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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): DECEMBER 3, 1998
BACK BAY RESTAURANT GROUP, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 0-19810 04-2812651
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
284 Newbury Street, Boston, Massachusetts 02115
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER: (617) 536-2800
Not Applicable
- --------------------------------------------------------------------------------
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS
(a) AGREEMENT AND PLAN OF MERGER
On December 3, 1998, the Registrant entered into an Agreement and
Plan of Merger (the "Merger Agreement") with SRC Holdings, Inc., a Delaware
corporation (the "Purchaser"), pursuant to which the Purchaser will be
merged with and into the Registrant (the "Merger") with the Registrant
being the surviving corporation, subject to the conditions set forth in the
Merger Agreement. Pursuant to the terms of the Merger Agreement, all of the
outstanding public shares of the Registrant's common stock will be
converted into the right to receive $10.25 per share in cash. Consummation
of the transactions contemplated by the Merger Agreement will be
conditioned upon, among other things, approval by the stockholders of the
Registrant, including a majority of its non-affiliated public stockholders,
and receipt by the Purchaser of approximately $38 million of cash proceeds
from financing commitments to fund the Merger.
The summary of the Merger Agreement set forth above is qualified in
its entirety by reference to the Merger Agreement, which is filed as an
exhibit hereto and is incorporated herein by reference. The press release
announcing the Merger Agreement is also filed as an exhibit hereto and is
incorporated herein by reference.
(b) AMENDMENT TO SHAREHOLDER RIGHTS AGREEMENT
On December 3, 1998, the Registrant entered into Amendment No. 1
("Amendment No. 1") to the Shareholder Rights Agreement, dated as of
December 20, 1994, between the Registrant and State Street Bank and Trust
Company, as Rights Agent (the "Rights Agreement"). Amendment No. 1 amends
the Rights Agreement to permit the parties to the Merger Agreement to
consummate the Merger without triggering the exercisability of the Rights
(as defined in the Rights Agreement).
The Rights Agreement is incorporated herein by reference to the
Report on Form 8-K filed by the Registrant with the Commission on December
21, 1994. Amendment No. 1 is filed with this report as Exhibit 4.2 and is
hereby incorporated by reference. The summary of Amendment No. 1 set forth
above is qualified in its entirety by reference to such exhibit.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Not Applicable
(b) Not Applicable
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(c) EXHIBITS:
Exhibit No. Description
----------- -----------
2 Agreement and Plan of Merger, dated as of December 3,
1998, by and between the Registrant and SRC Holdings,
Inc.
4.1 Shareholder Rights Agreement, dated as of December 20,
1994, between the Registrant and State Street Bank &
Trust Company, as Rights Agent.*
4.2 Amendment No. 1, dated as of December 3, 1998, to the
Shareholder Rights Agreement, dated as of December 20,
1994, between the Registrant and State Street Bank and
Trust Company, as Rights Agent.
99 Press Release, dated December 3, 1998, issued by the
Registrant.
* Incorporated herein by reference to the Registrant's Report on Form 8-K filed
with the Commission on December 21, 1994.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BACK BAY RESTAURANT GROUP, INC.
Date: December 11, 1998 By: /s/ Francis P. Bissaillon
----------------------------
Francis P. Bissaillon,
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
The following designated exhibits are filed herewith:
Exhibit Description Page Number
- ------- ----------- -----------
2 Agreement and Plan of Merger, dated as of December 3, A1
1998, by and between the Registrant and SRC Holdings,
Inc.
4.1 Shareholder Rights Agreement, dated as of December 20,
1994, between the Registrant and State Street Bank &
Trust Company, as Rights Agent.*
4.2 Amendment No. 1, dated as of December 3, 1998, to the B1
Shareholder Rights Agreement, dated as of December 20,
1994, between the Registrant and State Street Bank and
Trust Company, as Rights Agent.
99 Press Release, dated December 3, 1998, issued by the C1
Registrant.
* Incorporated herein by reference to the Registrant's Report on
Form 8-K filed with the Commission on December 21, 1994.
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EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 3, 1998
BY AND BETWEEN
BACK BAY RESTAURANT GROUP, INC.
AND
SRC HOLDINGS, INC.
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER.................................................. 1
SECTION 1.1. The Merger............................... 1
SECTION 1.2. Company Action........................... 1
SECTION 1.3. Closing.................................. 1
SECTION 1.4. Effective Time........................... 2
SECTION 1.5. Effects of the Merger.................... 2
SECTION 1.6. Certificate of Incorporation; By-Laws.... 2
SECTION 1.7. Directors................................ 2
SECTION 1.8. Officers................................. 2
ARTICLE II
EFFECT OF THE MERGER ON THE SECURITIES OF THE CONSTITUENT
CORPORATIONS.............................................. 2
SECTION 2.1. Effect on Capital Stock.................. 2
SECTION 2.2. Stock Options............................ 3
SECTION 2.3. Exchange of Certificates................. 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES.............................. 5
SECTION 3.1. Representations and Warranties of the
Company............................................... 5
SECTION 3.2. Representations and Warranties of
Purchaser............................................. 8
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER... 9
SECTION 4.1. Conduct of Business of the Company....... 9
SECTION 4.2. Other Actions............................ 11
ARTICLE V
ADDITIONAL AGREEMENTS....................................... 11
SECTION 5.1. Preparation of Proxy Statement;
Stockholders Meeting.................................. 11
SECTION 5.2. Access to Information;
Confidentiality....................................... 12
SECTION 5.3. Commercially Reasonable Efforts......... 12
SECTION 5.4. Financing............................... 12
SECTION 5.5. Indemnification; Directors' and
Officers' Insurance................................... 12
SECTION 5.6. Public Announcements.................... 13
SECTION 5.7. No Solicitation; Acquisition
Proposals............................................. 14
SECTION 5.8. Board Action Relating to Stock Option
Plans................................................. 15
SECTION 5.9. Consents and Approvals.................. 15
SECTION 5.10. State Takeover Laws..................... 15
ARTICLE VI
CONDITIONS PRECEDENT........................................ 15
SECTION 6.1. Conditions to each Party's Obligation to
Effect the Merger..................................... 15
SECTION 6.2. Conditions to Obligation of Purchaser to
Effect the Merger..................................... 15
SECTION 6.3. Condition to Obligation of the Company to
Effect the Merger..................................... 16
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER........................... 17
SECTION 7.1. Termination.............................. 17
SECTION 7.2. Effect of Termination.................... 17
SECTION 7.3. Amendment................................ 18
SECTION 7.4. Extension; Waiver........................ 18
SECTION 7.5. Procedure for Termination, Amendment,
Extension or Waiver................................... 18
ARTICLE VIII
GENERAL PROVISIONS.......................................... 19
SECTION 8.1. Nonsurvival of Representations and
Warranties............................................ 19
SECTION 8.2. Fees and Expenses........................ 19
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SECTION 8.3. Definitions............................. 19
SECTION 8.4. Notices................................. 19
SECTION 8.5. Interpretation.......................... 19
SECTION 8.6. Counterparts............................ 20
SECTION 8.7. Entire Agreement; Third-Party
Beneficiaries......................................... 20
SECTION 8.8. Governing Law........................... 20
SECTION 8.9. Assignment.............................. 20
SECTION 8.10. Enforcement............................. 20
SECTION 8.11. Severability............................ 20
SECTION 8.12. Attorney's Fees......................... 20
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AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 3, 1998
BY AND BETWEEN
BACK BAY RESTAURANT GROUP, INC.,
A DELAWARE CORPORATION (THE "COMPANY"),
AND
SRC HOLDINGS, INC., A DELAWARE CORPORATION ("PURCHASER")
WITNESSETH:
WHEREAS, the Board of Directors of the Company has determined that this
Agreement (this "Agreement") and the transactions contemplated hereby including
the Merger (as defined herein) are fair to and in the best interest of the
Company and its stockholders;
WHEREAS, the Board of Directors of Purchaser has determined that the
transactions contemplated by this Agreement (including the Merger) are in the
best interest of Purchaser and its stockholders; and
WHEREAS, the Boards of Directors of the Company and Purchaser have each
approved and adopted this Agreement and approved the Merger and the other
transactions contemplated hereby and recommended, in the case of the Company,
acceptance of the Merger by its stockholders.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with Section 251 of the Delaware
General Corporate Law (the "DGCL"), at the Effective Time (as hereinafter
defined), Purchaser shall be merged with and into the Company (the "Merger")
with the Company being the Surviving Corporation (the "Surviving Corporation").
SECTION 1.2. Company Action.
(a) The Company hereby consents to the Merger and represents that each
of the Company's Board of Directors (the "Board of Directors") and the
Special Committee of the Board of Directors (the "Special Committee"), at a
meeting duly called and held, has (i) unanimously determined that this
Agreement and the transactions contemplated hereby, including the Merger
(as defined in Section 1.1), are fair to and in the best interest of the
Company and its stockholders, (ii) unanimously approved this Agreement and
the transactions contemplated hereby, including the Merger, which approvals
are sufficient to render entirely inapplicable to the Merger or Purchaser
the provisions of Section 203 of the Delaware General Corporate Law (the
"DGCL") and (iii) resolved to recommend approval and adoption of this
Agreement and the Merger by its stockholders. Schroder & Co. Inc. (the
"Financial Advisor") has delivered to the Board of Directors its opinion,
subject to the qualifications and limitations stated therein, to the effect
that the consideration to be received by the holders of the Shares pursuant
to the Merger is fair to the holders of Shares from a financial point of
view. The Company has been authorized by the Financial Advisor to permit,
subject to prior review and consent by the Financial Advisor (such consent
not to be unreasonably withheld), the inclusion of the fairness opinion (or
a reference thereto) in the Preliminary Proxy Statement and the Company
Proxy Statement (as defined in paragraph (b) of Section 5.1).
SECTION 1.3. Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 7.1, and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the closing of the Merger (the "Closing") will take place
at 10:00 a.m., Boston time, not later than the fifth business day following the
date on which the last to be fulfilled
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or waived of the conditions set forth in Article VI shall be fulfilled or waived
in accordance with this Agreement (the "Closing Date"), at the offices of
Hutchins, Wheeler & Dittmar, A Professional Corporation, 101 Federal Street,
Boston, Massachusetts 02110, unless another date, time or place is agreed to in
writing by the parties hereto.
SECTION 1.4. Effective Time. The parties hereto will file with the
Secretary of State of the State of Delaware (the "Delaware Secretary of State")
on the Closing Date (or on such other date as Purchaser and the Company may
agree) a certificate of merger or other appropriate documents, executed in
accordance with the relevant provisions of the DGCL, and make all other filings
or recordings required under the DGCL in connection with the Merger. The Merger
shall become effective upon the filing of the certificate of merger with the
Delaware Secretary of State, or at such later time as is specified in the
certificate of merger (the "Effective Time").
SECTION 1.5. Effects of the Merger. The Merger shall have the effect set
forth in Section 251 of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and Purchaser shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Purchaser shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 1.6. Certificate of Incorporation; By-Laws.
(a) The Company's Restated Certificate of Incorporation, as in effect
at the Effective Time, shall be, from and after the Effective Time, the
Certificate of Incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
(b) The Company's By-laws, as in effect at the Effective Time, shall
be, from and after the Effective Time, the By-laws of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
SECTION 1.7. Directors. The directors of Purchaser at the Effective Time
shall become, from and after the Effective Time, the directors of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
SECTION 1.8. Officers. The officers of Purchaser at the Effective Time
shall become, from and after the Effective Time, the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE SECURITIES OF THE
CONSTITUENT CORPORATIONS
SECTION 2.1. Effect on Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of any holder:
(a) Common Stock of Purchaser. Each share of the capital stock of
Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into and become one validly issued, fully paid and
nonassessable share of common stock, par value $.01 per share, of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and Purchaser-Owned Stock. Each
Share issued or outstanding immediately prior to the Effective Time that is
owned by the Company or by Purchaser shall be canceled automatically and
shall cease to exist, and no cash or other consideration shall be delivered
or deliverable in exchange therefor.
(c) Conversion of Company Shares. At the Effective Time, each issued
and outstanding share of common stock, par value $.01 per share, of the
Company (the "Shares" or "Common Stock") other than (i) Shares to be
canceled pursuant to Section 2.1(b) and (ii) Dissenting Shares (as
hereinafter defined)
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shall be converted into and become the right to receive, upon surrender of
the certificate representing such Shares in accordance with Section 2.3, a
cash payment of $10.25 per Share, net to the stockholder in cash (the
"Merger Consideration").
(d) Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, Shares issued and outstanding immediately prior to the
Effective Time and held by a holder (a "Dissenting Stockholder"), if any,
who has the right to demand, and who properly demands, an appraisal of such
shares in accordance with Section 262 of the DGCL or any successor
provision ("Dissenting Shares") shall not be converted into a right to
receive the Merger Consideration unless such Dissenting Stockholder fails
to perfect or otherwise loses or withdraws such Dissenting Stockholder's
right to such appraisal, if any. Provided the holder of any Dissenting
Shares complies with the provisions of the DGCL, such holder shall have
with respect thereto solely the appraisal rights provided under Section 262
of the DGCL. If, after the Effective Time, such Dissenting Stockholder
fails to perfect or otherwise loses or withdraws any such right to
appraisal, each such share of such Dissenting Stockholder shall be treated
as a share that had been converted as of the Effective Time into the right
to receive the Merger Consideration in accordance with this Section 2.1(d).
The Company shall give prompt notice to Purchaser of any demands received
by the Company for appraisal of any Dissenting Shares, and Purchaser shall
have the right to participate in and direct all negotiations and
proceedings with respect to such demands. The Company shall not, except
with the prior written consent of Purchaser, which consent shall not be
unreasonably withheld, make any payment with respect to, or settle or offer
to settle, any such demands.
(e) Cancellation and Retirement of Common Stock. As of the Effective
Time all certificates representing Shares, other than certificates
representing Shares to be canceled in accordance with Section 2.1(b) or
Dissenting Shares, issued and outstanding immediately prior to the
Effective Time, shall no longer be outstanding and shall automatically be
canceled and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration upon
surrender of such certificate in accordance with Section 2.3.
SECTION 2.2. Stock Options. As of the Effective Time, each outstanding,
unexercised stock option to purchase Shares (a "Company Stock Option") issued
under the Company's Amended and Restated Stock Option Plan (the "Company Stock
Option Plan"), except those Company Stock Options which the Purchaser has agreed
in writing to exchange for options granted under the Purchaser's stock option
plan immediately prior to the Effective Time, shall terminate and be canceled
and each holder of a Company Stock Option shall be entitled to receive, in
consideration therefor, a cash payment from the Company (which payment shall be
made as soon as practicable after the Effective Time) equal to the product of
(a) the excess, if any, of (x) the Merger Consideration over (y) the per Share
exercise price of such Company Stock Option, times (b) the number of Eligible
Shares (as defined below) subject to such Company Stock Option. Such cash
payment shall be net of any required withholding taxes. The term "Eligible
Shares" shall mean the aggregate number of Shares that shall then be subject to
such option. The Company's obligation to make any such cash payment (1) shall be
subject to the obtaining of any necessary consents of optionees to the
cancellation of such Company Stock Options, in form and substance satisfactory
to Purchaser, and (2) shall not require any action which violates the Company
Stock Option Plan. As of the Effective Time, the Company Stock Option Plan shall
terminate and be of no further force or effect, and the Company shall take such
action as shall be necessary to ensure, to Purchaser's reasonable satisfaction,
that no holder of a Company Stock Option will have any right to acquire any
interest in the Surviving Corporation under the Company Stock Option Plans.
SECTION 2.3. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Purchaser (or the
Company, as the Surviving Corporation) shall deposit, or shall cause to be
deposited, with or for the account of a bank, trust company or other agent
designated by Purchaser, which shall be reasonably satisfactory to the
Company (the "Exchange Agent"), for the benefit of the holders of Shares,
cash in an aggregate amount equal to the product of (x) the number of
Shares outstanding immediately prior to the Effective Time (other than
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Shares to be canceled pursuant to Section 2.1(b) and Dissenting Shares),
times (y) the Merger Consideration (such amount being hereinafter referred
to as the "Payment Fund"). The Exchange Agent shall invest the Payment Fund
as directed by the Surviving Corporation.
(b) Exchange Procedures. As soon as practicable after the Effective
Time, each holder of an outstanding certificate or certificates which prior
thereto represented outstanding Shares shall, upon surrender to the
Exchange Agent of such certificate or certificates and acceptance thereof
by the Exchange Agent, be entitled to the amount of cash which the
aggregate number of Shares previously represented by such certificate or
certificates surrendered shall have been converted into the right to
receive pursuant to Section 2.1(c). The Exchange Agent shall accept such
certificates upon compliance with such reasonable terms and conditions as
the Exchange Agent may impose to effect an orderly exchange thereof in
accordance with normal exchange practices. If the consideration to be paid
in the Merger (or any portion thereof) is to be delivered to any person
other than the person in whose name the certificate representing Shares
surrendered in exchange therefor is registered, it shall be a condition to
such exchange that the certificate so surrendered shall be properly
endorsed with the signature guaranteed or otherwise be in proper form for
transfer and that the person requesting such exchange shall pay to the
Exchange Agent any transfer or other tax required by reason of the payment
of such consideration to a person other than the registered holder of the
certificate surrendered, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable. After the
Effective Time, there shall be no further transfer on the records of the
Company or its transfer agent of certificates representing Shares, and if
such certificates are presented to the Company for transfer, they shall be
canceled against delivery of the Merger Consideration as hereinabove
provided. Until surrendered as contemplated by this Section 2.3(b), each
certificate representing Shares shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender
the Merger Consideration, without any interest thereon, as contemplated by
Section 2.l(c). No interest will be paid or will accrue on any cash payable
as Merger Consideration to any holder of Shares.
(c) Letter of Transmittal. Promptly after the Effective Time (but in
no event more than five business days thereafter), the Surviving
Corporation shall require the Exchange Agent to mail to each record holder
of certificates that immediately prior to the Effective Time represented
Shares which have been converted pursuant to Section 2.1, a form of letter
of transmittal and instructions for use in surrendering such certificates
and receiving the consideration to which such holder shall be entitled
therefor pursuant to Section 2.1.
(d) No Further Ownership Rights in Common Stock. The Merger
Consideration paid upon the surrender for exchange of certificates
representing Shares in accordance with the terms of this Article II shall
be deemed to have been issued and paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such certificates, and
no holder of Shares shall thereby have any equity interest in the Surviving
Corporation.
(e) Termination of Payment Fund. Any portion of the Payment Fund
which remains undistributed to the holders of the certificates representing
Shares for one year after the Effective Time (including, without
limitation, all interest and other income received by the Exchange Agent in
respect to all funds made available to it) shall be delivered to the
Surviving Corporation, upon demand, and any such holders of Shares who have
not theretofore complied with this Article II shall thereafter look only to
the Surviving Corporation (subject to abandoned property, escheat and other
similar laws) and only as general creditors thereof for payment of their
claim for the Merger Consideration.
(f) No Liability. None of Purchaser, the Surviving Corporation or
the Exchange Agent shall be liable to any person in respect of any cash,
shares, dividends or distributions payable from the Payment Fund delivered
to a public official pursuant to any applicable abandoned property, escheat
or similar law. If any certificates representing Company Shares shall not
have been surrendered prior to five (5) years after the Effective Time (or
immediately prior to such earlier date on which the Merger Consideration in
respect of such certificate would otherwise escheat to or become the
property of any Governmental Entity (as defined in Section 3.1(d)), any
such cash, shares, dividends or distributions payable in respect of
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such certificate shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto.
(g) Withholding Rights. The Surviving Corporation or Purchaser shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Shares such amounts as the
Surviving Corporation or Purchaser is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of
state, local or foreign tax law, including, without limitation,
withholdings required in connection with payments with respect to Company
Stock Options. To the extent that amounts are so withheld by the Surviving
Corporation or Purchaser such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder in respect of
which such deduction and withholding was made.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Company. The Company
represents and warrants to Purchaser as follows; provided, however, that the
Company does not represent or warrant to Purchaser in this Section 3.1 with
respect to any matter set forth herein to the extent such information was
furnished to the Company by Purchaser or any Affiliate or Associate of
Purchaser:
(a) Organization, Standing and Corporate Power. The Company is a
corporation duly organized, validly existing and in corporate good standing
under the laws of the State of Delaware and has the requisite corporate
power and authority and any necessary governmental authority to carry on
its business as now being conducted and to own, operate and lease its
properties. The Company is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to
be so qualified or licensed (individually or in the aggregate) would not
have a material adverse effect upon (i) the business, assets, properties,
condition (financial or otherwise) or results of operations of the Company
and its Subsidiaries taken as a whole, or (ii) the transactions
contemplated hereby or the legality or validity of this Agreement (each a
"Material Adverse Effect").
(b) Intentionally Omitted.
(c) Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 20,000,000 shares of Common Stock, $.01
par value per share. As of the date hereof, 3,460,409 shares are issued and
outstanding, 727,923 shares of Common Stock are reserved for issuance
pursuant to outstanding Company Stock Options, and 208 shares of Common
Stock are held by the Company in its treasury. Except as set forth above
and in the Shareholder Rights Agreement, dated as of December 20, 1994, by
and between the Company and State Street Bank & Trust Company, as amended
(the "Rights Agreement"), no shares of capital stock or other equity
securities of the Company are issued, reserved for issuance or outstanding.
All outstanding shares of capital stock of the Company are, and all shares
which may be issued pursuant to the Company Stock Option Plan will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights.
(d) Authority; Enforceability; Noncontravention. The Company has the
requisite corporate power and authority to enter into this Agreement and to
consummate the Merger and the other transactions contemplated by this
Agreement. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
the Company. This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that
the enforceability hereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and that the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of
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the court before which any proceeding therefor may be brought. The
execution and delivery of this Agreement do not, and the consummation of
the transactions contemplated by this Agreement and compliance with the
provisions hereof will not, (i) violate any of the provisions of the
Restated Certificate of Incorporation or By-Laws of the Company, or (ii)
subject to the governmental filings and other matters referred to in the
following sentence, contravene any law, rule or regulation of any state or
of the United States or any political subdivision thereof or therein,
including any licensing board or agency, or any order, writ, judgment,
injunction, decree, determination or award currently in effect, which
singly or in the aggregate, would have a Material Adverse Effect. No
consent, approval or authorization of, or declaration or filing with, or
notice to, any governmental agency, board or regulatory authority, domestic
or foreign (a "Governmental Entity"), which has not been received or made,
is required by or with respect to the Company or any Subsidiary in
connection with the execution and delivery of this Agreement by the Company
or the consummation by the Company of the transactions contemplated hereby,
except for (i) compliance with any applicable requirements of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act") and
the rules and regulations promulgated thereunder, (ii) state securities or
blue sky laws and state takeover, antitrust and compensation law filings
and approvals, (iii) compliance with any applicable requirements of The
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the "HSR
Act"), (iv) the filing of a certificate of merger with the Delaware
Secretary of State and appropriate documents with the relevant authorities
of other states in which the Company is qualified to do business, (v) the
consent of any licensing board or agency governing the sale of alcoholic
beverage) and (vi) any required consents of landlords.
(e) Financial Statements; SEC Reports. The Company has previously
furnished Purchaser with true and complete copies of (i) its Annual Reports
on Form 10-K and Form 10-K/A for the fiscal year ended December 28, 1997
(the "Annual Report") filed by the Company with the Securities and Exchange
Commission (the "SEC"), (ii) its Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1998, June 28, 1998 and September 27, 1998
(collectively, the "Quarterly Reports" and, together with the Annual
Report, the "Reports") filed by the Company with the SEC, (iii) the
unaudited consolidated balance sheet and the unaudited consolidated
statement of operations of the Company and its Subsidiaries as of September
27, 1998 and for the nine (9) months ended September 27, 1998, respectively
(the "Financial Statements"), (iv) proxy statements relating to all of the
Company's meetings of stockholders (whether annual or special) held or
scheduled to be held since December 28, 1997 and (v) each other
registration statement, proxy or information statement or current report on
Form 8-K filed since December 28, 1997 by the Company with the SEC. Since
December 28, 1997 the Company has complied in all material respects with
its SEC filing obligations under the Exchange Act and the Securities Act of
1933, as amended (the "Securities Act"). The Financial Statements and
related schedules and notes thereto of the Company contained in the Reports
(or incorporated therein by reference) and the Financial Statements were
prepared in accordance with generally accepted accounting principles
(except, in the case of interim unaudited financial statements, as
permitted by Form 10-Q) applied on a consistent basis except as noted
therein, and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended, subject (in the case of interim unaudited
financial statements) to normal year-end audit adjustments, and such
financial statements complied as to form as of their respective dates in
all material respects with applicable rules and regulations of the SEC.
Each such registration statement, proxy statement and Report was prepared
in accordance with the requirements of the Securities Act or the Exchange
Act and did not, on the date of effectiveness in the case of such
registration statements, on the date of mailing in the case of such proxy
statements and on the date of filing in the case of such Reports, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(f) Absence of Certain Changes or Events. Except as may be disclosed
in the Reports, since September 28, 1998 there has not been (i) any
declaration, setting aside or payment of any dividend or other distribution
in respect of the capital stock of the Company or any redemption or other
acquisition by the Company of any of its capital stock; (ii) any issuance
by the Company, or agreement or
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commitment of the Company to issue, any shares of its Common Stock or
securities convertible into or exchangeable for shares of its Common Stock,
except for stock options and stock purchase rights; (iii) any change by the
Company in accounting methods, principles or practices except as required
by generally accepted accounting principles; or (iv) any agreement or
commitment, whether in writing or otherwise, to take any action described
in this subsection 3.1(f). Since September 28, 1998, the Company and its
Subsidiaries have conducted their respective businesses in all material
respects only in the ordinary course, consistent with past custom and
practice, except as contemplated by this Agreement.
(g) No Undisclosed Liabilities. Except as set forth in the Reports,
neither the Company nor any of its Subsidiaries has any liabilities
(absolute, accrued, contingent or otherwise), except liabilities (i) in the
aggregate adequately provided for in the Financial Statements, (ii)
incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in the Financial
Statements, (iii) incurred since September 28, 1998 in the ordinary course
of business consistent with past practice, (iv) incurred in connection with
this Agreement, or (v) which could not reasonably be expected to have a
Material Adverse Effect.
(h) Disclosure Documents.
(i) Each document required to be filed by the Company with the SEC
in connection with the transactions contemplated by this Agreement (the
"Company Disclosure Documents") and any amendments or supplements
thereto, will, when filed, comply as to form in all material respects
with the applicable requirements of the Exchange Act and the rules and
regulations thereunder.
(ii) At the time any Company Disclosure Document or any amendment
or supplement thereto is first mailed to stockholders of the Company, it
will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made,
not misleading. At the time of the filing of any Company Disclosure
Document or any amendment or supplement thereto, and from the time of
any distribution thereof through the Effective Time each such Company
Disclosure Document will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading. The representations and warranties
contained in paragraphs (i) and (ii) of this Section 3.1(h) will not
apply to statements or omissions included in the Company Disclosure
Documents, if any, based upon information furnished to the Company in
writing by Purchaser or its Affiliates or Associates specifically for
use therein.
(iii) The information with respect to the Company or any Company
Subsidiary that the Company furnishes to Purchaser in writing
specifically for use in the Schedule 13E-3 (as defined herein), the
Preliminary Proxy Statement and the Company Proxy Statement will not, at
the time of the filing thereof, and from the time of any distribution
thereof through 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 made therein, in
the light of the circumstances under which they were made, not
misleading. The representations and warranties contained in this
paragraph (iii) will not apply to statements or omissions included in
the Schedule 13E-3, the Preliminary Proxy Statement and Company Proxy
Statement, if any, based upon information furnished by Purchaser, its
Affiliates or Associates specifically for use therein.
(i) Fairness Opinion. The Board of Directors of the Company has
received from the Financial Advisor an oral opinion on December 2, 1998, to
be followed with a written opinion to be dated the date hereof, in
connection with this Agreement to the effect that the Merger Consideration
to be received by the stockholders of the Company pursuant to this
Agreement and the Merger is fair to such stockholders from a financial
point of view.
(j) Brokers. No broker, investment banker, financial advisor or
other person, the fees and expenses of which will be paid by the Company,
is entitled to any broker's, finder's, financial advisor's or other similar
fee or commission in connection with the transactions contemplated by this
Agreement,
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other than pursuant to an engagement letter with the Financial Advisor, a
copy of which has been previously furnished to Purchaser, which fees and
expenses shall remain the sole responsibility of the Company.
(k) Amendment to Rights Agreement. Contemporaneously with the
execution of this Agreement, the Company has amended the Rights Agreement
in the form of EXHIBIT A attached hereto.
SECTION 3.2. Representations and Warranties of Purchaser. Purchaser
represents and warrants to the Company as follows:
(a) Organization, Standing and Corporate Power. Purchaser is a
corporation duly organized, validly existing and in corporate good standing
under the laws of the State of Delaware. Purchaser has the requisite
corporate power and authority to carry on its business as now being
conducted. Purchaser is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to
be so qualified or licensed (individually or in the aggregate) would not
have a Material Adverse Effect.
(b) Capitalization. As of the date of this Agreement, the authorized
capital stock of Purchaser consists of 2,000,000 shares of common stock,
par value $.01 per share, no shares of which are presently issued and
outstanding. All of the issued and outstanding shares of capital stock of
Purchaser are validly issued, fully paid and nonassessable.
(c) Authority; Enforceability; Noncontravention. Purchaser has all
requisite corporate power and authority to enter into this Agreement and to
consummate the Merger and the other transactions contemplated by this
Agreement. The execution and delivery of this Agreement by Purchaser and
the consummation by Purchaser of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on
the part of Purchaser. This Agreement has been duly executed and delivered
by and constitutes a valid and binding obligation of Purchaser, enforceable
against it in accordance with its terms, except that the enforceability
hereof may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors'
rights generally and that the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may
be brought. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not (i) violate any
of the provisions of the charter documents or By-laws of Purchaser, (ii)
subject to the governmental filings and other matters referred to in the
following sentence, contravene any law, rule or regulation of any state or
of the United States or any political subdivision thereof or therein, or
any order, writ, judgment, injunction, decree, determination or award
currently in effect, or (iii) violate, conflict with or constitute a breach
under any contract, agreement, indenture, mortgage, deed of trust, lease or
other instrument to which Purchaser is a party or by which any of their
assets is bound or subject, which, in the case of clauses (ii) and (iii)
above, singly or in the aggregate, would have a material adverse effect on
the business, financial condition or results of operations of Purchaser or
prevent consummation of the transactions contemplated hereby. No consent,
approval or authorization of, or declaration or filing with, or notice to,
any Governmental Entity which has not been received or made is required by
or with respect to Purchaser in connection with the execution and delivery
of this Agreement by Purchaser or the consummation by Purchaser, as the
case may be, of any of the transactions contemplated by this Agreement,
except for (i) compliance with any applicable requirements of the Exchange
Act and the rules and regulations promulgated thereunder, (ii) state
securities or blue sky laws and state takeover, antitrust and competition
law filings and approvals, (iii) compliance with any applicable
requirements of the HSR Act, and (iv) the filing of the certificate of
merger with the Delaware Secretary of State and appropriate documents with
the relevant authorities of other states in which the Company is qualified
to do business.
(d) Financing. Purchaser has received (i) a written commitment from
FINOVA Capital Corporation (the "Bank") for the provision of a senior
credit facility (the "Senior Credit Facility") for
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the transactions contemplated hereby, on or prior to the Closing Date, in
the amount of $30,000,000 and (ii) a written commitment from DDJ Capital
Management, LLC ("DDJ," and, together with the Bank, the "Banks") for the
provision of subordinated debt in the amount of $8,000,000. The aggregate
of $38,000,000 of financing (the "Financing") contemplated by the
commitments from the Banks (collectively, the "Commitments") will be
sufficient to consummate the transactions contemplated by the Merger
Agreement, including the Merger. Purchaser has no reason to believe that,
as of the date hereof, the conditions precedent to the consummation of the
transactions contemplated by each of the Commitments would not be satisfied
on or before the Closing Date. True and correct copies of the Commitments
have been provided to the Company on or prior to the date hereof.
(e) Disclosure Documents.
(i) The information with respect to Purchaser that Purchaser
furnishes to the Company in writing specifically for use in any Company
Disclosure Documents will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of
the circumstances under which they were made, not misleading; provided
that no representation is made by Purchaser with respect to statements
or omissions in the Company Disclosure Documents based upon information
furnished to Purchaser by the Company specifically for use therein.
(ii) The Schedule 13E-3, the Preliminary Proxy Statement and
Company Proxy Statement will comply in all material respects with the
applicable requirements of the Exchange Act and will not, at the time of
the filing thereof, or from the time of any distribution thereof through
the Effective Time contain any untrue statement of material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements made therein, in the light of the circumstances
under which they were made, not misleading; provided, that no
representation is made by Purchaser with respect to statements or
omissions in the Schedule 13E-3, the Preliminary Proxy Statement or the
Company Proxy Statement based upon information furnished to Purchaser in
writing by the Company specifically for use therein.
(f) Brokers. No broker, investment banker, financial advisor or
other person, the fees and expenses of which will be paid by Purchaser, is
entitled to any broker's, finder's, financial advisor's or other similar
fee or commission in connection with the transactions contemplated by this
Agreement, except for fees payable to Tucker Anthony Incorporated and
Alouette Capital, Inc., which fees and expenses shall remain the sole
responsibility of Purchaser.
(g) Stockholder Agreements. The Voting and Shares Exchange
Agreements to be entered into by and between Purchaser and each of Charles
F. Sarkis, The Westwood Group, Inc. and the members of management of the
Company set forth on Schedule 3.2(g) attached hereto or added thereto by
notice to the Company (collectively, "Management") are the only agreements
between Purchaser or any person who is, or on the Effective Date will be, a
stockholder of Purchaser and any Company stockholder with respect to the
transactions contemplated hereunder.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
PRIOR TO MERGER
SECTION 4.1. Conduct of Business of the Company. Except as contemplated
by this Agreement, during the period from the date of this Agreement to the
Effective Time, and except with respect to actions taken by, at the direction
of, or with the approval of, the Purchaser or any of its Affiliates or
Associates, the Company shall operate, and shall cause each Subsidiary to
operate, its business in the ordinary course of business. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the Effective Time, except as expressly contemplated by this Agreement, the
Company and the Subsidiaries shall not, without the prior written consent of
Purchaser:
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(i) (x) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of
the Company's outstanding capital stock, (y) split, combine or reclassify
any of its outstanding capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its outstanding capital stock, or (z) purchase, redeem or
otherwise acquire any shares of outstanding capital stock or any rights,
warrants or options to acquire any such shares;
(ii) issue, sell, grant, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities, except for the
issuance of Shares upon exercise of Company Stock Options outstanding prior
to the date of this Agreement and disclosed in Section 3.1(c), or take any
action that would make the Company's representations and warranties set
forth in Section 3.l(c) not true and correct in all material respects;
(iii) amend its Restated Certificate of Incorporation or By-laws or
the comparable charter or organizational documents of any of its
Subsidiaries;
(iv) acquire any business or any corporation, partnership, joint
venture, association or other business organization or division thereof (or
any interest therein), or form any subsidiaries;
(v) sell or otherwise dispose of any of its substantial assets, except
in the ordinary course of business;
(vi) make any capital expenditures, enter into leases or agreements
for new locations, or make other commitments with respect thereto, except
capital expenditures, leases, agreements or commitments (i) set forth on
Section 4.1(vi) of the disclosure schedule attached hereto, or (ii) not
exceeding $200,000 in the aggregate as the Company may, in its discretion,
deem appropriate;
(vii) (x) incur any indebtedness for borrowed money or guaranty any
such indebtedness of another person, other than (A) borrowings in the
ordinary course under existing lines of credit (or under any refinancing of
such existing lines), or (B) indebtedness owing to, or guaranties of
indebtedness owing to, the Company, (y) make any loans or advances to any
other person, other than routine advances to employees;
(viii) grant or agree to grant to any employee any increase in wages
or bonus, severance, profit sharing, retirement, deferred compensation,
insurance or other compensation or benefits, or establish any new
compensation or benefit plans or arrangements, or amend or agree to amend
any existing Company Plans, except as may be required under existing
agreements or in the ordinary course of business consistent with past
practices;
(ix) merge, amalgamate or consolidate with any other person or entity
in any transaction, sell all or substantially all of its business or
assets, or acquire all or substantially all of the business or assets of
any other person or entity;
(x) enter into or amend any employment, consulting, severance or
similar agreement with any person or amend the engagement letter with the
Financial Advisor referred to in Section 3.1(j) hereof in any respect that
would result in a Material Adverse Effect;
(xi) change its accounting policies in any material respect, except as
required by generally accepted accounting principles;
(xii) enter into any material contract, agreement or commitment (other
than purchase agreements for food and beverages and restaurant supplies
entered into in the ordinary course of business) not otherwise permitted
under this Section 4.1, including, without limitation, any contract,
agreement or commitment involving expenditures by the Company or any of its
Subsidiaries in excess of $100,000 or which is not terminable by the
Company upon giving thirty (30) days or less prior written notice; or
(xiii) commit or agree to take any of the foregoing actions.
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SECTION 4.2. Other Actions. The Company or Purchaser shall not take any
action that would, or that could reasonably be expected to, result in (i) any of
the representations and warranties of such party set forth in this Agreement
that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect, or (iii) subject to the Company's right to take action under
Section 5.7, any of the conditions of the Merger set forth in Article VI not
being satisfied.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Preparation of Proxy Statement; Stockholders Meeting;
Schedule 13E-3.
(a) The Company will, as promptly as practicable following the date of
this Agreement and in consultation with Purchaser, duly call, give notice
of, convene and hold a meeting of its stockholders (the "Stockholders'
Meeting") for the purpose of approving this Agreement, the Merger and the
transactions contemplated by this Agreement. Subject to Section 5.7, the
Company will, through the Board of Directors and the Special Committee,
recommend to its stockholders approval of the foregoing matters and seek to
obtain all votes and approvals thereof by the stockholders.
(b) In connection with the Stockholders' Meeting contemplated hereby,
the Company will promptly prepare and file, and Purchaser will cooperate
with the Company in the preparation and filing of, a preliminary proxy
statement (the "Preliminary Proxy Statement") with the SEC and will use its
commercially reasonable best efforts to respond to the comments of the SEC
concerning the Preliminary Proxy Statement and to cause a final proxy
statement (the "Company Proxy Statement") to be mailed to the Company's
stockholders, in each case as soon as reasonably practicable. Purchaser
shall be given a reasonable opportunity to review and comment on all
filings with the SEC and all mailings to the Company's stockholders in
connection with the Merger prior to the filing or mailing thereof, and the
Company shall use its commercially reasonable best efforts to reflect all
such comments. The Company shall pay the filing fees for the Schedule 13E-3
and the Preliminary Proxy Statement. The Company will cooperate with
Purchaser in the preparation and filing of the Rule 13E-3 Transaction
Statement on Schedule 13E-3 (the "Schedule 13E-3") with the SEC and will
use its commercially reasonable best efforts to respond to comments by the
SEC concerning the Schedule 13E-3. Each party to this Agreement will notify
the other parties promptly of the receipt of the comments of the SEC, if
any, notification of SEC approval of the Company Proxy Statement and of any
request by the SEC for amendments or supplements to the Schedule 13E-3, the
Preliminary Proxy Statement or the Company Proxy Statement or for
additional information, and will promptly supply the other parties with
copies of all correspondence between such party or its representatives, on
the one hand, and the SEC or members of its staff, on the other hand, with
respect to the Schedule 13E-3, the Preliminary Proxy Statement, the Company
Proxy Statement or the Merger.
(c) If at any time prior to the Stockholders' Meeting, any event
should occur relating to the Company or any of the Subsidiaries which
should be set forth in an amendment of, or a supplement to, the Schedule
13E-3 or the Company Proxy Statement, the Company will promptly inform
Purchaser. If at any time prior to the Stockholders' Meeting, any event
should occur relating to Purchaser or any of its respective Associates or
Affiliates, or relating to the plans of any such persons for the Surviving
Corporation after the Effective Time of the Merger, or relating to the
Financing, that should be set forth in an amendment of, or a supplement to,
the Schedule 13E-3 or the Company Proxy Statement, the Company, with the
cooperation of Purchaser, will, upon learning of such event, promptly
prepare, file and, if required, mail such amendment or supplement to the
Company's stockholders; provided that, prior to such filing or mailing, the
Company shall consult with Purchaser with respect to such amendment or
supplement and shall afford Purchaser reasonable opportunity to comment
thereon.
(d) Purchaser shall furnish to the Company the information relating to
Purchaser, its Associates and Affiliates and the plans of such persons for
the Surviving Corporation after the Effective Time of the
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Merger, and relating to the Financing, which is required to be set forth in
the Preliminary Proxy Statement or the Company Proxy Statement under the
Exchange Act and the rules and regulations of the SEC thereunder. The
Company shall cause to be included (i) as an exhibit to the Preliminary
Proxy Statement and the Company Proxy Statement, the written fairness
opinion of the Financial Advisor referred to in Section 3.1(i), and (ii) as
an exhibit to the Schedule 13E-3 any materials delivered to the Company's
Board of Directors by the Financial Advisor in connection with the delivery
of the Fairness Opinion which are required under Schedule 13E-3 to be filed
as exhibits.
(e) The Company will cause its transfer agent to make stock transfer
records relating to the Company available to the extent reasonably
necessary to effectuate the intent of this Agreement.
(f) At the Stockholders Meeting, Purchaser covenants to vote all
Shares it will own or have a right to vote in favor of the Merger.
SECTION 5.2. Access to Information; Confidentiality. From and after the
date hereof, the Company will provide to Purchaser reasonable access, upon
notice and during normal business hours, to the Company's facilities, books and
records and shall cause the directors, employees, accountants, attorneys,
financial advisors, lenders and other agents and representatives (collectively,
"Representatives") of the Company to continue to cooperate fully with Purchaser
and Purchaser's Representatives in order to enhance such persons' knowledge of
the Company's assets, contracts, liabilities, operations, records and other
aspects of its business (including any environmental investigation of the
Company's facilities) and the efforts of Purchaser to secure the Financing as
described in Section 3.2(d). Except as the Company may otherwise expressly agree
in writing, unless and until the Merger is consummated, Purchaser shall be bound
by the terms of the Confidentiality Agreement, a copy of which is attached
hereto as EXHIBIT B.
SECTION 5.3. Commercially Reasonable Efforts. Upon the terms and subject
to the conditions and other agreements set forth in this Agreement, each of the
parties agrees to use commercially reasonable best efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including the procurement of the Financing and the satisfaction of
the respective conditions set forth in Article VI.
SECTION 5.4. Financing. Purchaser shall use commercially reasonable best
efforts (i) to close the Financing on terms consistent with the Commitments or
such other terms as shall be mutually satisfactory to Purchaser and the Company,
provided, however, that with respect to the Company's consent, such consent
shall only be required for any such term that would be likely to adversely
effect the parties' ability to close the transactions contemplated hereunder in
any material respect and shall not be unreasonably withheld or delayed, and (ii)
to execute and deliver definitive agreements with respect to the Financing (the
"Definitive Financing Agreements") on or before the Closing Date. Purchaser
shall use commercially reasonable best efforts to satisfy on or before the
Closing Date all requirements of the Definitive Financing Agreements which are
conditions to closing the transactions constituting the Financing and to drawing
the cash proceeds thereunder. The Company shall use its commercially reasonable
best efforts to assist and cooperate with Purchaser, its Affiliates and
Associates to satisfy on or before the Closing Date all of the conditions to
close the transactions constituting the Financing, provided that the Company
shall not be obligated to incur any material out-of-pocket expenses in order to
comply with this obligation. The obligations contained herein are not intended,
nor shall they be construed, to benefit or confer any rights upon any person,
firm or entity other than the parties hereto.
SECTION 5.5. Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time, Purchaser shall cause the
Surviving Corporation to indemnify and hold harmless each person who is
now, at any time has been or who becomes prior to the Effective Time a
director or officer of the Company or any of its Subsidiaries, and their
respective heirs and personal representatives (the "Indemnified Parties"),
against all expenses, liabilities and losses (including, without
limitation, attorneys' fees and related disbursements, judgments, fines,
ERISA excise
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taxes or penalties and amounts paid or to be paid in settlement) incurred
in connection with any "Proceeding" (as defined in Article VI of the
Company's By-laws) arising out of or pertaining to any action or omission
occurring prior to the Effective Time (including, without limitation, any
Proceeding which arises out of or relates to the transactions contemplated
by this Agreement), to the full extent permitted under Delaware law and the
Company's By-laws as in effect as of the date of this Agreement or under
any indemnification agreement in effect as of the date of this Agreement.
(b) The Surviving Corporation shall control the defense of any such
Proceeding with counsel selected by the Surviving Corporation, which
counsel shall be reasonably acceptable to the Indemnified Party, provided
that the Indemnified Party shall be permitted to participate in the defense
of such Proceeding at its own expense; except that the Surviving
Corporation shall pay as incurred the reasonable fees and expenses of
counsel retained by an Indemnified Party in the event that (i) the
Surviving Corporation and the Indemnified Party shall have mutually agreed
on the retention of such counsel, or (ii) the named parties to any
Proceeding include both the Surviving Corporation and the Indemnified Party
and representation of both parties by the same counsel would be
inappropriate, in the reasonable opinion of counsel to the Indemnified
Party, due to actual or potential differing interests between them; and
provided, further, that if any D&O Insurance (as defined in paragraph (c)
of this Section 5.5) in effect at the time shall require the insurance
company to control such defense in order to obtain the full benefits of
such insurance and such provision is consistent with the provisions of the
Company's D&O Insurance existing as of the date of this Agreement, then the
provisions of such policy shall govern. Neither Purchaser nor the Surviving
Corporation shall in any event be liable for any settlement effected
without its written consent, which consent shall not be withheld
unreasonably.
(c) For a period of not less than six (6) years after the Effective
Time, Purchaser or the Surviving Corporation shall maintain officers' and
directors' liability insurance ("D&O Insurance") covering each Indemnified
Party who is presently covered by the Company's officers' and directors'
liability insurance or will be so covered at the Effective Time with
respect to actions or omissions occurring prior to the Effective Time, on
terms no less favorable than such insurance maintained in effect by the
Company as of the date hereof in terms of coverage and amounts, provided
that Purchaser and the Surviving Corporation shall not be required to pay
in the aggregate an annual premium for D&O Insurance in excess of 200% of
the last annual premium paid prior to the date hereof, but in such case
shall purchase as much coverage as may be obtained for 200% of the last
annual premium paid prior to the date hereof.
(d) The Certificate of Incorporation and By-laws of the Surviving
Corporation shall contain the provisions with respect to indemnification
and exculpation set forth in the Certificate of Incorporation and By-laws
of the Company as of the date of this Agreement, which provisions shall not
be amended, repealed or otherwise modified after the Effective Time in any
manner that would adversely affect the rights thereunder of the Indemnified
Parties in respect of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions
contemplated by this Agreement), unless such modification is required by
law. Purchaser and the Company agree that all rights existing in favor of
any Indemnified Party under any indemnification agreement in effect as of
the date hereof shall survive the Merger and shall continue in full force
and effect, without any amendment thereto.
(e) The provisions of this Section 5.5 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties,
his or her heirs and his or her personal representatives and shall be
binding on all successors and assigns of Purchaser, the Company and the
Surviving Corporation.
SECTION 5.6. Public Announcements. Purchaser, on the one hand, and the
Company, on the other hand, will consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press release
or other public statements with respect to the existence of and transactions
contemplated by this Agreement, and shall not issue any such press release or
make any such public statement without the consent of the other party following
such consultation, except as may be required by applicable law, regulation or
judicial process, and in such case only after reasonable notice to the other
party.
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<PAGE> 17
SECTION 5.7. No Solicitation; Acquisition Proposals.
(a) The Company shall not, and shall not authorize or permit any of
its officers, directors or employees or any investment banker, financial
advisor, attorneys, accountant or other representative retained by it to,
directly or indirectly, (i) solicit, initiate or knowingly encourage
(including by way of furnishing non-public information), or take any other
action to knowingly facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, an Acquisition
Proposal (as such term is defined herein) or (ii) participate in any
discussions or negotiations with a Third Party (as such term is defined
herein) regarding an Acquisition Proposal; provided, however, that if, at
any time prior to the Effective Time, the Board of Directors of the Company
or the Special Committee of the Board of Directors of the Company
determines in good faith, (i) after consulting with outside counsel, that
it is likely to have a fiduciary duty to do so under applicable law, and
(ii) based on the advice of outside counsel and the Financial Advisor, that
the initiating Third Party is a credible potential buyer reasonably likely
to have the ability to consummate a Superior Proposal (as such term is
defined herein), the Company, in response to a written Acquisition Proposal
that was unsolicited from a Third Party or that did not otherwise result
from a breach of this Section 5.7, and is reasonably likely to lead to a
Superior Proposal, may (x) furnish non-public information with respect to
the Company to the Third Party who made such Acquisition Proposal pursuant
to a confidentiality agreement in substantially the form of EXHIBIT B
attached hereto, and (y) participate in negotiations regarding such
Acquisition Proposal. Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in the preceding sentence by
any director or officer of the Company or any of its Subsidiaries, other
than Affiliates or Associates of the Purchaser, or any investment banker,
financial advisor, attorney, accountant or other representative of the
Company or any of its Subsidiaries, whether or not acting on behalf of the
Company or any of its Subsidiaries, shall be deemed to be a breach of this
Section 5.7 by the Company.
(b) Neither, the Board of Directors of the Company nor the Special
Committee shall (i) withdraw or modify in a manner adverse to the
Purchaser, its approval or recommendation of this Agreement, and the Merger
unless there is a Superior Proposal outstanding, (ii) approve or recommend
an Acquisition Proposal unless it is a Superior Proposal, or (iii) cause
the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other agreement with respect to an Acquisition
Proposal unless it is a Superior Proposal, and, in addition, in the case of
either (i), (ii) or (iii), unless the Board of Directors of the Company or
the Special Committee of the Board of Directors of the Company shall have
(x) determined in good faith, after consulting with outside counsel, that
it is likely to have a fiduciary duty to do so under applicable law, and
(y) terminated this Agreement pursuant to Section 7.1(c) hereto.
(c) The Company shall promptly (but in any event within one (1) day)
advise the Purchaser orally and in writing of any Acquisition Proposal or
any inquiry regarding the making of an Acquisition Proposal or any inquiry
regarding the making of an Acquisition Proposal from a Third Party
including any request for information, the material terms and conditions of
such request, Acquisition Proposal or inquiry and the identity of the
person making such request, Acquisition Proposal or inquiry. The Company
will, to the extent reasonably practicable, keep the Purchaser fully
informed of the status and details (including amendments or proposed
amendments) of any such request, Acquisition Proposal or inquiry.
(d) Notwithstanding the foregoing, the Company shall neither (i) amend
the Rights Agreement to permit a Third Party to consummate a Superior
Proposal or in any other manner whatsoever nor (ii) take any steps to
exempt the transactions contemplated by a Superior Proposal from, or if
necessary to challenge the validity or applicability of, any applicable
take-over law, including without limitation, Section 203 of the DGCL,
unless the Company has complied in all respects with paragraphs (a) through
(c) above.
(e) For purposes of this Agreement, (i) "Acquisition Proposal" means
any bona fide written proposal with respect to a merger, consolidation,
share exchange, tender offer or similar transaction involving the Company,
or any purchase or other acquisition of all or any significant portion of
the assets of the Company, or any equity interest in the Company, other
than the transactions contemplated hereby; (ii) "Third Party" means any
corporation, partnership, person or other entity or "group" (as defined in
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<PAGE> 18
Section 13(d)(3) of the Exchange Act), other than Purchaser or any
Affiliates of Purchaser and its respective directors, officers, employees,
representatives and agents; (iii) "Superior Proposal" means an Acquisition
Proposal that (A) would take the form of either (i) a merger,
consolidation, share exchange, recapitalization, business combination, or
other similar transaction; (ii) a sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 100% of the assets of the Company and its
Subsidiaries, taken as a whole, in a single transaction or series of
transactions; or (iii) a tender offer or exchange offer for 100% of the
outstanding shares of capital stock of the Company or the filing of a
registration statement under the Securities Act of 1933, as amended, in
connection therewith; (B) the Board of Directors of the Company or the
Special Committee of the Board of Directors of the Company, in good faith,
based on the advice of its outside counsel and of the Financial Advisor,
determines to be of a higher price per share and more favorable than the
transaction contemplated hereunder; and (C) is already fully financed and
evidence of such financing, in the form of an executed commitment letter,
has been provided to the Company.
SECTION 5.8. Board Action Relating to Stock Option Plans. As soon as
practicable following the date of this Agreement, the Board of Directors of the
Company (or, if appropriate, any committee administering a Company Stock Option
Plan) shall adopt such resolutions or take such actions as may be required to
adjust the terms of all outstanding Company Stock Options in accordance with
Section 2.2 and shall make such other changes to the Company Stock Option Plan
as Purchaser deems appropriate to give effect to the Merger, and to terminate
such plans as of the Effective Time.
SECTION 5.9. Consents and Approvals. As soon as practicable following the
date of this Agreement, the Company and Purchaser shall make all filings
required to be made with and seek all consents, approvals, permits and
authorizations required to be obtained from, any third parties or Governmental
Entities in connection with this Agreement and the transactions contemplated
hereby, including, without limitation, the filing of any required notification
under the HSR Act. The Purchaser shall pay any required filing fees or other
expense in connection therewith.
SECTION 5.10. State Takeover Laws. The Company shall take all steps
necessary to exempt the transactions contemplated by this Agreement from, or if
necessary to challenge the validity or applicability of, any applicable takeover
law, including, without limitation, Section 203 of the DGCL.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect Merger is subject to
the satisfaction or waiver on or prior to the Closing Date (as applicable) of
the following conditions:
(a) Stockholder Approval of Merger. The Merger shall have been
adopted and approved by the affirmative vote required under the laws of the
State of Delaware.
(b) Intentionally Omitted.
(c) No Injunctions or Restraints. No temporary restraining order,
judgment, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect; provided,
however, that the parties invoking this condition shall use their
commercially reasonable best efforts to have any such order or injunction
vacated.
SECTION 6.2. Conditions to Obligation of Purchaser to Effect the
Merger. In addition to the conditions set forth in Section 6.1, the obligation
of Purchaser to effect the Merger is further subject to the satisfaction, or
waiver by the Purchaser, on or prior to the Closing Date, of the following
conditions:
(a) Financing Condition. The receipt of cash proceeds of the
Financing in an amount sufficient to consummate the transactions
contemplated hereby pursuant to the terms of the Commitments or such
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<PAGE> 19
other terms as Purchaser and the Company shall agree or as are not
materially more onerous than as set forth in the Commitments (the
"Financing Condition") shall have been satisfied.
(b) Material Adverse Effect. There shall not have occurred any
change, event, occurrence or circumstance in the business, operations,
assets or condition (financial or otherwise) of the Company or any of its
Subsidiaries, related to the period commencing on September 28, 1998, that
in the reasonable judgment of Purchaser, is likely to have a Material
Adverse Effect on the Company and its Subsidiaries, taken as a whole.
(c) Force Majeure. There shall not have occurred (i) any general
suspension of trading in, or limitation on prices for, securities on the
New York Stock Exchange, which suspension or limitation shall continue for
at least three consecutive trading days, (ii) any decline in either the Dow
Jones Industrial Average or the Standard and Poor's 500 Index by an amount
in excess of 25%, measured from August 31, 1998, (iii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iv) a commencement of a war or armed hostilities or other
national or international calamity directly or indirectly involving the
United States which would reasonably be expected to have a material adverse
impact on the capital markets of the United States, or (v) in the case of
any of the foregoing existing on the date of this Agreement, a material
acceleration, escalation or worsening thereof.
(d) Representations and Warranties. The representations and
warranties of the Company set forth in Section 3.1 that are qualified by
materiality shall be true and correct and such representations and
warranties of the Company set forth in Section 3.1 that are not so
qualified shall be true and correct in all material respects, in each case
as of the date of this Agreement and as of the Closing Date as though made
on and as of the Closing Date, except to the extent such representations
and warranties speak as of an earlier date and except for changes permitted
or contemplated by this Agreement, and except, in the case of any such
breach, where such breach would not, individually or in the aggregate,
materially and adversely affect the Financing described in Section 3.2(d)
or the ability of the Company to consummate the Merger. The Company shall
have received an officer's certificate signed on behalf of the Purchaser to
the effect set forth in this paragraph.
(e) Performance of Obligations and Covenants of the Company. The
Company shall have performed in all material respects all obligations and
covenants required to be performed by it under this Agreement at or prior
to the Closing Date. Company shall have received an officer's certificate
signed on behalf of Purchaser to the effect set forth in this paragraph.
(f) Termination of Merger Agreement. The Merger Agreement shall not
have been terminated in accordance with its terms.
SECTION 6.3. Condition to Obligation of the Company to Effect the
Merger. In addition to the conditions set forth in Section 6.1, the obligation
of the Company to effect the Merger is further subject to the satisfaction, or
waiver by the Company, on or prior to the Closing Date, of the following
conditions:
(a) Non-Affiliated Stockholder Approval of Merger. A majority of the
Shares held by the stockholders of the Company (the "Non-Affiliated
Stockholders") other than Charles F. Sarkis, The Westwood Group, Inc., the
members of Management and William B. Finneran shall have voted to approve
and authorize this Agreement and the Merger.
(b) Representations and Warranties. The representations and
warranties of Purchaser set forth in Section 3.2 that are qualified by
materiality shall be true and correct and such representations and
warranties of Purchaser set forth in Section 3.2 that are not so qualified
shall be true and correct in all material respects, in each case as of the
date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date, except to the extent such representations and
warranties speak as of an earlier date and except for changes permitted or
contemplated by this Agreement, and except, in the case of any such breach,
where such breach would not, individually or in the aggregate, materially
and adversely affect the Financing described in Section 3.2(d) or the
ability of Purchaser to consummate the Merger. The Company shall have
received an officer's certificate signed on behalf of the Purchaser to the
effect set forth in this paragraph.
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<PAGE> 20
(c) Performance of Obligations and Covenants of the
Purchaser. Purchaser shall have performed in all material respects all
obligations and covenants required to be performed by it under this
Agreement at or prior to the Closing Date. The Company shall have received
an officer's certificate signed on behalf of the Purchaser to the effect
set forth in this paragraph.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination. This Agreement may be terminated and abandoned
at any time prior to the Effective Time, whether before or after any approval of
the Merger by the stockholders of the Company: (a) by mutual written consent of
Purchaser and the Company; or (b) by either Purchaser or the Company: (i) if,
upon a vote at the Stockholders Meeting or any adjournment thereof, the adoption
and approval of this Agreement and the Merger by the stockholders of the Company
required by Delaware law, the Company's Restated Certificate of Incorporation or
the terms of this Agreement shall not have been obtained; (ii) if the Merger
shall not have been consummated on or before June 30, 1999, provided that the
failure to consummate the Merger is not attributable to the failure of the
terminating party to use its commercially reasonable best efforts to fulfill its
obligations pursuant to this Agreement; (iii) if there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise
prohibited, or if any judgment, injunction, order or decree enjoining or
otherwise restraining Purchaser or the Company from consummating the Merger is
entered and such judgment, injunction, order or decree shall become final and
nonappealable; or (iv) by the Company, if a majority of the Shares held by the
Non-Affiliated Stockholders shall not have voted to approve and authorize this
Agreement and the Merger; or (c) by the Company, immediately after payment to
Purchaser of the fee and expense reimbursement described in Section 7.2(b), if
prior to the Effective Time, either the Board of Directors of the Company or the
Special Committee of the Board of Directors of the Company has properly elected
to terminate this Agreement in accordance with the provisions of Section 5.7; or
(d) by Purchaser, if, prior to the Effective Time, the Company shall breach in
any material respect any of its representations, warranties or obligations
hereunder (including, without limitation, the terms and conditions of Section
5.7) and such breach shall not have been cured in all material respects or
waived and the Company shall not have provided reasonable assurance that such
breach will be cured in all material respects on or before the Closing Date, but
only if such breach, singly or together with all other such breaches would have
a Material Adverse Effect; or (e) by the Company, if Purchaser shall breach in
any material respect any of its representations, warranties or obligations
hereunder and such breach shall not have been cured in all material respects or
waived, and Purchaser shall not have provided reasonable assurance that such
breach will be cured in all material respects on or before the Closing Date, but
only if such breach, singly or together with all other such breaches would have
a Material Adverse Effect; provided, however, that the party seeking termination
pursuant to clause (d) or (e) hereof is not in breach of any of its material
representations, warranties, covenants or agreements contained in this
Agreement.
SECTION 7.2. Effect of Termination.
(a) Agreement Void. In the event of the termination and abandonment
of this Agreement pursuant to Section 7.1 hereof, this Agreement shall
forthwith become void and have no effect, without any liability on the part
of any party hereto or its affiliates, directors, officers or stockholders
and all rights and obligations of any party hereto shall cease except for
agreements contained in Sections 5.2, 7.2 and 8.2; provided, however, that
nothing contained in this Section 7.2 shall relieve any party from
liability for any breach of this Agreement or shall relieve the Company
from any liability under this Article VII.
(b) Termination Fee.
(i) If this Agreement is terminated by the Company pursuant to
Section 7.1(c) or, by the Purchaser pursuant to Section 7.1(d) as a
result of a willful breach by the Company of any of the terms and
conditions of Section 5.7, then the Company shall promptly pay to
Purchaser in cash a fee equal to $2,500,000 (the "Termination Amount"),
which amount shall be payable in same day federal funds. The Termination
Amount (provided the same shall be promptly paid) shall be the
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<PAGE> 21
exclusive remedy of Purchaser as a result of termination of this
Agreement pursuant to Section 7.1(c).
(ii) If this Agreement is terminated pursuant to Section 7.1(b),
provided that Purchaser has used commercially reasonable best efforts to
consummate the transactions contemplated hereunder, or 7.1(d), other
than as a result of a wilful breach by the Company of any of the terms
and conditions of Section 5.7, then the Company shall promptly pay to
Purchaser in cash a portion of the aggregate out-of-pocket, reasonable
costs and expenses of Purchaser in connection with this Agreement and
the transactions contemplated hereby, including, without limitation,
commitment, appraisal and other fees relating to the Financing and the
reasonable fees and disbursements of accountants, attorneys and
investment bankers, whether retained by Purchaser or by any other
person, (collectively, "Expenses") as follows: (i) 100% of Expenses up
to $250,000; (ii) no reimbursement of Expenses greater than $250,000 and
up to $500,000; and (iii) 50% of Expenses greater than $500,000;
provided, however, that in no event shall the total reimbursement of
aggregate Expenses exceed $1,000,000. In such event, Purchaser shall
reimburse the Company for 50% of the filing fees incurred by the Company
(if any) in connection with the filing of the Preliminary Proxy
Statement and Schedule 13E-3 pursuant to Section 5.1, which amount shall
be payable in cash.
(c) Reasonable Inducement. The parties acknowledge and agree that
the provisions for payment of the Termination Amount are included herein in
order to reasonably induce Purchaser to enter into this Agreement and to
reimburse Purchaser for incurring the costs and expenses related to
entering into this Agreement, obtaining the Commitments and the Financing,
and consummating the transactions contemplated by this Agreement.
(d) Costs of Enforcement. Notwithstanding anything to the contrary
set forth in this Agreement, in the event Purchaser is required to file
suit to seek all or a portion of the Termination Amount or Expense
reimbursement, it shall be entitled, if substantially successful, to
payment by the Company of all reasonable additional expenses, including
reasonable attorneys' fees and expenses, which it incurs in enforcing its
rights hereunder.
SECTION 7.3. Amendment. This Agreement may be amended by the parties at
any time before or after any required approval of matters presented in
connection with the Merger by the stockholders of the Company; provided,
however, that after any such approval, there shall be made no amendment that by
law requires further approval by such stockholders without the further approval
of such stockholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties.
SECTION 7.4. Extension; Waiver. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement, or (c)
subject to Section 7.3, waive compliance with any of the agreements or
conditions of the other parties contained in this Agreement. Any agreement on
the part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
SECTION 7.5. Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.3, an extension or waiver pursuant to Section
7.4, or any other approval or consent required or permitted to be given pursuant
to this Agreement shall, in order to be effective and in addition to
requirements of applicable law, require, in the case of Purchaser or the
Company, action by its Board of Directors, a duly authorized committee thereof
(including, in the case of the Company, the Special Committee), or the duly
authorized designee of such Board of Directors or such committee thereof,
provided that in the case of the Company, any such action contemplated by this
section shall be authorized by a majority of the disinterested directors.
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<PAGE> 22
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1. Nonsurvival of Representations and Warranties. None of the
representations and warranties set forth in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time, including, without
limitation, Section 5.5, 5.7 and 7.2.
SECTION 8.2. Fees and Expenses. Except as provided otherwise in this
Agreement, including, without limitation, in Section 7.2, whether or not the
Merger shall be consummated, each party hereto shall pay its own expenses
incident to preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.
SECTION 8.3. Definitions. For purposes of this Agreement:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act, provided that with respect to Purchaser, the
definitions of "Affiliate" and "Associate" shall not include any
Non-Affiliated Stockholder; and
(b) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
SECTION 8.4. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given when delivered personally or sent by overnight courier (providing proof of
delivery) or telecopy to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
<TABLE>
<S> <C>
(a) if to Purchaser: SRC Holdings, Inc.
284 Newbury Street
Boston, Massachusetts 02115
Attn: President
Facsimile No.: (617) 425-5252
with a copy to: Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
Attn: Francis J. Feeney, Jr., Esq.
Facsimile No.: (617) 951-1295
(b) if to the Company: Back Bay Restaurant Group, Inc.
284 Newbury Street
Boston, Massachusetts 02115
Attn: Board of Directors
Facsimile No.: (617) 425-5252
with a copy to: Ropes & Gray
One International Place
Boston, Massachusetts 02110
Attn: Alfred O. Rose, Esq.
Facsimile No.: (617) 951-7050
</TABLE>
SECTION 8.5. Interpretation. When a reference is made in this Agreement
to a Section or Schedule, such reference shall be to a Section of, or a Schedule
to, this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or
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<PAGE> 23
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
SECTION 8.6. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 8.7. Entire Agreement; Third-Party Beneficiaries. This Agreement
and the other agreements referred to herein constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement. This Agreement
is not intended to confer upon any person, other than the parties hereto and the
third party beneficiaries referred to in the following sentence, any rights or
remedies. The parties hereto expressly intend the provisions of Section 5.5 to
confer a benefit upon and be enforceable by, as third party beneficiaries of
this Agreement, the third persons referred to in, or intended to be benefited
by, such provisions.
SECTION 8.8. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of The Commonwealth of Massachusetts,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 8.9. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, and any such assignment that is not
consented to shall be null and void, except that Purchaser may assign this
Agreement (i) to any wholly owned subsidiary of Purchaser or (ii) together with
all of the outstanding capital stock of Purchaser, to an entity organized under
the corporate or limited liability laws of a jurisdiction of one of the United
States of America, the ownership interests of which entity are substantially
identical to the ownership interests of Purchaser immediately prior to such
assignment and which entity specifically and expressly assumes by written
agreement the obligations of Purchaser under this Agreement; in either case so
long as such assignment shall not adversely affect the ability of Purchaser to
secure the Financing described in Section 3.2(d) and without Purchaser being
released from liability hereunder and such transfer or assignment will not
relieve Purchaser of its obligations under this Agreement or prejudice the
rights of stockholders to receive payment for Shares pursuant to the
transactions contemplated by this Agreement. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
SECTION 8.10. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
(without requirement to post a bond) the terms and provisions of this Agreement,
this being in addition to any other remedy to which they are entitled at law or
in equity.
SECTION 8.11. Severability. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
SECTION 8.12. Attorney's Fees. If any legal proceeding is initiated by
any party hereto to enforce this Agreement or otherwise with respect to the
subject matter of this Agreement, the prevailing party or parties shall be
entitled to recover reasonable attorneys' fees incurred in connection with any
such proceedings.
IN WITNESS WHEREOF, the Company and Purchaser have caused this Agreement to
be executed as an agreement under seal by their respective officers thereunto
duly authorized, all as of the date first written above.
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<PAGE> 24
BACK BAY RESTAURANT GROUP, INC.
By: /s/ IRWIN CHAFETZ
----------------------------------
Name: Irwin Chafetz
Title: Director
SRC HOLDINGS, INC.
By: /s/ CHARLES F. SARKIS
----------------------------------
Name: Charles F. Sarkis
Title: President
21
<PAGE> 1
Exhibit 4.2
AMENDMENT NO. 1 TO SHAREHOLDER RIGHTS AGREEMENT
This Amendment No. 1 to Shareholder Rights Agreement (this
"Amendment"), dated as of December 3, 1998, amends the Shareholder Rights
Agreement dated as of December 20, 1994 (the "Rights Agreement") between Back
Bay Restaurant Group, Inc., a Delaware corporation (the "Company"), and State
Street Bank & Trust Company, a Massachusetts trust company (the "Rights Agent").
WHEREAS, the Board of Directors of the Company has approved an
amendment to the Rights Agreement pursuant to Section 26 thereof;
NOW THEREFORE, in consideration of these premises, the mutual
agreements herein set forth, and other good and valuable consideration, the
sufficiency of which is hereby acknowledged by each party, the parties hereto
hereby agree as follows:
1. Amendments.
1.1. The definition of "Acquiring Person" set forth in Section 1(a)
of the Rights Agreement is hereby amended to read in its entirety as
follows:
"(a) "Acquiring Person" shall mean, at the time any
determination is to be made, any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner
of 35% or more of the shares of Common Stock then outstanding;
PROVIDED, HOWEVER, that the term "Acquiring Person" shall not include
the Company, any Subsidiary of the Company, any employee benefit plan
of either the Company or of any Subsidiary of the Company, any Person
or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan, and that no Person shall become
an Acquiring Person solely by virtue of a reduction in the number of
Common Shares outstanding, unless subsequent to such reduction such
Person or any Affiliate or Associate of such Person shall become the
Beneficial Owner of additional shares of Common Stock constituting 1%
or more of the then outstanding shares of Common Stock other than as a
result of a stock dividend, stock split or similar transaction effected
by the Company in which all shareholders are treated equally; PROVIDED,
FURTHER, that so long as the Agreement and Plan of Merger dated as of
December 3, 1998 (as in effect from time to time, the "Merger
Agreement") between the Company and SRC Holdings, Inc., a Delaware
corporation ("Purchaser"), shall not have been terminated in accordance
with its terms, the term "Acquiring Person" shall not include the
Purchaser or any of its Affiliates or Associates as a result of the
execution, delivery or performance by the parties thereto of (i) the
Merger Agreement or (ii) the Voting and Shares Exchange Agreements by
and between Purchaser and each member of Management (as defined in the
Merger Agreement)."
1.2. The last sentence of Section 2 of the Rights Agreement is hereby
amended to read in its entirety as follows:
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<PAGE> 2
"The Company may from time to time appoint such Co-Rights Agents
as it may deem necessary or desirable, upon ten (10) days' prior
written notice to the Rights Agent. The Rights Agent shall have
no duty to supervise, and in no event be liable for, the acts or
omissions of any such Co-Rights Agent."
1.3. The second sentence of Section 25 of the Rights Agreement is
hereby amended to read in its entirety as follows:
"Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company
or by the holder of any Rights Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed
in writing with the Company) as follows:
State Street Bank & Trust Company
c/o Boston EquiServe Limited Partnership
150 Royall Street
Canton, MA 02021
Attention: Client Administration
Notices or demands authorized by this Agreement to be given or
made by the Company of the Rights Agent to the holder of any
Rights Certificate (or, if prior to the Distribution Date, to
the holder of certificates representing shares of Common Stock)
shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Company.
2. EFFECT OF AMENDMENT. Except as expressly amended hereby, the Rights
Agreement shall remain in full force and effect.
3. GOVERNING LAW. This Amendment shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of said state applicable to
contracts made and to be performed entirely within said state.
4. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the day first above written.
ATTEST: BACK BAY RESTAURANT GROUP, INC.
By /s/ Sarah Bates By /s/ Irwin Chafetz
----------------------- -------------------------------------------
Name: Irwin Chafetz
Title: Chairman of the Special Committee of
the Board of Directors
ATTEST: STATE STREET BANK & TRUST COMPANY,
as Rights Agent
By /s/ Patti J. Lee By /s/ Stephen Cesso
----------------------- -------------------------------------------
Name: Stephen Cesso
Title: Vice President and Assistant Counsel
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<PAGE> 1
Exhibit 99
FOR IMMEDIATE RELEASE
December 3, 1998
CONTACT: Francis P. Bissaillon
Executive Vice President,
Chief Financial Officer
(617) 536-2800
BOSTON, MA (December 3, 1998) - Back Bay Restaurant Group, Inc.
(NASDAQ:PAPA) and its Chairman, President and Chief Executive Officer, Charles
F. Sarkis, announced today that they have entered into an Agreement and Plan of
Merger, pursuant to which SRC Holdings, Inc., a new corporation formed by Mr.
Sarkis, will acquire Back Bay.
Under the terms of the merger agreement, which was approved by a
special committee of Back Bay's Board of Directors at a meeting held yesterday,
SRC Holdings will be merged with and into Back Bay and each outstanding public
share of Back Bay common stock will be converted into the right to receive
$10.25 per share, net to the seller in cash. In addition, Back Bay's existing
indebtedness of approximately $4 million will be refinanced as part of the
merger. Mr., Sarkis, and certain members of Back Bay's senior management and
their affiliates collectively control approximately 26% of the outstanding Back
Bay stock and have agreed to vote in favor of the merger.
The proposed merger will be conditioned upon, among other things, the
approval by the stockholders of Back Bay, including a majority of its
non-affiliated public stockholders, and the receipt of approximately $38 million
of cash proceeds from financing commitments to fund the merger. The financing is
subject to satisfaction of certain conditions, which will be described in the
proxy materials.
Back Bay's Board of Directors formed a special committee of independent
directors to evaluate the transaction. Schroder & Co., Inc. served as financial
advisor to the special committee in connection with the transaction.
In announcing the proposed merger, Mr. Sarkis stated: "We believe that
this transaction is in the best interest of our stockholders. The merger will
provide much needed liquidity to our public stockholder base at a price which is
a significant premium over the historical trading range of the stock at any time
in recent years."
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Back Bay and Mr. Sarkis expect that the necessary filings with the
Securities and Exchange Commission in connection with the merger will be made
during December 1998, and that the proxy materials will be mailed to Back Bay
stockholders promptly after SEC approval. The transaction is anticipated to
close by March of 1999.
Back Bay Restaurant Group, Inc. owns and operates thirty-four
full-service restaurants located in New England, New York, New Jersey and the
District of Columbia. Fourteen restaurants feature Italian cuisine and are
operated the Papa-Razzi trade name. Twenty restaurants serve American-style food
and are operated under several trade names including Joe's American Bar & Grill,
Charley's Eating & Drinking Saloon, Hillary's Ltd. Abe & Louie's and The Famous
Atlantic Fish Company.
Some of the statements in this press release may be considered
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking information is inherently subject
to risks and uncertainties, which include, but are not limited to, the
successful completion of this transaction, overall economic, market, and
industry conditions, and the risks described from time to time in reports filed
by Back Bay with the Securities and Exchange Commission, including its most
recently filed Form 10-K report. Should any such risks or uncertainties
materialize, or underlying assumptions prove incorrect, actual results or
outcomes may vary materially from those anticipated.
