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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): March 15, 1996
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SHONEY'S, INC.
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(Exact name of registrant as specified in its charter)
Tennessee 0-4377 62-0799798
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(State or other (Commission (I.R.S. Employer
jurisdiction of File No.) Identification No.)
incorporation)
1727 Elm Hill Pike, Nashville, TN 37210
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code (615) 391-5201
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ITEM 5. OTHER EVENTS.
On March 15, 1996, Shoney's, Inc. (the "Company") entered into an
agreement with TPI Enterprises, Inc. ("TPI") whereby the Company agreed
to acquire substantially all of the properties of TPI (including the
outstanding common stock of certain of TPI's subsidiaries). In exchange
for these properties, the Company will issue 5,577,102 shares of its $1.00
par value common stock plus an additional $10 million of the Company's
stock based upon the average per share price of the Company's stock for
the ten trading days immediately preceding the Closing Date. The number
of shares of stock to be issued also is subject to certain adjustments as
set forth in the agreement. In addition, certain specified liabilities
of TPI will be assumed as described in the agreement.
The agreement is subject to a number of contingencies, including
regulatory approvals, approvals of the lenders of each of the Company and
TPI and a vote of the shareholders of each of the Company and TPI.
For a further description of this event, reference is made to
the Plan of Tax-Free Reorganization Under Section 368 (a)(1)(C) of the
Internal Revenue Code and Agreement, a copy of which is attached as
Exhibit 2 to this Current Report on Form 8-K, and to the press release
issued with respect to the transaction, a copy of which is attached as
Exhibit 99.1 to this Current Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The following are filed as exhibits to this Current Report on
Form 8-K:
Exhibit No. Description
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(2) Plan of Tax-Free Reorganization Under Section 368
(a)(1)(C) of the Internal Revenue Code and Agreement
(99.1) Press Release
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized on this 15th day of
March, 1996.
SHONEY'S, INC.
By: /s/ Gregory A. Hayes
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Gregory A. Hayes
Vice President and Controller
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PLAN OF TAX-FREE REORGANIZATION UNDER
SECTION 368(a)(1)(C)
OF THE INTERNAL REVENUE CODE
AND
AGREEMENT
This Plan of Tax-Free Reorganization under Section 368(a)(1)(C)
of the Internal Revenue Code and Agreement (hereinafter referred to as the
"Agreement") made and entered into as of the 15th day of March, 1996,
by and among Shoney's, Inc., a Tennessee corporation, (hereinafter
referred to as "Shoney's"), TPI Restaurants Acquisition Corporation, a
Tennessee corporation (hereinafter referred to as "TPAC"), and TPI
Enterprises, Inc., a New Jersey corporation (hereinafter referred to as
"Enterprises").
W I T N E S S E T H:
WHEREAS, Shoney's owns all of the issued and outstanding capital
stock of TPAC; and
WHEREAS, Shoney's, by itself or through subsidiaries, is engaged
in the business of franchising, owning and/or operating "Shoney's,"
"Captain D's" and casual dining restaurants in the United States; and
WHEREAS, Enterprises owns all of the issued and outstanding
capital stock of each of TPI Restaurants, Inc., a Tennessee corporation
("TPIR"), TPI Entertainment, Inc., a Delaware corporation ("TPIE"), and
TPI Insurance Corporation, a Hawaii corporation ("TPII") (each of TPIR,
TPIE and TPII being sometimes hereinafter referred to as a "Company" and
collectively as the "Companies"), which comprise substantially all of the
properties and assets of Enterprises; and
WHEREAS, the Companies and their respective subsidiaries (with the
exception of TPIE) are engaged in the business of owning and/or operating
or providing support services to one hundred eighty-eight (188) "Shoney's"
and sixty-eight (68) "Captain D's" restaurants located at the addresses
set forth on SCHEDULE 1A to the Enterprises Disclosure Letter (each a
"Restaurant" and, collectively, the "Restaurants"); and
WHEREAS, TPAC desires to acquire from Enterprises, and Enterprises
desires to transfer to TPAC, all of the issued and outstanding shares of
capital stock of each of the Companies in exchange for Shoney's $1.00 par
value voting common stock (hereinafter referred to as "Shoney's Common
Stock") to be delivered on the Closing Date and the assumption of certain
liabilities of Enterprises, all upon the terms and conditions hereinafter
set forth; and
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WHEREAS, the Boards of Directors of Shoney's, TPAC and Enterprises
deem it desirable, and in the best interest of their respective
corporations and their shareholders, that the transactions contemplated
by this Agreement be consummated and qualify as a "reorganization" under
Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, provisions, covenants and grants herein contained, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, in addition to the terms defined
elsewhere herein, unless the context otherwise requires, the following
terms shall have the meanings indicated:
"ACCOUNTS RECEIVABLE" means all of the accounts and notes
receivable owed to one of TPIR, TPIE, TPII or a TPIR Subsidiary.
"AFFILIATE" means, when used with respect to a specific Person,
another Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control
with the Person specified.
"ASBESTOS" shall have the meaning set forth in SECTION 5.20(b).
"AVERAGE CLOSING MARKET PRICE" means the average per share price
of the last trade of Shoney's Common Stock on the NYSE as reported by The
Wall Street Journal for the ten trading days immediately preceding the
Closing Date; provided, however, that, if there shall be any material
alteration in the present system of reporting sales of Shoney's Common
Stock, or if Shoney's Common Stock shall no longer be listed on the NYSE,
the market value per share of the Shoney's Common Stock as of a particular
date shall be determined in such a method as may be mutually agreeable to
the parties.
"CASH EQUIVALENT" means any item classified by Enterprises as a
cash equivalent in accordance with GAAP.
"CIVIL ACTION" means that certain litigation pending in the
Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach
County, Florida styled Maxcell Telecom Plus, Inc., et al., v. McCaw
Cellular Communications, Inc., et al.
"CLOSING" means the consummation of the purchase and sale of all
of the issued and outstanding shares of capital stock of the Companies as
provided in this Agreement.
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"CLOSING DATE" means the second business day after the last of the
conditions set forth in ARTICLE IX hereof shall have been fulfilled or
waived, or any other date that may be mutually agreed upon by the parties
hereto.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of 1985, Public Law 99-272, Title X.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and any regulations or published rulings promulgated or
issued thereunder.
"COMPANY" and "COMPANIES" shall have the meaning set forth in the
THIRD RECITAL OF THIS AGREEMENT.
"COMPANY PROPERTY" means either a Leased Property or an Owned
Property. "COMPANY PROPERTIES" means all such Leased Properties and
Owned Properties, collectively.
"CONTROLS" (including, with its correlative meanings, "CONTROLLED
BY" and "UNDER COMMON CONTROL WITH") means possession, directly or
indirectly, of power to direct or cause direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise).
"ENTERPRISES" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"ENTERPRISES COMMON STOCK" means Enterprises' $.01 par value
voting common stock.
"ENTERPRISES' COUNSEL" means Shereff, Friedman, Hoffman & Goodman,
LLP of New York, New York.
"ENTERPRISES' DISCLOSURE LETTER" means the Disclosure Letter
delivered to Shoney's by Enterprises on or before the date hereof.
"ENTERPRISES 401(k) PLAN" means the NationsBank Defined
Contribution Master Plan and Trust Agreement.
"ENTERPRISES' MANAGEMENT AGREEMENT" means the Management Services
Agreement dated as of October 5, 1988 between TPIR and Enterprises.
"ENTERPRISES' TAX SHARING ARRANGEMENT" means the Tax Sharing
Arrangement dated as of October 5, 1988 between TPIR (on its behalf and
on behalf of its U.S. Subsidiaries) and Enterprises.
"ENTERPRISES OPTION" means an option to acquire Enterprises Common
Stock granted under one of the Enterprises Stock Option Plans.
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"ENTERPRISES STOCK OPTION PLAN" means one of the following: Telcom
Equipment Corp. Incentive Stock Option Plan, Telcom Plus International,
Inc. 1983 Stock Option Plan, Telcom Plus International, Inc. 1984 Stock
Option Plan, 1992 TPI Enterprises, Inc. Stock Option and Incentive Plan
and the TPI Enterprises, Inc. Non-Employee Directors Stock Option Plan.
"ENTERPRISES STOCK OPTION PLANS" means all such plans collectively.
"ENTERPRISES STOCK PURCHASE PLAN" means the TPI Enterprises, Inc.
1995 Employee Stock Purchase Plan.
"ENTERPRISES WARRANTS" means the warrants contained in that
certain Warrant Purchase Agreement dated March 19, 1993 by and among
Enterprises and The Bass Management Trust, Sid R. Bass Management Trust,
TPI Investors, L.P., Lee M. Bass and The Airlie Group, L.P.
"ENVIRONMENTAL LAWS" shall have the meaning set forth in SECTION
5.20.
"ENVIRONMENTAL CONDITION" means any condition at a Company
Property which: (1) is in violation of applicable Environmental Laws; (2)
involves the disposal, discharge, placement, generation or emission of
Hazardous Materials prior to the Closing Date; or (3) is likely to result
in a claim by any governmental or regulatory authority under applicable
Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any regulations or published rulings
promulgated or issued thereunder.
"ERISA AFFILIATE" means any trade or business (whether
incorporated or unincorporated) which is a member of a group described in
Section 414(b), (c), (m) or (o) of the Code, of which TPIR, TPIE, TPII or
any TPIR Subsidiary also is a member.
"EXCESS REPAIR AND MAINTENANCE EXPENSES" means the sum of (a) the
amount by which actual repair and maintenance expenses incurred by
Enterprises or TPIR for the year ended December 31, 1995 exceed $13,235,000;
plus (b) the amount by which actual repair and maintenance expenses incurred
by Enterprises or TPIR for the two periods ended February 25, 1996 exceed
$1,457,000.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCHANGE RATIO" shall mean the number of Exchange Shares divided
by the number of Enterprises Common Stock outstanding on the Closing Date.
"EXCHANGE SHARES" shall have the meaning set forth in SECTION 3.1.
"FF&E" means furniture, fixtures, equipment, machinery, signage,
inventories of china, glass and silver, utensils and small wares,
uniforms, spare and replacement parts, trucks, automobiles and all other
like personalty located at and/or used in connection with the operation
of the Restaurants or the business(es) of any of the Companies.
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"GAAP" means generally accepted accounting principles,
consistently applied.
"GROSS PROCEEDS" means the cash actually received by Enterprises
or its Affiliates from the defendants in the Civil Action through a final,
non-appealable judgment or settlement.
"HAZARDOUS MATERIALS" means and shall include, without limitation,
hazardous substances as defined in the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. Sec. 9601(14),
as amended by the Superfund Amendments and Reauthorization Act of 1986,
hazardous wastes and hazardous constituents as defined in the Resource
Conservation and Recovery Act, 42 U.S.C. Sec. 6901, ET SEQ., substances or
chemicals regulated under TSCA, 15 U.S.C. Sec. 2601 ET SEQ., hazardous
substances as defined in the Clean Water Act, 33 U.S.C. Sec. 1321 (a)(14);
hazardous air pollutants as defined in the Clean Air Act, 42 U.S.C. Sec.
7412(a)(6); hazardous substances and chemicals and extremely hazardous
substances regulated under Emergency Planning and Community Right-to-know
Act, 42 U.S.C. Sec. 11001 ET SEQ.; gasoline, petroleum, petroleum products,
explosives, radioactive materials, polychlorinated biphenyls or related
or similar materials, or any other substance or material defined as of the
date hereof as hazardous or toxic by any federal, state or local law,
ordinance, rule or regulation, but excluding Asbestos.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1977, as amended.
"INTERCOMPANY ACCOUNTS" means, collectively, all of the
intercompany accounts payable and intercompany accounts receivable among
Enterprises, the Remaining Subsidiaries, the Companies and the TPIR
Subsidiaries.
"INVENTORIES" means, collectively, the inventories of food, paper
and supplies, and other raw materials owned by one of the Companies or a
TPIR Subsidiary, whether stored on or away from a Company Property.
"KNOWLEDGE" means, with respect to any Person, to that Person's
actual knowledge as of the date of this Agreement and, if the Person is
a corporation, to the actual knowledge of the directors and executive
officers of that Person as of the date of this Agreement.
"LEASED PROPERTY" means a property, the land and/or building for
which is leased by one of TPIR, TPIE, TPII or a TPIR Subsidiary.
"LITIGATION EXPENSES" means any and all expenses incurred after
September 4, 1995 in instituting, prosecuting, defending any counterclaim
with respect to, and, if applicable, negotiating a settlement of and
settling the Civil Action (including, without limitation, attorneys' fees
and expenses, witness fees, consulting fees and settlement sharing
arrangements).
"MARLIN CLAIMS" means obligations or causes of action between Marlin
Services, Inc., Marlin Electric, Inc., d/b/a/ Marlin Services and their
respective affiliates (collectively
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"Marlin"), on the one hand, and Enterprises or TPIR, on the other hand,
arising in connection with that certain Maintenance Services Agreement
dated as of October 1, 1995 between Marlin and TPIR, including but not
limited to obligations arising from the settlement or any judgment
resulting from any such claims or as a result of any obligation to
subcontractors retained by Marlin, together with expenses arising from
the above, including attorney's fees incurred in prosecuting and
defending any dispute or litigation regarding such claims.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means,
subject to the qualifications or limitations set forth in this definition,
when used with respect to a Person, any change or effect that is or would
reasonably be expected (so far as can be foreseen at the time) to be
materially adverse to the assets, condition (financial or otherwise) or
results of operations of that Person. With respect to Enterprises, a
Material Adverse Change or Material Adverse Effect shall not be deemed to
have occurred unless a change, effect, condition or occurrence is or would
reasonably be expected to materially adversely affect the ability of
Enterprises to perform its obligations hereunder. For the purposes of this
Agreement, a Material Adverse Change shall not be deemed to have occurred or
a Material Adverse Effect shall not be deemed to exist with respect to TPIR,
the TPIR Subsidiaries, TPIE and TPII, taken as a whole, unless a change
or effect causes or results in a liability or expense in excess of
$500,000. For the purposes of this Agreement, a Material Adverse Change
shall not be deemed to have occurred or a Material Adverse Effect shall
not be deemed to exist with respect to Shoney's and its Subsidiaries,
taken as a whole, unless a change or effect causes or results in a
liability or expense in excess of $500,000.
"NET PROCEEDS" means the Gross Proceeds minus the Litigation
Expenses.
"NYSE" means the New York Stock Exchange.
"OPERATING COMMITTEE" means a committee composed of four persons:
two members of the Board of Directors of Enterprises designated by
Shoney's, and two designees of Enterprises.
"OWNED PROPERTY" means a property, the land and/or building for
which is owned in fee simple by one of TPIR, TPIE, TPII or a TPIR
Subsidiary.
"PERSON" means an individual, partnership, corporation, trust or
other entity, or a government or agency or instrumentality thereof.
"PRIVATE DEBENTURES" means those $15,000,000 in principal amount
outstanding of 5.00% convertible senior subordinated debentures due 2003
issued by Enterprises under that certain debenture purchase agreement
dated as of March 19, 1993 among Enterprises, TPIR, as guarantor and the
purchasers named therein.
"PRIVATE INDENTURE" means that certain debenture purchase
agreement dated as of March 19, 1993 among Enterprises, TPIR, as guarantor
and the purchasers named therein pursuant to which the Private Debentures
are issued.
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"PUBLIC DEBENTURES" means those $51,563,000 in principal amount
outstanding of 8.25% convertible subordinated debentures due 2002 issued
by Enterprises under that certain indenture dated as of July 15, 1992
among Enterprises, TPIR, as guarantor and NationsBank of Tennessee, N.A.,
as Trustee.
"PUBLIC INDENTURE" means that certain indenture dated as of July
15, 1992 among Enterprises, TPIR, as guarantor and NationsBank of
Tennessee, N.A., as Trustee pursuant to which the Public Debentures are
issued.
"REMAINING SUBSIDIARY" means one of Telecom Plus Shared Tenants
Services Inc., a Delaware corporation, and Maxcell Telecom Plus, Inc., a
Delaware corporation. "REMAINING SUBSIDIARIES" means Telecom Plus Shared
Tenants Services Inc., a Delaware corporation, and Maxcell Telecom Plus,
Inc., a Delaware corporation.
"RESTAURANT" and "RESTAURANTS" shall have the meanings set forth
in the FOURTH RECITAL of this Agreement.
"RETAINED REPAIR AND MAINTENANCE EXPENSES" means the sum of (a)
actual repair and maintenance expenses incurred by Enterprises or TPIR
for the year ended December 31, 1995, not exceeding $13,235,000; plus
(b) actual repair and maintenance expenses incurred by Enterprises or
TPIR for the two periods ended February 25, 1996, not exceeding
$1,457,000.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHONEY'S" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"SHONEY'S COMMON STOCK" shall have the meaning set forth in the
FIFTH RECITAL of this Agreement.
"SHONEY'S COUNSEL" means Tuke Yopp & Sweeney of Nashville,
Tennessee; provided, however, that with respect to the tax opinion
referred to in Section 9.2.6(b), Shoney's Counsel shall mean Sullivan &
Cromwell of New York, New York.
"SHONEY'S DISCLOSURE LETTER" means the Disclosure Letter delivered
to Enterprises by Shoney's on or before the date hereof.
"SHONEY'S STOCK PLAN" means one of the following: the Shoney's,
Inc. 1981 Stock Option Plan, the Shoney's Inc. Employee Stock Purchase
Plan, the Shoney's, Inc. Stock Bonus Plan and the Shoney's, Inc.
Non-Employee Director Stock Option Plan. "SHONEY'S STOCK PLANS" means
all such plans, collectively.
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"SPECIFIED WIND-UP EXPENSE" means one of the expenses in the
respective estimated amount as described on SCHEDULE 1(b) of the
Enterprises Disclosure Letter. "SPECIFIED WIND-UP EXPENSES" means all
such expenses, collectively.
"SUBSIDIARY" means any corporation, partnership, joint venture or
other legal entity of which a Person (either alone or through or together
with any other Subsidiary), owns, directly or indirectly, 50% or more of
the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
"TAX" (and, with correlative meaning, "TAXES" and "TAXABLE") shall
mean: (a) any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Section
59A of the Code), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated or other tax of any kind
whatsoever, including any interest, penalty or addition thereto, whether
disputed or not; and (b) liability for the payment of amounts with respect
to payments of a type described in clause (a) as a result of being a
member of an affiliated, consolidated, combined or unitary group, or as
a result of any obligation under any Tax Sharing Arrangement or Tax
indemnity arrangement.
"TAX RETURN" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"TAX SHARING ARRANGEMENT" shall mean any written or unwritten
agreement or arrangement for the allocation of payment of Tax liabilities
or payment for Tax benefits with respect to a consolidated, combined, or
unitary Tax Return which Tax Return includes TPIR, TPIE, TPII or any TPIR
Subsidiary.
"TERMINATION DATE" means June 30, 1996.
"TPAC" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"TPAC OPTION" shall mean an option to purchase Shoney's Common
Stock under a TPAC Stock Option Plan embodying the terms set forth in
SECTION 3.4.2.
"TPAC WARRANTS" means the warrants to purchase Shoney's Common
Stock contained in that certain Warrant Purchase Agreement dated the
Closing Date by and among TPAC and The Bass Management Trust, Sid R.
Bass Management Trust, TPI Investors, L.P., Lee M. Bass and The Airlie
Group, L.P. embodying the terms set forth in SECTION 3.4.3.
"TPIE" shall have the meaning set forth in the THIRD RECITAL of
this Agreement.
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"TPIE COMMON STOCK" means the common stock, $.01 par value per
share, of TPIE.
"TPII" shall have the meaning set forth in the THIRD RECITAL of
this Agreement.
"TPII COMMON STOCK" means the issued and outstanding common stock,
$1.00 par value per share, of TPII.
"TPIR" shall have the meaning set forth in the THIRD RECITAL of
this Agreement.
"TPIR BANK DEBT" means that indebtedness of TPIR outstanding under
that certain second amended and restated credit agreement dated as of
January 31, 1995, by and among TPIR, the banks party thereto, The Bank of
New York, as Administrative Agent, and NationsBank of North Carolina,
N.A., as Collateral Agent.
"TPIR COMMON STOCK" means the common stock, $.01 par value per
share, of TPIR.
"TPIR PREFERRED STOCK" means the preferred stock, $.01 par value
per share, of TPIR.
"TPIR SUBSIDIARY" and "TPIR SUBSIDIARIES" shall have the meanings
set forth in SECTION 5.1(b).
"VOTING DEBT" means any bond, debenture, note or other
indebtedness having the right to vote (or convertible into or exercisable
for securities having the right to vote) on any matters on which
shareholders may vote.
All references herein to "Sections," "Schedules" and "Exhibits"
shall, unless otherwise indicated, refer to the sections, schedules and
exhibits which (through attachment, whether to this Agreement, the
Enterprises Disclosure Letter or the Shoney's Disclosure Letter or
incorporation by reference) are a part of this Agreement.
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ARTICLE II
TRANSFERS BY ENTERPRISES
SECTION 2.1 ENTERPRISES' ASSETS. On the Closing Date, Enterprises
shall transfer and deliver to Shoney's (or, if directed by Shoney's, to
TPAC), subject to the terms and conditions set forth in this Agreement,
free and clear of all liens, encumbrances, claims, pledges, or security
interests, all of the issued and outstanding shares of TPIR Common Stock,
TPIR Preferred Stock, TPIE Common Stock and TPII Common Stock, all
Intercompany Accounts and all of the cash and Cash Equivalents of
Enterprises and each of Enterprises' Subsidiaries, except the amount of
cash permitted to be retained by SECTION 2.2 and SECTION 2.3. Shoney's
agrees (and agrees to cause TPAC, if applicable) to accept the transfer
from Enterprises of said shares, Intercompany Accounts and cash and Cash
Equivalents subject to the terms and conditions of this Agreement.
SECTION 2.2 CASH RETAINED TO PAY EXPENSES. To pay the
Specified Wind-up Expenses, Enterprises may retain in cash on the Closing
Date an amount not to exceed $7,350,000.
SECTION 2.3 OTHER CASH RETAINED. Subject to SECTION 2.4,
Enterprises shall on the Closing Date retain from its assets the sum of
$7,500,000.
SECTION 2.4 LIMIT ON RETAINED CASH. In no event shall the
aggregate amount of cash retained by Enterprises pursuant to SECTION 2.3
exceed ten percent (10%) of the dollar amount determined by multiplying
the number of Exchange Shares by the price of the last trade of a share
of Shoney's Common Stock on the NYSE as reported by THE WALL STREET
JOURNAL on the last trading day prior to the Closing Date.
SECTION 2.5 TRANSFER OF EXCESS CASH TO SHONEY'S. Promptly
after payment of all of the Specified Wind-up Expenses that are to be paid
from the cash withheld pursuant to SECTION 2.2 hereof, Enterprises shall
deliver to Shoney's (or as directed by Shoney's, to TPAC) the cash
remaining, if any, from the amount so withheld.
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ARTICLE III
PAYMENT BY SHONEY'S
SECTION 3.1 TRANSFER OF SHONEY'S SHARES. On the Closing
Date, Shoney's shall, or shall cause TPAC to, deliver to Enterprises a
stock certificate or stock certificates representing a number of shares
of Shoney's Common Stock equal to: (a) Five Million Five Hundred Seventy
Seven Thousand One Hundred Two (5,577,102); plus (b) (x) $10,000,000
divided by (y) the Average Closing Market Price, subject to adjustment as
provided in SECTION 3.2 (the "Exchange Shares").
SECTION 3.2 ADJUSTMENTS.
SECTION 3.2.1 In the event of any reclassification,
stock split or stock dividend with respect to Shoney's Common
Stock, any change of the Shoney's Common Stock into other
securities or any other dividend or distribution with respect to
the Shoney's Common Stock, or if a record date with respect to
any of the foregoing should occur, prior to the Closing,
appropriate and proportionate adjustments, if any, shall be made
to the number of Exchange Shares to be issued pursuant to this
Agreement, and all references to such terms in this Agreement
shall be deemed to be to such terms as so adjusted.
SECTION 3.2.2 In the event that, prior to the Closing
Date, any Person exercises an option granted prior to September
1, 1995 under one of the Enterprises Stock Option Plans or
exercises any Enterprises Warrants or converts any Public
Debentures or Private Debentures into Enterprises Common Stock,
in each case in accordance with the terms of the governing
instruments and which were outstanding on the date hereof,
Shoney's shall issue to Enterprises an additional number of
shares of Shoney's Common Stock equal to: (a) the number of
shares of Enterprises Common Stock issued pursuant to the
exercise of such options, warrants or debentures multiplied by
(b) the Exchange Ratio (as determined without reference to the
adjustment required by this Section). In the event of such an
adjustment, all references to "Exchange Shares" in this Agreement
(except in the definition of Exchange Ratio) shall be deemed to
be to such term as so adjusted.
SECTION 3.2.3 In the event that, after November 7, 1995
and prior to the Closing Date, any shares of Enterprises Common
Stock are issued, transferred from treasury or allocated in
connection with the Enterprises 401(k) Plan or the Enterprises
Stock Purchase Plan, Shoney's shall issue to Enterprises an
additional number of shares of Shoney's Common Stock equal to:
(a) the number of shares of Enterprises Common Stock so issued
multiplied by (b) the Exchange Ratio (as determined without
reference to the adjustment required by this Section). In the
event of such an adjustment, all references to "Exchange Shares"
in this Agreement (except in the definition of Exchange Ratio)
shall be deemed to be to such term as so adjusted.
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SECTION 3.2.4 In the event that Enterprises, solely by
reason of SECTION 2.4, retains less than $7,500,000, Shoney's
shall issue to Enterprises an additional number of shares of
Shoney's Common Stock equal to: (a) the number of dollars less
than $7,500,000 that Enterprises retains divided by (b) the
Average Closing Market Price. In the event of such an
adjustment, all references to "Exchange Shares" in this Agreement
shall be deemed to be to such term as so adjusted.
SECTION 3.2.5 In the event (and only to the extent)
that the Net Proceeds are required by TPIR's lenders to be used
to permanently retire all or any portion of the TPIR Bank Debt,
Shoney's shall issue to Enterprises an additional number of
shares of Shoney's Common Stock equal to: (a) the amount (not to
exceed: (x) that amount that may be retained by Enterprises
pursuant to SECTION 2.2 and SECTION 2.3 (as adjusted by SECTION
2.4); minus (y) that amount of cash and Cash Equivalents held by
Enterprises at the Closing) by which the TPIR Bank Debt was
permanently reduced using the Net Proceeds divided by (b) the
Average Closing Market Price. In the event of such an
adjustment, all references to "Exchange Shares" in this Agreement
shall be deemed to be to such term as so adjusted.
SECTION 3.3 NO FRACTIONAL SECURITIES. No certificates or
scrip representing fractional shares of Shoney's Common Stock shall be
issued pursuant to SECTION 3.2., and no Shoney's dividend or other
distribution or stock split shall relate to any fractional security, and
such fractional interests shall not entitle Enterprises to vote or to any
rights of a security holder of Shoney's. In lieu of any such fractional
securities, Enterprises will be paid an amount in cash (without interest)
equal to the value of such fractional shares of Shoney's Common Stock.
SECTION 3.4 ASSUMPTION OF ENTERPRISES' LIABILITIES. At the Closing,
Shoney's shall (or at its option cause TPAC to) assume and pay,
discharge, and perform when lawfully due the following liabilities,
contracts, and other obligations of Enterprises as described below.
SECTION 3.4.1 PUBLIC DEBENTURES. At the Closing,
Shoney's shall (or at its option cause TPAC to) assume all of
Enterprises' duties and obligations under the Public Indenture
in accordance with its terms.
SECTION 3.4.2 EMPLOYEE STOCK OPTIONS. Each employee
of Enterprises, TPIR, TPIE or TPII or the TPIR Subsidiaries who
has outstanding at the Closing an Enterprises Option shall be
issued a TPAC Option in exchange for such Enterprises Option as
follows:
(a) The number of shares of Shoney's Common Stock subject to
the TPAC Option shall be that number of shares subject to
the Enterprises Option for which the TPAC Option was
exchanged multiplied by the Exchange Ratio.
(b) The exercise price for the shares subject to the TPAC
Option shall be the exercise price for the shares subject
to the Enterprises Option for which the TPAC Option was
exchanged divided by the Exchange Ratio.
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(c) In determining the vesting or exercisability, as well as
the term, of any TPAC Option granted hereunder, the Grant
Date of the TPAC Option shall be the original grant date
of the Enterprises Option for which the TPAC Option was
exchanged subject to any acceleration of vesting or
exercisability of the Enterprises Option for which the
TPAC Option was exchanged which occurs as a result of the
Closing.
SECTION 3.4.3 ENTERPRISES WARRANTS. The holder of
the Enterprises Warrants shall be issued TPAC Warrants in
exchange for such Enterprises Warrants as follows:
(a) The number of shares of Shoney's Common Stock subject to
the TPAC Warrants shall be that number of shares subject
to the Enterprises Warrants multiplied by the Exchange
Ratio.
(b) The exercise price for the shares subject to the TPAC
Warrants shall be the exercise price for the shares
subject to the Enterprises Warrants divided by the
Exchange Ratio.
SECTION 3.4.4 OTHER LIABILITIES. At the Closing,
Shoney's shall (or at its option cause TPAC to) assume all
of Enterprises' duties and obligations under the liabilities
set forth in SECTION 3.4.4 of the Enterprises Disclosure Letter
and shall (or at its option cause TPAC to) hold Enterprises
harmless from any liabilities deriving from any duties,
obligations or liabilities assumed pursuant to this SECTION 3.4.
SECTION 3.5 NO ASSUMPTION OF OTHER LIABILITIES. Except as
specifically set forth in SECTIONS 3.4, 8.4 and 8.6, none of Shoney's,
TPAC or any of their respective Affiliates shall assume or have any
liability for any other liability or obligation of Enterprises or any
of the Remaining Subsidiaries including, without limitation, any
liability for Taxes.
SECTION 3.6 RESTRICTION ON SALE AND DISTRIBUTION OF EXCHANGE SHARES.
Enterprises agrees that the Exchange Shares shall be distributed to
Enterprises' shareholders and creditors in one or more distributions in
connection with the complete liquidation of Enterprises, and that the
Exchange Shares shall not otherwise be sold, transferred or exchanged.
Any certificate issued to Enterprises representing all or any portion of
the Exchange Shares will bear a legend to the foregoing effects, and
Shoney's will instruct its transfer agent for the Shares to place
appropriate stop orders on the stock transfer record to reflect such
provisions. Upon request by Enterprises and certification that any
proposed transferee is either an Enterprises shareholder or creditor,
Shoney's shall instruct its transfer agent to execute any transfer
instructions duly received from Enterprises.
SECTION 3.7 PERFORMANCE BY SHONEY'S. If, pursuant to this
Agreement, Shoney's elects to acquire (rather than causing TPAC to
acquire) the assets and properties of Enterprises, all obligations and
liabilities of TPAC hereunder shall be assumed and performed by Shoney's.
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ARTICLE IV
CLOSING
The Closing shall occur at the offices of Shoney's Counsel, Suite
1100 NationsBank Plaza, Nashville, Tennessee at 10:00 a.m., Nashville
time, on the Closing Date.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ENTERPRISES
Enterprises represents and warrants to Shoney's and TPAC that:
SECTION 5.1 ORGANIZATION, STANDING AND POWER.
(a) Enterprises is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey
and has the requisite corporate power and authority to carry on its
business as now being conducted. Enterprises has no Subsidiaries other
than those listed on SCHEDULE 5.1(a) to the Enterprises Disclosure Letter.
Enterprises is duly qualified to do business and is in good standing in
each jurisdiction where the character of its properties owned or held
under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect on
Enterprises.
(b) TPIR is a corporation duly organized, validly existing
and in good standing under the laws of the State of Tennessee and has the
requisite corporate power and authority to carry on its business as now
being conducted. TPIR has no Subsidiaries other than those listed on
SCHEDULE 5.1(b) to the Enterprises Disclosure Letter (each a "TPIR
Subsidiary" and, collectively, the "TPIR Subsidiaries"). With the
exception of the TPIR Subsidiaries, TPIR does not own any interest in any
partnership or other entity. There are no outstanding contractual
obligations of TPIR to acquire any shares of capital stock or other
ownership interest of any corporation, partnership or other entity. With
the exception of the TPIR Subsidiaries, TPIR does not have any investment
(either debt or equity), or commitments to make such an investment, in any
corporation, joint venture, general or limited partnership, business
enterprise or other person or entity. Each TPIR Subsidiary is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is incorporated (which is set
forth on SCHEDULE 5.1(b) to the Enterprises Disclosure Letter) and has the
requisite corporate power and authority to carry on its business as now
being conducted. Each of TPIR and the TPIR Subsidiaries is duly qualified
to do business and is in good standing in each jurisdiction where it owns
or leases property, conducts business or where the character of its
properties owned or held under lease or the nature of its activities makes
such qualification necessary, except where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse
Effect on TPIR, TPIE, TPII and the TPIR Subsidiaries, taken as a whole.
(c) TPIE is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the requisite
corporate power and authority to carry on its business as now being
conducted. TPIE has no Subsidiaries. TPIE does not own any interest
in any partnership or other entity. There are no outstanding contractual
obligations of TPIE to acquire any shares of capital stock or other
ownership interest of any corporation, partnership or other entity. TPIE
does not have any investment (either debt or equity), or commitments to make
such an investment, in any corporation, joint venture, general or limited
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partnership, business enterprise or other person or entity. TPIE is duly
qualified to do business and is in good standing in each jurisdiction
where it owns or leases property, conducts business or where the character
of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure
to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect on TPIR, TPIE, TPII and the TPIR Subsidiaries,
taken as a whole.
(d) TPII is a corporation duly organized, validly existing
and in good standing under the laws of the State of Hawaii and has the
requisite corporate power and authority to carry on its business as now
being conducted. TPII has no Subsidiaries. TPII does not own any
interest in any partnership or other entity. There are no outstanding
contractual obligations of TPII to acquire any shares of capital stock or
other ownership interest of any corporation, partnership or other entity.
TPII does not have any investment (either debt or equity), or commitments
to make such an investment, in any corporation, joint venture, general or
limited partnership, business enterprise or other person or entity. TPII
is duly qualified to do business and is in good standing in each
jurisdiction where it owns or leases property, conducts business or where
the character of its properties owned or held under lease or the nature
of its activities makes such qualification necessary, except where the
failure to be so qualified would not, individually or in the aggregate,
have a Material Adverse Effect on TPIR, TPIE, TPII and the TPIR
Subsidiaries, taken as a whole.
SECTION 5.2 CAPITAL STRUCTURE.
(a) TPIR has authorized capital consisting of one thousand
(1,000) shares of TPIR Common Stock, of which one hundred (100) shares are
issued and outstanding and ten thousand (10,000) shares of TPIR Preferred
Stock, all of which is issued and outstanding. TPIR has no other issued
or authorized securities. There are no shares of TPIR Common Stock held
in the treasury of TPIR. The issued and outstanding shares of TPIR Common
Stock are validly issued, fully paid and nonassessable. There are no
existing subscriptions, options, warrants, calls, commitments, agreements
or rights of any kind obligating TPIR to issue any shares of stock or
options or rights with respect thereto, and there are no existing or
outstanding securities of any kind convertible into or exchangeable for
shares of TPIR Common Stock. No former shareholder of TPIR or any
corporation heretofore merged with or into TPIR has any claim or cause of
action whatsoever against TPIR arising out of or in any way connected with
any occurrence or state of facts in existence prior to the date hereof
that would have a Material Adverse Effect on TPIR. To Enterprises'
Knowledge, no former shareholder of TPIR or any corporation heretofore
merged with or into TPIR has any claim or cause of action whatsoever
against TPIR not barred by the applicable statute of limitations arising
out of or in any way connected with any occurrence or state of facts in
existence prior to the date hereof. To Enterprises' Knowledge, no former
shareholder of TPIR or any corporation heretofore merged with or into TPIR
shall come to have any claim or cause of action whatsoever against TPIR,
Shoney's or TPAC, or any officer, director or shareholder of any such
corporations, by virtue of, or in any way connected with, the transactions
contemplated by this Agreement. All of the issued and outstanding TPIR
Common Stock has been issued and sold in compliance with all
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federal and state securities laws. There are no preemptive rights in
respect of TPIR Common Stock.
(b) TPIE has authorized capital consisting of three million
(3,000,000) shares of TPIE Common Stock, of which one thousand (1,000)
shares are issued and outstanding and one million (1,000,000) shares of
preferred stock, none of which is issued and outstanding. TPIE has no
other issued or authorized securities. There are no shares of TPIE Common
Stock held in the treasury of TPIE. The issued and outstanding shares of
TPIE Common Stock are validly issued, fully paid and nonassessable. There
are no existing subscriptions, options, warrants, calls, commitments,
agreements or rights of any kind obligating TPIE to issue any shares of
stock or options or rights with respect thereto, and there are no existing
or outstanding securities of any kind convertible into or exchangeable for
shares of TPIE Common Stock. No Person other than Enterprises has ever
been a shareholder of TPIE. No corporation has heretofore merged with or
into TPIE. All of the issued and outstanding TPIE Common Stock has been
issued and sold in compliance with all federal and state securities laws.
There are no preemptive rights in respect of TPIE Common Stock.
(c) TPII has authorized capital consisting of two hundred
fifty thousand (250,000) shares of TPII Common Stock, of one dollar
($1.00) par value each, all of which are issued and outstanding. TPII has
no other issued or authorized securities. There are no shares of TPII
Common Stock held in the treasury of TPII. The issued and outstanding
shares of TPII Common Stock are validly issued, fully paid and
nonassessable. There are no existing subscriptions, options, warrants,
calls, commitments, agreements or rights of any kind obligating TPII to
issue any shares of stock or options or rights with respect thereto, and
there are no existing or outstanding securities of any kind convertible
into or exchangeable for shares of TPII Common Stock. No Person other
than Enterprises has ever been a shareholder of TPII. No corporation has
heretofore merged with or into TPII. All of the issued and outstanding
TPII Common Stock has been issued and sold in compliance with all federal
and state securities laws. There are preemptive rights in respect of TPII
Common Stock.
(d) Each TPIR Subsidiary has authorized, issued and
outstanding capital as set forth on SCHEDULE 5.2(d) to the Enterprises
Disclosure Letter. None of the TPIR Subsidiaries has any other issued or
authorized securities. There are no shares of capital stock held in the
treasury of any of the TPIR Subsidiaries. The issued and outstanding
shares of each TPIR Subsidiary are validly issued, fully paid and
nonassessable. There are no existing subscriptions, options, warrants,
calls, commitments, agreements or rights of any kind obligating any TPIR
Subsidiary to issue any shares of stock or options or rights with respect
thereto, and there are no existing or outstanding securities of any kind
convertible into or exchangeable for shares of stock of any TPIR
Subsidiary. No former shareholder of any TPIR Subsidiary or any
corporation heretofore merged with or into any TPIR Subsidiary has any
claim or cause of action whatsoever against any TPIR Subsidiary arising
or in any way connected with any occurrence or state of facts in existence
prior to the date hereof, and no such former shareholder shall come to
have any claim or cause of action whatsoever against any TPIR Subsidiary,
TPIR, Enterprises, Shoney's or TPAC, or any officer, director or
shareholder of any such corporations, by virtue of, or in any
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way connected with, the transactions contemplated by this Agreement. All
of the issued and outstanding capital stock of each TPIR Subsidiary has
been issued and sold in compliance with all federal and state securities
laws. Except as set forth on SCHEDULE 5.2(d) to the Enterprises
Disclosure Letter, there are no preemptive rights in respect of the
capital stock of any TPIR Subsidiary.
(e) Enterprises owns of record and beneficially all of the
issued and outstanding TPIR Common Stock, TPIR Preferred Stock, TPIE
Common Stock and TPII Common Stock and has the right and power to transfer
and assign the TPIR Common Stock, TPIR Preferred Stock, TPIE Common Stock
and TPII Common Stock free and clear of all liens, encumbrances,
restrictions, claims, pledges or security interests or charges or
interests of any kind, whether voluntarily incurred or arising by
operation of law or otherwise, with the exception of those liens,
encumbrances, restrictions, claims, pledges or security interests or
charges or interests described in SCHEDULE 5.2(e) to the Enterprises
Disclosure Letter. Enterprises has the exclusive right, power and
authority to vote the TPIR Common Stock, the TPIR Preferred Stock, the
TPIE Common Stock and the TPII Common Stock. Enterprises is the sole
shareholder of each of TPIR, TPIE and TPII and will remain and continue
to be the sole shareholder of each of TPIR, TPIE and TPII through the
Closing Date and will not sell, pledge or otherwise transfer or assign any
of its stock in either of TPIR, TPIE or TPII prior to the Closing Date.
Upon and effective with the Closing, subject to TPAC's satisfaction of the
condition set forth in SECTION 9.3.3, TPAC will have good, valid and
marketable title to all of the issued and outstanding capital stock of
each of TPIR, TPIE and TPII free and clear of all liens, encumbrances,
restrictions, claims, pledges, security interests, charges or interests
of any kind, whether voluntarily incurred or arising by operation of law
or otherwise, with the exception of liens or encumbrances that may have
been created or granted by Shoney's or TPAC.
(f) TPIR owns of record and beneficially all of the issued
and outstanding capital stock of each TPIR Subsidiary and has the right
and power to transfer and assign shares of each TPIR Subsidiary free and
clear of all liens, encumbrances, restrictions, claims, pledges or
security interests or charges or interests of any kind, whether
voluntarily incurred or arising by operation of law or otherwise, with the
exception of those liens, encumbrances, restrictions, claims, pledges or
security interests or charges or interests described in SCHEDULE 5.2(f)
to the Enterprises Disclosure Letter. TPIR has the exclusive right, power
and authority to vote the shares of each TPIR Subsidiary. TPIR is the
sole shareholder of each TPIR Subsidiary, and will remain and continue to
be the sole shareholder through the Closing Date and will not sell, pledge
or otherwise transfer or assign any of its stock in any TPIR Subsidiary
prior to the Closing Date. Upon and effective with the Closing, subject
to TPAC's satisfaction of the condition set forth in SECTION 9.3.3, TPIR
will have good, valid and marketable title to all of the issued and
outstanding capital stock of each TPIR Subsidiary, free and clear of all
liens, encumbrances, restrictions, claims, pledges, security interests,
charges or interests of any kind, whether voluntarily incurred or arising
by operation of law or otherwise, with the exception of liens or
encumbrances that may have been created or granted by Shoney's or TPAC.
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(g) Since September 1, 1995, none of TPIR, TPIE or TPII has
declared, set aside, made or paid to Enterprises dividends or other
distributions on the outstanding shares of TPIR Common Stock, TPIE Common
Stock or TPII Common Stock, respectively, and none of TPIR, TPIE or TPII
has any obligation to declare, set aside, make or pay to Enterprises
dividends or other distributions on the outstanding shares of TPIR Common
Stock, TPIE Common Stock or TPII Common Stock, respectively. Except with
respect to the TPIR Preferred Stock, there are no amounts owed to
Enterprises by either of TPIR, TPIE or TPII as a result of any previous
declaration of any dividend or other distribution on any outstanding
securities of any of TPIR, TPIE or TPII.
SECTION 5.3 AUTHORITY; NON-CONTRAVENTION.
(a) Enterprises has all requisite corporate power and
authority to enter into this Agreement and, subject to approval of this
Agreement and the transactions contemplated hereby requiring approval by
its shareholders, Enterprises has all requisite corporate power and
authorization to consummate the transactions contemplated hereby.
Enterprises' execution and delivery of this Agreement and its consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action, subject to such approval by Enterprises'
shareholders. This Agreement has been duly executed and delivered by
Enterprises and, subject to the satisfaction of the conditions applicable
to Enterprises as forth herein, constitutes a valid and binding obligation
of Enterprises, enforceable in accordance with its terms.
(b) Except as set forth on SCHEDULE 5.3(b) to the Enterprises
Disclosure Letter, the execution and delivery of this Agreement by
Enterprises does not and will not, and the consummation of the
transactions contemplated hereby and compliance with the provisions hereof
will not conflict with, or result in any violation of, or default (with
or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or
to the loss of a benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or
assets of Enterprises or any of its Subsidiaries (including TPIR, TPIE,
TPII and each of the TPIR Subsidiaries) under:
(1) any provision of the Certificate of Incorporation or By-
laws of either Enterprises, TPIR, TPIE or TPII;
(2) any provision of the comparable charter or organization
documents of any of the Remaining Subsidiaries or of the
TPIR Subsidiaries;
(3) to Enterprises' Knowledge, any loan or credit agreement,
note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or
license applicable to Enterprises, any of the Remaining
Subsidiaries, TPIR, TPIE, TPII or any of the TPIR
Subsidiaries;
(4) to Enterprises' Knowledge, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to
Enterprises, any of the Remaining Subsidiaries,
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TPIR, TPIE, TPII or any of the TPIR Subsidiaries or any
of their respective properties or assets;
other than, in the case of clauses (3) or (4), any such conflicts,
violations, defaults, rights, loss of benefits, liens, security interests,
charges or encumbrances that, individually or in the aggregate, would not
have a Material Adverse Effect on Enterprises and the Remaining
Subsidiaries, taken as a whole, or on TPIR, TPII, TPIE and the TPIR
Subsidiaries, taken as a whole.
(c) To Enterprises' Knowledge, no filing or registration
with, or authorization, consent or approval of, any domestic (federal or
state), foreign or supranational court, commission, governmental body,
regulatory agency, authority or tribunal (a "Governmental Entity") is
required by or with respect to Enterprises, any of the Remaining
Subsidiaries, TPIR, TPIE, TPII or any of the TPIR Subsidiaries in
connection with the execution and delivery of this Agreement by
Enterprises or is necessary for the consummation of the transactions
contemplated by this Agreement, except:
(1) in connection, or in compliance, with the provisions of
the HSR Act;
(2) in connection, or in compliance, with the provisions of
the Securities Act, the Exchange Act and applicable state
securities or blue sky laws (the Securities Act, Exchange
Act and such applicable state securities laws being
hereinafter referred to collectively as "Securities
Laws");
(3) insurance regulatory filings with respect to TPII (the
"Insurance Regulatory Approvals");
(4) such filings, authorizations, orders and approvals as may
be required by the Interstate Commerce Commission (the
"ICC Filings"); and
(5) such other filings, registrations, authorizations,
consents or approvals, the failure to obtain which would
not have a Material Adverse Effect on Enterprises and the
Remaining Subsidiaries, taken as a whole, or on TPIR,
TPII, TPIE and the TPIR Subsidiaries, taken as a whole.
SECTION 5.4 VOTE REQUIRED. The affirmative vote of a
majority of the votes cast by holders of Enterprises Common Stock entitled
to vote thereon is the only vote of the holders of any class or series of
securities of either Enterprises or any of Enterprises' Subsidiaries
(including, without limitation, TPIR, TPIE, TPII or any of the TPIR
Subsidiaries) necessary to approve this Agreement and the transactions
contemplated by this Agreement (assuming for purposes of this
representation the accuracy of the representations contained in SECTION
6.6 (without giving effect to the knowledge qualification thereof)).
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SECTION 5.5 OPINION OF FINANCIAL ADVISOR. Enterprises has
received the opinion of Alex. Brown & Sons Incorporated (the "Enterprises
Financial Advisor") to the effect that, as of the date hereof, the
consideration to be received by Enterprises in exchange for the properties
being transferred to TPAC, pursuant to the terms and conditions of this
Agreement, is fair to Enterprises' shareholders from a financial point of
view.
SECTION 5.6 OWNERSHIP OF SHONEY'S COMMON STOCK. Except as
set forth on SCHEDULE 5.6 to the Enterprises Disclosure Letter, as of the
date hereof, none of Enterprises or Enterprises Subsidiaries, nor, to
Enterprises' Knowledge, any of their respective "Affiliates" or
"Associates" (as such terms are defined under the Exchange Act): (a)
beneficially owns, directly or indirectly, or (b) are parties to any
agreement, arrangement or understanding with any Person other than
Shoney's for the purpose of acquiring, holding, voting or disposing of,
in each case, any shares of Shoney's Common Stock.
SECTION 5.7 NON-APPLICABILITY OF CERTAIN PROVISIONS.
Assuming the accuracy of the representation and warranty of Shoney's
contained in SECTION 6.6, without giving effect to the knowledge
qualification thereof, the anti-takeover restrictions of the Tennessee
Investor Protection Act, the Delaware General Corporation Law, the Hawaii
Corporate Takeovers Act, the Florida 1989 Business Corporation Act and the
New Jersey Shareholders Protection Act do not apply to the execution and
delivery of this Agreement by Enterprises or the consummation of the
transactions contemplated by this Agreement.
SECTION 5.8 DISSENTERS' RIGHTS. As of the date of this
Agreement, there were in excess of one thousand five hundred (1,500)
holders of record of Enterprises Common Stock. No holder of Enterprises
Common Stock will have any right to dissent from the exchange by
Enterprises of the TPIR Common Stock, TPIR Preferred Stock, TPIE Common
Stock, TPII Common Stock and Enterprises' cash and Cash Equivalents for
the Exchange Shares or other consideration to be paid and/or assumed by
TPAC and/or have any appraisal rights with respect to this Agreement and
the transactions contemplated by this Agreement pursuant to any provision
of the New Jersey Business Corporation Act (the "NJBCA").
SECTION 5.9 CORPORATE DOCUMENTS. The copies of the
Articles of Incorporation or Charter, as the case may be, and By-laws of
Enterprises, TPIR, TPIE, TPII and each of the TPIR Subsidiaries, which
have been delivered to Shoney's and TPAC, are true, correct and complete
copies of each of such Articles of Incorporation or Charter, as the case
may be, and By-laws as in effect on the date hereof.
SECTION 5.10 COMPANY FINANCIAL INFORMATION. Enterprises has
delivered to Shoney's and TPAC true and complete copies of the following
(collectively, the "Company Financial Information"):
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Audited Annual Financial Statements:
ENTITY FISCAL
YEAR ENDED
TPI Enterprises, Inc. and Subsidiaries - Consolidated 12/25/94
TPI Restaurants, Inc. and Subsidiaries - Consolidated 12/25/94
TPI Insurance Corporation 12/25/94
UNAUDITED ANNUAL FINANCIAL STATEMENTS
(Balance Sheets, Statements of Operations and Statements of
Cash Flows for:)
PERIOD
ENTITY COVERED
TPI Enterprises, Inc. and Subsidiaries - Consolidated Year ended 12/31/95
TPI Restaurants, Inc. and Subsidiaries - Consolidated Year ended 12/31/95
TPI Insurance Corporation Year ended 12/31/95
TPI Entertainment, Inc. Year ended 12/31/95
OTHER
Consolidation worksheets for TPIR and Enterprises for the year
ended 12/31/95.
To Enterprises' Knowledge, none of the Company Financial Information
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which and as of
the respective dates they were made, not misleading, except for such
statements or omissions as would not have a Material Adverse Effect. To
Enterprises' Knowledge, the financial statements (including the
accompanying notes) included in any of the Company Financial Information,
as of their respective dates, were prepared in accordance with GAAP
applied on a consistent basis during the periods indicated (except as may
be indicated therein or in the notes thereto), subject, in the case of
unaudited financial statements, to the absence of footnotes and normal
year-end adjustments.
As of December 31, 1995 none of Enterprises or any of its Subsidiaries had
invested surplus cash in any investment other than a Cash Equivalent.
SECTION 5.11 INFORMATION SUPPLIED. None of the information
supplied or to be supplied by Enterprises, any of the Remaining
Subsidiaries, TPIR, TPIE, TPII or any TPIR Subsidiary for inclusion or
incorporation by reference in the Proxy Statement and the Registration
Statement (as defined below in SECTION 8.1) will, to Enterprises'
knowledge, at the time the Registration Statement is filed with the
Securities and Exchange Commission (the "SEC") and at the time it becomes
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, except
for such statements or omissions as would not have a Material Adverse
Effect on Enterprises and the Remaining Subsidiaries,
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taken as a whole, or on TPIR, TPIE, TPII and the TPIR Subsidiaries, taken
as a whole; provided, however, that Enterprises is given a reasonable
opportunity to review such information prior to filing and effectiveness.
The Proxy Statement and the Registration Statement (except for such
portions thereof that relate only to or contain information supplied by
Shoney's), to Enterprises' knowledge, will comply as to form in all
material respects with the provisions of the Securities Act and the
Exchange Act and the rules and regulations thereunder. None of the
information furnished by Enterprises, any of the Remaining Subsidiaries,
TPIR, TPIE, TPII or any TPIR Subsidiary in connection with this Agreement
or the consummation of the transactions contemplated by this Agreement
(which information is described on SCHEDULE 5.11 to the Enterprises
Disclosure Letter), to Enterprises' knowledge, contains or will contain
any untrue statement of a material fact or omit to state a material fact
required to be stated in order to make any information so furnished, in
light of the circumstances under which it is so furnished and as of the
date it was furnished, not misleading.
SECTION 5.12 COMPLIANCE WITH APPLICABLE LAWS AND AGREEMENTS.
To Enterprises' Knowledge, TPIR, TPIE, TPII and each TPIR Subsidiary hold
all permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities which are material to the operation of the
businesses of TPIR, TPIE, TPII and the TPIR Subsidiaries, taken as a whole
(the "Company Permits"). To Enterprises' Knowledge, except as set forth
on SCHEDULE 5.12 to the Enterprises Disclosure Letter, each of TPIR, TPIE,
TPII and each TPIR Subsidiary are in compliance with the terms of the
Company Permits, except where the failure to be in compliance would not
have a Material Adverse Effect on TPIR, TPIE, TPII and the TPIR
Subsidiaries, taken as a whole. To Enterprises' Knowledge, the businesses
of Enterprises, TPIR, TPIE, TPII and each of the TPIR Subsidiaries are not
being conducted in conflict with, violation of or default under: (a) any
law, ordinance, regulation, judgment or order of any Governmental Entity;
or (b) any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise, or other instrument or obligation to which
Enterprises, TPIR, TPIE, TPII or any of the TPIR Subsidiaries is a party
or by which Enterprises, TPIR, TPIE, TPII or any TPIR Subsidiary or any
of their respective properties or assets is bound or affected, except for
conflicts, violations or defaults which individually or in the aggregate
would not result in a Material Adverse Effect on either Enterprises and
the Remaining Subsidiaries, taken as a whole, or TPIR, TPIE, TPII and the
TPIR Subsidiaries, taken as a whole. To Enterprises' Knowledge, no
investigation or review by any Governmental Entity with respect to
Enterprises, TPIR, TPIE, TPII or any TPIR Subsidiary is pending or
threatened, nor has any Governmental Entity indicated an intention to
conduct the same, other than, in each case, those the outcome of which
will not have a Material Adverse Effect on either Enterprises and the
Remaining Subsidiaries, taken as a whole or TPIR, TPIE, TPII and the TPIR
Subsidiaries, taken as a whole.
SECTION 5.13 LITIGATION. To Enterprises' Knowledge, except
as set forth on SCHEDULE 5.13 to the Enterprises Disclosure Letter:
(a) There is no pending or threatened litigation relating to
the TPIR Common Stock, the TPIR Preferred Stock, the TPIE Common Stock,
the TPII Common Stock or any of the
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stock of any of the TPIR Subsidiaries, except for such litigation as would
not have a Material Adverse Effect on TPIR, TPIE, TPII and the TPIR
Subsidiaries, taken as a whole.
(b) There is no litigation, claim, suit, action,
administrative or arbitration proceeding or controversy pending or
threatened (whether or not from a Governmental Entity), nor is Enterprises
in receipt of any inquiry, notice, citation, investigation or complaint
from any Governmental Entity, which would have a Material Adverse Effect
on Enterprises nor does Enterprises know of any occurrence or condition
that might properly constitute a basis for such litigation or proceeding
or such inquiry, notice, citation, investigation or complaint.
(c) Enterprises is not subject to any judgment, order, writ,
injunction or decree of any court or administrative agency which would
have a Material Adverse Effect on Enterprises.
(d) There is no litigation, claim, suit, action, administrative
or arbitration proceeding or controversy pending or, to Enterprises'
knowledge, threatened against TPIR, TPIE, TPII or any TPIR Subsidiary
(whether or not from a Governmental Entity), nor is TPIR, TPIE, TPII or
any TPIR Subsidiary in receipt of any inquiry, notice, citation,
investigation or complaint from any Governmental Entity, which would have
a Material Adverse Effect on TPIR, TPIE, TPII and the TPIR Subsidiaries,
taken as a whole, nor does Enterprises know or have reasonable grounds to
know of any occurrence or condition that might properly constitute a basis
for such litigation, proceeding or controversy or such inquiry, notice,
citation, investigation or complaint, except as would not have a Material
Adverse Effect on TPIR, TPIE, TPII and the TPIR Subsidiaries, taken as a
whole.
(e) None of TPIR, TPIE, TPII or the TPIR Subsidiaries is
subject to any judgment, order, writ, injunction or decree of any
Governmental Entity that would have a Material Adverse Effect on TPIR,
TPIE, TPII or the TPIR Subsidiaries, taken as a whole.
SECTION 5.14 INSURANCE. To Enterprises' Knowledge,
Enterprises, the Remaining Subsidiaries, TPIR, TPIE, TPII and the TPIR
Subsidiaries maintain insurance against such risks and in such amounts as
is customary (subject to reasonable deductibles) for Persons engaging in
the businesses of Enterprises, its Subsidiaries, TPIR, TPIE, TPII and the
TPIR Subsidiaries, except as would not have a Material Adverse Effect on
Enterprises and the Remaining Subsidiaries, taken as a whole, or on TPIR,
TPIE, TPII and the TPIR Subsidiaries, taken as a whole. To Enterprises'
Knowledge, there is in full force and effect policies of insurance, which
policies are described on SCHEDULE 5.14 to the Enterprises Disclosure
Letter, to cover the business, assets and properties of TPIR, TPIE, TPII
and each of the TPIR Subsidiaries from loss by fire, windstorm and
extended coverage as well as insurance for general liability, product
liability, automobile and workers' compensation. To Enterprises'
Knowledge, Enterprises has provided or made available a list of all claims
(including but not necessarily limited to workers' compensation,
automobile and general liability and products liability) filed by or on
behalf of TPIR, TPIE, TPII or any TPIR Subsidiary for insured losses prior
to the date hereof which are pending and have not been disposed of and
that are for amounts in excess of the applicable policy limits, except as
would not have a Material Adverse Effect on TPIR, TPIE, TPII and the
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TPIR Subsidiaries, taken as a whole. To Enterprises' Knowledge, none of
Enterprises, the Remaining Subsidiaries, TPIR, TPIE, TPII or any of the
TPIR Subsidiaries is in default with respect to any provisions or
requirements of any such policy, nor have any of them failed to give
notice or present any claim thereunder in a due and timely fashion, except
for such defaults or failures that would not have a Material Adverse
Effect on Enterprises and the Remaining Subsidiaries, taken as a whole,
or on TPIR, TPIE, TPII and the TPIR Subsidiaries, taken as a whole. To
Enterprises' Knowledge, none of Enterprises, the Remaining Subsidiaries,
TPIR, TPIE, TPII or any of the TPIR Subsidiaries has received any notice
of cancellation or termination in respect of any of its insurance policies
that currently are in force. To Enterprises' Knowledge, except as would
not have a Material Adverse Effect on Enterprises and the Remaining
Subsidiaries, taken as a whole, or on TPIR, TPIE, TPII and the TPIE
Subsidiaries, taken as a whole, no litigation is presently pending against
Enterprises, the Remaining Subsidiaries, TPIR, TPIE, TPII or any TPIR
Subsidiary is being defended by any insurance carrier under reservation
of rights. To Enterprises' Knowledge, Enterprises' captive insurance
Subsidiary, TPII, is adequately capitalized to insure against such risks
as Enterprises reasonably believes necessary to conduct its business in
accordance with the requirements of the Hawaii Insurance Code.
SECTION 5.15 PROPERTIES. To Enterprises' Knowledge:
(a) TPIR, TPIE, TPII and/or one of the TPIR Subsidiaries owns
fee simple absolute or leasehold title to each of the Owned Properties and
Leased Properties, respectively, identified in SCHEDULE 5.15(a) to the
Enterprises Disclosure Letter, which constitutes all of the real estate
properties owned by or leased by any of them, except as would not have a
Material Adverse Effect on TPIR, TPIE, TPII and the TPIR Subsidiaries,
taken as a whole.
(b) SCHEDULE 5.15(b) to the Enterprises Disclosure Letter sets
forth the term (including renewals), rent structure and other information
as described thereon with respect to each lease of a Leased Property.
(c) TPIR, TPIE, TPII and/or one of the TPIR Subsidiaries owns or
leases all of the FF&E used in the businesses conducted by the Companies
at the Company Properties reflected in the Company Financial Information
as being owned or leased by TPIR, TPIE, TPII or one of the TPIR Subsidiaries,
except as would not have a Material Adverse Effect on TPIR, TPIE, TPII and
the TPIR Subsidiaries, taken as a whole. Schedule 5.15(c) to the Enterprises
Disclosure Letter is a complete and accurate list and description of all
the FF&E that TPIR, TPIE, TPII and each of the TPIR Subsidiaries own,
lease, have agreed (or have an option) to purchase, sell or lease, or may
be obligated to purchase, sell or lease, in each case the cost of which
(on an individual item-by-item basis) exceeds $50,000. Each item of FF&E
is in operating order, ordinary wear and tear excepted, except as would
not have a Material Adverse Effect on TPIR, TPIE, TPII and the TPIR
Subsidiaries, taken as a whole. At the Closing, the FF&E at each Company
Restaurant will be adequate for the operation of such Company Restaurant,
and such FF&E will be in operating condition, normal wear and tear excepted,
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except as would not have a Material Adverse Effect on TPIR, TPIE, TPII
and the TPIR Subsidiaries, taken as a whole.
(d) Each of the Owned Properties, each of the Leased
Properties and each item of FF&E is owned or leased, as the case may be,
free and clear of liens, mortgages or deeds of trust, claims against
title, charges which may be liens, security interests or other
encumbrances on title ("Encumbrances"), and is not subject to any
easements, rights of way, written agreements, laws, ordinances and
regulations materially affecting business use or occupancy, or
reservations of an interest in title (collectively, "Property
Restrictions") except for:
(1) Encumbrances and Property Restrictions set forth in
SCHEDULE 5.15(d)(1) to the Enterprises Disclosure Letter;
(2) Property Restrictions imposed or promulgated by law or
any other Governmental Entity with respect to real
property, including zoning regulations, provided they do
not materially adversely effect the current use of the
property;
(3) Encumbrances and Property Restrictions disclosed in
existing title insurance policies or existing surveys (in
either case copies of which title insurance policies and
surveys have been made available to Shoney's and are
listed on SCHEDULE 5.15(d)(3)) to the Enterprises
Disclosure Letter.
(4) mechanics', carriers', workers' and repairmen's liens,
property taxes not yet delinquent and other Encumbrances,
Property Restrictions and limitations of any kind, if
any, which, in the aggregate or individually, are not
substantial in amount, do not materially interfere with
the current use of the Company Properties, taken as a
whole, subject thereto or affected thereby, and do not
otherwise materially impair business operations conducted
by TPIR, TPIE, TPII and the TPIR Subsidiaries, taken as
a whole, and which have arisen or been incurred only in
the ordinary course of business.
(e) SCHEDULE 5.15(d)(3) to the Enterprises Disclosure Letter
sets forth a schedule of existing policies of title insurance that have
been issued insuring the fee simple absolute or leasehold title, as the
case may be, to the Company Properties and the amounts of such policies.
Subject only to the matters disclosed above, such policies are, at the
date hereof, in full force and effect and no claim has been made against
any such policy, except as disclosed in SCHEDULE 5.15(e) to the
Enterprises Disclosure Letter.
(f) Except as disclosed in SCHEDULE 5.15(f) to the
Enterprises Disclosure Letter or as would not have a Material Adverse
Effect on TPIR, TPIE, TPII and the TPIR Subsidiaries, taken as a whole:
(1) there is no certificate, permit or license from
any Governmental Entity having jurisdiction over
any of the Company Properties or any agreement,
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easement or other right which is necessary to
permit the lawful use and operation of the
buildings and improvements on any of the Company
Properties or which is necessary to permit the
lawful use and operation of all driveways, roads,
and other means of egress and ingress to and from
any of the Company Properties that has not been
obtained and is not in full force and effect, or
any pending threat of modification or cancellation
of any of the same;
(2) there is no written notice of any violation of
any federal, state or municipal law, ordinance,
order, regulation or requirement affecting any
portion of any of the Company Properties issued
by any Governmental Entity;
(3) there is no:
(i) structural defect relating to the Company
Properties; or
(ii) Company Property whose building systems are
not in working order in any material respect; or
(iii) physical damage to any Company Property
for which there is no insurance in effect
covering the cost of the restoration;
in the case of any of (i), (ii) or (iii) that
would that would require the expenditure of in
excess of $100,000 at any one Company Property
or that, in the aggregate, would that would
require the expenditure of in excess of $250,000
at all Company Properties;
(4) there is no ongoing renovation or restoration of
any Company Property the cost of which is
reasonably expected to exceed $100,000; or
(5) there is no reason (by reason of any existing
condition) why any Company Property would fail
to satisfy ordinary and normal conditions and
requirements of prudent and knowledgeable real
estate lenders to qualify as a financeable
property.
(g) Except as described on SCHEDULE 5.15(g) to the
Enterprises Disclosure Letter, not one of Enterprises, any of the
Remaining Subsidiaries, TPIR, TPIE, TPII or any TPIR Subsidiary has
received any notice to the effect that:
(1) any condemnation or rezoning proceedings are
pending or threatened with respect to any of the
Company Properties; or
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(2) any zoning, building or similar law, code,
ordinance, order or regulation is or will be
violated by the continued maintenance, operation
or use of any buildings or other improvements on
any of the Company Properties or by the
continued maintenance, operation or use of the
parking areas.
(h) Except as would not have a Material Adverse Effect on
Enterprises and the Remaining Subsidiaries, taken as a whole, or on TPIR,
TPIE, TPII and the TPIR Subsidiaries, taken as a whole, all work to be
performed, payments to be made and actions to be taken by Enterprises, any
of the Remaining Subsidiaries, TPIR, TPIE, TPII or any TPIR Subsidiary
prior to the date hereof pursuant to any agreement entered into with a
Governmental Entity in connection with a site approval, zoning
reclassification or other similar action relating to any of the Company
Properties (e.g., Local Improvement District, Road Improvement District,
Environmental Mitigation) has been performed, paid or taken, as the case
may be, and there is no planned or proposed work, payments or actions that
may be required after the date hereof pursuant to such agreements.
(i) Except as would not have a Material Adverse Effect on
Enterprises and the Remaining Subsidiaries, taken as a whole, or on TPIR,
TPIE, TPII and the TPIR Subsidiaries, taken as a whole, the Inventories
of TPIR, TPIE, TPII and each of the TPIR Subsidiaries shown on the
financial statements included in the Company Financial Information and
which will be on hand on the Closing Date consist of items that are good
and usable in the normal course of business and the values at which such
inventories are carried at values that reflect the customary inventory
valuation policies consistently applied of valuing inventories at lower
of cost or market.
(j) Except as set forth in SCHEDULE 5.15 (j) to the
Enterprises Disclosure Letter or as would not have a Material Adverse
Effect on Enterprises and the Remaining Subsidiaries, taken as a whole,
or on TPIR, TPIE, TPII and the TPIR Subsidiaries, taken as a whole, all
Accounts Receivable other than intercompany receivables shown on the
financial statements are good and collectible and arose in the ordinary
course of business and reflect obligations of third party debtors.
SECTION 5.16 TAX MATTERS. To Enterprises' Knowledge, except as
set forth on SCHEDULE 5.16 to the Enterprises Disclosure Letter, and
except as would not have a Material Adverse Effect on TPIR, TPIE, TPII and
the TPIR Subsidiaries, taken as a whole:
(a) Each of TPIR, TPIE, TPII and each TPIR Subsidiary has filed
or obtained timely extensions to file all Tax Returns which are required
to be filed prior to the date of this Agreement, and such filed returns
were true, complete and correct in all material respects. Each of TPIR,
TPIE, TPII and each TPIR Subsidiary has paid all Taxes and other charges
due or claimed to be due (whether or not requiring the filing of a return)
to the extent that such Taxes are due prior to the date of this Agreement.
The Tax Returns filed reflected all Taxes due and payable by TPIR, TPIE,
TPII and each TPIR Subsidiary, as the case may be, with respect to
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the periods covered thereby and not one of TPIR, TPIE, TPII or any TPIR
Subsidiary has any liabilities for Taxes with respect to such periods.
(b) Each of TPIR, TPIE, TPII and the TPIR Subsidiaries are
members of the affiliated group (as defined in Section 1504 of the Code)
of which Enterprises is the common parent. Enterprises has included or
will include TPIR, TPIE, TPII and each of the TPIR Subsidiaries in its
consolidated federal income Tax Return and any combined state Tax Return
required for the taxable year ended December 31, 1995, and for the
taxable year of Enterprises that includes the Closing Date, and
Enterprises has included TPIR, TPIE, TPII and each of the TPIR
Subsidiaries in its consolidated, combined or unitary Tax Returns relating
to state Taxes. None of TPIR, TPIE, TPII or the TPIR Subsidiaries has
obtained an extension of time within which to file any Tax Return which
has not yet been filed. None of Enterprises, the Remaining Subsidiaries,
TPIR, TPIE, TPII or any of the TPIR Subsidiaries has received written
notice from any Governmental Entity in a jurisdiction in which any of them
does not file a Tax Return stating that it is subject to taxation by that
jurisdiction. None of TPIR, TPIE, TPII or any of the TPIR Subsidiaries
is required to file any Tax Return in any jurisdiction outside the United
States or is the tax matters partner of any partnership.
(c) The amounts accrued as liabilities for Taxes on the books of
TPIR, TPIE, TPII and each of the TPIR Subsidiaries and reflected on
financial statements included in the Company Financial Information are
adequate to satisfy all material unpaid liabilities for Taxes of TPIR,
TPIE, TPII and each TPIR Subsidiary through the date of such financial
statements. There is no agreement, waiver or other document extending,
or having the effect of extending, the period for assessment or collection
of any Taxes of any of TPIR, TPIE, TPII or any TPIR Subsidiary, which
extension or waiver is still in effect. Enterprises has delivered to
Shoney's and TPAC correct and complete copies of all examination reports,
statements or deficiencies and similar documents prepared by any Tax
authority that relate to the income, operations or business of any of
TPIR, TPIE, TPII and each TPIR Subsidiary with respect to any period
ending on or after December 30, 1992. All final adjustments made by the
Internal Revenue Service with respect to any federal Tax Return of TPIR,
TPIE, TPII or any TPIR Subsidiary (or which includes TPIR, TPIE, TPII or
any TPIR Subsidiary) have been reported to the relevant state Tax
authorities as required by law. Other than the Enterprises Tax Sharing
Arrangement, none of TPIR, TPIE, TPII or any TPIR Subsidiary is a party
to any Tax Sharing Arrangement allocation agreement with any entity. None
of TPIR, TPIE, TPII or any TPIR Subsidiary: (i) has been a member of an
affiliated group filing a consolidated federal Tax Return other than the
affiliated group of which Enterprises is the common parent; or (ii) has
liability for Taxes of any person other than Enterprises under Treasury
Regulation Sec. 1.1502-6 or any similar provision of state law, or as a
transferee or successor, by contract or otherwise.
SECTION 5.17 CERTAIN AGREEMENTS. To Enterprises'
Knowledge, except as disclosed on SCHEDULE 5.17 to the Enterprises
Disclosure Letter, none of Enterprises, any of the Remaining Subsidiaries,
TPIR, TPIE, TPII or the TPIR Subsidiaries is a party to any oral or
written agreement or plan, including any employment, consulting, or
severance agreement, any stock option plan, stock appreciation rights
plan, restricted stock plan or stock purchase plan,
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any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement.
SECTION 5.18 BENEFIT PLANS.
(a) To Enterprises' Knowledge, except as disclosed on
SCHEDULE 5.18(a) to the Enterprises Disclosure Letter, none of
Enterprises, TPIR, TPIE, TPII or any TPIR Subsidiary provides, nor has an
obligation to provide, or makes, nor has had an obligation to make,
contributions to provide compensation or benefits of any kind or
description whatsoever (whether current or deferred and whether paid in
cash or in kind) to, or on behalf of, one, or more than one, current or
former employee or director of TPIR, TPIE, TPII or any TPIR Subsidiary or
any of their dependents, other than any plans, programs or other
arrangements which only provide for the payment of cash compensation
currently from the general assets of TPIR, TPIE, TPII or any TPIR
Subsidiary on a payday by payday basis as base salary or hourly wages for
current services (individually a "Benefit Plan" and collectively the
"Benefit Plans"). To Enterprises' Knowledge, each of the Benefit Plans
and each other plan pursuant to which any current or former employee or
director of TPIR, TPIE, TPII or any TPIR Subsidiary is entitled to any
compensation or benefits is listed on SCHEDULE 5.18(a) to the Enterprises
Disclosure Letter.
(b) To Enterprises' Knowledge, except as specifically
described on SCHEDULE 5.18(b) to the Enterprises Disclosure Letter:
(1) No ERISA Affiliate (other than TPIR, TPIE, TPII or any
TPIR Subsidiary) provides, or has an obligation to
provide, or makes, or has had an obligation to make,
contributions to provide, compensation or benefits of or
under any plan, program or arrangement which is subject
to Title IV of ERISA ("ERISA Affiliate Title IV Plan").
(2) Enterprises has furnished to Shoney's a true, complete
and current copy of each written Benefit Plan and any
amendments thereto, a complete description of each other
Benefit Plan, and all Internal Revenue Service,
Department of Labor or Pension Benefit Guaranty
Corporation rulings or determinations, annual reports,
summary plan descriptions, actuarial and other financial
reports and such other documentation with respect to any
Benefit Plan as is reasonably requested by Shoney's or
TPAC.
(3) No assets have been set aside in a trust or other
separate account to pay directly or indirectly any
benefits under any Benefit Plan or to the extent assets
have been set aside, all assets are shown on the books
and records of such trust or separate account at their
current fair market value.
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(4) Since January 1, 1991, each Benefit Plan and each ERISA
Affiliate Title IV Plan has been established, maintained
and administered in compliance with all applicable laws,
except for such noncompliance that would not have a
Material Adverse Effect upon TPIR, TPIE, TPII and the
TPIR Subsidiaries, taken as a whole. Not one of TPIR,
TPIE, TPII or any TPIR Subsidiary has any duty or
obligation to indemnify or hold any other person or
entity harmless for any liability attributable to any
acts or omissions by such person or entity with respect
to any Benefit Plan or ERISA Affiliate Title IV Plan,
other than indemnification of Benefit Plan fiduciaries
under the terms of the Benefit Plan documents and
corporate charters, bylaws and state corporate law.
(5) Not one of TPIR, TPIE, TPII or any TPIR Subsidiary has
incurred and no facts exist which are reasonably likely
to result in any liability to TPIR, TPIE, TPII or any
TPIR Subsidiary for any tax or penalty with respect to
any Benefit Plan, ERISA Affiliate Title IV Plan or any
group health plan (as described in section 5000 of the
Code) of an ERISA Affiliate including, without
limitation, any tax or penalty under ERISA or under the
Code, any of which would have a Material Adverse Effect
upon TPIR, TPIE, TPII and the TPIR Subsidiaries, taken as
a whole, and any deductions claimed by TPIR, TPIE, TPII
or any TPIR Subsidiary with respect to contributions made
to any Benefit Plan have been deductible in full on the
income tax returns on which TPIR, TPIE, TPII or any TPIR
Subsidiary has claimed such deduction.
(6) Since January 1, 1991, not one of TPIR, TPIE, TPII or any
TPIR Subsidiary has terminated or withdrawn from or
sought a funding waiver with respect to, and no facts
exist which could reasonably be expected to result in
termination or withdrawal from or seeking a funding
waiver with respect to, any Benefit Plan which is subject
to Title IV of ERISA. Not one of TPIR, TPIE, TPII or any
TPIR Subsidiary has incurred, and no facts exist which
could reasonably be expected to result in, liability to
TPIR, TPIE, TPII or any TPIR Subsidiary as a result of a
termination, withdrawal or funding waiver with respect to
an ERISA Affiliate Title IV Plan.
(7) There are no pending or, to Enterprises' knowledge,
threatened claims under a Benefit Plan or ERISA Affiliate
Title IV Plan which could reasonably be expected to
result in liability to TPIR, TPIE, TPII or any TPIR
Subsidiary (other than routine claims made in the
ordinary course of plan or contract operations) or with
respect to the employment or termination of employment or
treatment of any employee or former employee, and not one
of Enterprises, any of the Remaining Subsidiaries, TPIR,
TPIE, TPII or any TPIR Subsidiary has any notice or
knowledge of any proposed or actual audit or
investigation by any Governmental Entity with respect to
any Benefit Plan or ERISA Affiliate Title IV Plan, any of
which would have a Material Adverse Effect upon TPIR,
TPIE, TPII and the TPIR Subsidiaries, taken as a whole.
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(8) TPIR, TPIE, TPII and each TPIR Subsidiary has the right
under the terms of each Benefit Plan and under applicable
law to terminate any of such plans at any time, subject
to applicable notice requirements, exclusively by action
of TPIR, TPIE, TPII or the TPIR Subsidiary, as
applicable, and no additional contributions would be
required in order to properly effect the termination
of such plan in accordance with the terms of any such
plan and applicable law.
(9) None of TPIR, TPIE, TPII or any TPIR Subsidiary makes or
has made, or has or has had an obligation to make, or
reimburses or has reimbursed, or has or has had an
obligation to reimburse, another employer, directly or
indirectly, for making, contributions to a multiemployer
plan as described in Title IV of ERISA.
(10) Section 280G of the Code shall not apply to any payments
made by TPIR, TPIE, TPII or any TPIR Subsidiary as a
result of the transactions contemplated by this
Agreement, and there are no additional payments to or
increase in vesting for any current or former employee or
director or their dependents under any Benefit Plan or
otherwise which will be triggered as a result of the
change in the control of TPIR, TPIE, TPII or any TPIR
Subsidiary contemplated by this Agreement.
SECTION 5.19 LABOR MATTERS. To Enterprises' Knowledge, not
one of Enterprises, any of the Remaining Subsidiaries, TPIR, TPIE, TPII
or any TPIR Subsidiary is a party to, or bound by, any collective
bargaining agreement, contract or other agreement or understanding with
a labor union organization. To Enterprises' Knowledge, there is no unfair
labor practice or labor arbitration proceeding pending or, to Enterprises'
knowledge, threatened against Enterprises, any of the Remaining
Subsidiaries, TPIR, TPIE, TPII or any TPIR Subsidiary relating to their
respective businesses that would result in a Material Adverse Effect on
Enterprises and the Remaining Subsidiaries, taken as a whole or on TPIR,
TPIE, TPII and the TPIR Subsidiaries, taken as a whole. To Enterprises'
Knowledge, there are no organizational efforts with respect to the
formation of a collective bargaining unit presently being made or
threatened involving employees of Enterprises, any of the Remaining
Subsidiaries, TPIR, TPIE, TPII or any TPIR Subsidiary, except as would not
have a Material Adverse Effect on Enterprises and the Remaining
Subsidiaries, taken as a whole, or on TPIR, TPIE, TPII and the TPIR
Subsidiaries, taken as a whole. To Enterprises' Knowledge, not one of
Enterprises, any of the Remaining Subsidiaries, TPIR, TPIE, TPII or any
TPIR Subsidiary has experienced within the last three years, any strike,
work stoppage or interruption or obvious slowdown of production due to
labor controversies of any material nature. To Enterprises' Knowledge,
not one of Enterprises, any of the Remaining Subsidiaries, TPIR, TPIE,
TPII or any TPIR Subsidiary has any labor controversy in existence with
respect to its business and operations that would result in a Material
Adverse Effect on Enterprises and the Remaining Subsidiaries, taken as a
whole, or on TPIR, TPIE, TPII and the TPIR Subsidiaries, taken as a whole.
To Enterprises' Knowledge, not one of Enterprises, any of the Remaining
Subsidiaries, TPIR, TPIE, TPII or any TPIR Subsidiary has reason to
believe that any strike, work stoppage, interruption or obvious slowdown
of production or labor controversy of any nature is imminent or threatened
with respect to its employees.
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SECTION 5.20 ENVIRONMENTAL MATTERS.
(a) To Enterprises' Knowledge, except as disclosed on
SCHEDULE 5.20 to the Enterprises Disclosure Letter and except as would not
have a Material Adverse Effect on TPIR, TPIE, TPII and the TPIR
Subsidiaries, taken as a whole, at all times during the use and occupancy
of any of the Company Properties by TPIR, TPIE, TPII or any of the TPIR
Subsidiaries, as applicable, through and including the date of this
Agreement:
(1) not one of TPIR, TPIE, TPII or the TPIR Subsidiaries has
used, stored or disposed of any Hazardous Materials,
except in compliance with all applicable federal, state
and local laws, rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings or
charges thereunder or other governmental requirements
(each, an "Environmental Law" and, collectively, the
"Environmental Laws");
(2) no former user of any Company Property or any third party
has used, stored or disposed of any Hazardous Materials
on or at any Company Property, except in compliance with
all applicable Environmental Laws;
(3) each of TPIR, TPIE, TPII and the TPIR Subsidiaries has
complied with all applicable Environmental Laws in
connection with its use and occupancy of each of the
Company Properties;
(4) not one of Enterprises, any of the Remaining
Subsidiaries, TPIR, TPIE, TPII or any TPIR Subsidiary has
received any notice, citation, inquiry or advice from any
Governmental Entity or any source whatsoever with respect
to Hazardous Materials on, from or affecting any Company
Property, other than with respect to matters that will
require no further action on the part of any of TPIR,
TPIE, TPII or any of the TPIR Subsidiaries;
(5) there are no underground storage tanks, either active,
out-of-service or abandoned, on any of the Company
Properties;
(6) there has been no "release" as that term is defined in
CERCLA, 42 U.S.C. Sec. 9601(22), of any Hazardous Material
at, on or adjoining any of the Company Properties; and
(7) not one of Enterprises, any of the Remaining
Subsidiaries, TPIR, TPIE, TPII or any TPIR Subsidiary has
received any notice, citation, inquiry or advice of any
claim or potential claim arising out of the
transportation, generation, use or disposal of Hazardous
Materials at any of the Company Properties or at any
other location, whether arising under the Environmental
Laws, common law principles or other legal standards.
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(b) To Enterprises' Knowledge, except as would not have a
Material Adverse Effect on Enterprises and the Remaining Subsidiaries,
taken as a whole, or on TPIR, TPIE, TPII and the TPIR Subsidiaries, taken
as a whole, there is no asbestos or material containing asbestos
("Asbestos") in the buildings located on any of the Company Properties,
and not one of Enterprises, any of the Remaining Subsidiaries, TPIR, TPIE,
TPII or any TPIR Subsidiary has received any notice, citation, inquiry or
advice from any Governmental Entity or any source whatsoever with respect
to Asbestos on, affecting or installed in the buildings located on any of
the Company Properties.
(c) To Enterprises' Knowledge, each of Enterprises,
Enterprises's Subsidiaries, TPIR, TPIE, TPII and the TPIR Subsidiaries has
obtained or procured, and is in substantial compliance with, all licenses,
permits, registrations, and governmental authorizations necessary to
operate its respective properties under all applicable Environmental Laws,
except where the failure to so comply would not have a Material Adverse
Effect upon TPIR, TPIE, TPII and the TPIR Subsidiaries, taken as a whole.
To Enterprises' Knowledge, SCHEDULE 5.20 to the Enterprises Disclosure
Letter lists all such material licenses, permits, registrations and
government authorizations maintained by TPIR, TPIE, TPII or any of the
TPIR Subsidiaries that are required by any Environmental Law.
SECTION 5.21 CONTRACTS AND COMMITMENTS. To Enterprises'
Knowledge, except: (i) with respect to contracts or agreements with
Shoney's or Shoney's Subsidiaries; (ii) set forth on SCHEDULE 5.21 to the
Enterprises Disclosure Letter; and (iii) as otherwise would not have a
Material Adverse Effect on TPIR, TPIE, TPII and the TPIR Subsidiaries,
taken as a whole, not one of TPIR, TPIE, TPII or any TPIR Subsidiary is
a party to or bound by any:
(a) contract or agreement involving amounts payable to or by
TPIR, TPIE, TPII or any TPIR Subsidiary during any 12-month period that
will aggregate $50,000 or more;
(b) management, consultant or employment contract under which
there are amounts payable by TPIR, TPIE, TPII or any TPIR Subsidiary
during any 12-month period that will aggregate $50,000 or more;
(c) contract obligating TPIR, TPIE, TPII or any TPIR
Subsidiary to make severance or similar payments to any employee or
officer of Enterprises, TPIR, TPIE, TPII or any TPIR Subsidiary upon
termination of employment or to make payments to any officer or employee
of Enterprises, TPIR, TPIE, TPII or any TPIR Subsidiary in excess of the
officer's or employee's regular salary and reimbursement of ordinary
business expenses;
(d) contract or agreement with any distributor, dealer or
sales representative that is not cancelable without liability to TPIR,
TPIE, TPII or any TPIR Subsidiary on a maximum of thirty (30) days notice
and under which there are amounts payable by TPIR, TPIE, TPII or any TPIR
Subsidiary during any 12-month period that will aggregate $50,000 or more;
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(e) contract or agreement of any nature whatsoever with
Enterprises, any Subsidiary of Enterprises or any of their respective
Affiliates, with any past or present director or officer of Enterprises,
any of the Remaining Subsidiaries, TPIR, TPIE, TPII or any TPIR
Subsidiary, or any of their respective Affiliates, or with any person
related to any past or present director or officer of Enterprises, any of
the Remaining Subsidiaries, TPIR, TPIE, TPII or any TPIR Subsidiary;
(f) contract or agreement relating to any loan, factoring or
credit line;
(g) lease of real property other than those described on
SCHEDULE 5.15(b) to the Enterprises Disclosure Letter;
(h) lease of personal or mixed property under which TPIR,
TPIE, TPII or any TPIR Subsidiary is a lessor or lessee involving payments
by or to TPIR, TPIE, TPII or any TPIR Subsidiary in excess of $50,000 in
any 12-month period;
(i) joint venture, partnership or other agreement involving
sharing of profits;
(j) contract preventing TPIR, TPIE, TPII or any TPIR
Subsidiary from carrying on its business anywhere in the world;
(k) outstanding power of attorney empowering any person or
entity to act on behalf of TPIR, TPIE, TPII or any TPIR Subsidiary;
(l) outstanding offer or bid that, if accepted, would result
in (x) a contract required to be disclosed pursuant to this SECTION 5.21,
or (y) any other material contract or commitment;
(m) purchase commitments, requirements or similar contracts
(or series of related purchase commitments, requirements or similar
contracts) involving amounts payable by TPIR, TPIE, TPII or any TPIR
Subsidiary during any 12-month period that will aggregate $50,000 or more;
(n) outstanding guaranty, subordination or other similar type
of agreement, whether or not entered into in the ordinary course of
business;
(o) contract, commitment, or obligation otherwise material to
the business of any of TPIR, TPIE, TPII or any TPIR Subsidiary or not made
in the ordinary course of business; or
(p) agreement with a Governmental Entity (including any
conciliation agreement, consent decree or letter of commitment) other than
agreements that are immaterial in amount or scope.
To Enterprises' Knowledge, SCHEDULE 5.21 to the Enterprises Disclosure
Letter describes the material terms of all oral contracts disclosed in
SCHEDULE 5.21 to the Enterprises Disclosure
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Letter. To Enterprises' Knowledge, TPIR, TPIE, TPII and each TPIR
Subsidiary has duly complied in all material respects with all provisions
of every contract listed on SCHEDULE 5.21 to the Enterprises Disclosure
Letter (whether written or oral) to which TPIR, TPIE, TPII or any TPIR
Subsidiary is a party and is not in default in any material respect as to
any such contract, except where the failure to so comply or such default
would not have a Material Adverse Effect upon TPIR, TPIE, TPII and the
TPIR Subsidiaries, taken as a whole. To Enterprises' Knowledge, no
condition or state of facts exists that, with notice or the passage of
time, or both, would constitute such a default under any such contract,
except for defaults that would not have a Material Adverse Effect on TPIR,
TPIE, TPII and the TPIR Subsidiaries, taken as a whole. To Enterprises'
Knowledge, all contracts and other agreements to which TPIR, TPIE, TPII
or any TPIR Subsidiary is a party are in full force and effect and are
enforceable by TPIR, TPIE, TPII or a TPIR Subsidiary, as applicable, in
accordance with their terms against all other parties thereto, subject as
to enforceability to bankruptcy, insolvency and similar laws affecting
creditors's rights generally, except where the unenforceability would not
have a Material Adverse Effect upon any of TPIR, TPIE, TPII, and the TPIR
Subsidiaries, taken as a whole. To Enterprises' Knowledge, except as
disclosed on SCHEDULE 5.21 to the Enterprises Disclosure Letter, no loan
payable by TPIR, TPIE, TPII or any TPIR Subsidiary provides for any
prepayment penalty or premium. Copies of each such document described on
SCHEDULE 5.21 to the Enterprises Disclosure Letter will be delivered or
made available to Shoney's and TPAC no later than ten (10) business days
after the date of this Agreement.
SECTION 5.22 ABSENCE OF CERTAIN CHANGES OR EVENTS. To
Enterprises' Knowledge, except as disclosed on SCHEDULE 5.22 to the
Enterprises Disclosure Letter and except as would not have a Material
Adverse Effect on Enterprises and the Remaining Subsidiaries, taken as a
whole, or on TPIR, TPIE, TPII, and the TPIR Subsidiaries, taken as a
whole, since September 1, 1995, there has not been:
(a) any declaration or payment of dividends on any capital
stock of Enterprises, any Subsidiary of Enterprises, TPIR, TPIE, TPII or
any TPIR Subsidiary or any distribution with respect to, or in redemption
of, any of the shares of capital stock of Enterprises, any Subsidiary of
Enterprises, TPIR, TPIE, TPII or any TPIR Subsidiary;
(b) any sale or transfer of any assets or properties of
Enterprises, any Subsidiary of Enterprises, TPIR, TPIE, TPII or any TPIR
Subsidiary except in the ordinary course of business consistent with past
practice;
(c) any damage, destruction or loss (whether or not covered
by insurance) materially and adversely affecting the properties, assets,
business or prospects of Enterprises, any Subsidiary of Enterprises, TPIR,
TPIE, TPII or any TPIR Subsidiary;
(d) any Material Adverse Change in the condition (financial
or otherwise) of properties, assets, liabilities, business or prospects
of TPIR, TPIE, TPII and the TPIR Subsidiaries, taken as a whole, except
as reflected in the Company Financial Information and
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except for declines in profitability subsequent to the date of the Company
Financial Information but prior to the date of this Agreement of which
Shoney's has been made aware;
(e) any transaction other than in the ordinary course of
business of TPIR, TPIE, TPII or any TPIR Subsidiary consistent with past
practice;
(f) any lease of personal or real property to or from any
person, firm or entity with respect to which TPIR, TPIE, TPII or any TPIR
Subsidiary is a party;
(g) any amendment of the charter or bylaws of TPIR, TPIE,
TPII or any TPIR Subsidiary;
(h) the granting or filing of any lien, encumbrance or
security interest against any of the shares of capital stock of either
TPIR, TPIE, TPII or any TPIR Subsidiary or any of their respective
properties or assets, real, personal or mixed, tangible or intangible;
(i) any payment, loan or advance of any amount to, or sale,
transfer or lease of any properties or assets (real, personal or mixed,
tangible or intangible) to, or execution of any agreement with, officers
or directors of Enterprises, any of the Remaining Subsidiaries, TPIR,
TPIE, TPII or any TPIR Subsidiary;
(j) any personal injury on any premises of TPIR, TPIE, TPII
or any TPIR Subsidiary or in connection with their respective businesses
that may give rise to a claim in excess of the applicable insurance
coverage;
(k) any increase in the compensation payable to or to become
payable by TPIR, TPIE, TPII or any TPIR Subsidiary to any officer,
employee or agent of Enterprises, TPIR, TPIE, TPII or any TPIR Subsidiary
(including, without limitation, any increase in the discretionary matching
under any 401(k) plan), except for normal compensation adjustments to
salaries or wages to non-officers of TPIR, TPIE, TPII or any TPIR
Subsidiary, and to officers of TPIR, TPIE, TPII or any TPIR Subsidiary as
required by an applicable employment agreement, in each case made in the
ordinary course of business consistent with past practice;
(l) any payment, other than in the ordinary course of
business of TPIR, TPIE, TPII or any TPIR Subsidiary consistent with past
practice, under any insurance, pension or other benefit plan, program or
arrangement made to, for or with any officer, employee or agent of
Enterprises, any of the Remaining Subsidiaries, TPIR, TPIE, TPII or any
TPIR Subsidiary;
(m) any change in the method of accounting or accounting
practice by TPIR, TPIE, TPII or any TPIR Subsidiary, except as required
by generally accepted accounting principles;
(n) issuance of any certificates or coupons that would
entitle the bearer thereof to receive a reduction in the price of food
and/or beverages consumed at any of the Restaurants or
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to receive such food and/or beverages free of charge, except in the
ordinary course of business consistent with past practice;
(o) any extension or modification of any agreement required
to be disclosed by SECTION 5.21;
(p) any investment of surplus cash by Enterprises or any of
its Subsidiaries in any investment other than a Cash Equivalent;
(q) any agreement, whether in writing or otherwise, to take
any action described in this SECTION 5.22.
SECTION 5.23 BANK ACCOUNTS. A true and correct list of all
bank accounts of TPIR, TPIE, TPII and each TPIR Subsidiary is set forth
on SCHEDULE 5.23 to the Enterprises Disclosure Letter.
SECTION 5.24 BOOKS AND RECORDS. Enterprises has delivered or
made available to Shoney's and TPAC what, to Enterprises' Knowledge, are
true, correct and complete copies of the following items:
(a) With respect to each parcel of real property listed in
SCHEDULE 5.15(a) to the Enterprises Disclosure Letter, the deed evidencing
ownership of such property, each mortgage or other encumbrance thereon
reflected in a written instrument, each instrument (if any) evidencing a
grant by or to TPIR, TPIE, TPII or any TPIR Subsidiary of an option to
purchase or lease such property, each lease and leasehold mortgage (if
any) with respect to such property, and any title policies or commitments
and surveys (if any) with respect to such property;
(b) Each of the contracts, lease agreements, plans,
instruments, reports or documents that are in writing and are listed in
the Schedules attached hereto;
(c) The pleadings and briefs filed in each pending suit or
proceeding listed in SCHEDULE 5.13 to the Enterprises Disclosure Letter
and the judgments, orders, injunctions, decrees, stipulations and awards
listed in said Schedule;
(d) All federal income Tax Returns filed by TPIR, TPIE, TPII
or any TPIR Subsidiary within the past four (4) years; and
(e) True and correct copies of all stock records and
corporate minutes of TPIR, TPIE, TPII and each TPIR Subsidiary.
SECTION 5.25 NO BROKERS. Except as disclosed on SCHEDULE
5.25 to the Enterprises Disclosure Letter, none of Enterprises, the
Remaining Subsidiaries, TPIR, TPIE, TPII, or any TPIR Subsidiary is a
party to or bound by any contract, arrangement or understanding with any
person or firm which may result in the obligation of TPIR, TPIE, TPII, any
TPIR Subsidiary,
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Shoney's or TPAC to pay any finder's fees, brokerage or agent's
commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions
contemplated hereby, and there will be no claim for payment of any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
SECTION 5.26 ABSENCE OF UNDISCLOSED LIABILITIES. To
Enterprises' Knowledge, except as and to the extent reflected or reserved
against in the most recent financial statements contained in the Company
Financial Information and since December 31, 1995, none of TPIR, TPIE,
TPII or any of the TPIR Subsidiaries has incurred any liabilities of any
kind whatsoever (including liabilities for Taxes, liabilities under ERISA,
liabilities arising out of litigation, or liabilities arising out of
violations of Environmental Laws), whether accrued, absolute, contingent,
determined, determinable or otherwise other than: (a) liabilities incurred
in the ordinary course of business in accordance with past practice since
December 31, 1995; (b) liabilities that have been repaid, discharged or
otherwise extinguished; (c) liabilities under or contemplated by this
Agreement; (d) liabilities disclosed on SCHEDULE 5.26 to the Enterprises
Disclosure Letter; (e) liabilities of a type not required to be recorded
or disclosed in accordance with GAAP; (f) other liabilities in an amount
not to exceed $500,000; and (g) liabilities described on any Schedule to
this Agreement or to the Enterprises Disclosure Letter.
SECTION 5.27 REPRESENTATIONS COMPLETE. None of the
representations or warranties made by Enterprises herein contains, to
Enterprises' Knowledge, or will contain at the Closing Date any untrue
statement of a material fact or omits, to Enterprises' Knowledge, or will
omit at the Closing Date to state any material fact necessary to make the
statements therein, in light of the circumstances under which made, not
misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SHONEY'S AND TPAC
Shoney's and TPAC, jointly and severally, represent and warrant
to Enterprises that:
SECTION 6.1 ORGANIZATION, STANDING AND POWER.
Shoney's is a corporation duly organized, validly existing and in good
standing under the laws of the State of Tennessee and has the requisite
corporate power and authority to carry on its business as now being
conducted. Each Subsidiary (as defined herein) of Shoney's (including
TPAC) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated
and has the requisite corporate power and authority to carry on its
business as now being conducted. Each of Shoney's and its Subsidiaries
is duly qualified to do business and is in good standing in each
jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary,
except where the failure
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to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect on Shoney's.
SECTION 6.2 CAPITAL STRUCTURE.
(a) As of the date hereof, the authorized capital stock of
Shoney's consists of 100,000,000 shares of Shoney's Common Stock. At the
close of business on January 22, 1996:
(1) 41,614,113 shares of Shoney's Common Stock were issued
and outstanding;
(2) 7,840,442 shares of Shoney's Common Stock were reserved
for issuance upon the exercise of outstanding stock
options granted pursuant to the Shoney's Stock Plans;
(3) 5,205,632 shares of Shoney's Common Stock were reserved
for issuance upon the conversion of certain outstanding
Liquid Yield Option Notes (the "LYONs"); and
(4) no shares of Shoney's Common Stock were held by Shoney's
in its treasury.
All outstanding shares of Shoney's Common Stock are validly issued, fully
paid and nonassessable and not subject to preemptive rights.
(b) As of the date hereof, all of the issued and outstanding shares
of capital stock of TPAC (the "TPAC Stock") are and, on the Closing Date,
will be, directly owned by Shoney's. All outstanding shares of TPAC Stock
are validly issued, fully paid and nonassessable and not subject to
preemptive rights. As of the date hereof, there are not, and there will
not be on the Closing Date, any outstanding options, warrants, calls,
rights, commitments or any other agreements of any character to which
TPAC is a party, or by which it is bound, requiring it to issue, transfer,
sell, purchase, redeem or acquire any shares of capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for or acquire any shares of its capital stock, except
as provided under this Agreement.
(c) As of the date hereof, with the exception of the LYONs,
no Voting Debt of Shoney's is issued or outstanding.
(d) Except for those that are disclosed in the Shoney's SEC
Documents (as defined in SECTION 6.9), Shoney's does not have any
Subsidiaries or any interest in any other entity. All of the issued and
outstanding capital stock in each of Shoney's Subsidiaries (including
TPAC) is owned by Shoney's and is fully paid, nonassessable and not
subject to preemptive rights.
(e) As of the date hereof, except for options or awards
outstanding under certain of the Shoney's Stock Plans, the conversion
rights of the holders of the LYONs and as reflected in the Shoney's SEC
Documents, there are no options, warrants, calls, rights, commitments or
agreements of any character to which Shoney's or any of its Subsidiaries
is a party or by which
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any of them is bound obligating Shoney's or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, any
shares of Shoney's Common Stock or any Voting Debt of Shoney's or any
of its Subsidiaries, or obligating Shoney's or any of its Subsidiaries
to grant, extend or enter into any such option, warrant, call, right,
commitment or agreement obligating Shoney's or any of its Subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or sold,
any shares of Shoney's Common Stock or any Voting Debt of Shoney's or
any of its Subsidiaries, or obligating Shoney's or any of its
Subsidiaries to grant, extend, or enter into any such option, warrant,
call, right or agreement. As of the date hereof, there are no
outstanding contractual obligations of Shoney's or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of
Shoney's Common Stock.
SECTION 6.3 AUTHORITY; NON-CONTRAVENTION.
(a) Each of Shoney's and TPAC has all requisite corporate
power and authority to enter into this Agreement and, subject to approval
of this Agreement and the transactions contemplated hereby by Shoney's and
TPAC's shareholders, each of Shoney's and TPAC has all requisite corporate
power and authorization to consummate the transactions contemplated
hereby. Shoney's and TPAC's execution and delivery of this Agreement and
their consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action, subject to such approval by
Shoney's shareholders. This Agreement has been duly executed and
delivered by Shoney's and TPAC and, subject to the satisfaction of the
conditions applicable to them as set forth herein, constitutes a valid and
binding obligation of Shoney's and TPAC, enforceable in accordance with
its terms.
(b) The execution and delivery of this Agreement by Shoney's
and TPAC do not and will not, and the consummation by them of the
transactions contemplated hereby and compliance with the provisions hereof
will not conflict with, or result in any violation of, or default (with
or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or
to the loss of a benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or
assets of Shoney's or any of its Subsidiaries (including TPAC) under:
(1) any provision of the Charter or By-laws of Shoney's;
(2) any provision of the comparable charter or organization
documents of any of Shoney's Subsidiaries (including
TPAC);
(3) to Shoney's Knowledge, any loan or credit agreement,
note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or
license applicable to Shoney's or any of its Subsidiaries
(including TPAC);
(4) to Shoney's Knowledge, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to
Shoney's or any of its Subsidiaries (including TPAC) or
any of their respective properties or assets;
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other than, in the case of clauses (3) or (4), any such conflicts,
violations, defaults, rights, liens, security interests, charges or
encumbrances that, individually or in the aggregate, would not have a
Material Adverse Effect on Shoney's or TPAC or materially impair the
ability of either Shoney's or TPAC to perform their respective obligations
hereunder or prevent the consummation of any of the transactions
contemplated hereby.
(c) To Shoney's Knowledge, no filing or registration with, or
authorization, consent or approval of, any Governmental Entity is required
by or with respect to Shoney's or any of its Subsidiaries (including TPAC)
in connection with the execution and delivery of this Agreement by
Shoney's and TPAC or is necessary for the consummation of the transactions
contemplated by this Agreement, except for:
(1) in connection, or in compliance, with the provisions of
the HSR Act;
(2) in connection, or in compliance, with the Securities
Laws;
(3) the Insurance Regulatory Filings;
(4) the ICC Filings; and
(5) such other filings, registrations, authorizations,
consents or approvals, the failure to obtain which would
not have a Material Adverse Effect on Shoney's and its
Subsidiaries, taken as a whole.
SECTION 6.4 VOTE REQUIRED. The affirmative vote of the
holders of a majority of the outstanding shares of Shoney's Common Stock
entitled to vote thereon is the only vote of the holders of any class or
series of Shoney's securities necessary to approve this Agreement and the
transactions contemplated by this Agreement (assuming for purposes of this
representation the accuracy of the representations contained in SECTION
5.6 (without giving effect to the knowledge qualification thereof)). The
affirmative vote of the holders of a majority of the outstanding shares
of TPAC common stock entitled to vote thereon is the only vote of the
holders of any class or series of TPAC securities necessary to approve
this Agreement and the transactions contemplated by this Agreement.
SECTION 6.5 OPINION OF FINANCIAL ADVISOR. Shoney's has
received the opinion of Salomon Brothers Inc (the "Shoney's Financial
Advisor") to the effect that, as of the date hereof, the consideration to
be paid by Shoney's and/or TPAC in exchange for the properties being
transferred to TPAC, pursuant to the terms and conditions of this
Agreement, is fair to Shoney's shareholders from a financial point of
view.
SECTION 6.6 OWNERSHIP OF ENTERPRISES COMMON STOCK. As of the
date hereof, neither Shoney's, any of its Subsidiaries, nor, to Shoney's
Knowledge, any of their respective "Affiliates" or "Associates" (as such
terms are defined under the Exchange Act): (a) beneficially owns, directly
or indirectly, or (b) are parties to any agreement, arrangement or
understanding
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with any person other than Enterprises for the purpose of
acquiring, holding, voting or disposing of, in each case, any shares of
Enterprises Common Stock.
SECTION 6.7 NON-APPLICABILITY OF CERTAIN PROVISIONS.
Assuming the accuracy of the representation and warranty of Enterprises
contained in SECTION 5.6, without giving effect to the knowledge
qualification thereof, the restrictions on business combinations imposed
by the Tennessee Business Combination Act do not apply to the execution
and delivery of this Agreement by Shoney's or TPAC or the consummation of
the transactions contemplated by this Agreement by Shoney's or TPAC.
SECTION 6.8 CORPORATE DOCUMENTS. The copies of the
Charter and By-laws of Shoney's, which have been delivered to Enterprises,
are true, correct and complete copies of the Charter and By-laws of
Shoney's in effect on the date hereof.
SECTION 6.9 DISSENTERS' RIGHTS. As of the date of this
Agreement, Shoney's Common Stock was listed on the NYSE, which is a
"national securities exchange". No holder of Shoney's Common Stock will
have any right to dissent from the consummation of the transactions
contemplated by this Agreement and/or have any appraisal rights with
respect to the transactions contemplated by this Agreement pursuant to any
provision of the TBCA.
SECTION 6.10 SEC DOCUMENTS. Shoney's and TPAC have delivered
to Enterprises true and complete copies of each report, schedule,
registration statement and definitive proxy statement filed with the SEC
by or with respect to Shoney's or any of its Subsidiaries (as any such
document has since the time of its filing been amended, the "Shoney's SEC
Documents") since January 1, 1993, which are all the documents (other than
preliminary material) that were required to be filed with the SEC by
Shoney's or any of its Subsidiaries since such date. To Shoney's
Knowledge, each of the Shoney's SEC Documents, as of its respective date,
complied in all material respects with the requirements of the Securities
Act or the Exchange Act, as the case may be, and none of the Shoney's SEC
Documents contained any untrue statement of a material fact or omitted 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, except for such statements or omissions as
would not have a Material Adverse Effect on Shoney's and its Subsidiaries,
taken as a whole. To Shoney's Knowledge, the financial statements
(including the accompanying notes) included in any of the Shoney's SEC
Documents, as of their respective dates, complied as to form in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, were
prepared in accordance with generally accepted accounting principles
(except, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC) applied on a consistent basis during the periods indicated
(except as may be indicated therein or in the notes thereto) and fairly
present the consolidated financial position of Shoney's and Shoney's
consolidated Subsidiaries as of the dates thereof and the consolidated
results of the operations and cash flows of Shoney's and Shoney's
consolidated Subsidiaries for the periods then ended (subject, in the
case of unaudited statements, to normal year-end adjustments described
therein). To Shoney's Knowledge, all material agreements, contracts
and other documents required to be filed as
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exhibits to any of the Shoney's SEC Documents have been so filed.
Since January 1, 1993, Shoney's has timely filed with the SEC all reports,
registration statements and other filings required to be filed by the
SEC's rules and regulations.
SECTION 6.11 INFORMATION SUPPLIED. None of the information
supplied or to be supplied by Shoney's or any of its Subsidiaries for
inclusion or incorporation by reference in the Proxy Statement and the
Registration Statement (as defined below in SECTION 8.1) will, to Shoney's
knowledge, at the time the Registration Statement is filed with the SEC
and at the time it becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, except for such statements or omissions as would not have
a Material Adverse Effect on Shoney's and its Subsidiaries, taken as a
whole. The Proxy Statement and the Registration Statement (except for
such portions thereof that relate only to or contain information supplied
by Enterprises), to Shoney's knowledge, will comply as to form in all
material respects with the provisions of the Securities Act and the
Exchange Act and the rules and regulations thereunder. No information
furnished by Shoney's or any of its Subsidiaries in connection with this
Agreement or the consummation of the transactions contemplated by this
Agreement, to Shoney's knowledge, contains or will contain any untrue
statement of a material fact or omit to state a material fact required to
be stated in order to make any information so furnished, in light of the
circumstances under which it is so furnished and as of the date it was
furnished, not misleading.
SECTION 6.12 COMPLIANCE WITH APPLICABLE LAWS AND AGREEMENTS.
To Shoney's Knowledge, Shoney's and each of its Subsidiaries hold all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities which are material to the operation of the
businesses of Shoney's and each of its Subsidiaries, taken as a whole (the
"Shoney's Permits"). To Shoney's Knowledge, Shoney's and each of its
Subsidiaries are in compliance in all material respects with the terms of
the Shoney's Permits. To Shoney's Knowledge, the businesses of Shoney's
and each of its Subsidiaries are not being conducted in conflict with,
violation of or default under: (a) any law, ordinance, regulation,
judgment or order of any Governmental Entity; or (b) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise, or other instrument or obligation to which Shoney's or any of
its Subsidiaries is a party or by which Shoney's or any of its
Subsidiaries or any property or asset of Shoney's or any of its
Subsidiaries is bound or affected, except for conflicts, violations or
defaults which individually or in the aggregate would not result in a
Material Adverse Effect on Shoney's or materially impair the ability of
Shoney's to perform its obligations under this Agreement, or prevent the
consummation of any of the transactions contemplated hereby. To Shoney's
Knowledge, no investigation or review by any Governmental Entity with
respect to Shoney's or any of its Subsidiaries is pending or threatened,
nor has any Governmental Entity indicated an intention to conduct the
same, other than, in each case, those the outcome of which will not
have a Material Adverse Effect on Shoney's.
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SECTION 6.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. To
Shoney's Knowledge, except as set forth in Shoney's SEC Documents and
except as would not have a Material Adverse Effect on Shoney's and its
Subsidiaries, taken as a whole, since January 22, 1996, there has not
been:
(a) any damage, destruction or loss, whether covered by
insurance or not, which has had a Material Adverse Effect on Shoney's;
(b) any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock, or property) with respect
to any of Shoney's capital stock; or
(c) any transaction, commitment, dispute or other event or
condition (financial or otherwise) of any character (whether or not in the
ordinary course of business), individually or in the aggregate having a
Material Adverse Effect on Shoney's.
SECTION 6.14 ABSENCE OF UNDISCLOSED LIABILITIES. To
Shoney's Knowledge, except as and to the extent reflected or reserved
against in the most recent financial statements contained in or disclosed
in the Shoney's SEC Documents and since January 29, 1996, neither Shoney's
nor its Subsidiaries has incurred any liabilities of any kind whatsoever
(including liabilities for Taxes, liabilities under ERISA, liabilities
arising out of litigation, or liabilities arising out of violations of
Environmental Laws), whether accrued, absolute, contingent, determined,
determinable or otherwise, that, individually or in the aggregate, would
have a Material Adverse Effect on Shoney's and its Subsidiaries, taken as
a whole, other than: (a) liabilities incurred in the ordinary course of
business in accordance with past practice since January 29, 1996; (b)
liabilities that have been repaid, discharged or otherwise extinguished;
and (c) liabilities under or contemplated by this Agreement.
SECTION 6.15 NO BROKERS. Except for Shoney's Financial
Advisor, none of Shoney's or its Subsidiaries is a party to or bound by
any contract, arrangement or understanding with any person or firm which
may result in the obligation of Enterprises to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby, and there will be no claim for payment
of any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or
the consummation of the transactions contemplated hereby.
SECTION 6.16 REPRESENTATIONS COMPLETE. None of the representations
or warranties made by Shoney's or TPAC herein contains, to Shoney's
Knowledge, or will contain on the Closing Date any untrue statement of a
material fact or omits, to Shoney's Knowledge, or will omit on the Closing
Date to state any material fact necessary to make the statements therein,
in light of the circumstances under which made, not misleading.
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ARTICLE VII
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 7.1 ACQUISITION PROPOSALS. Prior to the Closing
Date, Enterprises agrees:
(a) that neither it nor any of its Subsidiaries or Affiliates
shall, and each of them shall direct and use its best efforts to cause its
respective officers, directors, employees, agents and representatives
(including, without limitation, any investment banker, attorney or
accountant retained by it or any of its Subsidiaries or Affiliates) not
to, initiate, solicit or encourage, directly or indirectly, any inquiries
or the making or implementation of any proposal or offer (including,
without limitation, any proposal or offer to its shareholders) with
respect to a merger, acquisition, tender offer, exchange offer,
consolidation or similar transaction involving, or any purchase of all or
any significant portion of the assets or the equity securities of,
Enterprises or any of its Subsidiaries or Affiliates, other than the
transactions contemplated by this Agreement (any such proposal or offer
being hereinafter referred to as an "Acquisition Proposal") or engage in
any negotiations concerning, or provide any confidential information or
data to, or have any discussions with, any person relating to an
Acquisition Proposal or otherwise facilitate any effort or attempt to make
or implement an Acquisition Proposal;
(b) that it will immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing and each will
take the necessary steps to inform the individuals or entities referred
to above of the obligations undertaken in this Section 7.1; and
(c) that it will notify Shoney's immediately if any such
inquiries or proposals are received by, any such information is requested
from, or any such negotiations or discussions are sought to be initiated
or continued with, it;
PROVIDED, HOWEVER, that nothing contained in this SECTION 7.1 shall
prohibit the Board of Directors of Enterprises from:
(a) furnishing information to or entering into discussions or
negotiations with, any person or entity that makes an unsolicited bona
fide Acquisition Proposal, if, and only to the extent that:
(1) the Board of Directors of such party determines in good
faith, based on the advice of Enterprises' Counsel, or
such other counsel reasonably acceptable to the Shoney's,
that such action is required for the Board of Directors
to comply with its fiduciary duties to shareholders
imposed by law; and
(2) subject to the exercise of fiduciary duties of
Enterprises' Board of Directors, the requirements of the
federal securities laws and any confidentiality agreement
with such person or entity (which such party determined
in good faith was required to
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be executed in order for Enterprises' Board of Directors
to comply with its fiduciary duties to shareholders
imposed by law), such party keeps the other party to this
Agreement informed of the status (not the terms) of any
such discussions or negotiations; and
(b) to the extent applicable, complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal.
Nothing in this SECTION 7.1 shall: (x) permit Enterprises to terminate
this Agreement (except as specifically provided in ARTICLE X hereof) or
(y) permit Enterprises or any of its Subsidiaries to enter into any
agreement with respect to an Acquisition Proposal during the term of this
Agreement (it being agreed that during the term of this Agreement, none
of Enterprises or its Subsidiaries shall enter into any agreement with any
person that provides for, or in any way facilitates, an Acquisition
Proposal (other than a confidentiality agreement in customary form)).
SECTION 7.2 CONDUCT OF BUSINESSES.
(a) Prior to the Closing Date, unless Shoney's has been
notified at least 5 business days in advance thereof and has not objected
in writing thereto, Enterprises shall and shall cause each of TPIR, TPIE,
TPII and each TPIR Subsidiary to:
(1) subject to SECTION 9.2.3(c) hereof, use their
reasonable efforts, and shall cause each of their respective
Subsidiaries and Affiliates to use their reasonable efforts, to
preserve intact their business organizations and goodwill and
keep available the services of their respective officers and
employees;
(2) confer on a regular basis with one or more
representatives of Shoney's to report operational matters of
materiality and, subject to SECTION 7.1, any proposals to engage
in material transactions;
(3) promptly notify Shoney's of any material
emergency or other material change in the condition (financial or
otherwise), business, properties, assets, liabilities, prospects
or the normal course of their businesses or in the operation of
their properties, any material governmental complaints,
investigations, or hearings (or communications indicating that
the same may be contemplated), or the breach in any material
respect of any representation or warranty contained herein;
(4) promptly deliver to Shoney's true and correct
copies of any report, statement or schedule filed with the SEC
subsequent to the date of this Agreement;
(5) conduct operations according to their usual,
regular and ordinary course in substantially the same manner as
heretofore conducted, subject to clause (6) below;
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(6) not acquire, enter into an option to acquire or
lease or exercise an option or contract to acquire or lease
additional real property, incur additional indebtedness for
borrowed money (other than under the TPIR Bank Debt to fund
operations in the ordinary course of business consistent with
past practice), encumber assets or commence construction of, or
enter into any agreement or commitment to develop or construct,
restaurant or other real estate projects;
(7) maintain in the ordinary course of business,
their respective properties in their current condition of repair,
ordinary wear and tear excepted, and assure that each of the
Company Properties, at the Closing Date, has sufficient FF&E and
Inventories to enable it to be operated in the usual and ordinary
course of business;
(8) maintain their books of account and records
relating to their respective operations in the usual, regular and
ordinary manner on a basis consistent with past practices and not
to make any changes in their accounting methods, principles or
practices, except as may be required by generally accepted
accounting principles;
(9) pay when due and payable all Taxes and
assessments relating to the operation of TPIR, TPIE, TPII and
each TPIR Subsidiary during taxable periods ending on or before
such Closing Date and file all Tax Returns relating to such Taxes
and assessments as required by SECTION 8.7;
(10) except in the ordinary course of business in
accordance with past practice, not withdraw, settle or otherwise
compromise any protest or reduction proceeding affecting real
estate or personal property Taxes assessed against any assets of
TPIR, TPIE, TPII or any TPIR Subsidiary for any fiscal period in
which the Closing Date is to occur or any subsequent fiscal
period;
(11) not amend their respective Articles of
Incorporation or Bylaws;
(12) not: (i) issue, transfer from treasury or
allocate any additional shares of capital stock (except pursuant
to the Enterprises Stock Purchase Plan, the Enterprises 401(k)
Plan, the exercise of options granted under one of the
Enterprises Stock Option Plans, the exercise of the Enterprises
Warrants or the conversion of any of the Public Debentures or the
Private Debentures), effect any stock split, reverse stock split,
stock dividend, recapitalization or other similar transaction;
(ii) grant, confer or award any option, warrant, conversion right
or other right not existing on the date hereof to acquire any
shares of the capital stock of TPIR, TPIE, TPII or any TPIR
Subsidiary; (iii) increase any compensation (except as may be
required by an applicable contract) or enter into or amend any
employment agreement with any of their respective present or
future officers or directors; (iv) adopt any new employee benefit
plan (including any stock option, stock benefit or stock purchase
plan, supplemental employee retirement plan or severance
arrangement), amend any existing employee benefit plan, program
or practice or the individual benefits provided to any individual
employee in any material respect,
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except for changes which are less favorable to participants in
such plans or terminate any existing employee benefit plan; or
(v) increase discretionary matching under any 401(k) Plan;
(13) not declare, set aside or pay any dividend or
make any other distribution or payment with respect to any shares
of the capital stock of TPIR, TPIE, TPII or any TPIR Subsidiary,
or make any commitment for any such action; PROVIDED, HOWEVER,
that, notwithstanding the foregoing, there is hereby permitted
the transfer of funds from any of TPIR, TPIE, TPII or the TPIR
Subsidiaries to Enterprises sufficient to satisfy when due all
payment obligations of Enterprises or TPIR in respect of the
Public Debentures (including, without limitation, the payment of
principal, premium, if any, interest or the Repurchase Price or
the Redemption Price (as such terms are defined in the Public
Indenture) or the Private Debentures (including, without
limitation, the payment of principal, premium, if any and
interest);
(14) not sell, lease or otherwise dispose of: (i) any
Company Property; or (ii) except in the ordinary course of
business, any assets with a value greater than $100,000;
(15) not make any loans, advances or capital
contributions to, or investments in, any other person or entity
(other than intercompany loans, advances, contributions or
investments in the ordinary course of business consistent with
past practice and as approved by the Operating Committee);
(16) except as set forth in SCHEDULE 7.2, not pay,
discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in
the ordinary course of business consistent with past practice or
in accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, the most recent
financial statements (or the notes thereto) included in the
Company Financial Information or incurred in the ordinary course
of business consistent with past practice;
(17) not enter into any commitment (or series of
related commitments) to purchase goods or services extending
beyond July 31, 1996 which may result in total payments by or
liability to it in excess of $100,000 (excluding commitments:
(a) to purchase food products in quantities that are necessary
to meet TPIR's anticipated needs to participate in product
promotions as part of the Shoney's system; or (b) that are
approved in writing by Shoney's);
(18) not enter into any commitment with any officer,
director or consultant of Enterprises, any of the Remaining
Subsidiaries, TPIR, TPIE, TPII, any TPIR Subsidiary or any of
their respective Affiliates;
(19) (i) not use, transport, store, dispose of or in
any manner deal with Hazardous Materials, except in compliance in
all material respects with all applicable
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Environmental Laws; (ii) comply in all material respects with
all applicable Environmental Laws, and to keep all Company
Properties free and clear of any liens imposed pursuant to
such Environmental Laws; and (iii) not install, or permit to
be installed, Asbestos on any Company Property;
(20) notify Shoney's and TPAC in writing as soon as
possible upon receipt of any notices from any persons, entities
or Governmental Entities pertaining to Hazardous Materials on,
from or affecting any Company Property or to alleged illegal
activities or conditions at any of the Company Properties or
operations;
(21) not cancel any debts owed to TPIR, TPIE, TPII or
any TPIR Subsidiary other than intercompany receivables due from
Enterprises;
(22) not enter into any contract or agreement of the
type described in SECTION 5.21 or SECTION 5.22 (except using a
$100,000 threshold for contracts or agreements which would
otherwise be subject to a $50,000 threshold);
(23) not pay the Specified Wind-up Expenses in an
amount in excess of the aggregate amount set forth in the
Enterprises Disclosure Letter;
(24) except pursuant to Shoney's marketing plans or
Enterprises' marketing plans described on SCHEDULE 7.2(a)(24) to
the Enterprises Disclosure Letter, not issue any certificates or
coupons that would entitle the bearer thereof to receive a
reduction in the price of food and/or beverages consumed at any
of the Restaurants or to receive such food and/or beverages free
of charge;
(25) not invest cash in any investment other than a
Cash Equivalent;
(26) not allow Accounts Receivable to exceed
$1,500,000;
(27) prior to the Closing Date, to record on their
books appropriate charges in accordance with GAAP with respect to
any Inventories that are obsolete, spoiled or unusable and with
respect to any Accounts Receivable that are not anticipated to be
collected; and
(28) not do any act, omit to do any act or permit any
act within the control of TPIR, TPIE, TPII or any TPIR Subsidiary
which will cause a breach of any representation, warranty,
covenant or agreement contained in this Agreement.
(b) If Shoney's is notified of a proposed action under
SECTION 7.2(a) and objects in writing within the time period set forth,
the matter shall be resolved by the Operating Committee.
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(c) Prior to the Closing Date, unless Enterprises has
consented in writing thereto, Shoney's:
(1) shall use its reasonable efforts, and shall cause
each of its respective Subsidiaries and Affiliates to use their
reasonable efforts, to preserve intact their business
organizations and goodwill and keep available the services of
their respective officers and employees;
(2) shall promptly notify Enterprises of any material
emergency or other material change in the condition (financial or
otherwise), business, properties, assets, liabilities, prospects
or the normal course of its businesses or in the operation of its
properties, any material governmental complaints, investigations,
or hearings (or communications indicating that the same may be
contemplated), or the breach in any material respect of any
representation or warranty contained herein;
(3) shall promptly deliver to Enterprises true and
correct copies of any report, statement or schedule filed with
the SEC subsequent to the date of this Agreement;
(4) shall not, and shall not permit any of its
Subsidiaries to, amend their respective Articles of Incorporation
or Bylaws; provided that TPAC may amend its Articles of Incorporation
or Bylaws for the sole purpose(s) of changing its name and /or
authorizing the issuance of preferred stock;
(5) Shall not: (i) except pursuant to the exercise
of options, warrants, conversion rights and other contractual
rights existing on the date hereof and disclosed pursuant to this
Agreement, issue any additional shares of Shoney's Common Stock,
effect any stock split, reverse stock split, stock dividend,
recapitalization or other similar transaction; or (ii) grant,
confer or award any option, warrant, conversion right or other
right not existing on the date hereof to acquire any Shoney's
Common Stock, other than (x) options granted pursuant to and in
accordance with Shoney's Stock Plans as in effect on the date
hereof, (y) options, redemption or conversion rights granted in
connection with the acquisition of properties by Shoney's or (z)
shares of Shoney's Common Stock granted pursuant to existing
employee benefit plans of Shoney's;
(6) Shall not: (i) declare, set aside or pay any
dividend or make any other distribution or payment with respect
to the Shoney's Common Stock; or (ii) except in connection with
Shoney's Stock Plans or the use of shares of Shoney's Common
Stock to pay the exercise price or tax withholding in connection
with Shoney's Stock Plans, directly or indirectly redeem,
purchase or otherwise acquire any Shoney's Common Stock or any of
the shares of capital stock of any of its Subsidiaries, or make
any commitment for any such action;
(7) Shall not, and shall not permit any of its
Subsidiaries to, sell, lease or otherwise dispose of any of their
respective properties other than: (i) in the ordinary
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course of business; or (ii) sales, leases or disposals of
assets which are not material, individually or in the
aggregate;
(8) Shall cause TPAC to take all necessary corporate
action to consummate the transactions contemplated hereby;
(9) Shall not, and shall not permit any of its
Subsidiaries to acquire or commit to acquire, from the date of
this Agreement until the Closing Date, more than twenty (20)
restaurants from third parties or make any other material
acquisition; and
(10) Shall not, and shall not permit any of its
Subsidiaries to do any act or permit any act within the control
of Shoney's or any of its Subsidiaries which will cause a breach
of any representation, warranty, covenant or agreement contained
in this Agreement.
(d) On the Closing Date, Shoney's shall cause TPAC to satisfy
or discharge the TPIR Bank Debt and the Private Debentures.
(e) Shoney's shall use its best efforts to satisfy the
conditions set forth in SECTION 9.1.2 (with respect to Shoney's lenders)
and to obtain the commitment letter referenced in SECTION 9.2.10 prior to
April 30, 1996. Upon its receipt, Shoney's shall deliver to Enterprises
a copy of the commitment letter referenced in SECTION 9.2.10.
SECTION 7.3 MEETINGS OF SHAREHOLDERS. Each of Shoney's
and Enterprises will take all action necessary in accordance with
applicable law, the rules and regulations of any national securities
exchange upon which its common stock is listed and its Articles of
Incorporation and Bylaws to convene a meeting of its shareholders as
promptly as practicable to consider and vote upon: (a) in the case of
Shoney's, the approval (separate from the approval of any other
transaction) of this Agreement and the transactions contemplated hereby
(including the issuance of the Exchange Shares); and (b) in the case of
Enterprises, the approval of this Agreement and the transactions
contemplated hereby. The Board of Directors of Shoney's and the Board of
Directors of Enterprises (consistent with their respective fiduciary
obligations) each shall recommend such approval, and Shoney's and
Enterprises each shall take all lawful action to solicit such approval,
including, without limitation, timely mailing the Proxy Statement (as
defined in SECTION 8.1); provided, however, that such recommendation or
solicitation is subject to any action taken by, or upon authority of, the
Board of Directors of Shoney's or the Board of Directors of Enterprises,
as the case may be, in the exercise of its good faith judgment as to its
fiduciary duties to its shareholders imposed by law. Shoney's and
Enterprises shall coordinate and cooperate with respect to the timing of
such meetings and shall use their best efforts to hold such meetings on
the same day. It shall be a condition to the mailing of the Proxy
Statement that: (a) Shoney's shall have received a "comfort" letter from
Deloitte & Touche, LLP, independent public accountants for Enterprises,
dated as of a date within two business days before the date on which the
Registration Statement (as defined in SECTION 8.1) shall become effective,
with respect to the financial statements of Enterprises included in the
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Proxy Statement, in form and substance reasonably satisfactory to
Shoney's, and customary in scope and substance for "comfort" letters
delivered by independent public accountants in connection with
registration statements and proxy statements similar to the Registration
Statement and the Proxy Statement; and (b) Enterprises shall have received
a "comfort" letter from Ernst & Young LLP, independent public accountants
for Shoney's, dated as of a date within two business days before the date
on which the Registration Statement shall become effective, with respect
to the financial statements of Shoney's included in the Proxy Statement,
in form and substance reasonably satisfactory to Enterprises, and
customary in scope and substance for "comfort" letters delivered by
independent public accountants in connection with registration statements
and proxy statements similar to the Registration Statement and the Proxy
Statement.
SECTION 7.4 FILINGS; OTHER ACTION. Subject to the terms and
conditions herein provided, Enterprises and Shoney's shall, and shall
cause each of their respective Subsidiaries: (a) to the extent required,
promptly make their respective filings and thereafter make any other
required submissions under the HSR Act with respect to this Agreement and
the transactions contemplated by this Agreement; (b) use all reasonable
efforts to cooperate with one another in: (1) determining which filings
are required to be made prior to the Closing Date with, and which
consents, approvals, permits or authorizations are required to be obtained
prior to the Closing Date from any Governmental Entities in connection
with the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby; and (2) timely making all such
filings and timely seeking all such consents, approvals, permits or
authorizations ((a) and (b) together, collectively, "Regulatory Filings");
(c) use their best efforts to obtain in writing any consents and financing
commitments required from third parties in form reasonably satisfactory
to Enterprises and Shoney's necessary to effectuate the transactions
contemplated by this Agreement, including, without limitations, the
consent or approval of their respective lenders; and (d) use all
reasonable efforts to take, or cause to be taken, all other action and do,
or cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by this
Agreement, including, without limitation, satisfaction of the conditions
set forth in ARTICLE IX below. If, at any time after the Closing Date,
any further action is necessary or desirable to carry out the purpose of
this Agreement, the proper officers and directors of Shoney's and
Enterprises shall take all such necessary action.
SECTION 7.5 DUE DILIGENCE; INSPECTION OF RECORDS AND
PROPERTIES. From the date hereof to the Closing Date, each of
Enterprises and Shoney's shall allow all designated officers, employees,
attorneys, accountants and other representatives of the other access at
all reasonable times to all its properties, records, files,
correspondence, audits (including, without limitation, workpapers of
independent auditors), as well as to all information relating to
commitments, contracts, titles and financial position, or otherwise
pertaining to the business and affairs, of Enterprises and Shoney's and
their respective Subsidiaries as such other party may reasonably request.
Each party will hold all information about the other party obtained by
them in connection with the transactions contemplated hereby which is non-
public in confidence to the extent required by, and in accordance with,
the provisions relating to the confidentiality of information contained
in the letters, each dated July 26, 1995, between Enterprises and Shoney's
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(the "Confidentiality Agreements"), as if herein stated in the first
instance, provided that any provisions therein relating to termination
shall be extended for six months after the original termination date.
SECTION 7.6 LISTING APPLICATION. Shoney's shall promptly prepare and
submit to the NYSE a listing application covering the Exchange Shares, and
shall use its reasonable efforts to obtain, prior to the Closing Date,
approval for the listing of such securities, subject to official notice of
issuance.
SECTION 7.7 LEGAL CONDITIONS TO EXCHANGE. Subject to the
terms and conditions herein provided, each of Enterprises and Shoney's
shall, and shall cause each of their respective Subsidiaries to, use all
reasonable efforts: (a) to take, or cause to be taken, all actions
necessary to comply promptly with all legal requirements which may be
imposed on such party or its Subsidiaries with respect to the Agreement
and to consummate the transactions contemplated hereby, subject to the
appropriate votes of its shareholders described herein; and (b) to obtain
(and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and/or any other public or private third party which is required
to be obtained or made by such party or any of its Subsidiaries in
connection with this Agreement and the transactions contemplated by this
Agreement. Each of Enterprises and Shoney's will promptly cooperate with
and furnish information to the other in connection with any such burden
suffered by, or requirement imposed upon, any of them or any of their
Subsidiaries in connection with the foregoing.
SECTION 7.8 SUPPLEMENTAL DISCLOSURE SCHEDULES. Each of
Shoney's and Enterprises shall supplement the Schedules to this Agreement,
the Enterprises Disclosure Letter and the Shoney's Disclosure Letter as
of the Closing Date to the extent necessary to reflect matters permitted
by, or consented to by, the other party under this Agreement. In
addition, from time to time prior to the Closing Date, each of Shoney's
and Enterprises will promptly deliver to the other party such amendments
or supplements to the Schedules to this Agreement, the Enterprises
Disclosure Letter and the Shoney's Disclosure Letter as may be necessary
to make the Schedules accurate and complete in all material respects as
of the Closing Date; provided, however, that no such disclosure shall have
any effect for the purpose of determining the satisfaction of the
conditions set forth in Article IX of this Agreement.
SECTION 7.9 DISSOLUTION. From and after the Closing Date,
Enterprises will not engage in any business other than with respect to
winding up the affairs of Enterprises and the Remaining Subsidiaries, will
promptly liquidate and dissolve as a corporation, and will distribute the
Exchange Shares to its shareholders in complete cancellation and
redemption of their shares of Enterprises Common Stock, except that
Enterprises shall not distribute any fractional interests in shares of
Shoney's Common Stock but shall arrange for the orderly sale, for the
account of its shareholders, of a sufficient number of Exchange Shares to
enable it to distribute cash in lieu of fractional interests to which its
shareholders would otherwise be entitled.
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SECTION 7.10 COBRA BENEFITS. Following the Closing Date, TPAC
shall offer the Enterprises employees listed on Schedule 7.10 of the
Enterprises Disclosure Letter benefits required by COBRA.
SECTION 7.11 CERTAIN NOTICES. From and after the Closing Date,
TPAC shall promptly notify Enterprises of all exercises of TPAC Options
and TPAC Warrants and all conversions of the Public Debentures or Private
Debentures.
SECTION 7.12 FURTHER ACTION. Each party hereto shall, subject
to the fulfillment at or before the Closing Date of each of the conditions
of performance set forth herein or the waiver thereof, perform such
further acts and execute such documents as may reasonably be required to
effect the transactions contemplated by this Agreement.
ARTICLE VIII
ADDITIONAL AGREEMENTS
SECTION 8.1 PREPARATION OF REGISTRATION AND PROXY STATEMENTS.
Shoney's and Enterprises shall cooperate and promptly prepare and
Shoney's shall file with the SEC as soon as practicable a Registration
Statement on Form S-4 (the "Registration Statement") under the Securities
Act, with respect to the issuance and distribution of the Exchange Shares,
a portion of which Registration Statement shall also serve as the joint
proxy statement with respect to the meetings of the shareholders of
Enterprises and of Shoney's in connection with this Agreement and the
transactions contemplated by this Agreement (the "Proxy Statement").
Shoney's and Enterprises will cause the Proxy Statement and the
Registration Statement to comply as to form in all material respects with
the applicable provisions of the Securities Act and the Exchange Act.
Shoney's shall use all reasonable efforts, and Enterprises will cooperate
with Shoney's, to have the Registration Statement declared effective by
the SEC as promptly as practicable. Shoney's shall use its best efforts
to obtain, prior to the effective date of the Registration Statement, all
necessary state securities law or "Blue Sky" permits or approvals required
to carry out the transactions contemplated by this Agreement. Shoney's
agrees that the Proxy Statement and each amendment or supplement thereto
at the time of mailing thereof and at the time of the respective meetings
of shareholders of Shoney's and Enterprises, or in the case of the
Registration Statement and each amendment or supplement thereto, at the
time it is filed or becomes effective, will not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading; provided,
however, that the foregoing shall not apply to the extent that any such
untrue statement of a material fact or omission to state a material fact
was made by Shoney's in reliance upon and in conformity with written
information concerning Enterprises or any of Enterprises Subsidiaries
(including, without limitation, TPIR, TPIE, TPII or any of the TPIR
Subsidiaries) furnished to Shoney's by Enterprises specifically for use
in the Proxy Statement. Shoney's will advise Enterprises, promptly after
it receives notice thereof, of the time when the Registration Statement
has become
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effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the
Exchange Shares for offering or sale in any jurisdiction, or any request
by the SEC for amendment of the Proxy Statement or the Registration
Statement or comments thereon and responses thereto or requests by the SEC
for additional information.
SECTION 8.2 AFFILIATES OF ENTERPRISES.
(a) At least 30 days prior to the Closing Date, Enterprises shall
deliver to Shoney's a list of names and addresses of those persons who
were, in Enterprises' reasonable judgment, at the record date for its
shareholders' meeting to approve this Agreement and the transactions
contemplated by this Agreement, "affiliates" (each such person a "Rule 145
Affiliate") of Enterprises within the meaning of Rule 145 of the rules and
regulations promulgated under the Securities Act ("Rule 145").
Enterprises shall provide Shoney's such information and documents as
Shoney's shall reasonably request for purposes of reviewing such list.
Enterprises shall use all reasonable efforts to deliver or cause to be
delivered to Shoney's, prior to the Closing Date, from each of the Rule
145 Affiliates of Enterprises identified in the foregoing list, an
Affiliate Letter in the form attached hereto as EXHIBIT 8.2. Shoney's
shall be entitled to place legends as specified in such Affiliate Letters
on the certificates evidencing any Shoney's Common Stock to be distributed
by Enterprises to such Rule 145 Affiliates, and to issue appropriate stop
transfer instructions to the transfer agent for the Shoney's Common Stock,
consistent with the terms of such Letters.
(b) Shoney's shall file the reports required to be filed by it
under the Exchange Act and the rules and regulations adopted by the SEC
thereunder, and it will take such further action as any Rule 145 Affiliate
of Enterprises may reasonably request, all to the extent required from
time to time to enable such Rule 145 Affiliate to sell Shoney's Common
Stock received by Enterprises pursuant to the transactions contemplated
by this Agreement and thereafter distributed to such Rule 145 Affiliate
without registration under the Securities Act pursuant to: (1) Rule
145(d)(1) under the Securities Act, as such Rule may be amended from time
to time; or (2) any successor rule or regulation hereafter adopted by the
SEC.
SECTION 8.3 EXPENSES; BREAK-UP FEE.
(a) If the transactions contemplated by this Agreement are
not consummated or this Agreement is terminated by either Enterprises or
Shoney's pursuant to Section 10.1 (other than a termination pursuant to
Section 10.1 (b)), all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense, except that (x) expenses incurred in
connection with filing, printing and mailing the Proxy Statement and the
Registration Statement, (y) expenses incurred in connection with the
listing of the Exchange Shares on the NYSE, including all fees paid to the
NYSE and (z) the filing fee associated with the filing under the HSR Act
shall be shared equally by Shoney's and Enterprises. If this Agreement
is terminated pursuant to Section 10.1(b) the breaching party shall be
liable to the terminating party for the costs and expenses of the
terminating party.
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(b) If this Agreement is terminated in accordance with
Section 10.1(f) or 10.1(g), Enterprises shall forthwith pay to Shoney's
(within five (5) days of the date of termination of this Agreement) a
break-up fee in the amount of One Million Dollars ($1,000,000) in
immediately available funds.
(c) If this Agreement is terminated in accordance with
Section 10.1(e) by reason of the failure of Enterprises' shareholders to
approve the matters to be submitted for their approval pursuant to this
Agreement after any of the following Third Party Acquisition Events has
occurred, then in such event Enterprises shall forthwith pay to Shoney's
(within five (5) days of the date of termination of this Agreement) a
break-up fee in the amount of One Million Dollars ($1,000,000) in
immediately available funds.
(d) For purposes hereof, a "Third Party Acquisition Event"
means:
(1) any Person as defined in Section 3(a)(9) and 13(d)(3) of
the Exchange Act (other than Shoney's or its affiliates)
shall have commenced (as such term is defined in Rule
14d-2 under the Securities Exchange Act), after the date
hereof, a tender offer or exchange offer to purchase
common stock of Enterprises such that, upon consummation
of such offer, such Person could own or control fifty
percent (50%) or more of Enterprises' outstanding common
stock; or
(2) any Person (other than Shoney's or its Affiliates) shall,
after the date hereof, have publicly announced a
proposal: (i) to consummate a bonafide Acquisition
Proposal with Enterprises or; (ii) to make an offer
described in clause (d)(1) above; or
(3) any Person (other than Shoney's or its Affiliates) shall,
after the date hereof, with respect to common stock of
Enterprises, have solicited proxies in connection with
any Acquisition Proposal or an effort to obtain the
control of the Board of Directors of Enterprises, or
executed any written consent or become a participant in
any such solicitations (as such term is defined in
Regulation 14A under the Exchange Act); or
(4) any Person (other than Shoney's or its Affiliates), after
the date hereof, shall have acquired beneficial ownership
(as such term is defined in Rule 13d-3 under the Exchange
Act) or the right to acquire beneficial ownership of, or
a new group has been formed which beneficially owns or
has the right to acquire beneficial ownership of, twenty
percent (20%) or more of the outstanding common stock of
Enterprises.
(e) Enterprises acknowledges that the provisions for the
payment of a break-up fee contained in this SECTION 8.3 are an integral
part of the transactions contemplated by this Agreement and that, without
these provisions, Shoney's would not have entered into this Agreement.
Accordingly, if a break-up fee shall become due and payable by
Enterprises, and Enterprises shall fail to pay such amount when due
pursuant to this Section, and, in order to
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obtain such payment, suit is commenced which results in a judgment
against Enterprises therefor, Enterprises shall pay Shoney's reasonable
costs and expenses (including reasonable attorneys' fees) in connection
with such suit, together with interest computed on any amounts determined
to be due pursuant to this Section (computed from the date upon which such
amounts were due and payable pursuant to this Section) and such costs
(computed from the dates incurred) at the prime rate of interest, announced
from time to time by NationsBank of Tennessee, N.A. The obligations of
Enterprises under this SECTION 8.3 shall survive any termination of this
Agreement.
SECTION 8.4 INDEMNITIES RELATING TO DISCLOSURES.
(a) Until the Closing Date Enterprises hereby indemnifies and
holds harmless Shoney's and its directors, officers, advisors and agents
and Shoney's hereby indemnifies and holds harmless Enterprises and its
directors, officers, advisors and agents, from and against any loss,
claim, damage, cost, liability, obligation or expense (including
reasonable attorney's fees and costs of investigation) to which any
indemnified party may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such loss, claim, damage, cost,
liability, obligation or expense or actions in respect thereof arises out
of or is based upon any untrue statement or alleged untrue statement of
a material fact relating to such indemnifying party and contained in the
Registration Statement or the Proxy Statement or arises out of or is based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
with respect to such indemnifying party not misleading.
(b)(1) Shoney's and TPAC agree that, until six years from the
Closing Date, the Charter and By-laws of TPIR, TPIE, TPII and each of the
TPIR Subsidiaries shall not be amended to reduce or limit the rights of
indemnity afforded to the present and former directors and officers of
TPIR, TPIE, TPII and each of the TPIR Subsidiaries thereunder or as to the
ability of TPIR, TPIE, TPII and each of the TPIR Subsidiaries to indemnify
such persons, or to hinder, delay or make more difficult the exercise of
such rights of indemnity or the ability to indemnify, or to reduce any
limitations therein on the liability of directors. Shoney's and TPAC
agree that they shall cause each of TPIR, TPIE, TPII and each of the TPIR
Subsidiaries to at all times exercise the powers granted to them by their
Charters, their By-laws, and by applicable law to indemnify to the fullest
extent possible present or former directors, officers, employees and
agents of TPIR, TPIE, TPII and each of the TPIR Subsidiaries, as the case
may be, against claims made against them arising from their service in
such capacities.
(2) Should any claim or claims be made against any present or
former director, officer, employee or agent of TPIR, TPIE, TPII or any
TPIR Subsidiary arising from his services as such, within six years of the
Closing Date, the provisions of this SECTION 8.4(b) respecting the Charter
and the By-laws of TPIR, TPIE and TPII and the TPIR Subsidiaries shall
continue in effect with respect to the Company in question until the final
disposition of all such claims.
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(3) The provisions of this SECTION 8.4(b) are intended to be for
the benefit of, and shall be enforceable by, each party entitled to
indemnification hereunder, his heirs and his representatives.
SECTION 8.5 EXCHANGE ACT REPORTS. For a period of three
years after the Closing Date, Shoney's shall use its best efforts to
comply with the current public information requirements of SEC Rule
144(c).
SECTION 8.6 INDEMNIFICATION.
(a) BY ENTERPRISES. Enterprises will indemnify, defend and
hold Shoney's, TPIR, TPIE, TPII, and each of the TPIR Subsidiaries
(collectively, the "Shoney's Parties") harmless after the Closing Date
from and against any claims or costs (including, without limitation,
reasonable attorneys' fees and court costs and costs of investigation),
losses, damages, liabilities or expenses (collectively "Costs") incurred
by the Shoney's Parties (whether as a result of a third-party claim, or
otherwise) as a result of:
(1) the nonfulfillment of any covenant, agreement or
obligation to be performed by Enterprises under or pursuant to
this Agreement or any of the other agreements contemplated by
this Agreement;
(2) any claim for brokerage, finders' fees or other
commissions relative to this Agreement or any of the other
agreements contemplated by this Agreement asserted by or on
behalf of any broker or finder claiming to have been retained by
Enterprises or to have rendered services on Enterprises' behalf;
(3) any Excess Repair and Maintenance Expenses and any
obligations or expenses arising from the Marlin Claims that are
not Retained Repair and Maintenance Expenses to the extent any
such expenses or obligations are not satisfied in full from cash
available for Specified Wind-Up Expenses pursuant to Section 2.2
hereof after all other Specified Wind-Up Expenses have been paid
or discharged; or
(4) any liability of Enterprises for taxes, penalties or
interest to the City of New York in excess of $150,000 for the
periods 1987 through 1989, whether such liability arises from
assessment, settlement, or otherwise.
(b) BY TPAC. Shoney's shall (or at its option shall cause TPAC to)
indemnify, defend and hold Enterprises harmless on and after the Closing
Date from and against all Costs incurred by Enterprises (whether as a
result of a third-party claim, or otherwise) as a result of:
(1) the nonfulfillment of any covenant, agreement or
obligation to be performed by Shoney's under or pursuant to this
Agreement or any of the other agreements contemplated by this
Agreement;
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(2) any claim for brokerage, finders' fees or other
commissions relative to this Agreement or any of the other
agreements contemplated by this Agreement asserted by or on
behalf of any broker or finder claiming to have been retained by
Shoney's or to have rendered services on Shoney's behalf; or
(3) any claim asserted against Enterprises arising
out of or related to any liability expressly assumed by TPAC
pursuant to SECTION 3.4.
(c) PARTICIPATION IN THIRD PARTY CLAIMS. Should any claim be
made by a person not a party to this Agreement with respect to any matter
to which the foregoing indemnity relates, the indemnified party shall
promptly notify the indemnifying party thereof. If the indemnified party
fails to promptly notify the indemnifying party, the obligation of the
indemnifying party shall be reduced by the amount of damages actually
suffered as a result of such late notice. The indemnified party may make
settlement of a claim and such settlement shall be binding on both
parties hereto for the purposes of this SECTION 8.6 if, not less than
thirty (30) days prior to such settlement, the indemnified party delivers
to the indemnifying party written notice of its intent to settle such
claim, which notice shall set forth the terms of the proposed settlement;
provided, however, that if within such thirty (30) day period the
indemnifying party shall have requested the indemnified party to contest
any such claim at the expense of the indemnifying party, the indemnified
party shall promptly comply, and the indemnifying party shall have the
right to direct the defense of such claim or any litigation based thereon
at its own expense through counsel reasonably acceptable to the
indemnified party. The indemnified party shall also have the right to
participate in the settlement of any such claim or in any such litigation
so long as its participation is at its own expense and with the
understanding that the indemnifying party may settle in its own
discretion. Any payment or settlement made by the indemnifying party in
such contest, together with the total expense thereof, shall be binding
on the indemnified party and the indemnifying party for the purposes only
of this SECTION 8.6. Notwithstanding anything herein to the contrary, an
indemnifying party shall not, without the prior written consent of the
indemnified party, settle any claim in any manner which adversely affects
the indemnified party. In addition to the foregoing, the indemnifying
party shall assume the defense of any claim, action or proceeding within
the scope of the foregoing indemnities upon the written request of the
indemnified party.
SECTION 8.7 TAX MATTERS.
(a) Enterprises shall cause to be prepared and filed any Tax
Return relating to TPIR, TPII, TPIE and each of the TPIR Subsidiaries for
any taxable period ending on or before the Closing Date. Any such Tax
Return shall be prepared on a basis consistent with those prepared for
prior Tax years unless a different treatment of any item is required by
an intervening change in law. Shoney's and TPAC shall prepare or cause
TPIR, TPII, TPIE and each of the TPIR Subsidiaries to prepare any Tax
Return relating to any of TPIR, TPII, TPIE or the TPIR Subsidiaries for
any taxable period ending after the Closing Date.
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(b) All Tax Returns filed by any of the parties that address
or include any period that includes the Closing Date shall record any
matter arising out of or related to the transactions contemplated by this
Agreement consistent with such transactions qualifying as a tax free
reorganization under Section 368(a)(1)(C) of the Code.
(c) The parties agree that net operating losses currently
existing in any of Enterprises or its Subsidiaries may be utilized in
offsetting any gain arising out of the settlement of the Civil Action.
(d) Any refund or credit (including any interest paid or
credited with respect thereto) received by Shoney's, TPAC, TPIR, TPII,
TPIE or any of the TPIR Subsidiaries of Taxes relating to taxable periods
ending on or before the Closing Date shall be the sole property of
Shoney's, TPAC, TPIR, TPII, TPIE or one or more of the TPIR Subsidiaries,
as the case may be, and neither Enterprises nor any of the Remaining
Subsidiaries shall have any interest in or right to all or any portion of
any such refund or credit.
ARTICLE IX
CONDITIONS PRECEDENT
SECTION 9.1 MUTUAL CONDITIONS TO CLOSING. The respective
obligations of each party to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction of the following
conditions:
SECTION 9.1.1 SHAREHOLDER APPROVAL. This Agreement shall have
been approved and adopted by the affirmative vote of the holders of a
majority of the outstanding shares of Shoney's Common Stock entitled to
vote thereon and the affirmative vote of a majority of the votes cast by
holders of Enterprises Common Stock entitled to vote thereon.
SECTION 9.1.2 OTHER APPROVALS. All authorizations, consents
or approvals of third parties, the failure of which to obtain would have
a Material Adverse Effect on Enterprises or on Shoney's (which shall
include, without limitation, the approval of Shoney's lenders), as the
case may be, shall have been obtained without either the payment of any
fee or the amendment of any agreement.
SECTION 9.1.3 REGISTRATION STATEMENT. The Registration
Statement shall have become effective under the Securities Act and shall
not be the subject of any stop order or proceedings making a stop order.
Shoney's shall have received all state securities laws or "Blue Sky"
permits and other authorizations necessary to issue the Exchange Shares
and otherwise consummate the transactions contemplated by this Agreement.
SECTION 9.1.4 STOCK EXCHANGE LISTINGS. The Exchange Shares
shall have been authorized for listing on the NYSE, subject to official
notice of issuance.
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SECTION 9.1.5 NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No
temporary restraining order, 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 transactions
contemplated by this Agreement shall be in effect, nor shall any
proceeding by any Governmental Entity seeking any of the foregoing which
has a reasonable likelihood of success be pending. There shall not be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the transactions contemplated by this
Agreement, which makes their consummation illegal.
SECTION 9.1.6 HART-SCOTT-RODINO WAITING PERIOD EXPIRED. The
required waiting periods under the HSR Act have either expired or been
terminated by the Federal Trade Commission and the Antitrust Division of
the United States Department of Justice.
SECTION 9.1.7 DISSENTER'S RIGHTS. No holder of any of the
outstanding shares of either Enterprises Common Stock or Shoney's Common
Stock shall be determined by a court of competent jurisdiction to have
been entitled to dissent from the transactions contemplated by this
Agreement or to demand payment for his or her shares of Enterprises Common
Stock if the transactions contemplated by this Agreement are effectuated.
SECTION 9.1.8 OPINIONS OF FINANCIAL ADVISORS. Each of the
Enterprises Financial Advisor and the Shoney's Financial Advisor have
delivered written opinions, dated the date of the Proxy Statement and
included in the Proxy Statement and in form and substance reasonably
satisfactory to the parties, that, in the case of Enterprises, the
consideration to be received by Enterprises in exchange for the properties
being transferred to TPAC, pursuant to the terms and conditions of this
Agreement, is fair to Enterprises' shareholders from a financial point of
view, and, in the case of Shoney's, that the consideration to be paid by
Shoney's and/or TPAC in exchange for the properties being transferred to
TPAC, pursuant to the terms and conditions of this Agreement, is fair to
Shoney's shareholders from a financial point of view.
SECTION 9.1.9 SUPPLEMENTAL INDENTURES. The obligations of
Enterprises under the Public Debentures shall have been assumed by TPAC
in accordance with their terms, and a supplemental indenture shall have
been entered into by TPAC with respect to the Public Debentures and
Shoney's and/or TPAC shall have received all authorizations necessary
under the Securities Laws to enter into and perform such supplemental
indenture.
SECTION 9.1.10 RECEIPT OF CIVIL ACTION PROCEEDS. Enterprises and/or
one of its Affiliates shall have received Net Proceeds from the Civil
Action in an amount not less than $17,500,000.
SECTION 9.2 CONDITIONS TO OBLIGATIONS OF SHONEY'S AND TPAC.
The obligations of Shoney's and TPAC to effect the transactions
contemplated by this Agreement are subject to the satisfaction of the
following conditions unless waived by Shoney's:
SECTION 9.2.1 REPRESENTATIONS AND WARRANTIES.
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(a) Each of the representations and warranties of Enterprises set
forth in SECTION 5.1 through SECTION 5.9 shall be true and correct on the
Closing Date.
(b) Each of the representations and warranties of Enterprises
(other than those set forth in SECTION 5.1 through SECTION 5.9 and those
relating to TPIR Bank Debt and the Private Debentures) contained herein
shall be true and correct on the Closing Date (without giving effect to
any Material Adverse Effect qualification within any individual
representation or warranty) as though made on and as of the Closing Date,
except when any such breach of a representation or warranty (determined
without giving effect to any Material Adverse Effect qualification within
any individual representation or warranty), individually or aggregated
with any other breach or breaches of a representation or warranty
(determined without giving effect to any Material Adverse Effect
qualification within any individual representation or warranty), would not
have a Material Adverse Effect on TPIR, TPIE, TPII and the TPIR
Subsidiaries, taken as a whole.
SECTION 9.2.2 PERFORMANCE OF OBLIGATIONS OF ENTERPRISES.
Enterprises shall have performed in all material respects all obligations
required to be performed by it hereunder at or prior to the Closing Date,
and Shoney's shall have received a certificate signed on behalf of
Enterprises by the Chief Executive Officer and the Chief Financial Officer
of Enterprises to such effect.
SECTION 9.2.3 DELIVERIES. Shoney's shall have received the
following:
(a) A stock certificate or stock certificates representing
all of the issued and outstanding shares of TPIR, TPIE, TPII, registered
in the name of Enterprises and duly endorsed in blank or with executed
stock powers or assignments attached, in proper form for transfer and/or
cancellation;
(b) The stock certificates representing all of the issued and
outstanding shares of each TPIR Subsidiary, registered in the name of
TPIR;
(c) Written resignations of all officers and directors of
TPIR, TPIE, TPII and each TPIR Subsidiary effective as of the Closing Date
(which resignations shall not affect or impair any, and shall be without
prejudice to, contractual rights of such officers or directors);
(d) The original minute books and stock transfer records of
each of TPIR, TPIE, TPII and each of the TPIR Subsidiaries;
(e) Copies of the charter and bylaws of Enterprises and of
TPIR, TPIE, TPII and of resolutions adopted by the boards of directors and
shareholders of Enterprises authorizing and approving the execution and
performance of this Agreement and the agreements contemplated by this
Agreement, all as certified by appropriate officers of the respective
corporation as of the Closing Date;
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(f) A certificate as to the incumbency of each person executing
this Agreement and the other agreements contemplated by this Agreement
on behalf of Enterprises;
(g) A Certificate of Existence with respect to Enterprises
dated not more than seven (7) days prior to the Closing Date issued by the
New Jersey Secretary of State and certificates of corporate good standing
(or equivalent) with respect to Enterprises dated not more than seven (7)
days prior to the Closing Date issued by the appropriate officers of the
States of New York, Florida and Hawaii;
(h) A Certificate of Existence with respect to TPIR dated not
more than seven (7) days prior to the Closing Date issued by the Tennessee
Secretary of State and certificates of corporate good standing (or
equivalent) with respect to TPIR dated not more than seven (7) days prior
to the Closing Date issued by the appropriate officers of the States of
Alabama, Arizona, Arkansas, Florida, Georgia, Louisiana, Michigan,
Mississippi, North Carolina, South Carolina and Texas;
(i) A Certificate of Existence with respect to TPIE dated not
more than seven (7) days prior to the Closing Date issued by the Delaware
Secretary of State and certificates of corporate good standing (or
equivalent) with respect to TPIE dated not more than seven (7) days prior
to the Closing Date issued by the appropriate officers of the States of
Florida;
(j) A Certificate of Existence with respect to TPII dated not
more than seven (7) days prior to the Closing Date issued by the Hawaii
Secretary of State;
(k) A Certificate of Existence with respect to TPI West Palm,
Inc. dated not more than seven (7) days prior to the Closing Date issued
by the Tennessee Secretary of State;
(l) A Certificate of Existence with respect to TPI
Transportation, Inc. dated not more than seven (7) days prior to the
Closing Date issued by the Tennessee Secretary of State and certificates
of corporate good standing (or equivalent) with respect to TPIR dated not
more than seven (7) days prior to the Closing Date issued by the
appropriate officers of the States of Alabama, Arizona, Arkansas, Florida,
Georgia, Kentucky, Louisiana, Michigan, Mississippi, Missouri, New Mexico,
North Carolina, Oklahoma, South Carolina and Texas;
(m) A Certificate of Existence with respect to TPI
Commissary, Inc. dated not more than seven (7) days prior to the Closing
Date issued by the Tennessee Secretary of State and certificates of
corporate good standing (or equivalent) with respect to TPIR dated not
more than seven (7) days prior to the Closing Date issued by the
appropriate officers of the States of Alabama, Arizona, Arkansas, Florida,
Georgia, Michigan, Mississippi, North Carolina, South Carolina and Texas;
(n) A Certificate of Existence with respect to The Insurex
Agency, Inc. dated not more than seven (7) days prior to the Closing Date
issued by the Tennessee Secretary of State;
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(o) A Certificate of Existence with respect to Insurex
Benefits Administrations, Inc. dated not more than seven (7) days prior
to the Closing Date issued by the Tennessee Secretary of State;
(p) A certificate signed on behalf of Enterprises by the
Chief Executive Officer of Enterprises and the Chief Financial Officer of
Enterprises certifying satisfaction of the conditions set forth in SECTION
9.2.1; and
(q) A certificate from an officer of Enterprises dated the
Closing Date as to certain factual matters regarding Enterprises (the form
and substance of such certificate to be mutually agreeable with
Enterprises Counsel and Shoney's Counsel) that will support, in part, the
opinion referred to in SECTION 9.2.6 (b).
SECTION 9.2.4 AFFILIATE LETTERS. Shoney's shall have received
an Affiliate Letter in the form attached hereto as Exhibit 8.2 from each
of the Rule 145 Affiliates of Enterprises.
SECTION 9.2.5 COMFORT LETTER. Shoney's shall have received a
"comfort" letter from Deloitte & Touche, LLP dated the Closing Date, with
respect to Enterprises financial information included in the Proxy
Statement.
SECTION 9.2.6 LEGAL OPINIONS.
(a) Shoney's shall have received a legal opinion from
Enterprises Counsel, dated the Closing Date, as to the matters set forth
on SCHEDULE 9.2.6.
(b) Shoney's shall have received the opinion of Shoney's
Counsel, dated the Closing Date, to the effect that the transactions
contemplated by this Agreement constitute a "reorganization" within the
meaning of Sec. 368(a)(1)(C) of the Code.
SECTION 9.2.7 NO MATERIAL ADVERSE CHANGE. There shall be no
Material Adverse Change in any of the Companies or the TPIR Subsidiaries
other than as a result of conditions or events (business or otherwise)
that also affect Shoney's and result in a Material Adverse Effect on
Shoney's.
SECTION 9.2.8 TERMINATION OF MANAGEMENT AGREEMENT. The
Enterprises Management Agreement shall have been terminated and each of
TPIR, TPIE, TPII and the TPIR Subsidiaries shall have been released and
discharged from any liabilities or obligations thereunder.
SECTION 9.2.9 TERMINATION OF ENTERPRISES TAX SHARING
ARRANGEMENT. The Enterprises Tax Sharing Arrangement shall have been
terminated and each of TPIR, TPIE, TPII and the TPIR Subsidiaries shall
have been released and discharged from any liabilities or obligations
thereunder.
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SECTION 9.2.10 FINANCING. Shoney's shall have received a
commitment for additional financing in the amount of $60,000,000 and such
commitment shall have been funded in accordance with its terms.
SECTION 9.2.11 INVENTORIES. On the Closing Date, the
Inventories at the Restaurants will be adequate for the operation of the
Restaurants and shall be at usual and customary levels in accordance with
past practice.
SECTION 9.3 CONDITIONS TO OBLIGATIONS OF ENTERPRISES. The
obligation of Enterprises to effect the transactions contemplated by this
Agreement is subject to the satisfaction of the following conditions
unless waived by Enterprises:
SECTION 9.3.1 REPRESENTATIONS AND WARRANTIES.
(a) Each of the representations and warranties of Shoney's and
TPAC set forth in SECTION 6.1 through SECTION 6.9 shall be true and
correct on the Closing Date.
(b) Each of the representations and warranties of Shoney's and
TPAC (other than those set forth in SECTION 6.1 through SECTION 6.9) set
forth herein shall be true and correct in all material respects as of the
date hereof and as of the Closing Date (without giving effect to any
Material Adverse Effect qualification within any individual representation
or warranty) as though made on and as of the Closing Date, except when any
such breach of a representation or warranty (determined without giving
effect to any material Adverse Effect qualification within any individual
representation or warranty), individually or aggregated with any other
breach or breaches of a representation or warranty (determined without
giving effect to any Material Adverse Effect qualification within any
individual representation or warranty) would not have a Material Adverse
Effect on Shoney's and its Subsidiaries, taken as a whole.
SECTION 9.3.2 PERFORMANCE OF OBLIGATIONS OF SHONEY'S AND TPAC.
Shoney's and TPAC shall have performed in all material respects all
obligations required to be performed by it hereunder at or prior to the
Closing Date, and Enterprises shall have received a certificate signed on
behalf of Shoney's and TPAC by the Chairman and Chief Executive Officer
or President and by the Chief Financial Officer of Shoney's to such
effect.
SECTION 9.3.3 TPIR BANK DEBT AND PRIVATE DEBENTURES. TPAC
shall have satisfied or otherwise discharged Enterprises from any
liabilities associated with or arising out of the TPIR Bank Debt, and TPAC
shall have satisfied all liabilities associated with or arising out of the
Private Debentures.
SECTION 9.3.4 DELIVERIES. Enterprises shall have received the
following:
(a) A stock certificate or stock certificates representing
all of the Exchange Shares issued, registered in the name of Enterprises
(or Enterprises' designees);
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(b) Copies of the charter and bylaws of Shoney's and of TPAC
and of resolutions adopted by the boards of directors and shareholders of
each of Shoney's and TPAC authorizing and approving the execution and
performance of this Agreement and the agreements contemplated by this
Agreement, all as certified by appropriate officers of Shoney's and TPAC
as of the Closing Date;
(c) A certificate as to the incumbency of each person
executing this Agreement and the other agreements contemplated by this
Agreement on behalf of either Shoney's or TPAC;
(d) A Certificate of Existence with respect to Shoney's dated
not more than seven (7) days prior to the Closing Date issued by the
Tennessee Secretary of State;
(e) A Certificate of Existence with respect to TPAC dated not
more than seven (7) days prior to the Closing Date issued by the Tennessee
Secretary of State;
(f) A certificate signed on behalf of Shoney's by the Chief
Executive Officer of Shoney's and the Chief Financial Officer of Shoney's
certifying satisfaction of the conditions set forth in SECTION 9.3.1;
(g) A certificate from an officer of Shoney's dated the
Closing Date as to certain factual matters regarding Shoney's (the form
and substance of such certificate to be mutually agreeable with
Enterprises Counsel and Shoney's Counsel) that will support, in part, the
opinion referred to in SECTION 9.3.5(b); and
(h) An assignment from TPIR of the following: (i) all rights to
prosecute the Marlin Claims, which rights shall include the right to
receive (x) payments from Marlin or it affiliates as a result of the
settlement of the Marlin Claims or a judgment, (y) payments under the
performance bond dated on or about November 15, 1995, with Marlin as
principal and the Aetna Casualty and Surety Company ("Aetna") as surety,
and (z) payments under the labor and material payment bond dated on or
about November 15, 1995, with Marlin as principal and Aetna as surety,
which bonds were provided in connection with the Maintenance Agreement
and (ii) the right to any insurance recovery under any insurance policy
maintained by Marlin or its affiliates, Enterprises or TPIR which covers
liabilities arising in connection with the Marlin Claims.
SECTION 9.3.5 LEGAL OPINIONS.
(a) Enterprises shall have received the opinion of Shoney's
Counsel, dated the Closing Date, as to the matters set forth on SCHEDULE
9.3.3.
(b) Enterprises shall have received the opinion of
Enterprises' Counsel, dated the Closing Date, to the effect that the
transactions contemplated by this Agreement constitute a "reorganization"
within the meaning of Sec. 368(a)(1)(C) of the Code.
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SECTION 9.3.6 COMFORT LETTER. Enterprises shall have received
a "comfort" letter from Ernst & Young, LLP dated the Closing Date, with
respect to the Shoney's financial statements included in the Proxy
Statement.
SECTION 9.3.7 NO MATERIAL ADVERSE CHANGE. There shall be no
Material Adverse Change in Shoney's other than as a result of conditions
or events (business or otherwise) that also affect Enterprises and result
in a Material Adverse Effect on Enterprises.
ARTICLE X
TERMINATION AND AMENDMENT
SECTION 10.1 TERMINATION. This Agreement may be terminated
at any time prior to the Closing Date, whether before or after its
approval by the shareholders of Enterprises or Shoney's:
(a) by mutual consent of Shoney's and Enterprises in a
written instrument;
(b) by either Shoney's or Enterprises, if there has been a
breach on the part of the other of one or more representations,
warranties, covenants or agreements set forth in this Agreement, which
breach has not been cured within five (5) business days following receipt
by the breaching party of notice of such breach and that, individually or
in the aggregate, causes or is likely to cause a Material Adverse Effect;
(c) by either Shoney's or Enterprises upon written notice to
the other party if any court or Governmental Entity of competent
jurisdiction shall have issued a final permanent order enjoining or
otherwise prohibiting the consummation of the transactions contemplated
by this Agreement, and in any such case the time for appeal or petition
for reconsideration of such order shall have expired without such appeal
or petition being granted;
(d) by either Shoney's or Enterprises if the transactions
contemplated by this Agreement shall not have been consummated on or
before the Termination Date unless the failure to so consummate by such
time is due to the breach of this Agreement by the party seeking to
terminate;
(e) by either Shoney's or Enterprises if any approval of the
shareholders of either Enterprises or Shoney's required for the
consummation of the transactions contemplated by this Agreement shall not
have been obtained by reason of the failure to obtain the required vote
at a duly held meeting of shareholders or at any adjournment thereof;
(f) by Shoney's, if prior to the Closing Date, the Board of
Directors of Enterprises shall have approved, recommended or endorsed any
Acquisition Proposal other than this Agreement;
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(g) by Enterprises if, prior to the Closing Date, its Board
of Directors, after consultation with its legal counsel and financial
advisors, determines in the good faith exercise of its fiduciary duties
that a bona fide proposal or offer by a third party to consummate an
Acquisition Proposal is in the best interests of its shareholders;
(h) by Enterprises if, prior to April 30, 1996, Shoney's has
failed to satisfy the conditions set forth in SECTION 9.1.2 (with respect
to Shoney's lenders) or to receive the financing commitment referenced in
SECTION 9.2.10; and
(i) by Shoney's if, prior to the Closing Date, Enterprises makes,
commits, agrees to make or otherwise becomes obligated to make any
payments of principal on either the Public Debentures or the Private
Debentures.
SECTION 10.2 EFFECT OF TERMINATION. In the event of
termination of this Agreement by either Enterprises or Shoney's as
provided in Section 10.1, this Agreement shall forthwith become void and
there shall be no liability or obligation on the part of Shoney's or
Enterprises or their respective officers or directors except for the
obligations of the parties with respect to the Confidentiality Agreements
and their covenants contained in Sections 7.8 and 8.3. No termination of
this Agreement shall relieve any person from liability resulting from a
willful breach by a party of any of its representations and warranties set
forth herein if such breach results in a Material Adverse Effect on the
breaching party, or from liability resulting from a willful breach by a
party of any of its covenants or agreements set forth herein.
SECTION 10.3 AMENDMENT. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective Boards
of Directors, at any time before or after approval of the matters
presented in connection with this Agreement by the shareholders of
Enterprises or of Shoney's, but, after any such approval, no amendment
shall be made which by law requires further approval by such shareholders
without such further approval. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties
hereto.
SECTION 10.4 EXTENSION; WAIVER. At any time prior to the
Closing Date, the parties hereto, by action taken or authorized by their
respective Board of Directors, may, to the extent legally allowed, (i)
extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties of the other contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of
the agreements or conditions contained herein. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
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ARTICLE XI
GENERAL PROVISIONS
SECTION 11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
None of the representations and warranties in this Agreement or
in any instrument delivered pursuant to this Agreement shall survive the
Closing Date. No investigation by either Enterprises, Shoney's or TPAC
shall affect the representations and warranties of the other.
SECTION 11.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (with confirmation) or mailed by registered or
certified mail (return receipt requested) upon the date actually delivered
to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) if to Shoney's, to
Shoney's, Inc.
1727 Elm Hill Pike
Nashville, Tennessee 37210
Facsimile No: 615/231-2531
Attention: Chief Financial Officer
with a copy to
Tuke Yopp & Sweeney
Suite 1100
NationsBank Plaza
414 Union Street
Nashville, Tennessee 37219
Facsimile No: 615/313-3310
Attention: Gary M. Brown, Esq.
and
(b) if to Enterprises, to
TPI Enterprises, Inc.
3950 RCA Boulevard, Suite 5001
Palm Beach Gardens, FL 33410
Facsimile No: 407/691-8881
Attention: J. Gary Sharp
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with a copy to
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue, 20th Floor
New York, New York 10022
Facsimile No: 212/758-9526
Attention: Richard A. Goldberg, Esq.
SECTION 11.3 INTERPRETATION. When a reference is made in this
Agreement to Sections or Exhibits, such reference shall be to a Section
or Exhibit to this Agreement unless otherwise indicated. The headings
contained herein 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 "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation." The
phrase "made available" in this Agreement shall mean that the information
referred to has been made available if requested by the party to whom such
information is to be made available. The phrases "the date of this
Agreement," "the date hereof' and terms of similar import, unless the
context otherwise requires, shall be deemed to refer to the date set forth
on the first page of this Agreement. Headings of articles and sections
used herein are used for convenience of reference only and shall not
affect the interpretation of this Agreement.
SECTION 11.4 COUNTERPARTS. This Agreement may be executed in
two or more counterparts, all of which shall be considered one and the
same agreement and shall become effective when two or more counterparts
have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
SECTION 11.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES;
RIGHTS OF OWNERSHIP. This Agreement (including the documents and the
instruments referred to herein) (i) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, provided that
the Confidentiality Agreements shall survive the execution and delivery
hereof, and (ii) except as provided in Sections 3.4, 8.2(b), 8.4 and 8.5,
is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
SECTION 11.6 GOVERNING LAW. This Agreement shall be governed
and construed in accordance with the laws of the State of Tennessee,
without regard to any otherwise applicable conflicts of law principles.
SECTION 11.7 PUBLICITY. It is the intention of the paries to
use reasonable efforts to reach agreement on the wording of any news
releases or other public announcements by Shoney's or Enterprises, or any
of their respective affiliates, pertaining to this Agreement. In the
absence of circumstances requiring otherwise, any such releases or public
announcements shall be submitted to the other party for its comment prior
to issuance.
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SECTION 11.8 ASSIGNMENT. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and
assigns.
SECTION 11.9 EXHIBITS. The Exhibits and Schedules attached
to this Agreement are integral parts of this Agreement and incorporated
herein by this reference and expressly made a part hereof.
SECTION 11.10 SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
rule of law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby
are not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties
as closely as possible in a mutually acceptable manner in order that the
transactions be consummated as originally contemplated to the fullest
extent possible.
SECTION 11.11 ENFORCEMENT OF THIS AGREEMENT. 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 temporary, preliminary and/or permanent
injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to
any other remedy to which they are entitled at law or in equity.
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IN WITNESS WHEREOF, Shoney's, Enterprises and TPAC have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, on this 15th day of March, 1996.
TPI ENTERPRISES, INC.
By:__________________________________________
Title:_______________________________________
SHONEY'S, INC.
By:__________________________________________
Title:_______________________________________
TPI RESTAURANTS ACQUISITION CORP.
By:__________________________________________
Title:_______________________________________
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1727 Elm Hill Pike, Nashville, Tennessee 37210
SHONEY'S
INC.
NEWS
FOR IMMEDIATE RELEASE Contact: SHONEY'S, INC.
W. Craig Barber
(615) 391-5201
or
TPI Enterprises, Inc.
Fred Burford
(407) 691-8802
SHONEY'S, INC. AND TPI ENTERPRISES, INC. ANNOUNCE
COMPLETION OF DEFINITIVE AGREEMENT
Nashville, TN, March 15, 1996--Officials of Shoney's, Inc. and TPI
Enterprises, Inc. jointly announced today that both companies have signed
a definitive agreement whereby Shoney's, Inc. or one of its subsidiaries
will acquire TPI Restaurants, Inc. and two other TPI subsidiaries, which
represent substantially all of the assets of TPI.
Shoney's, Inc. CEO C. Stephen Lynn and Gary Sharp, CEO of TPI
Enterprises, Inc. made the announcement and said the execution of the
definitive agreement will allow the companies to move forward in
developing a transition plan.
The transaction is expected to be closed on or before June 30, 1996.
It is subject to approval of the shareholders and lenders of both
companies as well as certain regulatory approvals.
The TPI subsidiaries will be acquired in exchange for 5,577,102
shares of Shoney's common stock plus an additional $10 million of Shoney's
common stock based upon the average closing market price for the ten
trading days immediately prior to closing. Based upon the average closing
market price for the last ten trading days, 6,710,246 shares of Shoney's
stock would be issued in the transaction. In addition, Shoney's will
assume certain obligations of TPI, including $51.6 million of 8 1/4%
subordinated convertible debentures that are expected to remain
outstanding following the closing.
<PAGE>
The transaction will be structured as a tax-free reorganization under
the Internal Revenue Code. TPI will distribute the Shoney's stock it
receives in the reorganization to its shareholders. Based on the
currently issued and outstanding TPI shares, TPI shareholders will receive
approximately .327 shares of Shoney's, Inc. stock for each TPI share. In
addition, TPI will retain up to $7.5 million in cash. The amount of cash
permitted to be retained is subject to reduction, if necessary, in order
to satisfy the requirements for a tax-free reorganization. In that event,
Shoney's will issue additional shares of its common stock to TPI, in lieu
of the reduced cash, to be valued at the average closing market price for
the ten trading days immediately prior to closing. The agreement also
provides for TPI to retain additional cash based on an estimate of its
remaining liabilities. As part of the tax-free reorganization, TPI will
dissolve as soon as practicable following the closing and distribute the
consideration received from Shoney's after satisfaction or provision of
its then remaining liabilities.
Lynn, said, "From the start of discussions with TPI last fall, we
have felt strongly that there are synergies and energies in this
combination that will enhance shareholder value and help us with our
overall improvement efforts for Shoney's Restaurants. We expect the
financial impact on Shoney's, Inc. to be the same as originally
anticipated--slight dilution in the near term and non-dilutive over a
longer term."
