with such Book-Entry Transfer Facility's procedures. All questions as to the
form and
2
<PAGE>
validity (including time of receipt) of notices of withdrawal will be determined
by Purchaser in its sole discretion, and its determination will be final and
binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided Purchaser with its list of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal and, if
required, other relevant materials, will be mailed to record holders of Shares
and furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing, for subsequent transmittal to beneficial
owners of Shares.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH STOCKHOLDERS ARE URGED TO READ BEFORE MAKING ANY DECISION WITH
RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Information
Agent as set forth below. Additional copies of the Offer to Purchase, the
Letter of Transmittal and all other tender offer materials may be obtained from
the Information Agent and will be furnished promptly at Purchaser's expense.
Purchaser will not pay any fees or commissions to any broker or dealer or any
other person for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(212) 269-5550 (Call Collect)
or
(800) 714-3310
May 20, 1998
3
<PAGE>
Exhibit (a)(8)
FOR IMMEDIATE RELEASE
- ---------------------
May 14, 1998
CONTACT: NE Restaurant Company, Inc.
Paul Hoagland, Executive Vice President-Administration, and CFO
508/ 870-9200
or
Bertucci's, Inc.
Norman S. Mallett, Treasurer, Vice President-Finance, and CFO
781/ 246-7878
NE RESTAURANT COMPANY, INC. SIGNS AGREEMENT TO ACQUIRE
------------------------------------------------------
BERTUCCI'S, INC. FOR $10.50 PER SHARE
-------------------------------------
WESTBOROUGH, MASS. and WAKEFIELD, MASS. (May 14) - NE Restaurant Company,
Inc. ("NERC") and Bertucci's, Inc. (NASDAQ: BERT) announced today that
Bertucci's has entered into a definitive merger agreement with NERC and its
subsidiary, NERC Acquisition Corp.
Under the terms of the merger agreement, which was unanimously approved by
Bertucci's Board of Directors at a meeting held last evening, NERC, through its
subsidiary, will commence a tender offer to purchase all outstanding shares of
Bertucci's common stock for $10.50 per share, net to the seller in cash. NERC
currently owns 430,000 shares, or about 4.8% of Bertucci's approximately
8,908,621 outstanding common shares. In the merger to occur following the
consummation of the tender offer, each share of Bertucci's common stock which is
outstanding and not purchased pursuant to the tender offer will be converted
into the right to receive $10.50 in cash.
The tender offer will be conditional upon, among other things, the
tender of Bertucci's shares which, together with the shares already owned by
NERC, represent at least ninety (90%) percent of the outstanding shares on a
fully-diluted basis, and the receipt of approximately $128.8 million of cash
proceeds from financing commitments to fund the tender offer and the merger,
refinance certain existing indebtedness of Bertucci's and of NERC and to pay
fees and expenses related to the transaction. Joseph Crugnale, the founder,
president and chief executive officer of Bertucci's, has agreed to tender all of
the 2,174,772 Bertucci's shares (approximately 24.4% of the outstanding)
beneficially owned by him in the offer. NERC has obtained subscriptions from
its stockholders and an investment fund sponsored by Jacobson Partners, a New
York City firm that sponsors various private investment funds, for $38.8 million
of equity securities of NERC. The Chase Manhattan Corp. and BankBoston
committed to arrange or provide $90 million of debt financing in connection with
the acquisition. The debt financing is subject to satisfaction of numerous
conditions which will be described in tender offer materials.
<PAGE>
The merger agreement provides that if it is terminated under specified
circumstance, NERC will be entitled to receive from Bertucci's a fee of $1.5
million plus reimbursement of up to $750,000 of NERC expenses incurred in
connection with the transaction.
NERC and Bertucci's expect that the necessary filings with the
Securities and Exchange Commission in connection with the tender offer will be
made during the week of May 18, 1998, and that the tender offer documents will
be mailed to Bertucci's stockholders promptly thereafter.
Dennis Pedra, president of NERC, said, "We are very excited to have
the opportunity to complete this transaction. We believe that Bertucci's is an
excellent restaurant concept because it was built upon the promise that the
guest would only be served the highest quality food and we will continue that
tradition."
Joey Crugnale, founder and chief executive officer of Bertucci's,
commented, "We are very proud of the Company which we have built, and especially
of our employees who have worked so hard to create the unique Bertucci's dining
experience. We believe that the combined company will be well positioned to
continue and expand upon the Bertucci's tradition of offering high-quality,
moderately-priced Italian food."
Bertucci's, Inc., headquartered in Wakefield, Massachusetts, operates a
chain of 85 "Bertucci's Brick Oven Pizzerias" and one "Sal and Vinnie's Sicilian
Steakhouse". Bertucci's is a full-service, Italian restaurant featuring
original recipe gourmet pizza prepared in brick ovens and other high-quality,
moderately-priced Italian foods. The majority of the restaurants are located in
the Northeastern and Mid-Atlantic areas with penetration in Chicago, Atlanta,
and Virginia.
NE Restaurant Company, Inc., headquartered in Westborough, Massachusetts,
operates two distinct restaurant concepts: Chili's Grill and Bar ("Chili's")
and On The Border ("OTB") restaurants. NERC operates 33 restaurants, including
31 Chili's and two OTBs in five New England states. NERC develops and operates
its restaurants under franchise agreements with Brinker International, Inc.
Some of the statements in this press release may be considered forward-
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking information is inherently subject to risks
and uncertainties, which include, but are not limited to, the successful
completion of this transaction, the effective integration of Bertucci's into
NERC and the overall economic, market, and industry conditions, as well as the
risks described from time to time in reports filed by Bertucci's with the
Securities and Exchange Commission, including its most recently filed Form 10-K
reports. Should any such risks or uncertainties materialize, or underlying
assumptions prove incorrect, actual results or outcomes may vary materially from
those anticipated.
<PAGE>
Exhibit (a)(9)
NE RESTAURANT COMPANY, INC. 80A TURNPIKE ROAD
WESTBOROUGH, MA 01581
PHONE: (508) 870-9200
CONTACT: PAUL HOAGLAND,
CHIEF FINANCIAL OFFICER
FOR IMMEDIATE RELEASE
NE RESTAURANT COMPANY, INC. COMMENCES TENDER OFFER FOR
ALL OUTSTANDING SHARES OF BERTUCCI'S, INC.
Westborough, MA, May 20, 1998 --- NE Restaurant Company, Inc. ("NERC")
announced today that it has commenced, through its wholly owned subsidiary, NERC
Acquisition Corp., a tender offer for all outstanding shares of common stock of
Bertucci's, Inc. (NASDAQ: BERT) ("Bertucci's") at $10.50 per share, net to the
seller in cash, without interest thereon. The Board of Directors of Bertucci's
has unanimously approved the offer and recommended that Bertucci's stockholders
tender their shares pursuant to offer.
The offer and withdrawal rights will expire at 12:00 midnight, New York
City time, on Wednesday, June 17, 1998, unless the offer is extended.
The tender offer is being made pursuant to the terms of a previously
announced Merger Agreement among NERC, NERC Acquisition Corp. and Bertucci's.
In the merger to occur following consummation of the tender offer, each share of
Bertucci's common stock which is outstanding and not purchased pursuant to the
tender offer will be converted into the right to receive $10.50 in cash.
The tender offer is conditioned upon, among other things, the tender of
Bertucci's shares which, together with the shares beneficially owned by NERC and
NERC Acquisition Corp., represent at least ninety percent (90%) of the
outstanding shares on a fully diluted basis. NERC currently owns 430,000
shares, or about 4.8% percent of approximately 8,908,621 outstanding shares.
Mr. Joseph Crugnale, the Founder, President and Chief Executive Officer of
Bertucci's, has agreed to tender all of the 2,174,772 Bertucci's shares
(approximately 24.4% of the outstanding) beneficially owned by him in the offer.
The tender offer is also conditioned upon the receipt of approximately
$128.8 million of cash proceeds from financing commitments to fund the tender
offer and the merger, refinance certain existing indebtedness of Bertucci's and
of NERC and to pay fees and expenses related to the transaction. NERC has
obtained subscriptions from its stockholders and an investment fund sponsored by
Jacobson Partners, a New York City firm that sponsors various private investment
funds, for $38.8 million of equity securities of NERC. The Chase Manhattan Bank
and BankBoston, N.A. committed to arrange or provide $90 million of debt
financing in connection with the acquisition. The debt financing is subject to
satisfaction of numerous conditions which are described in the tender offer
materials.
<PAGE>
The tender offer is being made only pursuant to the terms and conditions
set forth in the tender offer documents which are being filed with the
Securities and Exchange Commission today and will be mailed to Bertucci's
stockholders as soon as practicable.
Bertucci's, headquartered in Wakefield, Massachusetts, operates a chain of
85 "Bertucci's Brick Oven Pizzerias" and one "Sal and Vinnie's Sicilian
Steakhouse." Bertucci's is a full-service, Italian restaurant featuring
original recipe gourmet pizza prepared in brick ovens and other high-quality,
moderately-priced Italian foods. The majority of the restaurants are located in
the Northeastern and Mid-Atlantic areas with penetration in Chicago, Atlanta and
Virginia.
NERC, headquartered in Westborough, Massachusetts, operates two distinct
restaurant concepts: Chili's Grill and Bar ("Chili's") and On The Border
("OTB") restaurants. NERC operates 33 restaurants, including 31 Chili's and two
OTB's in five New England states. NERC develops and operates its restaurants
under franchise agreements with Brinker International, Inc.
<PAGE>
Exhibit (c)(1)
[Execution Copy]
AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 13, 1998
AMONG
BERTUCCI'S, INC.,
NE RESTAURANT COMPANY, INC.,
AND
NERC ACQUISITION CORP.
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
THE OFFER 1
SECTION 1.1. THE OFFER 1
SECTION 1.2. COMPANY ACTION. 3
SECTION 1.3. DIRECTORS. 5
ARTICLE II
THE MERGER 6
SECTION 2.1. THE MERGER 6
SECTION 2.2. CLOSING 7
SECTION 2.3. EFFECTIVE TIME 7
SECTION 2.4. EFFECTS OF THE MERGER 7
SECTION 2.5. ARTICLES OF ORGANIZATION; BY-LAWS 7
SECTION 2.6. DIRECTORS 7
SECTION 2.7. OFFICERS 8
ARTICLE III
EFFECT OF THE MERGER ON THE SECURITIES OF THE CONSTITUENT CORPORATIONS 8
SECTION 3.1. EFFECT ON CAPITAL STOCK 8
SECTION 3.2. STOCK OPTIONS 9
SECTION 3.3. EXCHANGE OF CERTIFICATES 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES 12
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 12
SECTION 4.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB 20
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER 23
SECTION 5.1. CONDUCT OF BUSINESS OF THE COMPANY 23
SECTION 5.2. OTHER ACTIONS 25
ARTICLE VI
ADDITIONAL AGREEMENTS 26
SECTION 6.1. MEETING OF STOCKHOLDERS 26
SECTION 6.2. PROXY STATEMENT 26
SECTION 6.3. ACCESS TO INFORMATION; CONFIDENTIALITY 27
SECTION 6.4. COMMERCIALLY REASONABLE EFFORTS 27
SECTION 6.5. FINANCING 28
SECTION 6.6. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE 28
SECTION 6.7. PUBLIC ANNOUNCEMENTS 29
SECTION 6.9. ACQUISITION PROPOSALS 30
<PAGE>
SECTION 6.9. STOCKHOLDER LITIGATION 31
SECTION 6.10. BOARD ACTION RELATING TO STOCK OPTION PLANS 31
SECTION 6.11. CONSENTS AND APPROVALS 31
SECTION 6.12. REPAYMENT OF INDEBTEDNESS 32
SECTION 6.13. PAYMENT OF FEE AND EXPENSES 32
ARTICLE VII
CONDITIONS PRECEDENT 32
SECTION 7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER 32
SECTION 7.2. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB 33
SECTION 7.3. CONDITIONS TO OBLIGATIONS OF THE COMPANY 33
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER 34
SECTION 8.1. TERMINATION 34
SECTION 8.2. EFFECT OF TERMINATION 35
SECTION 8.3. AMENDMENT 37
SECTION 8.4. EXTENSION; WAIVER 37
SECTION 8.5. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER 38
ARTICLE IX
GENERAL PROVISIONS 38
SECTION 9.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES 38
SECTION 9.2. FEES AND EXPENSES 38
SECTION 9.3. DEFINITIONS 38
SECTION 9.4. NOTICES 38
SECTION 9.5. INTERPRETATION 39
SECTION 9.6. COUNTERPARTS 40
SECTION 9.7. ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES 40
SECTION 9.8. GOVERNING LAW 40
SECTION 9.9. ASSIGNMENT 40
SECTION 9.10. ENFORCEMENT 41
SECTION 9.11. SEVERABILITY 41
<PAGE>
AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 13, 1998
AMONG
BERTUCCI'S, INC.,
A MASSACHUSETTS CORPORATION (THE "COMPANY"),
NE RESTAURANT COMPANY, INC.,
A DELAWARE CORPORATION ("PARENT"),
AND
NERC ACQUISITION CORP.,
A MASSACHUSETTS CORPORATION AND A WHOLLY OWNED SUBSIDIARY OF
PARENT ("SUB")
WITNESSETH:
WHEREAS, the Board of Directors of the Company has determined that this
Agreement and the transactions contemplated hereby including the Offer and the
Merger (each, as defined herein) are fair to and in the best interest of the
Company and its stockholders;
WHEREAS, the Board of Directors of each of Parent and Sub has determined that
the transactions contemplated by this Agreement (including the Offer and the
Merger) are in the best interests of Parent and Sub and their respective
stockholders; and
WHEREAS, the Boards of Directors of the Company, Parent and Sub, have each
approved and adopted this Agreement and approved the Offer and the Merger and
the other transactions contemplated hereby and recommended, in the case of the
Company, acceptance of the Offer by its stockholders.
NOW, THEREFORE, in consideration of the representations, warranties, covenants
and agreements contained in this Agreement, the parties agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1. THE OFFER.
(a) Provided that nothing shall have occurred that would result in a
failure to satisfy any of the conditions set forth in paragraphs (a) through (i)
of Annex I hereto, Parent shall or shall cause Sub to, as promptly as
practicable following the date hereof, but in no event later than
five business days after the initial public announcement of the Offer, commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) a tender offer (as amended from time to time in
accordance with this Agreement, the "Offer") to purchase all of the issued and
outstanding shares of common stock, par value $0.005 per share, of the Company
(the "Shares" or "Common Stock"), at a price of not less than $10.50
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per Share, net to the seller in cash. For purposes of this Article I, the party
which makes the Offer, whether Parent or Sub, shall be referred to as the
"Offeror." The obligation of Offeror to accept for payment and to pay for any
Shares tendered in the Offer shall be subject only to (i) the condition that
there shall be validly tendered in accordance with the terms of the Offer prior
to the expiration date of the Offer and not withdrawn a number of Shares which,
together with any Shares then owned by Parent or Sub, represents at least ninety
(90%) percent of the Shares outstanding on a fully-diluted basis (the "Minimum
Condition"), (ii) the receipt of cash proceeds of the Financing (as defined in
Section 4.2(d) of this Agreement) in an amount sufficient to consummate the
transactions contemplated hereby pursuant to the terms of the Commitments (as
defined in said Section 4.2(d)) or such other terms as Parent and the Company
shall agree or as are not materially more onerous than as set forth in the
Commitments (the "Financing Condition") and (iii) the other conditions set forth
in Annex I hereto. Offeror expressly reserves the right in its sole discretion
to waive any such condition (including the Minimum Condition, provided that no
such waiver of the Minimum Condition shall decrease the Minimum Condition to
less than sixty-six and two-thirds (66 2/3%) percent), to increase the price per
Share payable in the Offer, to extend the Offer and to make any other changes in
the terms and conditions of the Offer; provided, however, that unless
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previously approved by the Company in writing, Offeror will not (i) decrease the
price per Share payable in the Offer, (ii) decrease the maximum number of Shares
to be purchased in the Offer, (iii) impose conditions to the Offer in addition
to those set forth in Annex I hereto, (iv) change the conditions to the Offer in
any material respect adverse to the Company, (v) except as provided in the next
sentence, extend the Offer, (vi) change the form of consideration payable in the
Offer or (vii) amend any other term of the Offer in a manner adverse to the
holders of the Shares. Notwithstanding the foregoing, Offeror may, without the
consent of the Company, (i) extend the Offer beyond any scheduled expiration
date (the initial scheduled expiration date being 20 business days following
commencement of the Offer) for a period not to extend beyond July 31, 1998, if
at any scheduled expiration date of the Offer, any of the conditions to
Offeror's obligation to accept for payment, and pay for, Shares (including, with
respect to the Financing Condition, the consummation of the sale of the Senior
Notes (as defined in Section 4.2(d)) shall not be satisfied or waived, until
such time as such conditions are satisfied or waived and (ii) extend the Offer
for any period required by any rule, regulation, interpretation or position of
the Securities and Exchange Commission (the "SEC") or the staff thereof
applicable to the Offer. The limitations regarding the terms and conditions of
the Offer, as set forth in the second preceding and the immediately preceding
sentences, shall not be applicable in the event this Agreement is terminated
pursuant to Section 8.1(d) of this Agreement. Subject to the terms and
conditions of the Offer and this Agreement, Offeror shall accept for payment ,
and pay for, all Shares validly tendered and not withdrawn pursuant to the Offer
that Offeror becomes obligated to accept for payment, and pay for, pursuant to
the Offer as soon as practicable after expiration of the Offer, subject to
compliance with Rule 14e-1(c) under the Exchange Act. Subject to the terms and
conditions of the Offer, Parent and Sub will each use
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its reasonable best 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 the Offer.
(b) As soon as practicable on the date of the commencement of the Offer,
Offeror shall file with the SEC a Tender Offer Statement on Schedule 14D-1 with
respect to the Offer which will contain the offer to purchase and form of the
related letter of transmittal and summary advertisement (together with any
supplements or amendments thereto and including exhibits thereto, the "Offer
Documents"). The Offer Documents will comply in all material respects with
applicable federal securities laws and any other applicable laws. Parent,
Offeror and the Company each agree to promptly correct any information provided
by it for use in the Offer Documents if and to the extent that it shall have
become false or misleading in any material respect. Offeror will take all steps
necessary to cause the Offer Documents as so corrected to be filed with the SEC
and to be disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws and any other applicable laws.
The Company and its counsel shall be given an opportunity to review and comment
on the Offer Documents and any amendments thereto prior to the filing thereof
with the SEC; provided that Offeror will attempt to give the Company and its
counsel as much time prior to filing to so review and comment as Offeror
believes is reasonably practicable under the circumstances. Offeror will
provide the Company and its counsel with any comments Offeror and its counsel
may receive from the SEC or its staff with respect to the Offer Documents
promptly after the receipt thereof. In the event that the Offer is terminated
or withdrawn by Offeror, Parent and Sub shall cause all tendered Shares to be
returned to the registered holders of the Shares represented by the certificate
or certificates surrendered to the Exchange Agent (as defined in Section 3.3 of
this Agreement).
SECTION 1.2. COMPANY ACTION.
(a) The Company hereby consents to the Offer and represents that its Board
of Directors (the "Board of Directors"), at a meeting duly called and held, has
(i) unanimously determined that this Agreement and the transactions contemplated
hereby, including the Offer and the Merger (as defined in Section 2.1), are fair
to and in the best interest of the Company and its stockholders, (ii)
unanimously approved this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, which approvals are sufficient to render
entirely inapplicable to the Offer and the Merger or Parent or Sub the
provisions of Chapters 110C, 110D, 110E and 110F of the Massachusetts General
Laws, (iii) taken such action as is necessary to exempt this Agreement, the
purchase of Shares pursuant to the Offer, the Merger and the other
transactions contemplated hereby from the provisions set forth in (x) Article 6
of the Company's Restated Articles of Organization under the captions "Vote
Required for Certain Business
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Combinations" and "Redemption of Shares" and (y) Article 11 of the Company's
Restated By-Laws and (iv) resolved to recommend acceptance of the Offer and
approval and adoption of this Agreement and the Merger by its stockholders.
NationsBanc Montgomery Securities LLC (the "Financial Advisor") has delivered to
the Board of Directors its written opinion, subject to the qualifications and
limitations stated therein, to the effect that the consideration to be received
by the holders of the Shares pursuant to each of the Offer and the Merger, taken
together, is fair to the holders of Shares from a financial point of view. The
Company has been authorized by the Financial Advisor to permit, subject to prior
review and consent by the Financial Advisor (such consent not to be unreasonably
withheld), the inclusion of the fairness opinion (or a reference thereto) in the
Offer Documents and the Schedule 14D-9 (as defined in paragraph (b) of this
Section 1.2). The Company has been advised that Joseph Crugnale, President and
Chief Executive Officer and a Director of the Company, has agreed, pursuant to
the Tender and Voting Agreement, dated the date of this Agreement, among Parent,
Offeror and Joseph Crugnale (the "Tender and Voting Agreement"), to tender all
of the Shares beneficially owned by him pursuant to the Offer and, to the
Company's knowledge, all of its other directors and executive officers intend as
of the date hereof to the extent of their beneficial ownership of Shares, to
tender their Shares pursuant to the Offer. The Company will promptly furnish
Parent with a list of its stockholders, mailing labels containing the names and
addresses of all record holders of Shares and lists of securities positions of
Shares held in stock depositories, in each case as of the most recent
practicable date, and will provide to Parent such additional information
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Parent may
reasonably request from time to time in connection with the Offer and the Merger
(including but not limited to communicating the Offer and the Merger to the
record and beneficial holders of Shares). Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer or the
Merger, Parent, Offeror and their agents and advisors shall use the information
contained in any such labels and listings only in connection with the Offer and
the Merger and, if this Agreement shall be terminated pursuant to Article VIII
hereof, shall deliver to the Company all copies and extracts of such information
then in their possession or under their control.
(b) On or prior to the date that the Offer is commenced, the Company will
file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9,
(together with any supplements or amendments thereto and including exhibits
thereto, the "Schedule 14D-9") which shall contain the recommendations of the
Board of Directors referred to in Section 1.2(a) of this Agreement. The
Schedule 14D-9 will comply in all material respects with all applicable federal
securities laws and any other applicable laws. The Company, Parent and Sub each
agree to promptly correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it shall have become false or misleading in any
material respect. The Company will
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take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and to be disseminated to holders of Shares, in each case as and to
the extent required by applicable federal securities laws and any other
applicable laws. Parent, Sub and their counsel shall be given an opportunity to
review and comment on the Schedule 14D-9 and any amendments thereto prior to the
filing thereof with the SEC; provided that the Company will attempt to give
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Parent, Sub and their counsel as much time prior to filing to so review and
comment as the Company believes is reasonably practicable under the
circumstances. The Company will provide Parent and Sub and their counsel with
any comments the Company or its counsel may receive from the SEC or its staff
with respect to the Schedule 14D-9 promptly after the receipt of such comments.
SECTION 1.3. DIRECTORS.
(a) Effective upon the purchase of and payment for Shares by Offeror
pursuant to the Offer such that Offeror shall own at least a majority of the
Shares and from time to time thereafter, Parent shall be entitled to designate
up to such number of directors, rounded up to the next whole number, on the
Board of Directors that equals the product of (i) the total number of directors
on the Board of Directors (giving effect to any increase in the number of
directors pursuant to this Section 1.3) multiplied by (ii) the percentage that
the number of Shares owned by Parent and Sub bears to the total number of Shares
outstanding on a primary basis, and the Company shall take all action necessary
to cause Parent's designees to be elected or appointed to the Board of
Directors, including, without limitation, increasing the number of directors
and/or securing the resignations of such number of incumbent directors as is
necessary to enable Parent's designees to be elected to the Board of Directors
and to cause Parent's designees to be so elected. At such times, the Company
will use its best efforts to cause individuals designated by Parent to
constitute the same percentage as such individuals represent on the Board of
Directors of (x) each committee of the Board of Directors, (y) each board of
directors of each Subsidiary (as defined below) of the Company and (z) each
committee of each such board. Notwithstanding the foregoing, until the
Effective Time (as defined in Section 2.3 of this Agreement), the Company shall
use its best efforts to ensure that not less than two persons who are directors
on the date hereof shall remain as members of the Board of Directors (the
"Continuing Directors") until the Effective Time. In the event there is only
one Continuing Director, such Continuing Director shall have the right to
designate a person, who is reasonably acceptable to Offeror, to become a
Continuing Director. For purposes of this Agreement, "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 directly or indirectly owned by
the Company or Parent, as applicable.
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(b) The Company's obligations to appoint designees to the Board of
Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions required
pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 1.3, including mailing to the stockholders as part of the
Schedule 14D-9 the information required by such Section 14f-1, as is necessary
to enable Parent's designees to be elected to the Board of Directors. Parent
will supply to the Company in writing and be solely responsible for any
information with respect to itself and its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1. For purposes of this
Agreement, "affiliate" shall mean, as to any person, any other person that would
be deemed to be an "affiliate" of such person as that term is defined in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
(c) Following the election or appointment of Parent's designees pursuant to
this Section 1.3 and prior to the Effective Time, any amendment of this
Agreement, any termination of this Agreement by the Company, any extension by
the Company of the time for the performance of any of the obligations or other
acts of Parent or Sub, any consent of the Company contemplated hereby, any
waiver of any of the Company's rights hereunder, any amendment to the Company's
Restated Articles of Organization or any action taken by the Company that
materially adversely affects the interests of the stockholders of the Company
with respect to the transactions contemplated hereby, will require the
concurrence of a majority of the Continuing Directors.
ARTICLE II
THE MERGER
SECTION 2.1. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Section 78 of the
Massachusetts Business Corporation Law (the "MBCL"), at the Effective Time (as
hereinafter defined), Sub shall be merged with and into the Company (the
"Merger"). Upon the Effective Time, the separate existence of Sub shall cease,
and the Company shall continue as the surviving corporation (the "Surviving
Corporation"). Notwithstanding the foregoing, in the event that Parent and Sub
shall acquire in the aggregate at least ninety (90%) percent of the outstanding
Shares, pursuant to the Offer or otherwise, the parties hereto shall, at the
request of Parent and subject to Article VII hereof, take all necessary and
appropriate action to cause the merger of the Company with and into Sub to
become effective, without a meeting of stockholders of the Company, on the same
day as the purchase of and payment for Shares is made by Offeror pursuant to the
Offer in accordance with Section 82 of the MBCL, in which case the separate
existence of the Company shall cease and Sub shall continue as the Surviving
Corporation and its corporate name shall be changed to
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"Bertucci's, Inc." and the term "Merger" as used in this Agreement shall be
deemed to refer to such merger.
SECTION 2.2. CLOSING. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 8.1, and subject to the satisfaction or waiver of the
conditions set forth in Article VII, the closing of the Merger (the "Closing")
will take place at 10:00 a.m., Boston time, not later than the second business
day following the date on which the last to be fulfilled or waived of the
conditions set forth in Article VII shall be fulfilled or waived in accordance
with this Agreement (the "Closing Date"), at the offices of Stroock & Stroock &
Lavan LLP, 100 Federal Street, Boston, Massachusetts, unless another date, time
or place is agreed to in writing by the parties hereto.
SECTION 2.3. EFFECTIVE TIME. The parties hereto will file with the
Secretary of State of the Commonwealth of Massachusetts (the "Massachusetts
Secretary of State") on the Closing Date (or on such other date as Parent and
the Company may agree) articles of merger or other appropriate documents,
executed in accordance with the relevant provisions of the MBCL, and make all
other filings or recordings required under the MBCL in connection with the
Merger. The Merger shall become effective upon the filing of the articles of
merger with the Massachusetts Secretary of State, or at such later time as is
specified in the articles of merger (the "Effective Time").
SECTION 2.4. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 80 of the MBCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 2.5. ARTICLE OF ORGANIZATION; BY-LAWS.
(a) The Company's Restated Articles of Organization, as in effect at
the Effective Time, shall be, from and after the Effective Time, the Articles of
Organization of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
(b) The Company's Restated By-laws, as in effect at the Effective
Time, shall be, from and after the Effective Time, the By-laws of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
SECTION 2.6. DIRECTORS. The directors of Sub at the Effective Time
shall become, from and after the Effective Time, the directors of the Surviving
Corporation, until the earlier of
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their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
SECTION 2.7. OFFICERS. The officers of Sub at the Effective Time
shall become, from and after the Effective Time, the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
ARTICLE III
EFFECT OF THE MERGER ON THE SECURITIES OF THE
CONSTITUENT CORPORATIONS
SECTION 3.1. EFFECT ON CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of any holder:
(a) COMMON STOCK OF SUB. Each share of the capital stock of Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable share
of common stock, par value $0.005 per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each Share
issued or outstanding immediately prior to the Effective Time that is owned by
the Company or by Parent or Sub shall be canceled automatically and shall cease
to exist, and no cash or other consideration shall be delivered or deliverable
in exchange therefor.
(c) CONVERSION OF COMPANY SHARES. At the Effective Time, each Share
other than (i) Shares to be canceled pursuant to Section 3.1(b) and (ii)
Dissenting Shares (as hereinafter defined) shall be converted into and become
the right to receive, upon surrender of the certificate representing such Shares
in accordance with Section 3.3, the cash price per Share paid by Sub pursuant to
the Offer (the "Merger Consideration").
(d) DISSENTING SHARES. Notwithstanding anything in this Agreement to
the contrary, Shares issued and outstanding immediately prior to the Effective
Time and held by a holder (a "Dissenting Stockholder"), if any, who has the
right to demand, and who properly demands, an appraisal of such shares in
accordance with Section 85 of the MBCL or any successor provision ("Dissenting
Shares") shall not be converted into a right to receive the Merger Consideration
unless such Dissenting Stockholder fails to perfect or otherwise loses or
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withdraws such Dissenting Stockholder's right to such appraisal, if any.
Provided the holder of any Dissenting Shares complies with the provisions of the
MBCL, such holder shall have with respect thereto solely the rights provided
under Sections 86 through 98, inclusive, of the MBCL. If, after the Effective
Time, such Dissenting Stockholder fails to perfect or otherwise loses or
withdraws any such right to appraisal, each such share of such Dissenting
Stockholder shall be treated as a share that had been converted as of the
Effective Time into the right to receive the Merger Consideration in accordance
with this Section 3.1. The Company shall give prompt notice to Parent of any
demands received by the Company for appraisal of any Dissenting Shares, and
Parent shall have the right to participate in and direct all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Parent, which consent shall not be unreasonably
withheld, make any payment with respect to, or settle or offer to settle, any
such demands.
(e) CANCELLATION AND RETIREMENT OF COMMON STOCK. As of the Effective
Time all certificates representing Shares, other than certificates representing
Shares to be canceled in accordance with Section 3.1(b) or Dissenting Shares,
issued and outstanding immediately prior to the Effective Time, shall no longer
be outstanding and shall automatically be canceled and shall cease to exist, and
each holder of a certificate representing any such Shares shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration upon surrender of such certificate in accordance with Section 3.3.
SECTION 3.2. STOCK OPTIONS. As of the Effective Time, each
outstanding, unexercised stock option to purchase Shares (a "Company Stock
Option") issued under the Company's Amended and Restated 1987 Stock Option Plan
(the "1987 Plan"), the 1989 Time Accelerated Restricted Stock Option Plan (the
"TARSOP"), the 1993 Stock Option Plan for Non-Employee Directors (the "Director
Plan") and the 1997 Stock Option Plan (the "1997 Plan") (collectively, the
"Company Stock Option Plans") shall terminate and be canceled and each holder of
a Company Stock Option shall be entitled to receive, in consideration therefor,
a cash payment from the Company (which payment shall be made as soon as
practicable after the Effective Time) equal to the product of (a) the excess, if
any, of (x) the Merger Consideration over (y) the per Share exercise price of
such Company Stock Option, times (b) the number of Eligible Shares (as defined
below) subject to such Company Stock Option. Such cash payment shall be net of
any required withholding taxes. Notwithstanding the foregoing, any Director of
the Company who is not also an employee of the Company may make any payment of
any taxes incurred as a result of receipt of such cash payment and direct the
Company not to withhold any portion thereof, provided that any such Director
agrees in writing to indemnify the Company against any claim made against the
Company for the failure by such Director to make such tax payment. The term
"Eligible Shares" shall mean, (i) with respect to any Company Stock Option
granted under the 1987 Plan, the number of Shares subject to such option as to
which such option
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shall then be vested and exercisable as of the Effective Date, and (ii) with
respect to any Company Stock Option granted under the TARSOP, the Director Plan
or the 1997 Plan, the aggregate number of Shares that shall then be subject to
such option. The Company's obligation to make any such cash payment (1) shall be
subject to the obtaining of any necessary consents of optionees to the
cancellation of such Company Stock Options, in form and substance satisfactory
to Parent, and (2) shall not require any action which violates any of the
Company Stock Option Plans. As of the Effective Time, each of the Company Stock
Option Plans and the Company's 1992 Employee Stock Purchase Plan (the "ESPP")
shall terminate and be of no further force or effect, and the Company shall take
such action as shall be necessary to ensure, to Parent's reasonable
satisfaction, that no holder of a Company Stock Option or participant in the
ESPP will have any right to acquire any interest in the Surviving Corporation
under the Company Stock Option Plans or the ESPP.
SECTION 3.3. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time, Sub (or the Company, as
the Surviving Corporation) shall deposit, or shall cause to be deposited, with
or for the account of a bank, trust company or other agent designated by Sub,
which shall be reasonably satisfactory to the Company (the "Exchange Agent"),
for the benefit of the holders of Shares, cash in an aggregate amount equal to
the product of (x) the number of Shares outstanding immediately prior to the
Effective Time (other than Shares to be canceled pursuant to Section 3.1(b) and
Dissenting Shares), times (y) the Merger Consideration (such amount being
hereinafter referred to as the "Payment Fund"). The Exchange Agent shall invest
the Payment Fund as directed by the Surviving Corporation.
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective
Time, each holder of an outstanding certificate or certificates which prior
thereto represented outstanding Shares shall, upon surrender to the Exchange
Agent of such certificate or certificates and acceptance thereof by the Exchange
Agent, be entitled to the amount of cash which the aggregate number of Shares
previously represented by such certificate or certificates surrendered shall
have been converted into the right to receive pursuant to Section 3.1(c). The
Exchange Agent shall accept such certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose to effect an
orderly exchange thereof in accordance with normal exchange practices. If the
consideration to be paid in the Merger (or any portion thereof) is to be
delivered to any person other than the person in whose name the certificate
representing Shares surrendered in exchange therefor is registered, it shall be
a condition to such exchange that the certificate so surrendered shall be
properly endorsed with the signature guaranteed or otherwise be in proper form
for transfer and that the person requesting such exchange shall pay to the
Exchange Agent any transfer or other tax required by reason of the payment of
such
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consideration to a person other than the registered holder of the certificate
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable. After the Effective Time, there
shall be no further transfer on the records of the Company or its transfer agent
of certificates representing Shares, and if such certificates are presented to
the Company for transfer, they shall be canceled against delivery of the Merger
Consideration as hereinabove provided. Until surrendered as contemplated by this
Section 3.3(b), each certificate representing Shares shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration, without any interest thereon, as
contemplated by Section 3.l. No interest will be paid or will accrue on any
cash payable as Merger Consideration to any holder of Shares.
(c) LETTER OF TRANSMITTAL. Promptly after the Effective Time (but in
no event more than five business days thereafter), the Surviving Corporation
shall require the Exchange Agent to mail to each record holder of certificates
that immediately prior to the Effective Time represented Shares which have been
converted pursuant to Section 3.1, a form of letter of transmittal and
instructions for use in surrendering such certificates and receiving the
consideration to which such holder shall be entitled therefor pursuant to
Section 3.1.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMMON STOCK. The Merger
Consideration paid upon the surrender for exchange of certificates representing
Shares in accordance with the terms of this Article III shall be deemed to have
been issued and paid in full satisfaction of all rights pertaining to the Shares
theretofore represented by such certificates, and no holder of Shares shall
thereby have any equity interest in the Surviving Corporation.
(e) TERMINATION OF PAYMENT FUND. Any portion of the Payment Fund which
remains undistributed to the holders of the certificates representing Shares for
one year after the Effective Time (including, without limitation, all interest
and other income received by the Exchange Agent in respect to all funds made
available to it) shall be delivered to the Surviving Corporation, upon demand,
and any such holders of Shares who have not theretofore complied with this
Article III shall thereafter look only to the Surviving Corporation (subject to
abandoned property, escheat and other similar laws) and only as general
creditors thereof for payment of their claim for the Merger Consideration.
(f) NO LIABILITY. None of Parent, Sub, the Surviving Corporation or
the Exchange Agent shall be liable to any person in respect of any cash, shares,
dividends or distributions payable from the Payment Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any certificates representing Company Shares shall not have been surrendered
prior to five years after the Effective Time (or immediately prior to such
earlier date on which the Merger Consideration in respect of such certificate
would
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otherwise escheat to or become the property of any Governmental Entity (as
defined in Section 4.1(d)), any such cash, shares, dividends or distributions
payable in respect of such certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
(g) WITHHOLDING RIGHTS. The Surviving Corporation, Parent or Sub
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares such amounts as the
Surviving Corporation, Parent or Sub is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or foreign tax law, including, without limitation, withholdings required
in connection with payments with respect to Company Stock Options. To the
extent that amounts are so withheld by the Surviving Corporation, Parent or Sub,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder in respect of which such deduction and
withholding was made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to Parent and Sub as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing and in corporate good standing
under the laws of The Commonwealth of Massachusetts and has the requisite
corporate power and authority and any necessary governmental authority to carry
on its business as now being conducted and to own, operate and lease its
properties. The Company is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not have a material adverse
effect upon (i) the business, assets, properties, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries taken as
a whole, or (ii) the transactions contemplated hereby or the legality or
validity of this Agreement (a "Material Adverse Effect"). The Company has
delivered to Parent complete and correct copies of its Restated Articles of
Organization and Restated By-laws, as amended to the date of this Agreement.
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(b) SUBSIDIARIES. Section 4.l(b) of the disclosure schedule attached
hereto (the "Disclosure Schedule") sets forth the name, jurisdiction of
incorporation, capitalization and number of shares of outstanding capital stock
of each of the Company's Subsidiaries. All the issued and outstanding shares of
capital stock of each Subsidiary are validly issued, fully paid and
nonassessable and are owned, directly or indirectly, by the Company,
beneficially and of record, free and clear of all liens, pledges, encumbrances
or restrictions of any kind. No Subsidiary has outstanding any securities
convertible into or exchangeable or exercisable for any shares of its capital
stock, there are no outstanding options, warrants or other rights to purchase or
acquire any capital stock of any Subsidiary, there are no irrevocable proxies
with respect to such shares, and there are no contracts, commitments,
understandings, arrangements or restrictions by which any Subsidiary or the
Company is bound to issue additional shares of the capital stock of a
Subsidiary. Except for the Company's Subsidiaries, and as otherwise disclosed in
Section 4.1(b) of the Disclosure Schedule, the Company does not own, directly or
indirectly, any capital stock or other equity securities of any corporation or
have any direct or indirect equity interest in any business. Each of the
Company's Subsidiaries (a) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation; (b) has
all requisite corporate power and authority and any necessary governmental
authority to carry on its business as it is now being conducted and to own,
operate and lease its properties, except where the failure to have such
governmental authority would not have a Material Adverse Effect; and (c) is
qualified or licensed to do business as a foreign corporation and is in good
standing in each of the jurisdictions in which (i) the ownership or leasing of
real property or the conduct of its business requires such qualification or
licensing and (ii) the failure to be so qualified or licensed, either singly or
in the aggregate, would have a Material Adverse Effect. The Company has
delivered to Parent complete and correct copies of the Articles of Organization
or other charter documents and By-laws of each of its Subsidiaries, each as
amended to date.
(c) CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consists of 200,000 shares of Preferred Stock, $0.01 par
value per share ("Preferred Stock"), and 15,000,000 shares of Common Stock. As
of the date hereof, there are no shares of Preferred Stock issued or
outstanding. As of the date hereof, 8,908,621 Shares are issued and
outstanding, 521,050 shares of Common Stock are reserved for issuance pursuant
to outstanding Company Stock Options, and no shares of Common Stock are held by
the Company in its treasury. Except as set forth above, no shares of capital
stock or other equity securities of the Company are issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of the Company
are, and all shares which may be issued pursuant to the Company Stock Option
Plans will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. Section 4.1(c) of the
Disclosure Schedule accurately sets forth the number of Shares issuable upon
exercise of each outstanding Company Stock Option,
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the vesting schedule thereof, and the applicable exercise price with respect to
each such Company Stock Option. Except as set forth in Section 4.1(c) of the
Disclosure Schedule, the Company has no outstanding option, warrant,
subscription or other right, agreement or commitment which either (i) obligates
the Company to issue, sell or transfer, repurchase, redeem or otherwise acquire
or vote any shares of the capital stock of the Company or (ii) restricts the
transfer of Common Stock. Except as set forth in Section 4.l(c) of the
Disclosure Schedule, the Company has no outstanding stock appreciation rights,
phantom stock or stock equivalents.
(d) AUTHORITY; ENFORCEABILITY; NONCONTRAVENTION. The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject to the approval of its stockholders as set forth in Section 7.1(a) with
respect to the consummation of the Merger, to consummate the Merger and the
other transactions contemplated by this Agreement. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, subject to the approval of its
stockholders as set forth in Section 7.1(a). This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that the enforceability hereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions hereof will not, (i) violate any of
the provisions of the Restated Articles of Organization or Restated By-laws of
the Company, (ii) except as otherwise set forth in Section 4.1(d) of the
Disclosure Schedule and subject to the governmental filings and other matters
referred to in the following sentence, contravene any law, rule or regulation of
any state or of the United States or any political subdivision thereof or
therein, including any licensing board or agency, or any order, writ, judgment,
injunction, decree, determination or award currently in effect, or (iii) except
for leases requiring Landlord Consents as defined below in Section 6.11 and the
existing Revolving Credit and Term Loan Agreement among the Company, certain of
its Subsidiaries and The First National Bank of Boston (the "Company Credit
Agreement"), violate, conflict with or constitute a breach under any contract,
agreement, indenture, mortgage, deed of trust, lease or other instrument to
which the Company or any of its Subsidiaries is a party or by which any of its
assets is bound or subject, which, in the case of clauses (ii) and (iii) above,
singly or in the aggregate, would have a Material Adverse Effect or prevent
consummation of the transactions contemplated hereby. No consent, approval or
authorization of, or declaration or filing with, or notice to, any governmental
agency, board or regulatory authority, domestic or foreign (a "Governmental
Entity"), which has not been received
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or made, is required by or with respect to the Company or any Subsidiary in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions contemplated hereby, except
for (i) compliance with any applicable requirements of the Exchange Act and the
rules and regulations promulgated thereunder, (ii) state securities or blue sky
laws and state takeover, antitrust and compensation law filings and approvals,
(iii) compliance with any applicable requirements of The Hart-Scott-Rodino
Antitrust Improvement Act of 1976, as amended (the "HSR Act"), (iv) the filing
of articles of merger with the Massachusetts Secretary of State and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, and (v) such other consents, approvals,
authorizations, filings or notices as are set forth in Section 4.1(d) of the
Disclosure Schedule. Neither the Company nor any of its Subsidiaries is a party
or subject to, or bound by, any contract, agreement, indenture, mortgage, deed
of trust, lease or other instrument which prevents or restricts its power and
authority or its ability to guarantee obligations of third parties or pay
dividends on its capital stock, except for the Company Credit Agreement.
(e) FINANCIAL STATEMENTS; SEC REPORTS. The Company has previously
furnished Parent and Sub with true and complete copies of (i) its Annual Reports
on Form 10-K for the fiscal years ended December 28, 1996 (the "1996 Annual
Report") and December 27, 1997 (the "1997 Annual Report and, together with the
1996 Annual Report, the "Annual Reports") filed by the Company with the SEC,
(ii) its Quarterly Reports on Form 10-Q for the quarters ended April 19, July 12
and October 4, 1997 (collectively, the "Quarterly Reports" and, together with
the Annual Reports, the "Reports") filed by the Company with the SEC, (iii) the
unaudited consolidated balance sheet and the unaudited consolidated statement of
operations of the Company and its Subsidiaries as at April 18, 1998 and for the
16 weeks ended April 18, 1998, respectively (the "April 1998 Financial
Statements"), (iv) proxy statements relating to all of the Company's meetings of
stockholders (whether annual or special) held or scheduled to be held since
December 28, 1996 and (v) each other registration statement, proxy or
information statement or current report on Form 8-K filed since December 28,
1996 by the Company with the SEC. Since December 24, 1992, the Company has
complied in all material respects with its SEC filing obligations under the
Exchange Act and the Securities Act of 1933, as amended (the "Securities Act").
The financial statements and related schedules and notes thereto of the Company
contained in the Reports (or incorporated therein by reference) and the April
1998 Financial Statements were prepared in accordance with generally accepted
accounting principles (except, in the case of interim unaudited financial
statements, as permitted by Form 10-Q) applied on a consistent basis except as
noted therein, and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended, subject (in the case of interim unaudited financial
statements) to normal year-end audit adjustments, and such financial statements
complied as to form as of their respective dates in all
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material respects with applicable rules and regulations of the SEC. Each such
registration statement, proxy statement and Report was prepared in accordance
with the requirements of the Securities Act or the Exchange Act and did not, on
the date of effectiveness in the case of such registration statements, on the
date of mailing in the case of such proxy statements and on the date of filing
in the case of such Reports, contain any 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.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as may be disclosed
in the Reports or as otherwise disclosed in Section 4.1(f) of the Disclosure
Schedule, since December 27, 1997 there has not been (i) any declaration,
setting aside or payment of any dividend or other distribution in respect of the
capital stock of the Company or any redemption or other acquisition by the
Company of any of its capital stock; (ii) any issuance by the Company, or
agreement or commitment of the Company to issue, any shares of its Common Stock
or securities convertible into or exchangeable for shares of its Common Stock,
except for stock options and stock purchase rights set forth in Section 4.1(c)
of the Disclosure Schedule; (iii) any change by the Company in accounting
methods, principles or practices except as required by generally accepted
accounting principles; (iv) any increase in wage or bonus, severance, profit
sharing, retirement, deferred compensation, insurance or other compensation or
benefits or any new compensation or benefit plans or arrangements or any
amendments to any Company Benefit Plans (as hereinafter defined) existing on
December 27, 1997, other than bonus payments made in the ordinary course of
business consistent with past practice; or (v) any agreement or commitment,
whether in writing or otherwise, to take any action described in this subsection
4.1(f). Since December 27, 1997, the Company and its Subsidiaries have conducted
their respective businesses in all material respects only in the ordinary
course, consistent with past custom and practice, except as contemplated by this
Agreement. Since February 13, 1998, the Company and its Subsidiaries have
complied with all of the covenants and agreements applicable to the Company and
its Subsidiaries under the Agreement and Plan of Merger dated as of February 13,
1998 among the Company, Ten Ideas, Inc. and Ten Ideas Acquisition, Corp. (the
"Ten Ideas Merger Agreement"), including the provisions of Article IV thereof,
without the necessity of obtaining any consent or waivers from Ten Ideas, Inc.
or Ten Ideas Acquisition Corp.
(g) NO UNDISCLOSED LIABILITIES. Except as set forth in the Reports,
neither the Company nor any of its Subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise), except liabilities (i) in the aggregate
adequately provided for in the Company's audited balance sheet (including any
related notes thereto) for the fiscal year ended December 27, 1997 included in
the 1997 Annual Report (the "1997 Balance Sheet"), (ii) incurred in the ordinary
course of business and not required under generally accepted accounting
principles to be
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reflected on the 1997 Balance Sheet, (iii) incurred since December 27, 1997 in
the ordinary course of business consistent with past practice, (iv) incurred in
connection with this Agreement or (v) which could not reasonably be expected to
have a Material Adverse Effect.
(h) COMPLIANCE WITH LAWS. The business of the Company and each of the
Subsidiaries has been operated at all times in material compliance with all
applicable statutes, laws, rules, regulations, permits, licenses, orders,
injunctions and judgments (collectively, "Laws"), including, without limitation,
any applicable Laws regulating environmental matters, immigration, wages and
hours, working conditions or health and safety, except for such violations or
failures to comply that, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect nor have a material adverse effect
on the Financing.
(i) LITIGATION. Except as set forth in Section 4.1(i) of the
Disclosure Schedule or otherwise disclosed in the Reports, there is no suit,
action or proceeding pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, nor
is there any judgment, decree, injunction, rule or order of any Governmental
Entity outstanding against the Company or any of its Subsidiaries which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(j) DISCLOSURE DOCUMENTS.
(i) Each document required to be filed by the Company with the SEC in
connection with the transactions contemplated by this Agreement (the "Company
Disclosure Documents"), including, without limitation, the Schedule 14D-9, the
proxy or information statement of the Company (the "Company Proxy Statement"),
if any, to be filed with the SEC in connection with the Merger, and any
amendments or supplements thereto, will, when filed, comply as to form in all
material respects with the applicable requirements of the Exchange Act and the
rules and regulations thereunder.
(ii) At the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company, at the time
such stockholders vote on adoption of this Agreement and approval of the Merger
and at the Effective Time, the Company Proxy Statement, as supplemented or
amended, if applicable, will not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. At the time of the filing of any Company Disclosure Document other
than the Company Proxy Statement, at the time of any distribution thereof and
throughout the remaining pendency of the Offer, each such Company Disclosure
Document will not contain any untrue
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statement of a material fact or omit to state a material fact necessary in order
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading. The representations and warranties
contained in paragraphs (i) and (ii) of this Section 4.1(j) will not apply to
statements or omissions included in the Company Disclosure Documents or the
Company Proxy Statement, if any, based upon information furnished to the Company
in writing by Parent or Sub specifically for use therein.
(iii) The information with respect to the Company or any Company
Subsidiary that the Company furnishes to Parent or Sub in writing specifically
for use in the Offer Documents will not, at the time of the filing thereof, at
the time of any distribution thereof and throughout the remaining pendency of
the Offer, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(k) TERMINATION OF PRIOR MERGER AGREEMENT; BOARD RECOMMENDATION. The
Company's Board of Directors has (i) terminated the Ten Ideas Merger Agreement
pursuant to Section 7.1(c) thereof and (ii) taken the actions specified in the
first sentence of Section 1.2(a).
(l) FAIRNESS OPINION. The Board of Directors has received from the
Financial Advisor an oral opinion as of the date hereof, to be followed with a
written opinion to be dated the date hereof, in connection with this Agreement
to the effect that the consideration to be received by the stockholders of the
Company pursuant to the Offer and the Merger is fair to such stockholders from a
financial point of view and such written opinion has not been withdrawn or
modified.
(m) BROKERS. No broker, investment banker, financial advisor or other
person, the fees and expenses of which will be paid by the Company, is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement,
other than pursuant to an engagement letter with the Financial Advisor, a copy
of which has been furnished to Parent.
(n) EMPLOYEE BENEFIT MATTERS. All employee benefit plans and other
benefit arrangements covering employees of the Company and/or of the
Subsidiaries (collectively, the "Benefit Plans") are listed in Section 4.1(n) of
the Disclosure Schedule. True and complete copies of the Benefit Plans have
been made available to Parent and Sub. To the extent applicable, to the
Company's knowledge, the Benefit Plans comply in all material respects with the
requirements of the Employee Retirement Income Security Act of 1974, as amended
and
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the rules and regulations promulgated thereunder ("ERISA"), the Internal
Revenue Code of 1986, as amended (the "Code"), and any Benefit Plan intended to
be qualified under Section 401(a) of the Code has been determined by the United
States Internal Revenue Service to be so qualified. To the Company's knowledge,
no Benefit Plan is covered by Title IV of ERISA or Section 412 of the Code.
Neither the Company nor any Subsidiary, respectively, has incurred any liability
or penalty under Section 4975 of the Code or Section 502(i) of ERISA with
respect to any Benefit Plan, except as would not have a Material Adverse Effect.
Each Benefit Plan has been maintained and administered in all material respects
in compliance with its terms and with ERISA and the Code to the extent
applicable thereto and each Benefit Plan that is a "group health plan" as
defined in Section 607(1) of ERISA, has been operated in compliance with the
provisions of Part 6 of Title I of ERISA and Sections 162(k) and 4980B of the
Code. To the knowledge of the Company, there are no pending, nor has the
Company or any Subsidiary received written notice of any threatened, claims
against or otherwise involving any of the Benefit Plans, except as would not
have a Material Adverse Effect. To the Company's knowledge, all material
contributions required to be made as of the date this Agreement to the Benefit
Plans have been made or provided for. Neither the Company nor any Subsidiary,
respectively, nor any entity under "common control" with the Company and/or of
the Subsidiaries within the meaning of Section 4001 of ERISA has contributed to,
or been, to the Company's knowledge, required to contribute to, any
"multiemployer plan" (as defined in Sections 3 (37) and 4001(a)(3) of ERISA).
Neither the Company nor any Subsidiary has any present or future obligation to
make any payment to or under any "employee welfare plan" (as defined in Section
3(1) of ERISA, "ERISA Welfare Plan") which provides benefits to retirees. No
condition exists, to the Company's knowledge, which would prevent the Company or
any Subsidiary from amending or terminating any ERISA Welfare Plan.
(o) TAXES. Except as disclosed in the Reports or in Section 4.1(o) of
the Disclosure Schedule, each of the Company and the Subsidiaries (i) has timely
filed all federal, state and foreign Tax Returns required to be filed by the
Company and each Subsidiary, respectively, for Tax years ended prior to the date
of this Agreement and all such Tax Returns are correct and complete in all
material respects, (ii) has timely paid, withheld or accrued all Taxes shown to
be due and payable on such Tax Returns, (iii) has accrued all Taxes for such
periods subsequent to the periods covered by such Tax Returns ending on or prior
to the date hereof and (iv) has "open" years for federal, state, local and
foreign income Tax Returns only as set forth in the Reports or in Section 4.1(o)
of the Disclosure Schedule. There are no liens for Taxes on the assets of the
Company or the Subsidiaries except for liens for current Taxes not yet due, and,
except as set forth in the Reports or in Section 4.1(o) of the Disclosure
Schedule, there is no pending, nor has the Company or any Subsidiary received
written notice of any threatened, Tax audit, examination, refund litigation or
adjustment in controversy. Neither the Company nor any Subsidiary is a party to
any agreement providing for the allocation or sharing of Taxes. All
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Taxes which each of the Company and the Subsidiaries has been required to
collect or withhold have been duly collected or withheld and to the extent
required when due, have been or will be duly and timely paid to the proper
taxing authority.
As used in the foregoing paragraph, (a) "Taxes" shall mean (i) all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, excise, real and personal property, sales, transfer,
license, payroll and franchise taxes, imposed by the United States, or any
state, county, local or foreign government or subdivision or agency thereof; and
such term shall include any interest, penalties or additions to tax attributable
to such taxes, charges, fees, levies or other assessments and any obligations
under any agreement or arrangements with any other person with respect to such
amounts and including any liability for taxes of a predecessor entity and (ii)
all obligations, including joint and several liability pursuant to the law of
any jurisdiction or otherwise, for the payment of any of the types of taxes
referred to in clause (i) of this definition as a result of being a member of an
affiliated, consolidated, combined or unitary group for any taxable period and
(b) "Tax Returns" shall mean any report, return or other information required to
be supplied to any taxing authority in connection with Taxes.
SECTION 4.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.
Parent and Sub represent and warrant to the Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Parent is a
corporation duly organized, validly existing and in corporate good standing
under the laws of the State of Delaware. Sub is a corporation duly organized,
validly existing and in corporate good standing under the laws of The
Commonwealth of Massachusetts. Each of Parent and Sub has the requisite
corporate power and authority to carry on its business as now being conducted.
Each of Parent and Sub is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not have a Material Adverse
Effect.
(b) CAPITALIZATION. As of the date of this Agreement, the authorized
capital stock of Parent consists of 6,000,000 shares of common stock, par value
$0.01 per share, 1,316,656 shares of which are presently issued and outstanding.
As of the date of this Agreement, the authorized capital stock of Sub consists
of 1,000 shares of common stock, par value $0.01 per share, 1,000 shares of
which are presently issued and outstanding, which constitutes all of the issued
and outstanding capital stock of Sub. All of the issued and
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outstanding shares of capital stock of Parent and Sub are validly issued, fully
paid and nonassessable.
(c) AUTHORITY; ENFORCEABILITY; NONCONTRAVENTION. Parent and Sub have
all requisite corporate power and authority to enter into this Agreement and to
consummate the Merger and the other transactions contemplated by this Agreement.
The execution and delivery of this Agreement by Parent and Sub and the
consummation by Parent and Sub of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of Parent and Sub. This Agreement has been duly executed and delivered by
and constitutes a valid and binding obligation of each of Parent and Sub,
enforceable against such party in accordance with its terms, except that the
enforceability hereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not (i) violate any of the provisions
of the charter documents or By-laws of Parent or Sub, (ii) subject to the
governmental filings and other matters referred to in the following sentence,
contravene any law, rule or regulation of any state or of the United States or
any political subdivision thereof or therein, or any order, writ, judgment,
injunction, decree, determination or award currently in effect, or (iii) except
for the Parent's existing credit agreement with BankBoston, N.A. (the "Parent
Credit Agreement") which, together with the Company Credit Agreement, is to be
refinanced with a portion of the proceeds of the Financing as defined below in
Section 4.2(d), violate, conflict with or constitute a breach under any
contract, agreement, indenture, mortgage, deed of trust, lease or other
instrument to which Parent or any of its Subsidiaries is a party or by which any
of their assets is bound or subject, which, in the case of clauses (ii) and
(iii) above, singly or in the aggregate, would have a material adverse effect on
the business, financial condition or results of operations of Parent and Sub
taken as a whole or prevent consummation of the transactions contemplated
hereby. No consent, approval or authorization of, or declaration or filing with,
or notice to, any Governmental Entity which has not been received or made is
required by or with respect to Parent or Sub in connection with the execution
and delivery of this Agreement by Parent or Sub or the consummation by Parent or
Sub, as the case may be, of any of the transactions contemplated by this
Agreement, except for (i) compliance with any applicable requirements of the
Exchange Act and the rules and regulations promulgated thereunder, (ii) state
securities or blue sky laws and state takeover, antitrust and competition law
filings and approvals, (iii) compliance with any applicable requirements of the
HSR Act, (iv) the filing of the articles of merger with the Massachusetts
Secretary of State and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do
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business, and (iii) such other consents, approvals, authorizations, filings or
notices as are set forth in Section 4.1(d) of the Disclosure Schedule. Neither
Parent nor any of its Subsidiaries is a party or subject to, or bound by, any
contract, agreement, indenture, mortgage, deed of trust, lease or other
instrument which would prevent or restrict its power and authority or ability to
borrow under the "Interim Facility" (as defined below in Section 4.2(d),
guarantee obligations of third parties or pay dividends on its capital stock,
except for the Parent Credit Agreement and except that pursuant to the Loan
Agreement made as of August 6, 1997, as amended, between FFCA Acquisition
Corporation and NERC Limited Partnership, a Delaware limited partnership which
is a Subsidiary of Parent ("NERC LP"), NERC LP is prohibited from guaranteeing
obligations of third parties.
(d) FINANCING. Parent and Sub have received (i) a written commitment
from The Chase Manhattan Bank and BankBoston, N.A. (collectively, the "Banks")
for the provision of a senior credit facility (the "Interim Facility") for the
transactions contemplated hereby, on or prior to the Closing Date, in an amount
of at least $90 million as interim financing if Parent is unable to issue prior
to July 31, 1998 at least $90 million principal amount of senior unsecured notes
(the "Senior Notes") in a public offering or a Rule 144A private placement as
contemplated by such commitment , (ii) written commitments from stockholders of
Parent to subscribe for an aggregate of at least $21.5 million of equity
securities of Parent in connection with a rights offering made to stockholders
of Parent totaling $40 million of such equity securities to finance the
transactions contemplated hereby and (iii) a written commitment from JP
Acquisition Fund II, L.P. ("JPAF"), to subscribe for up to $18.5 million of such
equity securities of Parent. The aggregate of $130 million of financing (the
"Financing") contemplated by the commitments from the Banks and from
stockholders of Parent and from JPAF (collectively, the "Commitments"), will be
sufficient to consummate the Offer and the Merger. True and correct copies of
the Commitments have been provided to the Company prior to the date hereof.
(e) DISCLOSURE DOCUMENTS.
(i) The information with respect to Parent and its Subsidiaries that
Parent furnishes to the Company in writing specifically for use in any Company
Disclosure Document will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (i) in the case of the Company Proxy
Statement, if any, at the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company, at the time
the stockholders vote on adoption of this Agreement and at the Effective Time,
and (ii) in the case of any Company Disclosure Document other than the Company
Proxy Statement, at the time of the filing thereof, at the time of any
distribution thereof and throughout the remaining pendency of the Offer.
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(ii) The Offer Documents will comply in all material respects with the
applicable requirements of the Exchange Act and will not, at the time of the
filing thereof, at the time of any distribution thereof and throughout the
remaining pendency of the Offer contain any untrue statement of material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading; provided, that no representation is made by
Parent or Sub with respect to statements or omissions in the Offer Documents
based upon information furnished to Parent or Sub in writing by the Company
specifically for use therein.
(f) BROKERS. No broker, investment banker, financial advisor or other
person, the fees and expenses of which will be paid by Parent or Sub, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement,
except for fees payable to Jacobson Partners and fees and expenses payable to
the Banks, Chase Securities Inc., BancBoston Securities Inc., Donaldson, Lufkin
& Jenrette Securities Corporation and Jacobson Partners, which fees and expenses
shall remain the sole responsibility of Parent and Sub.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
PRIOR TO MERGER
SECTION 5.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement, during the period from the date of this
Agreement to the Effective Time, the Company shall operate, and shall cause each
Subsidiary to operate, its business in the ordinary course of business. Without
limiting the generality of the foregoing, during the period from the date of
this Agreement to the Effective Time, except as expressly contemplated by this
Agreement, the Company and the Subsidiaries shall not, without the prior written
consent of Parent:
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of the
Company's outstanding capital stock, (y) split, combine or reclassify any of its
outstanding capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
outstanding capital stock, or (z) purchase, redeem or otherwise acquire any
shares of outstanding capital stock or any rights, warrants or options to
acquire any such shares;
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(ii) issue, sell, grant, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities, including under the ESPP, except for the
issuance of Shares upon exercise of Company Stock Options outstanding prior to
the date of this Agreement and disclosed in Section 4.1(c), or take any action
that would make the Company's representations and warranties set forth in
Section 4.l(c) not true and correct in all material respects;
(iii) amend its Restated Articles of Organization or Restated By-laws
or the comparable charter or organizational documents of any of its
Subsidiaries;
(iv) acquire any business or any corporation, partnership, joint
venture, association or other business organization or division thereof (or any
interest therein), or form any subsidiaries;
(v) sell or otherwise dispose of any of its substantial assets,
except in the ordinary course of business;
(vi) make any capital expenditures, enter into leases or agreements
for new locations, or make other commitments with respect thereto, except
capital expenditures, leases, agreements or commitments (i) set forth on Section
5.1(vi) of the Disclosure Schedule, or (ii) not exceeding $100,000 in the
aggregate as the Company may, in its discretion, deem appropriate;
(vii) (x) incur any indebtedness for borrowed money or guaranty any
such indebtedness of another person, other than (A) borrowings in the ordinary
course under existing lines of credit (or under any refinancing of such existing
lines), (B) indebtedness owing to, or guaranties of indebtedness owing to, the
Company or (C) in connection with the Financing, or (y) make any loans or
advances to any other person, other than routine advances to employees;
(viii) except as disclosed in Section 4.1(f) of the Disclosure
Schedule, grant or agree to grant to any employee any increase in wages or
bonus, severance, profit sharing, retirement, deferred compensation, insurance
or other compensation or benefits, or establish any new compensation or benefit
plans or arrangements, or amend or agree to amend any existing Company Plans,
except as may be required under existing agreements or in the ordinary course of
business consistent with past practices;
(ix) merge, amalgamate or consolidate with any other person or entity
in any transaction, sell all or substantially all of its business or assets, or
acquire all or substantially all of the business or assets of any other person
or entity;
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(x) except as disclosed in Section 4.1(f) of the Disclosure Schedule,
enter into or amend any employment, consulting, severance or similar agreement
with any person or amend the engagement letter with the Financial Advisor
referred to in Section 4.1(l) hereof;
(xi) change its accounting policies in any material respect, except as
required by generally accepted accounting principles;
(xii) except as set forth in Section 4.1(f) of the Disclosure
Schedule, enter into any material contract, agreement or commitment (other than
purchase agreements for food and beverages and restaurant supplies entered into
in the ordinary course of business) not otherwise permitted under this Section
5.1, including, without limitation, any contract, agreement or commitment
involving expenditures by the Company or any of its Subsidiaries in excess of
$50,000 or which is not terminable by the Company upon giving 30 days of less
prior written notice; or
(xiii) commit or agree to take any of the foregoing actions.
SECTION 5.2. OTHER ACTIONS. The Company, Parent and Sub shall not
take any action that would, or that could reasonably be expected to, result in
(i) any of the representations and warranties of such party set forth in this
Agreement that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) any of the conditions of the Offer set forth in Annex
I or of the Merger set forth in Article VII not being satisfied.
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1. MEETING OF STOCKHOLDERS. Following the expiration of
the Offer, the Company will promptly take all action necessary in accordance
with applicable law and its Restated Articles of Organization and Restated By-
laws to duly call, give notice of, and convene a meeting of its stockholders
(the "Stockholders' Meeting") to consider and vote upon the adoption and
approval of this Agreement and the Merger and all actions contemplated hereby
which require approval and adoption by the Company's stockholders unless the
Merger may be effected pursuant to Section 82 of the MBCL; provided, however,
that the obligations contained herein shall be subject to the provisions of
Section 6.8. Parent shall agree to cause all of the shares of capital stock of
the Company held by Parent and/or Sub to be voted, either in person or by proxy,
in favor of the adoption and approval of this Agreement and the Merger at the
Stockholders' Meeting.
SECTION 6.2. PROXY STATEMENT.
(a) In connection with the Stockholders' Meeting contemplated hereby,
as promptly as practicable after Offeror first purchased Shares pursuant to the
Offer and if required by applicable law, the Company will promptly prepare and
file, and Parent will cooperate with the Company in the preparation and filing
of, a preliminary Company Proxy Statement (the "Preliminary Proxy Statement")
with the SEC and will use its commercially reasonable best efforts to respond to
the comments of the SEC concerning the Preliminary Proxy Statement and to cause
the Company Proxy Statement to be mailed to the Company's stockholders, in each
case as soon as reasonably practicable. The Company shall pay the filing fees
for the Preliminary Proxy Statement. Each party to this Agreement will notify
the other parties promptly of the receipt of the comments of the SEC, if any,
and of any request by the SEC for amendments or supplements to the Preliminary
Proxy Statement or the Company Proxy Statement or for additional information,
and will supply the other parties with copies of all correspondence between such
party or its representatives, on the one hand, and the SEC or members of its
staff, on the other hand, with respect to the Preliminary Proxy Statement, the
Company Proxy Statement or the Merger.
(b) If at any time prior to the Stockholders' Meeting, any event
should occur relating to the Company or any of the Subsidiaries which should be
set forth in an amendment of, or a supplement to, the Company Proxy Statement,
the Company will promptly inform Parent. If at any time prior to the
Stockholders' Meeting, any event should occur relating to Parent or Sub or any
of their respective Associates or Affiliates, or relating to the plans of any
such persons for
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the Surviving Corporation after the Effective Time of the Merger, or relating to
the Financing, that should be set forth in an amendment of, or a supplement to,
the Company Proxy Statement, the Company, with the cooperation of Parent, will,
upon learning of such event, promptly prepare, file and, if required, mail such
amendment or supplement to the Company's stockholders; provided that, prior to
such filing or mailing, the Company shall consult with Parent with respect to
such amendment or supplement and shall afford Parent reasonable opportunity to
comment thereon.
(c) Parent will furnish to the Company the information relating to
Parent and Sub, their respective Associates and Affiliates and the plans of such
persons for the Surviving Corporation after the Effective Time of the Merger,
and relating to the Financing, which is required to be set forth in the
Preliminary Proxy Statement or the Company Proxy Statement under the Exchange
Act and the rules and regulations of the SEC thereunder. The Company shall cause
to be included as an exhibit to the Preliminary Proxy Statement and the Company
Proxy Statement, the fairness opinion of the Financial Advisor referred to in
Section 4.1(l).
SECTION 6.3. ACCESS TO INFORMATION; CONFIDENTIALITY. From and after
the date hereof, the Company will provide to Parent reasonable access, upon
notice and during normal business hours, to the Company's facilities, books and
records and shall cause the directors, employees, accountants, attorneys,
financial advisors, lenders and other agents and representatives (collectively,
"Representatives") of the Company to continue to cooperate fully with Parent and
Parent's Representatives in order to enhance such persons' knowledge of the
Company's assets, contracts, liabilities, operations, records and other aspects
of its business (including any environmental investigation of the Company's
facilities) and the efforts of Parent and Sub to secure the Financing as
described in Section 4.2(d). Parent shall, and shall cause Parent's
Representatives to, keep all information supplied or made available to Parent
hereunder in confidence and shall not disclose the same to any party other than
its Representatives on a "need to know" basis and only for purposes of
evaluating the Merger and the Financing. Parent will not use such information
except for evaluating the Merger and in connection with procurement of the
Financing. If the Merger is not consummated and this Agreement is terminated in
accordance with its terms, Parent shall return any information provided
hereunder.
SECTION 6.4. COMMERCIALLY REASONABLE EFFORTS. Upon the terms and
subject to the conditions and other agreements set forth in this Agreement, each
of the parties agrees to use commercially reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer, the Merger and the other transactions contemplated by
this Agreement, including the satisfaction of the respective conditions set
forth in Annex I and
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Article VII; provided that nothing herein shall be deemed to require the Company
or any of its Subsidiaries to participate in any meetings with prospective
investors in connection with the sale of any securities constituting a part of
the Financing described in Section 4.2(d).
SECTION 6.5. FINANCING. Each of Parent and Sub shall use
commercially reasonable best efforts to close the Financing on terms consistent
with the Commitments or such other terms as shall be satisfactory to them and to
execute and deliver definitive agreements with respect to the Financing (the
"Definitive Financing Agreements") on or before the Closing Date. Parent and
Sub shall use commercially reasonable best efforts to satisfy on or before the
Closing Date all requirements of the Definitive Financing Agreements which are
conditions to closing the transactions constituting the Financing and to drawing
the cash proceeds thereunder. The obligations contained herein are not
intended, nor shall they be construed, to benefit or confer any rights upon any
person, firm or entity other than the Company.
SECTION 6.6. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) From and after the Effective Time, Parent shall cause the
Surviving Corporation to indemnify and hold harmless each person who is now, at
any time has been or who becomes prior to the Effective Time a
"Director/officer" of the Company (as defined in Article 7 of the Company's
Restated By-laws ("Article 7")), and their heirs and personal representatives
(the "Indemnified Parties"), against any and all "Expenses" (as defined in
Article 7) incurred in connection with any "Proceeding" (as defined in Article
7) arising out of or pertaining to any action or omission occurring prior to the
Effective Time (including, without limitation, any Proceeding which arises out
of or relates to the transactions contemplated by this Agreement), to the full
extent permitted under Massachusetts law and the Surviving Corporation's
Restated By-laws in effect as of the Effective Date or under any indemnification
agreement in effect as of the date of this Agreement.
(b) The Surviving Corporation shall control the defense of any such
Proceeding with counsel selected by the Surviving Corporation, which counsel
shall be reasonably acceptable to the Indemnified Party, provided that the
Indemnified Party shall be permitted to participate in the defense of such
Proceeding at its own expense; except that the Surviving Corporation shall pay
as incurred the reasonable fees and expenses of counsel retained by an
Indemnified Party in the event that (i) the Surviving Corporation and the
Indemnified Party shall have mutually agreed on the retention of such counsel or
(ii) the named parties to any Proceeding include both the Surviving Corporation
and the Indemnified Party and representation of both parties by the same
counsel would be inappropriate, in the reasonable opinion of counsel to the
Indemnified Party, due to actual or potential differing interests between them;
and provided, further, that if any D&O Insurance (as defined in paragraph (c) of
this Section 6.6) in effect at the time shall require
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the insurance company to control such defense in order to obtain the full
benefits of such insurance and such provision is consistent with the provisions
of the Company's D&O Insurance existing as of the date of this Agreement, then
the provisions of such policy shall govern. Neither Parent nor the Surviving
Corporation shall in any event be liable for any settlement effected without its
written consent, which consent shall not be withheld unreasonably.
(c) For a period of not less than six years after the Effective Time,
Parent or the Surviving Corporation shall maintain officers' and directors'
liability insurance ("D&O Insurance") covering each Indemnified Party who is
presently covered by the Company's officers' and directors' liability insurance
or will be so covered at the Effective Time with respect to actions or omissions
occurring prior to the Effective Time, on terms no less favorable than such
insurance maintained in effect by the Company as of the date hereof in terms of
coverage and amounts, provided that Parent and the Surviving Corporation shall
not be required to pay in the aggregate an annual premium for D&O Insurance in
excess of 125% of the last annual premium paid prior to the date hereof, but in
such case shall purchase as much coverage as may be obtained for such amount.
(d) The Restated Articles of Organization and Restated By-laws of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Restated Articles of Organization and Restated
By-laws of the Surviving Corporation as of the Effective Date, which provisions
shall not be amended, repealed or otherwise modified after the Effective Time in
any manner that would adversely affect the rights thereunder of the Indemnified
Parties in respect of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement), unless such modification is required by law. Parent, Sub and
the Company agree that all rights existing in favor of any Indemnified Party
under any indemnification agreement in effect as of the date hereof shall
survive the Merger and shall continue in full force and effect, without any
amendment thereto.
(e) The provisions of this Section 6.6 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, his or
her heir and his or her personal representatives and shall be binding on all
successors and assigns of Parent, Sub, the Company and the Surviving
Corporation.
SECTION 6.7. PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one hand,
and the Company, on the other hand, will consult with each other before issuing,
and provide each other the opportunity to review and comment upon, any press
release or other public statements with respect to the existence of and
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement without the consent of the other
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party following such consultation, except as may be required by applicable law,
regulation or judicial process, and in such case only after reasonable notice to
the other party.
SECTION 6.8. ACQUISITION PROPOSALS. The Company shall not, nor shall
it authorize or permit any of its Representatives to, directly or indirectly,
(i) solicit, initiate or knowingly encourage any Third Party (as defined in this
Section 6.8) with respect to the submission of any Acquisition Proposal (as
hereinafter defined) or (ii) participate in any discussions or negotiations
regarding, or furnish to any Third Party any non-public information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal; provided, however, that the foregoing shall not prohibit
the Board of Directors of the Company (or, if applicable, the duly appointed
Special Committee thereof) from: (i) furnishing information to, or entering into
discussions or negotiations with, any Third Party in connection with an
unsolicited bona fide Acquisition Proposal by such Third Party if, and to the
extent that, the Board of Directors of the Company (or the Special Committee),
after consultation with independent legal counsel (who may be the Company's
regularly engaged independent counsel), determines in good faith that such
action is required for the Board of Directors of the Company to comply with its
fiduciary obligations to stockholders under applicable law; (ii) withdrawing or
modifying its recommendation referred to in Section 4.1(k) following receipt of
a bona fide unsolicited Acquisition Proposal if the Board of Directors of the
Company (or the Special Committee), after consultation with independent legal
counsel (who may be the Company's regularly engaged independent counsel),
determines in good faith that such action is necessary for the Board of
Directors of the Company to comply with its fiduciary duties to stockholders
under applicable law; or (iii) making to the Company's stockholders any
recommendation and related filing with the SEC as required by Rule 14e-2 and
14d-9 under the Exchange Act, with respect to any tender offer, or taking any
other legally required action (including, without limitation, the making of
public disclosures as may be necessary or advisable under applicable securities
laws); and provided further, however, that, in the event of an exercise of the
Company's or its Board of Director's (or the Special Committee's) rights under
clause (i), (ii) or (iii) above, notwithstanding anything contained in this
Agreement to the contrary, such failure shall not constitute a breach of this
Agreement by the Company. The Company shall provide immediate written notice to
Parent of the receipt of any such Acquisition Proposal and of the Company's
intention to furnish information to, or enter into discussions or negotiations
with, such person or entity. For purposes of this Agreement, (i) "Acquisition
Proposal" means any proposal with respect to a merger, consolidation, share
exchange, tender offer or similar transaction involving the Company, or any
purchase or other acquisition of all or any significant portion of the assets of
the Company, or any equity interest in the Company, other than the transactions
contemplated hereby and (ii) "Third Party" means any corporation, partnership,
person or other entity or "group" (as defined in
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Section 13(d)(3) of the Exchange Act) other than Parent, Sub or any Affiliates
of Parent or Sub and their respective directors, officers, employees,
representatives and agents.
SECTION 6.9. STOCKHOLDER LITIGATION. The Company shall give Parent
the opportunity to participate, at the expense of Parent, in the defense or
settlement of any stockholder litigation against the Company and its
Representatives relating to the transactions contemplated by this Agreement
and/or the Ten Ideas Merger Agreement; provided, however, that no such
settlement shall be agreed to without Parent's consent, which consent shall not
be unreasonably withheld.
SECTION 6.10. BOARD ACTION RELATING TO STOCK OPTION PLANS. As soon
as practicable following the date of this Agreement, the Board of Directors of
the Company (or, if appropriate, any committee administering a Company Stock
Option Plan) shall adopt such resolutions or take such actions as may be
required to adjust the terms of all outstanding Company Stock Options or
accelerate vesting of options granted under the TARSOP, the Director Plan or the
1997 Plan in accordance with Section 3.2 and shall make such other changes to
the Company Stock Option Plans and the ESPP as Parent deems appropriate to give
effect to the Merger, and to terminate such plans as of the Effective Time.
Promptly following the termination of the ESPP, the Company or the Surviving
Corporation, as the case may be, shall refund to each participant in the ESPP in
cash the amount of payroll deductions, if any, then credited to such
participant's account under the ESPP in accordance with the provisions of
Section 19 of the ESPP.
SECTION 6.11. CONSENTS AND APPROVALS. As soon as practicable
following the date of this Agreement, the Company and Parent shall make all
filings required to be made with and seek all consents, approvals, permits and
authorizations required to be obtained from, any third parties or Governmental
Entities in connection with this Agreement and the transactions contemplated
hereby, including, without limitation, the filing of any required notification
under the HSR Act, the consent of any licensing board or agency governing the
sale of alcoholic beverages ("Liquor License Consents"), the consent of any
landlord (or of any other person) at any location leased by the Company or any
of its Subsidiaries ("Landlord Consents") and any other filing, consent or
approval listed on Section 4.1(d) of the Disclosure Schedule, it being
understood, however, that the consummation of the Offer and the Merger are not
conditioned on the Company, Parent or Sub obtaining any such Liquor License
Consents or Landlord Consents. The Company shall pay any required filing fees
or other expense in connection therewith; provided that the Company and Parent
shall each pay one-half of any filing fees under the HSR Act; provided, further,
that Parent shall reimburse the Company for such payment in the event that this
Agreement is terminated pursuant to Section 8.1 hereof in any manner which does
not entitle Parent to reimbursement from the Company for Expenses (as defined in
Section 8.2(b)(i)).
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SECTION 6.12. REPAYMENT OF INDEBTEDNESS. Parent shall utilize a
portion of the net proceeds of the Financing, together with available cash of
the Company, to repay, satisfy or otherwise discharge, in full, all of the
Company's indebtedness to BankBoston, N.A. existing on the Closing Date.
SECTION 6.13. PAYMENT OF FEES AND EXPENSES. Parent and Sub
acknowledge that concurrently with the execution of this Agreement, the Company
is obligated to pay Ten Ideas a fee of $1,500,000 and an amount not to exceed
$750,000, as reimbursement of expenses, all in accordance with the terms of the
Ten Ideas Merger Agreement, and agree that they shall in no event contest the
propriety of or the obligation to make such payments or to seek to recover all
or any portion of such payments.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVAL. The Merger shall have been adopted and
approved by the affirmative vote of the holders of two-thirds of the outstanding
Shares as required under the laws of The Commonwealth of Massachusetts.
(b) THIRD-PARTY AND GOVERNMENTAL CONSENTS. All filings required to be
made prior to the Effective Time with, and all consents (other than Liquor
License Consents and Landlord Consents) and, approvals, permits and
authorizations required to be obtained prior to the Effective Time from, any
third party or any Governmental Entities, including, without limitation, those
set forth in Section 4.1(d) of the Disclosure Schedule, in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by the Company, Parent and Sub, and which,
either individually or in the aggregate, if not obtained would have a Material
Adverse Effect or would prevent consummation of the Merger, shall have been made
or obtained (as the case may be).
(c) NO INJUNCTIONS, RESTRAINTS OR LITIGATION. No temporary
restraining order, judgment, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the
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consummation of the Merger shall be in effect; provided, however, that the
parties invoking this condition shall use their best efforts to have any such
order or injunction vacated.
(d) SHARES PURCHASED. Sub shall have purchased Shares pursuant to the
Offer, provided this condition shall be deemed to be satisfied if Sub fails to
accept for payment and pay for Shares in violation of the Offer.
SECTION 7.2. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction, or waiver by Parent, on or prior to the Closing Date, of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in Section 4.1 that are qualified by
materiality shall be true and correct and such representations and warranties of
the Company set forth in Section 4.1 that are not so qualified shall be true and
correct in all material respects, in each case as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date, except
to the extent such representations and warranties speak as of an earlier date,
except for changes permitted or contemplated by this Agreement, and except, in
the case of any such breach, where such breach would not have, individually or
in the aggregate, a Material Adverse Effect or materially and adversely affect
the Financing described in Section 4.2(d) or the ability of Parent and Sub to
consummate the Offer and the Merger. Parent shall have received an officers'
certificate signed on behalf of the Company to the effect set forth in this
paragraph.
(b) CONSENTS AND APPROVALS. On or prior to the Effective Date, Parent
and/or Sub shall have received all of the necessary consents (other than Liquor
License Consents and Landlord Consents) or approvals of Governmental Entities
and all third parties in connection with the execution and delivery of this
Agreement and the consummation of the Merger and the other transactions
contemplated hereby, unless the failure to obtain such consent or approval would
not have a Material Adverse Effect nor have a material adverse effect on the
Financing.
SECTION 7.3. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to effect the Merger are further subject to the
satisfaction, or waiver by the Company, on or prior to the Closing Date, of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Parent and Sub set forth in Section 4.2 that are qualified by materiality
shall be true and correct and such representations and warranties of Parent and
Sub set forth in Section 4.2 that are not so qualified shall be true and correct
in all material respects, in each case as of the date of this Agreement and as
of the Closing Date as though made on and as of the Closing Date, except to
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the extent such representations and warranties speak as of an earlier date and
except for changes permitted or contemplated by this Agreement, and except, in
the case of any such breach, where such breach would not, individually or in the
aggregate, materially and adversely affect the Financing described in Section
4.2(d) or the ability of Parent and Sub to consummate the Offer and the Merger.
The Company shall have received an officers' certificate signed on behalf of
Parent to the effect set forth in this paragraph.
(b) FAIRNESS OPINION. At or prior to the Effective Time, the
Financial Advisor shall not have withdrawn its fairness opinion referred to in
Section 4.1(l).
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. TERMINATION. This Agreement may be terminated and
abandoned at any time prior to the Effective Time, whether before or after
approval of the Merger by the stockholders of the Company: (a) by mutual written
consent of Parent and the Company; or (b) by either Parent or the Company if (i)
Parent or Sub shall have failed to commence the Offer within five business days
following the date hereof or the Offer shall have terminated or expired in
accordance with its terms without Parent or Sub having purchased any Shares
pursuant to the Offer, or (ii) the Offer has not been consummated by July 31,
1998, or (iii) any change to the Offer is made in contravention of the
provisions of Section 1.1; or (c) by either Parent or the Company: (i) if, upon
a vote at the Stockholders Meeting, or any adjournment thereof, the adoption and
approval of this Agreement and the Merger by the stockholders of the Company
required by Massachusetts law, the Company's Restated Articles of Organization
or the terms of this Agreement shall not have been obtained; or (ii) if the
Merger shall not have been consummated on or before October 31, 1998, provided
that the failure to consummate the Merger is not attributable to the failure of
the terminating party to fulfill its obligations pursuant to this Agreement; or
(iii) if there shall be any law or regulation (other than a law or regulation
relating to the issuance or transfer of any licenses or permits of any licensing
board or agency governing the sale of alcoholic beverages) that makes
consummation of the Offer or the Merger illegal or otherwise prohibited, or if
any judgment, injunction, order or decree enjoining or otherwise restraining Sub
from purchasing Shares pursuant to the Offer or Sub or the Company from
consummating the Merger is entered and such judgment, injunction, order or
decree shall become final and nonappealable; or (d) by the Company, immediately
after payment to Sub of the fee and expense reimbursement described in Section
8.2(b), if prior to the purchase of Shares pursuant to the Offer, (i) the Board
of Directors shall have withdrawn or modified in a manner adverse to Parent or
Sub its approval or recommendation of the Offer, this Agreement or the Merger in
order to permit the Company to execute an Acquisition Proposal providing for the
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<PAGE>
acquisition of the Company by a Third Party as determined by the Board of
Directors in good faith after consultation with independent legal counsel (who
may be the Company's regularly engaged independent counsel) that such action is
required for the Board of Directors of the Company to comply with its fiduciary
obligations to stockholders under applicable law, or (ii) the fairness
opinion referred to in Section 4.1(l) shall have been withdrawn; or (e) by
Parent, if the Board of Directors of the Company shall have approved an
Acquisition Proposal or withdrawn or modified (including by amendment of the
Schedule 14D-9), in a manner adverse to Parent or Sub, the Board of Director's
recommendation pursuant to Section 4.1(k); or (f) by Parent, if any of the
conditions set forth in Section 7.2 shall have become incapable of fulfillment,
and shall not have been waived by Parent, or if the Company shall breach in any
material respect any of its representations, warranties or obligations hereunder
and such breach shall not have been cured in all material respects or waived and
the Company shall not have provided reasonable assurance that such breach will
be cured in all material respects on or before the Closing Date, but only if
such breach, singly or together with all other such breaches, constitutes a
failure of the conditions contained in Section 7.2 as of the date of such
termination; or (g) by the Company, if any of the conditions set forth in
Section 7.3 shall have become incapable of fulfillment, and shall not have been
waived by the Company, or if Parent or Sub shall breach in any material respect
any of their respective representations, warranties or obligations hereunder and
such breach shall not have been cured in all material respects or waived and
Parent or Sub, as the case may be, shall not have provided reasonable assurance
that such breach will be cured in all material respects on or before the Closing
Date, but only if such breach, singly or together with all other such breaches,
constitutes a failure of the conditions contained in Section 7.3 as of the date
of such termination; provided, however, that the party seeking termination
pursuant to clause (f) or (g) hereof is not in breach of any of its material
representations, warranties, covenants or agreements contained in this
Agreement.
SECTION 8.2. EFFECT OF TERMINATION.
(a) AGREEMENT VOID. In the event of the termination and abandonment
of this Agreement pursuant to Section 8.1 hereof, this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
hereto or its affiliates, directors, officers or stockholders and all rights and
obligations of any party hereto shall cease except for agreements contained in
Sections 6.4, 8.2 and 9.2; provided, however, that nothing contained in this
Section 8.2 shall relieve any party from liability for any breach of this
Agreement or shall relieve the Company from any liability under this Article
VIII.
(b) TERMINATION FEE.
35
<PAGE>
(i) If this Agreement is terminated pursuant to Section 8.1(d)
or 8.1(e), pursuant to Section 8.1(f) as a result of a willful breach by the
Company, or pursuant to Section 8.1(g) as a result of the withdrawal or
modification of the Financial Advisor's fairness opinion referred to in Section
4.1(l), then the Company shall (provided that neither Parent nor Sub is then in
material breach of its obligations under this Agreement) promptly pay to Parent
in cash an amount equal to the aggregate out-of-pocket costs and reasonable
expenses of Parent and Sub in connection with this Agreement and the
transactions contemplated hereby, up to an aggregate amount not to exceed
$750,000, including, without limitation, commitment, appraisal and other fees
relating to the Financing and the reasonable fees and disbursements of
accountants, attorneys and investment bankers, whether retained by Parent or by
any other person (collectively, "Expenses").
(ii) In addition to any required payment of Expenses, if this
Agreement is terminated pursuant to Section 8.1(d) or 8.1(e), or pursuant to
Section 8.1(f) as a result of a willful breach by the Company, then the Company
shall (provided that neither Parent nor Sub is then in material breach of its
obligations under this Agreement) promptly pay to Parent the sum of $1,500,000
in cash (the "Termination Fee").
(iii) The sum of the Expenses and the Termination Fee, if any,
shall be referred to herein as the "Termination Amount." The rights of Parent to
receive the Termination Amount shall be in lieu of any damages remedy or claim
by Parent or Sub against the Company for termination of this Agreement pursuant
to Section 8.1(d) or 8.1(e), Section 8.1(f) in the event of a willful breach by
the Company or pursuant to Section 8.1(g) as a result of the Company's reliance
on the condition set forth in Section 7.3(b).
(iv) Notwithstanding the provisions of Section 8.2(b)(ii) above,
if this Agreement is terminated pursuant to Section 8.1(g) as a result of the
Company's reliance on the condition set forth in Section 7.3(b) at a time when
Parent is ready, willing and able (other than as a result of an inability to
consummate the Financing solely because of the withdrawal of the Financial
Advisor's fairness opinion referred to in Section 4.1(l)) to proceed with the
transactions contemplated hereby but for the withdrawal of such fairness
opinion, and within one year after such termination, the Company enters into an
agreement relating to an Acquisition Proposal with a person other than Parent or
Sub or their Affiliates and Associates, or the Company's Board of Directors
recommends or resolves to recommend to the Company's stockholders approval and
acceptance of such an Acquisition Proposal, then, upon the entry into such
agreement or the making of such recommendation or resolution, the Company shall
pay to Parent the Termination Fee.
36
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(c) ACQUISITION PROPOSAL FOLLOWING TERMINATION. At no time prior to
or within one year after termination of this Agreement shall the Company enter
into any agreement relating to an Acquisition Proposal with a person other than
Parent or Sub or their Affiliates and Associates unless such agreement provides
that such person shall, upon the execution of such agreement, pay any
Termination Amount due Parent under this Section 8.2 which at that time remains
unpaid.
(d) REASONABLE INDUCEMENT. The parties acknowledge and agree that the
provisions for payment of the Termination Amount are included herein in order to
reasonably induce Parent to enter into this Agreement and to reimburse Parent
for incurring the costs and expenses related to entering into this Agreement,
obtaining the Commitments and the Financing, and consummating the transactions
contemplated by this Agreement.
(e) COSTS OF ENFORCEMENT. Notwithstanding anything to the contrary
set forth in this Agreement, in the event Parent and/or Sub is required to file
suit to seek all or a portion of the Termination Amount, it shall be entitled,
in addition to payment of the Expenses, to payment by the Company of all
additional expenses, including reasonable attorneys' fees and expenses, which it
incurs in enforcing its rights hereunder.
SECTION 8.3. AMENDMENT. Subject to the applicable provisions of the
MBCL, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties; provided, however, that after
approval of the Merger by the stockholders of the Company, no amendment shall be
made which reduces the consideration payable in the Merger or adversely affects
the rights of the Company's stockholders hereunder without the approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
SECTION 8.4. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to Section 8.2, waive compliance with any of the agreements or conditions of the
other parties contained in this Agreement. Any agreement on the part of a party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
37
<PAGE>
SECTION 8.5. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER. A termination of this Agreement pursuant to Section 8.1, an amendment
of this Agreement pursuant to Section 8.3, an extension or waiver pursuant to
Section 8.4, or any other approval or consent required or permitted to be given
pursuant to this Agreement shall, in order to be effective and in addition to
requirements of applicable law, require, in the case of Parent, Sub or the
Company, action by its Board of Directors, a duly authorized committee thereof
(including, in the case of the Company, the Special Committee), or the duly
authorized designee of such Board of Directors or such committee thereof.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties set forth in of this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 9.1 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time, including,
without limitation, Section 6.7.
SECTION 9.2. FEES AND EXPENSES. Except as provided otherwise in this
Agreement, including, without limitation, in Sections 6.2, 6.11 and 8.2, whether
or not the Merger shall be consummated, each party hereto shall pay its own
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby.
SECTION 9.3. DEFINITIONS. For purposes of this Agreement:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act; and
(b) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
SECTION 9.4. NOTICES. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given when delivered personally or sent by overnight courier (providing
proof of delivery) or telecopy to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
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(a) if to Parent or Sub, to: NE Restaurant Company, Inc.
80A Turnpike Road
Westborough, Massachusetts 01581
Attn: President
Telecopy No.: (508) 870-9201
with copies to: Jacobson Partners
595 Madison Avenue
New York, New York 10022
Attn: Benjamin Jacobson
Telecopy No.: (212) 758-4567
- and -
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attn: David L. Finkelman, Esq.
Telecopy No.: (212) 806-6006
(b) if to the Company, to: Bertucci's, Inc.
14 Audubon Road
Wakefield, Massachusetts 01880
Attn: Board of Directors
Telecopy No.: (781) 246-2224
with a copy to: Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
Attn: James Westra, Esq.
Telecopy No.: (617) 951-1295
SECTION 9.5. INTERPRETATION. When a reference is made in this Agreement to
a Section or Schedule, such reference shall be to a Section of, or a Schedule
to, this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
39
<PAGE>
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
SECTION 9.6. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.7. ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This Agreement
and the other agreements referred to herein constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement. This
Agreement is not intended to confer upon any person, other than the parties
hereto and the third party beneficiaries referred to in the following sentence,
any rights or remedies. The parties hereto expressly intend the provisions of
Section 6.6 to confer a benefit upon and be enforceable by, as third party
beneficiaries of this Agreement, the third persons referred to in, or intended
to be benefited by, such provisions.
SECTION 9.8. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Massachusetts,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 9.9. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, and any such assignment that is not
consented to shall be null and void, except that Parent may assign this
Agreement (i) to any wholly owned subsidiary of Parent or (ii) together with all
of the outstanding capital stock of Sub, to an entity organized under the
corporate or limited liability laws of a jurisdiction of one of the United
States of America, the ownership interests of which entity are substantially
identical to the ownership interests of Parent immediately prior to such
assignment and which entity specifically and expressly assumes by written
agreement the obligations of Parent under this Agreement; in either case so long
as such assignment shall not adversely affect the ability of Parent and Sub to
secure the Financing described in Section 4.2(d) and without Parent being
released from liability hereunder and such transfer or assignment will not
relieve Parent or Sub of their obligations under the Offer or prejudice the
rights of tendering stockholders to receive payment for Shares validly tendered
and accepted for payment pursuant to the Offer. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
40
<PAGE>
SECTION 9.10. ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
(without requirement to post a bond) the terms and provisions of this Agreement,
this being in addition to any other remedy to which they are entitled at law or
in equity.
SECTION 9.11. SEVERABILITY. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
[Remainder of Page Intentionally Left Blank.]
41
<PAGE>
IN WITNESS WHEREOF, the Company, Parent and Sub have caused this Agreement to
be executed as an agreement under seal by their respective officers thereunto
duly authorized, all as of the date first written above.
BERTUCCI'S, INC.
By: /s/ Norman S. Mallett
-----------------------
Norman S. Mallett,
Vice President-Finance, Treasurer and
Chief Financial Officer
NE RESTAURANT COMPANY, INC.
By: /s/ Dennis Pedra
------------------
Dennis Pedra,
President
By: /s/ Paul Hoagland
--------------------
Paul Hoagland,
Assistant Treasurer and Chief Financial Officer
NERC ACQUISITION CORP.
By: /s/ Dennis Pedra
------------------------------------------------
Dennis Pedra,
President
By: /s/ Paul Hoagland
--------------------------------------------------
Paul Hoagland,
Assistant Treasurer and Chief Financial Officer
42
<PAGE>
ANNEX I
The capitalized terms used in this Annex have the meanings set forth
in the attached Agreement, except that the term "Merger Agreement" shall be
deemed to refer to the attached Agreement.
Notwithstanding any other provision of the Offer or the Merger
Agreement, Sub shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Sub's obligation to pay for or return tendered Shares
after the termination or withdrawal of the Offer), to pay for any Shares, and
may terminate the Offer, if (i) the Minimum Condition has not been satisfied,
(ii) the applicable waiting period under the HSR Act shall not have expired or
been terminated, (iii) the Financing Condition has not been satisfied or (iv) at
any time on or after May 13, 1998 and prior to the acceptance for payment of or
payment for Shares, any of the following conditions shall occur and be
continuing:
(a) there shall be instituted or pending any action or proceeding
before any domestic court, government or Governmental Entity, other than by
Parent or Sub, a stockholder of Parent or Sub or any person affiliated with
Parent or Sub, (i) challenging or seeking to make illegal, to delay materially
or otherwise to restrain or prohibit the making of the Offer, the acceptance for
payment of or payment for some of or all the Shares by Sub or the consummation
by Sub of the Merger, (ii) seeking to restrain or prohibit Parent's or the
Company's ownership or operation (or that of its respective Subsidiaries or
Affiliates) of all or any material portion of the business or assets of the
Company and its Subsidiaries, taken as a whole, or of Parent and its
Subsidiaries, taken as a whole, (iii) seeking to compel Parent or the Company to
sell or otherwise dispose of, or hold separate (through the establishment of a
trust or otherwise) any material assets or categories of assets or businesses of
any of the Company and its Subsidiaries, taken as a whole, or Parent or any of
Parent's Affiliates, taken as a whole, (iv) seeking to prohibit or impose
material limitations on the ability of Parent or any of its Subsidiaries or
affiliates effectively to exercise full rights of ownership of the Shares
(including, without limitation, the right to vote any Shares acquired or owned
by Parent or any of its Subsidiaries or affiliates on all matters properly
presented to the Company's stockholders), or seeking to prohibit Parent or any
of its Subsidiaries from effectively controlling in any material respect the
business and operations of the Company and its Subsidiaries, taken as a whole,
(v) seeking to require divestiture by Parent or any of its Subsidiaries or
affiliates of any Shares or seeking to obtain from the Company, Parent or Sub by
reason of any of the transactions contemplated by the Offer or the Merger
Agreement any
A-1
<PAGE>
damages that are material to the Company and its Subsidiaries, taken as a whole,
or Parent and its subsidiaries, taken as a whole, or (vi) that otherwise, in the
reasonable judgment of Parent, is likely to materially adversely affect the
Company and its Subsidiaries, taken as a whole, or Parent and its subsidiaries,
taken as a whole, provided that, in any such case, Parent shall have used its
best efforts to defeat or have vacated such action or proceeding and shall have
failed to do so; or
(b) there shall be any action taken, or any statute, rule, regulation,
injunction, interpretation, judgment, order or decree enacted, enforced,
promulgated, issued or deemed applicable to Parent or any of its Subsidiaries or
to the Company or any of its Subsidiaries or the Offer or the Merger, by any
court, government or Governmental Entity, other than the application of the
waiting period provision of the HSR Act to the Offer or the Merger, and other
than a law or regulation relating to the issuance or transfer of any licenses or
permits of any licensing board or agency governing the sale of alcoholic
beverages, that, in the reasonable judgment of Parent, is likely, directly or
indirectly, to result in any of the consequences referred to in clauses (i)
through (vi) of paragraph (a) above; or
(c) any change, event, occurrence or circumstance shall have occurred
in the business, operations, assets or condition (financial or otherwise) of the
Company or any of its Subsidiaries, relating to a period commencing after April
18, 1998, that in the reasonable judgment of Parent, is likely to have a
Material Adverse Effect on the Company and its Subsidiaries, taken as a whole;
or
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange,
which suspension or limitation shall continue for at least three consecutive
trading days, (ii) any decline in either the Dow Jones Industrial Average or the
Standard and Poor's 500 Index by an amount in excess of 25%, measured from May
13, 1998 (iii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (iv) a commencement of a war
or armed hostilities or other national or international calamity directly or
indirectly involving the United States which would reasonably be expected to
have a material adverse impact on the capital markets of the United States, or
(v) in the case of any of the foregoing existing on the date of this Agreement,
a material acceleration, escalation or worsening thereof; or
(e) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Merger Agreement,
or any of the representations and warranties of the Company set forth in the
Merger Agreement that are qualified as to materiality shall not be true and
correct and any of the representations and warranties without such
A-2
<PAGE>
qualification shall not be true and correct in any material respect, in each
case when made, except, in the case of any such breach, where such breach would
not have, individually or in the aggregate, a Material Adverse Effect or
materially and adversely affect the Financing described in Section 4.2(d) or the
ability of Parent and Sub to consummate the Offer and the Merger,; or
(f) the Merger Agreement shall have been terminated in accordance
with its terms; or
(g) any Third Party (other than Joseph Crugnale or "Permitted
Transferees" under the Tender and Voting Agreement) acquires beneficial
ownership of 15% or more of the outstanding Shares; or
(h) a tender offer or exchange offer for more than 33 1/3% of the
Shares shall have been made or publicly proposed by a Third Party for a price in
excess of the Merger Consideration; or
(i) the Board of Directors of the Company withdraws or modifies in a
manner adverse to Sub or Parent its approval or recommendation of the Offer,
this Agreement or the Merger or recommends or approves an Acquisition Proposal
by a Third Party;
which, in the reasonable judgment of Parent, in any such case, and regardless of
the circumstances giving rise to any such condition, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Parent and Sub
and may be asserted by Sub regardless of the circumstances giving rise to such
condition or may be waived by Sub in whole or in part at any time and from time
to time in its sole discretion. The failure by Sub or any Affiliate of Sub at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right, the waiver of any such right with respect to particular facts
and circumstances shall not be deemed a waiver with respect to any other facts
and circumstances and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
A-3
<PAGE>
Exhibit (c)(2)
[Execution Copy]
TENDER AND VOTING AGREEMENT
TENDER AND VOTING AGREEMENT (this "Agreement"), dated as of May 13,
1998, by and among NE Restaurant Company, Inc., a Delaware corporation
("Parent"), NE Acquisition Corp. ("Sub"), a Massachusetts corporation and a
wholly-owned subsidiary of Parent, and Joseph Crugnale (the "Stockholder").
WHEREAS, concurrently herewith, Parent, Sub and Bertucci's, Inc. (the
"Company"), a Massachusetts corporation, are entering into an Agreement and Plan
of Merger of even date herewith (the "Merger Agreement"; capitalized terms used
but not defined herein shall have the meanings set forth in the Merger
Agreement), pursuant to which Sub agrees to make a tender offer (the "Offer")
for all outstanding shares of Common Stock, par value $.005 per share (the
"Shares"), of the Company at $10.50 per share, net to the seller in cash (the
"Offer Price"), to be followed by the merger of Sub with the Company (the
"Merger"), with the corporation surviving the Merger becoming a wholly-owned
subsidiary of Parent;
WHEREAS, as of the date hereof, the Stockholder beneficially owns an
aggregate of 2,174,772 Shares (the "Owned Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have required that Stockholder agree, and Stockholder
has agreed (i) to tender pursuant to the Offer all of the Owned Shares (which
term shall include any Shares acquired by him after the date hereof), (ii) to
vote the Owned Shares in favor of the adoption of the Merger Agreement and the
approval of the Merger, (iii) to appoint Parent as the Stockholder's proxy to
vote the Owned Shares in connection with the Merger Agreement and the Merger and
(iv) with respect to other matters put to stockholders of the Company for a
vote, to vote the Owned Shares, in each case, in accordance with the terms and
conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration given to each party hereto, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Agreement to Tender and Vote.
----------------------------
1.1 Tender. Stockholder hereby agrees to validly tender (or cause the
------
record owner to tender), and not to withdraw, pursuant to and in accordance with
the terms of the Offer, not later than three (3) business days prior to the
initial expiration of the Offer, the Owned Shares beneficially owned by him on
the date hereof and any additional Shares acquired by Stockholder in any
capacity after the date hereof and prior to the termination of this Agreement
(whether upon the exercise of options, warrants or rights, the conversion or
exchange of convertible or
<PAGE>
exchangeable securities, or by means of purchase, dividend, distribution, gift,
bequest, inheritance or as a successor in interest in any capacity or otherwise)
beneficially owned by Stockholder, which additional Shares shall constitute
Owned Shares for all purposes of this Agreement. Stockholder acknowledges and
agrees that Parent's and Sub's obligation to accept and pay for the Owned Shares
in the Offer is subject to the terms and conditions of the Offer. The parties
agree that Stockholder will, for all Owned Shares tendered by Stockholder in the
Offer and accepted for payment and paid for by Sub, receive the same per share
consideration paid to other shareholders who have tendered Shares into the
Offer. The transfer by Stockholder of the Owned Shares to Sub in the Offer
shall, upon payment therefor, pass to and unconditionally vest in Sub good and
valid title to the Owned Shares, free and clear of all claims, liens,
restrictions, security interests, pledges, limitations and encumbrances
whatsoever.
1.2 Voting. Stockholder hereby agrees that, during the time this
------
Agreement is in effect, at any meeting of the shareholders of the Company,
however called, he shall (a) vote all of the Owned Shares as are beneficially
owned by him on the record date for determining stockholders of record entitled
to vote at such meeting in favor of the adoption of the Merger Agreement and
approval of the Merger; (b) vote such Owned Shares against any action or
agreement that would result in a breach in any material respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement; and (c) vote such Owned Shares against any action or
agreement (other than the Merger Agreement or the transactions contemplated
thereby) that would impede, interfere with, delay, postpone or attempt to
discourage the Merger, including, but not limited to: (i) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company; or (ii) a sale or transfer of a material
amount of assets of the Company or any of its subsidiaries or a reorganization,
recapitalization or liquidation of the Company or any of its subsidiaries. The
Stockholder shall forward to Parent any proxy cards that Stockholder receives
with respect to the Merger Agreement duly executed by Stockholder.
1.3 Irrevocable Proxy. In the event that Stockholder shall breach his
-----------------
covenant set forth in Section 1.2, Stockholder (without any further action on
Stockholder's part) shall be deemed to have hereby irrevocably appointed Parent
as the attorney and proxy of such Stockholder, with full power of substitution,
to vote, and otherwise act (by written consent or otherwise) with respect to all
Owned Shares that Stockholder is entitled to vote at any meeting of stockholders
of the Company (whether annual or special and whether or not an adjourned or
postponed meeting) or consent in lieu of any such meeting or otherwise, to vote
such Shares as set forth in Section 1.2 above. THIS PROXY AND POWER OF ATTORNEY
IS IRREVOCABLE AND COUPLED WITH AN INTEREST. Stockholder hereby revokes,
effective upon the execution and delivery of the Merger Agreement by the parties
thereto, all other proxies and powers of attorney with respect to the Owned
Shares that Stockholder may
2
<PAGE>
have heretofore appointed or granted, and no subsequent proxy or power of
attorney (except in furtherance of Stockholder's obligations under Section 1.2
hereof) shall be given or written consent executed (and if given or executed,
shall not be effective) by Stockholder with respect thereto so long as
Stockholder's obligations under this Section remain in effect.
2. Expiration. This Agreement and the Stockholder's obligations
----------
hereunder shall terminate on the earlier of (a) the consummation of the Merger,
(b) the termination of the Offer without any Shares having been purchased
pursuant thereto, (c) the termination of the Merger Agreement in accordance with
its terms, except that the covenants and agreements set forth in Sections 4.1
and 4.3 hereof shall survive for a period of six months after such termination
(the "Extended Period") if (i) at the time of such termination of the Merger
Agreement there is pending or outstanding an unsolicited bona fide Acquisition
Proposal by a Third Party (other than an Acquisition Proposal made by
Stockholder or any entity beneficially owned by him as permitted by Section 6.1
hereof) that has been publicly announced and (ii) such termination was not as a
result of termination of the Merger Agreement by the Company due to the breach
thereof by Parent or Sub or termination of the Merger Agreement by Parent and/or
Sub due to the failure to satisfy the Financing Condition contained in Section
4.2(d) thereof (the "Extension Conditions") and (d) unless the Extension
Conditions are satisfied, July 31, 1998.
3. Representations and Warranties.
------------------------------
3.1 Representations and Warranties of Parent and Sub. Parent and Sub
------------------------------------------------
hereby represent and warrant to Stockholder as follows:
(a) Organization; Due Authorization. Parent is a corporation duly
-------------------------------
organized, validly existing and in good standing under the laws of Delaware.
Parent has full power and authority to execute and deliver this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Parent, and no other corporate proceedings on the part of
Parent are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent and constitutes a valid and binding agreement
of Parent, enforceable against Parent in accordance with its terms, except to
the extent (i) such enforcement may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights and (ii) the remedy of
specific enforcement and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(b) Organization; Due Authorization. Sub is a corporation duly
-------------------------------
organized, validly existing and in good standing under the laws of
Massachusetts. Sub has full corporate
3
<PAGE>
power and authority to execute and deliver this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of Sub,
and no other corporate proceedings on the part of Sub are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Sub and
constitutes a valid and binding agreement of Sub, enforceable against Sub in
accordance with its terms, except to the extent (i) such enforcement may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights and (ii) the remedy of specific enforcement and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
3.2 Representations and Warranties of Stockholder. Stockholder hereby
---------------------------------------------
represents and warrants to Parent as follows:
(a) Title. Stockholder has good and valid title to the Owned Shares
-----
free and clear of any lien, charge, encumbrance or claim of whatever nature.
(b) Ownership of Shares. On the date hereof, such Stockholder
-------------------
beneficially owns 2,174,772 Shares, all of which are held of record by him.
Stockholder has sole voting power and sole power of disposition with respect to
the Owned Shares, with no restrictions, subject to applicable federal securities
laws, on his rights of disposition pertaining thereto.
(c) Power; Binding Agreement. Stockholder has the legal capacity,
------------------------
power and authority to enter into and perform all of his obligations under this
Agreement. The execution, delivery and performance of this Agreement by such
Stockholder will not violate any other agreement to which Stockholder is a party
including, without limitation, any voting agreement, stockholders agreement or
voting trust. This Agreement has been duly and validly executed and delivered
by Stockholder and constitutes a valid and binding agreement of such
Stockholder, enforceable against Stockholder in accordance with its terms,
except to the extent (i) such enforcement may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights and (ii) the
remedy of specific enforcement and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(d) No Conflicts. The execution, delivery and performance of this
------------
Agreement by Stockholder will not constitute a breach, violation or default (or
any event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration under, or
result in the creation of any lien or encumbrance upon any of the properties or
assets of
4
<PAGE>
Stockholder under, any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument to which Stockholder is a party or by which
his respective properties or assets are bound.
4. Certain Covenants of Stockholder. Stockholder hereby covenants and
--------------------------------
agrees as follows:
4.1 Restriction on Transfer, Proxies and Non-Interference. Stockholder
-----------------------------------------------------
hereby agrees, while this Agreement is in effect and, if the Extension
Conditions are satisfied, thereafter during the Extension Period, and except as
contemplated hereby, not to (i) sell, transfer, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of his Owned Shares, (ii) grant any
proxies, deposit any shares of capital stock of the Company into a voting trust
or enter into a voting agreement with respect to any such Shares or (iii) take
any action that would make any representation or warranty of Stockholder
contained herein untrue or incorrect or have the effect of preventing or
disabling Stockholder from performing his obligations under this Agreement;
provided, however, that Stockholder shall be permitted to transfer any of the
Owned Shares to Ten Ideas, Inc., Ten Ideas Acquisition Corp., any member of the
immediate family of Stockholder or any trust, limited partnership or other
entity the beneficial ownership of which is held by Stockholder or such family
members (each, a "Permitted Transferee"), so long as such Permitted Transferee
agrees in writing, in form and substance satisfactory to Parent and Sub, to be
bound by the terms hereof to the same extent as Stockholder is bound and
provided further, however, that no such transfer shall relieve Stockholder of
his obligations hereunder if such Permitted Transferee does not perform such
obligations.
4.2 Additional Shares. Stockholder hereby agrees, while this Agreement is
-----------------
in effect, to promptly notify Parent and Sub of the number of additional Shares
acquired by such Stockholder, if any, after the date hereof, which additional
Shares shall be deemed Owned Shares for all purposes of this Agreement.
4.3 No Solicitation of Transactions. While this Agreement is in effect
-------------------------------
and, if the Extension Conditions are satisfied, thereafter during the Extension
Period, Stockholder shall not, directly or indirectly, solicit or initiate any
Acquisition Proposal or offer from any person, or (except in his capacity as a
director or officer of the Company to the extent permitted by Section 6.8 of the
Merger Agreement) engage in discussions or negotiations relating thereto
(including by way of furnishing information). While this Agreement is in effect
and, if the Extension Conditions are satisfied, during the Extension Period,
Stockholder shall promptly advise Purchaser of the receipt of any Acquisition
Proposal or if any inquiries are received by, any
5
<PAGE>
information or documents are requested from, or any negotiations or discussions
are sought to be instituted or continued with, Stockholder or any of his
affiliates.
5. Further Assurances. From time to time, at the other party's request
------------------
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further action as may be necessary
or desirable to consummate and make effective the transactions contemplated by
Section 1 of this Agreement.
6. Other Matters.
-------------
6.1 Proposed Amendment of Merger Agreement. Notwithstanding anything to
--------------------------------------
the contrary contained herein or in Section 6.8 of the Merger Agreement, if,
without Stockholder's prior written consent, Parent or Sub proposes in writing
to the Company, the Board of Directors of the Company or any Committee thereof,
or publicly releases a proposal for, (i) any reduction in the Offer Price, (ii)
any extension of the date specified in Section 8.1(b)(ii) of the Merger
Agreement after which either Parent or the Company may terminate the Merger
Agreement if the Offer has not been consummated or (iii) any increase in the
Minimum Condition, this Agreement shall terminate and be of no further force or
effect.
6.2 Withdrawal of Shares on Termination. Any termination of this
-----------------------------------
Agreement shall be deemed to constitute an effective withdrawal of any Owned
Shares tendered by Stockholder in the Offer. Parent and Sub agree to cause to
be delivered to Stockholder the certificates for any such Owned Shares as
promptly as practicable following any such deemed withdrawal, and hereby waive
any procedural requirements of the Offer which would require Stockholder to take
any other action to effect such withdrawal.
7. Miscellaneous.
-------------
7.1 Entire Agreement; Assignment. This Agreement (i) constitutes the
----------------------------
entire agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof and (ii) shall not
be assigned by operation of law or otherwise, provided that Parent or Sub may
assign its rights and obligations hereunder to any direct or indirect wholly-
owned subsidiary of Parent, but no such assignment shall relieve Parent or Sub
of its obligations hereunder if such assignee does not perform such obligations.
7.2 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, by mail (registered or certified mail,
6
<PAGE>
postage prepaid, return receipt requested) or by any courier service, such as
Federal Express, providing proof of delivery. All communications hereunder shall
be delivered to the respective parties at the following addresses:
To Stockholder as follows:
Mr. Joseph Crugnale
c/o Bertucci's, Inc.
14 Audubon Road
Wakefield, Massachusetts 01880
copy to:
Posternak, Blankstein & Lund, L.L.P.
100 Charles River Plaza
Boston, Massachusetts 02114
Attention: Donald H. Siegel, P.C.
To Parent or Sub:
NE Restaurant Company, Inc.
80A Turnpike Road
Westborough, Massachusetts 01581
Attention: President
copies to:
Jacobson Partners
595 Madison Avenue
New York, NY 10032
Attention: Benjamin Jacobson
and
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attention: David L. Finkelman, Esq.
7
<PAGE>
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
7.3 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the Commonwealth of Massachusetts, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
7.4 Specific Performance. Each of the parties hereto recognizes and
--------------------
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereby agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
7.5 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same Agreement.
7.6 Descriptive Headings. The descriptive headings used herein are
--------------------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
7.7 Severability. Whenever possible, each provision or portion of any
------------
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
8
<PAGE>
IN WITNESS WHEREOF, Parent, Sub and Stockholder have caused this Agreement
to be duly executed as of the day and year first above written.
NE RESTAURANT COMPANY, INC.
By: /s/ Dennis Pedra
-----------------
Name: Dennis Pedra
Title: President
NE ACQUISITION CORP.
By: /s/ Paul Hoagland
------------------
Name: Paul V. Hoagland
Title: Asst. Treasurer and Chief
Financial Officer
STOCKHOLDER
/s/ Joseph Crugnale
---------------------
Joseph Crugnale
9
<PAGE>
Exhibit (c)(3)
LITIGATION SETTLEMENT AGREEMENT
-------------------------------
Litigation Settlement Agreement, dated as of May 13, 1998, by and among
Bertucci's, Inc., a Massachusetts corporation (the "Company"); Ten Ideas, Inc.,
a Delaware corporation ("Ten Ideas"); Ten Ideas Acquisition Corp., a
Massachusetts corporation ("Ten Ideas Acquisition"); NE Restaurant Company,
Inc., a Delaware corporation ("NE Restaurant"); NERC Acquisition Corp., a
Massachusetts corporation ("NERC"); and Joseph Crugnale ("Mr. Crugnale").
WITNESSETH
WHEREAS, the Company, Ten Ideas and Ten Ideas Acquisition are parties to a
certain Agreement and Plan of Merger, dated as of February 13, 1998 (the "Ten
Ideas Agreement"); pursuant to which Ten Ideas Acquisition would be merged with
and into the Company with the Company being the surviving corporation; and
WHEREAS, subsequent to execution of the Ten Ideas Agreement, three
purported class action law suits, as set forth on Schedule A attached hereto,
----------
were filed in Massachusetts Superior Court against the Company and the members
of its Board of Directors, including Mr. Crugnale, claiming that the
consummation of the Merger (as defined in the Ten Ideas Agreement) would be
wrongful, unfair and in breach of the individual defendants' fiduciary duties
(collectively, the "Stockholder Claims");
WHEREAS, on May 13, 1998, the Company, NE Restaurant and NERC entered into
an Agreement and Plan of Merger, pursuant to which NERC would be merged with the
Company (the "NE Restaurant Agreement");
WHEREAS, upon entering into the NE Restaurant Agreement, the Company,
pursuant to Section 7.1(c) of the Ten Ideas Agreement, is required and has paid
to Ten Ideas the sum of $1,500,000, plus documented expenses not to exceed
$750,000 (the "Termination Fee"); and
WHEREAS, the Parties hereto now wish to enter this Agreement in order to
(i) address the defense and settlement of the Stockholder Claims, and (ii)
acknowledge and agree to payment by the Company of the Termination Fee to Ten
Ideas.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises contained herein and for good and valuable consideration, the receipt
and adequacy of where are hereby acknowledged, the undersigned hereto agrees as
follows:
1. Defense and Settlement of Litigation. The Company, NE Restaurant and
------------------------------------
NERC hereby covenant and agree, jointly and severally, (i) to continue to permit
Mr. Crugnale, Ten Ideas and Ten Ideas Acquisition to participate in the defense
or settlement of each of the Stockholder Claims (or any claim consolidating the
Stockholder Claims) in accordance with the
<PAGE>
provisions of Section 6.6 of the NE Restaurant Agreement and the Company's
Restated By-laws, and (ii) not to settle or compromise any of the Stockholder
Claims (or any claim consolidating the Stockholder Claims) unless such
settlement or compromise includes the giving by the claimants thereunder to Mr.
Crugnale, Ten Ideas and Ten Ideas Acquisition of an unconditional release from
all liability in respect of each of the Stockholder Claims (or any such
consolidated claim).
2. Termination Fee. NE Restaurant and NERC hereby acknowledge that the
---------------
Company has paid the Termination Fee to Ten Ideas and the Company, NE Restaurant
and NERC hereby agree that they shall in no event (i) contest the propriety of
or the obligation to make such payments or (ii) seek to recover all or any
portion of the Termination Fee.
3. Notice. For purposes of this Agreement, all notices and all other
------
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when (a) delivered personally, (b) sent by
facsimile or similar electronic device and confirmed, (c) delivered by overnight
express, or (d) if sent by any other means, upon receipt. Notices and all other
communications provided for in this Agreement shall be addressed as follows:
(a) if to Ten Ideas, Ten Ideas
Acquisition and Mr. Crugnale: Ten Ideas, Inc.
14 Audubon Road
Wakefield, Massachusetts 01880
Attn: Joseph Crugnale, President
with a copy to: Posternak, Blankstein & Lund, L.L.P.
100 Charles River Plaza
Boston, Massachusetts 02114
Attn: Donald H. Siegel, P.C.
(b) if to the Company, to: Bertucci's, Inc.
14 Audubon Road
Wakefield, Massachusetts 01880
Attn: Board of Directors
2
<PAGE>
with a copy to: Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
Attn: James Westra, Esq.
(c) if to NE Restaurant and
NERC, to: NE Restaurant Company, Inc.
80A Turnpike Road
Westborough, Massachusetts 01581
Attn: President
with copies to: Jacobson Partners
595 Madison Avenue
New York, New York 10022
Attn: Benjamin Jacobson
with copies to: Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attn: David L. Finkelman, Esq.
4. Miscellaneous. No provision of this Agreement may be modified,
-------------
waived, or discharged unless such waiver, modification, or discharge is agreed
to in a written instrument signed by the parties hereto. No waiver by either
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by any
party which are not set forth expressly in this Agreement.
5. Validity. The invalidity or unenforceability of any provision or
--------
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
6. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed to be an original, but all of which together will
constitute one and the same agreement.
7. Entire Agreement; Effectiveness. This Agreement constitutes the
-------------------------------
entire agreement between the parties with respect to the subject matter hereof
and supersedes any and all prior agreements or arrangements among the parties
hereto or any other predecessor in interest thereto or any of their respective
subsidiaries, on the other hand.
3
<PAGE>
8. GOVERNING LAW. THIS AGREEMENT, INCLUDING THE VALIDITY HEREOF AND THE
-------------
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY IN SUCH STATE (WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF). EACH OF THE PARTIES
HERETO AGREES THAT ANY ACTION OR PROCEEDING BROUGHT TO ENFORCE THE RIGHTS OR
OBLIGATIONS OF ANY PARTY HERETO UNDER THIS AGREEMENT MAY BE COMMENCED AND
MAINTAINED IN ANY COURT OF COMPETENT JURISDICTION LOCATED IN THE COMMONWEALTH OF
MASSACHUSETTS, AND THAT THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MASSACHUSETTS SHALL HAVE NON-EXCLUSIVE JURISDICTION OVER ANY SUCH ACTION, SUIT
OR PROCEEDING BROUGHT BY ANY OF THE PARTIES HERETO. EACH OF THE PARTIES HERETO
FURTHER AGREES THAT PROCESS MAY BE SERVED UPON IT BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, ADDRESSED AS MORE GENERALLY PROVIDED IN SECTION 8 HEREOF, AND
CONSENTS TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTIES WITH RESPECT
TO ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ENFORCEMENT OF ANY
RIGHTS UNDER THIS AGREEMENT.
9. Invalidity. If any cause, paragraph, section or part of this
----------
Agreement shall be held or declared to be void, invalid or illegal, for any
reason, by any court of competent jurisdiction, such provision shall be
ineffective but shall not in any way invalidate or affect any other clause,
paragraph, section or part of this Agreement.
10. Binding Effect; Assignment. This Agreement shall be binding upon and
--------------------------
inure to the benefit of the parties hereto and their respective heirs,
successors, personal representatives and permitted assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first set forth above.
BERTUCCI'S, INC.
By: /s/ Norman S. Mallett
-----------------------------
Name:
Title: Treasurer
TEN IDEAS, INC.
By: /s/ Joseph Crugnale
-----------------------------
Name: Joseph Crugnale
Title: President
TEN IDEAS ACQUISITION CORP.
By: /s/ Joseph Crugnale
-----------------------------
Name: Joseph Crugnale
Title: President
NE RESTAURANT COMPANY, INC.
By: /s/ Dennis Pedra
-----------------------------
Name: Dennis Pedra
Title: President
NERC ACQUISITION CORP.
By: /s/ Paul Hoagland
-----------------------------
Name: Paul V. Hoagland
Title: Asst. Treasurer and Chief
Financial Officer
/s/ Joseph Crugnale
---------------------------------
Joseph Crugnale
S-1
<PAGE>
SCHEDULE A
----------
MARIETTA BREWSTER,
v.
JOSEPH CRUGNALE, ROBERT L.
LESTINA, JR., JAMES WESTRA, E.
BULKELEY GRISWOLD, ALLAN J.
STEINMETZ, and BERTUCCI'S, INC.
Civil Action No. 98-793
SANDRA WEISS, on behalf of herself
and all others similarly situated
v.
BERTUCCI'S, INC., JOSEPH CRUGNALE,
ROBERT L. LESTINA, JAMES WESTRA,
E. BULKELEY E. GRISWOLD, and ALLAN
J. STEINMETZ
Civil Action No. 98-811
KEITH JAMISON, on behalf of himself and
all others similarly situated
v.
JOSEPH CRUGNALE, ROBERT L.
LESTINA, JR., JAMES WESTRA, E.
BULKELEY GRISWOLD, ALLAN J.
STEINMETZ, and BERTUCCI'S, INC.
Civil Action No. 98-877
<PAGE>
Exhibit (c)(4)
BERTUCCI'S, INC.
PERSONAL AND CONFIDENTIAL
- -------------------------
April 6, 1998
NE Restaurant Company, Inc.
c/o Jacobson Partners
595 Madison Avenue
New York, New York 10022
Attention: Benjamin Jacobson
Gentlemen:
In connection with your consideration of a possible transaction with
Bertucci's, Inc. (the "Company"), you have requested information concerning the
Company. As a condition to your being furnished such information, you agree to
treat any information concerning the Company (whether prepared by the Company,
its advisors or otherwise) which is furnished to you by or on behalf of the
Company (herein collectively referred to as the "Evaluation Material") in
accordance with the provisions of this letter and to take or abstain from taking
certain other actions herein set forth. The term "Evaluation Material" does not
include information which (i) is already in your possession, provided that such
information is not known by you to be subject to another confidentiality
agreement with or other obligation of secrecy to the Company or another party,
or (ii) becomes generally available to the public other than as a result of a
disclosure by you or your directors, officers, employees, agents or advisors, or
(iii) becomes available to you on a non-confidential basis from a source other
than the Company or its advisors, provided that such source is not known by you
to be bound by a confidentiality agreement with or other obligation of secrecy
to the Company or another party.
You hereby agree that the Evaluation Material will be used solely for the
purpose of evaluating a possible transaction between the Company and you, and
that such information will be kept confidential and not disclosed by you and
your advisors except to the extent required by
<PAGE>
NE Restaurant Company, Inc.
April 6, 1998
Page 2
applicable law or regulations; provided, however, that (i) any of such
information may be disclosed to your directors, officers and employees and
representatives of your advisors who need to know such information for the
purpose of evaluating any such possible transaction between the Company and you
(it being understood that at the time of such disclosure such directors,
officers, employees and representatives shall be informed by you of the
confidential nature of such information and shall be directed by you to treat
such information confidentially), and (ii) any disclosure of such information
may be made to which the Company consents in writing.
In the event that you are requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or other process) to disclose any Evaluation Material, it
is agreed that you will provide the Company with prompt notice of any such
request or requirement so that the Company may seek an appropriate protective
order or waive your compliance with the provisions of this letter. If, failing
the entry of a protective order or the receipt of a waiver hereunder, you are,
in the opinion of your counsel, compelled to disclose Evaluation Material, you
may disclose that portion of the Evaluation Material your counsel advises you
that you are compelled to disclose, provided that you notify the Company not
later than the time of such disclosure of the nature and extent of such
disclosure. In any event, you will not oppose action by, and you will cooperate
with the Company to obtain an appropriate protective order or other reliable
assurance that confidential treatment will be accorded the Evaluation Material.
All references to you in this paragraph shall be deemed to include your agents
and employees.
You hereby acknowledge that the Evaluation Material is being furnished to
you in consideration of your agreement that for a period of two years from the
date hereof neither you nor any of your affiliates or subsidiaries will,
directly or indirectly, unless in any such case specifically invited to do so by
the Board of Directors of the Company, (i) in any manner acquire or agree to
acquire, any securities or property of the Company, except for the purchase of
shares of Common Stock of the Company pursuant to a cash tender offer for all of
the issued and outstanding shares of Common Stock of the Company at a price per
share of not less than $10.50 (a "Qualified Tender Offer"), (ii) commence a
tender or exchange offer for any securities of the Company, except for a
Qualified Tender Offer.
<PAGE>
NE Restaurant Company, Inc.
April 6, 1998
Page 3
You agree that neither you nor any of your affiliates or subsidiaries will
(i) for a period of two years from the date hereof solicit for employment or
hire any officer of the Company or any of its subsidiaries or any other employee
of the Company or any of its subsidiaries, including any area or regional
manager, with whom you have had contact in connection with your consideration of
a possible transaction with the Company and (ii) for a period of one year from
the date hereof solicit any area or regional manager who became known to you,
but with whom you have not had contact, in connection with your consideration of
a possible transaction with the Company
It is further understood and agreed that Jason Hutchinson of NationsBanc
Montgomery Securities (415-627-2476) will arrange for appropriate contacts for
due diligence purposes. It is also understood and agreed that all (i)
communications regarding a possible transaction, (ii) requests for additional
information, (iii) requests for facility tours or management meetings and (iv)
discussions or questions regarding procedures, will be submitted or directed
exclusively to Jason Hutchinson, and that none of you or your representatives
who are aware of the Evaluation Material and/or the possibility of a transaction
will initiate or cause to be initiated any communication with any director,
officer or employee of the Company concerning the Evaluation Material until
expressly authorized by Jason Hutchinson.
Although the Company has endeavored to include in the Evaluation Material
information known to it which it believes to be relevant for the purpose of your
investigation, you understand that neither the Company nor any of its directors,
employees, shareholders, representatives or advisors have made or make any
representation or warranty as to the accuracy or completeness of the Evaluation
Material. You agree that neither the Company nor its directors, employees,
shareholders, representatives or advisors shall have any liability to you or any
of your representatives or advisors resulting from the use of the Evaluation
Material.
You understand and agree that money damages would not be a sufficient remedy
for any breach of this letter by you and that the Company shall be entitled to
specific performance and injunctive relief as remedies for any such breach. Such
remedies shall not be deemed to be the exclusive remedies for your breach of
this letter but shall be in addition to all other remedies available at law or
in equity to the Company.
<PAGE>
NE Restaurant Company, Inc.
April 6, 1998
Page 4
In the event that you do not proceed with the transaction which is the
subject of this letter within a reasonable time, you shall promptly redeliver to
the Company all written Evaluation Material and any other written material
containing or reflecting any information in the Evaluation Material (whether
prepared by the Company, its advisors or otherwise) and will not retain any
copies, extracts or other reproductions in whole or in part of such written
material. All documents, memoranda, notes and other writings whatsoever prepared
by you or your advisors based on the information in the Evaluation Material
shall be destroyed, and such destruction shall be certified in writing to the
Company by an authorized officer supervising such destruction.
You agree that unless and until a definitive agreement between the Company
and you with respect to any transaction referred to in the first paragraph of
this letter has been executed and delivered, neither the Company nor you will be
under any legal obligation of any kind whatsoever with respect to such a
transaction by virtue of this or any written or oral expression with respect to
such a transaction by any of its directors, officers, employees, agents or any
other representatives or its advisors or representatives thereof except, in the
case of this letter, for the matters specifically agreed to herein. The
agreement set forth in this paragraph may be modified or waived only by a
separate writing by the Company and you expressly so modifying or waiving such
agreement.
It is further understood and agreed that no failure or delay by the Company
in exercising any right, power or privilege under this Agreement shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise of any right, power or privilege hereunder.
You hereby irrevocably and unconditionally submit to the non-exclusive
jurisdiction of any State or Federal court sitting in Boston, Massachusetts over
any suit, action or proceeding arising out of or relating to this letter. You
hereby agree that service of any process, summons, notice or document by U.S.
registered mail addressed to you shall be effective service of process for any
action, suit or proceeding brought against you in any such court. You hereby
irrevocably and unconditionally waive any objection to the laying of venue of
any such suit, action or proceeding brought in any such court and any claim that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum. You agree that a final judgment in any such suit,
action or proceeding brought in any such
<PAGE>
NE Restaurant Company, Inc.
April 6, 1998
Page 5
court shall be conclusive and binding upon you and may be enforced in any other
courts to whose jurisdiction you are or may be subject, by suit upon such
judgment.
In the event that any provision or portion of this letter is determined to
be invalid or unenforceable for any reason, in whole or in part, the remaining
provisions of this letter shall be unaffected thereby and shall remain in full
force and effect to the fullest extent permitted by applicable law.
This letter shall be governed by and construed in accordance with the laws
of The Commonwealth of Massachusetts. This Agreement is not assignable by you
without the written consent of the Company.
Please sign both copies of this letter and return a fully executed copy to
me, which will constitute our agreement with respect to the matters set forth
herein.
Very truly yours,
BERTUCCI'S, INC.
By:/s/ Norman S. Mallett
---------------------
CONFIRMED AND AGREED TO:
NE RESTAURANT COMPANY, INC.
By:/s/ Benjamin Jacobson
-----------------------
Date: 4/8/98
---------------------
<PAGE>
Exhibit (g)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To NE Restaurant Company, Inc.:
We have audited the accompanying consolidated balance sheets of NE
Restaurant Company, Inc. (the "Company") and its subsidiary as of December 31,
1997 and 1996, and the related consolidated statements of income, changes in
stockholders' (deficit) equity and cash flows for each of the three years in
the period 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 audits.
We conducted our audits 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 audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of NE Restaurant Company,
Inc. and its subsidiary as of December 31, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
Boston, Massachusetts
February 20, 1998
1
<PAGE>
NE RESTAURANT COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- MARCH 31,
1996 1997 1998
----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Current Assets:
Cash................................. $ 410,929 $ 247,675 $ 144,170
Marketable securities................ -- -- 3,434,610
Credit card receivables.............. 408,921 297,221 380,586
Inventories.......................... 707,169 592,143 610,250
Prepaid expenses and other........... 302,289 184,494 260,725
Pre-opening costs, net of accumu-
lated amortization.................. 338,525 159,728 323,487
Deferred taxes, current.............. 68,452 111,504 111,504
----------- ------------ ------------
Total current assets............... 2,236,285 1,592,765 5,265,332
----------- ------------ ------------
Property and Equipment, at cost:
Land and land right.................. 3,792,524 3,792,524 3,792,524
Buildings............................ 4,213,426 4,216,126 4,229,550
Leasehold improvements............... 13,923,838 16,623,160 16,628,239
Furniture and equipment.............. 13,712,979 15,155,666 15,275,725
----------- ------------ ------------
35,642,767 39,787,476 39,926,038
Less--Accumulated depreciation....... (7,070,313) (9,992,744) (10,793,351)
----------- ------------ ------------
28,572,454 29,794,732 29,132,687
Construction work in process......... 823,767 1,157,813 2,481,570
----------- ------------ ------------
Net property and equipment......... 29,396,221 30,952,545 31,614,257
Deferred Taxes, noncurrent............ 71,197 62,388 62,388
Other Assets:
Liquor licenses...................... 1,175,423 1,195,887 1,201,530
Restricted investments............... 489,053 931,676 1,152,641
Other assets......................... 971,845 2,601,565 2,550,462
----------- ------------ ------------
$34,340,024 $ 37,336,826 $ 41,846,610
=========== ============ ============
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current Liabilities:
Current portion of mortgage loan
payable............................. $ -- $ 632,538 $ 652,769
Accounts payable..................... 2,611,430 3,987,794 2,267,638
Accrued expenses..................... 4,544,733 5,298,000 5,466,831
Capital lease obligation--current
portion............................. 76,059 79,997 80,935
----------- ------------ ------------
Total current liabilities.......... 7,232,222 9,998,329 8,468,173
Line-of-Credit Loans.................. 14,875,000 13,500,000 19,186,000
Capital Lease Obligation, net of cur-
rent portion......................... 321,891 232,490 209,564
Mortgage Loan Payable, net of current
portion.............................. -- 23,463,313 23,283,778
Deferred Rent and Other Long-Term Lia-
bilities............................. 2,453,665 3,249,548 3,519,486
----------- ------------ ------------
Total liabilities.................. 24,882,778 50,443,680 54,667,001
----------- ------------ ------------
Commitments and Contingencies (Note 7)
Stockholders' Equity:
Common stock, $.01 par value
Authorized--4,000,000 shares
Issued--2,006,000 shares............ 20,000 20,060 20,060
Less--Treasury stock--689,344
shares, at cost..................... -- (8,017,070) (8,017,070)
Additional paid-in capital........... 4,447,933 22,440 22,440
(Accumulated deficit) retained earn-
ings................................ 4,989,313 (5,132,284) (4,845,821)
----------- ------------ ------------
Total stockholders' (deficit) equi-
ty................................ 9,457,246 (13,106,854) (12,820,391)
----------- ------------ ------------
$34,340,024 $ 37,336,826 $ 41,846,610
=========== ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
NE RESTAURANT COMPANY, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------------- -----------------------
1995 1996 1997 1997 1998
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net Sales............... $60,300,069 $70,094,027 $81,363,751 $18,045,014 $21,298,113
----------- ----------- ----------- ----------- -----------
Cost of Sales and
Expenses:
Cost of sales......... 18,095,226 21,203,336 23,383,851 5,297,115 6,008,114
Operating expenses.... 30,101,147 34,267,183 40,931,889 9,074,654 10,890,339
General and
administrative
expenses............. 3,448,949 3,678,875 4,206,862 973,852 1,100,161
Deferred rent,
depreciation and
amortization......... 3,200,140 3,679,095 3,910,946 1,012,196 966,338
Taxes other than
income............... 2,871,328 3,207,253 3,828,798 931,445 1,026,152
----------- ----------- ----------- ----------- -----------
Total cost of sales
and expenses....... 57,716,790 66,035,742 76,262,346 17,289,262 19,991,104
----------- ----------- ----------- ----------- -----------
Income from
operations......... 2,583,279 4,058,285 5,101,405 755,752 1,307,009
Interest Expense, net... 462,756 1,053,432 1,917,605 294,456 900,092
----------- ----------- ----------- ----------- -----------
Income before income
tax expense........ 2,120,523 3,004,853 3,183,800 461,296 406,917
Income Tax Expense...... 699,338 1,046,407 1,083,470 147,899 120,454
----------- ----------- ----------- ----------- -----------
Net income.......... $ 1,421,185 $ 1,958,446 $ 2,100,330 $ 313,397 $ 286,463
=========== =========== =========== =========== ===========
Basic and Diluted
Earnings per Share..... $ 0.71 $ 0.98 $ 1.22 $ 0.16 $ 0.22
=========== =========== =========== =========== ===========
Weighted Average Shares
Outstanding............ 2,000,000 2,000,000 1,722,918 2,000,000 1,316,656
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
NE RESTAURANT COMPANY, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
AND THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK (ACCUMULATED TOTAL
------------------ ---------------------- ADDITIONAL DEFICIT) STOCKHOLDERS'
NUMBER OF $.01 PER NUMBER OF PAID-IN RETAINED (DEFICIT)
SHARES SHARE SHARES AMOUNT CAPITAL EARNINGS EQUITY
--------- -------- --------- ----------- ----------- ------------ ------------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1994................... 2,000,000 $20,000 -- $ -- $ 4,447,933 $ 1,609,682 $ 6,077,615
Net income............ -- -- -- -- -- 1,421,185 1,421,185
--------- ------- -------- ----------- ----------- ------------ ------------
Balance, December 31,
1995................... 2,000,000 20,000 -- -- 4,447,933 3,030,867 7,498,800
Net income............ -- -- -- -- -- 1,958,446 1,958,446
--------- ------- -------- ----------- ----------- ------------ ------------
Balance, December 31,
1996................... 2,000,000 20,000 -- -- 4,447,933 4,989,313 9,457,246
Net income............ -- -- -- -- -- 2,100,330 2,100,330
Cash dividend and
return of capital.... -- -- -- -- (4,447,933) (12,221,927) (16,669,860)
Issuance of common
stock................ 6,000 60 -- -- 22,440 -- 22,500
Purchase of treasury
stock................ -- -- (716,429) (8,260,827) -- -- (8,260,827)
Sale of treasury
stock................ -- -- 27,085 243,757 -- -- 243,757
--------- ------- -------- ----------- ----------- ------------ ------------
Balance, December 31,
1997................... 2,006,000 20,060 (689,344) (8,017,070) 22,440 (5,132,284) (13,106,854)
Net income............ -- -- -- -- -- 286,463 286,463
--------- ------- -------- ----------- ----------- ------------ ------------
Balance, March 31, 1998. 2,006,000 $20,060 (689,344) $(8,017,070) $ 22,440 $ (4,845,821) $(12,820,391)
========= ======= ======== =========== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
NE RESTAURANT COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------------------- ------------------------
1995 1996 1997 1997 1998
------------ ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash Flows from
Operating Activities:
Net income............. $ 1,421,185 $ 1,958,446 $ 2,100,330 $ 313,397 $ 286,463
------------ ----------- ----------- ----------- -----------
Adjustments to
reconcile net income to
net cash provided by
(used in) operating
activities--
Depreciation and
amortization......... 2,871,187 3,298,345 3,557,686 1,012,196 966,338
Deferred taxes....... 40,053 (271,789) (34,243) 94,023 --
Deferred rent........ 328,953 380,750 353,260 85,989 42,349
Changes in operating
assets and
liabilities--
Refundable income
taxes.............. (111,960) 133,091 -- -- --
Inventories........ (229,607) (53,740) 115,026 100,841 (18,107)
Prepaid expenses,
credit card
receivables and
other current
assets............. (111,347) (219,213) 229,495 (276,789) (396,596)
Accrued expenses... 718,503 931,398 753,267 (1,789,726) 405,830
Accounts payable... 677,148 (412,554) 1,376,364 873,194 (1,720,156)
------------ ----------- ----------- ----------- -----------
Total adjustments. 4,182,930 3,786,288 6,350,855 99,728 (720,342)
------------ ----------- ----------- ----------- -----------
Net cash provided
by (used in)
operating
activities........ 5,604,115 5,744,734 8,451,185 413,125 (433,879)
------------ ----------- ----------- ----------- -----------
Cash Flows from
Investing Activities:
Additions to property
and equipment.......... (10,359,463) (7,946,034) (4,478,755) (739,777) (1,462,319)
Development and
franchise fees paid.... (400,000) (160,000) (320,000) (40,000) --
Acquisition of liquor
licenses............... (133,296) (61,937) (20,464) (1,464) (5,643)
Decrease (increase) in
other assets and
liabilities............ -- (115,125) 65,595 (240,513) (25,138)
Additions to pre-
opening costs.......... (864,990) (730,021) (392,371) (160,923) (246,624)
Acquisition of
marketable securities.. -- -- -- -- (3,434,610)
------------ ----------- ----------- ----------- -----------
Net cash used in
investing
activities........ (11,757,749) (9,013,117) (5,145,995) (1,182,677) (5,174,334)
------------ ----------- ----------- ----------- -----------
Cash Flows from
Financing Activities:
Borrowings of mortgage
loans.................. -- -- 24,250,000 -- --
Repayment of mortgage
loans.................. -- -- (154,149) -- (159,304)
Financing costs........ -- -- (1,439,402) -- --
Cash dividend paid..... -- -- (12,221,927) -- --
Return of capital...... -- -- (4,447,933) -- --
Issuance of common
shares................. -- -- 22,500 -- --
Repurchase of treasury
stock.................. -- -- (8,260,827) -- --
Sale of treasury
shares................. -- -- 243,757 -- --
Principal payments
under capital lease
obligations............ -- (23,223) (85,463) (21,377) (21,988)
Net (payments)
borrowings under line
of credit.............. 6,290,000 3,305,000 (1,375,000) 380,000 5,686,000
------------ ----------- ----------- ----------- -----------
Net cash (used in)
provided by
financing
activities........ 6,290,000 3,281,777 (3,468,444) 358,623 5,504,708
------------ ----------- ----------- ----------- -----------
Net (Decrease) Increase
in Cash................. 136,366 13,394 (163,254) (410,929) (103,505)
Cash, beginning of
period.................. 261,169 397,535 410,929 410,929 247,675
------------ ----------- ----------- ----------- -----------
Cash, end of period..... $ 397,535 $ 410,929 $ 247,675 $ -- $ 144,170
============ =========== =========== =========== ===========
Supplemental Disclosure
of Cash Flow
Information:
Cash paid during the
period for interest,
net of amounts
capitalized............ $ 393,682 $ 1,067,325 $ 1,946,811 $ 260,854 $ 254,565
============ =========== =========== =========== ===========
Cash paid during the
period for income
taxes.................. $ 756,314 $ 1,151,186 $ 1,217,812 $ 338,823 $ 237,000
============ =========== =========== =========== ===========
</TABLE>
During 1996, a capital lease obligation of approximately $400,000 was
incurred when the Company entered into a lease for new equipment.
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
NE RESTAURANT COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND OPERATIONS
NE Restaurant Company, Inc. (a Delaware corporation) (the "Company") was
incorporated on January 1, 1994. On January 1, 1994, the partners of NE
Restaurant Holdings Group (the "Group") transferred 100% of their respective
partnership interests in exchange for an aggregate of 2,000,000 shares of the
common stock of the Company. All significant leases, franchise agreements and
other contracts were assigned from the Group to the Company.
The Company was formed to acquire and operate restaurants situated in
Massachusetts, New Hampshire, Maine, Vermont, Rhode Island, Connecticut and
portions of New York. The restaurants, which operate under the name of Chili's
and On The Border, are operated under franchise agreements with Brinker
International (a Texas corporation) ("Brinker"). The restaurants offer a full
bar and dining service featuring a limited menu of broadly appealing food
items prepared daily according to special Chili's and On The Border recipes.
On August 6, 1997, the Company formed a wholly-owned limited partnership,
NERC Limited Partnership ("NERCLP"), to obtain the mortgage loans discussed
below. All significant intercompany accounts and transactions have been
eliminated in consolidation.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reclassification
Certain reclassifications have been made to prior year financial statements
to make them consistent with the current year's presentation.
Use of Management 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 estimates.
Interim Financial Statements
The accompanying consolidated financial statements as of March 31, 1998 and
for the three months ended March 31, 1997 and 1998 are unaudited, but in the
opinion of management, include all adjustments consisting of normal recurring
adjustments necessary for a fair presentation of results for the interim
periods. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted although the Company believes that the
disclosures included are adequate to make the information presented not
misleading. Results for the three months ended March 31, 1998 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1998.
Inventories
Inventories are carried at the lower of first-in, first-out cost or market
value, and consist of the following:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Food..................................................... $287,226 $358,508
Liquor................................................... 304,917 348,661
-------- --------
Total inventory........................................ $592,143 $707,169
======== ========
</TABLE>
6
<PAGE>
NE RESTAURANT COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Property and Equipment
Property and equipment are carried at cost. The Company provides for
depreciation and amortization using the straight-line method to charge the
cost of properties to expense over the estimated useful lives of the assets.
The lives used are as follows:
<TABLE>
<CAPTION>
ASSET CLASSIFICATION ESTIMATED USEFUL LIFE
-------------------- --------------------------
<S> <C>
Buildings 31-40 years
Leasehold improvements Term of the lease (ranging
between 10-20 years)
Furniture and equipment 5-7 years
</TABLE>
Included in furniture and equipment in the accompanying consolidated balance
sheets is smallwares. The Company capitalizes a normal complement of
smallwares for each location prior to the store's opening date and expenses
all smallwares purchased after each store's opening date.
Long-Lived Assets
In 1996, the Company adopted SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of. The Company's
long-lived assets consist primarily of real estate and leasehold improvements
related to its restaurant operations. SFAS No. 121 requires management to
consider whether long-lived assets have been impaired by comparing gross
future cash flows expected to be generated from utilizing these assets to
their carrying amounts. If cash flows are not sufficient to recover the
carrying amount of the assets, an impairment has occurred and the assets
should be written down to their fair market value. Significant estimates and
assumptions regarding future sales, cost trends, productivity and market
maturity are required to be made by management in order to test for impairment
under this standard. Based on current facts, estimates and assumptions,
management believes that no assets are impaired under this standard. There is
no assurance that management's estimates and assumptions will prove correct.
Land Right
In 1994, the Company executed an agreement to prepay the rent associated
with a 99-year lease for land in Southington, Connecticut. Prepaid rental
payments totaled $735,000 and are reflected as a land right in the
accompanying consolidated balance sheets. The lease is renewable for an
additional 99 years for a payment of $1.
Capitalized Interest
The Company capitalizes interest costs during the construction period on
capital expenditures funded by debt. Total interest costs incurred and amounts
capitalized are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- --------
<S> <C> <C> <C>
Total interest expense..................... $1,961,428 $1,151,490 $793,953
Less--Amount capitalized................... 43,823 98,058 331,197
---------- ---------- --------
Interest expense, net of amounts
capitalized............................ $1,917,605 $1,053,432 $462,756
========== ========== ========
</TABLE>
Liquor Licenses
Liquor licenses purchased are accounted for at the lower of cost or market.
Annual renewal fees are expensed as incurred.
Other Assets
Other assets are comprised partially of development and franchise fees (see
Note 9). Development fees are amortized over seven years, and franchise fees
are amortized over the life of the franchise agreements (20 years).
Accumulated amortization of these assets amounts to approximately $303,000 and
$204,000 at December 31, 1997 and 1996, respectively.
7
<PAGE>
NE RESTAURANT COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Underwriting, legal and other direct costs incurred in connection with the
issuance of the mortgages discussed below have been capitalized and are being
amortized over the life of the related mortgages.
Other assets also include investments restricted for the payment of certain
officers' deferred compensation. These investments are stated at market value
at December 31, 1997 and 1996. Since these securities are from time to time
bought and sold at the discretion of the officers they are classified as
trading securities.
Pre-opening Costs
Capitalized pre-opening costs include the direct and incremental costs
typically associated with the opening of a new restaurant. These costs
primarily consist of costs incurred to develop new restaurant management
teams; travel and lodging for both the training and opening unit management
teams; and the food, beverage and supplies costs incurred to perform role-play
testing of all equipment, concept systems and recipes. Subsequent to the
restaurant opening, costs are amortized over a 12-month period. Accumulated
amortization of these costs at December 31, 1997 and 1996 amounted to
approximately $188,000 and $336,000, respectively.
Accrued Liabilities
Accrued liabilities consist of the following as of December 31, 1997 and
1996:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Accrued occupancy costs............................. $ 687,622 $ 578,299
Accrued payroll and related benefits................ 2,305,483 1,839,860
Accrued interest.................................... 71,199 100,325
Accrued advertising................................. 421,855 455,110
Accrued royalty..................................... 362,947 294,783
Unredeemed gift certificates........................ 772,164 511,418
Accrued sales tax................................... 378,568 309,049
Accrued construction costs.......................... -- 225,083
Other accrued liabilities........................... 298,162 230,806
---------- ----------
$5,298,000 $4,544,733
========== ==========
</TABLE>
Marketable Securities
Marketable Securities consists of 430,000 shares of common stock of
Bertucci's, Inc. No provision has been made to adjust the carrying amount of
these Securities to market value as the Company intends to hold them to
maturity. The market value of these Securities at March 31, 1998 was
$3,413,125.
Fair Value of Financial Instruments
The Company's financial instruments consist mainly of cash and cash
equivalents, marketable securities, accounts receivable, accounts payable,
line of credit loans and long-term debt. The carrying amounts of the Company's
cash and cash equivalents, accounts receivable and accounts payable
approximate fair value due to the short-term nature of these instruments. The
fair value of marketable securities as of March 31, 1998 was $3,413,125. The
line of credit loans bear interest at a variable market rate and therefore,
the carrying amount approximates fair value. The fair value of the Company's
mortgage loans based on quoted market prices for similar issues approximates
the current carrying value.
New Accounting Pronouncements
In April 1998, the AICPA issued its Statement of Position 98-5 ("SOP 98-5"),
Reporting on the Costs of Start-Up Activities. SOP 98-5 requires that costs
incurred during start-up activities, including organization costs, be expensed
as incurred. SOP 98-5 is effective for financial statements for fiscal years
beginning after December
8
<PAGE>
NE RESTAURANT COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
15, 1998, although early application is encouraged. Initial application of SOP
98-5 should be as of the beginning of the fiscal year in which it is first
adopted and should be reported as a cumulative effect of a change in
accounting principle.
The Company currently intends to adopt SOP 98-5 on January 1, 1999. Upon
adoption, the Company estimates it will incur a cumulative effect of a change
in accounting principle that will range from $300,000 to $1 million. This
estimate primarily includes unamortized preopening costs which were previously
amortized over the 12-month period subsequent to a restaurant opening.
(3) INCOME TAXES
The Company accounts for income taxes under the liability method. The
components of the provision for income taxes for the years ended December 31,
1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- --------
<S> <C> <C> <C>
Current--
Federal................................. $ 704,254 $1,016,485 $398,491
State................................... 304,834 301,711 260,794
---------- ---------- --------
1,009,088 1,318,196 659,285
---------- ---------- --------
Deferred--
Federal................................. 56,835 (278,597) 30,576
State................................... 17,547 6,808 9,477
---------- ---------- --------
74,382 (271,789) 40,053
---------- ---------- --------
Total provision for income taxes...... $1,083,470 $1,046,407 $699,338
========== ========== ========
</TABLE>
A reconciliation of the amount computed by applying the statutory federal
income tax rate of 34% to income before taxes for the years ended December 31,
1997, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- --------
<S> <C> <C> <C>
Income tax expense computed at federal
statutory rate.......................... $1,082,492 $1,020,821 $720,978
State taxes, net of federal benefit...... 212,771 204,326 186,289
FICA tax credit.......................... (216,253) (180,756) (211,902)
Targeted jobs tax credit................. (1,897) -- --
Other.................................... 6,357 2,016 3,973
---------- ---------- --------
Income tax provision................... $1,083,470 $1,046,407 $699,338
========== ========== ========
</TABLE>
9
<PAGE>
NE RESTAURANT COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Significant items giving rise to deferred tax assets and deferred tax
liabilities at December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Deferred tax assets:
Deferred rent................................. $ 933,407 $ 791,150
Deferred and accrued compensation............. 425,952 385,594
Other......................................... 13,882 43,954
----------- -----------
1,373,241 1,220,698
----------- -----------
Deferred tax liabilities--
Accelerated tax depreciation.................. (984,220) (825,941)
Pre-opening costs............................. (64,322) (136,324)
Liquor licenses............................... (150,807) (118,784)
----------- -----------
(1,199,349) (1,081,049)
----------- -----------
Total net deferred tax assets............... $ 173,892 $ 139,649
=========== ===========
Current portion................................. $ 111,504 $ 68,452
=========== ===========
Noncurrent portion.............................. $ 62,388 $ 71,197
=========== ===========
</TABLE>
No valuation allowance has been provided as the Company estimates that all
of the tax assets will be realized.
(4) LINE-OF-CREDIT LOANS
During 1997, the Company amended and restated its existing bank line of
credit with BankBoston, N.A. (the "Bank"). The new bank line-of-credit
agreement (the "Agreement"), secured by cash flows of the Company, is in
effect until November 30, 2001, under which the Company may borrow up to
$20,000,000 in base rate loans or Eurodollar loans, as defined, less
outstanding letters of credit and lease obligations payable to the Bank. On
November 30, 2001, the Company must pay the Bank the entire unpaid principal
of and interest on the line of credit. The Company pays a commitment fee of
.250% on the unused portion of the line of credit. Borrowings bear interest at
the bank's base rate, as defined in the Agreement, plus an applicable margin
based on current funded debt leverage ratio, for base rate loans, and the
Eurodollar rate, as defined in the Agreement, plus an applicable margin based
on current funded debt leverage ratio, for a Eurodollar loan. The weighted-
average interest rate of the line of credit outstanding during 1997 was 7.7%.
Loans can be converted into a loan of another type in the amount of $500,000
and $100,000 increments thereafter, as the Company deems beneficial.
The loan agreement contains various restrictive covenants that, among other
things, require minimum earnings before interest, taxes, depreciation and
amortization, restrict total borrowings and the amount of borrowings used for
capital expenditures, and require certain levels of net worth, as defined. The
Company was in compliance with these covenants at December 31, 1997.
10
<PAGE>
NE RESTAURANT COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(5) CAPITAL LEASE OBLIGATION
During 1996, the Company entered into a capital lease with the Bank for
restaurant equipment. At the expiration of the lease in 2001, the Company may
purchase the equipment at the then fair market value.
The minimum lease payments due under the lease as of December 31, 1997 are
as follows:
<TABLE>
<CAPTION>
LEASE
PAYMENTS TO
BE MADE
-----------
<S> <C>
Year Ending December 31,
1998................................ $ 92,398
1999................................ 92,398
2000................................ 92,398
2001................................ 69,301
--------
346,495
Less--Interest...................... 34,008
--------
$312,487
========
</TABLE>
(6) MORTGAGE LOANS
On August 6, 1997, NERCLP entered into a loan agreement (the "Loan
Agreement") with FFCA Acquisition Corporation ("FFCA") in the aggregate amount
of $22,400,000 (the "Initial FFCA Loans"), evidenced by promissory notes
maturing on various dates from September 2002 through September 2017, with
interest at 9.67% per annum. Proceeds from the FFCA Loans were used to pay the
Company for real estate assets sold and transferred to NERCLP. The Company
then used the sale proceeds to make certain payments to its shareholders (see
Note 12 for further discussion). NERCLP mortgaged 17 restaurant properties to
FFCA as collateral for the Initial FFCA Loans. On or about August 28, 1997,
NERCLP obtained additional financing from FFCA in the aggregate amount of
$1,850,000 (the "Additional FFCA Loans", which together with the Initial FFCA
Loans are hereinafter referred to as the "FFCA Loans"), evidenced by
promissory notes maturing on various dates from September 2007 through
September 2017, with interest at 9.701% per annum. The Additional FFCA Loans
were collateralized by mortgages on three restaurant properties. The net book
value of all properties covered by mortgages granted to FFCA on the dates of
borrowing was $25,897,000. For the year ended December 31, 1997, interest
related to the FFCA Loans was $708,000.
The Loan Agreement with FFCA contains a restrictive covenant that requires
the maintenance of a Fixed Charge Coverage Ratio of 1.25:1, as determined on
each December 31, with respect to each of the FFCA mortgaged restaurant
properties. "Fixed Charge Coverage Ratio" is defined in the Loan Agreement to
mean the ratio of (a) the sum of net income, depreciation and amortization,
interest expense and operating lease expense, less a corporate overhead
allocation equal to 5% of gross sales, for an FFCA mortgaged restaurant
property to (b) the sum of FFCA debt service payments, equipment lease and
equipment loan payments and ground lease rental payments for such restaurant
property. If the Fixed Charge Coverage Ratio is not achieved, NERCLP is
required to pay FFCA an amount sufficient to comply with the Fixed Charge
Coverage Ratio. NERCLP was in compliance with this covenant as of December 31,
1997.
Existing loan documents between FFCA and NERCLP are cross-defaulted and
cross-collateralized with all other loan agreements, existing or forthcoming,
between FFCA and NERCLP or the Company, subject to certain limited exceptions.
11
<PAGE>
NE RESTAURANT COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The loan payments due under the mortgage loan as of December 31, 1997 are as
follows:
<TABLE>
<CAPTION>
LOAN
PRINCIPAL
PAYMENTS TO
BE MADE
-----------
<S> <C>
Year Ending December 31,
1998................................ $ 632,538
1999................................ 701,666
2000................................ 772,627
2001................................ 850,754
2002................................ 904,904
Thereafter.......................... 20,233,362
-----------
$24,095,851
===========
</TABLE>
(7) COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company has entered into numerous lease arrangements, primarily for
restaurant land, equipment and buildings, which are noncancelable and expire
on various dates through 2017.
Some operating leases contain rent escalation clauses whereby the rent
payments increase over the term of the lease. Rent expense includes base rent
amounts, percentage rent payable periodically, as defined in each lease, and
rent expense accrued to recognize lease escalation provisions on a straight-
line basis over the lease term. Rent expense recognized in restaurant expenses
in the accompanying consolidated statements of income was approximately
$3,955,000, $3,324,000 and $3,286,000 for the years ended December 31, 1997,
1996 and 1995, respectively. The excess of accrued rent over amounts paid is
classified as deferred rent in the accompanying consolidated balance sheets.
The approximate minimum rental payments due under all noncancelable
operating leases as of December 31, 1997 are as follows:
<TABLE>
<CAPTION>
RENTAL
PAYMENTS TO
BE MADE
-----------
<S> <C>
Year Ending December 31,
1998................................ $ 3,842,238
1999................................ 3,890,099
2000................................ 3,774,633
2001................................ 3,821,976
2002................................ 3,915,520
Thereafter.......................... 32,096,919
-----------
$51,341,385
===========
</TABLE>
Certain leases require the payment of an additional amount, calculated as a
percentage of annual sales, as defined in the lease agreement, which exceeds
annual minimum rentals. The percentage rent factors generally range from 3% to
6% of sales.
12
<PAGE>
NE RESTAURANT COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Contingencies
The Company is subject to various legal proceedings that arise in the
ordinary course of business. Based on discussion with the Company's legal
counsel, management believes that the amount of ultimate liability with
respect to these actions will not be material to the financial position or
results of operations of the Company.
(8) RELATED PARTIES
Under the terms of the corporation agreements, the stockholders have
consented to the payment of an ongoing financial consulting fee to Jacobson
Partners, Limited Partnership ("Jacobson"), a stockholder of the corporation.
The amounts paid to Jacobson for financial consulting fees were $160,000 for
each of the three years ended December 31, 1997, and are included in general
and administrative expenses in the accompanying consolidated statements of
income. In addition, Jacobson was paid $400,000 for consulting fees associated
with obtaining the above mentioned mortgages.
The Company has a nonqualified deferred compensation plan (the "Plan") for
certain officers and management personnel, which allows them to defer
receiving a portion of their compensation. This compensation is not taxable to
the employee or deductible to the Company for tax purposes until the
compensation is paid. An officer of the Company, who is also a participant in
the Plan, is the trustee of the Plan.
(9) FRANCHISE AND DEVELOPMENT AGREEMENTS
All of the Company's restaurants operate under franchise agreements with
Brinker. The agreements provide, among other things, that the Company pay an
initial franchise fee of $40,000 per restaurant and a royalty fee ranging from
2% to 4% of sales. The initial franchise fee is payable in two installments of
$20,000. The first installment is due on or before the construction
commencement date. The second installment is due at least 10 days prior to the
date on which the restaurant opens for business. The initial franchise fees
are capitalized and amortized over the term of the franchise agreement.
Royalty fees averaged 3.8% of sales in 1997, 3.9% in 1996 and 3.8% in 1995. In
addition, the Company is required to pay an advertising fee to Brinker of .5%
of sales and spend an additional 2% of sales on local advertising. In return,
Brinker is obligated to provide certain support for restaurant operations,
siting and promotion. Royalty and advertising fees are expensed as incurred.
In 1991, the Company entered into a development agreement with Brinker
whereby the Company was granted the exclusive right to develop additional
Chili's franchises within a certain geographic territory. In 1995, the Company
paid $150,000 to renew the agreement, which now expires in 2000. The Company
is required to develop a certain number of Chili's restaurants during the term
of the agreement in order to maintain its exclusive development rights. The
agreement is renewable at the Company's option for payment of additional sums
at the expiration date.
Also during 1995, the Company paid $50,000 to Brinker in exchange for both
the right to open its first On The Border franchise and the option to enter
into an On The Border development agreement in the future. In 1997, the
Company elected the option to enter into the On The Border development
agreement, and the above $50,000 fee was applied against the cost of the
development agreement.
(10) 401(K) PROFIT SHARING PLAN
The Company maintains a defined contribution plan (the "401(k) Plan")
whereby substantially all employees of the Company may defer a portion of
their current salary, on a pretax basis, to the 401(k) Plan. The Company may
also make a discretionary profit sharing contribution to the 401(k) Plan that
is allocated, based on
13
<PAGE>
NE RESTAURANT COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
a formula as defined by the 401(k) Plan, to the 401(k) Plan participants.
Discretionary contributions made by the Company for the years ended December
31, 1997, 1996 and 1995 were approximately $67,000, $43,000 and $59,000,
respectively. Two officers of the Company are also the 401(k) Plan's trustees.
(11) STOCK OPTION PLAN
On September 15, 1997, the Board of Directors of the Company established the
1997 Equity Incentive Plan, which included a nonqualified stock option plan
(the "Option Plan"), for certain key employees and directors. The Option Plan
will be administered by the Board of Directors of the Company and may be
modified or amended by the Board of Directors in any respect.
Between September 15, 1997 and December 4, 1997, 331,123 options were
granted. The options are exercisable as follows:
Two years beyond options grant date... 25%
Three years beyond option grant date.. 50%
Four years beyond option grant date... 75%
Five years beyond option grant date... 100%
The Company accounts for the Option Plan under Accounting Principles Board
Opinion No. 25, under which no compensation cost has been recognized since the
options are granted at fair market value.
Had compensation cost for the Option Plan been determined consistent with
Statement of Financial Accounting Standards No. 123, Accounting for Stock
Based Compensation, the Company's net income and earnings per share would have
been reduced to the following pro forma amounts:
<TABLE>
<CAPTION>
1997
----------
<S> <C>
Net income
As reported.......................... $2,100,330
Pro Forma............................ 2,041,288
EPS--
As reported.......................... $ 1.22
Pro Forma............................ 1.18
</TABLE>
A summary of the Option Plan at December 31, 1997, and changes during the
year then ended, is presented in the table and narrative below.
<TABLE>
<CAPTION>
1997
----
WEIGHTED
AVERAGE EXERCISE
SHARES PRICE
-------- --------
<S> <C> <C>
Outstanding at beginning of year.... -- $ --
Granted............................. 331,123 11.63
Exercised........................... -- --
Forfeited........................... -- --
Expired............................. -- --
------- ------
Outstanding at end of year.......... 331,123 $11.63
======= ======
Exercisable at end of year.......... -- --
Weighted average fair value of each
option granted..................... -- $ 3.06
</TABLE>
14
<PAGE>
NE RESTAURANT COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The 331,123 options outstanding at December 31, 1997 have a remaining
weighted average contractual life of approximately five years.
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions used for
grants in 1997: weighted average risk-free interest rates of 6.1 percent;
weighted average expected lives of five years; and expected volatility of 0%.
(12) STOCKHOLDERS' EQUITY
In August 1997, the Company made a dividend and return of capital payout to
shareholders of $8.31 per share from additional paid-in capital, with the
excess payout being charged to retained earnings. In addition, the Company
repurchased 716,429 shares of common stock at $11.63 per share. The Company's
repurchase of shares of common stock was recorded as treasury stock, at cost,
and resulted in a reduction of Stockholders' (Deficit) Equity.
15
