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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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BERTUCCI'S, INC.
(NAME OF SUBJECT COMPANY)
COMMON STOCK, $.005 PAR VALUE PER SHARE
(TITLE OF CLASS OF SECURITIES)
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086063 10 4
(CUSIP NUMBER OF CLASS OF SECURITIES)
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JOSEPH CRUGNALE, PRESIDENT
BERTUCCI'S, INC.
14 AUDUBON ROAD
WAKEFIELD, MASSACHUSETTS 01880
(781) 246-6700
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON
BEHALF OF THE PERSON(S) FILING STATEMENT)
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WITH A COPY TO:
JAMES WESTRA, ESQ.
HUTCHINS, WHEELER & DITTMAR
A PROFESSIONAL CORPORATION
101 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
(617) 951-6600
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Bertucci's, Inc., a Massachusetts
corporation (the "Company"), and the address of the principal executive
offices of the Company is 14 Audubon Road, Wakefield, Massachusetts 01880. The
title of the class of equity securities to which this statement relates is the
common stock, $.005 par value per share, of the Company (the "Common Stock").
ITEM 2. TENDER OFFER OF PURCHASER.
This statement relates to a cash tender offer by NE Restaurant Company,
Inc., a Delaware corporation ("Parent"), and its wholly owned subsidiary, NERC
Acquisition Corp., a Massachusetts corporation ("Purchaser"), disclosed in a
Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1"), dated May 20,
1998, to purchase all of the issued and outstanding shares of Common Stock
(the "Shares") at a price of $10.50 per share (such amount, or any greater
amount per share paid pursuant to the Offer, being hereafter referred to as
the "Per Share Amount"), net to the seller in cash, upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated May 20, 1998 (the
"Offer to Purchase"), and the related Letter of Transmittal (which together
constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 13, 1998, by and among Parent, Purchaser and the Company (the
"Merger Agreement"). The Merger Agreement provides that, among other things,
as soon as practicable after the consummation of the Offer and satisfaction or
waiver of all conditions to the Merger, subject to conditions set forth below
in the section entitled "The Merger Agreement--Vote Required to Approve
Merger," either (i) in the event that Parent, Purchaser or their affiliates
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, Purchaser of their
affiliates 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 "The Merger Agreement--Short-Form Merger," the
Company will be merged with and into Purchaser with Purchaser surviving the
Merger. In each instance, the surviving entity is at times herein referred to
as the "Surviving Corporation." A copy of the Merger Agreement is filed
herewith as EXHIBIT 1, and is incorporated herein by reference.
Based on the information in the Offer to Purchase, the principal executive
offices of Parent and Purchaser are located at 80A Turnpike Road, Westborough,
Massachusetts 01581.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) Except as set forth below, none of the officers or directors of the
Company is presently a party to any transaction with the Company (other than
for services as employees, officers and directors), including without
limitation any material contract, agreement, arrangement or understanding (i)
providing for the furnishing of services to or by, (ii) providing for rental
of real or personal property to or from, or (iii) otherwise requiring payments
to or from, any officer or director, any member of the family of any officer
or director or any corporation, partnership, trust or other entity in which
any officer or director has a substantial interest or is an officer, director,
trustee or partner.
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
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shall be entitled to receive, in consideration therefor, a cash payment from
the Company 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 the Company Stock Option. As of May 13, 1998, there were options covering
521,050 Shares outstanding at exercise prices ranging from $1.33 to $18.50.
Upon the acceleration of the Company Stock Options, the executive officers and
directors of the Company will respectively receive the following amounts: E.
Bulkeley Griswold will receive $34,250; Robert L. Lestina, Jr. will receive
$34,250; James Westra will receive $34,250; Allan J. Steinmetz will receive
$34,250; Theodore R. Barber will receive $54,000; Norman S. Mallett will
receive $111,375; and Anthony Balletta will receive $56,250.
Change of Control Severance Agreements, Continuation of Benefits Agreement.
On May 13, 1998, the Board of Directors of the Company approved a form of
Change of Control Severance Agreement to be entered into by the Company and
twenty-eight (28) of its restaurant managers and executive officers (each of
whom is referred to therein as an "Executive") (the "Severance Agreement").
The Severance Agreement provides that if within six (6) months of a Change of
Control (as defined in the Severance Agreement), the Executive's employment is
terminated by the Company for any reason, other than for Cause (as such term
is defined therein) or by death or disability of the Executive, or by the
Executive for Good Reason (as such term is defined therein), then the Company
will pay the Executive, within thirty (30) days of the date of termination
(the "Date of Termination"), a lump sum equal to the Executive's annual base
salary for the six (6) month period after the Date of Termination at the rate
in effect immediately prior to the Change of Control. In addition, if the
Executive's employment is terminated in accordance with the preceding
sentence, during the six (6) months commencing on the Date of Termination, the
Executive will be entitled to receive certain medical insurance benefits,
substantially equivalent to those in place, if any, on the Date of
Termination. A copy of the form of Severance Agreement is filed herewith as
EXHIBIT 2 and is incorporated herein by reference.
The Severance Agreement further provides that severance payments shall be
made without regard to whether the deductibility of such payments (or any
other payments to or for the benefit of the Executive) would be limited or
precluded by Internal Revenue Code Section 280G and without regard to whether
such payments (or any other payments) would subject the Executive to the
federal excise tax levied on certain "excess parachute payments" under
Internal Revenue Code Section 4999; provided, that if the total of all
payments to or for the benefit of the Executive, after reduction for all
federal taxes (including the tax described in Internal Revenue Code Section
4999, if applicable) with respect to such payments ("Executive's total after-
tax payments"), would be increased by the limitation or elimination of any
such payment, amounts payable shall be reduced to the extent, and only to the
extent, necessary to maximize the Executive's total after-tax payments. The
determination as to whether and to what extent payments are required to be
reduced in accordance with the preceding sentence shall be made at the
Company's expense by a certified public accounting firm that the Company's
Board of Directors may designate prior to a Change of Control. In the event of
any underpayment or overpayment, as determined by the designated accounting
firm, the amount of such underpayment or overpayment shall forthwith be paid
to the Executive or refunded to the Company, as the case may be, with interest
at the applicable Federal rate provided for in Section 7872(f)(2) of the
Internal Revenue Code.
On May 13, 1998, the Board of Directors of the Company approved a certain
Continuation of Benefits Agreement between the Company and Joseph Crugnale
(the "Continuation of Benefits Agreement"). The Continuation of Benefits
Agreement provides that if Mr. Crugnale's employment with the Company should
terminate or be terminated (whether by the Company or by Mr. Crugnale, for any
reason whatsoever), during the twelve (12) month period following a Change of
Control (as defined therein), the Company will pay or make available to Mr.
Crugnale any rights, compensation and benefits which are vested in Mr.
Crugnale or which Mr. Crugnale has or otherwise is entitled to receive under
any plan or program of the Company as such rights to compensation or benefits
become due. In addition, following the termination of Mr. Crugnale's
employment, the Company shall, at its cost, for the twelve (12) months
commencing on the Date of Termination, continue to provide Mr. Crugnale with
medical, dental, life and disability insurance benefits substantially
equivalent to those in place, if any, on the Date of Termination. In addition,
the Company shall, at its cost, following the Date of
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Termination, continue to provide Mr. Crugnale with the use of the leased
automobile presently used by him until the expiration of the current lease
term in August 1999. A copy of the Continuation Benefits Agreement is filed
herewith as EXHIBIT 3 and is incorporated herein by reference.
ACTUAL AND POTENTIAL CONFLICTS OF INTEREST
Indemnification of Officers and Directors and Insurance.
Under the Merger Agreement, the Company will indemnify each person who at
any time has been or becomes a director or officer prior to the Effective
Time, and his heirs and personal representatives, against all expenses
incurred in connection with any proceeding arising out of or pertaining to any
action or omission occurring prior to the Effective Time to the full extent
permitted under Massachusetts law and the Surviving Corporation's Restated By-
Laws in effect as of the Effective Time or under any indemnification agreement
in effect as of the date of the Merger Agreement. Parent or the Surviving
Corporation will, for a period of not less than six (6) years following the
Effective Time, maintain directors' and officers' liability insurance covering
each person presently covered by the Company's officers' and directors'
liability insurance or who 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 of the Merger Agreement in terms of coverage and
amounts; provided that the Parent and the Surviving Corporation will not be
required to pay in the aggregate an annual premium for directors' and
officers' liability insurance in excess of 125% of the last annual premium
paid prior to the date of the Merger Agreement; provided that the Parent and
the Surviving Corporation will be obligated to provide as much coverage as may
be obtained for such amount.
Litigation Settlement Agreement.
Joseph Crugnale is also a party to the Litigation Settlement Agreement (as
defined below). See "The Merger Agreement--Litigation Settlement Agreement."
Affiliated Leases.
During 1992, the Company purchased property for a restaurant site in
Westport, Connecticut, for approximately $1.2 million from an affiliate of a
partnership whose general partner is a director of the Company. The director
was not involved in the purchase negotiation of that particular property, and
management believes that the price paid represented fair market value.
During 1992, Mr. Crugnale made a personal loan amounting to $837,175 to the
Orange, Connecticut, landlord with whom the Company has an operating lease.
The repayment terms require the Company to make the rental payments directly
to Mr. Crugnale through the year 2002. The Company paid approximately $150,000
per year in 1995, 1996 and 1997 related to such agreement.
In March 1997, the Company leased a building and real property for the first
Sal and Vinnie's Sicilian Steakhouse location from Mr. Crugnale and purchased
all furniture, fixtures and equipment currently at the facility for their
appraised value of $650,000. In conjunction with this transaction, the Company
loaned to Mr. Crugnale approximately $637,500, which was repaid during 1997.
The Company leases a building and real property owned by Mr. Crugnale in
Mansfield, Massachusetts, for Bertucci's Brick Oven Pizzeria Number 94. The
lease commenced April 1, 1998 with rent in the amount of $95,000 per year
payable to Mr. Crugnale. The restaurant is scheduled to open in late May or
June of 1998.
Payment of Termination Fee
In connection with the termination of the Ten Ideas Merger Agreement (as
defined below), the Company is obligated to pay to Ten Ideas Inc., a Delaware
corporation formed by Mr. Crugnale to purchase the Company ("Ten Ideas"), a
termination fee of $1,500,000 and up to $750,000 for documented expenses. See
"The Merger--Litigation Settlement Agreement" and "The Solicitation or
Recommendation."
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THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions thereof
and is qualified in its entirety by reference to the full text thereof, which
is incorporated herein by reference and a copy of which is filed herewith as
EXHIBIT 1.
The Offer. The Merger Agreement provides for the making of the Offer. The
obligation of Purchaser to accept payment or pay for Shares is subject, among
other things, to the satisfaction of the condition that there be validly
tendered in accordance with the terms of the Offer prior to the Expiration
Date (defined below) and not withdrawn a number of Shares, which, together
with the Shares then owned by Parent and Purchaser and their affiliates as of
such time, represents at least 90% of the total number of outstanding Shares
on a fully diluted basis. 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 also conditioned upon, among other things, the Parent and
Purchaser obtaining sufficient financing (the "Financing") to fund the
purchase of Shares tendered in the Offer, consummate the Merger, refinance
certain indebtedness of the Company and of Parent and to pay all related fees
and expenses of the transaction (the "Financing Condition"). If any and 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, as
defined below under "Certain Conditions of the Offer" 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. In
addition to usual and customary terms and conditions, the Financing is subject
to the following additional conditions: (i) all governmental approvals and
third party approvals (including Landlords' Consent and Liquor License
Consents (as each term is defined herein), which would not in the absence
thereof, reasonably be expected to have a material advance effect on Parent
and the Company); (ii) there not occurring or becoming known 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 the Company, Parent and
their subsidiaries, taken as a whole, and (iii) there not having occurred a
material disruption of or material adverse change in financial, banking or
capital market conditions.
Certain Conditions of the Offer. 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 when added to the Shares
then beneficially owned by Parent and Purchaser would constitute at least 90%
of all outstanding Shares (determined on a fully diluted basis on the
Expiration Date) (the "Minimum Condition"), (ii) the Financing Condition being
satisfied and (iii) the expiration or termination of any waiting period under
The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations thereunder (the "HSR Act"), applicable to the purchase of Shares
pursuant to the Offer. Purchaser reserves the right (subject to obtaining the
consent of the Company, if required, and the applicable rules and regulations
of the Commission) to waive or reduce the Minimum Condition and to elect to
purchase, pursuant to the Offer, fewer than the minimum number of Shares
necessary to satisfy the Minimum Condition.
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)
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multiplied by (ii) the percentage that the number of Shares owned by Parent
and Purchaser 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 (2) 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.
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.
Vote Required to Approve Merger. Under the Massachusetts Business
Corporation Law (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. See "Tender and Voting Agreement."
The Merger. The Merger Agreement provides that, following consummation of
the Offer and following the satisfaction or waiver of the conditions described
above 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"
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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.
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 and Purchaser 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, Parent may, and intends to, effect the Merger without
approval of any other stockholder of the Company.
Conditions to the Merger. The Merger Agreement provides that the respective
obligations 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") 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 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 the Merger Agreement, "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
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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 Material Adverse Effect or
materially and adversely affect 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 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 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 Securities LLC ("NMS") shall not have
withdrawn the Fairness Opinion (as defined below under Item 4, "Background;
Reasons for the Recommendation--Recommendation of Board of Directors; Opinion
of Financial Advisor").
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 Agreement; or (c) by either Parent or the Company if: (i) upon a vote
at the Stockholders Meeting (as defined below), 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; (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 (as defined below under "Other Offers") 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 shall have been withdrawn; or (e) by Parent, if the Board of
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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 the 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 (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 right 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, NMS 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 the Fairness Opinion) to proceed with the transactions
contemplated by the Merger Agreement but for the withdrawal of such Fairness
Opinion, and within one (1) 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.
Appraisal Rights. Holders of Shares do not have appraisal rights as a result
of the Offer. However, if the Merger is consummated, holders of Shares will
have appraisal rights with respect to such Merger. In such event,
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the Surviving Corporation will notify holders of outstanding Shares on the
Effective Date of their 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, a copy of which has been filed
herewith as EXHIBIT 4. 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.
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 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. 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.
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 (as defined below under Item 4, "Background; Reasons for the
Recommendation--Reasons for Transaction; Factors Considered by the Board"))
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
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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 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.
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 ESPP (as
such term is defined below), except for the issuance of Shares upon
exercise of Company Stock Options 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 in
the Disclosure Schedule (as defined in the Merger Agreement), 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 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
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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 NMS;
(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 thirty
(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 above under
"Certain Conditions of the Offer" or of the Merger set forth above under
"Conditions to the Merger" not being satisfied.
Stock Options. Pursuant to the Merger Agreement, as of the Effective Time,
each Company Stock Option issued under 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 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 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
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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.
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.
Tender and Voting Agreement.
Simultaneously with the execution of the Merger Agreement, Joseph Crugnale
entered into a Tender and Voting Agreement with Parent and Purchaser (the
"Tender and Voting Agreement"). The following is a summary of the material
terms of the Tender and Voting Agreement. This summary is not a complete
description of the terms and conditions thereof and is qualified in its
entirety by reference to the full text thereof, which is incorporated herein
by reference and a copy of which is filed herewith as EXHIBIT 5.
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 (3) 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 Mr. Crugnale 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
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Agreement (as described above under "Other Offers"), engage in discussions or
negotiations relating thereto (all of which shall collectively be referred to
herein as "Crugnale's Restrictions"). 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 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
(6) 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 date in the Merger Agreement, after which either
the Company or Parent may terminate such Agreement, be extended beyond July
31, 1998, 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
Mr. Crugnale 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.
Litigation Settlement Agreement.
After the announcement of the Ten Ideas Merger (as defined below) the
following three (3) purported class action lawsuits 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 Actions"):
(i) Marietta Brewster, v. Joseph Crugnale, et al., Civil Action No. 98-793;
(ii) Sandra Weiss, on behalf of herself and all others similarly situated v.
Bertucci's Inc., et al., Civil Action No. 98-811; and (iii) Keith Jamison, on
behalf of himself and all others similarly situated v. Joseph Crugnale, et
al., Civil Action No. 98-877. The plaintiffs claim that the Ten Ideas Merger
is, or consummation thereof will be, wrongful, unfair and in breach of the
individual defendants' fiduciary duties. The plaintiffs alleged that the price
per Share in the Ten Ideas Merger is grossly inadequate, that consummation of
the Ten Ideas Merger would be 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 Actions 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.
The Company, Ten Ideas (as defined above under "Actual and Potential
Conflict of Interest--Payment of Termination Fee"), Ten Ideas Acquisition
Corp., a Massachusetts corporation and subsidiary of Ten Ideas ("Acquisition
Corp."), Parent, Purchaser and Joseph Crugnale entered into a Litigation
Settlement Agreement dated as of May 13, 1998 (the "Litigation Settlement
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 Actions (and any consolidation thereof)
in accordance with the provisions of Section 6.6 of the Merger Agreement and
the Company's By-laws. The Litigation Settlement Agreement also confirms the
payment by the Company to Ten Ideas of a termination fee of $1,500,000 and up
to $750,000 of documented expenses pursuant to the Ten Ideas Merger Agreement
(as defined below), 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.
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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 herewith as EXHIBIT 6.
Confidentiality Agreement.
In connection with negotiations relating to the Offer 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 (2)
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 (2) 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 is filed
herewith as EXHIBIT 7.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(A) RECOMMENDATION OF THE BOARD OF DIRECTORS.
The Board of Directors has unanimously approved the Merger Agreement and the
transactions contemplated thereby and determined that each of the Offer and
the Merger is fair to, and in the best interests of, the stockholders of the
Company. The Board of Directors recommends that all holders of Shares accept
the Offer and tender their Shares pursuant to the Offer.
(B) BACKGROUND; REASONS FOR THE RECOMMENDATION.
Reasons for the Transaction; Factors Considered by the Board.
The Company completed its initial public offering of Shares in June, 1991 at
an offering price (adjusted for a stock split in March 1992) of $8.67 per
share. As the Company expanded during its early years of operation as a public
company, the market price of the Shares generally appreciated in value.
However, as the Company expanded into locations increasingly remote from its
original base in the metropolitan Boston area and competition within the
restaurant industry intensified, a number of the newly-opened restaurants
failed to perform up to expectations, and the financial performance of the
Company declined. Commencing in 1994, results of operations of the Company
consistently fell short of securities analysts' expectations, resulting in a
steady decline in the trading price of the Shares. The Company recorded a
charge of $5.3 million for fiscal 1995 in connection with three locations
which closed in February 1996. The market price of the Shares fell below
$10.00 in January 1995 and never attained that level again until April 3,
1998. The Shares traded within a range of $4.25 to $7.25 during fiscal year
1996 and from $5.00 to $7.063 during fiscal 1997. The last reported sales
price for the Shares prior to the announcement of the Ten Ideas Merger was
$6.00 per Share.
Throughout this period, the Company's Board of Directors discussed its
concern over the Company's operating results and the concomitant decline in
the trading price of the Shares. At the initiation of the Board of Directors
several changes in management were made, without any discernable effect on the
results of operations.
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During 1995, the Board of Directors engaged an investment banking firm to
consider various strategic alternatives for the Company, including a potential
sale of the Company. However, the investment banking firm was not able to
present to the Board of Directors a transaction which the Board of Directors
felt would be in the best interest of the Company's stockholders.
By November of 1997, the Board of Directors had grown increasingly concerned
about the future prospects of the Company. At the invitation of the Board of
Directors, representatives of NMS addressed the Board of Directors and
discussed conditions prevailing within the restaurant industry generally, as
well as the challenges facing the Company. After considering the presentation
made by the representatives of NMS, the Board of Directors convened a special
meeting on December 4, 1997 at which the representatives of NMS were invited
to make a full presentation to the Board of Directors as to the strategic
alternatives available to the Company. At the December 4, 1997 meeting, the
representatives of NMS again reviewed with the Board of Directors the
conditions prevailing in the restaurant industry generally, as well as the
strengths and weaknesses of the Company. The representatives of NMS then
discussed with the Company the full range of strategic alternatives available
to the Company, including an acquisition by the Company of another restaurant
entity or concept, the extension by the Company of its brand equity through
other means, a sale of the Company to a strategic or financial buyer, which
could include participation by management, the payment by the Company of a
cash dividend or the repurchase by the Company of a portion of its shares, and
the continuation by the Company of its current operations without pursuit of a
strategic transaction. After reviewing the presentation by the representatives
of NMS, and taking into account the continuing challenges facing the Company,
the Board of Directors determined that it was in the best interest of the
stockholders of the Company to consider a sale of the Company. Mr. Crugnale
indicated that if the Company were to be sold, he would likely have an
interest in structuring, or participating in, a purchase of the Company.
Accordingly, a special committee of independent non-employee directors (the
"Special Committee"), consisting of E. Bulkeley Griswold, Robert L. Lestina,
Jr. and Allan J. Steinmetz, was formed to consider potential strategic
alternatives. Mr. Crugnale was advised to engage separate counsel to assist
him in considering whether to prepare an offer to acquire the Company. Mr.
Crugnale did not participate in any of the meetings of the Special Committee.
At the request of the Special Committee, NMS began a review of publicly and
privately available information concerning the Company, as well as a review of
publicly available information concerning certain other restaurant companies
and recent business combinations in the restaurant industry. NMS was also
directed to approach selected potential strategic acquirors in the restaurant
industry and potential financial acquirors to determine whether they had an
interest in acquiring the Company and, if so, at what price. The Special
Committee determined that it was not in the best interest of the stockholders
of the Company to conduct a public auction for the Company, because they
concluded that such a process would likely result in the loss of a significant
number of the Company's managers, and would be extremely disruptive to the
operations of the Company's restaurants. During the months of December and
January, representatives of NMS approached a number of potential strategic and
financial acquirors (which did not include the Parent), and reported the
results of these conversations to representatives of the Special Committee.
The representatives of NMS reported that given the Company's disappointing
results of operations, it was not viewed as a potential growth concept by the
strategic acquirors, and therefore was not an attractive acquisition
candidate. The representatives of NMS reported that several of the financial
acquirors and investors whom they approached expressed an interest in
investing in or acquiring the Company, but only at a relatively modest premium
to the trading value of the Company's shares, and only if management of the
Company were prepared to participate in such a transaction.
On February 3, 1998, Ten Ideas submitted a written proposal to the Special
Committee to acquire the outstanding publicly-held Shares at a price of $7.50
per Share, to be effected through a cash merger of Acquisition Corp. with and
into the Company. Such a merger would be subject, pursuant to Massachusetts
law, to the approval of two-thirds in interest of the holders of the Shares.
The Special Committee, together with NMS and the Company's legal counsel,
considered the proposal and informed Mr. Crugnale that it believed that the
price offered was inadequate. On February 7, 1998, Mr. Crugnale's legal and
financial advisors informed representatives of the Special Committee that they
were prepared to increase their offer to $7.75 per Share, and
15
<PAGE>
that such offer would be accompanied by firm financing commitments, subject to
only usual and customary conditions. The Special Committee convened a meeting
on February 8, 1998 with its financial and legal advisors to review at length
the strategic alternatives available to the Company, and concluded that it
would recommend acceptance of an offer from Ten Ideas but only at a price of
$8.00 per Share, if appropriate terms of a merger agreement could be
negotiated. The position of the Special Committee was communicated to the
financial and legal advisors of Ten Ideas, and following further negotiations,
Ten Ideas agreed to increase its offer to $8.00 per Share and agreed to obtain
firm written financing commitments.
On February 9, 1998, counsel for Ten Ideas presented to counsel for the
Company a proposed form of merger agreement to be entered into among the
Company, Ten Ideas and Acquisition Corp. (the "Ten Ideas Merger Agreement"),
who distributed it among the members of the Special Committee and discussed it
with them. The parties negotiated the terms of the proposed Ten Ideas Merger
Agreement throughout the week of February 9, 1998. On the evening of February
12, 1998, the Special Committee met with its financial and legal advisors to
consider the proposed transaction. At this meeting, the Special Committee also
reviewed the recent results of operations from the Company, and discussed the
likely effect of the disappointing results for the fourth quarter of fiscal
1997 on the trading value of the Shares, received a financial presentation
from NMS regarding the Ten Ideas Merger Agreement and the then current market
conditions as well an oral opinion regarding the fairness from a financial
point of view as of such date of the proposed consideration to be received by
the stockholders of the Company pursuant to the Ten Ideas Merger Agreement and
received a summary from its legal counsel of the terms and conditions of the
Ten Ideas Merger Agreement. Following its discussion, the Special Committee
resolved to recommend to the Board of Directors that the offer of Ten Ideas at
$8.00 per Share be accepted.
The Board then invited Mr. Crugnale to join the meeting and discussed
further with him his proposed financing arrangements and his plans for the
Company and its employees following the proposed Ten Ideas Merger. Thereafter,
by unanimous vote of all of the directors, the Board determined the Ten Ideas
Merger to be fair and in the bests interests of the Company and its
stockholders, approved the Ten Ideas Merger Agreement and the transactions
contemplated thereby, including the Ten Ideas Merger, and recommended that the
stockholders vote in favor of approval and adoption of the Ten Ideas Merger
Agreement and the transactions contemplated thereby, subject to the execution
and delivery of the final form of the Ten Ideas Merger Agreement and the
delivery by Acquisition Corp. of written commitments for the necessary
financing to consummate the transaction. On February 13, 1998, Acquisition
Corp. received from its prospective financing sources executed commitment
letters for financing to consummate the Ten Ideas Merger, and Ten Ideas and
Acquisition Corp. delivered to the Company's counsel an executed counterpart
of the Ten Ideas Merger Agreement and written financing commitments.
Subsequent to the execution of the Ten Ideas Merger Agreement, the Company,
Ten Ideas and Acquisition Corp. prepared a preliminary proxy statement and
Section 13(e)(3) Transaction Statement, which was filed with the Commission on
March 19, 1998.
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 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
16
<PAGE>
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.
Promptly thereafter, the Company notified Ten Ideas in writing, pursuant to
the terms of the Ten Ideas Merger Agreement that it would be exercising its
fiduciary right under the Ten Ideas Merger Agreement to enter into discussions
with Parent.
On Friday, April 3, 1998, a telephone conference call was held in which Mr.
Jacobson, Mr. Pedra, counsel for Parent, a representative of NMS 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 call 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 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 (See "Confidentiality Agreement").
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.
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<PAGE>
On Thursday, April 23, 1998, in advance of a meeting of the Special
Committee scheduled to be held the next day, Parent submitted to NMS 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 JP Acquisition Fund II, L.P., 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.
Thereafter, a representative of NMS arranged for a meeting on Friday, May 1,
1998, in Boston among Mr. Jacobson, Mr. Crugnale and the representative of NMS
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.
The Board of Directors also considered whether it was appropriate to approve
severance agreements for certain members of management. After careful
consideration, the Board of Directors determined that it was in
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<PAGE>
the best interest of the stockholders to ensure that senior management be
given appropriate assurances that they would receive severance benefits in the
event that their employments were terminated following an acquisition by
Parent. Accordingly, the Board of Directors authorized the execution of the
Change of Control Severance Agreements with twenty-eight (28) members of
senior and middle management of the Company (not including Mr. Crugnale)
pursuant to which these individuals will be entitled to receive severance
benefits consisting of a lump sum payment of six (6) months salary, together
with six (6) months medical benefits, in the event that their employment were
to be terminated, or if their job responsibilities or salaries were
diminished, or they were forced to relocate, within six (6) months following
an acquisition of the Company by a third party. The Board of Directors also
authorized an agreement with Mr. Crugnale pursuant to which he would be
entitled to twelve (12) months of insurance coverage and the continuation of
his current automobile lease through August 1999 in the event of an
acquisition of the Company by Parent.
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 NMS, 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 Actions (as described above under "The
Merger Agreement--Litigation Settlement Agreement") unless, as part of the
settlement, the Company obtained from the plaintiffs therein an unconditional
release in favor of Mr. Crugnale, Ten Ideas and 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 and Parent negotiated and obtained a
commitment letter from The Chase Manhattan Bank and BankBoston, N.A. (the
"Commitment Letter"), a copy of which was provided to the members of the
Special Committee. Throughout the period from March 31, 1998, when the offer
was first received from Parent, through May 13, 1998, the Special Committee
convened a number of telephonic meetings at which they received reports from
their legal and financial representatives as to the progress of negotiations
with the Parent. At a meeting of the Special Committee on May 11, 1998,
counsel for the Special Committee gave a full report as to the status of
negotiations, and NMS provided the Special Committee with its preliminary
analysis as of that date of the financial fairness of the consideration
offered by Parent. On May 13, 1998, the full Board of Directors of the Company
met to discuss the status of the offer from the Parent and the related
financing commitments. The Directors discussed at length the changes which had
been made to the Offer and the Commitment Letter. NMS also delivered to the
Special Committee the Fairness Opinion (later confirmed in writing) that
subject to certain important qualifications and subject to certain assumptions
made, matters considered, areas of reliance on others and limitations on the
review undertaken (that are set forth in the written opinion), the
consideration in connection with the Offer and Merger offered by Parent was
fair from a financial point of view, as of that date, to the stockholders of
the Company (see "Opinion of Financial Advisor"). The Special Committee then
recommended to the full Board of Directors that the Ten Ideas Merger Agreement
be terminated, and that the Company enter into the Merger Agreement with
Parent on the terms which had been negotiated. Following receipt of such
recommendation, the Board of Directors, with Mr. Crugnale abstaining, voted to
terminate the Ten Ideas Merger Agreement, and authorized payment to Ten Ideas
of the termination fee and reimbursement of expenses which the Company was
obligated to pay under the Ten Ideas Merger Agreement. At approximately 4:45
p.m., the full Board of Directors, including Mr. Crugnale, voted to authorize
the execution and delivery of 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.
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Recommendation of Board of Directors.
The Board of Directors, by unanimous vote of all of the directors, has
approved the Merger Agreement and the transactions contemplated thereby and
determined that each of the Offer and the Merger is fair to, and in the best
interest of, the stockholders of the Company. The Board of Directors
recommends that all stockholders tender their Shares in response to the Offer
and vote their Shares in favor of the Merger.
In approving the Merger Agreement and the transactions contemplated
thereunder, and recommending that all stockholders tender their Shares in
response to the Offer and vote their Shares in favor of the Merger Agreement,
the Board of Directors considered the following material factors:
(i) The terms of the Merger Agreement and the fact that they were the
product of arms'-length negotiations among the parties;
(ii) The trading price of Shares since its initial public offering,
including recent trends;
(iii) The premium of the Offer as compared to the offer made by Ten
Ideas;
(iv) The Company's projected financial performance, competitive position
and current trends in the restaurant industry;
(v) The results of the process undertaken by NMS to identify and solicit
indications of interest from selected potential purchasers with respect to
the purchase of the Company prior to entering into the Ten Ideas Merger
Agreement;
(vi) The oral opinion of NMS delivered to the Board at the May 13, 1998
meeting (which was subsequently confirmed in writing) (the "Fairness
Opinion"), more fully described below.
(vii) The fact that the terms of the Merger Agreement allow the Board of
Directors, if required by the Board's fiduciary duties, to withdraw its
recommendation of the Merger to accept an acquisition proposal which is
more favorable to the stockholders upon payment of a reasonable breakup fee
and reimbursement of expenses;
(viii) The fact that an affirmative vote of two-thirds of the outstanding
Shares of the Company is required to approve and adopt the Merger Agreement
and the fact that Joseph Crugnale had agreed to tender all of his Shares in
response to the Offer;
(ix) The fact that the Offer made by Parent and Purchaser was for cash
and was accompanied by financing commitments, subject to customary and
usual conditions; and
(x) The availability of dissenters' rights of appraisal in the Merger.
The Board of Directors did not assign relative weight to the above factors
or determine that any factor was of particular importance. Rather, the Board
of Directors view this position and its recommendations as being based on the
totality of the information presented to it and considered by it.
Opinion of Financial Advisor. The Board of Directors of the Company retained
NMS to act as its financial advisor and to render an opinion to the Special
Committee of the Board of Directors of the Company as to the fairness of the
Merger Consideration, from a financial point of view, to be received by the
stockholders of the Company. On May 13, 1998, NMS delivered the Fairness
Opinion to the Special Committee of the Board of Directors of the Company,
which was later confirmed in writing, to the effect that, as of such date, the
consideration to be received by the Company stockholders in the Offer and the
Merger was fair, from a financial point of view, to the stockholders of the
Company. The Fairness Opinion contains certain important qualifications and a
description of assumptions made, matters considered, areas of reliance on
others and limitations on the review undertaken by NMS, and is incorporated
herein in its entirety. THE FAIRNESS OPINION, WHICH IS LIMITED TO AN
ASSESSMENT, AS OF ITS DATE, OF THE FAIRNESS OF THE PROPOSED CONSIDERATION FROM
A FINANCIAL POINT OF VIEW, IS ADDRESSED SOLELY TO THE SPECIAL COMMITTEE FOR
ITS USE IN CONNECTION WITH ITS REVIEW AND APPROVAL OF THE MERGER AGREEMENT,
AND DOES NOT CONSTITUTE A RECOMMENDATION AS TO HOW ANY HOLDER OF SHARES SHOULD
VOTE WITH RESPECT TO THE MERGER, OR WHETHER OR NOT ANY HOLDER OF SHARES SHOULD
TENDER SUCH SHARES IN THE OFFER.
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ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
For its services in connection with the Offer, the Company shall pay NMS a
total transaction fee of approximately $1.4 million (the "Transaction Fee").
Of the Transaction Fee, $250,000 became payable upon delivery of the Fairness
Opinion on May 13, 1998 (the "Opinion Fee") and approximately $1.1 million
becomes payable upon consummation of the Merger (the "Consummation Fee").
Payment of the Consummation Fee is contingent upon the consummation of the
Merger, and the Special Committee was aware of this fee structure and took it
into account in considering the Fairness Opinion. The Company also has agreed
to reimburse NMS for its out-of-pocket expenses, including the fees and
expenses of legal counsel and other advisors, and to indemnify NMS and certain
related persons or entities against certain liabilities, including liabilities
under the federal securities laws, relating to or arising out of its
engagement. In the ordinary course of its business, NMS and its affiliates may
actively trade the debt and equity securities of the Company and Parent for
their own account and for the accounts of customers and, accordingly, may at
any time hold a long or short position in such securities.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) No transactions in the Shares have been effected during the past sixty
(60) days by the Company or, to the best of the Company's knowledge, by any
executive officer, director, affiliate or subsidiary of the Company.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, all of the Company's
executive officers, directors and affiliates who own Shares presently intend
to tender such Shares to Parent pursuant to the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY SUBJECT COMPANY.
(a) Except as set forth herein, the Company is not engaged in any
negotiation in response to the Offer which relates to or would result in (i)
an extraordinary transaction, such as a merger or reorganization, involving
the Company or any subsidiary of the Company; (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary of
the Company; (iii) a tender offer for or other acquisition of securities by or
of the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as set forth herein, there are no transactions, Board of
Directors' resolutions, agreements in principle or signed contracts in
response to the Offer that relate to or would result in one or more of the
events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The Information Statement attached hereto as Annex I is being furnished
pursuant to Rule 14f-1 under the Exchange Act in connection with the possible
designation by Parent and Purchaser, pursuant to the Merger Agreement, of
certain persons to be appointed to the Board of Directors other than at a
meeting of the Company's stockholders.
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit No.
<TABLE>
<C> <S>
Exhibit 1 Agreement and Plan of Merger, dated as of May 13, 1998, by and
among Bertucci's, Inc., NE Restaurant Company, Inc. and NERC
Acquisition Corp.
Exhibit 2 Form of Change of Control Severance Agreement.
Exhibit 3 Continuation Benefits Agreement, dated as of May 13, 1998, by and
between Bertucci's, Inc. and Joseph Crugnale.
Exhibit 4 Chapter 156B, Sections 85 to 98, Massachusetts Business Corporation
Law.
Exhibit 5 Tender and Voting Agreement, dated as of May 13, 1998, by and among
Bertucci's, Inc., NE Restaurant Company, Inc. and NERC Acquisition
Corp. and the stockholders named therein.
Exhibit 6 Litigation Settlement Agreement, dated as of May 13, 1998, by and
among Bertucci's, Inc., Ten Ideas, Inc., Ten Ideas Acquisition
Corp., NE Restaurant Company, Inc. and NERC Acquisition Corp.
Exhibit 7 Confidentiality Agreement, dated as of April 6, 1998, by and
between Bertucci's, Inc. and NE Restaurant Company, Inc.
Exhibit 8 Opinion of NationsBanc Montgomery Securities, LLC*
Exhibit 9 Press Release issued by Bertucci's, Inc. and NE Restaurant Company,
Inc., dated May 14, 1998.
Exhibit 10 Letter to Stockholders of Bertucci's, Inc.*
</TABLE>
- --------
* Included in copies mailed to stockholders.
22
<PAGE>
SIGNATURE
After reasonable 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.
Bertucci's, Inc.
/s/ Joseph Crugnale
By: _________________________________
Joseph CrugnalePresident
Dated: May 20, 1998
23
<PAGE>
ANNEX I
BERTUCCI'S, INC.
14 AUDUBON ROAD
WAKEFIELD, MASSACHUSETTS 01880
----------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about May 20, 1998, as part
of the Solicitation/ Recommendation Statement on Schedule14D-9 (the "Schedule
14D-9") to holders of the Shares. Capitalized terms used and not otherwise
defined herein shall have the meaning set forth in the Schedule14D-9. You are
receiving this Information Statement in connection with the possible election
of persons (the "Parent Designees") designated by NE Restaurant Company, Inc.
(the "Parent") to a majority of the seats on the Board of Directors of the
Company.
Pursuant to the Merger Agreement, on May 20, 1998, NERC Acquisition Corp. is
to commence the Offer. The Offer is scheduled to expire at 12:00 midnight, New
York City time, on Wednesday, June 17, 1998, unless otherwise extended.
The information contained in this Information Statement (including
information incorporated by reference) concerning Parent and NERC Acquisition
Corp. (a wholly-owned subsidiary of Parent) and the Parent Designees has been
furnished to the Company by Parent and NERC Acquisition Corp., and the Company
assumes no responsibility for the accuracy or completeness of such
information.
GENERAL INFORMATION REGARDING THE COMPANY
GENERAL
The common stock, $.005 par value per share ("the "Shares"), is the only
class of voting securities of the Company outstanding. Each Share has one (1)
vote. As of May 13, 1998, there were 8,908,621 Shares outstanding. The Company
does not have any treasury shares. The Board of Directors of the Company
currently consists of five (5) members and there are currently no vacancies on
the Board. The Board of Directors has three (3) classes and each director
serves a term of three (3) years until his successor is duly elected and
qualified or until his earlier death, resignation or removal.
PARENT DESIGNEES
The Merger Agreement provides that effective upon the purchase and payment
for shares by NERC Acquisition Corp., the Parent shall have the right to
designate that portion of the Board of Directors of the Company equal to the
percentage of Shares owned by Parent and NERC Acquisition Corp. combined, and
such designees shall become directors of the Company. At such time, certain of
the current directors will resign.
I-1
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
DIRECTORS OF THE COMPANY
The names of the current directors, ages as of May 13, 1998, and certain
other information are set forth below. As indicated above, some of the current
directors may resign effective immediately following the purchase of shares by
NERC Acquisition Corp. pursuant to the Offer.
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED A
NAME OF DIRECTOR AGE DIRECTOR POSITION WITH THE COMPANY
---------------- --- ---------- -------------------------
<C> <C> <C> <S>
Term ending in 2000:
Robert L. Lestina, Jr... 56 1987 Previously, for more than five (5)
years, employed in the Venture Capital
Division of Allstate Insurance Company.
Retired since December 1994.
James Westra............ 46 1993 Attorney, shareholder in the law firm
of Hutchins, Wheeler & Dittmar, A
Professional Corporation.
Term ending in 1999:
E. Bulkeley Griswold.... 59 1990 General Partner of MarketCorp Ventures,
Limited Partnership, the general
partner of MarketCorp Ventures
Associates, Limited Partnership, a
venture capital fund, since September
1983. Director of Scan Optics (which is
in the optical character business) and
Investor Preference Fund (a fixed
income mutual fund service). Public
Board member, New York Mercantile
Exchange.
Allan J. Steinmetz...... 46 1996 Senior Vice President, Director of
Marketing of Arthur D. Little, a
worldwide management/technology
consulting firm, since 1993.
Member of the United States Postal
Service Marketing Advisory Council.
Former Associate Partner of Marketing
of Andersen Consulting (1991 to 1993).
Term ending in 1998:
Joseph Crugnale......... 47 1984 Chairman of the Board since May 1991.
President of the Company since 1984.
</TABLE>
There are no family relationships among any of the directors or executive
officers of the Company.
INFORMATION CONCERNING THE BOARD OF DIRECTORS OF THE COMPANY
During fiscal 1997, there were four (4) meetings of the Board of Directors
of the Company and, additionally, the Board acted by written consent four (4)
times. All of the directors attended at least 75% of the aggregate of (i) the
total number of meetings of the Board of Directors during which they served as
director and (ii) the total number of meetings held by committees of the Board
of Directors on which they served. The Board of Directors does not have a
Nominating Committee.
The Audit Committee of the Board of Directors reviews, with the Company's
independent auditors, the scope of the audit for the year, the results of the
audit when completed, and the independent auditors' fees for services
performed. The Audit Committee also recommends independent auditors to the
Board of Directors and reviews, with management, various matters related to
its internal accounting controls. The present members of the Audit Committee
are Robert L. Lestina, Jr., and E. Bulkeley Griswold, both of whom became
members of the Audit Committee in May 1991. The Audit Committee was formed in
1991 in anticipation of the Company's initial public offering. The Audit
Committee met on one occasion in 1997 to review the audit for the Company's
1996 fiscal year.
I-2
<PAGE>
The Company also has an Employee Option Committee, whose purpose is to
administer the Company's 1987 Amended and Restated Stock Option Plan, the
Company's Amended and Restated Time Accelerated Restricted Stock Option Plan,
and the Company's 1997 Stock Option Plan. The members of such Committee are
Robert L. Lestina, Jr., and E. Bulkeley Griswold. The Employee Option
Committee met on one (1) occasion in 1997.
The Company also has a Director Option Committee to administer the
Bertucci's, Inc. 1993 Stock Option Plan for Non-Employee Directors (the "1993
Director Plan"). The members of such Committee are Joseph Crugnale and Robert
L. Lestina, Jr. The Director Option Committee met on one (1) occasion in 1997.
Each Director is entitled to receive from the Company a payment of $1,500
for each meeting of the Board of Directors that such Director attends and is
entitled to receive options to purchase 5,000 Shares per year. In addition,
the Company reimburses the Directors for expenses incurred in connection with
attending meetings of the Board of Directors.
The 1993 Director Plan provides for the granting of non-qualified options in
such amounts, on such terms, and to such non-employee directors of the Company
as the administrators of the 1993 Director Plan, in accordance with the terms
of the 1993 Director Plan, may select. A total of 155,000 Shares are reserved
for issuance pursuant to the 1993 Director Plan.
EXECUTIVE OFFICERS OF THE COMPANY
Information required by Item 7(b) of Schedule 14A with respect to executive
officers of the Company is set forth below. The executive officers of the
Company are elected annually by the Board of Directors and hold office until
their successors are elected and qualified, or until their earlier removal or
resignation.
Joseph Crugnale, 47, has been the President of the Company since its
founding in 1984. Mr. Crugnale is the former owner of Steve's Ice Cream,
which, at the time he acquired it in 1977, was a one store ice cream shop and
which, when Mr. Crugnale sold it in 1983, had grown to a twenty-six (26) store
operation.
Theodore R. Barber, 45, has been the Senior Vice President and Chief
Operating Officer of the Company since January 1996. Mr. Barber began his
employment with the Company in May 1994 as Vice President of Purchasing and
Contract Administrator. Previously, Mr. Barber had been the President and
Chief Consultant for Theodore Barber & Co., a food facility consulting
company, since 1992. Between 1990 and 1992, Mr. Barber was the Chief
Consultant and Project Manager of Euro Disneyland in Paris, France.
Anthony Balletta, 43, has been the Vice President of Operations of the
Company since August 1995 and has served in different management capacities
with the Company since 1991. Prior to joining the Company in 1991, Mr.
Balletta had over fifteen (15) years of restaurant experience.
Edward Buice, 52, joined the Company as Vice President and General Counsel
on March 20, 1995. Prior to joining the Company, Mr. Buice had been in private
practice in Massachusetts since 1993. Mr. Buice served as Vice President,
Secretary and General Counsel of Uno Restaurant Company from 1989 to 1993. Mr.
Buice was an in-house attorney for Church's Fried Chicken, Inc., from 1986 to
1987 and served as its Vice President and Corporate Counsel from 1987 to 1989.
Norman S. Mallett, 52, has been the Vice President-Finance, the Treasurer
and the Chief Financial Officer of the Company since 1991 and served as the
Director of Finance of the Company from 1987 to 1991. Prior to joining the
Company, Mr. Mallett was employed for fifteen (15) years by Shoney's South,
Inc., a company in the restaurant business operating throughout the
southeastern United States.
I-3
<PAGE>
BOARD OF DIRECTORS INTERLOCKS AND INSIDER PARTICIPATION
GENERAL.
Messrs. Crugnale, Griswold, Lestina, Steinmetz, and Westra served as members
of the Board of Directors during all of fiscal 1997 and participated in Board
of Directors' deliberations on executive compensation. Mr. Crugnale served as
President and Chairman of the Board of the Company during fiscal 1997. Mr.
Westra served as Clerk of the Company during fiscal 1997, but was not an
employee of the Company or any of its subsidiaries during fiscal 1997. Messrs.
Griswold, Steinmetz, and Lestina were not officers or employees of the Company
or any of its subsidiaries during fiscal 1997. During 1997, Mr. Crugnale was
involved in the Ten Ideas Merger, as described in Item 4 of the Schedule 14D-
9.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Change of Control Severance Agreements, Continuation of Benefits Agreement.
On May 13, 1998, the Board of Directors of the Company approved a form of
Change of Control Severance Agreement to be entered into by the Company and
twenty-eight (28) of its restaurant managers and executive officers (each of
whom is referred to herein as an "Executive") (the "Severance Agreement"). The
Severance Agreement provides that if within six (6) months of a Change of
Control (as defined in the Severance Agreement), the Executive's employment is
terminated by the Company for any reason, other than for Cause (as such term
is defined therein) or by death or disability of the Executive, or by the
Executive for Good Reason (as such term is defined therein), then the Company
will pay the Executive, within thirty (30) days of the date of termination
(the "Date of Termination"), a lump sum equal to the Executive's annual base
salary for the six (6) month period after the Date of Termination at the rate
in effect immediately prior to the Change of Control. In addition, if the
Executive's employment is terminated in accordance with the preceding
sentence, during the six (6) months commencing on the Date of Termination, the
Executive will be entitled to receive certain medical insurance benefits,
substantially equivalent to those in place, if any, on the Date of
Termination. A copy of the form of the Severance Agreement is filed as an
exhibit to the Schedule 14D-9 and is incorporated herein by reference.
The Severance Agreement further provides that severance payments shall be
made without regard to whether the deductibility of such payments (or any
other payments to or for the benefit of the Executive) would be limited or
precluded by Internal Revenue Code Section 280G and without regard to whether
such payments (or any other payments) would subject the Executive to the
federal excise tax levied on certain "excess parachute payments" under
Internal Revenue Code Section 4999; provided, that if the total of all
payments to or for the benefit of the Executive, after reduction for all
federal taxes (including the tax described in Internal Revenue Code Section
4999, if applicable) with respect to such payments ("Executive's total after-
tax payments"), would be increased by the limitation or elimination of any
such payment, amounts payable shall be reduced to the extent, and only to the
extent, necessary to maximize the Executive's total after-tax payments. The
determination as to whether and to what extent payments are required to be
reduced in accordance with the preceding sentence shall be made at the
Company's expense by a certified public accounting firm that the Company's
Board of Directors may designate prior to a Change of Control. In the event of
any underpayment or overpayment, as determined by the designated accounting
firm, the amount of such underpayment or overpayment shall forthwith be paid
to the Executive or refunded to the Company, as the case may be, with interest
at the applicable Federal rate provided for in Section 7872(f)(2) of the
Internal Revenue Code.
On May 13, 1998 the Board of Directors of the Company approved a certain
Continuation of Benefits Agreement between the Company and Joseph Crugnale
(the "Continuation of Benefits Agreement"). The Continuation of Benefits
Agreement provides that if Mr. Crugnale's employment with the Company should
terminate or be terminated (whether by the Company or by Mr. Crugnale, for any
reason whatsoever), during the twelve (12) month period following a Change of
Control (as defined therein) (the "Crugnale Date of Termination"), the Company
will pay or make available to Mr. Crugnale any rights, compensation and
benefits
I-4
<PAGE>
which are vested in Mr. Crugnale or which Mr. Crugnale has or otherwise is
entitled to receive under any plan or program of the Company as such rights to
compensation or benefits become due. In addition, following the termination of
Mr. Crugnale's employment, the Company shall, at its cost, for the twelve (12)
months commencing on the Date of Termination, continue to provide Mr. Crugnale
with medical, dental, life and disability insurance benefits substantially
equivalent to those in place, if any, on the Crugnale Date of Termination. In
addition, the Company shall, at its cost, following the Date of Termination,
continue to provide Mr. Crugnale with the use of the leased automobile he
presently uses until the expiration of the current lease term. A copy of the
Continuation Benefits Agreement is filed as an exhibit to the Schedule 14D-9
and is incorporated herein by reference.
Litigation Settlement Agreement.
After the announcement of the Ten Ideas Merger (as defined in the Schedule
14D-9) the following three (3) purported class action lawsuits 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
Actions"): (i) Marietta Brewster, v. Joseph Crugnale, et al., Civil Action No.
98-793; (ii) Sandra Weiss, on behalf of herself and all others similarly
situated v. Bertucci's, Inc., et al., Civil Action No. 98-811; and (iii) Keith
Jamison, on behalf of himself and all others similarly situated v. Joseph
Crugnale, et al., Civil Action No. 98-877. The plaintiffs claim that the Ten
Ideas Merger is, or consummation thereof will be, wrongful, unfair and in
breach of the individual defendants' fiduciary duties. The plaintiffs alleged
that the price per Share in the Ten Ideas Merger is grossly inadequate, that
consummation of the Ten Ideas Merger would be 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 Actions 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.
The Company, Ten Ideas, Inc., Ten Ideas Acquisition Corp., Parent, Purchaser
and Joseph Crugnale entered into a Litigation Settlement Agreement dated as of
May 13, 1998 (the "Litigation Settlement 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 Actions (and any consolidation thereof) in accordance with the
provisions of Section 6.6 of the Merger Agreement and the Company's By-laws.
The Litigation Settlement Agreement also confirms the payment by the Company
to Ten Ideas, Inc. of a termination fee of $1,500,000 and up to $750,000 of
documented expenses pursuant to the Ten Ideas Merger Agreement (as defined
below), 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.
Affiliated Leases.
During 1992, the Company purchased property for a restaurant site in
Westport, Connecticut, for approximately $1.2 million from an affiliate of a
partnership whose general partner is a director of the Company. The director
was not involved in the purchase negotiation of that particular property, and
management believes that the price paid represented fair market value.
During 1992, the Mr. Crugnale, the president of the Company, made a personal
loan amounting to $837,175 to the Orange, Connecticut, landlord, with whom the
Company has an operating lease. The repayment terms require the Company to
make the rental payments directly to Mr. Crugnale through the year 2002. The
Company paid approximately $150,000 per year in 1995, 1996, and 1997, related
to such agreement.
In March 1997, the Company leased a building and real property for the first
Sal and Vinnie's Sicilian Steakhouse location from Mr. Crugnale and purchased
all furniture, fixtures and equipment currently at the facility for their
appraised value of $650,000. In conjunction with this transaction, the Company
loaned to Mr. Crugnale approximately $637,500, which was repaid during 1997.
I-5
<PAGE>
The Company leases a building and real property owned by Mr. Crugnale in
Mansfield, Massachusetts, for Bertucci's Brick Oven Pizzeria Number 94. The
lease commenced April 1, 1998, with rent in the amount of $95,000 per year,
payable to Mr. Crugnale. The restaurant is scheduled to open in late May or
June of 1998.
Payment of Termination Fee
In connection with the termination of the Ten Ideas Merger Agreement (as
defined in the Schedule 14D-9), the Company is obligated to pay to Ten Ideas
Inc., a Delaware corporation formed by Mr. Crugnale to purchase the Company
("Ten Ideas"), a termination fee of $1,500,000 and up to $750,000 for document
expenses.
BOARD OF DIRECTORS
REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation is supervised by the Board of
Directors. Compensation paid to the Company's executive officers is intended
to reflect the responsibility associated with each executive's position, the
past performance of the specific executive, the goals of management, and the
profitability of the Company.
Executive compensation is designed to be competitive within the restaurant
industry and other companies of comparable size in order to attract and retain
talented and motivated individuals in key positions. Compensation in any
particular case may vary from any industry average on the basis of annual and
long-term Company performance, as well as compensation where, in its judgment,
external or individual circumstances warrant it. The compensation of Mr.
Crugnale consists of a base salary and a bonus payable at the discretion of
the Board of Directors. Although Mr. Crugnale's bonus compensation is not
directly tied to any particular measurement of the financial performance of
the Company during the Company's fiscal year, the Board of Directors does
exercise discretion in assessing the Company's performance and adjusting the
compensation of the Chief Executive Officer accordingly. No bonus was paid to
the Chief Executive Officer in 1997.
The Company utilizes a compensation system comprising base salaries,
quarterly bonuses, and stock option awards. No options were granted to the top
five (5) executive officers in 1997.
The Board of Directors reviews executive officer compensation annually.
Executive officers are eligible to receive quarterly cash bonuses upon
achievement of predetermined performance targets.
The Employee Option Committee may award stock options under the Company's
Amended and Restated Time Accelerated Restricted Stock Option Plan and the
Company's Amended and Restated 1987 Stock Option Plan to executive officers of
the Company. Stock options under each of these plans are designed to provide
incentive to the Company's employees to increase the market value of the
Company's stock, thus linking corporate performance and stockholder value to
executive compensation.
Under the 1987 Incentive Stock Option Plan, the Company may grant stock
options for the purchase of up to 775,000 Shares at an exercise price equal to
the fair market value of the common stock on the date of the grant. The plan
provides for options to be exercisable in four equal installments. All options
must be exercised within ten (10) years of the date of grant. At May 13, 1998,
434,050 of these options were outstanding.
In 1989, the Board of Directors of the Company approved the issuance of
150,000 time-accelerated restricted stock options to members of senior
management. These options are fully vested and exercisable through November
1999. Options are exercisable at a price equal to the fair market value of the
Shares on the date of the grant. At May 13, 1998, 43,000 of these options were
outstanding.
On March 25, 1992, the Board of Directors approved an Employee Stock
Purchase Plan permitting eligible employees to purchase Shares semi-annually
on June 30 and December 31, through payroll deductions of up to
I-6
<PAGE>
8% of each participating employee's compensation, at 85% of the average
trading price during the six-month period, but not less than specified
minimums. At December 26, 1992, 100,000 Shares were reserved for the plan. At
May 13, 1998, none of these options were outstanding.
In July 1993, the Board of Directors of the Company established the 1993
Stock Option Plan for Non-Employee Directors. Under this plan, the Company may
grant stock options for the purchase of up to 75,000 Shares at an exercise
price equal to the fair market value of the Shares on the date of grant. Each
director is entitled to receive options to purchase 5,000 Shares per year. At
May 13, 1998, 32,000 of these options were outstanding.
In 1997, the Company amended the 1993 Stock Option Plan for Non-Employee
Directors, pursuant to which the number of Shares reserved for issuance was
increased from 75,000 Shares to 155,000 Shares. Also in 1997, the Company
amended and restated the 1992 Stock Purchase Plan, pursuant to which the
number of Shares reserved for issuance was increased from 100,000 Shares to
200,000 Shares.
In 1997, the Company adopted the 1997 Stock Option Plan, which provides for
the grant of incentive options and non-qualified options or the purchase of an
aggregate of 250,000 Shares by employees of the Company. The exercise price
for options granted under the 1997 Plan shall be the mean between the high and
low sales prices of the Shares on the Nasdaq National Market on the date of
the grant for the immediately preceding business day. Options granted under
the 1997 Plan shall not be exercisable before the first anniversary of the
date of grant. At May 13, 1998, 12,000 of these options were outstanding. No
option shall be exercisable after ten years from the date on which it was
granted.
BOARD OF DIRECTORS
Joseph Crugnale
E. Bulkeley Griswold
Robert L. Lestina, Jr.
Allan J. Steinmetz
James Westra
I-7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by or
paid to the Company's Chief Executive Officer and each of the Company's most
highly compensated executive officers (other than the Chief Executive Officer)
whose total annual salary and bonus exceeded $100,000 for all services
rendered in all capacities to the Company and its subsidiaries for the
Company's fiscal year ended December 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- -----------------
NAME AND PRINCIPAL OTHER ANNUAL OPTIONS
POSITION YEAR SALARY(1) BONUS(1) COMPENSATION GRANTED ALL OTHER
------------------ ---- ----------- --------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Joseph Crugnale......... 1997 $271,376.18 -- -- -- --
President 1996 $220,388.70 -- -- -- --
1995 $220,388.70 -- -- -- --
Norman S. Mallett....... 1997 $126,662.98 -- -- -- --
Vice President--Finance 1996 $109,491.20 -- -- -- --
1995 $109,491.20 -- -- 10,000 --
Theodore R. Barber...... 1997 $146,820.24 -- -- -- --
Senior Vice President
and 1996 $126,683.77 -- -- -- --
Chief Operating Officer 1995 $ 91,200.51 -- -- 16,000 --
Anthony Balletta........ 1997 $103,261.36 -- -- -- --
Vice President--Opera-
tions 1996 $ 93,515.35 -- -- -- --
1995 $ 80,955.35 $9,389.79 -- 20,000 --
</TABLE>
- --------
(1) Salary and bonus amounts are presented in the years earned. However, the
payment of such amounts may have occurred in other years.
OPTION GRANTS IN LAST FISCAL YEAR
The Company made no grant options to purchase its common stock to any of its
executive officers during fiscal year 1997. No executive officer exercised an
option in fiscal year 1997.
I-8
<PAGE>
BERTUCCI'S, INC. PERFORMANCE GRAPH
The graph set forth below compares the change in the Company's cumulative
total stockholder return on the Shares (as measured by dividing (i) the sum of
(A) the cumulative amount of dividends for the period indicated, assuming
dividend reinvestment, and (B) the difference between the Company's share
price at the end of the period and December 31, 1992; by (ii) the share price
at December 31, 1997) with the cumulative total return of the Nasdaq Stock
Market (U.S.) Index and the cumulative total return of a group of other Nasdaq
listed companies in SIC Group number 58 (eating and drinking establishments).
During fiscal 1997, the Company paid no dividends.
[LINE CHART APPEARS HERE]
<TABLE>
<CAPTION>
LEGEND
CRSP Total Returns Index for: 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97
- ----------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Bertucci's Inc. 100.0 125.6 56.4 25.6 27.6 32.7
Nasdaq Stock Market (US Companies) 100.0 114.8 112.2 158.7 195.2 239.6
NASDAQ Stock (SIC 5800-5899 US Companies) 100.0 101.4 73.2 89.1 87.1 75.3
Eating and drinking places
</TABLE>
Notes:
A. The lines represent monthly index levels derived from compounded daily
reruns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceeding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/92.
I-9
<PAGE>
SECURITY OWNERSHIP OF
PRINCIPAL HOLDERS OF VOTING SECURITIES,
DIRECTORS, AND OFFICERS
The following information is furnished as of May 13, 1998, with respect to
the Shares beneficially owned, within the meaning of Rule 13d-3, by any person
who is known by the Company to be the beneficial owner of more than five
percent of any class of voting securities of the Company, by all Directors of
the Company and nominees, by all executive officers of the Company and by all
Directors and executive officers of the corporation as a group. Unless
otherwise indicated, the named individuals held sole voting and investment
power over the Shares listed below.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER ** AMOUNT AND NATURE OF PERCENT
AND NAME OF DIRECTOR TITLE OF CLASS BENEFICIAL OWNERSHIP OF CLASS
- --------------------------------------- -------------- -------------------- --------
<S> <C> <C> <C>
Joseph Crugnale................... Common Stock 2,177,710(1) 24.4%
E. Bulkeley Griswold.............. Common Stock 13,000(2) *
Robert L. Lestina, Jr............. Common Stock 11,000(3) *
James Westra...................... Common Stock 12,499(4) *
Allan J. Steinmetz................ Common Stock 8,000(5) *
Theodore R. Barber................ Common Stock 10,600(6) *
Norman S. Mallett................. Common Stock 80,500(7) *
Anthony Balletta ................. Common Stock 13,178(8) *
Edward Buice ..................... Common Stock 3,500(9) *
All Directors and officers as a
group (9 persons)................ Common Stock 2,329,987(10) 25.9%
</TABLE>
- --------
* Less than 1.0%
** Unless otherwise specified, the beneficial owner's address is c/o
Bertucci's.
(1) Of such shares, 2,938 shares are held in trusts for the benefit of Mr.
Crugnale's minor children. Mr. Crugnale does not have the power to vote
or dispose of such trust shares.
(2) Of such shares, 8,000 are purchasable by Mr. Griswold under options
presently exercisable and 5,000 are held by Mr. Griswold's 401(k) plan.
(3) Of such shares, 8,000 are purchasable by Mr. Lestina under options
presently exercisable. In addition, Mr. Lestina holds 3,000 of such
shares jointly with his wife.
(4) Of such shares, 2,600 are held in the Hutchins, Wheeler & Dittmar Profit
Sharing Trust, in which Mr. Westra has a beneficial interest, 8,000 are
purchasable by Mr. Westra under options presently exercisable, and 1,899
are held by Mr. Westra's wife. Mr. Westra disclaims beneficial ownership
of the shares held by his wife.
(5) All of these shares are purchasable under options presently exercisable.
(6) Of such shares, 9,600 are purchasable under options presently
exercisable.
(7) Of such shares, 27,500 are purchasable by Mr. Mallett under options
presently exercisable.
(8) Of such shares, 12,500 are purchasable by Mr. Balletta under options
presently exercisable.
(9) All of such shares are purchasable by Mr. Buice under options presently
exercisable.
(10) Included in this figure are 85,100 shares purchasable by certain officers
and Directors under options presently exercisable.
I-10
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended requires
the Company's officers and directors and persons owning more than 10% of the
Shares to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Officers, Directors and owners of greater
than 10% of the Shares are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on copies of such forms furnished as provided above, or written
representations that no Forms 5 were required, the Company believes that
through the date hereof, all Section 16(a) filing requirements applicable to
its officers, Directors and owners of greater than 10% of the Shares were
complied with.
INFORMATION WITH RESPECT TO PARENT DESIGNEES
As of the date of this Information Statement, the Parent has determined who
will be Parent Designees.
Set forth below is the name, business address, principal occupation or
employment and five (5) year employment history of the persons who will be
Parent Designees. Unless otherwise indicated, each such person has held the
occupation listed opposite his name for at least the past five (5) years and
each occupation refers to employment with the Parent. All persons listed below
are citizens of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR
NAME AND BUSINESS ADDRESS EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- ------------------------- ----------------------------------------------------
<S> <C>
Dennis Pedra ................... President, Chief Executive Officer and a Director of
c/o NE Restaurant Company, Inc. Parent (1991-present).
80A Turnpike Road
Westborough, Massachusetts 01581
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
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.
</TABLE>
I-11
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
Exhibit 1 Agreement and Plan of Merger, dated as of May 13, 1998, by and
among Bertucci's, Inc., NE Restaurant Company, Inc. and NERC
Acquisition Corp.
Exhibit 2 Form of Change of Control Severance Agreement
Exhibit 3 Continuation Benefits Agreement, dated as of May 13, 1998, by and
between Bertucci's and Joseph Crugnale.
Exhibit 4 Chapter 156B, Sections 85 to 98, Massachusetts Business Corporation
Law.
Exhibit 5 Tender and Voting Agreement, dated as of May 13, 1998, by and among
Bertucci's, Inc., NE Restaurant Company, Inc. and NERC Acquisition
Corp. and the stockholders named therein.
Exhibit 6 Litigation Settlement Agreement, dated as of May 13, 1998, by and
among Bertucci's, Inc., Ten Ideas, Inc., Ten Ideas Acquisition
Corp., NE Restaurant Company, Inc. and NERC Acquisition Corp.
Exhibit 7 Confidentiality Agreement, dated as of April 6, 1998, by and among
Bertucci's, Inc., NE Restaurant Company, Inc. and NERC Acquisition
Corp.
Exhibit 8 Opinion of NationsBanc Montgomery Securities, LLC*
Exhibit 9 Press Release issued by Bertucci's, Inc. and NE Restaurant Company,
Inc., dated May 14, 1998.
Exhibit 10 Letter to Stockholders of Bertucci's, Inc.*
- --------
* Included in copies mailed to stockholders.
<PAGE>
Exhibit 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
<PAGE>
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
-------- -------
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
2
<PAGE>
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
3
<PAGE>
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
4
<PAGE>
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
--------
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.
5
<PAGE>
(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
6
<PAGE>
"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
7
<PAGE>
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
8
<PAGE>
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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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.
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(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.
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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.
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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
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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.
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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.]
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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
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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
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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
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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 2
CHANGE OF CONTROL SEVERANCE AGREEMENT
-------------------------------------
THIS CHANGE OF CONTROL SEVERANCE AGREEMENT dated as of May 13, 1998, by and
between Bertucci's, Inc., a Massachusetts corporation (the "Company"), and the
undersigned executive of the Company (the "Executive").
WHEREAS, the Executive is a key executive of the Company or a subsidiary of
the Company and an integral part of its management;
WHEREAS, the Company recognizes that the possibility of a "Change of
Control" (as such term is defined herein) of the Company may result in the
departure or distraction of management to the detriment of the Company and its
shareholders; and
WHEREAS, the Company wishes to assure the Executive of fair severance
should his or her employment terminate in specified circumstances following a
Change of Control of the Company and to assure the Executive of certain other
benefits upon a Change of Control.
NOW, THEREFORE, in consideration of the Executive's continued employment
with the Company and other good and valuable consideration, the parties agree as
follows:
1. Benefits Upon Change of Control.
-------------------------------
1.1. In General. If, within six (6) months after a Change of Control, the
----------
Executive's employment has been terminated by the Company for any reason, other
than Cause or the death or disability of the Executive, or by the Executive for
Good Reason (any such event within the six (6) month period after a Change of
Control being referred to as a "Qualified Termination"), the Company shall pay
to the Executive within thirty (30) days following such termination a lump sum
equal to the Executive's annual Base Salary for the six (6) month period after
the Date of Termination at the rate in effect immediately prior to the Change of
Control, plus the accrued and unpaid portion of the executive's Base Salary
through the Date of Termination.
1.2. Benefits Following Termination of Employment. If a Qualified
--------------------------------------------
Termination occurs, the Company shall pay or make available to the Executive any
rights, compensation, and benefits which are vested in the Executive or which
the Executive has or is otherwise entitled to receive under any plan or program
of the Company as such rights, compensation, or benefits become due. In
addition, if a Qualified Termination occurs the Company shall, at its cost,
during the six (6) months commencing on the Date of Termination, continue to
provide the Executive with medical insurance benefits substantially equivalent
to those in place on the Date of Termination. Such rights, compensation, and
benefits shall be determined under, and paid or made available in accordance
with, the Company's applicable insurance and other compensation or benefit
plans, programs, and arrangements.
<PAGE>
1.3. Coordination with Certain Tax Rules. Payments under Sections 1.1 or
-----------------------------------
1.2 shall be made without regard to whether the deductibility of such payments
(or any other payments to or for the benefit of the Executive) would be limited
or precluded by Internal Revenue Code Section 280G and without regard to whether
such payments (or any other payments) would subject the Executive to the federal
excise tax levied on certain "excess parachute payments" under Internal Revenue
Code Section 4999; provided, that if the total of all payments to or for the
benefit of the Executive, after reduction for all federal taxes (including the
tax described in Internal Revenue Code Section 4999, if applicable) with respect
to such payments ("Executive's total after-tax payments"), would be increased by
the limitation or elimination of any payment under Sections 1.1 or l.2, amounts
payable under Sections 1.1 or 1.2 shall be reduced to the extent, and only to
the extent, necessary to maximize the Executive's total after-tax payments. The
determination as to whether and to what extent payments under Sections 1.1 or
1.2 are required to be reduced in accordance with the preceding sentence shall
be made at the Company's expense by a certified public accounting firm that the
Company's Board of Directors may designate prior to a Change of Control. In the
event of any underpayment or overpayment under Sections 1.1 or 1.2, as
determined by the designated accounting firm the amount of such underpayment or
overpayment shall forthwith be paid to the Executive or refunded to the Company,
as the case may be, with interest at the applicable Federal rate provided for in
Section 7872(f)(2) of the Internal Revenue Code.
2. No Mitigation of Damages; Other Severance Payments; Withholding.
----------------------------------------------------------------
2.1. No Duty to Mitigate Damages. The Executive's benefits under this
---------------------------
Agreement shall be considered severance pay in consideration of his or her past
service and his or her continued service from the date of this Agreement, and
his entitlement thereto shall neither be governed by any duty to mitigate his
damages by seeking further employment nor offset by any compensation which he or
she may receive from future employment.
2.2. Other Severance Payments. In the event that the Executive has an
------------------------
employment contract or any other agreement with the Company which entitles the
Executive to severance payments upon the termination of his employment with the
Company, the amount of any such severance payments shall be deducted from the
payments to be made under this Agreement.
2.3. Withholding Anything to the contrary notwithstanding, all payments
-----------
required to be made by the Company hereunder to the Executive shall be subject
to the withholding of such amounts, if any, relating to tax and other payroll
deductions as the Company may reasonably determine it should withhold pursuant
to any applicable law or regulation.
3. Arbitration. Any controversy or claim arising out of or relating to
-----------
this Agreement, or the breach thereof, shall be settled exclusively by
arbitration in Boston, Massachusetts in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect, and
judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
-2-
<PAGE>
4. Legal Fees and Expenses. The Company shall pay all legal fees and
-----------------------
expenses, including but not limited to counsel fees, stenographer fees, printing
costs, etc. reasonably incurred by the Executive in contesting or disputing
whether the termination of his or her employment is a Qualified Termination or
in obtaining any right or benefit to which the Executive is entitled under this
Agreement, but only if the Executive is the prevailing party in such contest or
dispute or any action to obtain such right or benefit.
5. Notices. All notices shall be in writing and shall be deemed properly
-------
served (i) five days after mailing in the continental United States by
registered or certified mail, (ii) upon personal delivery, (iii) delivery by a
recognized overnight service, or (iv) if sent by telecopy transmission to the
party entitled thereto at the address stated below or to such changed address as
the addressee may have given by a similar notice:
To the Company: Bertucci's, Inc.
14 Audubon Road
Wakefield, MA 01880-1203
Attention: President
Telecopy: (781) 246-2224
To the Executive: At his or her home address,
as set forth on the signature page hereto
6. Severability. In the event that any provision of this Agreement
------------
shall be determined to be invalid or unenforceable, such provision shall be
enforceable in any other jurisdiction in which valid and enforceable and in any
event the remaining provisions shall remain in full force and effect to the
fullest extent permitted by law.
7. General Provisions.
------------------
7.1. Binding Agreement. This Agreement shall be binding upon and inure to
-----------------
the benefit of the parties and be enforceable by the Executive's personal or
legal representatives or successors. If the Executive dies while any amounts
would still be payable to him or her hereunder, benefits would still be provided
to his family hereunder or rights would still be exercisable by him hereunder as
if he or she had continued to live, such amounts shall be paid to the
Executive's estate, such benefits shall be provided to the Executive's family
and such rights shall remain exercisable by the Executive's estate in accordance
with the terms of this Agreement. This Agreement shall not otherwise be
assignable by the Executive.
7.2. Successors. This Agreement shall inure to and be binding upon the
----------
Company's successors and assigns. The Company will require any successor to all
or substantially all of the business and/or assets of the Company by sale,
merger (where the Company is not the surviving corporation), lease or otherwise,
by agreement in form and substance satisfactory to the
-3-
<PAGE>
Executive, to assume expressly this Agreement. This Agreement shall not
otherwise be assignable by the Company.
7.3. Amendment or Modification; Waiver. This Agreement may not be amended
---------------------------------
unless agreed to in writing by the Executive and the Company. No waiver by
either party of any breach of this Agreement shall be deemed a waiver of a
subsequent breach.
7.4. Titles. No provision of this Agreement is to be construed by
------
reference to the title of any section.
7.5. Continued Employment. This Agreement shall not give the Executive any
--------------------
right of continued employment or any right to compensation or benefits from the
Company except the right specifically stated herein to certain severance and
other benefits, and shall not limit the company's right to change the terms of
or to terminate the Executive's employment, with or without Cause, at any time,
except as may be otherwise provided in a written employment agreement between
the Company and the Executive.
7.6. Termination Agreements. This Agreement shall be automatically
----------------------
terminated upon the termination of the Executive's employment for any reason,
whether voluntary or involuntary, at any time prior to a Change in Control.
7.7. Prior Agreement. This Agreement shall supersede and replace any prior
---------------
change of control severance agreement between the Company or any of its
subsidiaries, or any
predecessor, and the Executive.
7.8. Binding on Successors. This Agreement shall be binding on any
---------------------
successor to all or substantially all of the Company's business or assets.
7.9. Governing Law. The validity, interpretation, performance and
--------------
enforcement of this Agreement shall be governed by the internal substantive laws
of The Commonwealth of Massachusetts.
8. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings indicated below:
(A) "Base Salary" shall mean the Executive's annual base salary at
the time of the change of Control, exclusive of any bonus or
other benefits he may receive.
(B) "Cause" for termination by the Company of the Executive's
employment, after any Transaction, shall mean (i) the willful and
continued failure by the Executive to substantially perform the
Executive's duties with the Company (other than any such failure
resulting from the Executive's
-4-
<PAGE>
incapacity due to physical or mental illness) after a written
demand for substantial performance is delivered to the Executive
by the Company, which demand identifies with reasonable
specificity the manner in which the Company believes that the
Executive has not substantially performed the Executive's duties,
or (ii) the willful engaging by the Executive in misconduct which
is materially and adversely injurious to or its parent company or
any subsidiaries or affiliates thereof, monetarily or otherwise,
or (iii) the conviction of the Executive of, or the plea by the
Executive of guilty or nolo contendere to, a felony; provided,
---- ----------
however, that "Cause" shall not exist under clauses (i) and (ii)
unless the Company has complied with the following terms and
conditions:
(A) the Executive is provided with written notice of the
proposed termination;
(B) the Executive is given the opportunity to appear with
his or her counsel, and to present evidence and a
defense to the alleged acts or omissions constituting
"Cause", at a duly called and held meeting of the Board
of Directors of the Company, the purpose of which shall
be to determine whether "Cause" exists under clause (i)
or (ii) and the Executive should be terminated; and
(C) if the Executive avails himself or herself of the
opportunity set forth in clause (B), following such
meeting not less than two-thirds of the members of the
Board of Directors determine that "Cause" exists under
clause (1) and (ii) and the Executive should be
terminated. For purposes of clauses (i) and (ii) of
this definition, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done,
or omitted to be done, by the Executive not in good
faith and without reasonable belief that the
Executive's act, or failure to act, was in the best
interest of the Company.
(C) "Change of Control" shall mean any transaction in which any
person, or any two or more persons acting as a group, and all
affiliates of such person or persons, who prior to such time
owned shares representing less than fifty percent (50%) of the
voting power at elections for the Board of Directors of the
Company, shall acquire, whether by purchase, exchange, tender
offer, merger, consolidation or otherwise, such additional shares
of the Company's capital stock in one or more transactions, or
series of transactions, such that following such transaction or
transactions, such person or group and affiliates beneficially
own fifty percent (50%) or more
-5-
<PAGE>
of the voting power at elections for the Board of Directors of
the Company.
(D) "Date of Termination" shall mean the date on which Executive's
employment is terminated.
(E) "Good Reason" shall mean termination by the Executive of his or
her employment following a Change of Control for any one or more
of the following reasons: (i) the responsibility and authority of
the Executive shall be materially altered following the Change of
Control; (ii) the compensation of the Executive (taking into
account only Base Salary) shall be diminished following the
Change of Control; or (iii) following a Change of Control the
Company shall require the Executive to relocate to a location
more than twenty-five (25) miles from the location of where the
Executive performed his or her duties at the time of the Change
of Control.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as an
instrument under seal as of the day and year first above written.
BERTUCCI'S INC.
By:______________________________
Name:
Title:
EXECUTIVE:
______________________________
______________________________
Print Name
______________________________
Address
S-1
<PAGE>
EXHIBIT 3
CONTINUATION OF BENEFITS AGREEMENT
----------------------------------
THIS CONTINUATION OF BENEFITS AGREEMENT dated as of May 13, 1998, is
entered into by and between Bertucci's, Inc., a Massachusetts corporation (the
"Company"), and the undersigned Joseph Crugnale (the "Executive").
WHEREAS, the Executive serves as the Chairman, Chief Executive Officer and
President of the Company; and
WHEREAS, the Company and its stockholders have an interest in the
Executive's continued employment during a time when a "Change of Control" (as
such term is defined herein) of the Company is under consideration by the
Company's Board of Directors; and
WHEREAS, the Company wishes to assure the Executive of certain benefits
upon any termination of his employment following a Change of Control.
NOW, THEREFORE, in consideration of the Executive's continued employment
with the Company and other good and valuable consideration, the parties agree as
follows:
1. Benefits Following Termination of Employment. If the Executive's
--------------------------------------------
employment by the Company shall terminate or be terminated, whether by the
Company or by the Executive, for any reason whatsoever, during the twelve (12)-
month period following a Change of Control (a "Qualified Termination"), the
Company shall pay or make available to the Executive any rights, compensation,
and benefits which are vested in the Executive or which the Executive has or is
otherwise entitled to receive under any plan or program of the Company as such
rights, compensation, or benefits become due. In addition, following a
Qualified Termination, the Company shall, at its cost, during the twelve (12)
months commencing on the Date of Termination, continue to provide the Executive
with medical, dental, life and disability insurance benefits substantially
equivalent to those in place, if any, on the Date of Termination. Such rights,
compensation, and benefits shall be determined under, and paid or made available
in accordance with, the Company's applicable insurance and other compensation or
benefit plans, programs, and arrangements. Further, in the event of a Qualified
Termination, the Company shall, at its cost, continue to provide to the
Executive the use of the leased automobile now used by the Executive until the
expiration of the current lease term.
2. No Duty to Mitigate Damages. The Executive's benefits under this
---------------------------
Agreement shall be considered in consideration of his past service and his
continued service from the date of this Agreement, and his entitlement thereto
shall neither be governed by any duty to mitigate his damages by seeking further
employment nor offset by any compensation or benefits which he may receive from
future employment.
3. Withholding. Anything to the contrary notwithstanding, any payments
-----------
required to be made by the Company hereunder to the Executive shall be subject
to the
<PAGE>
withholding of such amounts, if any, relating to tax and other payroll
deductions as the Company may reasonably determine it should withhold pursuant
to any applicable law or regulation.
4. Arbitration. Any controversy or claim arising out of or relating to
-----------
this Agreement, or the breach thereof, shall be settled exclusively by
arbitration in Boston, Massachusetts in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect, and
judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
5. Legal Fees and Expenses. The Company shall pay all legal fees and
-----------------------
expenses, including but not limited to counsel fees, stenographer fees, printing
costs, etc. reasonably incurred by the Executive in obtaining any right or
benefit to which the Executive is entitled under this Agreement, but only if the
Executive is the prevailing party in any contest, dispute or action to obtain
such right or benefit.
6. Notices. All notices shall be in writing and shall be deemed properly
-------
served (i) five days after mailing in the continental United States by
registered or certified mail, (ii) upon personal delivery, (iii) one day after
delivery to a recognized overnight service, or (iv) if sent by telecopy
transmission to the party entitled thereto at the address stated below or to
such changed address as the addressee may have given by a similar notice:
To the Company: Bertucci's, Inc.
14 Audubon Road
Wakefield, MA 01880-1203
Attention: President
Telecopy: (781) 246-2224
To the Executive: At his home address, as set
forth on the records of the Company
7. Severability. In the event that any provision of this Agreement shall
------------
be determined to be invalid or unenforceable, such provision shall be
enforceable in any other jurisdiction in which valid and enforceable and in any
event the remaining provisions shall remain in full force and effect to the
fullest extent permitted by law.
-2-
<PAGE>
8. General Provisions.
------------------
8.1 Binding Agreement. This Agreement shall be binding upon and inure to
-----------------
the benefit of the parties and be enforceable by the Executive's personal or
legal representatives or successors. If the Executive dies while any benefits
would still be provided to his family hereunder or rights would still be
exercisable by him hereunder as if he had continued to live, such benefits shall
be provided to the Executive's family and such rights shall remain exercisable
by the Executive's estate in accordance with the terms of this Agreement. This
Agreement shall not otherwise be assignable by the Executive.
8.2 Successors. This Agreement shall inure to and be binding upon the
----------
Company's successors and assigns. The Company will require any successor to all
or substantially all of the business and/or assets of the Company by sale,
merger (where the Company is not the surviving corporation), lease or otherwise,
by agreement in form and substance satisfactory to the Executive, to assume
expressly this Agreement. This Agreement shall not otherwise be assignable by
the Company.
8.3 Amendment or Modification; Waiver. This Agreement may not be amended
---------------------------------
unless agreed to in writing by the Executive and the Company. No waiver by
either party of any breach of this Agreement shall be deemed a waiver of a
subsequent breach.
8.4 Continued Employment. This Agreement shall not give the Executive any
--------------------
right of continued employment or any right to compensation or benefits from the
Company except the right specifically stated herein to certain benefits, and
shall not limit the Company's right to change the terms of or to terminate the
Executive's employment, with or without cause, at any time, except as may be
otherwise provided in a written employment agreement between the Company and the
Executive.
8.5 Governing Law. The validity, interpretation, performance and
-------------
enforcement of this Agreement shall be governed by the internal substantive laws
of the Commonwealth of Massachusetts.
9. Definitions. For purposes of this Agreement, the following terms shall
-----------
have the meanings indicated below:
9.1 "Change of Control" shall mean any transaction in which any person, or
any two or more persons acting as a group, and all affiliates of such person or
persons, who prior to such time owned shares representing less than fifty
percent (50%) of the voting power at elections for the Board of Directors of the
Company, shall acquire, whether by purchase, exchange, tender offer, merger,
consolidation or otherwise, such additional shares of the Company's capital
stock in one or more transactions, or series of transactions, such that
following such transaction or transactions, such person or group and affiliates
beneficially own fifty percent (50%) or more of the voting power at elections
for the Board of Directors of the Company.
-3-
<PAGE>
9.2 "Date of Termination" shall mean the date on which Executive's
employment as an employee of the Company terminates, regardless of whether
Executive continues to serve on the Board of Directors of the Company or as a
consultant or advisor to the Company or in any other non-employee capacity.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as an
instrument under seal as of the day and year first above written.
BERTUCCI'S INC.
By: /s/ Norman S. Mallett
---------------------
Name: Norman S. Mallett
Title: VP - Finance and Treasurer
EXECUTIVE:
/s/ Joseph Crugnale
--------------------
Joseph Crugnale
-4-
<PAGE>
EXHIBIT 4
SECTIONS 85 TO 98 OF MASSACHUSETTS BUSINESS CORPORATION LAW
85 PAYMENT FOR STOCK OF DISSENTING STOCKHOLDER. A stockholder in any
corporation organized under the laws of Massachusetts which shall have duly
voted to consolidate or merge with another corporation or corporations under the
provisions of sections seventy-eight or seventy-nine who objects to such
consolidation or merger may demand payment for his stock from the resulting or
surviving corporation and an appraisal in accordance with the provisions of
sections eighty-six to ninety-eight, inclusive, and such stockholder and the
resulting or surviving corporation shall have the rights and duties and follow
the procedure set forth in those sections. This section shall not apply to the
holders of any shares of stock of a constituent corporation surviving a merger
if, as permitted by subsection (c) of section seventy-eight, the merger did not
require for its approval a vote of the stockholders of the surviving
corporation.
86 RIGHT OF APPRAISAL. If a corporation proposes to take a corporate
action as to which any section of this chapter provides that a stockholder who
objects to such action shall have the right to demand payment for his shares and
an appraisal thereof, sections eighty-seven to ninety-eight, inclusive, shall
apply except as otherwise specifically provided in any section of this chapter.
Except as provided in sections eighty-two and eighty-three, no stockholder shall
have such right unless (1) he files with the corporation before the taking of
the vote of the stockholders on such corporate action, written objection to the
proposed action stating that he intends to demand payment for his shares if the
action is taken and (2) his shares are not voted in favor of the proposed
action.
87 NOTICE OF STOCKHOLDERS MEETING TO CONTAIN STATEMENT AS TO APPRAISAL
RIGHTS. The notice of the meeting of stockholders at which the approval of such
proposed action is to be considered shall contain a statement of the rights of
objecting stockholders. The giving of such notice shall not be deemed to create
any rights in any stockholder receiving the same to demand payment for his
stock, and the directors may authorize the inclusion in any such notice of a
statement of opinion by the management as to the existence or non-existence of
the right of the stockholders to demand payment for their stock on account of
the proposed corporate action. The notice may be in such form as the directors
or officers calling the meeting deem advisable, but the following form of notice
shall be sufficient to comply with this section:
"If the action proposed is approved by the stockholders at the meeting and
effected by the corporation, any stockholder (1) who files with the
corporation before the taking of the vote on the approval of such action,
written objection to the proposed action stating that he intends to demand
payment for his shares if the action is taken and (2) whose shares are not
voted in favor of such action has or may have the right to demand in
writing from the corporation (or, in the case of a consolidation or merger,
the name of the resulting or surviving corporation shall be inserted),
within twenty days after the date of mailing to him of notice in writing
that the corporate action has become effective, payment for his shares and
an appraisal of the value thereof. Such corporation and any such
stockholders shall in such cases have the rights and duties and shall
follow the procedure set forth in sections 88 to 98, inclusive, of chapter
156B of the General Laws of Massachusetts."
88 NOTICE OF OBJECTING STOCKHOLDER THAT CORPORATE ACTION HAS BECOME
EFFECTIVE. The corporation taking such action, or in the case of a merger or
consolidation the surviving or resulting corporation, shall, within ten days
after the date on which such corporate action became effective, notify each
stockholder who filed written objection meeting the requirements of section
eighty-six and whose shares were not voted in favor of the approval of such
action, that the action approved at the meeting of the corporation of which he
is a stockholder has become effective. The giving of such notice shall not be
deemed to create any rights in any stockholder receiving the same to demand
payment of his stock. The notice shall be sent by registered or certified mail,
addressed to the stockholder at his last know address as it appears in the
records of the corporation.
<PAGE>
89 DEMAND FOR PAYMENT BY OBJECTING STOCKHOLDER. If within twenty days
after the date of mailing a notice under subsection (e) of section eighty-two,
subsection (f) of section eighty-three, or section eighty-eight any stockholder
to whom the corporation taking such action, or in the case of a consolidation or
merger from the resulting or surviving the corporation, payment for his stock,
the corporation upon which such demand is made shall pay to him the fair value
of his stock within thirty days after the expiration of the period during which
such demand may be made.
90 DETERMINATION OF VALUE OF STOCK BY SUPERIOR COURT. If during the
period of thirty days provided for in section eighty-nine the corporation upon
which such demand is made and any such objecting stockholder fail to agree as to
the value of such stock, such corporation or any such stockholder may within
four months after the expiration of such thirty-day period demand a
determination of the value of the stock of all such objecting stockholders by a
bill in equity filed in the superior court in the county where the corporation
in which such objecting stockholder held stock had or has its principal office
in the commonwealth.
91 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS
ON FAILURE TO AGREE ON VALUE THEREOF, ETC.; PARTIES TO BILL ETC.; SERVICE OF
BILL ON CORPORATION; NOTICE TO STOCKHOLDER PARTIES, ETC. If the bill is filed
by the corporation, it shall name as parties respondent all stockholders who
have demanded payment for their shares and with whom the corporation has not
reached agreement as to the value thereof. If the bill is filed by a
stockholder, he shall bring the bill in his own behalf and in behalf of all
other stockholders who have demanded payment for their shares and with whom the
corporation has not reached agreement as to the value thereof, and service of
the bill shall be made upon the corporation by subpoena with a copy of the bill
annexed. The corporation shall file with its answer a duly verified list of all
such other stockholders, and such stockholders shall thereupon be deemed to have
been added as parties to the bill. The corporation shall give notice in such
form and returnable on such date as the court shall order to each stockholder
party to the bill by registered or certified mail, addressed to the last known
address of such stockholder as shown in the record of the corporation, and the
court may order such additional notice by publication or otherwise as it deems
advisable. Each stockholder who makes demand as provided in section eighty-nine
shall be deemed to have consented to the provisions of this section relating to
notice, and the giving of notice by the corporation to any such stockholder in
compliance with the order of the court shall be a sufficient service of process
on him. Failure to give notice to any stockholder making demand shall not
invalidate the proceedings as to other stockholders to whom notice was properly
given, and the court may at any time before the entry of a final decree make
supplementary orders of notice.
92 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS
ON FAILURE TO AGREE ON VALUE THEREOF, ETC.; ENTRY OF DECREE DETERMINING VALUE OF
STOCK; DATE ON WHICH VALUE IS TO BE DETERMINED. After hearing the court shall
enter a decree determining the fair value of the stock of those stockholders who
have become entitled to the valuation of and payment for their shares, and shall
order the corporation to make payment of such value, together with interest, if
any, as hereinafter provided, to the stockholders entitled thereto upon the
transfer by them to the
<PAGE>
corporation of the certificates representing such stock if certificated or if
uncertificated, upon receipt of an instruction transferring such stock to the
corporation. For this purpose, the value of the shares shall be determined as of
the day preceding the date of the vote approving the proposed corporate action
and shall be exclusive of any element of value arising from the expectation or
accomplishment of the proposed corporate action.
93 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS
ON FAILURE TO AGREE ON VALUE THEREOF, ETC.; COURT MAY REFER BILL, ETC., TO
SPECIAL MASTER TO HEAR PARTIES, ETC. The court in its discretion may refer the
bill or any question arising thereunder to a special master to hear the parties,
make findings and report the same to the court, all in accordance with the usual
practice in suits in equity in the superior court.
94 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS
ON FAILURE TO AGREE ON VALUE THEREOF, ETC.; STOCKHOLDER PARTIES MAY BE REQUIRED
TO SUBMIT THEIR STOCK CERTIFICATES FOR NOTATION THEREON OF PENDENCY OF BILL,
ETC. On motion the court may order stockholder parties to the bill to submit
their certificates of stock to the corporation for notation thereon of the
pendency of the bill, and may order the corporation to not such pendency in its
records with respect to any uncertificated shares held by such stockholder
parties, and may on motion dismiss the bill as to any stockholder who fails to
comply with such order.
95 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS
ON FAILURE TO AGREE ON VALUE THEREOF, ETC.; TAXATION OF COSTS, ETC; INTEREST ON
AWARD, ETC. The costs of the bill, including the reasonable compensation and
expenses of any master appointed d by the court, but exclusive of fees of
counsel or of experts retained by any party, shall be determined by the court
and taxed upon the parties to the bill, or any of them, in such manner as
appears to be equitable, except that all costs of giving notice to stockholders
as provided in this chapter shall be paid by the corporation. Interest shall be
paid upon any award from the date of the vote approving the proposed corporate
action, and the court may on application on any interested party determine the
amount of interest to be paid in the case of any stockholder.
96 STOCKHOLDER DEMANDING PAYMENT FOR STOCK NOT ENTITLED TO NOTICE OF
STOCKHOLDERS' MEETING OR TO VOTE STOCK OR TO RECEIVE DIVIDENDS, ETC.;
EXCEPTIONS. Any stockholder who has demanded payment for his stock as provided
in this chapter shall not thereafter be entitled to notice of any meeting of
stockholders or to vote such stock for any purpose and shall not be entitled to
the payment of dividends or other distribution on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the date of the vote approving the proposed corporate action) unless:
(1) A bill shall not be filed with the time provided in section
ninety;
<PAGE>
(2) A bill, if filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the
corporation, or in the case of a consolidation or merger, the resulting or
surviving corporation, deliver to it a written withdrawal of his objections
to and an acceptance of such corporate action.
Notwithstanding the provisions of clauses (1) to (3), inclusive, said
stockholder shall have only the rights of a stockholder who did not so demand
payment for his stock as provided in this chapter.
97 CERTAIN SHARES PAID FOR BY CORPORATION TO HAVE STATUS OF TREASURY
STOCK, ETC. The shares of the corporation paid for by the corporation pursuant
to the provisions of this chapter shall have the status of treasury stock or in
the case of a consolidation or merger the shares or the securities of the
resulting or surviving corporation into which the shares of such objecting
stockholder would have been converted had he not objected to such consolidation
or merger shall have the status of treasury stock or securities.
98 ENFORCEMENT BY STOCKHOLDER OF RIGHT TO RECEIVE A PAYMENT FOR HIS
SHARES TO BE EXCLUSIVE REMEDY; EXCEPTION. The enforcement by a stockholder of
his right to receive payment for his shares in the manner provided in this
chapter shall be an exclusive remedy except that this chapter shall not exclude
the right of such stockholder to bring or maintain an appropriate proceeding to
obtain relief on the ground that such corporate action will be or is illegal or
fraudulent as to him.
<PAGE>
Exhibit 5
[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 6
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. Mallet
------------------------------
Name: Norman S. Mallet
Title: Treasurer
TEN IDEAS, INC.
By: /s/ Joseph Crugnale
------------------------------
Name: Joseph Crugnale
Title: President
TEN IDEAS ACQUISITION CORP.
By: /s/ Dennis Pedra
------------------------------
Name: Dennis Pedra
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 7
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. Mallet
-------------------------------
CONFIRMED AND AGREED TO:
NE RESTAURANT COMPANY, INC.
By: /s/ Benjamin Jacobson
----------------------------
Date: 4-8-98
--------------------------
<PAGE>
EXHIBIT 8
---------------------------------
NationsBanc Montgomery Securities
---------------------------------
May 13, 1998
Special Committee of the Board of Directors
Bertucci's, Inc.
14 Audubon Road
Wakefield, MA 01880
Gentlemen:
We understand that NE Restaurant Company, Inc, a Delaware
corporation ("Parent") NERC Acquisition Corp., a Massachusetts corporation and a
whollyowned subsidiary of Parent ("Buyer"), and Bertucci's, Inc., a
Massachusetts corporation ("Seller"), have entered into an Agreement and Plan of
Merger (the "Merger Agreement") pursuant to which Buyer (i) Buyer will promptly
commence a tender offer (the "Tender Offer") to purchase all of the outstanding
shares of common stock, $0.005 par value per share, of Seller ("Seller Common
Stock") for $10.50 per share in cash (the "Consideration") and (ii) as promptly
after the completion of the Tender Offer as practicable Buyer will merge into
Seller (the "Merger"). Pursuant to the Merger, Seller will become a wholly owned
subsidiary of Parent and each outstanding share of Seller, other than shares
held in treasury or held by Parent or Buyer, will be converted into the right to
receive $10.50 per share in cash (subject to the rights of dissenting
shareholders, if any). The Tender Offer and the Merger are collectively referred
to herein as the "Transaction". The terms and conditions of the Tender Offer and
the Merger are set forth in more detail in the Merger Agreement.
You have asked for our opinion as investment bankers as to whether
the Consideration to be received by the shareholders of Seller pursuant to the
Transaction is fair to such shareholders from a financial point of view, as of
the date hereof.
In connection with our opinion, we have, among other things: (i)
reviewed certain publicly available financial and other data with respect to
Seller, including the consolidated financial statements for recent years and
interim periods through April 18, 1998, and certain other relevant financial and
operating data relating to Seller made available to us from published sources
and from the internal records of Seller; (ii) reviewed the financial terms and
conditions of the Merger Agreement; (iii) reviewed certain publicly available
information concerning the trading of, and the trading market for, Seller Common
Stock; (iv) compared Seller from a financial point of view with certain other
companies in the restaurant industry which we deemed to be relevant; (v)
considered the financial terms, to the extent publicly available, of selected
recent business combinations of companies in the restaurant industry which we
deemed to be comparable, in whole or in part, to the Transaction;
NationsBanc Montgomery Securities LLC
600 Montgomery Street San Francisco, California 94111 (415) 627-2000
- --------------------------------------------------------------------------------
NationsBank
<PAGE>
Special Committee of the Board of Directors
Bertucci's, Inc.
May 13, 1998
Page 2
(vi) reviewed and discussed with representatives of the management of Seller
certain information of a business and financial nature regarding Seller,
furnished to us by management of Seller, including financial forecasts and
related assumptions of Seller; (vii) made inquiries regarding and discussed the
Transaction and the Merger Agreement and other matters related thereto with
Seller's counsel; and (viii) performed such other analyses and examinations as
we have deemed appropriate. We have also assumed that Buyer will be provided
with the funds necessary to consummate the Transaction.
In connection with our review, we have not assumed any obligation
independently to verify the foregoing information and have relied on its being
accurate and complete in all material respects. With respect to the financial
forecasts for Seller provided to us by management of Seller, upon your advice
and with your consent we have assumed for purposes of our opinion that the
forecasts have been reasonably prepared on bases reflecting the best available
estimates and judgments of management of Seller as to the future financial
performance of Seller and that they provide a reasonable basis upon which we can
form our opinion. We have also assumed that there have been no material changes
in Seller's assets, financial condition, results of operations, business or
prospects since the respective dates of its last financial statements made
available to us. We have relied on advice of the counsel and the independent
accountants to Seller as to all legal issues, tax, and financial reporting
matters with respect to Seller, the Merger, the Tender Offer and the Merger
Agreement. We have assumed that the Merger and the Tender Offer will be
consummated in a manner that complies in all respects with the applicable
provisions of the Securities Exchange Act of 1934 and all other applicable
federal and state statutes, rules and regulations. In addition, we have not
assumed responsibility for making an independent evaluation, appraisal or
physical inspection of any of the assets or liabilities (contingent or
otherwise) of Seller, nor have we been furnished with any such appraisals.
Finally, our opinion is based on economic, monetary and market and other
conditions as in effect on, and the information made available to us as of, the
date hereof. Accordingly, although subsequent developments may affect this
opinion, we have not assumed any obligations to update, revise or reaffirm this
opinion.
We have further assumed with your consent that the Transaction will
be consummated in accordance with the terms described in the Merger Agreement,
without any further amendments thereto and without waiver by Seller of any of
the conditions to its obligations thereunder.
We have acted as a financial advisor to Seller in connection with the
Transaction and will receive a fee for our services, including rendering this
opinion, a significant portion of which is contingent upon the consummation of
the Transaction. In the ordinary course of our business, we trade the equity
securities of Seller for our own account and for the accounts of customers and,
accordingly, may at any time hold a
<PAGE>
Special Committee of the Board of Directors
Bertucci's, Inc.
May 13, 1998
Page 3
long or short position in such securities. We have also acted as an underwriter
in connection with offerings of securities of Seller.
Based upon the foregoing and in reliance thereon, it is our opinion
as investment bankers that the Consideration to be received by the shareholders
of Seller pursuant to the Transaction is fair to such shareholders from a
financial point of view, as of the date hereof.
This opinion is directed to the Special Committee of the Board of
Directors of Seller in its consideration of the Transaction and is not a
recommendation to any shareholder as to how shareholders should vote with
respect to the Merger or whether or not shareholders should tender their Seller
Common Stock into the Tender Offer. Shareholders of Seller are neither
addressees nor intended beneficiaries of our opinion (which is addressed solely
to the members of the Special Committee of the Board of Directors of Seller for
their personal use in connection with their review and approval of the
Transaction) or our underlying financial analysis, and no shareholder of Seller
may rely or allege any reliance on our opinion (in connection with such
shareholder's consideration of the merits of the Transaction or otherwise).
Further, this opinion addresses only the financial fairness of the Consideration
to the shareholders and does not address any other aspect of the Transaction
including, without limitation, the relative merits of the Transaction, any
alternatives to the Transaction or Seller's underlying decision to proceed with
or effect the Transaction. This opinion may not be used or referred to by
Seller, or quoted or disclosed to any person in any manner, without our prior
written consent, which consent is hereby given to the inclusion of this opinion
in any proxy statement and Form 14D-9 filed with the Securities and Exchange
Commission in connection with the Transaction that requires a description of the
factors considered by the Special Committee of the Board of Directors of Seller
in connection with its approval of the Merger Agreement.
Very truly yours,
/s/ NationsBanc Montgomery
NationsBanc Montgomery
Securities LLC
<PAGE>
EXHIBIT 9
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 10
LOGO
BERTUCCI'S
----------
BRICK OVEN PIZZERIA(R)
May 20, 1998
To Our Stockholders:
On behalf of the Board of Directors of Bertucci's, Inc. (the "Company"), we
are pleased to inform you that, on May 13, 1998, the Company entered into an
Agreement and Plan of Merger (the "Merger Agreement") with NE Restaurant
Company, Inc. and its wholly-owned subsidiary, NERC Acquisition Corp.,
pursuant to which NERC Acquisition Corp. has today commenced a cash tender
offer (the "Offer") to purchase all of the outstanding shares (the "Shares")
of the Company's Common Stock at $10.50 per Share. Under the Merger Agreement,
the Offer will be followed by a merger (the "Merger") in which any remaining
Shares will be converted into the right to receive $10.50 per Share in cash,
without interest thereon.
Your Board of Directors has unanimously determined that the Offer and the
Merger are fair to, and in the best interests of, the Company and its
stockholders, approved the Offer and the Merger, and recommends that the
Company's stockholders accept the Offer and tender their Shares pursuant to
the Offer.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9
that is being filed today with the Securities and Exchange Commission,
including, among other things, the terms and conditions of the Merger
Agreement and the fairness opinion of NationsBanc Montgomery Securities LLC
("NMS"), the Company's financial advisor, addressed to the Special Committee
of the Company's Board of Directors and the text of which is more fully
described in the attached Schedule 14D-9. Holders of Shares are urged to read
the NMS opinion in its entirety.
In addition to the attached Schedule 14D-9 relating to the Offer, also
enclosed is the Offer to Purchase, dated May 20, 1998, of NERC Acquisition
Corp., together with related materials, including a Letter of Transmittal, to
be used for tendering your Shares. These documents set forth the terms and
conditions of the Offer and the Merger and provide instructions as to how to
tender your Shares. We urge you to read the enclosed materials carefully in
making your decision with respect to tendering your Shares pursuant to the
Offer.
On behalf of the Board of Directors,
/s/ Joseph Crugnale
Joseph Crugnale
President and Chairman
