SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): JANUARY 15, 1999
MIAMI SUBS CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA 0-19623 65-0249329
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification no.)
6300 N.W. 31ST AVENUE, FORT LAUDERDALE, FLORIDA 33309
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (954) 973-0000
(NOT APPLICABLE)
(Former name or former address, if changed since last report)
Page 1 of 122 pages
Exhibit Index at Page 3
ITEM 5. OTHER EVENTS.
On January 15, 1999, Miami Subs Corporation , a Florida corporation
("Miami Subs"), Nathan's Famous, Inc., a Delaware corporation ("Nathan's"),
and Miami Acquisition Corp., a newly formed Florida corporation and wholly
owned subsidiary of Nathan's ("Sub"), entered into an Agreement and Plan of
merger dated as of January 15, 1999 (the "Merger Agreement"), pursuant to
which Sub will merge with and into Miami Subs (the "Merger"), with Miami Subs
thereafter becoming a wholly owned subsidiary of Nathan's.
Pursuant to the terms of the Merger Agreement, each share of Miami Subs
common stock, $ .01 par value per share ("Miami Subs Common Stock"),
outstanding immediately prior to the effective time (the "Effective Time") of
the Merger (other than shares held by Nathan's or in the treasury of Miami
Subs and other than shares with respect to which dissenter's rights are
properly exercised) will be converted into the right to receive a fraction of
a share of Nathan's common stock, $ .01 par value per share ("Nathan's
Common Stock"), having a value of $2.068 (provided that Nathan's shall not be
required to issue more than one share of Nathan's Common Stock for each two
shares of Miami Subs Common Stock). In addition, for each four shares of
Nathan's Common Stock that a Miami Subs shareholder is entitled to receive,
such holder shall be entitled to receive one warrant (the "Warrants") to
purchase one share of Nathan's Common Stock at an exercise price of $6.00 per
share.
Each holder of Miami Subs Common Stock who would otherwise be entitled to
receive a fractional share of Nathan's Common Stock (after taking into account
all of the holder's certificates representing shares of Nathan's Common Stock)
will be entitled to receive cash (without interest) in lieu thereof.
Consummation of the Merger is subject to satisfaction of certain
conditions, including, without limitation, the satisfactory completion of a
due diligence investigation by each of the companies, receipt of a fairness
opinion by each of the companies and approval by the shareholders of each of
the companies.
The Merger Agreement and Merger will be submitted for approval at a
special meeting of shareholders of Miami Subs and at a special meeting of
stockholders of Nathan's. Prior thereto, Nathan's shall file a registration
statement (including a prospectus that will serve as a joint proxy statement
for the companies' special meetings) with the Securities and Exchange
Commission to register under the Securities Act of 1933, as amended, the
shares of Nathan's Common Stock and Warrants (including the shares of Nathan's
Common Stock underlying such Warrants) to be issued to Miami Subs'
shareholders in connection with the Merger.
The foregoing summary of the Merger is qualified in its entirety by
reference to the text of the Merger Agreement, and Miami Subs Press Release
dated February 1, 1999, which are attached hereto as Exhibits 2.1 and 99.1,
respectively, and are incorporated herein by reference.
Page 2 of 122 pages
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Exhibits
The following Exhibits are provided in accordance with the
provisions of Item 601 of Regulation S-K and are filed herewith unless
otherwise noted.
EXHIBIT INDEX
2.1 Plan and Agreement of Merger made and entered into as of January
15, 1999, among Nathan's Famous, Inc., Miami Acquisition Corp. and Miami Subs
Corporation.
99.1 Press Release of Miami Subs Corporation dated February 1, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MIAMI SUBS CORPORATION
Date: February 3, 1999 By: /s/ Jerry W. Woda
JERRY W. WODA
Senior Vice President,
Chief Financial Officer,
and Principal Accounting
and Financial Officer
Page 3 of 122 pages
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
NATHAN'S FAMOUS, INC.
MIAMI ACQUISITION CORP.
AND
MIAMI SUBS CORPORATION
DATED AS OF JANUARY 15, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER 1
1.1. THE MERGER 1
1.2. EFFECTIVE TIME; CLOSING 2
1.3. EFFECT OF THE MERGER 2
1.4. ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS 2
1.5. DIRECTORS AND OFFICERS 2
1.6. EFFECT ON CAPITAL STOCK 2
1.7. DISSENTING SHARES 4
1.8. SURRENDER OF CERTIFICATES 4
1.9. NO FURTHER OWNERSHIP RIGHTS IN MSC CAPITAL STOCK 5
1.10. LOST, STOLEN OR DESTROYED CERTIFICATES 6
1.11. TAKING OF NECESSARY ACTION; FURTHER ACTION 6
1.12. MATERIAL ADVERSE EFFECT 6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF MIAMI SUBS 6
2.1. ORGANIZATION OF MIAMI SUBS 6
2.2. MIAMI SUBS CAPITAL STRUCTURE 7
2.3. SUBSIDIARIES 7
2.4. OBLIGATIONS WITH RESPECT TO CAPITAL STOCK 8
2.5. AUTHORITY; ENFORCEABILITY; NON CONTRAVENTION; CONSENTS 8
2.6. SECTION 607.0902 OF THE FLORIDA BUSINESS CORPORATION ACT NOT APPLICABLE
9
2.7. SEC FILINGS; MIAMI SUBS' FINANCIAL STATEMENTS 10
2.8. ABSENCE OF CERTAIN CHANGES OR EVENTS 11
2.9. TAXES 11
2.10. INTELLECTUAL PROPERTY 11
2.11. COMPLIANCE; PERMITS; RESTRICTIONS 12
2.12. LITIGATION 12
2.13. BROKERS' AND FINDERS' FEES 13
2.14. EMPLOYEE BENEFIT PLANS 13
2.15. ABSENCE OF LIENS AND ENCUMBRANCES 13
2.16. ENVIRONMENTAL MATTERS 13
2.17. LABOR MATTERS 14
2.18. AGREEMENTS, CONTRACTS AND COMMITMENTS 14
2.19. CHANGE OF CONTROL PAYMENTS 16
2.20. STATEMENTS; PROXY STATEMENT/PROSPECTUS 16
2.21. BOARD APPROVAL 16
2.22. MINUTE BOOKS 17
2.23. POLITICAL CONTRIBUTIONS 17
2.24. DISCLOSURE 17
ARTICLE III REPRESENTATIONS AND WARRANTIES OF NATHAN'S AND MERGER SUB 17
3.1. ORGANIZATION OF NATHAN'S 17
3.2. NATHAN'S CAPITAL STRUCTURE 17
3.3. SUBSIDIARIES 18
3.4. OBLIGATIONS WITH RESPECT TO CAPITAL STOCK 19
3.5. AUTHORITY; ENFORCEABILITY; NON CONTRAVENTION; CONSENTS 19
3.6. SEC FILINGS; NATHAN'S FINANCIAL STATEMENTS 20
3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS 21
3.8. TAXES 21
3.9. INTELLECTUAL PROPERTY 22
3.10. COMPLIANCE; PERMITS; RESTRICTIONS 22
3.11. LITIGATION 23
3.12. BROKERS' AND FINDERS' FEES 23
3.13. EMPLOYEE BENEFIT PLANS 23
3.14. ABSENCE OF LIENS AND ENCUMBRANCES 23
3.15. ENVIRONMENTAL MATTERS 23
3.16. LABOR MATTERS 24
3.17. AGREEMENTS, CONTRACTS AND COMMITMENTS 24
3.18. CHANGE OF CONTROL PAYMENTS 26
3.19. STATEMENTS; PROXY STATEMENT/PROSPECTUS 26
3.20. BOARD APPROVAL 26
3.21. MINUTE BOOKS 27
3.22. POLITICAL CONTRIBUTIONS 27
3.23. DISCLOSURE 27
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME 27
4.1. CONDUCT OF BUSINESS 27
ARTICLE V ADDITIONAL AGREEMENTS 29
5.1. PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT; OTHER FILINGS 29
5.2. MEETINGS OF STOCKHOLDERS 30
5.3. ACCESS TO INFORMATION; CONFIDENTIALITY 30
5.4. NO SOLICITATION BY MIAMI SUBS 31
5.5. PUBLIC DISCLOSURE 32
5.6. LEGAL REQUIREMENTS 33
5.7. THIRD PARTY CONSENTS 33
5.8. FIRPTA 33
5.9. NOTIFICATION OF CERTAIN MATTERS 33
5.10. BEST EFFORTS AND FURTHER ASSURANCES 33
5.11. STOCK OPTIONS 34
5.12. REGISTRATION RIGHTS 34
5.13. INDEMNIFICATION AND INSURANCE 34
5.14. NASDAQ LISTING 36
5.15. BOARD OF DIRECTORS OF NATHAN'S 36
5.16. EMPLOYMENT AGREEMENTS 36
ARTICLE VI CONDITIONS TO THE MERGER 36
6.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER 36
6.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF MIAMI SUBS 37
6.3. ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF NATHAN'S AND MERGER SUB
38
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER 39
7.1. TERMINATION 39
7.2. NOTICE OF TERMINATION; EFFECT OF TERMINATION 41
7.3. FEES AND EXPENSES 41
7.4. AMENDMENT 41
7.5. EXTENSION; WAIVER 41
ARTICLE VIII GENERAL PROVISIONS 42
8.1. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES 42
8.2. NOTICES 42
8.3. INTERPRETATION; KNOWLEDGE 43
8.4. COUNTERPARTS 43
8.5. ENTIRE AGREEMENT 43
8.6. SEVERABILITY 43
8.7. OTHER REMEDIES; SPECIFIC PERFORMANCE 44
8.8. GOVERNING LAW 44
8.9. RULES OF CONSTRUCTION 44
8.10. ASSIGNMENT 44
INDEX OF EXHIBITS
EXHIBIT A FORM OF WARRANT AGREEMENT
EXHIBIT B FORM OF EMPLOYMENT AGREEMENT FOR DONALD L. PERLYN
EXHIBIT C FORM OF EMPLOYMENT AGREEMENT FOR JERRY W. WODA
EXHIBIT D FORM OF EMPLOYMENT AGREEMENT FOR FRANK BARAN
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of January 15, 1999, among Nathan's Famous, Inc., a Delaware
corporation ("Nathan's"), Miami Acquisition Corp., a Florida corporation and
a wholly-owned subsidiary of Nathan's ("Merger Sub"), and Miami Subs
Corporation, a Florida corporation ("Miami Subs").
RECITALS
Upon the terms and subject to the conditions of this Agreement and in
accordance with the Florida Business Corporation Act ("FBCA"), Nathan's and
Miami Subs will enter into a business combination transaction pursuant to
which Merger Sub will merge with and into Miami Subs (the "Merger") so that
Miami Subs will continue as the surviving corporation and will become a wholly
owned subsidiary of Nathan's.
The respective Boards of Directors of Nathan's and Merger Sub (i) have
determined that the Merger is consistent with and in furtherance of the
long-term business strategy of Nathan's and in its best interests, (ii) have
approved this Agreement, the Merger and the other transactions contemplated by
this Agreement and (iii) have resolved to recommend that the stockholders of
Nathan's vote to approve the Merger.
The Board of Directors of Miami Subs (i) has determined that the Merger
is consistent with and in furtherance of the long-term business strategy of
Miami Subs and in its best interests, (ii) has approved this Agreement, the
Merger and the other transactions contemplated by this Agreement and (iii) has
resolved to recommend that the shareholders of Miami Subs vote to approve the
Merger.
Nathan's and Merger Sub, on the one hand, and Miami Subs on the other
hand, desire to make certain representations and warranties and other
agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. At the Effective Time (as defined in Section 1.2)
and subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the FBCA, Merger Sub shall be merged with and into
Miami Subs, the separate corporate existence of Merger Sub shall cease and
Miami Subs shall continue as the surviving corporation. Miami Subs as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
1.2. Effective Time; Closing. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by
filing Articles of Merger (the "Articles of Merger") with the Department of
State of the State of Florida in accordance with the relevant provisions of
the FBCA (the time of such filing (or such later time as may be agreed in
writing by the parties and specified in the Articles of Merger) being the
"Effective Time") as soon as practicable on or after the Closing Date (as
herein defined). Unless the context otherwise requires, the term
"Agreement" as used herein refers collectively to this Agreement and the
Articles of Merger. The closing of the Merger (the "Closing") shall take
place at the offices of Blau, Kramer, Wactlar & Lieberman, P.C. at a time and
date to be specified by the parties, which shall be no later than the second
business day after the satisfaction or waiver of the conditions set forth in
Article VI, or at such other time, date and location as the parties hereto
agree in writing (the "Closing Date").
1.3. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement and the applicable
provisions of the FBCA. Without limiting the generality of the foregoing, and
subject thereto, by virtue of the Merger and the FBCA all the property,
rights, privileges, powers and franchises of Miami Subs and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of
Miami Subs and Merger Sub shall become the debts, liabilities and duties of
the Surviving Corporation.
1.4. Articles of Incorporation; Bylaws; Directors and Officers.
(a) Unless otherwise determined by Nathan's prior to the
Effective Time, at the Effective Time, the Articles of Incorporation of Miami
Subs, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation until thereafter
amended as provided by the FBCA and such Articles of Incorporation; provided,
however, that at the Effective Time the Articles of Incorporation of the
Surviving Corporation shall be amended so that the terms will be substantially
similar to those contained in the Articles of Incorporation of Merger Sub.
(b) The Bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be, at the Effective Time, the Bylaws of the
Surviving Corporation until thereafter amended, altered, or repealed as
provided therein, in the Articles of Incorporation of the Surviving
Corporation and the FBCA.
1.5. Directors and Officers. The directors and officers of Merger
Sub immediately prior to the Effective Time shall be the initial directors and
officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified.
1.6. Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of any holder thereof:
(a) Conversion of MSC Capital Stock. Each share of Common
Stock, par value $.01 per share, of Miami Subs (the "MSC Capital Stock")
issued and outstanding immediately prior to the Effective Time (other than any
shares of MSC Capital Stock to be canceled pursuant to Section 1.6(b) and any
Dissenting Shares (as defined in and to the extent provided in Section 1.7(a))
will be canceled and extinguished and automatically converted (subject to
Sections 1.6(e)) into the right to receive (i) a fraction of a share of Common
Stock, par value $.01 per share, of Nathan's (the "Nathan's Common Stock")
having a value of $2.068 (the "Exchange Ratio") upon surrender of the
certificate representing such share of MSC Capital Stock in the manner
provided in Section 1.8 (or in the case of a lost, stolen or destroyed
certificate, upon delivery of an affidavit (and bond, if required) in the
manner provided in Section 1.10); provided, however that Nathan's shall not be
required to issue more than one share of Nathan's Common Stock for each two
shares of MSC Capital Stock. In addition, for each four shares of Nathan's
Common Stock that a holder of MSC Capital Stock is entitled to receive, such
holder shall be entitled to receive one warrant to purchase one share of
Nathan's Common Stock (the "Warrant") at an exercise price of $6.00 per
share pursuant to the terms of a Warrant Agreement, substantially in the form
of Exhibit A hereto. Nathan's will not issue Warrants to purchase a fraction
of a share of Nathan's Common Stock. For the purpose of calculating the
Exchange Ratio, the value of a share of Nathan's Common Stock shall be the
average closing price of a share of Nathan's Common Stock for the ten most
recent days that Nathan's Common Stock has traded, ending on the trading day
immediately prior to the Closing Date, as reported on the Nasdaq National
Market System.
(b) Cancellation of Nathan's-Owned Stock. Each share of MSC
Capital Stock held in the treasury of Miami Subs or owned by Merger Sub,
Nathan's or any direct or indirect wholly owned subsidiary of Miami Subs or of
Nathan's immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.
(c) Stock Options. At the Effective Time, all options to
purchase MSC Capital Stock then outstanding under Miami Subs's 1990 Executive
Option Plan (the "Miami Subs Option Plan"), and the options and warrants to
purchase shares of Miami Subs Common Stock otherwise listed on Schedule 1.6(c)
(the "Miami Subs Stock Options") shall be assumed by Nathan's in accordance
with Section 5.11 hereof.
(d) Capital Stock of Merger Sub. Each share of Common Stock,
par value $.01 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into and exchanged for one
validly issued, fully paid and nonassessable share of Common Stock, par value
$.01 per share, of the Surviving Corporation. Each stock certificate of
Merger Sub evidencing ownership of any such shares shall continue to evidence
ownership of such shares of capital stock of the Surviving Corporation.
(e) Fractional Shares. No fraction of a share or Warrant to
purchase a fraction of a share of Nathan's Common Stock will be issued by
virtue of the Merger, but in lieu of fractional shares of Nathan's Common
Stock, each holder of shares of MSC Capital Stock who would otherwise be
entitled to a fraction of a share of Nathan's Common Stock (after aggregating
all fractional shares of Nathan's Common Stock to be received by such holder)
shall receive from Nathan's an amount of cash (rounded to the nearest whole
cent) equal to the product of (i) such fraction, multiplied by (ii) the
average closing price of a share of Nathan's Common Stock for the ten most
recent days that Nathan's Common Stock has traded, ending on the trading day
immediately prior to the Closing Date, as reported on the Nasdaq National
Market System.
1.7. Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, the shares of any holder of MSC Capital Stock who has demanded and
perfected appraisal rights for such shares in accordance with the FBCA and
who, as of the Effective Time, has not effectively withdrawn or forfeited such
appraisal rights ("Dissenting Shares"), shall not be converted into or
represent a right to receive Nathan's Common Stock pursuant to Section 1.6,
but the holder thereof shall only be entitled to such rights as are granted by
the FBCA.
(b) Notwithstanding the foregoing, if any holder of shares of
MSC Capital Stock who demands appraisal of such shares under the FBCA shall
effectively withdraw or forfeit the right to appraisal, then, as of the later
of the Effective Time and the occurrence of such event, such holder's shares
shall automatically be converted into and represent only the right to receive
pursuant to the Exchange Ratio Nathan's Common Stock and Warrants, without
interest thereon, upon surrender of the certificate(s) representing such
shares in compliance with Section 1.8.
(c) Miami Subs shall give Nathan's (i) prompt notice of any
written demands for appraisal of any shares of MSC Capital Stock, withdrawals
of such demands, and any other instruments served pursuant to the FBCA and
received by Miami Subs which relate to any such demand for appraisal and (ii)
the opportunity to participate in all negotiations and proceedings which take
place prior to the Effective Time with respect to demands for appraisal under
the FBCA. Miami Subs shall not, except with the prior written consent of
Nathan's or as may be required by applicable law, voluntarily make any payment
with respect to any demands for appraisal of MSC Capital Stock or offer to
settle or settle any such demands or approve any withdrawal of such demands.
1.8. Surrender of Certificates.
(a) Exchange Agent. Nathan's shall select American Stock
Transfer and Trust Company or another institution reasonably satisfactory to
Miami Subs to act as the exchange agent (the "Exchange Agent") in the
Merger.
(b) Nathan's to Provide Common Stock. Promptly after the
Effective Time, Nathan's shall make available to the Exchange Agent for
exchange in accordance with this Article I, the shares of Nathan's Common
Stock (together with any dividends or distributions with respect thereto) and
Warrants issuable pursuant to Section 1.6 in exchange for outstanding shares
of MSC Capital Stock, and cash in an amount sufficient for payment in lieu of
fractional shares pursuant to Section 1.6(e).
(c) Exchange Procedures. Promptly after the Effective Time,
Nathan's shall cause the Exchange Agent to mail to each holder of record (as
of the Effective Time) of a certificate or certificates (the "Certificates")
which immediately prior to the Effective Time represented outstanding shares
of MSC Capital Stock whose shares were converted into the right to receive
shares of Nathan's Common Stock and Warrants pursuant to Section 1.6 and cash
in lieu of any fractional shares pursuant to Section 1.6(e), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent accompanied by a properly executed letter
of transmittal and shall be in such form and have such other provisions as
Nathan's may reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing
shares of Nathan's Common Stock, Warrants and cash in lieu of any fractional
shares pursuant to Section 1.6(e). Upon surrender to the Exchange Agent of
one or more Certificates for cancellation, together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate(s) shall be entitled to
receive in exchange therefor a certificate representing the number of whole
shares of Nathan's Common Stock, and, as applicable, Warrants and payment in
lieu of fractional shares which such holder has the right to receive pursuant
to Section 1.6(e). Subject to Section 1.7 hereof, until so surrendered, each
outstanding Certificate will be deemed from and after the Effective Time, for
all corporate purposes, to evidence the ownership of the number of full shares
of Nathan's Common Stock and, as applicable, Warrants into which such shares
of MSC Capital Stock shall have been so converted and the right to receive an
amount in cash in lieu of the issuance of any fractional shares in accordance
with Section 1.6(e).
(d) Transfers of Ownership. If any certificate for shares of
Nathan's Common Stock or any Warrant is to be issued in a name other than that
in which the Certificate surrendered in exchange therefor is registered, it
will be a condition of the issuance thereof that the Certificate so
surrendered will be properly endorsed and otherwise in proper form for
transfer and that the person requesting such exchange will have paid to the
Exchange Agent any transfer or any other taxes required by reason of the
issuance of a certificate for shares of Nathan's Common Stock or Warrant in
any name other than that of the registered holder of the Certificate
surrendered, or established to the satisfaction of the Exchange Agent that
such tax has been paid or is not payable.
(e) No Liability. Notwithstanding anything to the contrary in
this Section 1.8, neither the Exchange Agent, Nathan's, the Surviving
Corporation nor any party hereto shall be liable to any holder of MSC Capital
Stock for any Nathan's Common Stock (including dividends or distributions
thereon), Warrants or cash in lieu of fractional shares, properly delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
1.9. No Further Ownership Rights in MSC Capital Stock. All shares
of Nathan's Common Stock (including dividends and distributions thereon) and
Warrants issued upon the surrender for exchange of Certificates in accordance
with the terms hereof (including any cash paid in respect thereof pursuant to
Section 1.6(e)) shall be deemed to have been issued in full satisfaction of
all rights pertaining to such shares of MSC Capital Stock, and there shall be
no further registration of transfers on the records of the Surviving
Corporation of shares of MSC Capital Stock which were outstanding immediately
prior to the Effective Time. If after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall, when
accompanied by proper documentation, be exchanged and canceled as provided in
this Article I.
1.10. Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed Certificates, upon
the making of an affidavit of that fact by the holder thereof, such whole
number of shares of Nathan's Common Stock into which the shares of MSC Capital
Stock evidenced thereby shall have been converted, and, as applicable,
Warrants and cash in lieu of fractional shares; provided, however, that
Nathan's may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed Certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against
any claim that may be made against Nathan's or the Exchange Agent with respect
to the Certificates alleged to have been lost, stolen or destroyed.
1.11. Taking of Necessary Action; Further Action. If, at any time
after the date hereof, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of Miami Subs and Merger Sub, the then officers and
directors of Miami Subs and Merger Sub are fully authorized in the name of
their respective corporations or otherwise to take, and will take, all such
lawful and necessary action, so long as such action is consistent with this
Agreement.
1.12. Material Adverse Effect. When used in connection with Miami
Subs or Nathan's as the case may be, the term "Material Adverse Effect"
means, for purposes of this Agreement, any change, event or effect that
individually or when taken together with all other such changes, events or
effects that have occurred prior to the date of determination of the
occurrence of the Material Adverse Effect is or is reasonably likely to be
materially adverse to the business, operations, assets (including intangible
assets), condition (financial or otherwise), or results of operations or
prospects of Miami Subs and its subsidiaries or Nathan's and its subsidiaries,
as the case may be, taken as a whole.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF MIAMI SUBS
Miami Subs represents and warrants to Nathan's and Merger Sub, subject to
the exceptions specifically disclosed in writing in the disclosure letter
supplied by Miami Subs to Nathan's and Merger Sub (the "Miami Subs
Schedules", which are incorporated herein by reference and made a part hereof
as if fully set forth herein), as follows:
2.1. Organization of Miami Subs. Miami Subs is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Florida, has the requisite corporate power and authority to own, lease and
operate its properties and assets as and where the same are owned, operated
or leased and to carry on its business as now being conducted and as proposed
to be conducted, and is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction in which the failure to be so
qualified would have a Material Adverse Effect on Miami Subs. Miami Subs has
delivered to Nathan's complete and correct copies of the Articles of
Incorporation and Bylaws of Miami Subs, each as amended to and as in effect on
the date hereof.
2.2. Miami Subs Capital Structure. The authorized capital stock of
Miami Subs consists of 50,000,000 shares of Common Stock, par value $.01 per
share, of which there were 27,119,340 shares issued and outstanding as of
November 30, 1998 and 8,000,000 shares of Preferred Stock, par value $.01 per
share, of which no shares were issued and outstanding as of November 30, 1998.
All outstanding shares of MSC Capital Stock are duly authorized, validly
issued, fully paid and non-assessable and are not subject to preemptive rights
created by statute, the Articles of Incorporation or Bylaws of Miami Subs or
any agreement or document to which Miami Subs is a party or by which it is
bound. As of December 1, 1998, Miami Subs had reserved an aggregate of
4,338,716 shares of MSC Capital Stock, net of exercises, for issuance to
employees, consultants and non-employee directors pursuant to the Miami Subs
Stock Options outstanding as of such date. All shares of MSC Capital Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, would be
duly authorized, validly issued, fully paid and nonassessable. Schedule
1.6(c) of the Miami Subs Schedules list each Miami Subs Stock Option
outstanding at November 30, 1998, the name of the holder of such Miami Subs
Stock Option, the number of shares subject to such Miami Subs Stock Option ,
the exercise price of such Miami Subs Stock Option, the number of shares as to
which such Miami Subs Stock Option will have vested at such date and whether
the exercisability of such Miami Subs Stock Option will be accelerated in any
way by the transactions contemplated by this Agreement or for any other
reason, and indicate the extent of acceleration, if any.
2.3. Subsidiaries.
(a) Except for the subsidiaries listed in the Miami Subs
Schedules there are no entities 10% or more of whose outstanding voting
securities or other equity interest are owned, directly or indirectly through
one or more intermediaries, by Miami Subs. Each subsidiary of Miami Subs is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation (which jurisdiction is indicated
in the Miami Subs Schedules) and has all requisite corporate power and
authority to own, operate and lease its properties and assets as and where the
same are owned, operated or leased by such subsidiary and to conduct its
business as it is now being conducted. Each subsidiary is in good standing
and duly qualified or licensed as a foreign corporation to do business in each
of the jurisdictions in which the location of the property and assets owned,
operated or leased by such subsidiary or the nature of the business conducted
by such subsidiary makes such qualification or licensing necessary, except
where the failure to be so qualified or licensed would not have a Material
Adverse Effect. Miami Subs has delivered to Nathan's complete and correct
copies of each of its subsidiaries' articles of incorporation and bylaws (or
similar organizational document), in each case as amended to and as in effect
on the date hereof.
(b) The Miami Subs Schedules set forth the authorized capital
stock of each subsidiary of Miami Subs, the number of outstanding shares of
each class of such capital stock and Miami Subs's (or in the case of
subsidiaries indirectly owned by Miami Subs, a specified subsidiary's)
ownership of each such class. Miami Subs or such subsidiary has good and
valid title to all such shares free and clear of all mortgages, pledges,
claims, liens, security interests or other restrictions or encumbrances of any
kind or nature whatsoever ("Encumbrances"). All of the outstanding shares
of capital stock of each subsidiary of Miami Subs are validly issued, fully
paid and nonassessable, and there are no preemptive or similar rights in
respect of any shares of capital stock of any subsidiary. All of the
outstanding shares of each subsidiary of Miami Subs were issued in compliance
with all requirements of all applicable federal and state securities laws.
Except as set forth in the Miami Subs Schedules, neither Miami Subs nor any
subsidiary owns any capital stock of or other equity interest of any kind or
nature in any person.
2.4. Obligations With Respect to Capital Stock. Except as set forth
in Section 2.2, there are no equity securities of any class of Miami Subs, or
any securities exchangeable or convertible into or exercisable for such equity
securities, issued, reserved for issuance or outstanding. Except for
securities Miami Subs owns, directly or indirectly through one or more
subsidiaries, there are no equity securities of any class of any subsidiary of
Miami Subs, or any security exchangeable or convertible into or exercisable
for such equity securities, issued, reserved for issuance or outstanding.
Except as set forth in Section 2.2, there are no options, warrants, equity
securities, calls, rights (including preemptive rights), commitments or
agreements of any character to which Miami Subs or any of its subsidiaries is
a party or by which it is bound obligating Miami Subs or any of its
subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, or repurchase, redeem or otherwise acquire, or cause to be repurchased,
redeemed or acquired, of any shares of capital stock of Miami Subs or any of
its subsidiaries or obligating Miami Subs or any of its subsidiaries to grant,
extend, accelerate the vesting of or enter into any such option, warrant,
equity security, call, right, commitment or agreement. Except as set forth in
the Miami Subs Schedules, there are no registration rights and, to the
knowledge of Miami Subs, there are no voting trusts, proxies or other
agreements or understandings with respect to any equity security of any class
of Miami Subs or with respect to any equity security of any class of any of
its subsidiaries.
2.5. Authority; Enforceability; Non Contravention; Consents.
(a) Miami Subs has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby, subject to the approval of this Agreement by the shareholders of Miami
Subs. Subject to such approval, the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of Miami Subs, and
this Agreement has been duly executed and delivered by Miami Subs and,
assuming the due authorization, execution and delivery by Nathan's and Merger
Sub, constitutes the valid and binding obligation of Miami Subs, enforceable
against it in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
or relating to the enforcement of creditors' rights generally and subject to
general principles of equity. A vote of the holders of at least a majority of
the outstanding shares of the MSC Capital Stock is required for Miami Subs's
shareholders to approve this Agreement. Neither the execution, delivery and
performance of this Agreement by Miami Subs nor consummation by Miami Subs of
the transactions contemplated hereby will, (i) conflict with or violate the
Articles of Incorporation or Bylaws of Miami Subs or the equivalent
organizational documents of any of its subsidiaries, (ii) subject to obtaining
the approval of Miami Subs's shareholders of the Merger as contemplated in
Section 5.2 and compliance with the requirements set forth in Section 2.5(b)
below, conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Miami Subs or any of its subsidiaries or by which its or
any of their respective properties is bound or affected, or (iii) result in
any breach of or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, or impair Miami Subs's rights
or alter the rights or obligations of any third party under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance on any of the properties or
assets of Miami Subs or any of its subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Miami Subs or any of its subsidiaries
is a party or by which Miami Subs or any of its subsidiaries or its or any of
their respective properties are bound or affected, except, with respect to
clauses (ii) and (iii), for any such conflicts, violations, defaults or other
occurrences that would not have a Material Adverse Effect on Miami Subs. The
Miami Subs Schedules list all material consents, waivers and approvals under
any of Miami Subs's or any of its subsidiaries' agreements, contracts,
licenses or leases required to be obtained in connection with the consummation
of the transactions contemplated hereby.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any court, administrative agency or
commission or other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to Miami Subs in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby or thereby, except for (i) the filing of a
Form S-4 Registration Statement by Nathan's covering the shares of Nathan's
Common Stock and the Warrants (including the shares of Nathan's Common Stock
underlying such Warrants) (the "Registration Statement") with the Securities
and Exchange Commission ("SEC") in accordance with the Securities Act of
1933, as amended (the "Securities Act"), (ii) the filing of the Articles of
Merger with the Department of State of the State of Florida, (iii) the filing
of the Proxy Statement (as defined in Section 2.20) with the SEC in accordance
with the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(iv) the filing of a Current Report on Form 8-K with the SEC, (v) the filing
of a Form 15 with the SEC, (vi) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under applicable federal and state laws and the laws of any foreign country
and (vii) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not have a Material
Adverse Effect on Miami Subs or have a material adverse effect on the ability
of Miami Subs to consummate the Merger.
2.6. Section 607.0902 of the Florida Business Corporation Act Not
Applicable. The Board of Directors of Miami Subs has taken all actions so
that the restrictions contained in Section 607.0902 of the FBCA will not apply
to the execution, delivery or performance of this Agreement or to the
consummation of the Merger or the other transactions contemplated by this
Agreement.
2.7. SEC Filings; Miami Subs Financial Statements.
(a) Miami Subs has filed all forms, reports and documents
required to be filed with the SEC since November 1996 and has made available
to Nathan's such forms, reports and documents in the form filed with the SEC.
All such required forms, reports and documents, (including those that Miami
Subs may file subsequent to the date hereof) are referred to herein as the
"Miami Subs SEC Reports." As of their respective dates, the Miami Subs SEC
Reports (i) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Miami Subs SEC Reports,
and (ii) did not at the time they were filed (or if amended or superseded by a
filing on or prior to the date of this Agreement, then on the date of such
filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of Miami Subs's subsidiaries is required to file
any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Miami Subs SEC Reports,
including any Miami Subs SEC Reports filed after the date hereof until the
Closing Date (the "Miami Subs Financials"), (x) complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, (y) was prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as specified therein or as may be indicated in the
notes thereto or, in the case of unaudited interim financial statements, as
may be permitted by the SEC on Form 10-Q under the Exchange Act) and (z)
fairly presented in all material respects the consolidated financial position
of Miami Subs and its subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year end adjustments which were not, or are
not expected to be, material in amount. The balance sheet of Miami Subs
contained in the Miami Subs SEC Reports as of November 30, 1998 is hereinafter
referred to as the "Miami Subs Balance Sheet." Neither Miami Subs nor any
of its subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise) of a nature required to be disclosed on a balance sheet or in the
related notes to the consolidated financial statements prepared in accordance
with GAAP which are, individually or in the aggregate, material to the
business, results of operations or financial condition of Miami Subs and its
subsidiaries taken as a whole, except liabilities (i) provided for in the
Miami Subs Balance Sheet, or (ii) incurred since the date of the Miami Subs
Balance Sheet in the ordinary course of business consistent with past
practices.
(c) Miami Subs has heretofore furnished to Nathan's a complete
and correct copy of any amendments or modifications, which have been prepared
but have not been filed with the SEC and which are not yet required to be
filed therewith, to agreements, documents or other instruments which
previously had been filed by Miami Subs with the SEC pursuant to the
Securities Act or the Exchange Act.
2.8. Absence of Certain Changes or Events. Except as set forth in
the Miami Subs Schedules, since the date of the Miami Subs Balance Sheet
through the date of this Agreement, there has not been: (i) any Material
Adverse Effect on Miami Subs, (ii) any material change by Miami Subs in its
accounting methods, principles or practices, except as required by concurrent
changes in GAAP or regulations and rules of the SEC, or (iii) any revaluation
by Miami Subs of any of its assets having a Material Adverse Effect on Miami
Subs, including, without limitation, writing down the value of capitalized
software or inventory or writing off notes or accounts receivable other than
in the ordinary course of business.
2.9. Taxes. Except as set forth in the Miami Subs Schedules, Miami
Subs and each of its subsidiaries has filed all tax returns required to be
filed by any of them and has paid (or Miami Subs has paid on its behalf), or
has set up an adequate reserve for the payment of, all material Taxes required
to be paid as shown on such returns, and the most recent financial statements
contained in the Miami Subs SEC Reports reflect an adequate reserve for all
material Taxes payable by Miami Subs and its subsidiaries accrued through the
date of such financial statements. Except as reasonably would not be expected
to have a Material Adverse Effect on Miami Subs, no deficiencies for any Taxes
have been proposed, asserted or assessed against Miami Subs or any of its
subsidiaries. For the purpose of this Agreement, the term "Taxes" shall
include all Federal, state, local and foreign income, profits, franchise,
gross receipts, payroll, sales, employment, use, property, withholding, excise
and other taxes, duties or assessments of any nature whatsoever, together with
all interest, penalties and additions imposed with respect to such amounts.
2.10. Intellectual Property.
(a) Miami Subs and its subsidiaries own, or have the right to
use, sell or license all patents, trademarks, trade names, service marks,
copyrights, technology, know-how, trade secrets, computer software programs or
applications and tangible proprietary information and other intellectual
property necessary or required for the conduct of their respective businesses
as presently conducted (such intellectual property and the rights thereto are
collectively referred to herein as the "Miami Subs IP Rights"), except for
any failure to own or have the right to use, sell or license that would not
have a Material Adverse Effect on Miami Subs.
(b) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not
constitute a breach of any instrument or agreement governing any Miami Subs IP
Rights (the "Miami Subs IP Rights Agreements"), will not cause the
forfeiture or termination or give rise to a right of forfeiture or termination
of any Miami Subs IP Rights or impair the right of Miami Subs and its
subsidiaries, the Surviving Corporation or Nathan's to use, sell or license
any Miami Subs IP Rights or portion thereof, except for the occurrence of any
such breach, forfeiture, termination or impairment that would not result in a
Material Adverse Effect on Miami Subs.
(c) (i) neither the manufacture, marketing, license, sale or
intended use of any product currently licensed or sold or under development by
Miami Subs or any of its subsidiaries violates any license or agreement
between Miami Subs or any of its subsidiaries and any third party or infringes
any intellectual property right of any other party; and (ii) there is no
pending or, to the knowledge of Miami Subs, threatened claim, arbitration or
litigation contesting the validity, ownership or right to use, sell, license
or dispose of any Miami Subs IP Rights, nor has Miami Subs received any
written notice asserting that any Miami Subs IP Rights or the proposed use,
sale, license or disposition thereof conflicts or will conflict with the
rights of any other party, except, with respect to clauses (i) and (ii), for
any violations, infringements, claims or litigation that would not have a
Material Adverse Effect on Miami Subs.
(d) Miami Subs has taken reasonable and practicable steps
designed to safeguard and maintain the secrecy and confidentiality of, and its
proprietary rights in, all Miami Subs IP Rights.
2.11. Compliance; Permits; Restrictions.
(a) Neither Miami Subs nor any of its subsidiaries is in
conflict with, or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree applicable to Miami Subs or any of its subsidiaries
or by which its or any of their respective properties is bound or affected, or
(ii) any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Miami Subs or any
of its subsidiaries is a party or by which Miami Subs or any of its
subsidiaries or its or any of their respective properties is bound or
affected, except, with respect to clauses (i) and (ii), for any conflicts,
defaults or violations which would not have a Material Adverse Effect on Miami
Subs. Except as set forth in the Miami Subs Schedules, to the knowledge of
Miami Subs, no investigation or review by any Governmental Entity is pending
or threatened against Miami Subs or its subsidiaries, nor has any Governmental
Entity indicated to Miami Subs an intention to conduct the same, other than,
in each such case, those the outcome of which would not have a Material
Adverse Effect on Miami Subs.
(b) Miami Subs and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from Governmental Entities which
are material to the operation of the business of Miami Subs and its
subsidiaries taken as a whole (collectively, the "Miami Subs Permits").
Miami Subs and its subsidiaries are in compliance with the terms of Miami Subs
Permits, except where the failure to so comply would not have a Material
Adverse Effect on Miami Subs.
2.12. Litigation. Except as set forth in the Miami Subs Schedules,
as of the date of this Agreement, there is no action, suit, proceeding, claim,
arbitration or, to Miami Subs's knowledge, any investigation pending, or as to
which Miami Subs or any of its subsidiaries has received any notice of
assertion nor, to Miami Subs's knowledge, is there a threatened action, suit,
proceeding, claim, arbitration or investigation against Miami Subs or any of
its subsidiaries which would have a Material Adverse Effect on Miami Subs, or
which in any manner challenges or seeks to prevent, enjoin, alter or delay any
of the transactions contemplated by this Agreement.
2.13. Brokers' and Finders' Fees. Miami Subs has not incurred, nor
will it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
2.14. Employee Benefit Plans. With respect to each material
employee benefit plan, program, arrangement and contract (including, without
limitation, any "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
maintained or contributed to by Miami Subs or any trade or business (an
"ERISA Affiliate") which is under common control with Miami Subs within the
meaning of Section 414 of the Internal Revenue Code of 1986, as amended (the
"Code") (the "Miami Subs Employee Plans"), Miami Subs has made available to
Nathan's a true and complete copy of, to the extent applicable, (i) such Miami
Subs Employee Plan, (ii) the most recent annual report (Form 5500), (iii) each
trust agreement related to such Miami Subs Employee Plan, (iv) the most recent
summary plan description for each Miami Subs Employee Plan for which such a
description is required, (v) the most recent actuarial report relating to any
Miami Subs Employee Plan subject to Title IV of ERISA and (vi) the most recent
United States Internal Revenue Service ("IRS") determination letter issued
with respect to any Miami Subs Employee Plan.
2.15. Absence of Liens and Encumbrances. Miami Subs and each of
its subsidiaries has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its material
tangible properties and assets, real, personal and mixed, used in its
business, free and clear of any Encumbrances except as reflected in the Miami
Subs Financials and except for liens for taxes not yet due and payable and
such imperfections of title and Encumbrances, if any, which would not have a
Material Adverse Effect on Miami Subs.
2.16. Environmental Matters.
(a) Hazardous Material. Except as would not have a Material
Adverse Effect on Miami Subs, no underground storage tanks and no amount of
any substance that has been designated by any Governmental Entity or by
applicable federal, state or local law to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including, without
limitation, PCBs, asbestos, petroleum, urea-formaldehyde and all substances
listed as hazardous substances pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, or defined as a
hazardous waste pursuant to the United States Resource Conservation and
Recovery Act of 1976, as amended, and the regulations promulgated pursuant to
said laws, (a "Hazardous Material"), but excluding office and janitorial
supplies, are present, as a result of the deliberate actions of Miami Subs or
any of its subsidiaries, or, to Miami Subs's knowledge, as a result of any
actions of any third party or otherwise, in, on or under any property,
including the land and the improvements, ground water and surface water
thereof, that Miami Subs or any of its subsidiaries has at any time owned,
operated, occupied or leased.
(b) Hazardous Materials Activities. Except as would not have
a Material Adverse Effect on Miami Subs, neither Miami Subs nor any of its
subsidiaries has transported, stored, used, manufactured, disposed of,
released or exposed its employees or others to Hazardous Materials in
violation of any law in effect on or before the date hereof, nor has Miami
Subs or any of its subsidiaries disposed of, transported, sold, or
manufactured any product containing a Hazardous Material (collectively
"Hazardous Materials Activities") in violation of any rule, regulation,
treaty or statute promulgated by any Governmental Entity in effect prior to or
as of the date hereof to prohibit, regulate or control Hazardous Materials or
any Hazardous Material Activity.
(c) Permits. Miami Subs and its subsidiaries currently hold
all environmental approvals, permits, licenses, clearances and consents (the
"Miami Subs Environmental Permits") necessary for the conduct of Miami
Subs's and its subsidiaries' Hazardous Material Activities and other
businesses of Miami Subs and its subsidiaries as such activities and
businesses are currently being conducted, except where the failure to so hold
would not have a Material Adverse Effect on Miami Subs.
(d) Environmental Liabilities. No material action,
proceeding, revocation proceeding, amendment procedure, writ, injunction or
claim is pending or, to Miami Subs's knowledge, threatened concerning any
Miami Subs Environmental Permit, Hazardous Material or any Hazardous Materials
Activity of Miami Subs or any of its subsidiaries which would have a Material
Adverse Effect on Miami Subs. Miami Subs is not aware of any fact or
circumstance which could involve Miami Subs or any of its subsidiaries in any
environmental litigation or impose upon Miami Subs or any of its subsidiaries
any environmental liability that would have a Material Adverse Effect on Miami
Subs.
2.17. Labor Matters. To Miami Subs's knowledge, there are no
activities or proceedings of any labor union to organize any employees of
Miami Subs or any of its subsidiaries and there are no strikes, or material
slowdowns, work stoppages or lockouts, or threats thereof by or with respect
to any employees of Miami Subs or any of its subsidiaries. Miami Subs and its
subsidiaries are and have been in compliance with all applicable laws
regarding employment practices, terms and conditions of employment, and wages
and hours (including, without limitation, ERISA, WARN or any similar state or
local law), except for any noncompliance that would not have a Material
Adverse Effect on Miami Subs.
2.18. Agreements, Contracts and Commitments. Except as set forth
in the Miami Subs Schedules, neither Miami Subs nor any of its subsidiaries is
a party to or is bound by:
(a) any collective bargaining agreements;
(b) any bonus, deferred compensation, incentive compensation,
pension, profit-sharing or retirement plans, or any other employee benefit
plans or arrangements;
(c) any employment or consulting agreement, contract or
commitment with any officer or director level employee, not terminable by
Miami Subs or any of its subsidiaries on thirty days notice without liability,
except to the extent general principles of wrongful termination law may limit
Miami Subs's or any of its subsidiaries' ability to terminate employees at
will;
(d) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan, any
of the benefits of which will be increased, or the vesting of benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement;
(e) any agreement of indemnification or guaranty not entered
into in the ordinary course of business other than indemnification agreements
between Miami Subs or any of its subsidiaries and any of its present or former
officers or directors;
(f) any agreement, contract or commitment containing any
covenant limiting the freedom of Miami Subs or any of its subsidiaries to
engage in any line of business or compete with any person;
(g) any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of $100,000 and not
cancelable without penalty;
(h) any agreement, contract or commitment currently in force
relating to the disposition or acquisition of assets not in the ordinary
course of business or any ownership interest in any corporation, partnership,
joint venture or other business enterprise;
(i) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating to the
borrowing of money or extension of credit;
(j) any joint marketing or development agreement;
(k) any distribution agreement (identifying any that contain
exclusivity provisions); or
(l) any other agreement, contract or commitment (excluding real
and personal property leases) which involve payment by Miami Subs or any of
its subsidiaries under any such agreement, contract or commitment of $100,000
or more in the aggregate and is not cancelable without penalty within thirty
(30) days.
Neither Miami Subs nor any of its subsidiaries, nor to Miami Subs's
knowledge any other party to any Miami Subs Contract (as defined below), has
breached, violated or defaulted under, or received notice that it has breached
violated or defaulted under, any of the material terms or conditions of any of
the agreements, contracts or commitments to which Miami Subs is a party or by
which it is bound of the type described in clauses (a) through (l) above (any
such agreement, contract or commitment, a "Miami Subs Contract") in such a
manner as would permit any other party to cancel or terminate any such Miami
Subs Contract, or would permit any other party to seek damages, which
cancellation, termination or damages would have a Material Adverse Effect on
Miami Subs.
2.19. Change of Control Payments. There are no plans or agreements
pursuant to which any amounts may become payable (whether currently or in the
future) to current or former officers or directors of Miami Subs as a result
of or in connection with the Merger.
2.20. Statements; Proxy Statement/Prospectus. The information
supplied or to be supplied by Miami Subs in writing for inclusion or
incorporation by reference in the Registration Statement (as defined in
Section 2.5(b)) shall not at the time the Registration Statement is filed with
the SEC and at the time it or any amendment or supplement thereto becomes
effective under the Securities Act, 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 therein not misleading in light of
the circumstances under which they are made; and Nathan's shall have received
a certificate, signed on behalf of Miami Subs by the President and Chief
Financial Officer of Miami Subs, to the effect that nothing has come to their
attention after due inquiry to cause them to believe that such representation
and warranty is not true and correct. The information supplied or to be
supplied by Miami Subs in writing for inclusion or incorporation by reference
in the proxy statement/prospectus to be sent to the shareholders of Miami Subs
and stockholders of Nathan's in connection with the meeting of Miami Subs's
shareholders to consider the approval of the Merger (the "Miami Subs
Shareholders' Meeting") and in connection with the meeting of Nathan's
stockholders to consider the approval of the Merger (the "Nathan's
Stockholders' Meeting") (such proxy statement/prospectus as amended or
supplemented is referred to herein as the "Proxy Statement") shall not, on
the date the Proxy Statement is first mailed to Miami Subs's shareholders and
Nathan's stockholders, or any amendment or supplement thereto, at the time of
the Miami Subs Shareholders' Meeting or the Nathan's Stockholders' Meeting and
at the Effective Time, 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 therein, in light of the circumstances under which they
are made, not false or misleading; or omit to state any material fact
necessary to correct any statement in any earlier communication with respect
to the solicitation of proxies for the Miami Subs Shareholders' Meeting or the
Nathan's Stockholders' Meeting which has become false or misleading; and
Nathan's shall have received a certificate, signed on behalf of Miami Subs by
the President and Chief Financial Officer of Miami Subs, to the effect that
nothing has come to their attention after due inquiry to cause them to
believe that such representation and warranty is not true and correct. The
Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder. If
at any time prior to the Effective Time, any event relating to Miami Subs or
any of its affiliates (other than Nathan's and its affiliates), officers or
directors should be discovered by Miami Subs which should be set forth in an
amendment or supplement to the Registration Statement or a supplement to the
Proxy Statement, Miami Subs shall promptly inform Nathan's. Notwithstanding
the foregoing, Miami Subs makes no representation or warranty with respect to
any information supplied by Nathan's or Merger Sub which is contained in any
of the foregoing documents.
2.21. Board Approval. The Board of Directors of Miami Subs has, as
of the date of this Agreement, (i) adopted the Merger, and (ii) resolved to
recommend that the shareholders of Miami Subs approve the Merger.
2.22. Minute Books. The minute books of Miami Subs made available
to counsel for Nathan's are the only minute books of Miami Subs and contain a
reasonably accurate summary, in all material respects, of all meetings of
directors (or committees thereof) and stockholders or actions by written
consent since the time of incorporation of Miami Subs.
2.23. Political Contributions. Neither Miami Subs nor any of its
subsidiaries has, directly or indirectly, (i) made any unlawful contribution
to any candidate for political office, or failed to disclose fully any
contribution in violation of law; or (ii) made any payment to any federal,
state or foreign governmental official, or any other person charged with
similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States and applicable foreign
jurisdictions.
2.24. Disclosure. None of the representations and warranties by
Miami Subs in this Agreement and no statement on the part of Miami Subs in the
Miami Subs Schedules contains or will contain as to the applicable
representation and warranty any untrue statement of material fact or omits or
will omit to state any material fact necessary in order to make any of the
statements herein or therein, in light of the circumstances under which it was
made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NATHAN'S AND MERGER SUB
Nathan's and Merger Sub represent and warrant to Miami Subs, subject to
the exceptions specifically disclosed in writing in the disclosure letter
supplied by Nathan's to Miami Subs (the "Nathan's Schedules", which are
incorporated herein by reference and made a part hereof as if fully set forth
herein ), as follows:
3.1. Organization of Nathan's. Nathan's and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has the
requisite corporate power and authority to own, lease and operate its
properties and assets as and where the same are owned, operated or leased and
to carry on its business as now being conducted and as proposed to be
conducted, and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the failure to be so
qualified would have a Material Adverse Effect on Nathan's. Nathan's has
delivered to Miami Subs complete and correct copies of the Articles of
Incorporation and Bylaws of Nathan's, each as amended to and as in effect on
the date hereof .
3.2. Nathan's Capital Structure. The authorized capital stock of
Nathan's consists of 20,000,000 shares of Common Stock, par value $.01 per
share, of which there were 4,722,216 shares issued and outstanding as of
November 30, 1998. The authorized capital stock of Merger Sub consists of
1,000 shares of Common Stock, par value $.01 per share, 100 shares of which,
as of the date hereof, are issued and outstanding and are held by Nathan's.
All outstanding shares of the Common Stock of Nathan's are duly authorized,
validly issued, fully paid and non-assessable and are not subject to
preemptive rights created by statute, the Certificate of Incorporation or
Bylaws of Nathan's or any agreement or document to which Nathan's is a party
or by which it is bound. All of the shares of Nathan's Common Stock to be
issued in exchange for MSC Capital Stock at the Effective Time in accordance
with this Agreement will be, when so issued, duly authorized, validly issued,
fully paid and nonassessable and free of preemptive rights. All of the shares
of Nathan's Common Stock to be issued upon conversion of the Warrants to be
granted in exchange for the MSC Capital Stock at the Effective Time will be,
when so issued, duly authorized, validly issued, fully paid and nonassessable
and free of preemptive rights. As of November 30, 1998, Nathan's had reserved
an aggregate of 1,225,000 shares of Common Stock, net of exercises, for
issuance to employees, consultants and non-employee directors pursuant to
Nathan's 1992 Stock Option Plan, its Outside Director Stock Option Plan and
1998 Stock Option Plan (collectively, the "Nathan's Stock Option Plans"),
under which options are outstanding for an aggregate 707,667 shares. As of
November 30, 1998, Nathan's had reserved an aggregate of 350,000 shares of
Common Stock, net of exercises, for issuance upon the exercise of 350,000
outstanding common stock purchase warrants. All shares of the Common Stock of
Nathan's subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
would be duly authorized, validly issued, fully paid and nonassessable. The
Nathan's Schedules list each outstanding option and warrant to acquire shares
of Nathan's Common Stock at November 30, 1998, the name of the holder of such
option or warrant, the number of shares subject to such option or warrant, the
exercise price of such option or warrant, the number of shares as to which
such option or warrant will have vested at such date and whether the
exercisability of such option or warrant will be accelerated in any way by the
transactions contemplated by this Agreement or for any other reason, and
indicate the extent of acceleration, if any.
3.3. Subsidiaries.
(a) Except for the subsidiaries listed in the Nathan's Schedules
there are no entities 10% of more of whose outstanding voting securities or
other equity interest are owned, directly or indirectly through one or more
intermediaries, by Nathan's. Each subsidiary of Nathan's is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation (which jurisdiction is indicated in the
Nathan's Schedules and has all requisite corporate power and authority to own,
operate and lease its properties and assets as and where the same are owned,
operated or leased by such subsidiary and to conduct its business as it is now
being conducted. Each subsidiary is in good standing and duly qualified or
licensed as a foreign corporation to do business in each of the jurisdictions
in which the location of the property and assets owned, operated or leased by
such subsidiary or the nature of the business conducted by such subsidiary
makes such qualification or licensing necessary, except where the failure to
be so qualified or licensed would not have a Material Adverse Effect.
Nathan's has delivered to Miami Subs complete and correct copies of each of
its subsidiaries' certificate of incorporation and bylaws (or similar
organizational document), in each case as amended to and as in effect on the
date hereof.
(b) The Nathan's Schedules set forth the authorized capital
stock of each subsidiary of Nathan's, the number of outstanding shares of each
class of such capital stock and Nathan's (or in the case of subsidiaries
indirectly owned by Nathan's, a specified subsidiary's) ownership of each such
class. Nathan's or such subsidiary has good and valid title to all such
shares free and clear of all Encumbrances. All of the outstanding shares of
capital stock of each subsidiary of Nathan's are validly issued, fully paid
and nonassessable, and there are no preemptive or similar rights in respect of
any shares of capital stock of any subsidiary. All of the outstanding shares
of each subsidiary of Nathan's were issued in compliance with all requirements
of all applicable federal and state securities laws. Except as set forth in
the Nathan's Schedules, neither Nathan's nor any subsidiary owns any capital
stock of or other equity interest of any kind or nature in any person.
3.4. Obligations With Respect to Capital Stock. Except as set
forth in Section 3.2, there are no equity securities of any class of Nathan's,
or any securities exchangeable or convertible into or exercisable for such
equity securities, issued, reserved for issuance or outstanding. Except for
securities Nathan's owns, directly or indirectly through one or more
subsidiaries, there are no equity securities of any class of any subsidiary of
Nathan's, or any security exchangeable or convertible into or exercisable for
such equity securities, issued, reserved for issuance or outstanding. Except
as set forth in Section 3.2 and as contemplated by this Agreement, there are
no options, warrants, equity securities, calls, rights (including preemptive
rights), commitments or agreements of any character to which Nathan's or any
of its subsidiaries is a party or by which it is bound obligating Nathan's or
any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, or repurchase, redeem or otherwise acquire, or cause the
repurchase, redemption or acquisition, of any shares of capital stock of
Nathan's or any of its subsidiaries or obligating Nathan's or any of its
subsidiaries to grant, extend, accelerate the vesting of or enter into any
such option, warrant, equity security, call, right, commitment or agreement.
There are no registration rights and, to the knowledge of Nathan's there are
no voting trusts, proxies or other agreements or understandings with respect
to any equity security of any class of Nathan's or with respect to any equity
security of any class of any of its subsidiaries.
3.5. Authority; Enforceability; Non Contravention; Consents.
(a) Each of Nathan's and Merger Sub has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby, subject to the approval of this Agreement by
the stockholders of Nathan's. Subject to such approval, the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Nathan's and this Agreement has been duly executed and
delivered by each of Nathan's and Merger Sub and, assuming the due
authorization, execution and delivery of this Agreement by Miami Subs, this
Agreement constitutes the valid and binding obligations of each of Nathan's
and Merger Sub, enforceable against each of them in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting or relating to the enforcement of creditors'
rights generally and subject to general principles of equity. A vote of the
holders of at least a majority of the outstanding shares of Nathan's Common
Stock is required for Nathan's stockholders to approve the Merger. Neither
the execution, delivery and performance of this Agreement by each of Nathan's
and Merger Sub nor consummation by each of Nathan's and Merger Sub of the
transactions contemplated hereby will (i) conflict with or violate the
Certificate of Incorporation or Bylaws of Nathan's or the Articles of
Incorporation or Bylaws of Merger Sub or the equivalent organizational
documents of any of its other subsidiaries, (ii) subject to obtaining the
approval of the Merger by Nathan's stockholders as contemplated in Section 5.2
and compliance with the requirements set forth in Section 3.5(b) below,
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to Nathan's or any of its subsidiaries (including Merger Sub) or by
which its or any of their respective properties is bound or affected, or (iii)
result in any breach of or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or impair Nathan's
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or encumbrance on any of the properties or
assets of Nathan's or any of its subsidiaries (including Merger Sub) pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Nathan's or any
of its subsidiaries (including Merger Sub) is a party or by which Nathan's or
any of its subsidiaries (including Merger Sub) or its or any of their
respective properties are bound or affected, except, with respect to clauses
(ii) and (iii), for any such conflicts, violations, defaults or other
occurrences that would not have a Material Adverse Effect on Nathan's. The
Nathan's Schedules list all material consents, waivers and approvals under any
of Nathan's or any of its subsidiaries' agreements, contracts, licenses or
leases required to be obtained in connection with the consummation of the
transactions contemplated hereby.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is required
by or with respect to Nathan's or Merger Sub in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the Registration Statement
with the SEC in accordance with the Securities Act, (ii) the filing of the
Articles of Merger with the Department of State of the State of Florida, (iii)
the filing of the Proxy Statement with the SEC in accordance with the Exchange
Act, (iv) the filing of a Current Report on Form 8-K with the SEC, (v) the
listing of the Nathan's Common Stock and Warrants (including the shares of
Nathan's Common Stock underlying the Warrants and Miami Subs Stock Options) on
the Nasdaq National Market System, (vi) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under applicable federal and state laws and the laws of any foreign country
and (vii) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not have a Material
Adverse Effect on Nathan's or have a material adverse effect on the ability of
Nathan's to consummate the Merger.
3.6. SEC Filings; Nathan's Financial Statements.
(a) Nathan's has filed all forms, reports and documents required
to be filed with the SEC since November 1996, and has made available to Miami
Subs such forms, reports and documents in the form filed with the SEC. All
such required forms, reports and documents (including those that Nathan's may
file subsequent to the date hereof) are referred to herein as the "Nathan's
SEC Reports." As of their respective dates, the Nathan's SEC Reports (i)
were prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Nathan's SEC Reports, and (ii) did not at the
time they were filed (or if amended or superseded by a filing on or prior to
the date of this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
None of Nathan's subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in Nathan's SEC Reports (the
"Nathan's Financials"), including any Nathan's SEC Reports filed after the
date hereof until the Closing Date, (x) complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, (y) was prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as specified therein or as may be indicated in the notes
thereto or, in the case of unaudited interim financial statements, as may be
permitted by the SEC on Form 10-Q under the Exchange Act) and (z) fairly
presented in all material respects the consolidated financial position of
Nathan's and its subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year end adjustments which were not or are
not expected to be, material in amount. The balance sheet of Nathan's
contained in Nathan's SEC Reports as of September 27, 1998 is hereinafter
referred to as the "Nathan's Balance Sheet." Except as disclosed in the
Nathan's Financials, neither Nathan's nor any of its subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise) of a nature required
to be disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP which are, individually
or in the aggregate, material to the business, results of operations or
financial condition of Nathan's and its subsidiaries taken as a whole, except
liabilities (i) provided for in the Nathan's Balance Sheet, or (ii) incurred
since the date of the Nathan's Balance Sheet in the ordinary course of
business consistent with past practices.
(c) Nathan's has heretofore furnished to Miami Subs a complete
and correct copy of any amendments or modifications, which have not yet been
filed with the SEC but which are required to be filed, to agreements,
documents or other instruments which previously had been filed by Nathan's
with the SEC pursuant to the Securities Act or the Exchange Act.
3.7. Absence of Certain Changes or Events. Since the date of the
Nathan's Balance Sheet through the date of this Agreement, there has not been:
(i) any Material Adverse Effect on Nathan's, (ii) any material change by
Nathan's in its accounting methods, principles or practices, except as
required by concurrent changes in GAAP or rules and regulations of the SEC, or
(iii) any revaluation by Nathan's of any of its assets having a Material
Adverse Effect on Nathan's, including, without limitation, writing down the
value of capitalized software or inventory or writing off notes or accounts
receivable other than in the ordinary course of business.
3.8. Taxes. Nathan's and each of its subsidiaries has filed all
tax returns required to be filed by any of them and has paid (or Nathan's has
paid on its behalf), or has set up an adequate reserve for the payment of, all
material Taxes required to be paid as shown on such returns and the most
recent financial statements contained in the Nathan's SEC Reports reflect an
adequate reserve for all material Taxes payable by Nathan's and its
subsidiaries accrued through the date of such financial statements. Except as
reasonably would not be expected to have a Material Adverse Effect on
Nathan's, no deficiencies for any Taxes have been proposed, asserted or
assessed against Nathan's or any of its subsidiaries.
3.9. Intellectual Property.
(a) Nathan's and its subsidiaries own, or have the right to use,
sell or license all patents, trademarks, trade names, service marks,
copyrights, technology, know-how, trade secrets, computer software programs or
applications and tangible proprietary information and other intellectual
property necessary or required for the conduct of their respective businesses
as presently conducted (such intellectual property and the rights thereto are
collectively referred to herein as the "Nathan's IP Rights"), except for any
failure to own or have the right to use, sell or license that would not have a
Material Adverse Effect on Nathan's.
(b) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not
constitute a breach of any instrument or agreement governing any Nathan's IP
Rights (the "Nathan's IP Rights Agreements"), will not cause the forfeiture
or termination or give rise to a right of forfeiture or termination of any
Nathan's IP Rights or impair the right of Nathan's and its subsidiaries to
use, sell or license any Nathan's IP Rights or portion thereof, except for the
occurrence of any such breach, forfeiture, termination or impairment that
would not individually or in the aggregate, result in a Material Adverse
Effect on Nathan's.
(c) (i) neither the manufacture, marketing, license, sale or
intended use of any product currently licensed or sold or under development by
Nathan's or any of its subsidiaries violates any license or agreement between
Nathan's or any of its subsidiaries and any third party or infringes any
intellectual property right of any other party; and (ii) there is no pending
or, to the knowledge of Nathan's, threatened claim, arbitration or litigation
contesting the validity, ownership or right to use, sell, license or dispose
of any Nathan's IP Rights, nor has Nathan's received any written notice
asserting that any Nathan's IP Rights or the proposed use, sale, license or
disposition thereof conflicts or will conflict with the rights of any other
party, except, with respect to clauses (i) and (ii), for any violations,
infringements, claims or litigation that would not have a Material Adverse
Effect on Nathan's.
(d) Nathan's has taken reasonable and practicable steps designed
to safeguard and maintain the secrecy and confidentiality of, and its
proprietary rights in, all Nathan's IP Rights.
3.10. Compliance; Permits; Restrictions.
(a) Neither Nathan's nor any of its subsidiaries is in conflict
with, or in default or violation of, (i) any law, rule, regulation, order,
judgment or decree applicable to Nathan's or any of its subsidiaries or by
which its or any of their respective properties is bound or affected, or (ii)
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Nathan's or any
of its subsidiaries is a party or by which Nathan's or any of its subsidiaries
or its or any of their respective properties is bound or affected, except,
with respect to clauses (i) and (ii), for any conflicts, defaults or
violations which would not have a Material Adverse Effect on Nathan's. To the
knowledge of Nathan's, no investigation or review by any Governmental Entity
is pending or threatened against Nathan's or its subsidiaries, nor has any
Governmental Entity indicated an intention to conduct the same, other than, in
each such case, those the outcome of which would not have a Material Adverse
Effect on Nathan's.
(b) Nathan's and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from Governmental Entities which
are material to the operation of the business of Nathan's and its subsidiaries
taken as a whole (collectively, the "Nathan's Permits"). Nathan's and its
subsidiaries are in compliance with the terms of Nathan's Permits, except
where the failure to so comply would not have a Material Adverse Effect on
Nathan's.
3.11. Litigation. As of the date of this Agreement, there is no
action, suit, proceeding, claim, arbitration or, to Nathan's knowledge, any
investigation pending, or as to which Nathan's or any of its subsidiaries has
received any notice of assertion nor, to Nathan's knowledge, is there a
threatened action, suit, proceeding, claim, arbitration or investigation
against Nathan's or any of its subsidiaries which would have a Material
Adverse Effect on Nathan's, or which in any manner challenges or seeks to
prevent, enjoin, alter or delay any of the transactions contemplated by this
Agreement.
3.12. Brokers' and Finders' Fees. Nathan's has not incurred, nor
will it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
3.13. Employee Benefit Plans. Nathan's has no employee benefit
plan, program, arrangement or contract (including, without limitation, any
"employee benefit plan" as defined in Section 3(3) of ERISA) maintained or
contributed to by Nathan's or any trade or business which is under common
control with Nathan's within the meaning of Section 414 of the Code.
3.14. Absence of Liens and Encumbrances. Nathan's and each of its
subsidiaries has good and valid title to, or, in the case of leased properties
and assets, valid leasehold interests in, all of its material tangible
properties and assets, real, personal and mixed, used in its business, free
and clear of any Encumbrances except as reflected in the Nathan's Financials
and except for liens for taxes not yet due and payable and such imperfections
of title and Encumbrances, if any, which would not have a Material Adverse
Effect on Nathan's.
3.15. Environmental Matters.
(a) Hazardous Material. Except as would not have a Material
Adverse Effect on Nathan's, no underground storage tanks and no Hazardous
Materials (but excluding office and janitorial supplies) are present as a
result of the deliberate actions of Nathan's or any of its subsidiaries, or,
to Nathan's knowledge, as a result of any actions of any third party or
otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water thereof, that Nathan's or any of
its subsidiaries has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as would not have
a Material Adverse Effect on Nathan's, neither Nathan's nor any of its
subsidiaries has transported, stored, used, manufactured, disposed of,
released or exposed its employees or others to Hazardous Materials in
violation of any law in effect on or before the Closing Date, nor has Nathan's
or any of its subsidiaries engaged in any Hazardous Materials Activities in
violation of any rule, regulation, treaty or statute promulgated by any
Governmental Entity in effect prior to or as of the date hereof to prohibit,
regulate or control Hazardous Materials or any Hazardous Material Activity.
(c) Permits. Nathan's and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the
"Nathan's Environmental Permits") necessary for the conduct of Nathan's and
its subsidiaries' Hazardous Material Activities and other businesses of
Nathan's and its subsidiaries as such activities and businesses are currently
being conducted, except where the failure to so hold would not have a Material
Adverse Effect on Nathan's.
(d) Environmental Liabilities. No material action,
proceeding, revocation proceeding, amendment procedure, writ, injunction or
claim is pending, or to Nathan's knowledge, threatened concerning any Nathan's
Environmental Permit, Hazardous Material or any Hazardous Materials Activity
of Nathan's or any of its subsidiaries which would have a Material Adverse
Effect on Nathan's. Nathan's is not aware of any fact or circumstance which
could involve Nathan's or any of its subsidiaries in any environmental
litigation or impose upon Nathan's or any of its subsidiaries any
environmental liability that would have a Material Adverse Effect on Nathan's.
3.16. Labor Matters. To Nathan's knowledge, there are no
activities or proceedings of any labor union to organize any employees of
Nathan's or any of its subsidiaries and there are no strikes, or material
slowdowns, work stoppages or lockouts, or threats thereof by or with respect
to any employees of Nathan's or any of its subsidiaries. Nathan's and its
subsidiaries are and have been in compliance with all applicable laws
regarding employment practices, terms and conditions of employment, and wages
and hours (including, without limitation, ERISA, WARN or any similar state or
local law), except for any noncompliance that would not have a Material
Adverse Effect on Nathan's.
3.17. Agreements, Contracts and Commitments. Except as set forth
in the Nathan's Schedules, neither Nathan's nor any of its subsidiaries is a
party to or is bound by:
(a) any collective bargaining agreements;
(b) any bonus, deferred compensation, incentive compensation,
pension, profit-sharing or retirement plans, or any other employee benefit
plans or arrangements;
(c) any employment or consulting agreement, contract or
commitment with any officer or director level employee, not terminable by
Nathan's or any of its subsidiaries on thirty days notice without liability,
except to the extent general principles of wrongful termination law may limit
Nathan's or any of its subsidiaries' ability to terminate employees at will;
(d) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan, any
of the benefits of which will be increased, or the vesting of benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement;
(e) any agreement of indemnification or guaranty not entered
into in the ordinary course of business other than indemnification agreements
between Nathan's or any of its subsidiaries and any of its officers or
directors;
(f) any agreement, contract or commitment containing any
covenant limiting the freedom of Nathan's or any of its subsidiaries to engage
in any line of business or compete with any person;
(g) any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of $100,000 and not
cancelable without penalty;
(h) any agreement, contract or commitment currently in force
relating to the disposition or acquisition of assets not in the ordinary
course of business or any ownership interest in any corporation, partnership,
joint venture or other business enterprise;
(i) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating to the
borrowing of money or extension of credit;
(j) any joint marketing or development agreement;
(k) any distribution agreement (identifying any that contain
exclusivity provisions); or
(l) any other agreement, contract or commitment (excluding real
and personal property leases) which involves payment by Nathan's or any of its
subsidiaries under any such agreement, contract or commitment of $100,000 or
more in the aggregate and is not cancelable without penalty within thirty (30)
days.
Neither Nathan's nor any of its subsidiaries, nor to Nathan's knowledge
any other party to any Nathan's Contract (as defined below), has breached,
violated or defaulted under, or received notice that it has breached violated
or defaulted under, any of the material terms or conditions of any of the
agreements, contracts or commitments to which Nathan's is a party or by which
it is bound of the type described in clauses (a) through (l) above (any such
agreement, contract or commitment, a "Nathan's Contract") in such a manner
as would permit any other party to cancel or terminate any such Nathan's
Contract, or would permit any other party to seek damages, which would have a
Material Adverse Effect on Nathan's.
3.18. Change of Control Payments. There are no plans or agreements
pursuant to which any material amounts may become payable (whether currently
or in the future) to current or former officers or directors of Nathan's as a
result of or in connection with the Merger.
3.19. Statements; Proxy Statement/Prospectus. The information
supplied or to be supplied by Nathan's in writing for inclusion or
incorporation by reference in the Registration Statement (as defined in
Section 2.5(b)) shall not at the time the Registration Statement is filed with
the SEC and at the time it or any amendment or supplement thereto becomes
effective under the Securities Act, 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 therein not misleading in light of
the circumstances under which they are made; and Miami Subs shall have
received a certificate, signed on behalf of Nathan's by the President and
Chief Financial Officer of Nathan's, to the effect that nothing has come to
their attention after due inquiry to cause them to believe that such
representation and warranty is not true and correct. The information supplied
or to be supplied by Nathan's in writing for inclusion or incorporation by
reference in the Proxy Statement to be sent to the stockholders of Nathan's
and the shareholders of Miami Subs in connection with the Nathan's
Stockholders' Meeting and Miami Subs Shareholders' Meeting shall not, on the
date the Proxy Statement is first mailed to Nathan's stockholders and Miami
Subs's shareholders, or any amendment or supplement thereto, at the time of
the Miami Subs Shareholders' Meeting or the Nathan's Stockholders' Meeting and
at the Effective Time, 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 therein, in light of the circumstances under which they
are made, not false or misleading; or omit to state any material fact
necessary to correct any statement in any earlier communication with respect
to the solicitation of proxies for the Nathan's Stockholders' Meeting or the
Miami Subs Shareholders' Meeting which has become false or misleading; and
Miami Subs shall have received a certificate, signed on behalf of Nathan's by
the President and Chief Financial Officer of Nathan's, to the effect that
nothing has come to their attention after due inquiry to cause them to
believe that such representation and warranty is not true and correct. The
Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder. If
at any time prior to the Effective Time, any event relating to Nathan's or any
of its affiliates (other than Miami Subs), officers or directors should be
discovered by Nathan's which should be set forth in an amendment or supplement
to the Registration Statement or a supplement to the Proxy Statement, Nathan's
shall promptly inform Miami Subs. Notwithstanding the foregoing, Nathan's
makes no representation or warranty with respect to any information supplied
by Miami Subs which is contained in any of the foregoing documents.
3.20. Board Approval. The Board of Directors of Nathan's has, as
of the date of this Agreement, (i) adopted the Merger, and (ii) resolved to
recommend that the stockholders of Nathan's approve the Merger.
3.21. Minute Books. The minute books of Nathan's made available to
counsel for Miami Subs are the only minute books of Nathan's and contain a
reasonably accurate summary, in all material respects, of all meetings of
directors (or committees thereof) and stockholders or actions by written
consent since the time of incorporation of Nathan's.
3.22. Political Contributions. Neither Nathan's nor any of its
subsidiaries has, directly or indirectly, (i) made any unlawful contribution
to any candidate for political office, or failed to disclose fully any
contribution in violation of law; or (ii) made any payment to any federal,
state or foreign governmental official, or any other person charged with
similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States and applicable foreign
jurisdictions.
3.23. Disclosure. None of the representations and warranties by
Nathan's or Merger Sub in this Agreement and no statement on the part of
Nathan's or Merger Sub in the Nathan's Schedules contains or will contain as
to the applicable representation and warranty any untrue statement of material
fact or omits or will omit to state any material fact necessary in order to
make any of the statements herein or therein, in light of the circumstances
under which it was made, not misleading.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1. Conduct of Business. During the period from the date of this
Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Miami Subs (which for
the purposes of this Article 4 shall include Miami Subs and each of its
subsidiaries) and Nathan's (which for the purposes of this Article 4 shall
include Nathan's and each of its subsidiaries) agree, except to the extent
that the other party shall otherwise consent in writing, to carry on its
business diligently and in accordance with good commercial practice and to
carry on its business in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted, to pay its debts and
taxes when due subject to good faith disputes over such debts or taxes, to pay
or perform other material obligations when due, and use its commercially
reasonable efforts consistent with past practices and policies to preserve
intact its present business organization, keep available the services of its
present officers and employees and preserve its relationships with customers,
suppliers, distributors, licensors, licensees, and others with which it has
business dealings. In furtherance of the foregoing and subject to applicable
law, Miami Subs and Nathan's agree to confer, as promptly as practicable,
prior to taking any material actions or making any material management
decisions with respect to the conduct of business. In addition, except in the
case of Miami Subs as provided in Article 4 of the Miami Subs Schedules and in
the case of Nathan's as provided in Article 4 of the Nathan's Schedules,
without the prior written consent of the other, neither Miami Subs nor
Nathan's shall do any of the following, and neither Miami Subs nor Nathan's
shall permit its subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of options or restricted stock, or reprice
options granted under any employee, consultant or director stock plans or
authorize cash payments in exchange for any options granted under any of such
plans;
(b) Enter into any material partnership arrangements, joint
development agreements or strategic alliances;
(c) Grant any severance or termination pay to any officer or
employee except payments in amounts consistent with policies and past
practices or pursuant to written agreements outstanding, or policies existing,
on the date hereof and as previously disclosed in writing to the other, or
adopt any new severance plan;
(d) Transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to the Miami Subs
IP Rights or the Nathan's IP Rights, as the case may be, other than in the
ordinary course of business;
(e) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any capital
stock or split, combine or reclassify any capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for any capital stock;
(f) Repurchase or otherwise acquire, directly or indirectly, any
shares of capital stock except pursuant to rights of repurchase of any such
shares under any employee, consultant or director stock plan;
(g) Issue, deliver, sell, authorize or propose the issuance,
delivery or sale of, any shares of capital stock or any securities convertible
into shares of capital stock, or subscriptions, rights, warrants or options to
acquire and shares of capital stock or any securities convertible into shares
of capital stock, or enter into other agreements or commitments of any
character obligating it to issue any such shares or convertible securities,
other than (i) the issuance of shares of Nathan's Common Stock or MSC Capital
Stock, as the case may be, pursuant to the exercise of stock options or
warrants therefor outstanding as of the date of this Agreement, (ii) options
to purchase shares of MSC Capital Stock or Nathan's Common Stock, as the case
may be, to be granted at fair market value in the ordinary course of business,
consistent with past practice and in accordance with existing stock option
plans, (iii) shares of MSC Capital Stock or Nathan's Common Stock, as the case
may be, issuable upon the exercise of the options referred to in clause (ii),
and (iv) shares of Nathan's Common Stock and Warrants pursuant to the terms
hereof;
(h) Cause, permit or propose any amendments to any charter
document or Bylaw (or similar governing instruments of any subsidiaries),
except to increase the size of the Board of Directors of Nathan's to seven
directors;
(i) Except as set forth on the Miami Subs Schedules or the
Nathan's Schedules, as the case may be, acquire or agree to acquire by merging
or consolidating with, or by purchasing any equity interest in or a material
portion of the assets of, or by any other manner, any business or any
corporation, partnership interest, association or other business organization
or division thereof, or otherwise acquire or agree to acquire any assets which
are material, individually or in the aggregate, to the business of Miami Subs
or Nathan's, as the case may be, or enter into any joint ventures, strategic
partnerships or alliances, other than in the ordinary course of business
consistent with past practice; provided that Nathan's may enter into such a
transaction if (i) Nathan's is a surviving entity in such a transaction or
(ii) if Nathan's is not the surviving entity, such surviving entity
specifically assumes the obligations of Nathan's hereunder;
(j) Sell, lease, license, Encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of Miami Subs or Nathan's, as the case may be;
(k) Incur any indebtedness for borrowed money (other than
ordinary course trade payables or pursuant to existing credit facilities in
the ordinary course of business) or guarantee any such indebtedness or issue
or sell any debt securities or warrants or rights to acquire debt securities
of Miami Subs or Nathan's, as the case may be, or guarantee any debt
securities of others (other than by Miami Subs on behalf of its franchisees in
connection with the Arthur Treacher's/Miami Subs Development Project);
(l) Adopt or amend any employee benefit or stock purchase or
option plan, or enter into any employment contract, pay any special bonus or
special remuneration to any director or employee, or increase the salaries or
wage rates of its officers or employees other than in the ordinary course of
business, consistent with past practice;
(m) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business;
(n) Make any grant of exclusive rights to any third party; or
(o) Agree in writing or otherwise to take any of the actions
described in Article 4 (a) through (n) above.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1. Proxy Statement/Prospectus; Registration Statement; Other
Filings. As promptly as practicable after the execution of this Agreement,
Miami Subs and Nathan's will prepare and file with the SEC the Proxy Statement
and Nathan's will prepare and file with the SEC the Registration Statement in
which the Proxy Statement will be included as a prospectus. Each of Miami
Subs and Nathan's will respond to any comments of the SEC, will use its best
efforts to have the Registration Statement declared effective under the
Securities Act as promptly as practicable after such filing and will cause the
Proxy Statement to be mailed to its shareholders and stockholders,
respectively at the earliest practicable time. As promptly as practicable
after the date of this Agreement, Miami Subs and Nathan's will prepare and
file any other filings required under the Exchange Act, the Securities Act or
any other Federal, foreign or state securities or blue sky laws relating to
the Merger and the transactions contemplated by this Agreement (the "Other
Filings"). Each party will notify the other party promptly upon the receipt
of any comments from the SEC or its staff and of any request by the SEC or its
staff or any other government officials for amendments or supplements to the
Registration Statement, the Proxy Statement or any Other Filing or for
additional information and will supply the other party with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the
other hand, with respect to the Registration Statement, the Proxy Statement,
the Merger or any Other Filing. The Proxy Statement, the Registration
Statement and the Other Filings will comply in all material respects with all
applicable requirements of law and the rules and regulations promulgated
thereunder. Whenever any event occurs which is required to be set forth in an
amendment or supplement to the Proxy Statement, the Registration Statement or
any Other Filing, Miami Subs or Nathan's, as the case may be, will promptly
inform the other party of such occurrence and cooperate in filing with the SEC
or its staff or any other government officials, and/or mailing to shareholders
of Miami Subs and stockholders of Nathan's, such amendment or supplement. The
Proxy Statement will also include the recommendations of (i) the Board of
Directors of Miami Subs in favor of approval of the Merger (except to the
extent permitted by Section 5.4) and (ii) the Board of Directors of Nathan's
in favor of the approval of this Agreement (except that the respective Board
of Directors of Nathan's and Miami Subs may withdraw, modify or refrain from
making such recommendations to the extent that the respective Board determines
in good faith after consultation with outside legal counsel that such Board's
fiduciary duties under applicable law require it to do so).
5.2. Meetings of Stockholders. Promptly after the date hereof,
Miami Subs will take all action necessary in accordance with the FBCA and its
Articles of Incorporation and Bylaws to convene the Miami Subs Shareholders'
Meeting to be held as promptly as practicable, and in any event within 45 days
after the declaration of effectiveness of the Registration Statement, for the
purpose of voting upon the Merger. Miami Subs will consult with Nathan's and
use its commercially reasonable efforts to hold the Miami Subs Shareholders'
Meeting no more than one business day prior to the Nathan's Stockholders'
Meeting. Promptly after the date hereof, Nathan's will take all action
necessary in accordance with Delaware Law and its Certificate of Incorporation
and Bylaws to convene the Nathan's Stockholders' Meeting to be held as
promptly as practicable, and in any event within 45 days after the declaration
of effectiveness of the Registration Statement, for the purpose of voting upon
the Merger. Nathan's will consult with Miami Subs and will use its
commercially reasonable efforts to hold the Nathan's Stockholders' Meeting no
more than one business day following the date on which the Miami Subs
Shareholders' Meeting is convened. Nathan's and Miami Subs will each use its
commercially reasonable efforts to solicit from its stockholders and
shareholders, respectively, proxies in favor of such approvals and will take
all other action necessary or advisable to secure the vote or consent of their
stockholders and shareholders, respectively, required by Delaware Law and the
FBCA, respectively, to obtain such approvals (except to the extent permitted
by Section 5.4).
5.3. Access to Information; Confidentiality. Each party will
afford the other party and its accountants, counsel and other representatives
reasonable access during normal business hours to the properties, books,
records and personnel of the other party (and its subsidiaries) during the
period prior to the Effective Time to obtain all information concerning the
business, including the status of product development efforts, properties,
results of operations and personnel of such party (and its subsidiaries), as
the other party may reasonably request. No information or knowledge obtained
in any investigation pursuant to this Section 5.3 will affect or be deemed to
modify any representation or warranty contained herein or the conditions to
the obligations of the parties to consummate the Merger.
5.4. No Solicitation by Miami Subs.
(a) From and after the date of this Agreement until the earlier
of the Effective Time or termination of this Agreement pursuant to its terms,
Miami Subs and its subsidiaries will not, and will instruct their respective
directors, officers, employees, representatives, investment bankers, agents
and affiliates not to, directly or indirectly, (i) solicit or knowingly
encourage submission of, any proposals or offers by any person, entity or
group (other than Nathan's and its affiliates, agents and representatives), or
(ii) participate in any discussions or negotiations with, or disclose any
non-public information concerning Miami Subs or any of its subsidiaries to, or
afford any access to the properties, books or records of Miami Subs or any of
its subsidiaries to, or otherwise assist or facilitate, or enter into any
agreement or understanding with, any person, entity or group (other than
Nathan's and its affiliates, agents and representatives), in connection with
any Acquisition Proposal with respect to Miami Subs. For the purposes of this
Agreement, an "Acquisition Proposal" with respect to an entity means any
proposal or offer relating to (i) any merger, consolidation, sale of
substantial assets or similar transactions involving the entity or any
subsidiaries of the entity (other than sales of assets or inventory in the
ordinary course of business or permitted under the terms of this Agreement),
(ii) sale of 5% or more of the outstanding shares of capital stock of the
entity (including without limitation by way of a tender offer or an exchange
offer), (iii) the acquisition by any person of beneficial ownership or a right
to acquire beneficial ownership of, or the formation of any "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) which beneficially owns, or has the right to acquire beneficial
ownership of, 5% or more of the then outstanding shares of capital stock of
the entity (except for acquisitions for passive investment purposes only in
circumstances where the person or group qualifies for and files a Schedule 13G
with respect thereto); or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing. Miami Subs will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. Miami Subs will (i) notify Nathan's as promptly as
practicable if any inquiry or proposal is made or any information or access is
requested in writing in connection with an Acquisition Proposal or potential
Acquisition Proposal and (ii) as promptly as practicable notify Nathan's of
the significant terms and conditions of any such Acquisition Proposal. In
addition, subject to the provisions of Section 5.4(b), from and after the date
of this Agreement until the earlier of the Effective Time and termination of
this Agreement pursuant to its terms, Miami Subs and its subsidiaries will
not, and will instruct their respective directors, officers, employees,
representatives, investment bankers, agents and affiliates not to, directly or
indirectly, make or authorize any public statement, recommendation or
solicitation in support of any Acquisition Proposal made by any person, entity
or group (other than Nathan's); provided, however, that nothing herein
shall prohibit Miami Subs's Board of Directors from taking and disclosing to
Miami Subs's shareholders a position with respect to a tender offer pursuant
to Rules 14d-9 and 14e-2 promulgated under the Exchange Act.
(b) Notwithstanding the provisions of paragraph (a)(i) above,
prior to the approval of this Agreement by the shareholders of Miami Subs at
the Miami Subs Shareholders' Meeting, Miami Subs may, to the extent the Board
of Directors of Miami Subs determines, in good faith, after consultation with
outside legal counsel, that the Board's fiduciary duties under applicable law
require it to do so, participate in discussions or negotiations with, and,
subject to the requirements of paragraph (c), below, furnish information to
any person, entity or group after such person, entity or group has delivered
to Miami Subs in writing, an unsolicited bona fide Acquisition Proposal which
the Board of Directors of Miami Subs in its good faith reasonable judgment
determines, after consultation with its independent financial advisors, would
result in a transaction more favorable to the shareholders of Miami Subs from
a financial point of view than the Merger and for which financing, to the
extent required, is then committed or which, in the good faith reasonable
judgment of the Board of Directors of Miami Subs (based upon the advice of
independent financial advisors), is reasonably capable of being financed by
such person, entity or group and which is likely to be consummated (a "Miami
Subs Superior Proposal"). In addition, notwithstanding the provisions of
paragraph (a)(i) above, in connection with a possible Acquisition Proposal,
Miami Subs may refer any third party to this Section 5.4(b) or make a copy of
this Section 5.4(b) available to a third party. In the event Miami Subs
receives a Miami Subs Superior Proposal, nothing contained in this Agreement
(but subject to the terms hereof) will prevent the Board of Directors of Miami
Subs from approving such Miami Subs Superior Proposal or recommending such
Miami Subs Superior Proposal to Miami Subs's shareholders, if the Board
determines that such action is required by its fiduciary duties under
applicable law; in such case, the Board of Directors of Miami Subs may
withdraw, modify or refrain from making its recommendation concerning the
approval of the Merger; provided, however, that Miami Subs shall not
accept or recommend to its shareholders, or enter into any agreement
concerning, a Miami Subs Superior Proposal for a period of not less than 48
hours after Nathan's receipt of a copy of such Miami Subs Superior Proposal
(or a description of the significant terms and conditions thereof, if not in
writing) unless the Board of Directors of Miami Subs determines in good faith
after consultation with outside legal counsel that the Board's fiduciary
duties under applicable law require it to do so sooner.
(c) Notwithstanding anything to the contrary in paragraph (b),
Miami Subs will not provide any non-public information to a third party
unless: (x) Miami Subs provides such non-public information pursuant to a
nondisclosure agreement with terms regarding the protection of confidential
information; and (y) such non-public information is the same information
previously delivered to Nathan's.
5.5. Public Disclosure. Nathan's and Miami Subs will consult with
each other before issuing any press release or otherwise making any public
statement with respect to the Merger, this Agreement or an Acquisition
Proposal and will not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or any
listing agreement with a national securities exchange, the Nasdaq or
automated quotation system.
5.6. Legal Requirements. Each of Nathan's, Merger Sub and Miami
Subs will take all reasonable actions necessary or desirable to comply
promptly with all legal requirements which may be imposed on them with respect
to the consummation of the transactions contemplated by this Agreement
(including furnishing all information required in connection with approvals of
or filings with any Governmental Entity, and prompt resolution of any
litigation prompted hereby in a manner mutually acceptable to the parties
hereto) and will promptly cooperate with and furnish information to any party
hereto necessary in connection with any such requirements imposed upon any of
them or their respective subsidiaries in connection with the consummation of
the transactions contemplated by this Agreement. Nathan's will use its
commercially reasonable efforts to take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of Nathan's Common Stock and Warrants (including
the shares of Nathan's Common Stock underlying such Warrants) pursuant hereto.
Miami Subs will use its commercially reasonable efforts to assist Nathan's as
may be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable in connection with the issuance of Nathan's
Common Stock and Warrants (including the shares of Nathan's Common Stock
underlying such Warrants) pursuant hereto .
5.7. Third Party Consents. As soon as practicable following the
date hereof, Nathan's and Miami Subs will each use its commercially reasonable
efforts to obtain all material consents, waivers and approvals under any of
its or its subsidiaries' agreements, contracts, licenses or leases required to
be obtained in connection with the consummation of the transactions
contemplated hereby.
5.8. FIRPTA. At or prior to the Closing, Miami Subs, if requested
by Nathan's, shall deliver to the IRS a notice that the MSC Capital Stock is
not a "U.S. Real Property Interest" as defined and in accordance with the
requirements of Treasury Regulation Section 1.897-2(h)(2).
5.9. Notification of Certain Matters. Nathan's and Merger Sub will
give prompt notice to Miami Subs, and Miami Subs will give prompt notice to
Nathan's, of the occurrence, or failure to occur, of any event, which
occurrence or failure to occur would be reasonably likely to cause (a) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date of this Agreement
to the Effective Time, or (b) any material failure of Nathan's and Merger Sub
or Miami Subs, as the case may be, or of any officer, director, employee or
agent thereof, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it under this Agreement. Notwithstanding
the above, the delivery of any notice pursuant to this section will not limit
or otherwise affect the remedies available hereunder to the party receiving
such notice.
5.10. Best Efforts and Further Assurances. Subject to the
respective rights and obligations of Nathan's and Miami Subs under this
Agreement, each of the parties to this Agreement will use its best efforts to
effectuate the Merger and the other transactions contemplated hereby and to
fulfill and cause to be fulfilled the conditions to closing under this
Agreement. Each party hereto, at the reasonable request of another party
hereto, will execute and deliver such other instruments and do and perform
such other acts and things as may be necessary or desirable for effecting
completely the consummation of the transactions contemplated hereby.
5.11. Stock Options.
(a) At the Effective Time, each outstanding Miami Subs Stock
Option, whether or not exercisable, will be assumed by Nathan's. From and
after the Effective Time, each Miami Subs Stock Option so assumed by Nathan's
under this Agreement shall be deemed to constitute an option to acquire
Nathan's Common Stock, on the same terms and conditions as were applicable
under such Miami Subs Stock Option, and (i) will be exercisable (or will
become exercisable in accordance with its terms) for that number of whole
shares of Nathan's Common Stock equal to the product of the number of shares
of MSC Capital Stock that were issuable upon exercise of such Miami Subs Stock
Option immediately prior to the Effective Time multiplied by the Exchange
Ratio, rounded down to the nearest whole number of shares of Nathan's Common
Stock, and (ii) the per share exercise price for the shares of Nathan's Common
Stock issuable upon exercise of such assumed Miami Subs Stock Option will be
equal to the amount determined by multiplying the exercise price per share of
MSC Capital Stock at which such Miami Subs Stock Option was exercisable
immediately prior to the Effective Time by $2.068, rounded up to the nearest
whole cent. As soon as practicable after the Effective Time, Nathan's shall
deliver to the holders of Miami Subs Stock Options appropriate notices setting
forth such holders' right pursuant to the Miami Subs Option Plan (and
agreements evidencing the grants of such Miami Subs Stock Options) or, if not
granted under the Miami Subs Option Plan, the agreement governing and
evidencing such Miami Subs Stock Options, and indicated that such options
shall continue in effect on the same terms and conditions (subject to the
adjustments required by this Section 5.11(a) after giving effect to the Merger
and the assumption by Nathan's as set forth herein).
(b) Nathan's shall take all corporate action necessary to
reserve sufficient shares of Nathan's Common Stock for issuance under Section
5.11(a) and under Section 1.6(c) hereof.
5.12. Registration Rights. As soon as practicable after the
Effective Time and in no event later than ten (10) business days after the
Effective Time, Nathan's shall file a registration statement on Form S-8 and
Form S-3 with respect to the shares of Nathan's Common Stock subject to such
assumed Miami Subs Stock Options, and following the effectiveness of such
registration statements, Nathan's shall use all commercially reasonable
efforts to maintain the effectiveness of such registration statements (and
maintain the current status of the prospectus or prospectuses contained
therein) for so long as such options remain outstanding.
5.13. Indemnification and Insurance.
(a) The Surviving Corporation shall assume all of the
obligations of Miami Subs or any of its subsidiaries under any indemnification
agreement with any present or former director, officer, employee, and/or agent
of Miami Subs or any of its subsidiaries, as in effect on or prior to the
Effective Time. From and after the Effective Time for a period of three years,
the Surviving Corporation shall provide with respect to each director,
officer, employee and agent of Miami Subs and its subsidiaries (as of the date
hereof and through the Effective Time) (the "Indemnified Parties), the
indemnification rights (including any rights to advancement of reasonable
expenses) which such Indemnified Parties had, whether from Miami Subs or any
such subsidiary, immediately prior to the Effective Time, whether under the
FBCA, the Articles of Incorporation or Bylaws of Miami Subs or such
subsidiary. Notwithstanding the foregoing sentence, from and after the
Effective Time for a period of three years, the Surviving Corporation shall
honor any indemnification rights (including the advancement of reasonable
expenses) of any former director, officer, employee and/or agent of Miami Subs
or any of its subsidiaries, which any such person had, whether from Miami Subs
or any such subsidiary, immediately prior to the Effective Time, whether under
the FBCA, the Articles of Incorporation or Bylaws of Miami Subs or such
subsidiary. The Articles of Incorporation and Bylaws of the Surviving
Corporation will contain provisions with respect to indemnification and
elimination of liability for monetary damages of the Indemnified Parties
substantially similar to those set forth in the Articles of Incorporation and
Bylaws of Miami Subs, which provisions will not be amended, repealed or
otherwise modified for a period of three years from the Effective Time in any
manner that would adversely affect the rights thereunder of the Indemnified
Parties , unless such modification is required by law. Immediately following
the Effective Time, Nathan's shall cause to remain in effect, if applicable,
the current policies of directors' and officers' liability insurance
maintained by Miami Subs or any of its subsidiaries (provided that Nathan's
may substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are no less advantageous) with respect
to claims arising from facts or events which occurred at or before the
Effective Time, and Nathan's shall maintain such coverage for a period of
three years after the Effective Time.
(b) After the Effective Time the Surviving Corporation and
Nathan's will, to the fullest extent permitted under applicable law or under
the Surviving Corporation's Articles of Incorporation or Bylaws and Nathan's
Certificate of Incorporation or Bylaws, respectively, indemnify and hold
harmless, the Indemnified Parties against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim,
action, suit, proceeding or investigation, whether civil, administrative or
investigative, to the extent arising out of or pertaining to any action or
omission in his or her capacity as a director, officer, employee or agent of
Miami Subs arising out of or pertaining to the transactions contemplated by
this Agreement for a period of three years after the date hereof. In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) any counsel retained by the
Indemnified Parties for any period after the Effective Time will be reasonably
satisfactory to the Surviving Corporation and Nathan's, (ii) after the
Effective Time, the Surviving Corporation will pay the reasonable fees and
expenses of such counsel, promptly after statements therefor are received and
(iii) the Surviving Corporation will cooperate in the defense of any such
matter; provided, however, that the Surviving Corporation will not be
liable for any settlement effected without its written consent (which consent
will not be unreasonably withheld); and provided, further, that, in the
event that any claim or claims for indemnification are asserted or made within
such three-year period, all rights to indemnification in respect of any such
claim or claims will continue until the disposition of any and all such
claims. The Indemnified Parties as a group may retain only one law firm (in
addition to local counsel) to represent them with respect to any single action
unless there is, under applicable standards of professional conduct, a
conflict on any significant issue between the positions of any two or more
Indemnified Parties.
(c) This Section 5.13 will survive any termination of this
Agreement and the consummation of the Merger at the Effective Time, is
intended to benefit Miami Subs, the Surviving Corporation and the Indemnified
Parties and their heirs and representatives (each of whom shall be entitled to
enforce this Section 5.13 against Nathan's or the Surviving Corporation to the
extent specified herein), and will be binding on all successors and assigns of
Nathan's and the Surviving Corporation.
5.14. NASDAQ Listing. Nathan's will use all commercially
reasonable efforts to cause to be approved for listing on the Nasdaq National
Market the shares of Nathan's Common Stock and Warrants issuable, and shares
of Nathan's Common Stock required to be reserved for issuance in respect of
the Warrants and the Miami Subs Stock Options, in connection with the Merger,
upon official notice of issuance.
5.15. Board of Directors of Nathan's. The Board of Directors of
Nathan's will take all actions necessary to cause the Board of Directors of
Nathan's, immediately after the Effective Time, to consist of seven persons,
six of whom shall have served on the Board of Directors of Nathan's
immediately prior to the Effective Time or otherwise be designated by Nathan's
and one of whom, Donald Perlyn, shall have served on the Board of Directors of
Miami Subs immediately prior to the Effective Time.
5.16. Employment Agreements. . On the Closing Date, Nathan's (or
a subsidiary thereof) shall enter into employment agreements in form attached
hereto as Exhibits B, C and D, respectively, with each of Donald L. Perlyn,
Jerry W. Woda and Frank Baran, each of whom is presently an executive officer
of Miami Subs.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1. Conditions to Obligations of Each Party to Effect the Merger.
The respective obligations of each party to this Agreement to effect the
Merger shall be subject to the satisfaction at or prior to the Closing Date of
the following conditions:
(a) Stockholder Approval. This Agreement shall have been
approved and adopted, and the Merger shall have been duly approved, by the
requisite vote under applicable law by the shareholders of Miami Subs and by
the stockholders of Nathan's.
(b) Registration Statement Effective. The SEC shall have
declared the Registration Statement effective. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose, and no similar proceeding in
respect of the Proxy Statement, shall have been initiated or threatened by the
SEC. At the effective date of the Registration Statement, the Registration
Statement shall not contain any untrue statement of a material fact, or omit
to state any material fact necessary in order to make the statements therein
not misleading, and at the mailing of the Proxy Statement and the date of
Nathan's Stockholders' Meeting and Miami Subs Shareholders' Meeting, the Proxy
Statement shall not contain any untrue statement.
(c) No Order. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of
making the Merger illegal or otherwise prohibiting consummation of the Merger.
(d) Nasdaq Listing. The shares of Nathan's Common Stock and
Warrants issuable to shareholders of Miami Subs pursuant to this Agreement and
such shares of Nathan's Common Stock required to be reserved for issuance in
respect of the Warrants and the Miami Subs Stock Options shall have been
authorized for listing on the Nasdaq National Market upon official notice of
issuance.
(e) Authorizations; Consents. All authorizations, consents,
waivers and approvals from parties to contracts or other agreements to which
any of Miami Subs or Nathan's (or their respective subsidiaries) is a party,
or by which either is bound, as may be required to be obtained by them in
connection with the performance of this Agreement, the failure to obtain which
would prevent the consummation of the Merger or have a Material Adverse Effect
on Miami Subs or Nathan's, as the case may be.
6.2. Additional Conditions to Obligations of Miami Subs. The
obligations of Miami Subs to consummate and effect the Merger shall be subject
to the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Miami Subs:
(a) Representations and Warranties. The representations and
warranties of Nathan's and Merger Sub contained in this Agreement shall be
true and correct on and as of the Closing Date, except for changes
contemplated by this Agreement and except for those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such particular date), with the same force and
effect as if made on and as of the Closing Date, except, in all such cases
where the failure to be so true and correct, would not have a Material Adverse
Effect on Nathan's; and Miami Subs shall have received a certificate, signed
on behalf of Nathan's by the President and the Chief Financial Officer of
Nathan's, to the effect that nothing has come to their attention after due
inquiry to cause them to believe that such representations and warranties are
not true and correct, except in all such cases where the failure to be so true
and correct would not have a Material Adverse Effect on Nathan's;
(b) Agreements and Covenants. Nathan's and Merger Sub shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by them
on or prior to the Closing Date, and Miami Subs shall have received a
certificate to such effect signed on behalf of Nathan's by the President and
the Chief Financial Officer of Nathan's to the best of their knowledge after
due inquiry;
(c) Material Adverse Effect. No Material Adverse Effect with
respect to Nathan's shall have occurred since the date of this Agreement;
(d) Legal Opinion. Miami Subs shall have received a legal
opinion from Blau, Kramer, Wactlar & Lieberman, P.C., counsel to Nathan's, in
a form reasonably acceptable to Miami Subs;
(e) Fairness Opinion. Miami Subs shall have received a
written opinion from Raymond James & Associates, Inc. to the effect that the
Merger is fair to Miami Subs's shareholders from a financial point of view and
shall have delivered to Nathan's a copy of such opinion; and
(f) Due Diligence. Miami Subs shall, in its sole and absolute
discretion, be satisfied with the results of its due diligence with respect to
Nathan's; provided that such due diligence must be completed by no later than
thirty (30) days after the delivery to Miami Subs of the completed Nathan's
Schedules. Absent written notification by Miami Subs within the five (5)
business days immediately after the end of such thirty (30) day period, this
condition shall be deemed waived.
6.3. Additional Conditions to the Obligations of Nathan's and Merger
Sub. The obligations of Nathan's and Merger Sub to consummate and effect the
Merger shall be subject to the satisfaction at or prior to the Closing Date of
each of the following conditions, any of which may be waived, in writing,
exclusively by Nathan's:
(a) Representations and Warranties. The representations and
warranties of Miami Subs contained in this Agreement shall be true and correct
on and as of the Closing Date, except for changes contemplated by this
Agreement and except for those representations and warranties which address
matters only as of a particular date (which shall remain true and correct as
of such particular date), with the same force and effect as if made on and as
of the Effective Time, except, in all such cases where the failure to be so
true and correct, would not have a Material Adverse Effect on Miami Subs; and
Nathan's and Merger Sub shall have received a certificate, signed on behalf of
Miami Subs by the President and Chief Financial Officer of Maimi Subs, to the
effect that nothing has come to their attention after due inquiry to cause
them to believe that such representations and warranties are not so true and
correct, except in all such cases where the failure to be so true and correct
would not have a Material Adverse Effect on Miami Subs;
(b) Agreements and Covenants. Miami Subs shall have performed
or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or prior
to the Closing Date, and Nathan's shall have received a certificate to such
effect signed on behalf of Miami Subs by the President and the Chief Financial
Officer of Miami Subs to the best of their knowledge after due inquiry;
(c) Material Adverse Effect. No Material Adverse Effect with
respect to Miami Subs shall have occurred since the date of this Agreement;
(d) Legal Opinion. Nathan's shall have received a legal
opinion from Greenberg Traurig, P.A., counsel to Miami Subs, in a form
reasonably acceptable to Nathan's;
(e) Fairness Opinion. Nathan's shall have received a written
opinion from Cruttenden & Roth Incorporated to the effect that the Merger is
fair to Nathan's stockholders from a financial point of view and shall have
delivered to Miami Subs a copy of such opinion; and
(f) Due Diligence. Nathan's and Merger Sub shall, in their
sole and absolute discretion, be satisfied with the results of their due
diligence with respect to Miami Subs; provided that such due diligence must be
completed by no later than thirty (30) days after the delivery to Nathan's and
Merger Sub of the completed Miami Subs Schedules. Absent written notification
by Nathan's and Merger Sub, within the five (5) business days immediately
after the end of such thirty (30) day period, this condition shall be deemed
waived.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time of the Merger, whether before or after approval of
the Merger by the stockholders of Nathan's and Miami Subs:
(a) by mutual written consent duly authorized by the Boards of
Directors of Nathan's and Miami Subs;
(b) by either Miami Subs or Nathan's if the Merger shall not
have been consummated by May 15, 1999; provided, however, that the right
to terminate this Agreement under this Section 7.1(b) shall not be available
to any party whose action or failure to act has been a principal cause of or
resulted in the failure of the Merger to occur on or before such date and such
action or failure to act constitutes a breach of this Agreement;
(c) by either Miami Subs or Nathan's if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action (an "Order"), in any case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger, which order,
decree or ruling is final and nonappealable;
(d) by either Miami Subs or Nathan's if the required approvals
of the shareholders of Miami Subs or stockholders of Nathan's, as the case may
be, contemplated by this Agreement shall not have been obtained by reason of
the failure to obtain the required vote upon a vote taken at a meeting of
shareholders of Miami Subs or stockholders of Nathan's, as the case may be,
duly convened therefor or at any adjournment thereof (provided that the
right to terminate this Agreement under this Section 7.1(d) shall not be
available to any party where the failure to obtain stockholder or shareholder
approval of such party, as the case may be, shall have been caused by the
action or failure to act of such party in breach of this Agreement);
(e) by either Miami Subs or Nathan's, if Miami Subs shall have
accepted an Miami Subs Superior Proposal or by Nathan's if the Miami Subs's
Board of Directors recommends a Miami Subs Superior Proposal to the
shareholders of Miami Subs;
(f) by Nathan's, if the Board of Directors of Miami Subs shall
have withheld, withdrawn or modified in a manner adverse to Nathan's its
recommendation to its shareholders in favor of approving the Merger;
(g) by Miami Subs, if the Board of Directors of Nathan's shall
have withheld, withdrawn or modified in a manner adverse to Miami Subs its
recommendation to its stockholders in favor of approving the Merger;
(h) by Miami Subs, upon a material breach of any representation,
warranty, covenant or agreement on the part of Nathan's set forth in this
Agreement, or if any representation or warranty of Nathan's shall have become
untrue in any material respect, in either case such that the conditions set
forth in Section 6.2(a) or Section 6.2(b) would not be satisfied as of the
time of such breach or as of the time such representation or warranty shall
have become untrue, provided that if such inaccuracy in Nathan's's
representations and warranties or breach by Nathan's is curable by Nathan's
through the exercise of its commercially reasonable efforts within fifteen
(15) days of the time such representation or warranty shall have become untrue
or such breach, then Miami Subs may not terminate this Agreement under this
Section 7.1(h) during such fifteen-day period provided Nathan's continues to
exercise such commercially reasonable efforts;
(i) by Nathan's, upon a material breach of any representation,
warranty, covenant or agreement on the part of Miami Subs set forth in this
Agreement, or if any representation or warranty of Miami Subs shall have
become untrue in any material respect, in either case such that the conditions
set forth in Section 6.3(a) or Section 6.3(b) would not be satisfied as of the
time of such breach or as of the time such representation or warranty shall
have become untrue, provided, that if such inaccuracy in the Miami Subs's
representations and warranties or breach by Miami Subs is curable by Miami
Subs through the exercise of its commercially reasonable efforts within
fifteen (15) days of the time such representation or warranty shall have
become untrue or such breach, then Nathan's may not terminate this Agreement
under this Section 7.1(i) during such fifteen-day period provided Miami Subs
continues to exercise such commercially reasonable efforts;
(j) by either Miami Subs or Nathan's if the conditions set forth
in Sections 6.2(f) or 6.3(f), respectively, are not satisfied;
(k) by Miami Subs, if there shall have occurred any Material
Adverse Effect with respect to Nathan's since the date of this Agreement; or
(l) by Nathan's, if there shall have occurred any Material
Adverse Effect with respect to Miami Subs since the date of this Agreement.
7.2. Notice of Termination; Effect of Termination.
(a) Subject to Section 7.2(b), any termination of this Agreement
under Section 7.1 above will be effective immediately upon the delivery of
written notice of the terminating party to the other parties hereto. In the
event of the termination of this Agreement as provided in Section 7.1, this
Agreement shall be of no further force or effect, except (i) as set forth in
this Section 7.2, Section 7.3 and Article 8 (miscellaneous), each of which
shall survive the termination of this Agreement, and (ii) nothing herein shall
relieve any party from liability for any willful breach of this Agreement.
(b) Any termination of this Agreement by Miami Subs pursuant to
Section 7.1(e) hereof shall be of no force or effect unless prior to such
termination Miami Subs shall have paid to Nathan's any amounts payable
pursuant to Section 7.3(b).
7.3. Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses,
whether or not the Merger is consummated; provided, however, that Nathan's
and Miami Subs shall share equally all fees and expenses, other than
reasonable attorneys' and accountants fees and expenses, incurred in relation
to the printing and filing of the Proxy Statement (including any preliminary
materials related thereto) and the Registration Statement (including financial
statements and exhibits) and any amendments or supplements thereto.
(b) Miami Subs shall immediately make payment to Nathan's (by
wire transfer or certified or cashiers check) of (x) $500,000 (i) in the event
this Agreement is terminated by Miami Subs or Nathan's pursuant to Section
7.1(e) hereof or (ii) in the event this Agreement is terminated by Nathan's
pursuant to Section 7.1(f) hereof; or (y) $250,000 in the event this Agreement
is terminated by Nathan's pursuant to Section 7.1(i) hereof.
(c) Nathan's shall immediately make payment to Miami Subs (by
wire transfer or certified or cashiers' check) of (x) $250,000 in the event
this Agreement is terminated by Miami Subs pursuant to Section 7.1(g); or (y)
$125,000 in the event this Agreement is terminated by Miami Subs pursuant to
Section 7.1(h).
7.4. Amendment. Subject to applicable law, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of the parties hereto.
7.5. Extension; Waiver. At any time prior to the Effective Time
any party hereto may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties made
to such party contained herein or in any document delivered pursuant hereto
and (iii) waive compliance with any of the agreements or conditions for the
benefit of such party contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
8.1. Non-Survival of Representations and Warranties. The
representations, warranties, and covenants of Miami Subs, Nathan's and Merger
Sub contained in this Agreement shall terminate at the Effective Time, and
only the covenants that by their terms survive the Effective Time shall
survive the Effective Time.
8.2. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by
commercial delivery service, or sent via telecopy (receipt confirmed) to the
parties at the following addresses or telecopy numbers (or at such other
address or telecopy numbers for a party as shall be specified by like notice):
(a) if to Nathan's or Merger Sub, to:
Nathan's Famous, Inc.
1400 Old Country Road
Westbury, New York 11590
Attention: Wayne Norbitz, President
Telephone No.: (516) 338-8500
Telecopy No.: (516) 338- 7220
with a copy to:
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
Attention: Nancy D. Lieberman, Esq.
Telephone No.: (516) 822-4820
Telecopy No.: (516) 822-4824
(b) if to Miami Subs, to:
Miami Subs Corporation
6300 N.W. 31st Avenue
Fort Lauderdale, Florida 33309
Attention: Donald Perlyn, President
Telephone No.: (954) 973-0000
Telecopy No.: (954) 973-7616
with a copy to:
Greenberg Traurig
1221 Brickell Avenue
Miami, Florida 33131
Attention: Harold E. Berritt, Esq.
Telephone No.: (305) 579-0876
Telecopy No.: (305) 579-0717
8.3. Interpretation; Knowledge.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
The words "include," "includes" and "including" when used herein shall
be deemed in each case to be followed by the words "without limitation."
The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. When reference is made herein to "the
business of" an entity, such reference shall be deemed to include the
business of all direct and indirect subsidiaries of such entity. Reference to
the subsidiaries of an entity shall be deemed to include all direct and
indirect subsidiaries of such entity.
(b) For purposes of this Agreement, the term "knowledge" means,
with respect to any matter in question, that the executive officers of Miami
Subs or Nathan's, as the case may be, have actual knowledge of such matter.
8.4. 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 party, it being understood that all
parties need not sign the same counterpart.
8.5. Entire Agreement. This Agreement and the documents and
instruments and other agreements among the parties hereto as contemplated by
or referred to herein, including the Miami Subs Schedules and the Nathan's
Schedules (a) constitute the entire agreement among the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof; and (b) are not intended to confer upon any other
person any rights or remedies hereunder, except as set forth herein.
8.6. Severability. In the event that any provision of this
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
8.7. Other Remedies; Specific Performance. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party of
any one remedy will not preclude the exercise of any other remedy. The
parties hereto 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 the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
8.8. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of law thereof. Each of the parties hereto irrevocably consents to the
exclusive jurisdiction of any state or federal court within the State of
Florida, in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, agrees that process may be
served upon them in any manner authorized by the laws of the State of Florida
for such persons and waives and covenants not to assert or plead any objection
which they might otherwise have to such jurisdiction and such process.
8.9. Rules of Construction. The parties hereto agree that they
have been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or
document.
8.10. Assignment. No party may assign either this Agreement or any
of its rights, interests, or obligations hereunder without the prior written
approval of the other parties.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, Nathan's, Merger Sub, and Miami Subs have caused this
Agreement to be signed by their duly authorized respective officers, all as of
the date first written above.
NATHAN'S FAMOUS, INC.
By: _________________________________
Name:
Title:
MIAMI SUBS CORPORATION
By: _________________________________
Name:
Title:
MIAMI ACQUISITION CORP.
By: __________________________________
Name:
Title:
Exhibit A
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of this ___th day of __________, 1999,
by and between ______________, a Delaware corporation (the "Company") and
American Stock Transfer & Trust Company, as warrant agent (the "Warrant
Agent").
W I T N E S S E T H
WHEREAS, in connection with the merger of Miami Subs Corporation
("Miami Subs") with a wholly-owned subsidiary of the Company, the Company
proposes to make a public offering (the "Public Offering") of shares of its
Common Stock (as defined in Section I hereof) and common stock purchase
warrants (the "Warrants") of the Company, each Warrant exercisable to purchase
one share of Common Stock; and
WHEREAS, in relation to the Public Offering, the Company has filed a
Registration Statement on Form S-4 (Registration Statement No. 333-________)
(as amended or supplemented, the "Registration Statement") with the Securities
and Exchange Commission ("SEC"); and
WHEREAS, the Company desires the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is willing so to act, in connection with
the issuance, registration, transfer, and exchange of the Warrants, the
issuance of certificates representing the Warrants (each a "Warrant
Certificate"), the exercise of the Warrants, and the rights of the registered
holders thereof;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company and the
Warrant Agent, the parties hereto hereby agree as follows:
SECTION 1. Definitions. As used herein, the following terms shall
have the following meanings, unless the context shall otherwise require:
(a) "Common Stock" shall mean the Company's common stock, par
value $.01 per share.
(b) "Company" shall have the meaning set forth in the
introductory paragraph.
(c) "Corporate Office" shall mean the office of the Warrant
Agent (or its successor) at which at any particular time its principal
business shall be administered, which office is located at 40 Wall Street, New
York, New York 10005 as of the date hereof.
(d) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(e) "Exercise Date" shall mean, as to any Warrant, the date on
which the Warrant Agent shall have received both (i) the Warrant Certificate
representing such Warrant, with the exercise form thereon duly executed by the
Registered Holder thereof, or his attorney duly authorized in writing, with
the appropriate signature guarantees, as described in the Warrant Certificate,
and (ii) payment in cash, or by official bank or certified check made payable
to the Company, of an amount in lawful money of the United States of America
equal to the Exercise Price plus transfer taxes, if any.
(f) "Exercise Price" shall mean the purchase price to be paid
upon exercise of a Warrant in accordance with the terms hereof, which price
shall be $6.00 per share of Common Stock. Until the Warrant Expiration Date,
subject to (i) adjustment from time to time pursuant to the provisions of
Section 8 hereof, and (ii) the Company's right to reduce the Exercise Price,
upon written notice to all Registered Holders, for a period of not less than
30 days.
(g) "Nasdaq National Market" shall have the meaning set forth in
Section 8(f) hereof.
(h) "Notice Event" shall mean any consolidation or merger to
which the Company is a party and for which approval of any stockholders of the
Company is required, or of the conveyance or transfer of the properties and
assets of the Company substantially as an entirety, or of any reclassification
or change of Common Stock issuable upon exercise of the Warrants (other than a
change in par value, or from par value to no par value, or from no par value
to par value, or as a result of a subdivision or combination), or a tender
offer or exchange offer for shares of Common Stock.
(i) "Prospectus" shall mean the prospectus contained in the
Registration Statement, as such prospectus is amended or supplemented from
time to time.
(j) "Public Offering" shall have the meaning set forth in the
Recitals.
(k) "Registered Holder" shall mean the person in whose name any
certificate representing Warrants shall be registered on the books maintained
by the Warrant Agent pursuant to Section 6 hereof.
(l) "SEC" shall have the meaning set forth in the Recitals.
(m) "SEC Reports" shall have the meaning set forth in Section
5(g) hereof.
(n) "Registration Statement" shall have the meaning set forth in
the Recitals.
(o) "Time of Determination" shall have the meaning set forth in
Section 9 hereof.
(p) "Transfer Agent" shall mean American Stock Transfer & Trust
Company, as the Company's transfer agent, or its authorized successor, as
such.
(q) "Warrant Agent" shall have the meaning set forth in the
introductory paragraph.
(r) "Warrant Certificate" shall have the meaning set forth in
the Recitals.
(s) "Warrant Expiration Date" shall mean 5:00 p.m. (New York
City time) on ________ ___, 2002 (or as may be extended pursuant to Section
5(d)), provided that, if in New York City, such date (or extended date) shall
be a holiday or a day on which banks are authorized to close, then 5:00 p.m.
(New York City time) on the next following day which in New York City is not a
holiday or a day on which banks are authorized to close.
(t) "Warrants" shall have the meaning set forth in the Recitals.
SECTION 2. Warrants and Issuance of Warrant Certificates.
(a) Each Warrant Exercisable for One Share. A Warrant shall
initially entitle the Registered Holder of the Warrant Certificate
representing such Warrant to purchase one share of Common Stock upon the
exercise thereof, in accordance with the terms hereof, subject to modification
and adjustment as provided in Section 8 hereof.
(b) 593,750 Shares. From time to time, up to the Warrant
Expiration Date, the Transfer Agent shall execute and deliver stock
certificates in required whole number denominations representing up to an
aggregate of 593,750 shares of Common Stock, subject to adjustment as
described herein, upon the exercise of Warrants in accordance with this
Agreement.
(c) Warrant Certificates. From time to time, up to the
Warrant Expiration Date, the Warrant Agent shall execute and deliver Warrant
Certificates in required whole number denominations to the persons entitled
thereto in connection with any transfer or exchange permitted under this
Agreement; provided that no Warrant Certificates shall be issued except (i)
those initially issued hereunder, (ii) those issued upon the exercise of fewer
than all Warrants represented by any Warrant Certificate, to evidence any
unexercised Warrants held by the exercising Registered Holder, (iii) those
issued upon any transfer or exchange pursuant to Section 6 hereof, (iv) those
issued in replacement of lost, stolen, destroyed or mutilated Warrant
Certificates pursuant to Section 7 hereof and, (v) at the option of the
Company, in such form as may be approved by its Board of Directors, to reflect
(A) any adjustment or change in the Exercise Price or the number of shares of
Common Stock purchasable upon exercise of the Warrants made pursuant to
Section 8 hereof and (B) any other modifications approved by Registered
Holders in accordance with Section 15 hereof.
SECTION 3. Form and Execution of Warrant Certificates.
(a) Form. The Warrant Certificates shall be substantially in
the form annexed hereto as Exhibit A (the provisions of which are hereby
incorporated herein) and may have such letters, numbers or other marks of
identification or designation and such legends, summaries or endorsements
printed, lithographed, engraved or typed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
as may be required to comply with any law, with any rule or regulation made
pursuant thereto, or with any rule or regulation of any stock exchange or
securities association on which or through which the Warrants may be listed,
or to conform to usage. The Warrant Certificates shall be dated the date of
issuance thereof (whether upon initial issuance, transfer, exchange or in lieu
of mutilated, lost, stolen, or destroyed Warrant Certificates) and issued in
registered form. Warrants shall be numbered serially with the letter "W."
(b) Execution. Warrant Certificates shall be executed on
behalf of the Company by the Company's Chairman of the Board, President or any
Vice President and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary, by manual signatures or by facsimile signatures
printed thereon, shall have imprinted thereon a facsimile of the Company's
seal and shall be countersigned by an authorized signatory of the Warrant
Agent. In case any officer of the Company who shall have signed any of such
Warrant Certificates shall cease to be such officer of the Company before the
date of issuance of the Warrant Certificates and issue and delivery thereof,
such Warrant Certificates may nevertheless be issued and delivered with the
same force and effect as though the person who signed such Warrant
Certificates had not ceased to be such officer of the Company. After execution
by the Company and countersignature by the Warrant Agent, Warrant Certificates
shall be delivered by the Warrant Agent to the Registered Holders.
SECTION 4. Exercise.
(a) Time of Exercise. Each Warrant may be exercised by the
Registered Holder thereof at any time after the date hereof and on or before
the Warrant Expiration Date, upon the terms and subject to the conditions set
forth herein and in the applicable Warrant Certificate. A Warrant shall be
deemed to have been exercised immediately prior to the close of business on
the Exercise Date, and the person entitled to receive the shares of Common
Stock and any unexercised Warrants deliverable upon such exercise shall be
treated for all purposes as the holder of such shares of Common Stock and such
unexercised Warrants upon such exercise as of the close of business on the
Exercise Date. As soon as practicable on or after the Exercise Date, the
Warrant Agent shall deposit the proceeds received from the exercise of a
Warrant into an account of the Company as designated in writing by the Company
or as the Company may otherwise direct in writing.
(b) Receipt of Payment and Issuance. The Warrant Agent shall
promptly after clearance of checks received in payment of the Exercise Price,
direct the Transfer Agent to issue and deliver to the person or persons
entitled to receive the same, a stock certificate or certificates for the
shares of Common Stock deliverable upon such exercise and the Warrant Agent
shall issue and deliver a Warrant Certificate for any remaining unexercised
Warrants. Upon the exercise of any Warrant and clearance of the funds
received therefor, the Warrant Agent shall promptly remit the payment received
for the Warrants to the Company or as the Company may direct in writing.
SECTION 5. Reservation of Shares; Listing; Payment of Taxes; etc.
(a) Issuance and Sale of Shares. The Company covenants that
it will at all times reserve and keep available, free from preemptive rights,
out of its authorized Common Stock, solely for the purpose of issuance upon
exercise of Warrants, such number of shares of Common Stock as shall then be
issuable upon the exercise of all outstanding Warrants. The Company covenants
that all shares of Common Stock that shall be issuable upon exercise of the
Warrants shall, at the time of delivery, be duly and validly issued, fully
paid, nonassessable and free from all taxes, liens and charges with respect to
the issue or sale thereof.
The Transfer Agent for the Common Stock will be irrevocably
authorized and directed at all times to reserve such number of authorized
shares as shall be required for such purpose. The Company will keep a copy of
this Agreement on file with the Transfer Agent. The Warrant Agent is hereby
irrevocably authorized to requisition from time to time from such Transfer
Agent the stock certificates required to honor outstanding Warrants upon
exercise thereof in accordance with the terms of this Agreement. The Company
will supply such Transfer Agent with duly executed certificates for such
purposes and will provide or otherwise make available any cash which may be
payable as provided in Section 9. The Company will furnish the Transfer Agent
a copy of all notices of adjustments and certificates related thereto,
transmitted to each Registered Holder pursuant to Section 8(p) hereof.
Before taking any action which would cause an adjustment pursuant to
Section 8 hereof that would reduce the Exercise Price below the then par value
(if any) of the shares of Common Stock, the Company will take any corporate
action which may, in the opinion of its counsel, be necessary in order that
the Company may validly and legally issue fully paid and nonassessable shares
of Common Stock at the Exercise Price as so adjusted.
(b) Registration Statement. Registered Holders will be able
to exercise their Warrants only if (i)(A) the Registration Statement or
another registration statement relating to the sale of shares of Common Stock
underlying such Warrants is then in effect, or (B) the sale of such shares
upon exercise of such Warrants is exempt from the registration requirements of
the Securities Act of 1933, as amended, and (ii) such shares are qualified for
sale or exempt from qualification under applicable laws of the states where
the Registered Holders reside. The Company covenants to maintain the
Registration Statement or another registration statement in effect at all
times with respect to the sale of shares of Common Stock underlying such
Warrants until the Warrant Expiration Date. The Company also covenants to
maintain at all times all necessary or desirable state "blue sky" filings with
respect to the sale of shares of Common Stock underlying such Warrants until
the Warrant Expiration Date.
(c) Stamp Taxes. The Company shall pay all documentary, stamp
or similar taxes and other governmental charges that may be imposed with
respect to the issuance of Warrants, or the issuance or delivery of any shares
of Common Stock upon exercise of the Warrants; provided, however, that if
shares of Common Stock are to be delivered in a name other than the name of
the Registered Holder of the Warrant Certificate, then no such delivery shall
be made unless the person requesting the same has paid to the Warrant Agent
the amount of transfer taxes or charges incident thereto, if any.
(d) Listings. The Company will from time to time take all
action which may be reasonably necessary so that the Warrants and the shares
of Common Stock issuable upon the exercise of the Warrants will be listed on
the principal securities exchanges and markets (including, without limitation,
the Nasdaq National Market) within the United States of America, if any, on
which any of the Company's shares of Common Stock are then listed.
(e) SEC Reports. So long as any of the Warrants remain
outstanding, the Company shall cause copies of all quarterly and annual
financial reports and of the information, documents, and other reports (or
copies of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act ("SEC Reports") to be
filed with the Warrant Agent and mailed to the Registered Holders at their
addresses appearing in the register of the Registered Holders maintained by
the Warrant Agent, in each case, within 15 days after filing with the SEC. If
the Company is not subject to the requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall nevertheless continue to cause SEC Reports,
comparable to those which it would be required to file pursuant to Section 13
or 15(d) of the Exchange Act if it were subject to the requirements of either
such section, to be so filed with the SEC (but only if the SEC permits such
filings) and with the Warrant Agent and mailed to the Registered Holders, in
each case, within the same time periods as would have applied (including under
the preceding sentence) had the Company been subject to the requirements of
Section 13 or 15(d) of the Exchange Act. The Company shall provide the
Warrant Agent with a sufficient number of copies of all SEC Reports to enable
the Warrant Agent to deliver to each Registered Holder at least one copy and
to each nominee Registered Holder at least one copy for each beneficial holder
for whom such nominee Registered Holder holds Warrants.
SECTION 6. Exchange and Registration of Transfer.
Subject to the restrictions on transfer contained herein or in the
Warrant Certificates:
(a) Exchange of Warrant Certificates. Warrant Certificates
may be exchanged for other Warrant Certificates representing an equal
aggregate number of Warrants or may be transferred in whole or in part.
Warrant Certificates to be exchanged shall be surrendered to the Warrant Agent
at its Corporate Office, and upon satisfaction of the terms and provisions
herein, the Company shall execute, and the Warrant Agent shall countersign,
issue and deliver in exchange therefor, the Warrant Certificate or
Certificates that the Registered Holder making the exchange shall be entitled
to receive.
(b) Warrant Register. The Warrant Agent shall keep books at
its office, in which it shall register Warrant Certificates and transfers
thereof in accordance with its regular practice. Upon due presentment for
registration of transfer of any Warrant Certificate at its office, the Company
shall execute and the Warrant Agent shall issue and deliver to the transferee
or transferees a new Warrant Certificate or Certificates representing an equal
aggregate number of Warrants.
(c) Exercise Form. With respect to all Warrant Certificates
presented for registration of transfer, or for exchange or exercise, the
exercise form attached thereto must be duly endorsed, or be accompanied by a
written instrument or instruments of transfer and exercise in form
satisfactory to the Warrant Agent, duly executed by the Registered Holder or
his attorney-in-fact duly authorized in writing.
(d) Service Charge. A service charge may be imposed by the
Warrant Agent upon the Registered Holder for any exchange or registration of
transfer of Warrant Certificates. The Warrant Agent may require payment by a
Registered Holder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.
(e) Registered Holder Treated as Absolute Owner. Prior to due
presentment for registration of transfer thereof, the Company and the Warrant
Agent may deem and treat the Registered Holder of any Warrant Certificate as
the absolute owner thereof and of each Warrant represented thereby for all
purposes and shall not be affected by any notice to the contrary.
SECTION 7. Loss or Mutilation. Upon receipt by the Company and
the Warrant Agent of evidence satisfactory to them of the ownership and loss,
theft, destruction or mutilation of any Warrant Certificate and, in case of
loss, theft or destruction, of indemnity satisfactory to them, and in the case
of mutilation, upon surrender and cancellation thereof, in the absence of
notice that the Warrant Certificate has been acquired by a bona fide purchaser
the Company shall execute and the Warrant Agent shall countersign and deliver
to the Registered Holder in lieu thereof a new Warrant Certificate of like
tenor representing an equal aggregate number of Warrants. Registered Holders
requesting a substitute Warrant Certificate will be required to comply with
such other reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.
SECTION 8. Adjustment of Exercise Price and Number of Shares of
Common Stock. The number of shares of Common Stock purchasable upon the
exercise of the Warrants and the Exercise Price shall be subject to adjustment
from time to time as follows:
(a) Stock Splits, Combinations, etc. In case the Company shall
hereafter (i) pay a dividend or make a distribution on its Common Stock in
shares of its capital stock (whether shares of Common Stock or of capital
stock of any other class), (ii) subdivide its outstanding shares of Common
Stock, (iii) combine its outstanding shares of Common Stock into a smaller
number of shares, or (iv) issue by reclassification of its shares of Common
Stock any shares of capital stock of the Company, the Exercise Price in effect
and the number of shares of Common Stock issuable upon exercise of each
Warrant immediately prior to such action shall be adjusted so that the
Registered Holder of any Warrant thereafter exercised shall be entitled to
receive the number of shares of capital stock of the Company at the same
aggregate Exercise Price that such Registered Holder would have owned
immediately following such action had such Warrant been exercised immediately
prior thereto. An adjustment made pursuant to this paragraph shall become
effective immediately after the record date in the case of a dividend and
shall become effective immediately after the effective date in the case of a
subdivision, combination or reclassification. If, as a result of an
adjustment made pursuant to this paragraph, the Registered Holder of any
Warrant thereafter exercised shall become entitled to receive shares of two or
more classes of capital stock of the Company, the Board of Directors of the
Company (whose determination shall be conclusive) shall determine the
allocation of the adjusted Exercise Price between or among shares of such
classes of capital stock.
(b) Reclassification, Combinations, Mergers, etc. In case of
any reclassification or change of outstanding shares of Common Stock issuable
upon exercise of the Warrants (other than as set forth in paragraph (a) above
and other than a change in par value, or from par value to no par value, or
from no par value to par value or as a result of a subdivision or
combination), or in case of any consolidation or merger of the Company with or
into another corporation or entity (other than a merger in which the Company
is the continuing corporation and which does not result in any
reclassification or change of the then outstanding shares of Common Stock or
other capital stock issuable upon exercise of the Warrants), or in the case of
any sale or conveyance of all or substantially all of the assets of the
Company followed by a related distribution to holders of shares of Common
Stock of cash, securities or other property, then as a condition of such
reclassification, change, consolidation, merger, or sale of assets, the
Company or such a successor corporation or entity, as the case may be, shall
forthwith make lawful and adequate provision whereby the Registered Holder of
each Warrant then outstanding shall have the right thereafter to receive on
exercise of such Warrant the kind and amount of shares of stock and other
securities and property receivable upon such reclassification, change,
consolidation, merger, or sale of assets, by a holder of the number of shares
of Common Stock issuable upon exercise of such Warrant immediately prior to
such reclassification, change, consolidation, merger, or sale of assets, and
enter into a supplemental warrant agreement so providing. Such provisions
shall include provision for adjustments that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 8. If the
issuer of securities deliverable upon exercise of the Warrants under the
supplemental warrant agreement is an affiliate of the formed or surviving
corporation or other entity, that issuer shall join in the supplemental
warrant agreement. The above provisions of this paragraph (b) shall similarly
apply to successive reclassifications and changes of shares of Common Stock
and to successive consolidations or mergers.
(c) Change in Number of Warrants. The Company may elect, upon
any adjustment of the Exercise Price hereunder, to adjust the number of
Warrants outstanding, in lieu of the adjustment in the number of shares of
Common Stock purchasable upon the exercise of each Warrant as hereinabove
provided, so that each Warrant outstanding after such adjustment shall
represent the right to purchase one share of Common Stock. Each Warrant held
of record prior to such adjustment of the number of Warrants shall become that
number of Warrants (calculated to the nearest tenth) determined by multiplying
the number one by a fraction, the numerator of which shall be the Exercise
Price in effect immediately prior to such adjustment and the denominator of
which shall be the Exercise Price in effect immediately after such adjustment.
Upon each adjustment of the number of Warrants pursuant to this Section 8, the
Company shall, as promptly as practicable, cause to be distributed to each
Registered Holder of Warrant Certificates, on the date of such adjustment,
Warrant Certificates evidencing, subject to Section 9 hereof, the number of
additional Warrants to which such Registered Holder shall be entitled as a
result of such adjustment or, at the option of the Company, cause to be
distributed to such Registered Holder in substitution and replacement for the
Warrant Certificates held by such Registered Holder prior to the date of
adjustment (and upon surrender thereof, if required by the Company) new
Warrant Certificates evidencing the number of Warrants to which such
Registered Holder shall be entitled after such adjustment.
(d) Deferral of Certain Adjustments. No adjustment to the
Exercise Price (including the related adjustment to the number of shares of
Common Stock purchasable upon the exercise of each Warrant) shall be required
hereunder unless such adjustment, together with other adjustments carried
forward as provided below, would result in an increase or decrease of at least
one percent of the Exercise Price; provided that any adjustments which by
reason of this paragraph (i) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. No adjustment
need to be made for a change in the par value of the Common Stock. All
calculations under this Section 8 shall be made to the nearest 1/1,000 of one
cent or to the nearest 1/1000 of a share, as the case may be.
(e) Other Adjustments. In the event that at any time, as a
result of an adjustment made pursuant to this Section 8, the Registered
Holders shall become entitled to receive any securities of the Company other
than shares of Common Stock, thereafter the number of such other securities so
receivable upon exercise of the Warrants and the Exercise Price applicable to
such exercise shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the shares of Common Stock contained in this Section 8.
(f) Common Stock. As used in this Section 8, the term "Common
Stock" shall mean and include the Common Stock authorized on the date of the
original issue of the shares of Common Stock and Warrants in connection with
the Public Offering and shall also include any capital stock of any class of
the Company thereafter authorized that is not limited to a fixed sum or
percentage in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary liquidation,
dissolution or winding up of the Company.
(g) Notice of Change in Exercise Price. Upon any adjustment
of the Exercise Price pursuant to Section 8, the Company shall promptly
thereafter (i) cause to be prepared a certificate of the President and Chief
Financial Officer of the Company setting forth the Exercise Price after such
adjustment and setting forth in reasonable detail the method of calculation
and the facts upon which such calculations are based and setting forth the
number of shares of Common Stock (or portion thereof) issuable after such
adjustment in the Exercise Price upon exercise of a Warrant and payment of the
adjusted Exercise Price, which certificate shall be conclusive evidence of the
correctness of the matters set forth therein absent manifest error, provided
that if the Warrant Agent reasonably requests, the Company shall engage a firm
of independent public accountants of recognized standing selected by the Board
of Directors of the Company (who may be the regular auditors of the Company)
to prepare and file such certificate in lieu of the certificate of the
President and Chief Financial Officer, in which case such certificate shall be
conclusive evidence of the matters set forth therein absent manifest error,
and (ii) deliver the Warrant Agent at its Corporate Office and to each of the
Registered Holders of the Warrant Certificates at the address appearing on the
registry books maintained by the Warrant Agent written notice of such
adjustments by first-class mail, postage prepaid. The Warrant Agent shall be
entitled to rely on the above-referenced certificate and shall be under no
duty or responsibility with respect to any such certificate, except to exhibit
the same from time to time to any Registered Holder desiring an inspection
thereof during reasonable business hours. The Warrant Agent shall not at any
time be under any duty or responsibility to any Registered Holder to determine
whether any facts exist that may require any adjustment of the number of
shares of Common Stock or other stock or property issuable on exercise of the
Warrants or the Exercise Price, or with respect to the nature or extent of any
such adjustment when made, or with respect to the method employed in making
such adjustment or the validity or value (or the kind or amount) of any shares
of Common Stock or other stock or property which may be issuable on exercise
of the Warrants.
(h) Notice of Certain Events. With respect to any Notice
Event, the Company shall cause to be filed with the Warrant Agent and shall
cause to be given to each of the Registered Holders of the Warrant
Certificates at such Registered Holder's address appearing on the registry
books maintained by the Warrant Agent, at least 20 days prior to the
applicable record date hereinafter specified, or promptly in the case of
events for which there is no record date, by first class mail, postage
prepaid, a written notice stating (i) the date as of which the holders of
record of shares of Common Stock entitled to receive any such rights, options,
warrants or distribution is to be determined, (ii) the initial expiration date
set forth in any tender offer or exchange offer for shares of Common Stock, or
(iii) the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange such shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up. The failure to give the notice required by this Section 8(h) or
any defect therein shall not affect the legality or validity of any
distribution, right, option, warrant, consolidation, merger, conveyance,
transfer, dissolution, or liquidation or winding up, or the vote upon any
action, provided that the Registered Holders shall retain any right to damages
from the Company with respect to such failure.
SECTION 9. Fractional Warrants and Fractional Shares.
Regardless of whether or not the number of shares of Common Stock purchasable
upon the exercise of each Warrant is adjusted pursuant to Section 8 hereof,
the Company shall nevertheless not be required to issue or sell fractions of
shares upon exercise of the Warrants or otherwise, or to distribute
certificates that evidence fractional shares. With respect to any fraction of
a share called for upon the exercise of any Warrants, the Company shall pay to
the Registered Holder an amount in cash equal to such fraction multiplied by
the "current market price" per share. To the extent possible, upon a
Registered Holder's exercise of more than one Warrant the shares issuable or
transferable shall be aggregated so that the Company shall only be required to
pay for the value of one fractional share.
The "current market price" per share of Common Stock at any date
shall be the average of the daily closing prices for the shorter of (i) the 20
consecutive trading days ending on the last full trading day on the exchange
or market described below prior to the Time of Determination (as defined
below) and (ii) the period commencing on the date next succeeding the first
public announcement of the issuance, sale, distribution or granting in
question through such last full trading day prior to the Time of
Determination. The term "Time of Determination" as used herein shall be the
time and date of the earlier to occur of (A) the date as of which the current
market price is to be computed and (B) the last full trading day on such
exchange or market before the commencement of "ex-dividend" trading in the
Common Stock relating to the event giving rise to the adjustment. The closing
price for any day shall be the last reported sale price regular way or, in
case no such reported sale takes place on such day, the average of the closing
bid and asked prices regular way for such day, in each case (1) on the
principal national securities exchange on which the shares of Common Stock are
listed or to which such shares are admitted to trading or (2) if the Common
Stock is not listed or admitted to trading on a national securities exchange,
in the over-the-counter market as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("Nasdaq National Market")
or any comparable system or (3) if the Common Stock is not listed on Nasdaq
National Market or a comparable system, as furnished by two members of the
NASD selected from time to time in good faith by the Board of Directors of the
Company for that purpose. In the absence of all of the foregoing, or if for
any reason the current market price per share cannot be determined pursuant to
the foregoing provisions of this paragraph (9), the current market price per
share shall be the fair market value thereof as determined in good faith by
the Board of Directors of the Company.
SECTION 10. Warrant Holders Not Deemed Stockholders. No
Registered Holder shall, as such, be entitled to vote or to receive dividends
or be deemed the holder of Common Stock that may at any time be issuable or
transferable upon exercise of such Warrants for any purpose whatsoever, nor
shall anything contained herein be construed to confer upon the holder of
Warrants, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issue or reclassification
of stock, change of par value or change of stock to no par value,
consolidation, merger or conveyance or otherwise), or to receive notice of
meetings, or to receive dividends or subscription rights, until such
Registered Holder shall have exercised such Warrants and been issued shares of
Common Stock in accordance with the provisions hereof.
SECTION 11. Rights of Action. All rights of action with respect
to this Agreement are vested in the respective Registered Holders of the
Warrants, and any Registered Holder of a Warrant, without consent of the
Warrant Agent or of the holder of any other Warrant, may, on his or her own
behalf and for his or her own benefit, enforce against the Company his or her
right to exercise the Warrants for the purchase of shares of Common Stock in
the manner provided in the Warrant Certificate and this Agreement.
SECTION 12. Agreement of Warrant Holders. Every holder of a
Warrant, by his or her acceptance thereof, consents and agrees with the
Company, the Warrant Agent and every other holder of a Warrant that:
(a) Transfer of Warrants. The Warrants are transferable only
on the registry books of the Warrant Agent by the Registered Holder thereof in
person or by his attorney-in-fact duly authorized in writing and only if the
Warrant Certificates representing such Warrants are surrendered at the office
of the Warrant Agent, duly endorsed or accompanied by a proper instrument of
transfer satisfactory to the Warrant Agent in its sole discretion, together
with payment of any applicable transfer taxes; and
(b) Registered Holder Treated as Absolute Owner. The Company
and the Warrant Agent may deem and treat the person in whose name the Warrant
Certificate is registered as the Registered Holder thereof and as the
absolute, true and lawful owner of the Warrants represented thereby for all
purposes, and the Company and the Warrant Agent shall not be affected by any
notice or knowledge to the contrary.
SECTION 13. Cancellation of Warrant Certificates. If the Company
shall acquire any Warrants, the Warrant Certificate or Warrant Certificates
evidencing the same shall thereupon be canceled by the Warrant Agent, and the
Company shall retire such Warrants. The Warrant Agent shall also cancel
Warrant Certificates surrendered to the Warrant Agent following exercise of
any or all of the Warrants represented thereby or delivered to it for
transfer, split-up, combination or exchange.
SECTION 14. Concerning the Warrant Agent. The Warrant Agent acts
hereunder as agent and in a ministerial capacity for the Company, and its
duties shall be determined solely by the provisions hereof. The Warrant Agent
shall not, by issuing and delivering Warrant Certificates or by any other act
hereunder, be deemed to make any representations as to the validity, value or
authorization of the Warrant Certificates or the Warrants represented thereby
or of any securities or other property delivered upon exercise of any Warrant
or whether any stock issued upon exercise of any Warrant is fully paid and
nonassessable.
The Warrant Agent shall account promptly to the Company with respect
to Warrants exercised and concurrently deposit all moneys received by the
Warrant Agent upon the exercise of Warrants into an account of the Company as
designated in writing by the Company or as the Company may otherwise direct in
writing. The Warrant Agent shall, upon request of the Company from time to
time, deliver to the Company such complete reports of registered ownership of
the Warrants and such complete records of transactions with respect to the
Warrants as the Company may request. The Warrant Agent shall also make
available to the Company for inspection by their agents or employees, from
time to time as they may request, such original books of accounts and record
as may be maintained by the Warrant Agent in connection with the issuance and
exercise of Warrants hereunder, such inspections to occur at the Warrant
Agent's Corporate Office during normal business hours.
The Warrant Agent shall not at any time be under any duty or
responsibility to any Registered Holder to make or cause to be made any
adjustment of the Exercise Price provided in this Agreement, or to determine
whether any fact exists which may require any such adjustments, or with
respect to the nature or extent of any such adjustment, when made, or with
respect to the method employed in making the same. The Warrant Agent shall
not be (i) liable for any recital or statement of facts contained herein or
for any action taken, suffered or omitted by it in reliance on any Warrant
Certificate or other document or instrument believed by it in good faith to be
genuine and to have been signed or presented by the proper party or parties,
(ii) responsible for any failure on the part of the Company to comply with any
of its covenants and obligations contained in this Agreement or in any Warrant
Certificate, or (iii) liable for any act or omission in connection with this
Agreement except for its own negligence or willful misconduct. The Warrant
Agent may at any time consult with counsel satisfactory to it (who may be
counsel for the Company) and shall incur no liability or responsibility for
any action taken, suffered or omitted by it in good faith in accordance with
the opinion or advice of such counsel.
Any notice, statement, instruction, request, direction, order or
demand of the Company shall be sufficiently evidenced by an instrument signed
by the Chairman of the Board, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary, or any Assistant Secretary
(unless other evidence in respect thereof is herein specifically prescribed).
The Warrant Agent shall not be liable for any action taken, suffered or
omitted by it in accordance with such notice, statement, instruction, request,
direction, order or demand believed by it to be genuine.
The Company agrees to pay the Warrant Agent reasonable compensation
for its services hereunder and to reimburse it for its reasonable expenses
hereunder, including reasonable legal fees. The Company further agrees to
indemnify the Warrant Agent and save it harmless against any and all losses,
expenses and liabilities, including judgments, costs and legal fees, for
anything done or omitted by the Warrant Agent in the execution of its duties
and powers hereunder except losses, expenses and liabilities arising as a
result of the Warrant Agent's negligence or willful misconduct.
The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent's own negligence or willful misconduct), upon 30
days prior written notice to the Company and the Company may discharge the
Warrant Agent from its duties and liabilities hereunder (except liabilities
arising as a result of the Warrant Agent's own negligence or willful
misconduct) upon 30 days prior written notice to the Warrant Agent. At least
15 days prior to the date such resignation or discharge is to become
effective, the Warrant Agent shall cause a copy of such notice of resignation
or discharge to be mailed to the Registered Holder of each Warrant Certificate
at the Company's expense. Upon such resignation or discharge, or any inability
of the Warrant Agent to act as such hereunder, the Company shall appoint a new
warrant agent in writing. If the Company shall fail to make such appointment
within a period of 15 days after it has been notified in writing of such
resignation by the resigning Warrant Agent, or within a period of 15 days
after the Warrant Agent has been notified by the Company of such discharge,
then the Registered Holder of any Warrant Certificate may apply to any court
of competent jurisdiction for the appointment of a new warrant agent. Any new
warrant agent, whether appointed by the Company or by such a court, shall be a
bank or trust company having a capital and surplus, as shown by its last
published report to its stockholders, of not less than $10,000,000 or a stock
transfer company. After acceptance in writing of such appointment by the new
warrant agent is received by the Company, the Warrant Agent's resignation or
discharge shall be deemed to be effective and such new warrant agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be
necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning
Warrant Agent. Not later than the effective date of any such appointment, the
Company shall file notice thereof with the resigning Warrant Agent and shall
forthwith cause a copy of such notice to be mailed to the Registered Holder of
each Warrant Certificate.
Any corporation into which the Warrant Agent may be converted or
merged or any corporation resulting from any consolidation to which the
Warrant Agent shall be a party or any corporation succeeding to the trust
business of the Warrant Agent shall be a successor warrant agent under this
Agreement without any further act, provided that such corporation is eligible
for appointment as successor to the Warrant Agent under the provisions of the
preceding paragraph. Any such successor warrant agent shall promptly cause
notice of its succession as warrant agent to be mailed to the Company and the
Registered Holder of each Warrant Certificate.
The Warrant Agent, its subsidiaries and affiliates, and any of its
or their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same
manner and to the same extent and with like effects as though it were not
Warrant Agent. Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.
SECTION 15. Modification of Agreement.
(a) Approval of Registered Holders. Subject to the provisions
of Section 15(b) hereof, the Company and the Warrant Agent may by supplemental
agreement make any changes or corrections in this Agreement that (i) they deem
appropriate to cure any ambiguity or to correct any defective or inconsistent
provision or manifest mistake or error herein contained or (ii) they deem
necessary or desirable and which shall not adversely affect the interests of
the holders of Warrant Certificates; provided, however, that except as
otherwise indicated in this section and this Agreement, this Agreement shall
not otherwise be modified, supplemented or altered in any respect, including
the modification of the number of shares of Common Stock issuable upon
exercise of the Warrants, the Exercise Price and the Warrant Expiration Date,
except with the consent in writing of the Company, the Warrant Agent, and the
Registered Holders of Warrant Certificates representing not less than
two-thirds of the Warrants then outstanding.
(b) Decrease in Exercise Price. The Company shall have the
right at any time and from time to time to decrease the Exercise Price for a
period of not less than 30 days on not less than 30 days prior written notice
to the Registered Holders of the Warrants.
SECTION 16. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first class registered or certified mail,
postage prepaid as follows: if to the Registered Holder of a Warrant
Certificate, at the address of such holder as shown on the registry books
maintained by the Warrant Agent; if to the Company, at 1400 Old Country Road,
Westbury, New York 11590 Attention: President (with a copy to: Blau, Kramer,
Wactlar & Lieberman, P.C., 100 Jericho Quadrangle, Jericho, New York 11753,
Attention: Nancy Lieberman, Esq., Facsimile No.: (516) 822-5609); if to the
Warrant Agent, at its Corporate Office.
SECTION 17. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
reference to principles of conflict of laws.
SECTION 18. Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the Company and the Warrant Agent (and their
respective successors and assigns) and the holders from time to time of
Warrant Certificates. Nothing in this Agreement is intended or shall be
construed to confer upon any other person any right, remedy or claim, in
equity or at law, or to impose upon any other person any duty, liability or
obligation.
SECTION 19. Termination. This Agreement shall terminate on the
earliest to occur of (a) the Expiration Date, (b) the date upon which all
Warrants have been exercised and (c) the date on which the Company certifies
to the Warrant Agent that no Warrants are outstanding; provided however, that
notwithstanding any such termination, the Warrant Agent shall be obligated to
deliver funds to the Company in accordance with this Agreement.
SECTION 20. Counterparts. This Agreement may be executed in
counterparts, all of which taken together shall constitute a single document.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
NATHAN'S FAMOUS, INC.
__________________________________
By: __________________________
Wayne Norbitz
President
AMERICAN STOCK TRANSFER & TRUST COMPANY
___________________________________
By: ___________________________
Authorized Officer
EXHIBIT A
No. W __________ __________ Warrants
WARRANT CERTIFICATE
NATHAN'S FAMOUS, INC.
This Warrant Certificate certifies that ____________, or its registered
assigns is the registered holder (the "Registered Holder") of the number of
Warrants set forth above, each of which represents the right to purchase one
fully paid and nonassessable share of common stock, par value $.10 per share
(the "Common Stock"), of Nathan's Famous, Inc., a Delaware corporation (the
"Company"), at any time until the Expiration Date hereinafter referred to, by
surrendering this Warrant Certificate, with the exercise form set forth hereon
duly executed with signatures guaranteed as provided below, at the office
maintained pursuant to the Warrant Agreement hereinafter referred to for that
purpose by American Stock Transfer & Trust Company, 40 Wall Street, New York,
New York 10005, and any other offices of the Warrant Agent or its successor
designated for such purpose (any such warrant agent being herein called the
"Warrant Agent"), and by paying in full the sum of $6.00 per share on or
before the Expiration Date (as defined below) (the "Exercise Price"), plus
transfer taxes, if any. Payment of the Exercise Price shall be made in United
States currency, by certified check or money order payable to the order of the
Company.
Upon certain events provided for in the Warrant Agreement, the Exercise
Price and the number of shares of Common Stock issuable upon the exercise of
each Warrant are required to be adjusted.
No Warrant may be exercised after 5:00 p.m. (New York City time) on
______ __, 2002 or on such expiration date as may be extended to maintain an
effective registration statement under the Securities Act of 1933, as amended
(the "Securities Act") for at least 90 consecutive days prior to such
expiration date (the "Expiration Date"). After the Expiration Date, all
Warrants evidenced hereby shall thereafter become void, and the holders
thereof shall have no rights hereunder. Prior to the Expiration Date, subject
to any applicable laws, rules or regulations restricting transferability and
to any restriction on transferability that may appear on this Warrant
Certificate in accordance with the terms of the Warrant Agreement, the
Registered Holder shall be entitled to transfer this Warrant Certificate in
whole or in part upon surrender of this Warrant Certificate at the office of
the Warrant Agent with the form of assignment set forth hereon duly executed,
with signatures guaranteed by a member firm of a national securities exchange,
a commercial bank, a savings bank or a savings and loan association or a trust
company located in the United States, a member of the National Association of
Securities Dealers, Inc. or other eligible guarantor institution which is a
participant in a signature guarantee program (as such terms are defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended). Upon any
such transfer, a new Warrant Certificate or Warrant Certificates representing
the same aggregate number of Warrants will be issued in accordance with the
instructions in the form of assignment.
No Warrant is exercisable unless, at the time of such exercise, the
Company has a registration statement in effect under the Securities Act
covering the shares of Common Stock issuable or transferable upon exercise of
such Warrant, and such shares have been registered or qualified under the
securities laws of the state of residence of the exercising Registered Holder,
or such issuance or transfer is exempt from the registration requirements of
the Securities Act and such shares of Common Stock are exempt from such
registration or qualification.
Upon the exercise of less than all of the Warrants evidenced by this
Warrant Certificate, there shall be issued to the Registered Holder a new
Warrant Certificate in respect of the Warrants not exercised.
Prior to the Expiration Date, the Registered Holder shall be entitled to
exchange this Warrant Certificate, with or without other Warrant Certificates,
for another Warrant Certificate or Warrant Certificates for the same aggregate
number of Warrants, upon surrender of this Warrant Certificate at the office
maintained for such purpose by the Warrant Agent.
No fractional shares will be issued upon the exercise of Warrants. As to
any final fraction of a share, which the Registered Holder of one or more
Warrant Certificates, the rights under which are exercised in the same
transaction, would otherwise be entitled to purchase upon such exercise, the
Registered Holder shall be paid the cash value thereof determined as provided
in the Warrant Agreement.
This Warrant Certificate is issued under and in accordance with a Warrant
Agreement between the Company and the Warrant Agent (the "Warrant Agreement")
and is subject to the terms and provisions contained in said Warrant
Agreement, to all of which terms and provisions the Registered Holder consents
by acceptance hereof.
This Warrant Certificate shall not entitle the Registered Holder to any
of the rights of a stockholder of the Company, including, without limitation,
the right to vote, to receive dividends and other distributions, or to attend
or receive any notice of meetings of stockholders or any other proceedings of
the Company.
This Warrant Certificate shall not be valid for any purpose until it
shall have been countersigned by the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
NATHAN'S FAMOUS, INC.
___________________________
BY: _______________________
President
[SEAL]
Treasurer
COUNTERSIGNED:
AMERICAN STOCK TRANSFER &
TRUST COMPANY, WARRANT AGENT
___________________________________
By:Authorized Officer
[REVERSE SIDE]
Exercise Form
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive shares of Common
Stock and herewith makes payment therefor. The undersigned requests that a
certificate for such shares be registered in the name of , whose
address is and whose social security or other identifying
number is _________________, and that such shares be delivered to
, whose address is . If said number of
shares is less than all of the shares of Common Stock purchasable hereunder,
the undersigned requests that a new Warrant Certificate representing the
balance of such shares be registered in the name of ,
whose address is
and whose social security or other identifying number is
_________________, and that such Warrant Certificate be delivered to
whose address is .
Date:
Signature
Signature Guaranteed:
The signature to the exercise form must correspond to the name as written
upon the face of this Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever. The signature should be
guaranteed by an eligible guarantor institution (banks, stockbrokers, savings
and loan associations and credit unions with membership in an approved
signature guarantee medallion program), pursuant to Rule 17Ad-15.
Form of Assignment
For value received, the undersigned hereby sells, assigns and transfers
unto _______ ___________________, whose address is ________________________
and whose social security or other identifying number is __________________,
the Warrants represented by this Warrant Certificate (or ____ Warrants, if
less than all of the Warrants represented by this certificate), and hereby
irrevocably constitutes and appoints the Warrant Agent as his or her
attorney-in-fact to transfer this Warrant Certificate in the books of the
Warrant Agent maintained for such purpose, with full power of substitution and
re-substitution in the premises. If said number of Warrants is less than all
of the Warrants evidenced by this certificate, the undersigned requests that a
new Warrant Certificate representing the balance of such Warrants be
registered in the name of _____________________, whose address is
_______________________________ and whose social security or other identifying
number is ________________, and that such Warrant Certificate be delivered to
___________________, whose address is _____________________________.
Date:
Signature
Signature Guaranteed:
The signature to the assignment form must correspond to the name as written
upon the face of this Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever. The signature should be
guaranteed by an eligible guarantor institution (banks, stockbrokers, savings
and loan associations and credit unions with membership in an approved
signature guarantee medallion program), pursuant to Rule 17Ad-15.
EXHIBIT B
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement made as of the 15th day of
January, 1999 ("Agreement"), by and between MIAMI SUBS CORPORATION, a
corporation incorporated under the laws of the State of Florida, with its
principal place of business at 6300 Northwest 31st Avenue, Fort Lauderdale,
Florida 33309 (the "Company"), and Donald L. Perlyn, residing at 2798 N.W.
27th Terrace, Boca Raton, Fl. 33434 (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company and the Executive are parties to that certain Employment
Agreement made as of December 1, 1998 (the "Initial Employment Agreement");
WHEREAS, the Company and the Executive desire to amend and restate the Initial
Employment Agreement as a condition to and in connection with consummation of
the merger of Miami Acquisition Corp. ("Merger Sub"), a wholly owned
subsidiary of Nathan's Famous, Inc. ("Parent"), with and into the Company,
whereby the Company will become a wholly owned subsidiary of Parent (the
"Merger") pursuant to that certain Agreement and Plan of Merger dated as of
January 15, 1999 (the "Merger Agreement"), among the Parent, Merger Sub and
the Company;
WHEREAS, on the Effective Date (as hereinafter defined), the Company and
Executive intend this Agreement to supersede any existing employment agreement
among the parties, including the Initial Employment Agreement;
WHEREAS, the Parent desires to comply with, and be bound by the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
and agreements herein contained, the Company and Executive agree that on the
Effective Date the Initial Employment Agreement shall be amended and restated
as follows:
1. Recitals: The foregoing recitals are true and correct and are
incorporated herein by reference thereto.
2. Employment.The Company hereby agrees to continue to employ
Executive, and Executive agrees to continue to be employed by the Company, on
the terms and conditions herein contained, to serve as the President and Chief
Operating Officer of the Company and a member of the Board of Directors of
each of the Company and the Parent. In addition, the Executive hereby agrees
to be involved in the day-to-day operations of Parent (including any of its
other affiliated entities) as the Board of Directors of Parent shall
reasonably require from time to time. The Executive shall devote
substantially all of his business time, energy, skill and efforts to the
performance of his duties hereunder and shall faithfully and diligently serve
the Company. The foregoing shall not prevent Executive from participating in
not-for-profit activities or from managing his passive personal investments
provided that these activities do not materially interfere with Executive's
obligations hereunder.
3. Term of Employment. Executive's employment under this
Agreement shall be for a term commencing on the effective date of the Merger
(the "Effective Date") and, subject to earlier termination as provided in
Section 8 below, terminating on the third anniversary of the Effective Date
(the "Initial Term"). The Initial Term shall be automatically extended for
successive one-year periods (the "Additional Terms") unless terminated at the
end of the Initial Term or any Additional Term by either party upon one
hundred eighty (180) days' prior written notice given to the other party (the
Initial Term and any Additional Terms shall be referred to as the "Employment
Term"). Notwithstanding anything else herein, the provisions of Section 9
hereof shall survive and remain in effect notwithstanding the termination of
the Employment Term.
4. Compensation. (a) As compensation for his services under
this Agreement, the Company shall pay Executive a salary at the rate of Two
Hundred Thousand Dollars ($200,000) per year (the "Base Salary"), payable in
equal installments (not less frequently than monthly) and subject to
withholding in accordance with the Company's normal payroll practices. The
Executive's Base Salary shall be reviewed annually by the Company and may be
increased, but not decreased, in the Company's sole discretion.
(b) In addition to the Base Salary, Executive shall participate
in any executive bonus program established by the Company and Parent from time
to time. Notwithstanding the foregoing, the Company will pay Executive a
bonus of not less than three percent (3%) of the pre-tax income of the Company
for each fiscal year, payable within forty-five (45) days after the end of
each such year In the event that Executive's employment under this Agreement
is terminated pursuant to Section 8(a)(v) prior to December 31, 2001,
Executive agrees to reimburse the Company for the pro-rata portion of the
bonus paid to him in January 1999 pursuant to Section 3(b)(i) of the Initial
Employment Agreement computed by dividing the number of months from the date
of termination to December 31, 2001 by 37 months, and multiplying such ratio
by the amount of the bonus.
5. Benefits and Fringes. During the Employment Term, Executive
shall be entitled to such benefits and fringes, if any, as are generally
provided from time to time by the Company and/or Parent to its executive
employees of a comparable level, including any life, medical or dental
insurance plans for the benefit of Executive and members of his immediate
family, and pension, profit-sharing, 401(k) and other similar plans and on the
same terms as so provided. Notwithstanding the foregoing, the Executive shall
be provided with long-term disability insurance providing for payment of a
minimum monthly benefit of $6,896 and with life insurance, payable to his
designated beneficiary, at least equal to $1,000,000; and provided, further
that Executive shall be furnished a Company automobile.
6. Expenses. The Company shall reimburse Executive in
accordance with its expense reimbursement policy as in effect from time to
time for all reasonable expenses, including, without limitation, Executive's
professional dues, license fees, continuing educational courses, professional
association membership fees, airplane travel and other travel expenses and all
reasonable expenses related to his Company automobile (including, without
limitation, repairs, maintenance, insurance and gasoline), incurred by
Executive in connection with the performance of his duties under this
Agreement upon the presentation by Executive of an itemized account of such
expenses and appropriate receipts.
7. Vacation. During the Employment Term, Executive shall be
entitled to vacation in accordance with the Company's practices, provided that
Executive shall not be entitled to less than four (4) weeks paid vacation in
each full contract year. Any vacation not taken in any year shall be deemed
to be forfeited by the Executive as of January 1 of the succeeding year.
8. Termination. (a) Executive's employment under this
Agreement and the Employment Term shall terminate as follows:
(i) automatically on the date of Executive's death.
(ii) Upon written notice given by the Company to the Executive if
Executive is unable to perform his material duties hereunder for 180 days
(whether or not continuous) during any period of 360 consecutive days by
reason of physical or mental disability.
(iii) Upon written notice by the Company to the Executive for Cause.
Cause shall mean (A) the Executive's conviction of a felony involving moral
turpitude (after exhaustion or lapse of all rights of appeal); (B) willful
refusal to perform his duties as President and Chief Operating Officer or
director of the Company and as otherwise set forth in Section 2 hereof, which
is not remedied promptly after receipt by the Executive of written notice from
the Company specifying the details thereof; and (C) Executive's dishonesty in
the performance of his duties. Upon a termination for Cause, Executive (and
his representative) shall be given the opportunity to appear before the Board
of Directors of the Company (the "Board") to explain why the Executive
believes that Cause did not occur. Such appearance shall be scheduled on no
less than twenty (20) and no more than forty (40) days written notice to
Executive. In the event the Board agrees with the Executive, which shall be a
determination made in its sole discretion, the Executive shall be
retroactively reinstated in his position. The removal pending such Board
meeting shall not be deemed Good Reason under (vi) below.
(iv) Upon written notice by the Company without Cause.
(v) Upon the voluntary resignation of the Executive without Good
Reason upon sixty (60) days prior written notice to the Company (which the
Company may in its sole discretion make effective earlier).
(vi) Upon the written resignation of the Executive for Good Reason
stating with specificity the details of the Good Reason, if the stated Good
Reason is not cured within thirty (30) days of the giving of such notice.
"Good Reason" shall mean (A) relocation of the Executive's office, or
materially change the location at which Executive is required to perform his
duties, from within the Territory, (B) any material reduction in his
authority, duties or responsibilities or (C) any other material breach of any
provision of this Agreement by the Company. For purposes hereof, "Territory"
shall mean Broward, Miami-Dade and Palm Beach Counties, Florida.
(vii) Upon written notice of non-renewal by the Company or Executive
pursuant to Section 3 hereof.
(b) Upon any termination of the Employment Term Executive shall be
entitled to receive any unpaid salary and accrued vacation through his date of
termination and any benefits under any benefit plan in accordance with the
terms of said plan. In addition, (i) if the termination is pursuant to
(a)(iv) or (a)(vi) above, Executive shall receive (without a duty to mitigate)
severance pay in a lump sum equal to three (3) times the amount of Executive's
Base Salary in effect at the time of termination, and (ii) if termination is
by the Company pursuant to (a)(vii) above, Executive shall receive (without a
duty to mitigate) severance pay in a lump sum equal to Executive's Base Salary
in effect at the time of termination. Such lump sum severance payments shall
be paid within thirty (30) and fifteen (15) days, respectively, after the date
of termination. In the event termination is pursuant to (a)(ii) alone,
Executive shall receive in monthly payments for one (1) year thereafter
Executive's Base Salary in effect at the time of termination reduced by any
disability benefits or worker's compensation salary replacement he receives
from any program sponsored or made available by the Company or a governmental
entity. In the event of termination other than pursuant to (a)(i), (a)(iii)
or (a)(v), to the extent the Executive or his dependents are eligible for
COBRA coverage, the Company shall pay the cost of such coverage for the
maximum period permitted under federal law. The Company shall have no other
obligations to the Executive.
9. Confidential Information and Non-Competition.
(a) Executive acknowledges that as a result of his employment by
the Company, Executive will obtain secret and confidential information as to
the Company and its affiliated entities, that the Company and its affiliated
entities will suffer substantial damage, which would be difficult to
ascertain, if Executive shall enter into Competition (as defined below) with
the Company or any of its affiliated entities and that because of the nature
of the information that will be known to Executive it is necessary for the
Company and its affiliated entities to be protected by the prohibition against
Competition set forth herein, as well as the confidentiality restrictions set
forth herein. Executive acknowledges that the provisions of this Agreement
are reasonable and necessary for the protection of the business of the Company
and its affiliated entities and that part of the compensation paid under this
Agreement is in consideration for the agreements in this Section 9.
(b) Competition shall mean:
(i) participating, directly or indirectly, as an individual
proprietor, partner, stockholder, officer, employee, director, joint venturer,
investor, lender, consultant or in any capacity whatsoever in the State of
Florida in a business in competition with the quick-service restaurant
business conducted by the Company or its affiliated entities during the
Employment Term; provided, however, that such prohibited participation shall
not include: (A) the mere ownership of not more than one percent (1%) of the
total outstanding stock of a publicly held company; (B) the performance of
services for any enterprise to the extent such services are not performed,
directly or indirectly, for a business in the aforesaid Competition; or (C)
any activity engaged in with the prior written approval of the Board.
(ii) recruiting, soliciting or inducing any nonclerical
employee or employees of the Company or its affiliated entities to terminate
their employment with, or otherwise cease their relationship with, the Company
or its affiliated entities or hiring or assisting another person or entity to
hire any nonclerical employee of the Company or its affiliated entities.
Notwithstanding the foregoing, if requested by an entity with which Executive
is not affiliated, Executive may serve as a reference for any person who at
the time of the request is not an employee of the Company or any of its
affiliated entities.
If any restriction set forth in above items (i) and/or (ii) is found by any
court of competent jurisdiction, or an arbitrator, to be unenforceable because
it extends for too long a period of time or over too great a range of
activities or in too broad a geographic area, it shall be interpreted to
extend over the maximum period of time, range of activities or geographic area
as to which it may be enforceable.
(c) During and after the Employment Term, Executive shall hold
in a fiduciary capacity for the benefit of the Company and its affiliated
entities all secret or confidential information, knowledge or data relating to
the Company and its affiliated entities, and their respective businesses,
including any confidential information as to customers or vendors of the
Company or its affiliated entities, (i) obtained by Executive during his
employment by the Company or its affiliated entities; and (ii) not otherwise
public knowledge or known within the Company's or its affiliated entities'
industries. Executive shall not, without prior written consent of the
Company, unless compelled pursuant to the order of a court or other
governmental or legal body having jurisdiction over such matter, communicate
or divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. In the event Executive is compelled by
order of a court or other governmental or legal body to communicate or divulge
any such information, knowledge or data to anyone other than the Company and
those designated by it, Executive shall promptly notify the Company of any
such order and shall cooperate fully with the Company in protecting such
information to the extent possible under applicable law.
(d) Upon termination of Executive's employment with the Company,
or at any other time as the Company may request, Executive will promptly
deliver to the Company all documents which Executive may possess or have under
his direction or control (whether prepared by the Company, an affiliated
entity, Executive or a third party) relating to the Company or its affiliated
entities or any of their respective businesses or properties.
(e) During the Employment Term and for a period of one (1) year
following termination thereof (except for termination pursuant to Section
8(a)(iv) or (vi)), Executive shall not enter into Competition with the Company
or any of its affiliated entities.
(f) In the event of a breach or potential breach of this Section
9, Executive acknowledges that the Company and its affiliated entities will be
caused irreparable injury and that money damages may not be an adequate remedy
and agree that the affiliated entities shall be entitled to injunctive relief
(in addition to its other remedies at law) to have the provisions of this
Section 9 enforced.
10. Executive Representation.
Executive represents and warrants that he is under no contractual or
other limitation from entering into this Agreement and performing his
obligations hereunder.
11. Indemnification
The Executive shall be entitled to be indemnified by the Company for his
actions as an officer, director, employee, agent or fiduciary of the Company
or its affiliated entities to the fullest extent permitted by applicable law
and shall, to the extent the Company does not or is unable as a result of a
conflict between the parties to undertake his defense, have reasonable legal
fees (including, but not limited to, a retainer fee) and other reasonable
expenses paid to him in advance of final disposition of a proceeding, provided
that he has actually incurred such expenses and he executes an undertaking to
repay such amounts if, and to the extent, required to do so by applicable law.
The Company shall cover the Executive under any directors' and
officers'liability insurance policy to the same extent as its other senior
officers.
12. Stock Options.
On the Effective Date, Parent shall grant to Executive, in exchange for
the cancellation of the Executive's options (assumed by Parent pursuant to the
Merger) to purchase 385,116 shares of the Company's common stock under the
Company's 1990 Executive Option Plan, immediately exercisable stock options
under a stock option plan of the Parent (the "Plan") to purchase 192,558
shares of Parent's common stock, $.01 par value per share (the "Common
Stock"). Such options shall continue to be exercisable for a term of ten (10)
years, irrespective of whether Executive remains employed by the Company, at
an exercise price equal to the fair market value per share on the date of
grant, subject to adjustment as provided in the Plan. Parent shall file
within ten business days of the Effective Date, and shall maintain in effect,
a registration statement on Form S-8 under the Securities Act of 1933, as
amended, registering the shares of Common Stock issuable upon exercise of all
stock options held by Executive and the resale thereof by him.
13. Change of Control.
Upon a "Change of Control" (as defined below) of the Company or Parent,
the Company shall pay Executive, within thirty (30) days of such event, a lump
sum equal to three (3) times the amount of his Base Salary in effect at the
time of such event, together with a pro rata portion of the bonus accrued
through the date of such Change of Control. As used herein "Change of
Control"means (a) a change in control as such term is presently defined in
Regulation 240.12b-2 under the Securities Exchange Act of 1934 ("Exchange
Act"); or (b) if any "person" (as such term is used in Section 13(d) and 14(d)
of the Exchange Act) in either the case of the Company or Parent (other than
the Parent or any "person" who on the date of this Agreement is a director or
officer of the Parent or Company, as the case may be), becomes the "beneficial
owner" (as defined in Rule 13(d)-3 under the Exchange Act), directly or
indirectly, of securities of the Company or Parent, as the case may be,
representing twenty (20%) percent of the voting power of the Company's or
Parent's then outstanding securities, as the case may be; or (c) if during any
period of two (2) consecutive years during the term of Executive's employment,
individuals who at the beginning of such period constitute the Board of
Directors of either the Company or Parent cease for any reason to constitute
at least a majority thereof.
14. Entire Agreement; Modification.
This Agreement constitutes the full and complete understanding of the
parties hereto and will supersede all prior agreements and understandings,
oral or written, with respect to the subject matter hereof. Each party to
this Agreement acknowledges that no representations, inducements, promises or
agreements, oral or otherwise, have been made by either party, or anyone
acting on behalf of either party, which are not embodied herein and that no
other agreement, statement or promise not contained in this Agreement shall be
valid or binding. This Agreement may not be modified or amended except by an
instrument in writing signed by the party against whom or which enforcement
may be sought.
15. Severability.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without rendering invalid or
unenforceable thc remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms of provisions of
this Agreement in any other jurisdiction.
16. Waiver of Breach.
The waiver by any party of a breach of any provisions of this Agreement,
which waiver must be in writing to be effective, shall not operate as or be
construed as a waiver of any subsequent breach.
17. Notices.
All notices hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand, or one day after sending by express
mail or other "overnight mail service," or three days after sending by
certified or registered mail, postage prepaid, return receipt requested.
Notice shall be sent as follows: if to Executive, to the address as listed in
the Company's records; and if to the Company, to the Company at its office as
set forth at the head of this Agreement, to the attention of its Vice
President and Chief Financial Officer. Either party may change the notice
address by notice given as aforesaid.
18. Assignability; Binding Effect.
This Agreement shall be binding upon and inure to the benefit of
Executive and Executive's legal representatives, heirs and distributees, and
shall be binding upon and inure to the benefit of the Company, its successors
and assigns. This Agreement may not be assigned by the Executive. This
Agreement may not be assigned by the Company except in connection with a
merger or a sale by the Company of all or substantially all of its assets and
then only provided the assignee specifically assumes in writing all of the
Company's obligations hereunder.
19. Governing Law.
(a) All issues pertaining to the validity, construction,
execution and performance of this Agreement shall be construed and governed in
accordance with the laws of the State of New York, without giving effect to
the conflict or choice of law provisions thereof.
(b) Any dispute or controversy with regard to this Agreement,
other than injunctive relief pursuant to Section 9, shall be settled by
arbitration in New York, New York before the American Arbitration Association
("AAA") in accordance with the Rules of Commercial Arbitration of the AAA.
The decision of the arbitrators shall be final and binding upon the parties
hereto and may be entered in any court having jurisdiction. The Company shall
advance all of the Executive's expenses (including, without limitation,
reasonable counsel fees) incurred in connection with such arbitration,
provided that Executive shall repay the same in the event he is not, to any
extent, the prevailing party.
20. Headings.
The headings in this Agreement are intended solely for convenience of
reference and shall be given no effect in the construction or interpretation
of this Agreement.
21. Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together shall constitute
one and the same instrument.
22. Guarantee and Joinder.
Parent hereby unconditionally and irrevocably guarantees, as primary
obligor not merely as surety: (i) the punctual payment when due of all
obligations of the Company arising under this Agreement; and (ii) the due and
punctual performance and observance by the Company of all covenants,
agreements and conditions on its part to be performed and observed under this
Agreement. Parent hereby agrees to comply with, and be bound by this
Agreement.
IN WITNESS WHEREOF, the Company and Parent have each caused this
Agreement to be duly executed by an authorized officer and Executive has
hereunto set his hand as of the date first set forth above.
MIAMI SUBS CORPORATION
By:
Name: Jerry Woda
Title: Vice President
Donald L. Perlyn
NATHAN'S FAMOUS, INC.
By:
Name:
Title:
EXHIBIT C
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement made as of the 15th day of
January, 1999 ("Agreement"), by and between MIAMI SUBS CORPORATION, a
corporation incorporated under the laws of the State of Florida, with its
principal place of business at 6300 Northwest 31st Avenue, Fort Lauderdale,
Florida 33309 (the "Company"), and Jerry Woda, residing at 7615 Gloucester
Lane, Parkland, Fl. 33067 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company and the Executive are parties to that certain Employment
Agreement made as of December 1, 1998 (the "Initial Employment Agreement");
WHEREAS, the Company and the Executive desire to amend and restate the Initial
Employment Agreement as a condition to and in connection with consummation of
the merger of Miami Acquisition Corp. ("Merger Sub"), a wholly owned
subsidiary of Nathan's Famous, Inc. ("Parent"), with and into the Company,
whereby the Company will become a wholly owned subsidiary of Parent (the
"Merger") pursuant to that certain Agreement and Plan of Merger dated as of
January 15, 1999 (the "Merger Agreement"), among the Parent, Merger Sub and
the Company;
WHEREAS, on the Effective Date (as hereinafter defined), the Company and
Executive intend this Agreement to supersede any existing employment agreement
among the parties, including the Initial Employment Agreement;
WHEREAS, the Parent desires to comply with, and be bound by the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
and agreements herein contained, the Company and Executive agree that on the
Effective Date the Initial Employment Agreement shall be amended and restated
as follows:
1. Recitals: The foregoing recitals are true and correct and are
incorporated herein by reference thereto.
2. Employment.
The Company hereby agrees to continue to employ Executive, and Executive
agrees to continue to be employed by the Company, on the terms and conditions
herein contained, to serve as its Vice President and Chief Financial Officer.
The Executive shall devote substantially all of his business time, energy,
skill and efforts to the performance of his duties hereunder and shall
faithfully and diligently serve the Company. The foregoing shall not prevent
Executive from participating in not-for-profit activities or from managing his
passive personal investments provided that these activities do not materially
interfere with Executive's obligations hereunder.
3. Term of Employment.
Executive's employment under this Agreement shall be for a term
commencing on the effective date of the Merger (the "Effective Date") and,
subject to earlier termination as provided in Section 8 below, terminating on
the second anniversary of the Effective Date (the "Initial Term"). The
Initial Term shall be automatically extended for successive one-year periods
(the "Additional Terms") unless terminated at the end of the Initial Term or
any Additional Term by either party upon one hundred eighty (180) days' prior
written notice given to the other party (the Initial Term and any Additional
Terms shall be referred to as the "Employment Term"). Notwithstanding
anything else herein, the provisions of Section 9 hereof shall survive and
remain in effect notwithstanding the termination of the Employment Term.
4. Compensation.
(a) As compensation for his services under this Agreement, the
Company shall pay Executive a salary at the rate of One Hundred Fifty Thousand
Dollars ($150,000) per year (the "Base Salary"), payable in equal installments
(not less frequently than monthly) and subject to withholding in accordance
with the Company's normal payroll practices. The Executive's Base Salary
shall be reviewed annually by the Company and may be increased, but not
decreased, in the Company's sole discretion.
(b) In addition to the Base Salary, Executive shall participate
in any executive bonus program established by the Company and Parent from time
to time. In the event that Executive's employment under this Agreement is
terminated pursuant to Section 8(a)(v) prior to December 31, 2000, Executive
agrees to reimburse the Company for the pro-rata portion of the bonus paid to
him in January 1999 pursuant to Section 3(b)(i) of the Initial Employment
Agreement computed by dividing the number of months from the date of
termination to December 31, 2000 by 25 months, and multiplying such ratio by
the amount of the bonus.
5. Benefits and Fringes.
During the Employment Term, Executive shall be entitled to such benefits
and fringes, if any, as are generally provided from time to time by the
Company and/or Parent to its executive employees of a comparable level,
including any life, medical or dental insurance plans for the benefit of
Executive and members of his immediate family, and pension, profit-sharing,
401(k) and other similar plans and on the same terms as so provided, as well
as a Company automobile.
6. Expenses.
The Company shall reimburse Executive in accordance with its expense
reimbursement policy as in effect from time to time for all reasonable
expenses, including, without limitation, Executive's professional dues,
license fees, continuing educational courses, professional association
membership fees, airplane travel and other travel expenses and all reasonable
expenses related to his Company automobile (including, without limitation,
repairs, maintenance, insurance and gasoline), incurred by Executive in
connection with the performance of his duties under this Agreement upon the
presentation by Executive of an itemized account of such expenses and
appropriate receipts.
7. Vacation.
During the Employment Term, Executive shall be entitled to vacation in
accordance with the Company's practices, provided that Executive shall not be
entitled to less than four (4) weeks paid vacation in each full contract year.
Any vacation not taken in any year shall be deemed to be forfeited by the
Executive as of January 1 of the succeeding year.
8. Termination.
(a) Executive's employment under this Agreement and the
Employment Term shall terminate as follows:
(i) automatically on the date of Executive's death.
(ii) Upon written notice given by the Company to the
Executive if Executive is unable to perform his material duties hereunder for
180 days (whether or not continuous) during any period of 360 consecutive days
by reason of physical or mental disability.
(iii) Upon written notice by the Company to the Executive
for Cause. Cause shall mean (A) the Executive's conviction of a felony
involving moral turpitude (after exhaustion or lapse of all rights of appeal);
(B) willful refusal to perform his duties as Vice President and Chief
Financial Officer of the Company, which is not remedied promptly after receipt
by the Executive of written notice from the Company specifying the details
thereof; and (C) Executive's dishonesty in the performance of his duties.
Upon a termination for Cause, Executive (and his representative) shall be
given the opportunity to appear before the Board of Directors of the Company
(the "Board") to explain why the Executive believes that Cause did not occur.
Such appearance shall be scheduled on no less than twenty (20) and no more
than forty (40) days written notice to Executive. In the event the Board
agrees with the Executive, which shall be a determination made in its sole
discretion, the Executive shall be retroactively reinstated in his position.
The removal pending such Board meeting shall not be deemed Good Reason under
(vi) below.
(iv) Upon written notice by the Company without Cause.
(v) Upon the voluntary resignation of the Executive without
Good Reason upon sixty (60) days prior written notice to the Company (which
the Company may in its sole discretion make effective earlier).
(vi) Upon the written resignation of the Executive for Good
Reason stating with specificity the details of the Good Reason, if the stated
Good Reason is not cured within thirty (30) days of the giving of such notice.
"Good Reason" shall mean (A) relocation of the Executive's office, or
materially change the location at which Executive is required to perform his
duties, from within the Territory, (B) any material reduction in his
authority, duties or responsibilities or (C) any other material breach of any
provision of this Agreement by the Company. For purposes hereof, "Territory"
shall mean Broward, Miami-Dade and Palm Beach Counties, Florida.
(vii) Upon written notice of non-renewal by the Company or
Executive pursuant to Section 3 hereof.
(b) Upon any termination of the Employment Term Executive shall be
entitled to receive any unpaid salary and accrued vacation through his date of
termination and any benefits under any benefit plan in accordance with the
terms of said plan. In addition, (i) if the termination is pursuant to
(a)(iv) or (a)(vi) above, Executive shall receive (without a duty to mitigate)
severance pay in a lump sum equal to three (3) times the amount of Executive's
Base Salary in effect at the time of termination, and (ii) if termination is
by the Company pursuant to (a)(vii) above, Executive shall receive (without a
duty to mitigate) severance pay in a lump sum equal to Executive's Base Salary
in effect at the time of termination. Such lump sum severance payments shall
be paid within thirty (30) and fifteen (15) days, respectively, after the date
of termination. In the event termination is pursuant to (a)(ii) alone,
Executive shall receive in monthly payments for one (1) year thereafter
Executive's Base Salary in effect at the time of termination reduced by any
disability benefits or worker's compensation salary replacement he receives
from any program sponsored or made available by the Company or a governmental
entity. In the event of termination other than pursuant to (a)(i), (a)(iii)
or (a)(v), to the extent the Executive or his dependents are eligible for
COBRA coverage, the Company shall pay the cost of such coverage for the
maximum period permitted under federal law. The Company shall have no other
obligations to the Executive.
9. Confidential Information and Non-Competition.
(a) Executive acknowledges that as a result of his employment by
the Company, Executive will obtain secret and confidential information as to
the Company and its affiliated entities, that the Company and its affiliated
entities will suffer substantial damage, which would be difficult to
ascertain, if Executive shall enter into Competition (as defined below) with
the Company or any of its affiliated entities and that because of the nature
of the information that will be known to Executive it is necessary for the
Company and its affiliated entities to be protected by the prohibition against
Competition set forth herein, as well as the confidentiality restrictions set
forth herein. Executive acknowledges that the provisions of this Agreement
are reasonable and necessary for the protection of the business of the Company
and its affiliated entities and that part of the compensation paid under this
Agreement is in consideration for the agreements in this Section 9.
(b) Competition shall mean:
(i) participating, directly or indirectly, as an individual
proprietor, partner, stockholder, officer, employee, director, joint venturer,
investor, lender, consultant or in any capacity whatsoever in the State of
Florida in a business in competition with the quick-service restaurant
business conducted by the Company or its affiliated entities during the
Employment Term; provided, however, that such prohibited participation shall
not include: (A) the mere ownership of not more than one percent (1%) of the
total outstanding stock of a publicly held company; (B) the performance of
services for any enterprise to the extent such services are not performed,
directly or indirectly, for a business in the aforesaid Competition; or (C)
any activity engaged in with the prior written approval of the Board.
(ii) recruiting, soliciting or inducing any nonclerical
employee or employees of the Company or its affiliated entities to terminate
their employment with, or otherwise cease their relationship with, the Company
or its affiliated entities or hiring or assisting another person or entity to
hire any nonclerical employee of the Company or its affiliated entities.
Notwithstanding the foregoing, if requested by an entity with which Executive
is not affiliated, Executive may serve as a reference for any person who at
the time of the request is not an employee of the Company or any of its
affiliated entities.
If any restriction set forth in above items (i) and/or (ii) is found by any
court of competent jurisdiction, or an arbitrator, to be unenforceable because
it extends for too long a period of time or over too great a range of
activities or in too broad a geographic area, it shall be interpreted to
extend over the maximum period of time, range of activities or geographic area
as to which it may be enforceable.
(c) During and after the Employment Term, Executive shall hold
in a fiduciary capacity for the benefit of the Company and its affiliated
entities all secret or confidential information, knowledge or data relating to
the Company and its affiliated entities, and their respective businesses,
including any confidential information as to customers or vendors of the
Company or its affiliated entities, (i) obtained by Executive during his
employment by the Company or its affiliated entities; and (ii) not otherwise
public knowledge or known within the Company's or its affiliated entities'
industries. Executive shall not, without prior written consent of the
Company, unless compelled pursuant to the order of a court or other
governmental or legal body having jurisdiction over such matter, communicate
or divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. In the event Executive is compelled by
order of a court or other governmental or legal body to communicate or divulge
any such information, knowledge or data to anyone other than the Company and
those designated by it, Executive shall promptly notify the Company of any
such order and shall cooperate fully with the Company in protecting such
information to the extent possible under applicable law.
(d) Upon termination of Executive's employment with the Company,
or at any other time as the Company may request, Executive will promptly
deliver to the Company all documents which Executive may possess or have under
his direction or control (whether prepared by the Company, an affiliated
entity, Executive or a third party) relating to the Company or its affiliated
entities or any of their respective businesses or properties.
(e) During the Employment Term and for a period of one (1) year
following termination thereof (except for termination pursuant to Section
8(a)(iv) or (vi)), Executive shall not enter into Competition with the Company
or any of its affiliated entities.
(f) In the event of a breach or potential breach of this Section
9, Executive acknowledges that the Company and its affiliated entities will be
caused irreparable injury and that money damages may not be an adequate remedy
and agree that the affiliated entities shall be entitled to injunctive relief
(in addition to its other remedies at law) to have the provisions of this
Section 9 enforced.
10. Executive Representation.
Executive represents and warrants that he is under no contractual or
other limitation from entering into this Agreement and performing his
obligations hereunder.
11. Indemnification
The Executive shall be entitled to be indemnified by the Company for his
actions as an officer, director, employee, agent or fiduciary of the Company
or its affiliated entities to the fullest extent permitted by applicable law
and shall, to the extent the Company does not or is unable as a result of a
conflict between the parties to undertake his defense, have reasonable legal
fees (including, but not limited to, a retainer fee) and other reasonable
expenses paid to him in advance of final disposition of a proceeding, provided
that he has actually incurred such expenses and he executes an undertaking to
repay such amounts if, and to the extent, required to do so by applicable law.
The Company shall cover the Executive under any directors' and
officers'liability insurance policy to the same extent as its other senior
officers.
12. Stock Options.
On the Effective Date, Parent shall grant to Executive, in exchange for
the cancellation of the Executive's options (assumed by Parent pursuant to the
Merger) to purchase 196,488 shares of the Company's common stock under the
Company's 1990 Executive Option Plan, immediately exercisable stock options
under a stock option plan of the Parent (the "Plan") to purchase 125,000
shares of Parent's common stock, $.01 par value per share (the "Common
Stock"). Such options shall continue to be exercisable for a term of ten (10)
years, irrespective of whether Executive remains employed by the Company, at
an exercise price equal to the fair market value per share on the date of
grant, subject to adjustment as provided in the Plan. Parent shall file
within ten business days of the Effective Date, and shall maintain in effect,
a registration statement on Form S-8 under the Securities Act of 1933, as
amended, registering the shares of Common Stock issuable upon exercise of all
stock options held by Executive and the resale thereof by him.
13. Change of Control.
Upon a "Change of Control" (as defined below) of the Company or Parent,
the Company shall pay Executive, within thirty (30) days of such event, a lump
sum equal to three (3) times the amount of his Base Salary in effect at the
time of such event, together with a pro rata portion of the bonus accrued
through the date of such Change of Control. As used herein "Change of
Control"means (a) a change in control as such term is presently defined in
Regulation 240.12b-2 under the Securities Exchange Act of 1934 ("Exchange
Act"); or (b) if any "person" (as such term is used in Section 13(d) and 14(d)
of the Exchange Act) in either the case of the Company or Parent (other than
the Parent or any "person" who on the date of this Agreement is a director or
officer of the Parent or Company, as the case may be), becomes the "beneficial
owner" (as defined in Rule 13(d)-3 under the Exchange Act), directly or
indirectly, of securities of the Company or Parent, as the case may be,
representing twenty (20%) percent of the voting power of the Company's or
Parent's then outstanding securities, as the case may be; or (c) if during any
period of two (2) consecutive years during the term of Executive's employment,
individuals who at the beginning of such period constitute the Board of
Directors of either the Company or Parent cease for any reason to constitute
at least a majority thereof.
14. Entire Agreement; Modification.
This Agreement constitutes the full and complete understanding of the
parties hereto and will supersede all prior agreements and understandings,
oral or written, with respect to the subject matter hereof. Each party to
this Agreement acknowledges that no representations, inducements, promises or
agreements, oral or otherwise, have been made by either party, or anyone
acting on behalf of either party, which are not embodied herein and that no
other agreement, statement or promise not contained in this Agreement shall be
valid or binding. This Agreement may not be modified or amended except by an
instrument in writing signed by the party against whom or which enforcement
may be sought.
15. Severability.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without rendering invalid or
unenforceable thc remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms of provisions of
this Agreement in any other jurisdiction.
16. Waiver of Breach.
The waiver by any party of a breach of any provisions of this Agreement,
which waiver must be in writing to be effective, shall not operate as or be
construed as a waiver of any subsequent breach.
17. Notices.
All notices hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand, or one day after sending by express
mail or other "overnight mail service," or three days after sending by
certified or registered mail, postage prepaid, return receipt requested.
Notice shall be sent as follows: if to Executive, to the address as listed in
the Company's records; and if to the Company, to the Company at its office as
set forth at the head of this Agreement, to the attention of its President and
Chief Operating Officer. Either party may change the notice address by notice
given as aforesaid.
18. Assignability; Binding Effect.
This Agreement shall be binding upon and inure to the benefit of
Executive and Executive's legal representatives, heirs and distributees, and
shall be binding upon and inure to the benefit of the Company, its successors
and assigns. This Agreement may not be assigned by the Executive. This
Agreement may not be assigned by the Company except in connection with a
merger or a sale by the Company of all or substantially all of its assets and
then only provided the assignee specifically assumes in writing all of the
Company's obligations hereunder.
19. Governing Law.
(a) All issues pertaining to the validity, construction,
execution and performance of this Agreement shall be construed and governed in
accordance with the laws of the State of New York, without giving effect to
the conflict or choice of law provisions thereof.
(b) Any dispute or controversy with regard to this Agreement,
other than injunctive relief pursuant to Section 9, shall be settled by
arbitration in New York, New York before the American Arbitration Association
("AAA") in accordance with the Rules of Commercial Arbitration of the AAA.
The decision of the arbitrators shall be final and binding upon the parties
hereto and may be entered in any court having jurisdiction. The Company shall
advance all of the Executive's expenses (including, without limitation,
reasonable counsel fees) incurred in connection with such arbitration,
provided that Executive shall repay the same in the event he is not, to any
extent, the prevailing party.
20. Headings.
The headings in this Agreement are intended solely for convenience of
reference and shall be given no effect in the construction or interpretation
of this Agreement.
21. Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together shall constitute
one and the same instrument.
22. Guarantee and Joinder.
Parent hereby unconditionally and irrevocably guarantees, as primary
obligor not merely as surety: (i) the punctual payment when due of all
obligations of the Company arising under this Agreement; and (ii) the due and
punctual performance and observance by the Company of all covenants,
agreements and conditions on its part to be performed and observed under this
Agreement. Parent hereby agrees to comply with, and be bound by this
Agreement.
IN WITNESS WHEREOF, the Company and Parent have each caused this
Agreement to be duly executed by an authorized officer and Executive has
hereunto set his hand as of the date first set forth above.
MIAMI SUBS CORPORATION
By:
Name: Donald L. Perlyn
Title: President
Jerry Woda
NATHAN'S FAMOUS, INC.
By:
Name:
Title:
EXHIBIT D
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement made as of the 15th day of
January, 1999 ("Agreement"), by and between MIAMI SUBS CORPORATION, a
corporation incorporated under the laws of the State of Florida, with its
principal place of business at 6300 Northwest 31st Avenue, Fort Lauderdale,
Florida 33309 (the "Company"), and Frank Baran, residing at 6062 Robinson
Street, Palm Beach Gardens, Fl. 33418 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company and the Executive are parties to that certain Employment
Agreement made as of December 1, 1998 (the "Initial Employment Agreement");
WHEREAS, the Company and the Executive desire to amend and restate the Initial
Employment Agreement as a condition to and in connection with consummation of
the merger of Miami Acquisition Corp. ("Merger Sub"), a wholly owned
subsidiary of Nathan's Famous, Inc. ("Parent"), with and into the Company,
whereby the Company will become a wholly owned subsidiary of Parent (the
"Merger") pursuant to that certain Agreement and Plan of Merger dated as of
January 15, 1999 (the "Merger Agreement"), among the Parent, Merger Sub and
the Company;
WHEREAS, on the Effective Date (as hereinafter defined), the Company and
Executive intend this Agreement to supersede any existing employment agreement
among the parties, including the Initial Employment Agreement;
WHEREAS, the Parent desires to comply with, and be bound by the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
and agreements herein contained, the Company and Executive agree that on the
Effective Date the Initial Employment Agreement shall be amended and restated
as follows:
1. Recitals: The foregoing recitals are true and correct and are
incorporated herein by reference thereto.
2. Employment.
The Company hereby agrees to continue to employ Executive, and Executive
agrees to continue to be employed by the Company, on the terms and conditions
herein contained, to serve as its Vice President-Operations. The Executive
shall devote substantially all of his business time, energy, skill and efforts
to the performance of his duties hereunder and shall faithfully and diligently
serve the Company. The foregoing shall not prevent Executive from
participating in not-for-profit activities or from managing his passive
personal investments provided that these activities do not materially
interfere with Executive's obligations hereunder.
3. Term of Employment.
Executive's employment under this Agreement shall be for a term
commencing on the effective date of the Merger (the "Effective Date") and,
subject to earlier termination as provided in Section 8 below, terminating on
the first anniversary of the Effective Date (the "Initial Term"). The Initial
Term shall be automatically extended for successive one-year periods (the
"Additional Terms") unless terminated at the end of the Initial Term or any
Additional Term by either party upon one hundred eighty (180) days' prior
written notice given to the other party (the Initial Term and any Additional
Terms shall be referred to as the "Employment Term"). Notwithstanding
anything else herein, the provisions of Section 9 hereof shall survive and
remain in effect notwithstanding the termination of the Employment Term.
4. Compensation.
(a) As compensation for his services under this Agreement, the
Company shall pay Executive a salary at the rate of One Hundred Ten Thousand
Dollars ($110,000) per year (the "Base Salary"), payable in equal installments
(not less frequently than monthly) and subject to withholding in accordance
with the Company's normal payroll practices. The Executive's Base Salary
shall be reviewed annually by the Company and may be increased, but not
decreased, in the Company's sole discretion.
(b) In addition to the Base Salary, Executive shall participate
in any executive bonus program established by the Company and Parent from time
to time.
5. Benefits and Fringes.
During the Employment Term, Executive shall be entitled to such benefits
and fringes, if any, as are generally provided from time to time by the
Company and/or Parent to its executive employees of a comparable level,
including any life, medical or dental insurance plans for the benefit of
Executive and members of his immediate family, and pension, profit-sharing,
401(k) and other similar plans and on the same terms as so provided, as well
as a Company automobile.
6. Expenses.
The Company shall reimburse Executive in accordance with its expense
reimbursement policy as in effect from time to time for all reasonable
expenses, including, without limitation, Executive's professional dues,
license fees, continuing educational courses, professional association
membership fees, airplane travel and other travel expenses and all reasonable
expenses related to his Company automobile (including, without limitation,
repairs, maintenance, insurance and gasoline), incurred by Executive in
connection with the performance of his duties under this Agreement upon the
presentation by Executive of an itemized account of such expenses and
appropriate receipts.
7. Vacation.
During the Employment Term, Executive shall be entitled to vacation in
accordance with the Company's practices, provided that Executive shall not be
entitled to less than four (4) weeks paid vacation in each full contract year.
Any vacation not taken in any year shall be deemed to be forfeited by the
Executive as of January 1 of the succeeding year.
8. Termination.
(a) Executive's employment under this Agreement and the
Employment Term shall terminate as follows:
(i) automatically on the date of Executive's death.
(ii) Upon written notice given by the Company to the
Executive if Executive is unable to perform his material duties hereunder for
180 days (whether or not continuous) during any period of 360 consecutive days
by reason of physical or mental disability.
(iii) Upon written notice by the Company to the Executive
for Cause. Cause shall mean (A) the Executive's conviction of a felony
involving moral turpitude (after exhaustion or lapse of all rights of appeal);
(B) willful refusal to perform his duties as Vice President-Operations of the
Company, which is not remedied promptly after receipt by the Executive of
written notice from the Company specifying the details thereof; and (C)
Executive's dishonesty in the performance of his duties. Upon a termination
for Cause, Executive (and his representative) shall be given the opportunity
to appear before the Board of Directors of the Company (the "Board") to
explain why the Executive believes that Cause did not occur. Such appearance
shall be scheduled on no less than twenty (20) and no more than forty (40)
days written notice to Executive. In the event the Board agrees with the
Executive, which shall be a determination made in its sole discretion, the
Executive shall be retroactively reinstated in his position. The removal
pending such Board meeting shall not be deemed Good Reason under (vi) below.
(iv) Upon written notice by the Company without Cause.
(v) Upon the voluntary resignation of the Executive without
Good Reason upon sixty (60) days prior written notice to the Company (which
the Company may in its sole discretion make effective earlier).
(vi) Upon the written resignation of the Executive for Good
Reason stating with specificity the details of the Good Reason, if the stated
Good Reason is not cured within thirty (30) days of the giving of such notice.
"Good Reason" shall mean (A) relocation of the Executive's office, or
materially change the location at which Executive is required to perform his
duties, from within the Territory, (B) any material reduction in his
authority, duties or responsibilities or (C) any other material breach of any
provision of this Agreement by the Company. For purposes hereof, "Territory"
shall mean Broward, Miami-Dade and Palm Beach Counties, Florida.
(vii) Upon written notice of non-renewal by the Company or
Executive pursuant to Section 3 hereof.
(b) Upon any termination of the Employment Term Executive shall be
entitled to receive any unpaid salary and accrued vacation through his date of
termination and any benefits under any benefit plan in accordance with the
terms of said plan. In addition, (i) if the termination is pursuant to
(a)(iv) or (a)(vi) above, Executive shall receive (without a duty to mitigate)
severance pay in a lump sum equal to three (3) times the amount of Executive's
Base Salary in effect at the time of termination, and (ii) if termination is
by the Company pursuant to (a)(vii) above, Executive shall receive (without a
duty to mitigate) severance pay in a lump sum equal to Executive's Base Salary
in effect at the time of termination. Such lump sum severance payments shall
be paid within thirty (30) and fifteen (15) days, respectively, after the date
of termination. In the event termination is pursuant to (a)(ii) alone,
Executive shall receive in monthly payments for one (1) year thereafter
Executive's Base Salary in effect at the time of termination reduced by any
disability benefits or worker's compensation salary replacement he receives
from any program sponsored or made available by the Company or a governmental
entity. In the event of termination other than pursuant to (a)(i), (a)(iii)
or (a)(v), to the extent the Executive or his dependents are eligible for
COBRA coverage, the Company shall pay the cost of such coverage for the
maximum period permitted under federal law. The Company shall have no other
obligations to the Executive.
9. Confidential Information and Non-Competition.
(a) Executive acknowledges that as a result of his employment by
the Company, Executive will obtain secret and confidential information as to
the Company and its affiliated entities, that the Company and its affiliated
entities will suffer substantial damage, which would be difficult to
ascertain, if Executive shall enter into Competition (as defined below) with
the Company or any of its affiliated entities and that because of the nature
of the information that will be known to Executive it is necessary for the
Company and its affiliated entities to be protected by the prohibition against
Competition set forth herein, as well as the confidentiality restrictions set
forth herein. Executive acknowledges that the provisions of this Agreement
are reasonable and necessary for the protection of the business of the Company
and its affiliated entities and that part of the compensation paid under this
Agreement is in consideration for the agreements in this Section 9.
(b) Competition shall mean:
(i) participating, directly or indirectly, as an individual
proprietor, partner, stockholder, officer, employee, director, joint venturer,
investor, lender, consultant or in any capacity whatsoever in the State of
Florida in a business in competition with the quick-service restaurant
business conducted by the Company or its affiliated entities during the
Employment Term; provided, however, that such prohibited participation shall
not include: (A) the mere ownership of not more than one percent (1%) of the
total outstanding stock of a publicly held company; (B) the performance of
services for any enterprise to the extent such services are not performed,
directly or indirectly, for a business in the aforesaid Competition; or (C)
any activity engaged in with the prior written approval of the Board.
(ii) recruiting, soliciting or inducing any nonclerical
employee or employees of the Company or its affiliated entities to terminate
their employment with, or otherwise cease their relationship with, the Company
or its affiliated entities or hiring or assisting another person or entity to
hire any nonclerical employee of the Company or its affiliated entities.
Notwithstanding the foregoing, if requested by an entity with which Executive
is not affiliated, Executive may serve as a reference for any person who at
the time of the request is not an employee of the Company or any of its
affiliated entities.
If any restriction set forth in above items (i) and/or (ii) is found by any
court of competent jurisdiction, or an arbitrator, to be unenforceable because
it extends for too long a period of time or over too great a range of
activities or in too broad a geographic area, it shall be interpreted to
extend over the maximum period of time, range of activities or geographic area
as to which it may be enforceable.
(c) During and after the Employment Term, Executive shall hold
in a fiduciary capacity for the benefit of the Company and its affiliated
entities all secret or confidential information, knowledge or data relating to
the Company and its affiliated entities, and their respective businesses,
including any confidential information as to customers or vendors of the
Company or its affiliated entities, (i) obtained by Executive during his
employment by the Company or its affiliated entities; and (ii) not otherwise
public knowledge or known within the Company's or its affiliated entities'
industries. Executive shall not, without prior written consent of the
Company, unless compelled pursuant to the order of a court or other
governmental or legal body having jurisdiction over such matter, communicate
or divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. In the event Executive is compelled by
order of a court or other governmental or legal body to communicate or divulge
any such information, knowledge or data to anyone other than the Company and
those designated by it, Executive shall promptly notify the Company of any
such order and shall cooperate fully with the Company in protecting such
information to the extent possible under applicable law.
(d) Upon termination of Executive's employment with the Company,
or at any other time as the Company may request, Executive will promptly
deliver to the Company all documents which Executive may possess or have under
his direction or control (whether prepared by the Company, an affiliated
entity, Executive or a third party) relating to the Company or its affiliated
entities or any of their respective businesses or properties.
(e) During the Employment Term and for a period of one (1) year
following termination thereof (except for termination pursuant to Section
8(a)(iv) or (vi)), Executive shall not enter into Competition with the Company
or any of its affiliated entities.
(f) In the event of a breach or potential breach of this Section
9, Executive acknowledges that the Company and its affiliated entities will be
caused irreparable injury and that money damages may not be an adequate remedy
and agree that the affiliated entities shall be entitled to injunctive relief
(in addition to its other remedies at law) to have the provisions of this
Section 9 enforced.
10. Executive Representation.
Executive represents and warrants that he is under no contractual or
other limitation from entering into this Agreement and performing his
obligations hereunder.
11. Indemnification
The Executive shall be entitled to be indemnified by the Company for his
actions as an officer, director, employee, agent or fiduciary of the Company
or its affiliated entities to the fullest extent permitted by applicable law
and shall, to the extent the Company does not or is unable as a result of a
conflict between the parties to undertake his defense, have reasonable legal
fees (including, but not limited to, a retainer fee) and other reasonable
expenses paid to him in advance of final disposition of a proceeding, provided
that he has actually incurred such expenses and he executes an undertaking to
repay such amounts if, and to the extent, required to do so by applicable law.
The Company shall cover the Executive under any directors' and officers'
liability insurance policy to the same extent as its other senior officers.
12. Stock Options.
On the Effective Date, Parent shall grant to Executive, in exchange for
the cancellation of the Executive's options (assumed by Parent pursuant to the
Merger) to purchase 9,500 shares of the Company's common stock under the
Company's 1990 Executive Option Plan, immediately exercisable stock options
under a stock option plan of the Parent (the "Plan") to purchase 25,000
shares of Parent's common stock, $.01 par value per share (the "Common
Stock"). Such options shall continue to be exercisable for a term of ten (10)
years, irrespective of whether Executive remains employed by the Company, at
an exercise price equal to the fair market value per share on the date of
grant, subject to adjustment as provided in the Plan. Parent shall file
within ten business days of the Effective Date, and shall maintain in effect,
a registration statement on Form S-8 under the Securities Act of 1933, as
amended, registering the shares of Common Stock issuable upon exercise of all
stock options held by Executive and the resale thereof by him.
13. Change of Control.
Upon a "Change of Control" (as defined below) of the Company or Parent,
the Company shall pay Executive, within thirty (30) days of such event, a lump
sum equal to three (3) times the amount of his Base Salary in effect at the
time of such event, together with a pro rata portion of the bonus accrued
through the date of such Change of Control. As used herein "Change of
Control"means (a) a change in control as such term is presently defined in
Regulation 240.12b-2 under the Securities Exchange Act of 1934 ("Exchange
Act"); or (b) if any "person" (as such term is used in Section 13(d) and 14(d)
of the Exchange Act) in either the case of the Company or Parent (other than
the Parent or any "person" who on the date of this Agreement is a director or
officer of the Parent or Company, as the case may be), becomes the "beneficial
owner" (as defined in Rule 13(d)-3 under the Exchange Act), directly or
indirectly, of securities of the Company or Parent, as the case may be,
representing twenty (20%) percent of the voting power of the Company's or
Parent's then outstanding securities, as the case may be; or (c) if during any
period of two (2) consecutive years during the term of Executive's employment,
individuals who at the beginning of such period constitute the Board of
Directors of either the Company or Parent cease for any reason to constitute
at least a majority thereof.
14. Entire Agreement; Modification.
This Agreement constitutes the full and complete understanding of the
parties hereto and will supersede all prior agreements and understandings,
oral or written, with respect to the subject matter hereof. Each party to
this Agreement acknowledges that no representations, inducements, promises or
agreements, oral or otherwise, have been made by either party, or anyone
acting on behalf of either party, which are not embodied herein and that no
other agreement, statement or promise not contained in this Agreement shall be
valid or binding. This Agreement may not be modified or amended except by an
instrument in writing signed by the party against whom or which enforcement
may be sought.
15. Severability.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without rendering invalid or
unenforceable thc remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms of provisions of
this Agreement in any other jurisdiction.
16. Waiver of Breach.
The waiver by any party of a breach of any provisions of this Agreement,
which waiver must be in writing to be effective, shall not operate as or be
construed as a waiver of any subsequent breach.
17. Notices.
All notices hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand, or one day after sending by express
mail or other "overnight mail service," or three days after sending by
certified or registered mail, postage prepaid, return receipt requested.
Notice shall be sent as follows: if to Executive, to the address as listed in
the Company's records; and if to the Company, to the Company at its office as
set forth at the head of this Agreement, to the attention of its President and
Chief Operating Officer. Either party may change the notice address by notice
given as aforesaid.
18. Assignability; Binding Effect.
This Agreement shall be binding upon and inure to the benefit of
Executive and Executive's legal representatives, heirs and distributees, and
shall be binding upon and inure to the benefit of the Company, its successors
and assigns. This Agreement may not be assigned by the Executive. This
Agreement may not be assigned by the Company except in connection with a
merger or a sale by the Company of all or substantially all of its assets and
then only provided the assignee specifically assumes in writing all of the
Company's obligations hereunder.
19. Governing Law.
(a) All issues pertaining to the validity, construction,
execution and performance of this Agreement shall be construed and governed in
accordance with the laws of the State of New York, without giving effect to
the conflict or choice of law provisions thereof.
(b) Any dispute or controversy with regard to this Agreement,
other than injunctive relief pursuant to Section 9, shall be settled by
arbitration in New York, New York before the American Arbitration Association
("AAA") in accordance with the Rules of Commercial Arbitration of the AAA.
The decision of the arbitrators shall be final and binding upon the parties
hereto and may be entered in any court having jurisdiction. The Company shall
advance all of the Executive's expenses (including, without limitation,
reasonable counsel fees) incurred in connection with such arbitration,
provided that Executive shall repay the same in the event he is not, to any
extent, the prevailing party.
20. Headings.
The headings in this Agreement are intended solely for convenience of
reference and shall be given no effect in the construction or interpretation
of this Agreement.
21. Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together shall constitute
one and the same instrument.
22. Guarantee and Joinder.
Parent hereby unconditionally and irrevocably guarantees, as primary
obligor not merely as surety: (i) the punctual payment when due of all
obligations of the Company arising under this Agreement; and (ii) the due and
punctual performance and observance by the Company of all covenants,
agreements and conditions on its part to be performed and observed under this
Agreement. Parent hereby agrees to comply with, and be bound by this
Agreement.
IN WITNESS WHEREOF, the Company and Parent have each caused this
Agreement to be duly executed by an authorized officer and Executive has
hereunto set his hand as of the date first set forth above.
MIAMI SUBS CORPORATION
By:
Name: Donald L. Perlyn
Title: President
Frank Baran
NATHAN'S FAMOUS, INC.
By:
Name:
Title:
EXHIBIT 99.1
February 1, 1999 Contact: Donald L. Perlyn
For Immediate Release Jerry W. Woda
(954) 973-0000
MIAMI SUBS CORPORATION
NATHAN'S FAMOUS, INC.
ANNOUNCE DEFINITIVE MERGER AGREEMENT
Fort Lauderdale, Florida, February 1, 1999...Miami Subs Corporation
(NASDAQ:SUSCD) and Nathan's Famous, Inc. (NASDAQ:NATH) reported today that
the companies have entered into a definitive merger agreement pursuant to
which Nathan's will acquire the issued and outstanding shares of common stock
of Miami Subs in exchange for common stock of Nathan's having a market price
of $2.068 per share at closing but no more than one share of Nathan's common
stock for each two shares of common stock of Miami Subs. Shareholders of
Miami Subs will also receive warrants to purchase Nathan's common stock which
have an exercise price of $6.00 per share at the rate of one warrant for each
four shares of Nathan's common stock received by Miami Subs shareholders. The
merger is subject to certain conditions, including completion of due
diligence, receipt of a fairness opinion, and approval by a majority of the
shareholders of Nathan's and Miami Subs. In November 1998, Nathan's acquired,
in a private transaction, approximately 30% of the outstanding common stock of
Miami Subs.
Wayne Norbitz, president of Nathan's Famous, Inc., stated, "We are
enthusiastic about our potential acquisition of Miami Subs, which we believe
represents a significant step towards realizing Nathan's growth strategy. The
combined entity would double the revenue base of Nathan's and is expected to
be accretive to earnings. We shall seek to exploit opportunities to market
and develop each company's concept separately, as well as in concert, through
co-branding opportunities. We will also seek to make margin improvements,
leverage and enhance management and effectuate cost efficiencies."
"Nathan's is a natural partner for us," said Donald L. Perlyn president and
chief operating officer of Miami Subs Corporation. "It is not only a
situation where we enhance our product line, but one where we will improve our
financial strength and development potential as well. It was clearly time to
seek a strategic alliance for our Company, and I am certain we are making the
right move by joining forces with Nathan's."
Miami Subs Corporation currently operates and franchises 194 restaurants
located in 16 states, Puerto Rico, Peru, the Dominican Republic, and Ecuador.
The Nathan's Famous retail system is currently comprised of 26 Company-owned
units, 168 franchised or licensed units, and over 500 Branded Product points
of distribution, located in twenty-nine states, the District of Columbia and
two foreign countries, featuring Nathan's world famous all-beef hot dogs.
Except for historical information contained in this news release, the matters
discussed are forward looking statements that involve risks and uncertainties.
Among the factors that could cause actual results to differ materially are
the following: the effect of business and economic conditions; the impact of
competitive products and pricing; capacity; the regulatory and trade
environment; and the risk factors reported from time to time in Nathan's and
Miami Subs' SEC reports.
