<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 20, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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LANDRY'S SEAFOOD RESTAURANTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1400 POST OAK BOULEVARD 76-0405386
(STATE OF INCORPORATION) SUITE 1010 (I.R.S. EMPLOYER
HOUSTON, TEXAS 77056 IDENTIFICATION NUMBER)
713/850-1010
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
TILMAN J. FERTITTA
CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
LANDRY'S SEAFOOD RESTAURANTS, INC.
1400 POST OAK BOULEVARD, SUITE 1010
HOUSTON, TEXAS 77056
713/850-1010
(NAME, ADDRESS INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES OF ALL COMMUNICATIONS TO:
ARTHUR S. BERNER, ESQ. STEVEN L. SCHEINTHAL, ESQ. THOMAS P. MASON, ESQ.
WINSTEAD SECHREST & GENERAL COUNSEL ANDREWS & KURTH L.L.P.
MINICK P.C. LANDRY'S SEAFOOD RESTAURANTS, INC. 4200 CHASE TOWER
910 TRAVIS, SUITE 2400 1400 POST OAK BOULEVARD, HOUSTON, TEXAS 77002
HOUSTON, TEXAS 77002 SUITE 1010 713/220-4200
713/650-2729 HOUSTON, TEXAS 77056
713/850-1010
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE (2) PRICE(2) FEE(2)
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<S> <C> <C> <C> <C>
Common Stock, $.01 par 4,407,950
value.................. shares $27.6875 $122,045,116 $36,003.31
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</TABLE>
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(1) Includes 574,950 shares that the Underwriters have the option to purchase
from the Company and the Selling Stockholders to cover over-allotments, if
any.
(2) Calculated pursuant to Rule 457(c) of the rules and regulations under the
Securities Act of 1933, as amended, solely for the purpose of calculating
the registration fee on the basis of the average high and low price
reported for the Common Stock on the Nasdaq National Market on February
17, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE +
+WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES +
+LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED FEBRUARY 20, 1998
3,833,000 SHARES
[Logo of Landry's Seafood appears here]
COMMON STOCK
Of the 3,833,000 shares of Common Stock offered hereby, 3,000,000 are being
sold by the Company and 833,000 are being sold by Selling Stockholders. See
"Principal and Selling Stockholders." The Company will not receive any of the
proceeds from the sale of shares by the Selling Stockholders.
The Common Stock is traded on the Nasdaq National Market under the symbol
"LDRY." On February 19, 1998, the last sale price of the Common Stock as
reported by the Nasdaq National Market was $29.00 per share. See "Price Range
of Common Stock and Dividend Policy."
SEE "RISK FACTORS" BEGINNING ON PAGE 6 HEREOF FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK
OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
Proceeds to
Price to Underwriting Proceeds to Selling
Public Discount(1) Company(2) Stockholders
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<S> <C> <C> <C> <C>
Per Share.......... $ $ $ $
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Total(3)........... $ $ $ $
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</TABLE>
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(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.
(2) Before deducting expenses payable by the Company estimated at $500,000.
(3) The Company and the Selling Stockholders have granted the Underwriters a
30-day option to purchase up to an additional 574,950 shares of Common
Stock at the Price to Public less the Underwriting Discount solely to cover
over-allotments, if any. If the Underwriters exercise this option in full,
the Price to Public will total $ , the Underwriting Discount will
total $ , the Proceeds to Company will total $ and the
Proceeds to Selling Stockholders will total $ . See "Principal and
Selling Stockholders" and "Underwriting."
The shares of Common Stock are offered by the Underwriters named herein when,
as and if delivered to and accepted by the Underwriters and subject to their
right to reject any order in whole or in part. It is expected that delivery of
the certificates representing the shares will be made against payment therefor
at the office of NationsBanc Montgomery Securities LLC on or about ,
1998.
-----------
NationsBanc Montgomery Securities LLC
Morgan Stanley Dean Witter
J.C. Bradford & Co.
Piper Jaffray Inc.
Sanders Morris Mundy
, 1998
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES, AND THE IMPOSITION OF A PENALTY BID IN CONNECTION WITH THE
OFFERING. FOR A DESCRIPTION OF SUCH ACTIVITIES, SEE "UNDERWRITING."
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements and
related notes thereto appearing elsewhere in this Prospectus or incorporated
herein by reference. Unless otherwise indicated, all information in this
Prospectus assumes no exercise of the Underwriters' overallotment option and
the market price per share of Common Stock is equal to $29.00, the last
reported sale price of the Common Stock on the Nasdaq National Market on
February 19, 1998. Unless the context requires otherwise, all references to the
"Company" in this Prospectus include Landry's Seafood Restaurants, Inc. and its
subsidiaries.
Certain matters discussed under the caption "The Company," and elsewhere in
this Prospectus and the information incorporated herein by reference, may
constitute forward-looking statements for purposes of the Securities Act of
1933, as amended (the "Securities Act"), and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and as such, may involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from future results, performance or achievements expressed or implied by such
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, those disclosed herein under the caption "Risk
Factors.".
THE COMPANY
As of February 19, 1998, Landry's Seafood Restaurants, Inc. (the "Company")
operated 122 full-service, mid-priced, casual dining seafood restaurants in 26
states, primarily under the division names "Joe's Crab Shack" (58 restaurants),
"Landry's Seafood House" (43 restaurants) and "The Crab House" (21
restaurants). In addition, the Company operates three limited-menu takeout
service units. Management believes that the Company's restaurants appeal to a
broad range of customers by offering generous portions of fresh seafood and
excellent service in a high energy environment at an attractive price-value
relationship.
The Company's restaurants feature a wide variety of broiled, grilled and
fried seafood items including red snapper, shrimp, crawfish, lump crabmeat,
lobster, soft shell crabs, oysters, scallops, flounder, and other traditional
seafood items, many with a choice of the Company's signature toppings. The
restaurants are generally open for lunch and dinner and offer full liquor
service. Sales of alcoholic beverages accounted for between 15% and 16% of the
Company's revenues in 1997. The Joe's Crab Shack restaurants are designed to
appear like an old fishing camp with a wood facade, tin roof and a raised
outside deck. Many of the Joe's Crab Shack facilities incorporate a small
playground area for children adjacent to family dining areas. The Landry's
Seafood House restaurants feature a prototype look that is readily identified
by a large theater-style marquee over the entrance and by a distinctive brick
and wood facade creating the feeling of a traditional old seafood house
restaurant. The Crab House restaurants feature a casual nautical theme, and
many include a fresh seafood salad bar. In many locations, the Company's
restaurants provide outdoor patio service for a more casual, open-air dining
experience and often feature waterfront views. The Company's restaurants
average approximately 8,000 square feet in size. All of the Company's
restaurants operate with very similar philosophies, management policies and
practices, training and control practices, purchasing, and menu selections.
Management believes the Company's restaurants
2
<PAGE>
enjoy a high level of repeat business and customer loyalty due to high food
quality, comfortable atmosphere, and friendly, efficient service.
For the 12-month period ended December 31, 1997, the 78 restaurants opened
prior to January 1, 1997, generated average restaurant revenues of
approximately $3,000,000, average restaurant cash flow of approximately
$630,000 (or 21.0% of revenues), and average restaurant operating income (after
depreciation, but before amortization of pre-opening expenses) of approximately
$507,000 (or 16.9% of revenues).
Management believes its commitment to its customers and employees is
important to its long-term success. In addition to serving quality seafood at
affordable prices in attractive locations, the Company achieves customer
satisfaction through prompt, efficient service, low table-to-waitstaff ratios,
and an attentive management staff. The Company promotes a sense of personal
commitment from its employees through a monthly cash bonus program based on
achievement of restaurant specific performance objectives, and a stock option
plan which includes restaurant managers.
The executive headquarters and principal office of the Company are located at
1400 Post Oak Boulevard, Suite 1010, Houston, Texas 77056. The Company's
telephone number is (713) 850-1010.
EXPANSION STRATEGY
The Company plans to continue expanding principally through the opening of
new restaurants. From time-to-time, the Company will evaluate the conversion or
strategic acquisition of existing restaurants. The Company has no present
understandings or agreements to acquire any restaurant concept. During the next
several years, the Company plans to focus expansion efforts primarily in the
southern and mid-western portions of the United States, although the Company
has and will continue to develop or acquire restaurants in cities outside of
this area. The Company believes that the taste, variety, and perceived health
advantages of seafood, support the Company's decision to concentrate its
expansion efforts on quality seafood restaurants in strategically targeted
markets.
The Company's current development plan is to open at least 45 new restaurants
in 1998, of which seven restaurants were open and 31 restaurants were under
construction or development as of February 19, 1998. The Company's primary
growth will be in its Joe's Crab Shack division although additional restaurants
will be built in the Landry's Seafood House and The Crab House divisions of the
Company. Restaurants may be opened in areas where another Company restaurant is
operating but which management believes can accommodate another quality seafood
restaurant, or where management believes the demographics better suit a
different concept. The number of restaurants actually opened will vary
depending upon, among other things, the Company's ability to locate suitable
restaurant sites, the Company's ability to obtain satisfactory lease or
purchase arrangements for restaurant locations, the availability of funds to
construct and open such restaurants, the Company's ability to obtain on a
timely basis all necessary governmental permits to construct and operate such
restaurants, the Company's ability to adequately manage the construction or
conversion of such restaurants, the Company's ability to hire, train and retain
skilled management and other restaurant personnel, and general economic
conditions. See "Risk Factors--Growth."
3
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company........ 3,000,000 shares
Common Stock offered by the Selling Stock-
holders................................... 833,000 shares(1)
Common Stock to be outstanding after this
offering.................................. 29,137,449 shares
Use of proceeds............................ To repay outstanding bank loans, to
finance expansion and for general
corporate purposes. See "Use of
Proceeds."
Nasdaq National Market symbol.............. LDRY
</TABLE>
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(1) Of the 833,000 shares offered by the Selling Stockholders, 133,000 shares
will be acquired immediately prior to the closing of this offering pursuant
to the exercise of options granted under the Company's Stock Option Plans.
See "Principal and Selling Stockholders."
4
<PAGE>
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1993 1994 1995 1996 1997
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA (1)
Revenues.................... $60,667 $100,773 $157,620 $236,107 $311,673
Merger costs................ -- -- -- 25,971(2) --
Operating income............ 5,254 9,252 15,445 224 41,373
Income before income taxes
and cumulative effect of
accounting change.......... 5,431 10,128 16,994 2,285(2) 42,830
Provision for income taxes.. 1,543(3) 3,520 5,946 779 15,400
------- -------- -------- -------- --------
Income before cumulative
effect of accounting
change..................... 3,888(3) 6,608 11,048 1,506(2) 27,430
Cumulative effect of
accounting change.......... 223 -- -- -- --
------- -------- -------- -------- --------
Net income.................. $ 4,111(3) $ 6,608 $ 11,048 $ 1,506(2) $ 27,430
======= ======== ======== ======== ========
Net income before cumulative
effect of accounting change
per share.................. $ 0.34
Cumulative effect of
accounting change per
share...................... $ 0.02
-------
Net income per share--basic. $ 0.36 $ 0.41 $ 0.58 $ 0.06(2) $ 1.07
======= ======== ======== ======== ========
Net income per share--
diluted.................... $ 0.36 $ 0.41 $ 0.57 $ 0.06(2) $ 1.03
======= ======== ======== ======== ========
Weighted average number of
common
shares--basic.............. 11,266 16,098 19,051 23,360 25,518
======= ======== ======== ======== ========
Weighted average number of
common shares and common
share equivalents--diluted. 11,266 16,098 19,300 24,100 26,600
======= ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------
ACTUAL AS ADJUSTED(4)
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<S> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD)
Working capital....................................... $ 35,058 $ 69,828
Total assets.......................................... 382,281 416,396
Short-term notes payable and current portion of long-
term notes and other obligations..................... 72 72
Long-term notes and other obligations, noncurrent..... 50,235 235
Stockholders' equity.................................. $296,738 $381,507
</TABLE>
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(1) On August 9, 1996, the Company acquired the Bayport Restaurant Group, Inc.
("Bayport") pursuant to a merger transaction (the "Bayport Merger"). The
Bayport Merger was accounted for as a pooling of interests and,
accordingly, the consolidated financial statements of the Company have been
restated to include the accounts and operations of Bayport for all periods
represented.
(2) In connection with the Bayport Merger, the Company incurred certain costs.
Without giving effect to such costs, the Company's income before income
taxes, net income, and net income per share (diluted) would have been
approximately $28,257, $18,000 and $0.75, respectively.
(3) Presented on a pro forma basis to give effect to a pro forma tax provision
as a result of the Company's conversion from S Corporation to C Corporation
status upon consummation of the Company's initial public offering.
(4) Gives effect to the sale of 3,000,000 shares of Common Stock of the Company
offered hereby at an assumed offering price per share of $29.00 (the
closing price per share on the Nasdaq National Market on February 19, 1998)
and the application of the estimated net proceeds therefrom and the
exercise of 133,000 stock options by certain Selling Stockholders. See "Use
of Proceeds" and "Capitalization."
5
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus or
incorporated herein by reference, prospective investors should carefully
consider the following factors in evaluating an investment in the shares of
Common Stock offered by this Prospectus.
GROWTH
The Company has pursued an accelerated expansion strategy since 1990. The
Company owned 122 full service and three limited service restaurants as of
February 19, 1998. The Company's current development plan is to open 45 new
restaurants in 1998 of which seven restaurants were open and 31 restaurants
were under construction or development as of February 19, 1998. There can be
no assurance that the new restaurants will perform in accordance with
management's expectations, or that the Company will not encounter
unanticipated problems or liabilities in connection with the new restaurants.
Many of its new restaurants will be in geographic markets in which the Company
has limited or no previous operating experience. There can be no assurance
that the Company will be successful in opening the number of restaurants
anticipated in a timely manner, or that, if opened, those restaurants will be
operated profitably.
The Company's ability to expand the number of its restaurants will depend
upon a number of factors, including the selection and availability of suitable
restaurant sites, the negotiation of acceptable lease or purchase terms, the
securing of required governmental permits and approvals, the adequate
supervision of construction, the hiring, training, and retaining of skilled
management and other personnel, the availability of adequate financing,
general economic conditions, and other factors, many of which are beyond the
control of the Company. The Company's approach to opening new restaurants has
been to control its required investment by developing its own in-house
construction and development capabilities as general contractor and to lease a
substantial number of its restaurant sites. The Company currently anticipates
that it will continue to purchase in fee a number of its new restaurant
locations, which are expected to be more costly than leased locations. The
Company will also evaluate, from time-to-time, the strategic acquisition of
existing restaurants. In view of its planned growth, increased competition for
sites and inherent uncertainties of construction costs, there can be no
assurance that the Company's required net investment for leased or fee owned
units will not be higher in the future. See "Business--Expansion Strategy" and
"Business--Unit Economics."
Since 1989, the Company has experienced rapid growth in revenues, restaurant
level profit, and net income. The Company remains vulnerable to a variety of
business risks generally associated with rapidly growing companies. Failure to
continue to upgrade operating and financial controls and systems or unexpected
difficulties encountered during expansion could adversely affect the Company's
business, financial condition, and results of operation. Although the Company
believes that its systems and controls are adequate to address its current
needs, there can be no assurance that such systems and controls will be
adequate to sustain future growth.
LIMITED OPERATING HISTORY
A significant number of the Company's restaurants have been open for less
than two years. Consequently, the earnings achieved to date by such
restaurants may not be indicative of future operating results.
GEOGRAPHIC CONCENTRATION
Of the Company's existing and planned restaurants, a majority are
concentrated in the southern half of the United States. Accordingly, the
Company's results of operations may be adversely affected by economic
conditions in that region and other geographic areas into which the Company
may expand. Also, given the Company's present geographic concentration,
adverse publicity relating to the Company's restaurants could have a more
pronounced adverse effect on the Company's overall sales than might be the
case if the Company's restaurants were more broadly dispersed. In addition, in
view of the location of many of the Company's existing
6
<PAGE>
and planned restaurants in the Gulf Coast area from Texas to Florida, the
Company is particularly susceptible to damage caused by hurricanes or other
severe weather conditions. While the Company maintains business interruption
insurance, there can be no assurance that if a severe hurricane or other
natural disaster should affect the Company's geographical areas of operations,
the Company would be able to maintain its current level of operations or
profitability.
SEAFOOD SUPPLY AND QUALITY
In the recent past, certain types of seafood have experienced fluctuations
in supply availability. The Company has in the past utilized several seafood
suppliers and has not experienced any difficulty in obtaining adequate
supplies of fresh seafood on a timely basis. In addition, some types of
seafood have been subject to adverse publicity due to certain levels of
contamination at their source, which can adversely affect both supply and
market demand. The Company maintains an in-house inspection program for its
seafood purchases and in the past has not experienced any detriment from
contaminated seafood. However, the Company can make no assurances that in the
future either seafood contamination or inadequate supplies of seafood might
not have a significant and materially adverse effect on the Company's
operations and profitability.
CHANGES IN FOOD AND OTHER COSTS
The Company's profitability is dependent on its ability to anticipate and
react to increases in food, labor, employee benefits, and similar costs over
which the Company has limited or no control. Specifically, the Company's
dependence on frequent deliveries of fresh seafood and produce subjects it to
the risk of possible shortages or interruptions in supply caused by adverse
weather or other conditions which could adversely affect the availability and
cost of such items. The Company's business may also be affected by inflation.
In the past, management has been able to anticipate and avoid any adverse
effect on the Company's profitability from increasing costs through its
purchasing practices and menu price adjustments, but there can be no assurance
that it will be able to do so in the future.
RESTAURANT INDUSTRY AND COMPETITION
The restaurant industry is affected by changes in consumer tastes and by
national, regional, and local economic conditions and demographic trends. The
performance of individual restaurants may be affected by factors such as
traffic patterns, demographic considerations, and the type, number, and
location of competing restaurants. The restaurant industry is intensely
competitive based on the type and quality of food offered, location, and other
factors. The Company has many well established competitors with substantially
greater financial resources and longer histories of operation than the
Company, including competitors already established in regions into which the
Company is planning to expand, as well as competitors planning to expand in
the same regions. The Company faces competition from mid-priced, full-service,
casual dining restaurants offering seafood and other types and varieties of
cuisine. The Company's competitors include national, regional, and local
chains as well as local owner-operated restaurants. The Company also competes
with other restaurants and retail establishments for restaurant sites.
DEPENDENCE ON CHIEF EXECUTIVE OFFICER AND OTHER EMPLOYEES
The Company believes that the development of its business has been, and will
continue to be, dependent on Tilman J. Fertitta, the Chief Executive Officer,
President, and Chairman of the Board of the Company, and other key executive
employees. The loss of Mr. Fertitta's services could have a material adverse
effect upon the Company's business and development, and there can be no
assurance that an adequate replacement could be found for Mr. Fertitta in the
event of his unavailability. Mr. Fertitta has entered into an Employment
Agreement with the Company expiring December 31, 2000, subject to renewal. The
Company's continued growth will also depend on its ability to attract and
retain additional skilled management personnel. See "Business--Management and
Employees."
7
<PAGE>
CONTROL BY MANAGEMENT AND PRINCIPAL STOCKHOLDER
Following the completion of this offering, Mr. Fertitta, the principal
stockholder of the Company, will beneficially own, in the aggregate,
approximately 10.2% of the outstanding Common Stock. As a result he may have
significant ability to influence the election of the Board of Directors of the
Company and the direction of the affairs of the Company. See "Management" and
"Principal and Selling Stockholders."
GOVERNMENT REGULATION
The restaurant industry is subject to extensive state and local government
regulation relating to the sale of food and alcoholic beverages and to
sanitation, public health, fire and building codes. In 1997, between 15% and
16% of the Company's revenues were attributable to the sale of liquor.
Alcoholic beverage control regulations require each of the Company's
restaurants to apply for and obtain from state authorities a license or permit
to sell liquor on the premises and to provide service for extended hours and
on Sundays. Typically, licenses must be renewed annually and may be revoked or
suspended for cause at any time. Alcoholic beverage control regulations affect
various aspects of daily operations of the Company's restaurants, including
minimum age of patrons and employees, hours of operation, advertising,
wholesale purchasing, inventory control and handling, storage and dispensing
of alcoholic beverages. In certain states, the Company may be subject to "dram
shop" statutes, which generally provide a person injured by an intoxicated
person the right to recover damages from the establishment which wrongfully
served alcoholic beverages to the intoxicated person. The Company carries
liquor liability coverage as part of its comprehensive general liability
insurance.
Restaurant operating costs are also affected by other government actions
that are beyond the Company's control, including workers' compensation
insurance rates, and unemployment and other taxes. At the federal level, there
have recently been increases in the minimum hourly wage and there are
proposals under consideration to further increase the minimum hourly wage
requirements. These and other initiatives could adversely affect the Company
as well as the restaurant industry in general. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
In 1997, the Food and Drug Administration ("FDA") adopted regulations
relating to the establishment of procedures for the safe processing and
importing of fish and fishery products. The FDA regulations, which do not
apply to retail restaurant establishments, establish regulations to assure the
safe processing and importing of seafood by means of implementation of
monitoring systems based upon hazard analysis critical control point
principles. As a result of the implementation of such regulations, the
Company's seafood costs could increase due to the increased expense to seafood
suppliers and processors in complying with such regulations.
Difficulties or failures in obtaining required licensing or other regulatory
approvals could delay or prevent the opening of a new restaurant. The
suspension of, or inability to renew, a license could interrupt operations at
an existing restaurant, and the inability to retain or renew such licenses
would adversely affect the operations of such restaurant. The Company's
operations are also subject to requirements of local governmental entities
with respect to zoning, land use and environmental factors which could delay
or prevent the development of new restaurants in particular locations.
At the federal and state levels, there are from time to time various
proposals and initiatives under consideration to further regulate various
aspects of the Company's business and employment regulations. These and other
initiatives could adversely affect the Company as well as the restaurant
industry in general. In addition, seafood is harvested on a world-wide basis
and, on occasion, imported seafood is subject to federally imposed import
duties.
TAX LIABILITIES
The State of Texas currently imposes a franchise tax on each corporation
that is organized or does business in the State of Texas at a rate, in
general, of 4.5% of such entity's reported federal taxable income. A portion
of the Company's revenues are utilized to pay licensing and management fees to
certain of the Company's
8
<PAGE>
subsidiaries. The income received by certain of these subsidiaries is not
subject to Texas franchise tax under current state law. However, there can be
no assurance that the State of Texas might not attempt to enact legislation or
assert positions which would attempt to assess additional franchise tax
payments on the Company's operations. In the event of any assessment, the
Company's income and results of operations could be affected up to the amount
of the tax imposed.
WORKERS' COMPENSATION
Until July 1997, the Company did not subscribe to the workers' compensation
insurance program in the State of Texas. As such, the Company's employees have
the right to sue the Company for negligence relating to injuries that occurred
prior to the Company participating in such program, and the Company would be
prevented from asserting contributory negligence and certain other defenses in
connection with any such lawsuit. In addition, employees may be able to
recover compensatory and punitive damages in such actions that would not be
available to them if the Company had been a participant in the workers'
compensation insurance program in Texas at the time of an injury. However, the
Company maintained excess employer's occupational injury insurance to cover
large losses. The Company has had a limited number of lawsuits by employees in
connection with workers' compensation claims and the results of such lawsuits,
individually and collectively, have not had a material adverse effect upon the
Company's results of operations.
STOCK PRICE VOLATILITY
The Company's Common Stock has been traded on the Nasdaq National Market
since its initial public offering, and the market price of the Common Stock
has fluctuated substantially since that time. In the future, the market price
of the Common Stock could continue to fluctuate substantially due to a variety
of factors, including quarterly operating results of the Company or other
restaurant companies in the restaurant industry, changes in general conditions
in the economy, the financial markets or the restaurant industry, natural
disasters, or other developments affecting the Company or its competitors. In
addition, in recent years the stock market has experienced extreme price and
volume fluctuations. This volatility has had a significant effect on the
market prices of securities issued by many companies for reasons unrelated to
the operating performance of these companies.
YEAR 2000
The Company is now assessing the potential impact of the situation commonly
referred to as the "Year 2000 Problem." The Year 2000 Problem, which is common
to most corporations, concerns the inability of information systems, primarily
computer software programs, to properly recognize and process date sensitive
information related to the year 2000 and beyond. The Company is currently
evaluating the expected cost to be incurred in connection with the Year 2000
Problem, but expects that such costs will not be significant.
RISKS ASSOCIATED WITH FORWARD LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act, which are intended to be covered by safe harbors created thereby.
Investors are cautioned that all forward-looking statements involve risks and
uncertainty, including without limitation, the ability of the Company to
continue its accelerated expansion strategy, changes in costs of food, labor
and employee benefits, the ability of the Company to acquire prime locations
at acceptable lease or purchase terms, seasonality of results, ability to make
projected capital expenditures, store unit sales and the ability to achieve
projected quarterly results, as well as general market conditions,
competition, and pricing. All statements, other than statements of historical
facts, included or incorporated by reference in this Prospectus that address
activities, events or developments that the Company expects or anticipates
will or may occur in the future, including such things as future capital
expenditures (including the amount and nature thereof), business strategy and
measures to implement such strategy, competitive strengths, goals, expansion
and growth of the Company's business and operations, plans, references to
future success as well as other statements which include
9
<PAGE>
words such as "anticipate," "believe," "plan," "estimate," "expect," and
"intend" and other similar expressions constitute forward-looking statements.
Although the Company believes that the assumptions underlying the forward-
looking statements contained herein are reasonable, any of the assumptions
could be inaccurate and, therefore, there can be no assurance that the
forward-looking statements included in this Prospectus will prove to be
accurate. In light of the significant uncertainties inherent in the forward-
looking statements included herein, the inclusion of such information should
not be regarded as a representation by the Company or any other person that
the objectives and plans of the Company will be achieved.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
PRICE RANGE OF COMMON STOCK
The Company effected its initial public offering of Common Stock on August
18, 1993, at a price to the public of $6.00 per share (adjusted for the
Company's 2-for-1 stock split effected in June 1995). Since that date, the
Common Stock has been traded on the Nasdaq National Market. As of February 19,
1998, there were approximately 1,943 stockholders of record of the Common
Stock.
The table below sets forth, for the periods indicated, the high and low sale
prices as reported on the Nasdaq National Market for the Common Stock since
January 1, 1995.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1995
First Quarter............................................ $15.75 $12.75
Second Quarter........................................... 22.25 14.88
Third Quarter............................................ 22.00 16.00
Fourth Quarter........................................... 18.25 12.50
1996
First Quarter............................................ $19.75 $14.00
Second Quarter........................................... 25.75 17.50
Third Quarter............................................ 28.38 18.75
Fourth Quarter........................................... 26.25 19.50
1997
First Quarter............................................ $23.25 $15.63
Second Quarter........................................... 23.00 13.13
Third Quarter............................................ 30.00 20.88
Fourth Quarter........................................... 32.38 18.00
1998
First Quarter (through February 19, 1998)................ $29.06 $21.25
</TABLE>
On February 19, 1998, the last sale price of the Common Stock as reported on
the Nasdaq National Market was $29.00 per share.
DIVIDEND POLICY
The Company's Board of Directors does not anticipate payment of any cash
dividends in the foreseeable future and intends to maintain a policy of
retaining earnings for reinvestment in the Company's operations. The payment
of cash dividends in the future will depend upon the Company's earnings
levels, capital requirements, financial condition, and other factors deemed
relevant by the Board of Directors. Pursuant to the Company's revolving credit
facility with a group of banks headed by Bank of America, the Company is
restricted in paying cash dividends to an amount not to exceed 10% of the
Company's net income for the previous fiscal year.
10
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 3,000,000 shares of
Common Stock offered by the Company hereby are estimated to be $82,367,500
($98,249,056 if the over-allotment option is fully exercised and provided for
solely by the Company). In addition, the Company will receive $1,747,500 upon
the exercise of stock options by certain Selling Stockholders. The Company
intends to use the net proceeds to repay approximately $50 million that has
been drawn under the revolving credit facility, finance the development or
acquisition of additional restaurants and for general corporate purposes. The
revolving credit facility permits the Company to borrow from time to time up
to $125 million and terminates on June 1, 2000. Amounts drawn under the
revolving credit facility bear per annum interest generally payable quarterly
at the Eurodollar rate plus 0.6% or at a defined bank's Base Rate. The
revolving credit facility is governed by certain financial covenants,
including minimum tangible net worth, a maximum leverage ratio and a minimum
fixed charge coverage ratio.
The Company will not receive any of the proceeds from the sale of shares of
Common Stock by the Selling Stockholders.
CAPITALIZATION
The following table sets forth the short-term debt and the capitalization of
the Company as of December 31, 1997, (i) on an actual basis, and (ii) on an as
adjusted basis to reflect the sale of 3,000,000 shares of Common Stock offered
by the Company hereby at an assumed public offering price of $29.00 per share
(based on the closing price of the Common Stock on the Nasdaq National Market
on February 19, 1998), and to reflect the repayment of approximately $50
million of debt incurred under the Company's revolving credit facility and the
exercise of 133,000 stock options by certain of the Selling Stockholders. See
"Use of Proceeds."
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------
(IN THOUSANDS)
ACTUAL AS ADJUSTED(1)
-------- --------------
<S> <C> <C>
Short-term notes payable and current portion of long-
term notes and other obligations...................... $ 72 $ 72
======== ========
Long-term notes and other obligations, noncurrent...... $ 50,235 $ 235
Stockholders' equity:
Preferred Stock, $0.01 par value; 2,000,000 shares
authorized; 2,702 shares outstanding................. -- --
Common Stock, $0.01 par value; 60,000,000 shares
authorized; actual: 26,004,449 shares outstanding; as
adjusted: 29,137,449 shares outstanding.............. 260 291
Additional paid-in capital............................ 250,936 335,674
Retained earnings..................................... 45,542 45,542
-------- --------
Total stockholders' equity......................... 296,738 381,507
-------- --------
Total capitalization............................. $346,973 $381,742
======== ========
</TABLE>
- --------
(1) Includes 133,000 shares of Common Stock to be issued upon exercise of
stock options immediately prior to the closing of this offering for which
the Company will receive $1,747,500 of option exercise proceeds.
11
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The selected consolidated financial information presented below for, and as
of the end of, each of the years in the five-year period ended December 31,
1997 is derived from the consolidated financial statements of the Company. The
following selected consolidated financial information should be read in
conjunction with the Company's consolidated financial statements and related
notes and with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere herein, or incorporated by
reference.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1993 1994 1995 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
(1)
Revenues:
Restaurant............ $ 58,041 $ 96,262 $149,737 $232,597 $311,673
Processing plant...... 2,626 4,511 7,883 3,510 --
-------- -------- -------- -------- --------
Total revenues........ $ 60,667 $100,773 $157,620 $236,107 $311,673
Operating costs and ex-
penses:
Cost of sales......... 18,759 31,424 47,978 72,304 95,639
Restaurant labor...... 14,591 23,986 38,595 60,249 80,837
Other restaurant
operating expenses... 13,614 21,606 31,662 51,077 66,227
Merger costs.......... -- -- -- 25,971(2) --
Depreciation and
amortization......... 1,783 4,060 7,817 12,978 17,080
Processing plant cost
of sales and
operating expenses... 2,519 4,328 7,686 3,857 --
General and
administrative
expenses............. 4,147 6,117 8,437 9,447 10,517
-------- -------- -------- -------- --------
Total operating
costs and expenses. 55,413 91,521 142,175 235,883 270,300
Operating income........ 5,254 9,252 15,445 224(2) 41,373
Other (income) expense:
Interest (income)
expense, net......... (47) (915) (1,604) (2,379) (1,063)
Other, net............ (130) 39 55 318 (394)
-------- -------- -------- -------- --------
Total other (income)
expense............ (177) (876) (1,549) (2,061) (1,457)
Income before income
taxes and cumulative
effect of accounting
change ................ 5,431 10,128 16,994 2,285(2) 42,830
Provision for income
taxes.................. 1,543(3) 3,520 5,946 779 15,400
-------- -------- -------- -------- --------
Income before cumulative
effect of accounting
change................. 3,888(3) 6,608 11,048 1,506(2) 27,430
Cumulative effect of
accounting change...... 223 -- -- -- --
-------- -------- -------- -------- --------
Net income.............. $ 4,111(3) $ 6,608 $ 11,048 $ 1,506(2) $ 27,430
======== ======== ======== ======== ========
Net income before
cumulative effect of
accounting change per
share.................. $ 0.34
Cumulative effect of
accounting change per
share.................. $ 0.02
--------
Net income per share--
basic.................. $ 0.36 $ 0.41 $ 0.58 $ 0.06(2) $ 1.07
======== ======== ======== ======== ========
Net income per share--
diluted................ $ 0.36 $ 0.41 $ 0.57 $ 0.06(2) $ 1.03
======== ======== ======== ======== ========
Weighted average number
of common shares--
basic.................. 11,266 16,098 19,051 23,360 25,518
======== ======== ======== ======== ========
Weighted average number
of common shares and
common share
equivalents--diluted... 11,266 16,098 19,300 24,100 26,600
======== ======== ======== ======== ========
BALANCE SHEET DATA (AT
END OF PERIOD)(1)
Working capital......... $ 8,931 $ 23,258 $ 11,279 $ 64,377 $ 35,058
Total assets............ 48,339 99,667 187,866 281,199 382,281
Short-term notes payable
and current portion of
long-term notes and
other obligations...... 896 855 2,677 492 72
Long-term notes and
other obligations,
noncurrent............. 3,054 5,494 16,204 221 50,235
Stockholders' equity.... $ 38,428 $ 82,966 $144,791 $256,447 $296,738
</TABLE>
- --------
(1) On August 9, 1996, the Company acquired Bayport pursuant to the Bayport
Merger. The Bayport Merger was accounted for as a pooling of interests
and, accordingly, the consolidated financial statements of the Company
have been restated to include the accounts and operations of Bayport for
all periods represented.
(2) In connection with the Bayport Merger, the Company incurred certain costs.
Without giving effect to such costs, the Company's income before income
taxes, net income, and net income per share (diluted) would have been
approximately $28,257, $18,000 and $0.75, respectively.
(3) Presented on a pro forma basis to give effect to a pro forma tax provision
as a result of the Company's conversion from S Corporation to C
Corporation status upon consummation of the Company's initial public
offering.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
As of December 31, 1997, the Company owned and operated 115 full-service,
casual dining seafood restaurants located in 25 states. In addition, the
Company operates three limited-menu take-out service units.
The Company's operations may be impacted by changes in federal and state
taxes and other federal and state governmental policies, which include many
possible factors such as the level of minimum wages, the deductibility of
business and entertainment expenses, levels of disposable income, and national
and regional economic growth. The enactment of staged increases to the
federally mandated minimum wage has increased the Company's labor costs.
Effective October 1, 1996, the federal minimum wage increased from $4.25/hour
to $4.75/hour, and further increased to $5.15/hour effective September 1,
1997. The new minimum wage increases affected primarily initial entry-level
wages of the least skilled jobs in the Company's restaurant kitchens, as the
federal law mandated an offsetting increase in the tip-credit amounts for
tipped employees (i.e., waitstaff). However, the increases in minimum wage
have increased pressure for further wage increases of the other restaurant
staff.
Upon the consummation of the Bayport Merger in 1996 the Company recognized a
one-time charge of approximately $26 million before taxes and $17 million
after provision for income taxes. The American Institute of Certified Public
Accountants may issue a proposed accounting standard during 1998 that would
require entities to expense pre-opening costs as incurred. If adopted, the
standard may require the Company to expense previously capitalized pre-opening
costs as a cumulative effect of a change in accounting principle. At December
31, 1997, unamortized pre-opening costs were $5,162,503.
RESULTS OF OPERATIONS
Restaurant Profitability
The following table sets forth the percentage relationship to total
restaurant revenues of certain restaurant operating data for the periods
indicated:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
-------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Restaurant revenues.................................. 100.0% 100.0% 100.0%
Restaurant cost of sales............................. 32.0 31.1 30.7
Restaurant labor..................................... 25.8 25.9 25.9
Other restaurant operating expenses (1).............. 21.2 21.9 21.2
----- ----- -----
Restaurant level profit (1).......................... 21.0% 21.1% 22.2%
===== ===== =====
</TABLE>
- --------
(1) Excludes depreciation and amortization.
Year Ended December 31, 1997 Compared to the Year Ended December 31, 1996
Revenues increased $75,565,680, or 32.0%, from $236,106,877 to $311,672,557
for the year ended December 31, 1997, compared to the year ended December 31,
1996. The increase in revenues was attributable to revenues from new
restaurant openings offset by a reduction in processing plant revenues. There
was a nominal change in revenues from units opened prior to 1996.
As a primary result of increased restaurant revenues, restaurant cost of
sales increased $23,335,688, or 32.3%, from $72,303,748 to $95,639,436 for the
year ended December 31, 1997 compared to the prior year. Restaurant cost of
sales as a percentage of restaurant revenues for the year ended December 31,
1997 decreased
13
<PAGE>
to 30.7% from 31.1% in 1996. The decrease in restaurant cost of sales as a
percentage of restaurant revenues reflects slightly lower product costs and
better management cost controls in 1997. Product prices for shrimp, which are
a very high use product, are expected to be higher in 1998 than in 1997. This
cost increase may be partially offset by decreases in other product costs and
management measures, but the overall effect may increase restaurant cost of
sales as a percentage of revenues in 1998.
Restaurant labor expenses increased $20,588,224, or 34.2%, from $60,248,830
to $80,837,054 for the year ended December 31, 1997 compared to the prior
year, primarily as a result of increased openings of new restaurants.
Restaurant labor expenses as a percentage of restaurant revenues for the year
ended December 31, 1997, remained flat in 1997 and 1996 at 25.9%. The Company
continues to experience labor cost pressures attributable in part to recent
increases in federally mandated minimum wages.
Other restaurant operating expenses increased $15,150,467, or 29.7%, from
$51,076,737 to $66,227,204 for the year ended December 31, 1997, compared to
the prior year, as a result of increased revenues and the opening of new
restaurants. Such expenses decreased as a percentage of restaurant revenues to
21.2% from 21.9% primarily due to revenue growth of newly opened restaurants
exceeding the increase in other restaurant operating expenses.
Depreciation and amortization expenses increased $4,101,307, or 31.6%, from
$12,978,075 to $17,079,382 in 1997, compared to the prior year. The dollar
increase was primarily due to the addition of new restaurants and purchases of
new equipment. Depreciation and amortization as a percentage of restaurant
revenue remained flat in 1997 and 1996 at 5.5%. A decrease in pre-opening
amortization expense during the first six months of 1997 was offset by a
subsequent increase in pre-opening expense during the last six months of 1997.
These changes were due to changes in the number of units subject to
amortization and changes in the per unit pre-opening expenses.
General and administrative expenses increased $1,069,952, or 11.3%, from
$9,446,541 to $10,516,493 for the year ended December 31, 1997, compared to
the prior year, and decreased as a percentage of restaurant revenues to 3.4%
from 4.1%. During the first seven months of 1996, Landry's and Bayport
operated as separate companies and were, therefore, incurring separate general
and administrative expenses to support each company's separate growth plans.
However, upon the consummation of the Bayport Merger, Bayport's corporate
offices were closed and substantially all of Bayport's office employees were
terminated. As a result, general and administrative expenses, as a percentage
of revenues, were less than the combined expenses of the separate companies
for 1997, compared to the prior year. The dollar increase resulted primarily
from increased personnel, salaries and travel to support the combined
Company's expansion plans offset by the reduction of Bayport's general and
administrative expenses upon consummation of the Bayport Merger.
The decrease in net interest income of $1,317,014 is the result of lower
excess cash balances in 1997, as compared to the prior year. The change in
other expense was not deemed significant.
Provision for income taxes increased due to the increase in the Company's
income. The Company anticipates that its 1998 effective tax rate may decline
primarily due to the effect of FICA tax tip credits.
Year Ended December 31, 1996 Compared to the Year Ended December 31, 1995
Restaurant revenues increased $82,859,829, or 55.3%, from $149,736,680 to
$232,596,509 for the year ended December 31, 1996, compared to the year ended
December 31, 1995. The increase in revenues was attributable to revenues from
new restaurant openings. There was a nominal change in revenues from units
opened prior to 1995. Several of the Company's restaurants that opened during
1995 opened at volumes in excess of the Company's average unit volumes.
Subsequently, however, the Company has experienced a moderation of their
initial unit volumes.
As a primary result of increased revenues, restaurant cost of sales
increased $24,325,584, or 50.7%, from $47,978,164 to $72,303,748 for the year
ended December 31, 1996 compared to the prior year. Restaurant cost
14
<PAGE>
of sales as a percentage of restaurant revenues for the year ended December
31, 1996 decreased to 31.1% from 32.0% in 1995. The decrease in restaurant
cost of sales as a percentage of restaurant revenues reflects favorable
product prices and better management cost controls in 1996.
Restaurant labor expenses increased $21,654,012, or 56.1%, from $38,594,818
to $60,248,830 for the year ended December 31, 1996 compared to the prior
year. Restaurant labor expenses as a percentage of restaurant revenues for the
year ended December 31, 1996, increased to 25.9% from 25.8% in 1995. The
increase in restaurant labor as a percentage of restaurant revenues was
primarily a result of increased labor costs of new Crab House restaurants.
Other restaurant operating expenses increased $19,413,943, or 61.3%, from
$31,662,794 to $51,076,737 for the year ended December 31, 1996, compared to
the prior year, as a result of increased revenues and the opening of new
restaurants in 1996. Such expenses increased as a percentage of restaurant
revenues to approximately 21.9% in 1996 from 21.2% in 1995 primarily a result
of higher occupancy and other operating costs of new Crab House restaurants.
Depreciation and amortization expenses increased $5,160,809, or 66.0%, from
$7,817,266 to $12,978,075 for the year ended December 31, 1996, compared to
the prior year. The increase was primarily due to the addition of new
restaurants and purchases of new equipment.
General and administrative expenses increased $1,009,657, or 12.0%, from
$8,436,884 to $9,446,541 for the year ended December 31, 1996, compared to the
prior year, and decreased as a percentage of total revenues to 4.0% from 5.4%.
During 1995 and the first seven months of 1996 Landry's and Bayport operated
as separate companies and were, therefore, incurring separate general and
administrative expenses to support each company's separate growth plans.
However, upon the consummation of the Bayport Merger, Bayport's corporate
offices were closed and substantially all of Bayport's office employees were
terminated. As a result, general and administrative expenses were less than
the combined expenses of the separate companies, causing the decrease in
general and administrative expenses as a percentage of sales in 1996 compared
to 1995. In August 1996, merger costs were incurred related to the Bayport
Merger. These costs primarily include investment banking fees, legal and
accounting fees, printing, filing and related costs, employee severance
payments and write-off of specific assets which included duplicative
facilities locations and certain non-operating properties.
Net interest income increased by $775,350 from $1,604,081 to $2,379,431 in
1996 compared to 1995. The increase resulted primarily from the Company's
investment of excess cash in interest bearing securities subsequent to the
Company's public stock offerings. Other expenses were not deemed significant.
Provision for income taxes decreased by $5,166,399 from $5,945,850 in 1995
to $779,451 in 1996 primarily due to the change in the Company's income.
LIQUIDITY AND CAPITAL RESOURCES
In 1995, the Company, exclusive of Bayport, spent approximately $71 million
on capital expenditures. Since 1993, the Company has funded capital
expenditures primarily from proceeds of common stock offerings, and in part
from cash flow from operations. Separately, Bayport spent approximately $19
million in 1995 on capital expenditures, which was primarily funded out of
borrowings.
In 1996, the combined capital expenditures of the Company were approximately
$64 million. The Company funded capital expenditures out of existing cash
balances and cash flow from operations during 1996. Bayport's portion of
capital expenditures was funded, up to the date of the Bayport Merger, out of
additional borrowings. In addition, the Company incurred merger costs related
to the acquisition of Bayport and repaid the pre-merger outstanding
indebtedness of Bayport. As a result, the combined entities cash balances
declined from approximately $119 million at June 30, 1996, immediately prior
to the Bayport Merger, to approximately $57 million at December 31, 1996, and
the majority of the outstanding debt of the combined companies was repaid. For
the year ended December 31, 1997, the capital expenditures of the Company were
approximately $136 million which were primarily funded out of existing cash
balances, cash flow from operations and borrowings.
15
<PAGE>
The Company has a $125 million line of credit from a syndicate of banks
which expires in June 2000. The line of credit is available for expansion,
acquisitions and general corporate purposes. At December 31, 1997, the Company
had $50 million outstanding under this credit facility at an average interest
rate of 6.65% and had cash balances aggregating approximately $17.2 million.
These borrowings were used to fund capital expenditures and working capital.
The Company's current development plans are to open approximately 45
restaurants during 1998, of which seven were opened as of February 19, 1998,
and 31 were under construction or development. During 1997, the Company
commenced construction on a development plan for a waterfront area in South
Houston (the "Kemah Development"). The Kemah Development includes up to eight
restaurant sites, with additional light retail and hotel/motel facilities in a
master planned development. The Company currently operates five restaurants in
this development, and has not determined which portions of the remaining
development it will operate or sublease. Further, the Company is evaluating
the feasibility of building a multistory office building for the Company's
corporate headquarters. Due to the Company's rapid growth and increasing
office needs, the Company has experienced difficulty in obtaining adequate
office space within the desired immediate area of its existing office. To this
end, in July 1997 the Company acquired a four acre undeveloped land parcel in
Houston.
Exclusive of any acquisitions or large real estate purchases, the Company
currently expects to incur capital expenditures of approximately $125 million
in l998, depending upon the actual timing of construction expenditures, the
number of land purchases, the amount of expenditures spent on remodels, and
the mix of leased, owned or conversion type locations, and the actual timing
and number of restaurants built. The Company expects that its average per unit
investment cost, excluding real estate costs, capitalized interest costs and
pre-opening expenses, will approximate $1.9 million. However, individual unit
investment costs can vary from management's expectations due to a variety of
factors. Moreover, average unit investment costs are dependent upon many
factors, including competition for sites, location, construction costs, unit
size and the mix of conversions, build-to-suit, leased and fee-owned
locations. The Company currently anticipates that it will continue to purchase
a portion of its new restaurant locations, which are expected to be more
costly than leased locations. Separately, the Company may spend up to $12 to
$15 million on the Kemah Development and approximately $5 million on the
corporate headquarters development, both of which will be spread over the next
several fiscal years. The Company is reviewing its alternative options related
to the corporate headquarters development, including the viability of a sale-
leaseback, an outright sale and other options. The Company believes that
existing cash balances, cash generated from operations and potential financing
sources will be sufficient to satisfy the Company's working capital and
planned capital expenditures through 1998.
Upon completion of this offering, the Company believes there will be
sufficient finances to complete planned capital expenditures through 1999.
SEASONALITY AND QUARTERLY RESULTS
The Company's business is seasonal in nature, with revenues and, to a
greater degree, operating profits being lower in the first and fourth quarters
than in other quarters due to the Company's reduced winter volumes. The
Company has and continues to open restaurants in highly seasonal tourist
markets and has further noted that the Joe's Crab Shack concept restaurants
tend to experience an even greater seasonality and sensitivity to weather. The
timing of unit openings can and will affect quarterly results. The Company
anticipates some moderation in revenues from the initial volumes of new units.
IMPACT OF INFLATION
Management does not believe inflation has had a significant effect on the
Company's operations during the past several years. Management believes the
Company has historically been able to pass on increased costs through menu
price increases, but there can be no assurance that it will be able to do so
in the future. Future increases in land and construction costs could adversely
affect the Company's ability to expand.
16
<PAGE>
BUSINESS
GENERAL
The Company owns and operates full-service, mid-priced, casual dining,
seafood restaurants located in 26 states, under the restaurant divisional
names "Joe's Crab Shack," "Landry's Seafood House," and "The Crab House." As
of February 19, 1998, the Company operated 122 full service restaurants,
including 58 Joe's Crab Shack restaurants, 43 Landry's Seafood House division
restaurants and 21 The Crab House restaurants. In addition, the Company
operates three limited-menu take-out service units. Management believes that
the Company's restaurants appeal to a broad range of customers by offering
generous portions of fresh seafood and excellent service in a high energy
environment at an attractive price-value relationship. The first Landry's
Seafood House restaurant opened in 1980. In 1988, Mr. Tilman J. Fertitta
acquired sole ownership of the two existing Landry's restaurants. The first
Joe's Crab Shack was acquired by the Company in 1994. Following his 1988
acquisition, Mr. Fertitta instituted: (i) new financial, accounting and
reporting systems; (ii) financial incentives for employees; (iii) a system for
training, supervising and retaining employees; (iv) a program for hiring top
management personnel; (v) a site selection and growth strategy; and (vi) an
operating philosophy emphasizing customer service and quality control. As a
result of the implementation of these programs, profitability increased
substantially, and the Company commenced an expansion program.
RESTAURANT CONCEPTS AND STRATEGY
Management believes that the relatively small number of national and
regional chain restaurants competing in the seafood segment of the restaurant
industry, as compared to other restaurant segments, provides the Company a
significant opportunity to capitalize on its high energy, casual dining
seafood restaurant concepts.
The key elements of the Company's restaurant concepts and strategy include
the following:
Variety and Value. The Company's restaurants provide customers an attractive
price-value relationship by serving generous portions of fresh, high quality
seafood at moderate prices. The restaurants feature a wide variety of broiled,
grilled and fried seafood items, including red snapper, shrimp, crawfish, crab
and lump crabmeat, lobster, soft shell crabs, oysters, scallops, flounder and
other traditional seafood items, many with a choice of unique seasonings,
stuffings and toppings. These items are complemented by unique side dishes,
salads, garlic bread, appetizers, and desserts presented in a visually
appealing manner.
Commitment to Customer Satisfaction. The Company is committed to providing
its customers prompt, friendly, efficient service, keeping table-to-waitstaff
ratios low, and staffing each restaurant with an experienced management team
to ensure attentive customer service and consistent food quality. Through the
use of comment cards and a 1-800 telephone number, senior management receives
valuable feedback from customers and, through prompt responses, demonstrates a
continuing interest in customer satisfaction.
Distinctive Design and Decor and Casual Atmosphere. Each restaurant concept
has a distinctive appearance and a flexible design which can accommodate a
wide variety of available sites. The Joe's Crab Shack restaurants are designed
to appear like an old fishing camp with a wood facade, tin roof and a raised
outside deck. Many of the Joe's Crab Shack facilities incorporate a small
playground area for children adjacent to family dining areas. For Landry's
Seafood House, the Company has developed a prototype look that is readily
identified by a large theater-style marquee over the entrance and by a
distinctive brick and wood facade creating the feeling of a traditional old
seafood house restaurant. The Crab House restaurants feature a casual nautical
theme, and many include a fresh seafood salad bar. A casual, energetic dining
atmosphere is created for all of the Company's restaurants through the design
and decor of the dining areas, which generally display vibrant, colorful
interiors. In many locations, the Company's restaurants provide outdoor patio
service for a more casual, open-air dining experience and often feature
waterfront views.
High Profile Restaurant Locations. The Company's site selection strategy is
to locate its restaurants in markets which provide a balanced mix of tourist,
convention, business, and residential clientele. A variety of
17
<PAGE>
factors are analyzed in the site selection process, including local market
demographics, site visibility, aesthetics (including waterfront views) and
accessibility and proximity to significant generators of potential customers
such as major retail centers, office complexes, hotel concentrations,
convention and entertainment complexes, historical areas and entertainment
facilities (stadiums, arenas, theaters, etc.). Management believes that this
strategy results in a high volume of new and repeat customers and provides the
Company with increased name recognition in new markets. The Company's current
restaurants are located in areas that satisfy the Company's site selection
strategy.
Commitment to Attracting and Retaining Quality Employees. By providing
extensive training and attractive compensation, the Company fosters a strong
corporate culture and encourages a sense of personal commitment from its
employees. The Company has a monthly cash bonus program establishing
performance goals on a restaurant-by- restaurant basis for each restaurant's
management team pursuant to which management believes restaurant managers
typically earn bonuses equal to between 15% and 25% of their total cash
compensation. The Company has historically utilized a program of extensive
background checks for prospective management employees (including criminal
checks, credit checks and drug screening). Management believes its policies
have resulted in a low rate of management-level employee turnover.
EXPANSION STRATEGY
Since 1990, the Company has pursued an accelerated expansion strategy
through the opening of new restaurants or the conversion of existing
restaurants. The Company's current development plan is to open at least 45 new
restaurants in 1998, of which seven restaurants were open and 31 restaurants
were under construction or development as of February 19, 1998. The number of
restaurants actually opened will vary depending upon, among other things, the
Company's ability to locate suitable restaurant sites, the Company's ability
to obtain satisfactory lease or purchase arrangements for its restaurant
locations, the availability of funds to construct and open such restaurants,
the Company's ability to obtain on a timely basis all necessary governmental
permits to construct and operate such restaurants, the Company's ability to
adequately manage the construction or conversion of such restaurants, the
Company's ability to hire, train and retain skilled management and other
restaurant personnel and general economic conditions. See "Risk Factors--
Growth." The Company plans to continue expanding principally through the
opening of new restaurants. From time-to-time, the Company will evaluate the
strategic acquisition of existing restaurants. The Company will also consider
the conversion of existing restaurant concepts to one of its existing
concepts, as well as possibly acquiring existing restaurants with
complementary concepts. The Company has no present understandings or
agreements to acquire any restaurant concepts.
The Company plans to focus expansion efforts primarily in the southern and
midwestern portions of the United States, although the Company has and will
continue to develop or acquire restaurants in cities outside of this area.
Further development of locations in an existing market are likely to occur
where management believes the area can effectively support additional quality
seafood restaurants. In connection with this expansion effort, the Company's
primary growth will utilize the Joe's Crab Shack concept although additional
restaurants will be built in the Landry's Seafood House and The Crab House
divisions of the Company. The Company believes that the increased consumption
of seafood due to its taste, variety and perceived health advantages, combined
with the excellent unit economics of its restaurants, support the Company's
decision to concentrate its expansions efforts on quality seafood restaurants
in strategically targeted markets. The Company has designated a team of
employees that are responsible for opening new restaurant locations, including
kitchen personnel and other individuals who are trained as hosts, waiters,
floor managers and bartenders. The Company has enhanced its management
training program to enable assistant general managers to be promoted to
general managers. The Company believes that through its training program and
the hiring of outside personnel it will be able to support its expansion
strategy.
UNIT ECONOMICS
For the 12-month period ended December 31, 1997, the 78 restaurants opened
prior to January 1, 1997 generated average restaurant revenues of
approximately $3,000,000, average restaurant cash flow of
18
<PAGE>
approximately $630,000 (or 21.0% of revenues), and average restaurant
operating income (after depreciation, but before amortization of pre-opening
expenses) of approximately $507,000 (or 16.9% of revenues). Historically, the
Company has leased a substantial number of its restaurant sites to minimize
the costs of opening a new restaurant. However, the Company has purchased a
number of its restaurant locations. The Company's approach to opening new
restaurants has been to control its required investment by using its own in-
house construction capabilities as a general contractor to build-out or
renovate its new restaurant sites. Excluding real estate costs and pre-opening
expenses, the average cash investment to open new restaurants in 1997 was
approximately $1.97 million per unit. However, the average cash investment for
the last 10 restaurants opened in 1997 by the Company, which were all Joe's
Crab Shack restaurants, was approximately $1.67 million. The Company expects
that its average investment per unit opened will be reduced from the overall
1997 average to an average of approximately $1.9 million in 1998 due primarily
to an overall reduction of the average unit size from those opened during 1997
and its continued emphasis on the Joe's Crab Shack concept. Such restaurants
generally cost less to construct than Landry's Seafood House or The Crab House
restaurants. However, individual unit investment costs could vary due to a
variety of factors. Moreover, average unit investment costs are dependent upon
many factors including competition for sites, location, construction costs,
unit size and the mix of conversions, build-to-suit and leased locations. The
Company currently anticipates that it will continue to purchase a number of
its new restaurant locations, which are expected to be more costly than leased
locations.
RESTAURANT LOCATIONS
The Company's restaurants range in size from 5,000 square feet to 16,000
square feet, with the average restaurant approximating 8,000 square feet. The
restaurants generally have dining room floor seating for approximately 215
customers, many with patio seating on a seasonal basis, and bar seating for
approximately 10 to 20 additional customers.
The following table provides information with respect to the states in which
the Company's existing full service restaurants were open as of February 19,
1998:
<TABLE>
<CAPTION>
NUMBER
OF
STATE UNITS
- ----- ------
<S> <C>
Alabama................. 3
Arizona................. 4
Arkansas................ 1
California.............. 2
Colorado................ 5
Florida................. 18
Georgia................. 3
Illinois................ 4
Indiana................. 1
Kentucky................ 1
Louisiana............... 4
Maryland................ 1
Michigan................ 1
Mississippi............. 1
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF
STATE UNITS
- ----- ------
<S> <C>
Missouri.................. 3
Nevada.................... 2
New Jersey................ 1
New Mexico................ 1
New York.................. 2
North Carolina............ 1
Ohio...................... 5
Oklahoma.................. 2
South Carolina............ 8
Tennessee................. 7
Texas..................... 40
Virginia.................. 1
---
Total................... 122
===
</TABLE>
MENU
The Company's restaurants offer a wide variety of high quality, broiled,
grilled, and fried seafood items at moderate prices, including red snapper,
shrimp, crawfish, lump crabmeat, lobster, oysters, scallops, flounder, and
other traditional seafood items, many with a choice of unique seasonings,
stuffings and toppings. The Company's restaurants' menus also include a wide
variety of seafood appetizers, salads, soups and side dishes. In order to
provide an alternative to seafood items, the Company's restaurants also offer
high quality beef, fowl, pastas, and
19
<PAGE>
other American food entrees. The Company's restaurants also feature a unique
selection of desserts made fresh on a daily basis at each location. Many of
the Company's restaurants offer complimentary salad and garlic bread with each
entree, as well as certain lunch specials and lower priced children's entrees.
The Company's restaurants emphasize a complete dining experience, and,
accordingly, full liquor service is available. Alcoholic beverages are
primarily served to complement meals, with sales of alcoholic beverages
accounting for between 15% and 16% of the Company's revenues in 1997. The
Company's restaurants generally serve both lunch and dinner. The average
dinner entree menu price for the Company's restaurants is between $11 and $13,
excluding menu entree items which are priced daily "at market," based on cost
and availability to the Company's restaurants. At certain of the Company's
restaurants there is a separate lunch menu with reduced prices on selected
entrees.
MANAGEMENT AND EMPLOYEES
The Company's policy is to staff its restaurants with management that has
significant experience in the restaurant industry. The Company believes its
strong team-oriented culture helps it attract and retain highly motivated
employees who provide customers with a level of service superior to that
normally found in other restaurants. The Company trains its kitchen employees
and waitstaff to take great pride in preparing and serving food in accordance
with the strict standards established by the Company. Restaurant managers and
staff are trained to be courteous and attentive to customer needs, and the
managers, in particular, are instructed to visit each table. Senior corporate
management holds weekly group meetings with restaurant general managers to
discuss individual restaurant performance and customer comments. Moreover, the
Company requires general managers to hold regular staff meetings at their
individual restaurants. Compliance with the Company's quality requirements is
monitored through periodic on-site visits and formal periodic inspections by
the regional field manager and supervisory personnel from the Company's
corporate offices.
The management staff of a typical Company restaurant consists of a five-
person management team (one general manager, two kitchen managers, and two
floor managers) with the general manager having overall responsibility for
restaurant operations. The general managers typically have been promoted after
training in all areas of restaurant level management within the Company. The
kitchen managers in each restaurant supervise kitchen operations, which allows
the general managers to spend most of their time in the dining area of the
restaurant supervising the staff and providing service to customers. Each
restaurant management team is eligible to receive monthly incentive bonuses
subject to achievement of operating performance objectives specifically
tailored for such restaurant for each monthly period. These employees
typically earn between 15% and 25% of their total cash compensation under this
program. In addition, restaurant managers are entitled to participate in the
Company's stock option plans.
The Company has historically spent considerable effort in screening
prospective employees and training and developing employees, allowing it to
promote from within. The Company requires each employee to participate in a
formal training program that utilizes departmental training manuals,
examinations and a scheduled evaluation process. Newly hired waitstaff are
required to spend from 5 to 10 days in training before they serve customers.
The Company has historically utilized a program of extensive background checks
for prospective management employees such as criminal checks, credit checks,
and drug screening. Management believes that its policies have resulted in a
reduced rate of management-level employee turnover. Management training
encompasses three general areas including: (i) all service positions; (ii)
management accounting, personnel management, and dining room and bar
operations; and (iii) kitchen management, which entails food preparation and
quality controls, cost controls, training, ordering and receiving, and
sanitation operations. Due to the Company's enhanced training program,
management training customarily lasts approximately 8 to 12 weeks, depending
upon the trainee's prior experience and performance relative to the Company's
objectives. As the Company expands, it will need to hire additional management
personnel and its continued success will depend in large part on its ability
to attract, train, and retain quality management employees.
As of January 1, 1998, there were approximately 30 individuals involved in
regional management functions. As the Company grows, it plans to increase the
number of regional managers, and to have each regional manager
20
<PAGE>
responsible for a limited number of restaurants within those geographic
regions. The Company plans to promote experienced restaurant level management
personnel to serve as future regional managers as well as hire needed
personnel from outside the Company.
As of December 31, 1997, the Company employed approximately 8,200 persons,
of whom approximately 640 were restaurant managers or manager-trainees,
approximately 260 were corporate and administrative employees, and the rest
were hourly employees. Each restaurant employs an average of approximately 70
to 100 people, depending on seasonal needs. The Company considers its
employees to be high quality and believes that its management level employee
turnover is within industry standards. None of the Company's employees is
covered by a collective bargaining agreement. The Company considers its
relationship with employees to be satisfactory.
CUSTOMER SATISFACTION
The Company is committed to providing its customers prompt, friendly,
efficient service, keeping table-to-waitstaff ratios low and staffing each
restaurant with an experienced management team to ensure attentive customer
service and consistent food quality. Through the use of comment cards and a 1-
800 telephone number, senior management receives valuable feedback from
customers and through prompt responses demonstrates a continuing interest in
customer satisfaction. The Company emphasizes availability of the items on its
menu and, if an item is in short supply, restaurant level management is
expected to use its initiative to procure the item immediately.
PURCHASING
The Company strives to obtain consistent quality items at competitive prices
from reliable sources. The Company continually researches and surveys various
products in an effort to obtain the highest quality products possible and to
be responsive to changing customer tastes. In order to maximize operating
efficiencies and to provide the freshest ingredients for its food products
while obtaining the lowest possible prices for the required quality, each
restaurant's management team determines the daily quantities of food items
needed and orders such quantities from major suppliers at prices often
negotiated directly with the Company's corporate office.
The Company currently uses many distributors for obtaining its seafood
products in order to maintain the freshness and quality required by the
Company, all of which are available on short notice from qualified suppliers.
For non-seafood items, the Company generally uses one national distributor in
order to achieve certain cost efficiencies, but such items are available on
short notice from alternative qualified suppliers. The Company has not
experienced any significant delays in receiving its food and beverage
inventories, restaurant supplies or equipment.
ADVERTISING AND MARKETING
The Company employs a marketing strategy that utilizes frequent, high
profile advertising in order to attract new customers and establish a high
level of name recognition. The Company relies primarily on word-of-mouth
publicity, billboards with distinctive graphics, travel and hospitality
magazines and print advertising. The Company uses multiple billboards on
highways leading to its restaurants to direct potential customers from the
highways to the restaurants, as well as to build name recognition within each
market. Additionally, many of the restaurants offer facilities for banquets,
meetings and private parties. The Company's advertising expenditures for 1997
were approximately 1.5% of revenues.
RESTAURANT REPORTING
Financial controls are maintained through management of an accounting and
management information system that is implemented at the restaurant level.
Administrative and management staff prepare daily reports of cash, deposits,
sales, sales mix, labor, and customer counts. Physical inventories of food,
beverage and supply
21
<PAGE>
items are taken weekly. Weekly and monthly costs of sales and profit and loss
statements are compiled by the Company's accounting department and provided to
the regional managers for analysis and comparison to the Company's budgets.
The Company closely monitors sales, costs of sales, labor and restaurant
trends. Weekly sales data is used by management to detect trends from location
to location and negative trends are immediately investigated and remedied
where possible. The Company purchases food carefully and, through tight
controls, keeps food and beverage waste and theft to a minimum. Management
believes that its current systems are adequate for its planned expansion
strategy.
RESTAURANT SECURITY
The Company takes precautions to protect individual restaurant locations
against theft, robbery and other breaches of security through security
procedures and sophisticated alarm and surveillance systems. A component of
the Company's emphasis on restaurant security is the employment of a licensed
peace officer as Director of Security. The Director of Security, who reports
directly to the corporate office, supervises the installation and operation of
individual restaurant security systems and performs monthly security
inspections at each restaurant to monitor compliance with the Company's
policies relating to theft prevention, employee related security issues and
restaurant facility protection. As a result of the Company's program, it has
experienced no material security problem in its operations.
SERVICE MARKS
Landry's Seafood House and Joe's Crab Shack are each registered as a federal
service mark on the Principal Register of the United States Patent and
Trademark Office. The Crab House is a registered design mark. In addition, the
Company has registered numerous other marks related to its business and
advertising.
COMPETITION
The restaurant industry is intensely competitive with respect to price,
service, the type and quality of food offered, location and other factors. The
Company has many well established competitors, both seafood and non-seafood,
with substantially greater financial resources and a longer history of
operations than the Company. The Company competes with both locally-owned
seafood and non-seafood restaurants, as well as national and regional seafood
and non-seafood restaurant chains, some of which may be better established in
the Company's existing and future markets. In particular, Red Lobster, a
national seafood restaurant chain, operates approximately 700 seafood
restaurants nationwide, many of which operate in the Company's existing and
future markets. The Company also competes with other restaurant and retail
establishments for sites. Changes in customer tastes, economic conditions,
demographic trends and the location and number of, and type of food served by,
competing restaurants could adversely affect the Company's business as could
the unavailability of experienced management and hourly employees. Management
believes its restaurants enjoy a high level of repeat business and customer
loyalty due to high food quality, comfortable atmosphere, and friendly
efficient service.
22
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The directors and executive officers of the Company and their ages are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Tilman J. 40 Chairman of the Board, President and Chief
Fertitta(1)(3)......... Executive Officer
E.A. Jaksa, Jr.(3)...... 51 Executive Vice President, Chief Operating Officer,
and Director
Steven L. Scheinthal(3). 36 Vice President of Administration, General Counsel,
Secretary, and Director
Paul S. West(3)......... 38 Vice President of Finance, Chief Financial Officer
and Director
Richard E. Ervin........ 41 Vice President of Restaurant Operations
Sarah A. Veach.......... 37 Controller of Restaurant Operations
James E. 65 Director
Masucci(1)(2)(4).......
Joe Max Taylor(1)(2)(4). 65 Director
</TABLE>
- --------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
(3) Member of Executive Committee.
(4) Member of Stock Option Committee.
The principal occupations and positions for the past five years of each of
the Directors and Executive Officers of the Company are as follows:
Mr. Fertitta has served as President and Chief Executive Officer of the
Company since 1987. In 1988, he became the controlling shareholder and assumed
full responsibility for all of the Company's operations. Prior to serving as
President and Chief Executive Officer of the Company, Mr. Fertitta devoted his
full time to the control and operation of a hospitality and development
company. Mr. Fertitta is an advisory director of the Houston Rockets National
Basketball Association team and serves on the boards of the Houston Livestock
Show and Rodeo, Space Center Houston, the Children's Museum of Houston, The
Greater Houston Convention and Visitors Bureau, Crohn's and Colitis
Foundation, the Better Business Bureau of Houston, and the Childress
Foundation.
Mr. Jaksa has served as the Executive Vice President and Chief Operating
Officer of the Company since 1988. His primary responsibility is new site
selection, lease negotiations and restaurant construction and development.
Before joining the Company, Mr. Jaksa served as President of Richmark
Bancshares in Houston, Texas for five years. Mr. Jaksa is a licensed real
estate broker in Texas and has owned and operated his own real estate firm and
construction company.
Mr. Scheinthal has served as Vice President of Administration, General
Counsel and Secretary to the Company since September 1992. He devotes a
substantial amount of time to lease and contract negotiations and is primarily
responsible for the Company's compliance with all federal, state and local
ordinances. Prior to joining the Company, he was a partner in the law firm of
Stumpf & Falgout in Houston, Texas. Mr. Scheinthal represented the Company for
approximately five years before joining the Company. He has been licensed to
practice law in the state of Texas since 1984.
Mr. West has served as Vice President of Finance and Chief Financial Officer
of the Company since June 1993. Prior to joining the Company, Mr. West was a
senior manager at Deloitte & Touche and a leader of their
23
<PAGE>
Restaurant/Entertainment Advisors Group in Dallas, Texas. He was responsible
for numerous restaurant audits and performed the annual restaurant industry
operations survey and study on behalf of the National Restaurant Association
and many state restaurant associations. Mr. West had been engaged in public
accounting and auditing since 1981, and has been a certified public accountant
since 1983.
Mr. Ervin has served as Vice President of Restaurant Operations since 1991.
Prior to that time, he was the Vice-President of Internal Controls and
Director of Beverage Operations. He has 15 years of experience in high volume,
multi-unit food and beverage operations. His experience includes new
restaurant development and employee training programs.
Ms. Veach has served as Controller of Restaurant Operations since January
1990. Prior to joining the Company in 1989 as an accountant, she worked as
controller for American General Investment Corp. and as a tax associate for
the accounting firm of Coopers & Lybrand.
Mr. Masucci is self-employed as an advertising consultant. From 1956 until
June 1996 he was employed by Capital Cities/ABC ("ABC"). His last position
with ABC was as President and General Manager of KTRK-TV, an owned station of
ABC in Houston, Texas, a position he held from August 1990 to June 1996. Prior
to serving as President, Mr. Masucci served in various executive positions
with KTRK-TV and has served as Division Vice President and Vice President of
the Broadcast Division of ABC.
Mr. Taylor is a director and member of the Executive Committee of American
National Insurance Company, a publicly traded insurance company. He also
serves on the Board and Audit Committee of the Transitional Learning Center of
Galveston and is President and a member of the Executive Committee of Moody
Gardens, Inc., which operates a public resort and entertainment facility in
Galveston, Texas. Mr. Taylor is also the chief law enforcement administrator
for Galveston County, Texas and serves on the Galveston County Pre-Trial Board
as well as the Board of Directors of Harbourview Care Center.
24
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock by (a) the Selling Stockholders, (b)
each person known to the Company owning beneficially more than five percent of
the outstanding shares of the Company's Common Stock, (c) each director of the
Company, and (d) all executive officers and directors of the Company as a
group. The Selling Stockholders have sole voting and investment power with
respect to the shares beneficially owned.
<TABLE>
<CAPTION>
SHARES BEFORE THE
OFFERING SHARES SHARES AFTER THE OFFERING
----------------- OFFERED ---------------------------
NUMBER PERCENT HEREBY(1) NUMBER PERCENT TOTAL(3)
--------- ------- --------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Tilman J. Fertitta(2)... 4,380,000 16.4% 700,000 3,680,000 12.3% 3,880,000
E.A. Jaksa, Jr.(2)...... 189,167 * 62,000 127,167 * 268,000
Steven L. Scheinthal(2). 112,667 * 37,000 75,667 * 191,500
Paul S. West(2)......... 93,667 * 34,000 59,667 * 173,000
James E. Masucci........ 9,800 * -- 9,800 * 14,000
Joe Max Taylor.......... 3,800 * -- 3,800 * 8,000
Putnam Investments, Inc.
(4).................... 3,693,549 14.2% -- 3,693,549 12.6% 3,693,549
FMR Corp (5)............ 3,140,600 12.2% -- 3,140,600 10.8% 3,148,600
All executive officers
and directors as a
group (8 persons) (2).. 4,846,435 17.9% 833,000 3,964,768 13.2% 4,669,500
</TABLE>
- --------
* Less than 1%.
(1) Pursuant to an option granted to the Underwriters, the Selling
Stockholders may sell shares to cover a portion of the Underwriters' over-
allotments, if any. See "Underwriting." The address of each of the Selling
Stockholders is the Company's principal executive office.
(2) Includes options to acquire 700,000, 139,167, 80,167, 81,667 and 1,066,935
shares of the Company's Common Stock held by Messrs. Fertitta, Jaksa,
Scheinthal, West, and all executive officers and directors as a group
respectively, which are exercisable within 60 days of the date of this
offering. Options to purchase 62,000, 37,000 and 34,000 shares for Messrs.
Jaksa, Scheinthal and West will be exercised immediately prior to the
closing of this offering and such shares will be sold pursuant hereto.
(3) Includes all unvested options held by the Selling Stockholders and all
executive officers and directors as a group.
(4) The Company has been informed by Putnam Investments, Inc. ("Putnam") that
certain Putnam investment managers (together with their parent
corporations, Putnam and Marsh & McLennan Companies), are considered
"beneficial owners" in the aggregate of 3,693,549 shares, or 14.2%, of the
Company's Common Stock. Such shares were acquired for investment purposes
by such investment managers for certain of their advisory clients. The
information set forth in this table has been provided to the Company by
Putnam as reported on its Schedule 13G filed with the SEC. Putnam's
address is One Post Office Square, 10th Floor, Boston, Massachusetts
02109.
(5) Based on a Schedule 13G filed in July 1996, FMR Corp. ("FMR") is
considered the "beneficial owner" in the aggregate of 3,140,600 shares, or
12.2% of the Company's Common Stock, although no Common Stock is held
directly by FMR. FMR's address is 82 Devonshire Street, Boston,
Massachusetts 02109.
25
<PAGE>
UNDERWRITING
The Underwriters named below (the "Underwriters") have severally agreed,
subject to the terms and conditions contained in the underwriting agreement
(the "Underwriting Agreement") by and among the Company, the Selling
Stockholders and the Underwriters, to purchase from the Company and the
Selling Stockholders the number of shares of Common Stock indicated below
opposite their respective names at the public offering price less the
underwriting discount set forth on the cover page of this Prospectus. The
Underwriting Agreement provides that the obligations of the Underwriters are
subject to certain conditions precedent and that the Underwriters are
committed to purchase all of the shares if they purchase any.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
NationsBanc Montgomery Securities LLC...........................
Morgan Stanley & Co. Incorporated...............................
J.C. Bradford & Co..............................................
Piper Jaffray Inc...............................................
Sanders Morris Mundy Inc........................................
---------
Total......................................................... 3,833,000
=========
</TABLE>
The Underwriters have advised the Company and the Selling Stockholders that
the Underwriters propose initially to offer the Common Stock directly to the
public at the public offering price set forth on the cover page of this
Prospectus and to certain dealers, including the Underwriters, at such price
less a concession not in excess of $ per share. The Underwriters may
allow, and such dealers may reallow, a concession of not in excess of $
to certain other dealers. After the offering, the public offering price and
other selling terms may be changed by the Underwriters. The Common Stock is
offered subject to receipt and acceptance by the Underwriters and to certain
other conditions, including the right to reject orders in whole or in part.
The Company and the Selling Stockholders have granted an option to the
Underwriters, exercisable during the 30-day period after the date of this
Prospectus, to purchase up to an aggregate maximum of 574,950 additional
shares of Common Stock, to cover over-allotments, if any, at the same price
per share as the initial shares to be purchased by the Underwriters. To the
extent that the Underwriters exercise this option, the Underwriters will be
committed, subject to certain conditions, to purchase such additional shares
in approximately the same proportion as set forth in the above table. The
Underwriters may purchase such shares only to cover over-allotments made in
connection with this offering.
The Underwriting Agreement provides that the Company and the Selling
Stockholders will indemnify the Underwriters and their controlling persons
against certain liabilities, including civil liabilities under the Securities
Act, or will contribute to payments the Underwriters may be required to make
in respect thereof.
All of the Company's officers and directors have agreed that, for a period
of 90 days from the date of this Prospectus, they will not, without the prior
written consent of NationsBanc Montgomery Securities LLC, directly or
indirectly sell, offer, contract or grant any option to sell, pledge,
transfer, or otherwise dispose of any shares of Common Stock, options or
warrants to acquire shares of Common Stock, or securities exchangeable or
convertible for or convertible into shares of Common Stock, other than for the
shares of Common Stock offered by the Selling Stockholders hereby. In
addition, the Company has agreed that, for a period of 90 days after the date
of this Prospectus, it will not, without the prior written consent of
NationsBanc Montgomery Securities LLC, directly or indirectly issue, sell,
offer, contract or grant any option to sell, pledge, transfer, or otherwise
dispose of any shares of Common Stock, options or warrants to acquire shares
of Common Stock or securities exchangeable or exercisable for or convertible
into shares of Common Stock other than (i) the shares of Common Stock offered
by the Company hereby, (ii) shares of Common Stock issued upon exercise of
stock options and warrants and conversion of preferred stock outstanding as of
the date of this Prospectus and (iii) the grant of additional options under
the Company's stock option plans consistent with past practices.
26
<PAGE>
Certain persons participating in this offering may over-allot or effect
transactions which stabilize, maintain or otherwise prevail in the open
market. Such transactions may include stabilizing bids, effecting syndicate
covering transactions or imposing penalty bids. A stabilizing bid means the
placing of any bid or effecting any purchase for the purpose of pegging,
fixing or maintaining the price of the Common Stock. A syndicate covering
transaction means the placing of any bid on behalf of the underwriting
syndicate or the effecting of any purchase to reduce a short position created
in connection with the offering. The Underwriters may also elect to reduce any
short position by exercising all or part of the over-allotment options
described above. A penalty bid means an arrangement that permits the
Underwriters to reclaim a selling concession from a syndicate member in
connection with the offering when shares of Common Stock sold by the syndicate
member are purchased in syndicate covering transactions. Such transactions may
be effected on the Nasdaq National Market, in the over-the-counter market, or
otherwise.
In general, the purchase of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchase. Neither the Company nor any
of the Underwriters makes any representation or prediction as to the direction
or magnitude of any effect that the transactions described above may have on
the price of the Common Stock. In addition, neither the Company nor any of the
Underwriters makes any representation that the Underwriters will engage in
such transactions or that such transactions, once commenced, will not be
discontinued without notice.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby is being passed
upon for the Company and the Selling Stockholders by Winstead Sechrest &
Minick P.C., Houston, Texas. Certain legal matters will be passed upon for the
Underwriters by Andrews & Kurth L.L.P., Houston, Texas. No attorneys who
participated in the preparation of this Prospectus own shares of Common Stock
of the Company.
EXPERTS
The consolidated financial statements of the Company incorporated by
reference in this Prospectus and Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as set forth in their
report. In that report, that firm states that with respect to Bayport, its
opinion for the 1995 period is based on the report of other independent public
accountants, namely Grant Thornton LLP. The consolidated financial statements
referred to above have been incorporated by reference herein in reliance upon
the authority of those firms as experts in giving said reports.
27
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus is a part) on
Form S-3 under the Securities Act, with respect to the securities offered
hereby. This Prospectus does not contain all of the information set forth in
the Registration Statement, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. Statements contained
in this Prospectus as to the content of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of
the contract or other document filed as an exhibit to the Registration
Statement, each statement being qualified in all respects by that reference
and the exhibits to the Registration Statement. For further information
regarding the Company and the securities offered hereby, reference is hereby
made to the Registration Statement and the exhibits to the Registration
Statement which may be obtained from the Commission at its principal office in
Washington, D.C., upon payment of fees prescribed by the Commission.
The Company is subject to the informational requirements of the Exchange
Act, and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Reports, proxy statements and other
information filed by the Company can be inspected and copied, at prescribed
rates, at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington D.C. 20549; and at its Regional Offices located
at Suite 1400, 500 West Madison Street, Chicago, Illinois 60661; and 13th
Floor, Seven World Trade Center, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the
Commission. The address of the Commission's Web site is: http://www.sec.gov.
The Company furnishes its stockholders with annual reports containing
financial statements audited by its independent auditors and makes available
quarterly reports containing unaudited summary financial information for each
of the first three quarters of each fiscal year.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Commission under the
Exchange Act, are incorporated in this Prospectus by reference:
(a) The Company's Annual Report on Form 10-K for the year ended December
31, 1997.
(b) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed with the Commission on
July 21, 1993.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the shares offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.The Company will provide without charge
to each person to whom this Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the documents incorporated
herein by reference (other than exhibits to such documents which are not
specifically incorporated by reference in such documents). Written request for
such copies should be directed to Mr. Steven L. Scheinthal, Vice President-
Administration, General Counsel and Secretary, 1400 Post Oak Blvd., Houston,
Texas 77056, telephone number (713) 850-1010.
28
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
No dealer, salesperson or other person has been authorized to give any in-
formation or to make any representations other than those contained in this
Prospectus in connection with this offering and, if given or made, such infor-
mation or representation must not be relied upon as having been authorized by
the Company or the Selling Stockholders or any Underwriter. This Prospectus
does not constitute an offer to sell or a solicitation of an offer to buy any
of the securities offered hereby in any jurisdiction to any person to whom it
is unlawful to make such offer in such jurisdiction. Neither the delivery of
this Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that the information herein is correct as of any time
subsequent to the date hereof or that there has been no change in the affairs
of the Company since such date.
-----------------------
TABLE OF CONTENTS
-----------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary........................................................ 2
Risk Factors.............................................................. 6
Price Range of Common Stock and Dividend Policy........................... 10
Use of Proceeds........................................................... 11
Capitalization............................................................ 11
Selected Consolidated Financial Information............................... 12
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 13
Business.................................................................. 17
Management................................................................ 23
Principal and Selling Stockholders........................................ 25
Underwriting.............................................................. 26
Legal Matters............................................................. 27
Experts................................................................... 27
Available Information..................................................... 28
Incorporation of Certain Documents by Reference........................... 28
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
3,833,000 SHARES
[Logo of Landry's Seafood Restaurants appears here]
COMMON STOCK
----------------
PROSPECTUS
----------------
NationsBanc Montgomery
Securities LLC
Morgan Stanley Dean Witter
J.C. Bradford & Co.
Piper Jaffray Inc.
Sanders Morris Mundy
, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses of this offering will be paid by Landry's Seafood Restaurants,
Inc. (the "Registrant") and, exclusive of underwriting discounts and
commissions, are estimated as follows:
<TABLE>
<S> <C>
SEC registration fee............................................ $ 36,003
National Association of Securities Dealers filing fee........... 12,705
NASDAQ listing fee.............................................. 17,500
Printing including preparation of share certificate............. 100,000*
Legal fee and expenses.......................................... 90,000*
Accounting fees and expenses.................................... 60,000*
Blue Sky filing fees and expenses (including counsel fees)...... 5,000*
Transfer Agent and Registrar fees and expenses.................. 10,000*
Miscellaneous................................................... 168,792*
========
Total......................................................... $500,000
========
</TABLE>
- --------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to Section 102(b)(7) of the Delaware General Corporation
Law (the "DGCL"), which enables a corporation in its original certificate of
incorporation or an amendment thereto to eliminate or limit the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of the director's fiduciary duty, except (i) for any breach
of the director's duty of loyalty to the corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
DGCL (providing for liability of directors for unlawful payment of dividends
or unlawful stock purchases or redemptions), or (iv) for any transaction from
which the director derived an improper personal benefit. The Registrant's
Certificate of Incorporation, as amended, contains provisions permitted by
Section 102(b)(7) of the DGCL.
The Company is incorporated under the laws of the State of Delaware. Section
145 of the DGCL ("Section 145") provides that a Delaware corporation may
indemnify any persons who are, or are threatened to be made, parties to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of such corporation), by reason of the fact that such person is or was
an officer, director, employee or agent of such corporation, or is or was
serving at the request of such corporation as a director, officer, employee or
agent of another corporation or enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
action, suit or proceeding, provided such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the corporation's
best interests and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that his conduct was unlawful. A Delaware
corporation may indemnify any persons who were or are parties or are
threatened to be made a party, to any threatened, pending or completed action
or suit by or in the right of the corporation by reason of the fact that such
person is or was a director, officer, employee or agent of such corporation,
or enterprise. The indemnity may include expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit, provided such person acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
corporation's best interest except that no indemnification is permitted
without judicial approval if the officer is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses which such officer or director has actually
and reasonably incurred.
II-1
<PAGE>
Article IX of the Company's Certificate of Incorporation provides that the
Company shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative (other
than an action by or in the right of the Company) by reason of the fact that
he is or was a director, officer, employee or agent of the Company, or is or
was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
The Certificate of Incorporation further provides that the Company shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of
the Company to procure a judgment in its favor by reason of the fact that he
is or was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company and
except that no indemnification shall be made in respect of any claim, issue,
or matter as to which such person shall have been adjudged to be liable to the
Company unless and only to the extent that the Delaware Court of Chancery or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnify for such expenses which the Delaware Court of Chancery of such other
court shall deem proper.
The Certificate of Incorporation also provides that to the extent that a
director, officer, employee or agent of the Company has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to
above, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
The Certificate of Incorporation further provides that any indemnification
under the above paragraphs (unless ordered by a court) shall be made by the
Company only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set fort
in the above paragraph. Such determination shall be made (i) by the Board of
Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders. Notwithstanding the foregoing, a director, officer, employee or
agent of the Company shall be able to contest any determination that the
director, officer, employee or agent has not met the applicable standard of
conduct set fort in the above paragraphs by petitioning a court of appropriate
jurisdiction.
The Certificate of Incorporation also provides that expenses (including
attorneys' fees) incurred by an officer or director in defending or settling
any civil, criminal, administrative or investigative action, suit or
proceeding may be paid by the Company in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of such director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Company as
authorized in these paragraphs. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the Board of
Directors deems appropriate.
II-2
<PAGE>
The Certificate of Incorporation further provides that the indemnification
and advancement of expenses provided by, or granted pursuant to, the other
sections of these paragraphs shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office.
The Certificate of Incorporation further provides that the Company shall
have the power to purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of these paragraphs.
The indemnification and advancement of expenses provided by, or granted
pursuant to, the Certificate of Incorporation, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Article VIII of the Company's Bylaws, requires the Company to indemnify the
Company's directors and officers to the extent permitted under the DGCL and
the Certificate of Incorporation.
The Company has entered into indemnification agreements with the Directors
and certain officers.
The foregoing discussion is qualified in its entirety by reference to the
DGCL and the Registrant's Certificate of Incorporation and Bylaws.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
Certain of the exhibits to this Registration Statement are hereby
incorporated by reference to the Company's Registration Statement on Form S-1
No. 33-65498 as filed with the Securities and Exchange Commission and all
amendments thereto with which they were filed as exhibits with the same
exhibit number in such Registration Statement. Such exhibits are denoted with
the letter "A." Exhibits denoted by * are filed herewith.
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- ----------------------------------------------------------------------
<C> <S>
*1 --Form of Underwriting Agreement.
2.1 --Form of Plan and Agreement of Corporate Restructuring--Pirogue --A--
2.2 --Form of Plan and Agreement of Corporate Restructuring --A--
3.1 --Certificate of Incorporation of Landry's Seafood Restaurants, Inc.
as filed with the Delaware Secretary of State on June 23, 1993, as
amended --A--
3.2 --Bylaws of Landry's Seafood Restaurants, Inc. --A--
--Specimen Common Stock Certificate, $.01 par value of Landry's
4 Seafood Restaurants, Inc. --A--
*5 --Opinion of Winstead Sechrest & Minick P.C. regarding legality.
*23.1 --Consent of Arthur Andersen LLP.
*23.2 --Consent of Grant Thornton LLP.
--Consent of Winstead Sechrest & Minick P.C. (included in their
*23.2 opinion filed as Exhibit 5).
*24 --Powers of Attorney (included on page II-5).
</TABLE>
(b) Financial Statement Schedules.
All schedules are omitted because the required information is included in
the Consolidated Financial Statements or the Notes thereto or is otherwise
inapplicable.
II-3
<PAGE>
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described in Item 15
above, or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the 1933 Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 403A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the 1933 Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the 1933 Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to the initial bona fide offering thereof.
(3) For purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED IN THE CITY OF HOUSTON, STATE OF TEXAS, ON THE 20TH DAY OF
FEBRUARY, 1998.
LANDRY'S SEAFOOD RESTAURANTS, INC.
By: Tilman J. Fertitta
__________________________________
TILMAN J. FERTITTA
CHAIRMAN OF THE BOARD/PRESIDENT
AND CHIEF EXECUTIVE OFFICER
Each person whose signature appears below constitutes and appoints Tilman J.
Fertitta, Steven L. Scheinthal and Paul S. West, and each of them (with full
power to each of them to act alone), his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities to sign on his behalf
individually and in each capacity stated below any amendment (including post-
effective amendments) to this Registration Statement and any Registration
Statement (including any amendment thereto) for this offering that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act of
1933, as amended, and to file the same, with all exhibits thereto and other
documents in connection therewith with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents and either of them, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<S> <C>
</TABLE>
SIGNATURE TITLE DATE
Tilman J. Fertitta Chairman, President February 20, 1998
- ----------------------------------- and Chief Executive
TILMAN J. FERTITTA Officer and Director
(Principal Executive
Officer)
Paul S. West Vice President, February 20, 1998
- ----------------------------------- Principal Financail
PAUL S. WEST Officer, Principal
Accounting Officer
and Director
E. A. Jaksa, Jr. Executive Vice February 20, 1998
- ----------------------------------- President, Chief
E. A. JAKSA, JR. Operating Officer and
Director
Steven L. Scheinthal Vice President, February 20, 1998
- ----------------------------------- Administration,
STEVEN L. SCHEINTHAL Secretary, General
Counsel; and Director
James E. Masucci Director February 20, 1998
- -----------------------------------
JAMES E. MASUCCI
Joe Max Taylor Director February 20, 1998
- -----------------------------------
JOE MAX TAYLOR
II-5
<PAGE>
EXHIBIT 1
3,833,000 SHARES
LANDRY'S SEAFOOD RESTAURANTS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
----------------------
March ____, 1998
NATIONSBANC MONTGOMERY SECURITIES LLC
MORGAN STANLEY & CO. INCORPORATED
J.C. BRADFORD & CO.
PIPER JAFFRAY INC.
SANDERS MORRIS MUNDY INC.
As Representatives of the Several Underwriters
c/o NATIONSBANC MONTGOMERY SECURITIES LLC
600 Montgomery Street
San Francisco, California 94111
Dear Sirs:
Section 1. Introductory. Landry's Seafood Restaurants, Inc., a
Delaware corporation (the "Company"), proposes to issue and sell 3,000,000
shares of its authorized but unissued Common Stock (the "Common Stock"), and
certain stockholders of the Company named in Schedule B annexed hereto (the
"Selling Stockholders") propose to sell an aggregate of 833,000 shares of the
Company's issued and outstanding Common Stock, to the several underwriters named
in Schedule A annexed hereto (the "Underwriters"). Said aggregate of 3,833,000
shares are herein called the "Firm Common Shares." In addition, the Company and
the Selling Stockholders, including Tilman J. Fertitta ("Fertitta"), propose
to grant to the Underwriters an option to purchase up to an aggregate of 574,950
additional shares of Common Stock (the "Optional Common Shares"), as provided in
Section 5 hereof. The Firm Common Shares and, to the extent such option is
exercised, the Optional Common Shares are hereinafter collectively referred to
as the "Common Shares."
You have advised the Company and the Selling Stockholders that the
Underwriters propose to make a public offering of their respective portions of
the Common Shares on the effective date of the registration statement
hereinafter referred to, or as soon thereafter as in your judgment is advisable.
<PAGE>
The Company and the Selling Stockholders hereby confirm their respective
agreements with respect to the purchase of the Common Shares by the Underwriters
as follows:
Section 2. Representations and Warranties of the Company and Fertitta.
The Company and Fertitta represent and warrant to the several Underwriters that:
(a) A registration statement on Form S-3 (File No. 333- ) with respect
to the Common Shares has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and has been filed with the
Commission. The Company has prepared and has filed or proposes to file prior to
the effective date of such registration statement an amendment or amendments to
such registration statement, which amendment or amendments have been or will be
similarly prepared. There have been delivered to you two signed copies of such
registration statement and amendments, together with two copies of each exhibit
filed therewith. Conformed copies of such registration statement and amendments
(but without exhibits) and of the related preliminary prospectus have been
delivered to you in such reasonable quantities as you have requested. The
Company will next file with the Commission one of the following: (i) prior to
effectiveness of such registration statement, a further amendment thereto,
including the form of final prospectus, (ii) a final prospectus in accordance
with Rules 430A and 424(b) of the Rules and Regulations or (iii) a term sheet
(the "Term Sheet") as described in and in accordance with Rules 434 and 424(b)
of the Rules and Regulations. As filed, the final prospectus, if one is used,
or the Term Sheet and Preliminary Prospectus, if a final prospectus is not used,
shall include all Rule 430A Information (as hereinafter defined), and, except to
the extent that you shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the date and time
that this Agreement was executed and delivered by the parties hereto, or, to the
extent not completed at such date and time, shall contain only such specific
additional information and other changes (beyond that contained in the latest
Preliminary Prospectus) as the Company shall have previously advised you in
writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall mean such
registration statement at the time such registration statement becomes effective
and, in the event any post-effective amendment thereto becomes effective prior
to the First Closing Date (as hereinafter defined), shall also mean such
registration statement as so amended; provided, however, that such term shall
also include (i) all Rule 430A Information deemed to be included in such
registration statement at the time such registration statement becomes effective
as provided by Rule 430A of the Rules and Regulations and (ii) any registration
statement filed pursuant to 462(b) of the Rules and Regulations relating to the
Common Shares. The term "Preliminary Prospectus" as used in this agreement
shall mean any preliminary prospectus referred to in the preceding paragraph and
any preliminary prospectus included in the Registration Statement at the time it
becomes effective that omits Rule 430A Information. The term "Prospectus" as
used in this Agreement shall mean either (i) the prospectus relating to the
Common Shares in the form in which it is first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations or, (ii) if a Term Sheet is
not used
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and no filing pursuant to Rule 424(b) of the Rules and Regulations is required,
shall mean the form of final prospectus included in the Registration Statement
at the time such registration statement becomes effective or (iii) if a Term
Sheet is used, the Term Sheet in the form in which it is first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations, together with
the Preliminary Prospectus included in the Registration Statement at the time it
becomes effective. The term "Rule 430A Information" as used in this Agreement
shall mean information with respect to the Common Shares and the offering
thereof permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A of the Rules and Regulations. Any reference
herein to any Preliminary Prospectus, the Prospectus or Registration Statement
shall be deemed to refer to and include the documents incorporated by reference
therein pursuant to Form S-3 under the Act, as of the date of such Preliminary
Prospectus, Prospectus or Registration Statement, as the case may be.
(b) The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus, and each Preliminary Prospectus has conformed
in all material respects to the requirements of the Act and the Rules and
Regulations and, as of its date, has not included any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and at the time the Registration Statement becomes
effective, and at all times subsequent thereto up to and including each Closing
Date hereinafter mentioned, the Registration Statement and the Prospectus, and
any amendments or supplements thereto, will contain all material statements and
information required to be included therein by the Act and the Rules and
Regulations and will in all material respects conform to the requirements of the
Act and the Rules and Regulations, and neither the Registration Statement nor
the Prospectus, nor any amendment or supplement thereto, will include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, no representation or warranty contained in this subsection
2(b) shall be applicable to information contained in or omitted from any
Preliminary Prospectus, the Registration Statement, the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
specifically for use in the preparation thereof. The documents incorporated by
reference in the Prospectus, when they were filled with the Commission,
conformed in all material respects to the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the Commission thereunder, and none of such documents contained
an 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 not
misleading.
(c) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed (i)
in Exhibit 21 to the Company's Annual Report on Form 10-K for its most recent
fiscal year or (ii) on Schedule C hereto (the "subsidiaries"). The only
subsidiaries of the Company that would constitute "significant subsidiaries", as
such term is defined in Rule 1-02 of Regulation S-X of the Rules and
Regulations, are listed under the caption "Significant Subsidiaries" on Schedule
C attached hereto (such
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subsidiaries are referred to herein as the "Significant Subsidiaries"). The
Company and each of its subsidiaries other than Landry's Management, L.P. (the
"Corporate Subsidiaries") have been duly incorporated and are validly existing
as corporations in good standing under the laws of their respective
jurisdictions of incorporation, with full power and authority (corporate and
other) to own and lease their properties and conduct their respective businesses
as described in the Registration Statement and the Prospectus; Landry's
Management L.P. (the "Partnership") has been duly organized and is validly
existing and in good standing as a limited partnership under the laws of its
jurisdiction of organization, with full power and authority (partnership and
other) to own and lease its properties and conduct its business as described in
the Registration Statement and the Prospectus; the Company owns directly or
indirectly (through one or more Corporate Subsidiaries), all of the outstanding
capital stock of its Corporate Subsidiaries and all of the outstanding general
and limited partner interests in the Partnership, free and clear of all claims,
liens, charges and encumbrances; the Company and each of its subsidiaries are in
possession of and operating in compliance with all franchises, authorizations,
licenses, permits, easements, consents, certificates and orders material to the
conduct of their respective businesses, all of which are valid and in full force
and effect; the Company and each of its subsidiaries are duly qualified to do
business and in good standing as a foreign corporation or a foreign limited
partnership, as applicable, in each jurisdiction in which the ownership or
leasing of properties or the conduct of their respective businesses require such
qualification, except for jurisdictions in which the failure to so qualify would
not have a material adverse effect upon the Company and its subsidiaries, taken
as a whole; and no proceeding has been instituted in any such jurisdiction,
revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification.
(d) The Company has an authorized and outstanding capital stock as set
forth under the heading "Capitalization" in the Prospectus; the issued and
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable, have been approved for quotation on the Nasdaq
National Market, have been issued in compliance with all federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and conform to
the description thereof contained in the Prospectus. All issued and outstanding
shares of capital stock of the Corporate Subsidiaries of the Company have been
duly authorized and validly issued and are fully paid and nonassessable. All of
the outstanding general and limited partner interests in the Partnership have
been duly authorized and validly issued and are fully paid and nonassessable.
Except as disclosed in or contemplated by the Prospectus and the financial
statements of the Company, and the related notes thereto, included in the
Prospectus, neither the Company nor any subsidiary has outstanding any options
to purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any such options,
rights, convertible securities or obligations.
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(e) The Common Shares to be sold by the Company have been duly authorized
and, when issued, delivered and paid for in the manner set forth in this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform to the description thereof contained in the
Prospectus. No preemptive rights or other rights to subscribe for or purchase
exist with respect to the issuance and sale of the Common Shares by the Company
pursuant to this Agreement. No stockholder of the Company has any right which
has not been waived to require the Company to register the sale of any shares
owned by such stockholder under the Act in the public offering contemplated by
this Agreement. No further approval or authority of the stockholders or the
Board of Directors of the Company will be required for the transfer and sale of
the Common Shares to be sold by the Selling Stockholder or the issuance and sale
of the Common Shares to be sold by the Company as contemplated by this
Agreement.
(f) The Company has full legal right, power and authority to enter into
this Agreement and perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by the Company and constitutes
a valid and binding obligation of the Company in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or other similar laws relating to or
affecting creditor rights generally or by general equitable principles and
except for indemnification provisions. The making and performance of this
Agreement by the Company and the consummation of the transactions herein
contemplated will not violate any provisions of the certificate of incorporation
or bylaws, or other organizational documents of the Company or any of its
subsidiaries, and will not conflict with, result in the breach or violation of,
or constitute, either by itself or upon notice or the passage of time or both, a
default under any agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of its respective properties may be bound or affected, any statute or any
authorization, judgment, decree, order, rule or regulation of any court or any
regulatory body, administrative agency or other governmental body applicable to
the Company or any of its subsidiaries or any of their respective properties.
No consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body is required for the
execution and delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement, except for compliance with the Act, the Blue Sky
laws applicable to the public offering of the Common Shares by the several
Underwriters and the clearance of such offering with the National Association of
Securities Dealers, Inc. (the "NASD").
(g) Arthur Andersen LLP, who have expressed their opinion with respect to
the audited financial statements of the Company, and related schedules, filed
with the Commission as a part of the Registration Statement and included in the
Prospectus and in the Registration Statement, are independent accountants as
required by the Act and the Rules and Regulations.
(h) Grant Thornton LLP, who have expressed their opinion with respect to
the audited financial statements of Bayport Restaurant Group, Inc. incorporated
by reference in the Prospectus
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and in the Registration Statement, are independent accountants as required by
the Act and the Rules and Regulations.
(i) The financial statements and schedules of the Company, and the related
notes thereto, included or incorporated by reference in the Registration
Statement and the Prospectus present fairly the financial position of the
Company as of the respective dates of such financial statements and schedules,
and the results of operations and changes in financial position of the Company
for the respective periods covered thereby. Such statements, schedules and
related notes have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis as certified by the
independent accountants named in subsection 2(g). No other financial statements
or schedules are required to be included in the Registration Statement. The
selected financial data set forth in the Prospectus under the captions
"Capitalization" and "Selected Consolidated Financial Information" fairly
present the information set forth therein on the basis stated in the
Registration Statement.
(j) Except as disclosed in the Prospectus, and except as to defaults which
individually or in the aggregate would not be material to the Company, neither
the Company nor any of its subsidiaries is in violation or default of any
provision of its certificate of incorporation or bylaws, or other organizational
documents, or is in breach of or default with respect to any provision of any
agreement, judgment, decree, order, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which it is a party or by
which or any of its properties are bound; and there does not exist any state of
facts which constitutes an event of default on the part of the Company or any
such subsidiary as defined in such documents or which, with notice or lapse of
time or both, would constitute such an event of default.
(k) There are no contracts or other documents required to be described in
the Registration Statement or to be filed as exhibits to the Registration
Statement by the Act, or by the Rules and Regulations which have not been
described or filed as required. The contracts so described in the Prospectus
are in full force and effect on the date hereof, and neither the Company nor any
of its subsidiaries, nor to the best of the Company's knowledge, any other party
is in breach of or default under any of such contracts.
(l) There are no legal or governmental actions, suits or proceedings
pending or, to the best of the Company's knowledge, threatened to which the
Company or any of its subsidiaries is or may be a party or of which property
owned or leased by the Company or any of its subsidiaries is or may be the
subject, or related to environmental or discrimination matters, which actions,
suits or proceedings might, individually or in the aggregate, prevent or
adversely affect the transactions contemplated by this Agreement or result in a
material adverse change in the condition (financial or otherwise), properties,
business, results of operations or prospects of the Company and its
subsidiaries; and no labor disturbance by the employees of the Company or any of
its subsidiaries
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exists or is imminent which might be expected to affect adversely such
condition, properties, business, results of operations or prospects. Neither the
Company nor any of its subsidiaries is a party or subject to the provisions of
any material injunction, judgment, decree or order of any court, regulatory
body, administrative agency or other governmental body.
(m) The Company or the applicable subsidiary has good and defensible title
to all the properties and assets reflected as owned in the financial statements
hereinabove described (or elsewhere in the Prospectus), subject to no lien,
mortgage, pledge, charge or encumbrance of any kind, except (i) those, if any,
reflected in such financial statements (or elsewhere in the Prospectus), or (ii)
those which are not material in amount and do not adversely affect the use made
and proposed to be made of such property by the Company and its subsidiaries.
The Company or the applicable subsidiary holds its leased properties under valid
and binding leases, with such exceptions as are not materially significant in
relation to the business of the Company. Except as disclosed in the Prospectus,
the Company owns or leases all such properties as are necessary to its
operations as now conducted or as proposed to be conducted.
(n) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) the Company and its
subsidiaries have not incurred any material liabilities or obligations,
indirect, direct or contingent, or entered into any material verbal or written
agreement or other transaction which is not in the ordinary course of business
or which could result in a material reduction in the future earnings of the
Company and its subsidiaries, taken as a whole; (ii) the Company and its
subsidiaries have not sustained any material loss or interference with their
respective businesses or properties from fire, flood, windstorm, accident or
other calamity, whether or not covered by insurance; (iii) the Company has not
paid or declared any dividends or other distributions with respect to its
capital stock and the Company and its subsidiaries are not in default in the
payment of principal or interest on any outstanding debt obligations; (iv) there
has not been any change in the capital stock (other than upon the sale of the
Common Shares hereunder) or indebtedness material to the Company and its
subsidiaries (other than in the ordinary course of business); and (v) there has
not been any material adverse change in the condition (financial or otherwise),
business, properties, results of operations or prospects of the Company and its
subsidiaries, taken as a whole.
(o) Except as disclosed in or specifically contemplated by the Prospectus,
the Company and its subsidiaries have sufficient trademarks, trade names, patent
rights, copyrights, licenses, approvals and governmental authorizations to
conduct their businesses as now conducted; the expiration of any trademarks,
trade names, patent rights, copyrights, licenses, approvals or governmental
authorizations would not have a material adverse effect on the condition
(financial or otherwise), business, results of operations or prospects of the
Company or its subsidiaries taken as a whole; and the Company has no knowledge
of any infringement by it or its subsidiaries of trademark, trade name rights,
patent rights, copyrights, licenses, trade secret or other similar rights of
others, and there is no claim being made against the Company or its subsidiaries
regarding trademark, trade name, patent, copyright, license, trade secret or
other infringement which could
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<PAGE>
have a material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company and its
subsidiaries, taken as a whole.
(p) The Company has not been advised, and has no reason to believe, that
either it or any of its subsidiaries is not conducting business in compliance
with all applicable laws, rules and regulations of the jurisdictions in which it
is conducting business, including, without limitation, all applicable local,
state and federal environmental laws and regulations; except where failure to be
so in compliance would not materially adversely affect the condition (financial
or otherwise), business, results of operations or prospects of the Company and
its subsidiaries, taken as a whole.
(q) All United States federal income tax returns of the Company and its
subsidiaries required by law to be filed have been filed and all taxes shown by
such returns or otherwise assessed, which are due and payable, have been paid;
each of the Company and the subsidiaries has filed all other tax returns that
are required to have been filed by it pursuant to applicable foreign, state,
local or other law, except insofar as the failure to file such returns would not
have a material adverse effect on the condition (financial or otherwise),
business, prospects or results of operations of the Company and its
subsidiaries, taken as a whole, and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by the Company and the
subsidiaries, except for such taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided; the charges,
accruals and reserves on the books of the Company and the subsidiaries in
respect of any tax liability for any years not finally determined are adequate
to meet any assessments or re-assessments for additional tax for any years not
finally determined, except to the extent of any inadequacy that would not have a
material adverse effect on the condition (financial or otherwise), business,
prospects or results of operations of the Company and its subsidiaries, taken as
a whole.
(r) Neither the Company nor any of its subsidiaries are, or on the First
Closing Date or Second Closing Date will be, an "investment company" or a
company "controlled" by an "investment company" as defined under the Investment
Company Act of 1940, as amended, and the rules and regulations promulgated by
the Commission thereunder (collectively, the "Investment Company Act").
(s) The Company has not distributed and will not distribute prior to the
First Closing Date any offering material in connection with the offering and
sale of the Common Shares other than the Prospectus, the Registration Statement
and the other materials permitted by the Act.
(t) Each of the Company and its subsidiaries maintains insurance of the
types and in the amounts that management of the Company reasonably believes to
be adequate for its business, including, but not limited to, insurance covering
real and personal property owned or leased by the Company and its subsidiaries
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect.
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<PAGE>
(u) Neither the Company nor any of its subsidiaries has at any time during
the last five years (i) made any unlawful contribution to any candidate for
foreign office, or failed to disclose fully any contribution in violation of law
or (ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States or of
any jurisdiction thereof.
(v) The Company has not taken and will not take, directly or indirectly,
any action designed to or that might be reasonably expected to cause or result
in stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Common Shares.
(w) The Company is eligible to use a Registration Statement on Form S-3
under the Act and the Rules and Regulations thereunder for purposes of
registering the Common Shares under the Act.
(x) To the best of the Company's knowledge, neither the Company nor any of
its affiliates is currently doing business with the government of Cuba or with
any person or affiliate located in Cuba.
Section 3. Representations, Warranties and Covenants of the Selling
Stockholders.
(a) Fertitta represents and warrants to, and agrees with, the several
Underwriters that he has, and on the First Closing Date and the Second Closing
Date hereinafter mentioned, will have, good and marketable title to the Common
Shares proposed to be sold by him hereunder on such Closing Date and full right,
power and authority to enter into this Agreement and to sell, assign, transfer
and deliver such Common Shares hereunder, free and clear of all voting trust
arrangements, liens, encumbrances, equities, security interests, restrictions
and claims whatsoever; and upon delivery of and payment for such Common Shares
hereunder, the Underwriters will acquire good and marketable title thereto, free
and clear of all liens, encumbrances, equities, claims, restrictions, security
interests, voting trusts or other defects of title whatsoever.
(b) Each of E.A. Jaksa, Jr., Paul S. West and Steven L. Scheinthal, three
of the Selling Stockholders, represent and warrant to, and agree with, the
Underwriters that such Selling Stockholder has on the
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date hereof valid and currently exercisable options to purchase the Common
Shares proposed to be sold by such Selling Stockholder hereunder on the First
Closing Date and, pursuant to the valid exercise of such options, on the First
Closing Date such Selling Stockholder will have good and marketable title to the
Common Shares proposed to be sold by such Selling Stockholder hereunder on such
Closing Date; such Selling Stockholder has full right, power and authority to
enter into this Agreement and to sell, assign, transfer and deliver such Common
Shares hereunder, free and clear of all voting trust arrangements, liens,
encumbrances, equities, security interests, restrictions and claims whatsoever;
and upon delivery of and payment for such Common Shares hereunder, the
Underwriters will acquire good and marketable title thereto, free and clear of
all liens, encumbrances, equities, claims, restrictions, security interests,
voting trusts or other defects of title whatsoever.
(c) Each of the Selling Stockholders represents and warrants to, and agrees
with, the Underwriters that:
(i) The performance of this Agreement and the consummation of the
transactions contemplated hereby will not result in a breach or violation by
such Selling Stockholder of any of the terms or provisions of, or constitute a
default by such Selling Stockholder under, any indenture, mortgage, deed of
trust, trust (constructive or other), loan agreement, lease, franchise, license
or other agreement or instrument to which such Selling Stockholder is a party or
by which such Selling Stockholder or any of his properties is bound, any
statute, or any judgment, decree, order, rule or regulation of any court or
governmental agency or body applicable to such Selling Stockholder or any of his
properties; and
(ii) Such Selling Stockholder has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Common Shares.
(d) Each of the Selling Stockholders agrees with the Company and the
Underwriters not to offer to sell, sell or contract to sell or otherwise dispose
of any shares of Common Stock or securities convertible into or exchangeable for
any shares of Common Stock, for a period of 90 days after the date of the
Prospectus without the prior written consent of NationsBanc Montgomery
Securities LLC ("Montgomery Securities").
Section 4. Representations and Warranties of the Underwriters. The
Underwriters, represent and warrant to the Company and to the Selling
Stockholders that the information set forth (i) on the cover page of the
Prospectus with respect to price, underwriting discounts and commissions and
terms of the offering and (ii) under "Underwriting" in the Prospectus was
furnished to the Company by and on behalf of the Underwriters for use in
connection with the preparation of the Registration Statement and the Prospectus
and is correct in all material respects. The Company and the Selling
Stockholders acknowledge that this information is the sole information furnished
to
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the Company by the Underwriters for inclusion in the Registration Statement, any
Preliminary Prospectus, any Prospectus, or any amendment or supplement thereto.
Section 5. Purchase, Sale and Delivery of Common Shares. On the basis
of the representations, warranties and agreements herein contained, but subject
to the terms and conditions herein set forth, (i) the Company agrees to issue
and sell to the Underwriters 3,000,000 of the Firm Common Shares, and (ii) the
Selling Stockholders agree, severally and not jointly, to sell to the
Underwriters, in the respective amounts set forth in Schedule B hereto, an
aggregate of 833,000 of the Firm Common Shares. The Underwriters agree,
severally and not jointly, to purchase from the Company and the Selling
Stockholders, respectively, the number of Firm Common Shares described below.
The purchase price per share to be paid by the several Underwriters to the
Company and to the Selling Stockholders, respectively, for the Firm Common
Shares shall be _______ per share.
The obligation of each Underwriter to the Company shall be to purchase from
the Company that number of full shares which (as nearly as practicable, as
determined by you) bears to 3,000,000 the same proportion as the number of
shares set forth opposite the name of such Underwriter in Schedule A hereto
bears to the total number of Firm Common Shares. The obligation of each
Underwriter to the Selling Stockholders shall be to purchase from the Selling
Stockholders that number of full shares which (as nearly as practicable, as
determined by you) bears to 833,000 the same proportion as the number of shares
set forth opposite the name of such Underwriter in Schedule A hereto bears to
the total number of Firm Common Shares.
Delivery of certificates for the Firm Common Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of Montgomery
Securities, 600 Montgomery Street, San Francisco, California (or such other
place as may be agreed upon by the Company and the Representatives) at such time
and date, not later than the third (or, if the Firm Common Shares are priced, as
contemplated by Rule 15c6-1(c) under the Securities Exchange Act of 1934, after
4:30 P.M. Washington D.C. time, the fourth) full business day following the
first date that any of the Common Shares are released by you for sale to the
public, as you shall designate by at least 48 hours prior notice to the Company
(or at such other time and date, not later than one week after such third or
fourth, as the case may be, full business day as may be agreed upon by the
Company and the Representatives (the "First Closing Date"); provided, however,
that if the Prospectus is at any time prior to the First Closing Date
recirculated to the public, the First Closing Date shall occur upon the later of
the third or fourth, as the case may be, full business day following the first
date that any of the Common Shares are released by you for sale to the public or
the date that is 48 hours after the date that the Prospectus has been so
recirculated.
Delivery of certificates for the Firm Common Shares shall be made by or on
behalf of the Company and the Selling Stockholders to you, for the respective
accounts of the Underwriters, with respect to the Firm Common Shares to be sold
by the Company and by the Selling Stockholders against payment by you, for the
accounts of the several Underwriters, of the purchase price therefor by wire
transfer of federal funds to accounts designated by the Company and each of the
Selling Stockholders in proportion to the number of Firm Common Shares to be
sold by the Company and
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each of the Selling Stockholders, respectively. The certificates for the Firm
Common Shares shall be registered in such names and denominations as you shall
have requested at least two full business days prior to the First Closing Date,
and shall be made available for checking and packaging on the business day
preceding the First Closing Date at a location in New York, New York, as may be
designated by you. Time shall be of the essence, and delivery at the time and
place specified in this Agreement is a further condition to the obligations of
the Underwriters.
In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company and the Selling Stockholders hereby grant an option to the several
Underwriters to purchase, severally and not jointly, up to an aggregate of
833,000 Optional Common Shares, as provided more fully below, at the purchase
price per share to be paid for the Firm Common Shares, for use solely in
covering any over allotments made by you in the sale and distribution of the
Firm Common Shares. The option granted hereunder may be exercised at any time
(but not more than once) within 30 days after the first date that any of the
Common Shares are released by you for sale to the public, upon notice by you to
the Company and the Selling Stockholders setting forth the aggregate number of
Optional Common Shares as to which the Underwriters are exercising the option,
the names and denominations in which the certificates for such shares are to be
registered and the time and place at which such certificates will be delivered.
Such time of delivery (which may not be earlier than the First Closing Date),
being herein referred to as the "Second Closing Date," shall be determined by
you, but if at any time other than the First Closing Date shall not be earlier
than three nor later than five full business days after delivery of such notice
of exercise. The number of Optional Common Shares to be purchased by each
Underwriter shall be determined by multiplying the number of Optional Common
Shares to be sold by the Company and the Selling Stockholders
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pursuant to such notice of exercise by a fraction, the numerator of which is the
number of Firm Common Shares to be purchased by such Underwriter as set forth
opposite its name in Schedule A and the denominator of which is 3,833,000
(subject to such adjustments to eliminate any fractional share purchases as you
in your discretion may make). Certificates for the Optional Common Shares will
be made available for checking and packaging on the business day preceding the
Second Closing Date at a location in New York, New York, as may be designated by
you. The manner of payment for and delivery of the Optional Common Shares shall
be the same as for the Firm Common Shares purchased from the Company and the
Selling Stockholders as specified in the two preceding paragraphs. At any time
before lapse of the option, you may cancel such option by giving written notice
of such cancellation to the Company and Fertitta. If the option is canceled or
expires unexercised in whole or in part, the Company will deregister under the
Act the number of Optional Common Shares as to which the option has not been
exercised.
You have advised the Company and the Selling Stockholders that each
Underwriter has authorized you to accept delivery of its Common Shares, to make
payment and to receipt therefor. You, individually and not as the
Representatives of the Underwriters, may (but shall not be obligated to) make
payment for any Common Shares to be purchased by any Underwriter whose funds
shall not have been received by you by the First Closing Date or the Second
Closing Date, as the case may be, for the account of such Underwriter, but any
such payment shall not relieve such Underwriter from any of its obligations
under this Agreement.
Subject to the terms and conditions hereof, the Underwriters propose to
make a public offering of their respective portions of the Common Shares as soon
after the effective date of the Registration Statement as in the judgment of the
Underwriters is advisable and at the public offering price set forth on the
cover page of and on the terms set forth in the final prospectus, if one is
used, or on the first page of the Term Sheet, if one is used.
Not later than 12:00 p.m. on the second business day following the date the
Common Shares are released by the Underwriters for sale to the public, the
Company shall deliver or cause to be delivered copies of the Prospectus in such
quantities and at such places as the Underwriters shall request.
Section 6. Covenants of the Company. The Company covenants and agrees
that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective. If the Registration Statement has become or becomes effective
pursuant to Rule 430A of the Rules and Regulations, or the filing of the
Prospectus is otherwise required under Rule 424(b) of the Rules and Regulations,
the Company will file the Prospectus, properly completed, pursuant to the
applicable paragraph of Rule 424(b) of the Rules and Regulations within the time
period prescribed and will provide evidence satisfactory to you of such timely
filing. The Company will promptly advise you in writing (i) of the receipt of
any comments of the Commission, (ii) of any request of the Commission for
amendment of or supplement to the Registration Statement (either before or after
it becomes effective), any Preliminary Prospectus or the Prospectus or for
additional information, (iii) when the Registration Statement shall have become
effective and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the institution
of any proceedings for that purpose. If the Commission shall enter any such
stop order at any time, the Company will
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use its best efforts to obtain the lifting of such order at the earliest
possible moment. The Company will not file any amendment or supplement to the
Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus of which you have not been furnished
with a copy a reasonable time prior to such filing or to which you reasonably
object or which is not in compliance with the Act and the Rules and Regulations.
(b) The Company will prepare and file with the Commission, promptly upon
your request, any amendments or supplements to the Registration Statement or the
Prospectus which in your judgment may be necessary or advisable to enable the
several Underwriters to continue the distribution of the Common Shares and will
use its best efforts to cause the same to become effective as promptly as
possible. The Company will fully and completely comply with the provisions of
Rule 430A of the Rules and Regulations with respect to information omitted from
the Registration Statement in reliance upon such Rule.
(c) If at any time within the nine-month period referred to in Section
10(a)(3) of the Act during which a prospectus relating to the Common Shares is
required to be delivered under the Act any event occurs, as a result of which
the Prospectus, including any amendments or supplements, would include an 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, or if
it is necessary at any time to amend the Prospectus, including any amendments or
supplements, to comply with the Act or the Rules and Regulations, the Company
will promptly advise you thereof and will promptly prepare and file with the
Commission, at its own expense, an amendment or supplement which will correct
such statement or omission or an amendment or supplement which will effect such
compliance and will use its best efforts to cause the same to become effective
as soon as possible; and, in case any Underwriter is required to deliver a
prospectus after such nine-month period, the Company upon request, but at the
expense of such Underwriter, will promptly prepare such amendment or amendments
to the Registration Statement and such Prospectus or Prospectuses as may be
necessary to permit compliance with the requirements of Section 10(a)(3) of the
Act.
(d) As soon as practicable, but not later than 45 days after the end of the
first quarter ending after one year following the "effective date of the
Registration Statement" (as defined in Rule 158(c) of the Rules and
Regulations), the Company will make generally available to its security holders
an earnings statement (which need not be audited) covering a period of 12
consecutive months beginning after the effective date of the Registration
Statement which will satisfy the provisions of the last paragraph of Section
11(a) of the Act.
(e) During such period as a prospectus is required by law to be delivered
in connection with sales by an Underwriter or dealer, the Company, at its
expense, but only for the nine-month period referred to in Section 10(a)(3) of
the Act, will furnish to you and the Selling Stockholders or mail to your order
copies of the Registration Statement, the Prospectus, the Preliminary Prospectus
and all amendments and supplements to any such documents in each case as soon as
available and in such quantities as you and the Selling Stockholders may
request, for the purposes contemplated by the Act.
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<PAGE>
(f) The Company shall cooperate with you and your counsel in order to
qualify or register the Common Shares for sale under (or obtain exemptions from
the application of) the Blue Sky laws of such jurisdictions as you designate,
will comply with such laws and will continue such qualifications, registrations
and exemptions in effect so long as reasonably required for the distribution of
the Common Shares. The Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any such
jurisdiction where it is not presently qualified or where it would be subject to
taxation as a foreign corporation, nor shall the Company be required to escrow
any shares of capital stock of the Company. The Company will advise you
promptly of the suspension of the qualification or registration of (or any such
exemption relating to) the Common Shares for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company, with your cooperation, will use its best
efforts to obtain the withdrawal thereof.
(g) During the period of five years hereafter or for so long as required by
law, if shorter, the Company will furnish to the Representatives and, upon
request of the Representatives, to each of the other Underwriters: (i) as soon
as practicable after the end of each fiscal year, copies of the Annual Report of
the Company containing the balance sheet of the Company as of the close of such
fiscal year and statements of income, stockholders' equity and cash flows for
the year then ended and the opinion thereon of the Company's independent public
accountants; (ii) as soon as practicable after the filing thereof, copies of
each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q,
Report on Form 8-K or other report filed by the Company with the Commission, the
NASD or any securities exchange; and (iii) as soon as available, copies of any
report or communication of the Company mailed generally to holders of its Common
Stock.
(h) During the period of 90 days after the first date that any of the
Common Shares are released by you for sale to the public, without the prior
written consent of Montgomery Securities (which consent may be withheld at the
sole discretion of Montgomery Securities), the Company will not issue, offer,
sell, grant options to purchase or otherwise dispose of any of the Company's
equity securities or any other securities convertible into or exchangeable with
its Common Stock or other equity security, except that Company may, without
consent, issue shares of Common Stock upon exercise of stock options outstanding
as of the date of the Prospectus and grant additional options under the
Company's 1993 Stock Option Plan, the Company's Nonqualified Formula Stock
Option Plan for Non-Employee Directors, the Company's 1995 Flexible Incentive
Plan and any other stock option plan adopted by the Board of Directors of the
Company and approved by the stockholders of the Company, in each case consistent
with past practices.
(i) The Company will apply the net proceeds of the sale of the Common
Shares sold by it substantially in accordance with its statements under the
caption "Use of Proceeds" in the Prospectus.
(j) The Company (i) will use its best efforts to qualify or register its
Common Stock for sale in non-issuer transactions under, or obtain exemptions
from the application of, the Blue Sky
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<PAGE>
laws of the State of California (and thereby permit market making transactions
and secondary trading in the Company's Common Stock in California), (ii) will
comply with such Blue Sky laws, and (iii) will continue such qualifications,
registrations and exemptions in effect for a period of five years after the date
hereof.
(k) The Company will file with the National Association of Securities
Dealers, Inc. all documents and notices required by the NASD of companies that
have issued securities that are traded in the over-the-counter market and
quotations of which are reported by the Nasdaq National Market.
You may, in your sole discretion, waive in writing the performance by the
Company of any one or more of the foregoing covenants or extend the item for
their performance.
Section 7. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective or is
terminated, the Company agrees to pay all costs, fees and expenses of the
Company and, except as set forth below, of the Selling Stockholders incurred in
connection with the performance of their obligations hereunder and in connection
with the transactions contemplated hereby, including, without limiting the
generality of the foregoing, (i) all expenses incident to the issuance and
delivery of the Common Shares (including all costs of preparing stock
certificates), (ii) all fees and expenses of the registrar and transfer agent of
the Common Stock, (iii) all necessary issue, transfer and other stamp taxes in
connection with the issuance and sale of the Common Shares to the Underwriters,
(iv) all fees and expenses of the Company's counsel and the Company's
independent accountants, (v) all costs and expenses incurred in connection with
the preparation, printing, filing, shipping and distribution of the Registration
Statement, each Preliminary Prospectus and the Prospectus (including all
exhibits and financial statements) and all amendments and supplements provided
for herein, this Agreement, the Agreement Among Underwriters, the Selected
Dealers Agreement, the Underwriters' Questionnaire, the Underwriters' Power of
Attorney and the Blue Sky memorandum, (vi) all filing fees, attorneys' fees
and expenses incurred by the Company or the Underwriters in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) all or any part of the Common Shares for offer and sale under
the United States or Canadian Blue Sky laws, (vii) all filing fees, attorneys'
fees and expenses incurred by the Company or the Underwriters in connection with
compliance with the rules of the National Association of Securities Dealers,
Inc. ("NASD") in connection with the offering of the Common Shares, and (viii)
all other fees, costs and expenses referred to in Item 13 of the Registration
Statement. Except as provided in this Section 7, Section 9 and Section 11
hereof, the Underwriters shall pay all of their own expenses, including the fees
and disbursements of their counsel (excluding those relating to qualification,
registration or exemption under the United States or Canadian Blue Sky laws and
the Blue Sky memorandum referred to above). This Section 7 shall not affect any
agreements relating to the payment of expenses between the Company and the
Selling Stockholders.
Each of the Selling Stockholders will pay (directly or by reimbursement)
all fees and expenses incident to the performance of his obligations under this
Agreement which are not
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<PAGE>
otherwise specifically provided for herein, including but not limited to (i) any
fees and expenses of counsel for such Selling Stockholder; and (ii) all expenses
and taxes incident to the sale and delivery of the Common Shares to be sold by
such Selling Stockholder to the Underwriters hereunder.
Section 8. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm Common
Shares on the First Closing Date and the Optional Common Shares on the Second
Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein set
forth as of the date hereof and as of the First Closing Date or the Second
Closing Date, as the case may be, to the accuracy of the statements of Company
officers and the Selling Stockholders made pursuant to the provisions hereof, to
the performance by the Company and the Selling Stockholders of their respective
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later than
5:30 P.M., Washington, D.C. time, on the date of this Agreement, or at such
later time as shall have been consented to by you; if the filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule 424(b) of
the Rules and Regulations, the Prospectus shall have been filed in the manner
and within the time period required by Rule 424(b) of the Rules and Regulations;
prior to such Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge of
the Company, the Selling Stockholders or the Underwriters, shall be contemplated
by the Commission; any request of the Commission for inclusion of additional
information in the Registration Statement, or otherwise, shall have been
complied with to the Underwriters' satisfaction; and prior to such Closing Date
there shall not have come to the attention of the Underwriters any facts that
would cause them to believe that the Prospectus, at the time it was required to
be delivered to a purchaser of the Common Shares, contained any untrue statement
of a material fact or omitted to state any material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) The Underwriters shall be satisfied that since the respective dates as
of which information is given in the Registration Statement and Prospectus, (i)
there shall not have been any change in the capital stock (other than upon the
sale of the Common Shares under this Agreement or pursuant to the exercise of
director or employee stock options outstanding as of the respective dates of the
Registration Statement or the Prospectus) of the Company or any of its
subsidiaries or any material change in the indebtedness (other than as
contemplated by the Prospectus) of the Company or any of its subsidiaries, (ii)
except as set forth or contemplated by the Registration Statement or the
Prospectus, no material verbal or written agreement or other transaction shall
have been entered into by the Company or any of its subsidiaries, which is not
in the ordinary course of business or which could result in a material reduction
in the future earnings of the Company and its subsidiaries, taken as a whole,
(iii) no loss or damage (whether or not insured) to the property of the Company
or any of its subsidiaries shall have been sustained which materially and
adversely affects the condition (financial or otherwise), business, results of
operations or prospects of the Company and its subsidiaries, taken as a whole,
(iv) no legal or governmental action, suit or proceeding
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<PAGE>
affecting the Company or any of its subsidiaries which is material to the
Company and its subsidiaries or which affects or may affect the transactions
contemplated by this Agreement shall have been instituted or threatened and (v)
there shall not have been any material change in the condition (financial or
otherwise), business, management, results of operations or prospects of the
Company and its subsidiaries taken as a whole which makes it impractical or
inadvisable in your judgment to proceed with the public offering or purchase the
Common Shares as contemplated hereby.
(c) There shall have been furnished to you on each Closing Date, in form
and substance satisfactory to the Underwriters, except as otherwise expressly
provided below.
(i) An opinion of Winstead Sechrest & Minick P.C., counsel for the Company,
addressed to the Underwriters and dated the First Closing Date, or the Second
Closing Date, as the case may be, to the effect that:
(1) The Company and each of the Significant Subsidiaries other than
Landry's Management, L.P. (the "Significant Corporate Subsidiaries") have
been duly incorporated, are validly existing and in good standing as
corporations under the laws of their respective jurisdictions and have all
requisite corporate power and authority to own or lease its properties and
conduct its business as described in the Prospectus; the Partnership has
been duly organized and is validly existing and in good standing as a
limited partnership under the laws of its jurisdiction of organization and
has all requisite partnership power and authority to own or lease its
properties and conduct its business as described in the Prospectus; the
Company and each of the Significant Corporate Subsidiaries is duly
qualified as a foreign corporation in good standing in all other
jurisdictions where it owns or leases properties or conducts business; and
the Partnership is duly qualified as a foreign limited partnership in good
standing in all other jurisdictions where it owns or leases properties or
conducts business;
(2) The authorized, issued and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the
Prospectus; all necessary and proper corporate proceedings have been taken
in order to authorize validly such authorized Common Stock; all outstanding
shares of Common Stock (including the Firm Common Shares and any Optional
Common Shares) have been duly and validly issued, are fully paid and
nonassessable, have been issued in compliance with federal and state
securities laws, were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase any
securities and conform to the description thereof contained in the
Prospectus; without limiting the foregoing, there are no preemptive or
other rights to subscribe for or purchase any of the Common Shares to be
sold by the Company hereunder;
(3) All of the issued and outstanding shares of capital stock of the
Company's Significant Corporate Subsidiaries have been duly and validly
authorized and issued, are fully paid and nonassessable and are owned
beneficially by the Company free and clear of
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all liens, encumbrances, equities, claims, security interests, voting
trusts or other defects of title whatsoever; and all of the outstanding
general partner and limited partner interests in the Partnership have been
duly authorized and validly issued, are fully paid and nonassessable and
are owned, directly or indirectly (through one or more Significant
Corporate Subsidiaries), by the Company and are owned beneficially by the
Company free and clear of all liens, encumbrances, equities, claims,
security interests, voting trusts or other defects of title whatsoever;
(4) The certificates evidencing the Common Shares to be delivered
hereunder are in due and proper form under Delaware law, and when duly
countersigned by the Company's transfer agent and registrar, and delivered
to, or upon the order of, the Underwriters against payment of the agreed
consideration therefor in accordance with the provisions of this Agreement,
the Common Shares represented thereby will be duly authorized and validly
issued, fully paid and nonassessable, will not have been issued in
violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities and will conform in all respects to
the description thereof contained in the Prospectus and there is no
restriction upon the voting or transfer of any of the Common Shares
pursuant to applicable law (assuming compliance with all applicable federal
and state securities laws) or the Company's certificate of incorporation or
bylaws or, to the best of such counsel's knowledge, any agreement or other
outstanding instrument;
(5) Except as disclosed in or specifically contemplated by the
Prospectus, to the best of such counsel's knowledge, there are no
outstanding options, warrants or other rights calling for the issuance of,
and no commitments, plans or arrangements to issue, any shares of capital
stock of the Company or any of its subsidiaries or any security convertible
into or exchangeable for capital stock of the Company or any of its
subsidiaries;
(6) (a) The Registration Statement has become effective under the Act,
and, to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or preventing the use of the
Prospectus has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated by the Commission; any required
filing of the Prospectus and any supplement thereto pursuant to Rule 424(b)
of the Rules and Regulations has been made in the manner and within the
time period required by such Rule 424(b);
(b) The Registration Statement, the Prospectus and each amendment or
supplement thereto (except for the financial statements and schedules
included therein as to which such counsel need express no opinion) comply
as to form in all material respects with the requirements of the Act and
the Rules and Regulations;
(c) To the best of such counsel's knowledge, there are no franchises,
leases, contracts, agreements or documents of a character required to be
disclosed in the Registration
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Statement or Prospectus or to be filled as exhibits to the Registration
Statement which are not disclosed or filed, as required;
(d) To the best of such counsel's knowledge, there are no legal or
governmental actions, suits or proceedings pending or threatened against
the Company which are required to be described in the Prospectus which are
not described as required;
(e) The documents incorporated by reference in the Registration
Statement and the Prospectus (except for the financial statements and
schedules included therein as to which such counsel need express no
opinion), when they were filed with the Commission, complied as to form in
all material respects with the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder;
(7) The Company has full right, power and authority to enter into this
Agreement and to sell and deliver the Common Shares to be sold by it to the
several Underwriters; this Agreement has been duly and validly authorized
by all necessary corporate action by the Company, has been duly and validly
executed and delivered by and on behalf of the Company, and is a valid and
binding agreement of the Company in accordance with its terms, except as
enforceability may be limited by general equitable principles, bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights generally and except as to those provisions relating to indemnity or
contribution for liabilities arising under the Act as to which no opinion
need be expressed; and no approval, authorization, order, consent,
registration, filing, qualification, license or permit of or with any
court, regulatory, administrative or other governmental body is required
for the execution and delivery of this Agreement by the Company or the
consummation of the transactions contemplated by this Agreement, except (i)
such as have been obtained and are in full force and effect under the Act
and (ii) such as may be required under United States and Canadian Blue Sky
laws in connection with the purchase and distribution of the Common Shares
by the Underwriters and the clearance of such offering with the NASD (as to
which matters in clauses (i) and (ii) no opinion need be expressed);
(8) Neither the execution or performance of this Agreement nor the
consummation of the transactions herein contemplated will conflict with,
result in the breach of, or constitute, either by itself or upon notice or
the passage of time or both, a default under, any agreement, mortgage, deed
of trust, lease, franchise, license, indenture, permit or other instrument
known to such counsel to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or any of its or
their property may be bound which is material to the Company and its
subsidiaries, or violate any of the provisions of the certificate of
incorporation or bylaws, or other organizational documents, of the Company
or any of its subsidiaries or, so far as is known to such counsel, violate
any statute, judgment, decree, order, rule or regulation of any court or
governmental body having jurisdiction over the Company or any of its
subsidiaries or any of its or their property;
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<PAGE>
(9) Neither the Company nor any subsidiary is in violation of its
certificate of incorporation or bylaws, or other organizational documents
or to the best of such counsel's knowledge, in breach of or default with
respect to any provision of any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument known to such
counsel to which the Company or any such subsidiary is a party or by which
it or any of its properties may be bound or affected, except where such
default would not materially adversely affect the Company and its
subsidiaries; and, to the best of such counsel's knowledge, the Company and
its subsidiaries are in compliance with all laws, rules, regulations,
judgments, decrees, orders and statutes of any court or jurisdiction to
which they are subject, except where noncompliance would not materially
adversely affect the Company and its subsidiaries;
(10) To the best of such counsel's knowledge, no holders of securities
of the Company have rights which have not been waived to the registration
of shares of Common Stock or other securities, because of the filing of the
Registration Statement by the Company or the offering contemplated hereby;
(11) To the best of such counsel's knowledge, this Agreement has been
duly authorized, executed and delivered by or on behalf of each of the
Selling Stockholders; the performance of this Agreement and the
consummation of the transactions herein contemplated by the Selling
Stockholders will not result in a breach of, or constitute a default under,
any indenture, mortgage, deed of trust, trust (constructive or other), loan
agreement, lease, franchise, license or other agreement or instrument to
which any of the Selling Stockholders is a party or by which any of the
Selling Stockholders or any of the respective properties of such Selling
Stockholder may be bound, or violate any statute, judgment, decree, order,
rule or regulation known to such counsel of any court or governmental body
having jurisdiction over any of the Selling Stockholders or any of the
respective properties of any of the Selling Stockholders; and to the best
of such counsel's knowledge, no approval, authorization, order or consent
of any court, regulatory body, administrative agency or other governmental
body is required for the execution and delivery of this Agreement or the
consummation by any of the Selling Stockholders of the transactions
contemplated by this Agreement, except (i) such as have been obtained and
are in full force and effect under the Act and (ii) such as may be required
under the rules of the NASD and United States and Canadian Blue Sky laws;
(12) To the best of such counsel's knowledge, each of the Selling
Stockholders has full right, power and authority to enter into this
Agreement and to sell, transfer and deliver the Common Shares to be sold on
such Closing Date by such Selling Stockholder hereunder and good and
marketable title to the Common Shares to be sold on the Closing Date by
such Selling Stockholder hereunder, free and clear of all liens,
encumbrances, equities, claims, restrictions, security interests, voting
trusts, or other defects of title whatsoever, has been transferred to the
Underwriters (whom counsel may assume to be bona fide purchasers) who have
purchased such Common Shares hereunder;
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<PAGE>
(13) To the best of such counsel's knowledge, this Agreement is a
valid and binding agreement of each of the Selling Stockholders in
accordance with its terms except as enforceability may be limited by
general equitable principles, bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and except
with respect to those provisions relating to indemnities or contributions
for liabilities under the Act, as to which no opinion need be expressed;
and
(14) No transfer taxes are required to be paid in connection with the
sale and delivery of the Common Shares to the Underwriters hereunder.
In rendering such opinion, such counsel may rely as to the matters set
forth in paragraphs (11), (12), (13) and (14), on opinions of other counsel
retained by the Selling Stockholders, as to matters of local law, on opinions of
local counsel, and as to matters of fact, on certificates of the Selling
Stockholders and of officers of the Company and of governmental officials, in
which case their opinion is to state that they are so doing and that the
Underwriters are justified in relying on such opinions or certificates and
copies of said opinions or certificates are to be attached to the opinion. Such
counsel shall also include a statement to the effect that nothing has come to
such counsel's attention that would lead such counsel to believe that either at
the effective date of the Registration Statement or at the applicable Closing
Date, the Registration Statement or the Prospectus, or any such amendment or
supplement, contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
(ii) Such opinion or opinions of Andrews & Kurth L.L.P., counsel for the
Underwriters, dated the First Closing Date or the Second Closing Date, as the
case may be, with respect to the incorporation of the Company, the sufficiency
of all corporate proceedings and other legal matters relating to this Agreement,
the validity of the Common Shares, the Registration Statement and the Prospectus
and other related matters as the Underwriters may reasonably require, and the
Company and the Selling Stockholders shall have furnished to such counsel such
documents and shall have exhibited to them such papers and records as they may
reasonably request for the purpose of enabling them to pass upon such matters.
In connection with such opinions, such counsel may rely on representations or
certificates of officers of the Company and governmental officials.
(iii) A certificate of the Company executed by the Chief Executive Officer
or President and the chief financial or accounting officer of the Company, dated
the First Closing Date or the Second Closing Date, as the case may be, to the
effect that:
(1) The representations and warranties of the Company set forth in
Section 2 of this Agreement are true and correct as of the date of this
Agreement and as of the First Closing Date or the Second Closing Date, as
the case may be, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied on or
prior to such Closing Date;
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(2) The Commission has not issued any order preventing or suspending
the use of the Prospectus or any Preliminary Prospectus filed as a part of
the Registration Statement or any amendment thereto; no stop order
suspending the effectiveness of the Registration Statement has been issued;
and to the best of the knowledge of the respective signers, no proceedings
for that purpose have been instituted or are pending or contemplated under
the Act;
(3) Each of the respective signers of the certificate has carefully
examined the Registration Statement and the Prospectus; in his opinion and
to the best of his knowledge, the Registration Statement and the Prospectus
and any amendments or supplements thereto contain all statements required
to be stated therein regarding the Company and its subsidiaries; and
neither the Registration Statement nor the Prospectus nor any amendment or
supplement thereto includes any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading;
(4) Since the initial date on which the Registration Statement was
filed, no agreement, written or oral, transaction or event has occurred
which should have been set forth in an amendment to the Registration
Statement or in a supplement to or amendment of any prospectus which has
not been disclosed in such a supplement or amendment;
(5) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as disclosed in or
contemplated by the Prospectus, there has not been any material adverse
change or a development involving a material adverse change in the
condition (financial or otherwise), business, properties, results of
operations, management or prospects of the Company and its subsidiaries
taken as a whole; and no legal or governmental action, suit or proceeding
is pending or threatened against the Company or any of its subsidiaries
which is material to the Company and its subsidiaries, whether or not
arising from transactions in the ordinary course of business, or which may
adversely affect the transactions contemplated by this Agreement; since
such dates and except as so disclosed, neither the Company nor any of its
subsidiaries has entered into any verbal or written agreement or other
transaction which is not in the ordinary course of business or which could
result in a material reduction in the future earnings of the Company or
incurred any material liability or obligation, direct, contingent or
indirect, made any change in its capital stock, made any material change in
its short-term debt or funded debt or repurchased or otherwise acquired any
of the Company's capital stock; and the Company has not declared or paid
any dividend, or made any other distribution, upon its outstanding capital
stock payable to stockholders of record on a date prior to the First
Closing Date or Second Closing Date; and
(6) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus and except as disclosed in or
contemplated by the Prospectus,
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the Company and its subsidiaries have not sustained a material loss or
damage by strike, fire, flood, windstorm, accident or other calamity
(whether or not insured).
(iv) On the First Closing Date or the Second Closing Date, as the case
may be, a certificate, dated such Closing Date and addressed to the
Underwriters, signed by or on behalf of each of the Selling Stockholders to the
effect that the representations and warranties of such Selling Stockholder in
this Agreement are true and correct, as if made at and as of the First Closing
Date or the Second Closing Date, as the case may be, and such Selling
Stockholder has complied with all the agreements and satisfied all the
conditions on his part to be performed or satisfied prior to the First Closing
Date or the Second Closing Date, as the case may be.
(v) On the date before this Agreement is executed, and also on the First
Closing Date and the Second Closing Date a letter addressed to the Underwriters
from Arthur Andersen LLP, independent accountants, the first one to be dated the
day before the date of this Agreement, the second one to be dated the First
Closing Date and the third one (in the event of a Second Closing) to be dated
the Second Closing Date, in form and substance satisfactory to you.
(vi) On or before the First Closing Date, letters from each director and
officer of the Company, in form and substance satisfactory to you, confirming
that for a period of 90 days after the date of the Prospectus, such person will
not directly or indirectly sell or offer to sell or otherwise dispose of any
shares of Common Stock or any right to acquire such shares without the prior
written consent of Montgomery Securities other than shares disposed of as bona
fide gifts, provided such gifted shares continued to be bound for the prescribed
period.
(vii) On or before the First Closing Date, the Common Shares shall have
been duly approved for quotation on the Nasdaq National Market.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Andrews & Kurth L.L.P., counsel for the Underwriters. The Company shall
furnish you with such manually signed or conformed copies of such opinions,
certificates, letters and documents as you request. Any certificate signed by
any officer of the Company and delivered to the Underwriters or to counsel for
the Underwriters shall be deemed to be a representation and warranty by the
Company to the Underwriters as to the statements made therein.
If any condition to your obligations hereunder to be satisfied prior to or
at the First Closing Date is not so satisfied, this Agreement at your election
will terminate upon notification by you to the Company and the Selling
Stockholders without liability on your part or the part of the Company or the
Selling Stockholders except for the expenses to be paid or reimbursed by the
Company and by the Selling Stockholders pursuant to Sections 7 and 9 hereof and
except to the extent provided in Section 11 hereof.
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Section 9. Reimbursement of Underwriters' Expenses. Notwithstanding
any other provisions hereof, if this Agreement shall be terminated by you
pursuant to Section 8, or if the sale to the Underwriters of the Common Shares
at the First Closing is not consummated because of any refusal, inability or
failure on the part of the Company or the Selling Stockholders to perform any
agreement herein or to comply with any provision hereof, the Company agrees to
reimburse you upon demand for all out-of-pocket expenses that shall have been
reasonably incurred by you in connection with the proposed purchase and the sale
of the Common Shares, including but not limited to fees and disbursements of
counsel, printing expenses, travel expenses, postage, telegraph charges and
telephone charges relating directly to the offering contemplated by the
Prospectus. Any such termination shall be without liability of any party to any
other party except that the provisions of this Section, Section 7 and Section 11
shall at all times be effective and shall apply.
Section 10. Effectiveness of Registration Statement. You, the Company
and the Selling Stockholders will use your, its and their best efforts to cause
the Registration Statement to become effective, to prevent the issuance of any
stop order suspending the effectiveness of the Registration Statement and, if
such stop order be issued, to obtain as soon as possible the lifting thereof.
Section 11. Indemnification. (a) The Company and the Selling
Stockholders, jointly and severally, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act against any losses, claims, damages, liabilities or expenses,
joint or several, to which such Underwriter or such controlling person may
become subject, under the Act, the Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state in any of them a material fact
required to be stated therein or necessary to make the statements in any of them
not misleading, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company or the Selling
Stockholders contained herein or any failure of the Company or the Selling
Stockholders to perform their respective obligations hereunder or under law; and
will reimburse each Underwriter and each such controlling person for any legal
and other expenses as such expenses are reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action; provided, however, neither the Company nor the Selling
Stockholders will be liable in any such case to the extent that any such loss,
claim, damage, liability or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with the
information furnished to the Company pursuant to Section 4 hereof; and provided
further, that with respect to any untrue statement or omission or alleged untrue
statement or omission made in any Preliminary Prospectus, the indemnity
contained in this paragraph shall not inure to the benefit of any
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Underwriter from whom the person asserting any such loss, claim, damages,
liabilities or expenses purchased the Common Stock concerned (or to the benefit
of any person controlling such Underwriter) to the extent any such loss, claim,
damage, liability or expense of such Underwriter or controlling person results
from the fact that a copy of the Prospectus was not sent or given to such person
at or prior to the written confirmation of sale of Common Stock to such person
as required by the Act, and if the untrue statement or omission has been
corrected in the Prospectus, unless the failure to deliver the Prospectus was a
result of noncompliance by the Company with its obligations under Section 6(e)
hereof; and provided further, that each Selling Stockholder shall only be liable
under this paragraph for an amount equal to the initial offering price of the
Common Stock sold by such Selling Stockholder to the Underwriters. The Company
and the Selling Stockholders may agree, as among themselves and without limiting
the rights of the Underwriters under this Agreement, as to their respective
amounts of such liability for which they each shall be responsible. In addition
to their other obligations under this Section 11(a), the Company and the Selling
Stockholders agree that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, or any
inaccuracy in the representations and warranties of the Company or the Selling
Stockholders herein or failure to perform their obligations hereunder, all as
described in this Section 11(a), they will reimburse each Underwriter on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's
or the Selling Stockholders' obligations to reimburse each Underwriter for such
expenses and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, each Underwriter
shall promptly return it to the Company together with interest, compounded
daily, determined on the basis of the prime rate (or other commercial lending
rate for borrowers of the highest credit standing) announced from time to time
by Bank of America NT&SA, San Francisco, California (the "Prime Rate"). Any such
interim reimbursement payments which are not made to an Underwriter within 30
days of a request for reimbursement, shall bear interest at the Prime Rate from
the date of such request. This indemnity agreement will be in addition to any
liability which the Company or the Selling Stockholders may otherwise have.
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement, the Selling Stockholders and each person, if any, who controls the
Company or any of the Selling Stockholders within the meaning of the Act,
against any losses, claims, damages, liabilities or expenses to which the
Company, the Selling Stockholders, or any such director, officer or controlling
person may become subject, under the Act, the Exchange Act, or other federal or
state statutory law or regulation, or at common law or otherwise (including the
settlement of any litigation, if such settlement is effected with the written
consent of such Underwriter), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or
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are 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 not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, any Preliminary Prospectus, the Prospectus, or
any amendment or supplement thereto, in reliance upon and in conformity with the
information furnished to the Company pursuant to Section 4 hereof, and will
reimburse the Company, the Selling Stockholders, or any such director, officer
or controlling person for any legal and other expense reasonably incurred by the
Company, the Selling Stockholders, or any such director, officer or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. In addition
to its other obligations under this Section 11(b), each Underwriter severally
agrees that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, or any alleged
statement or omission, described in this Section 11(b) which relates to
information furnished to the Company pursuant to Section 4 hereof, it will
reimburse the Company (and, to the extent applicable, each officer, director,
controlling person or the Selling Stockholders) on a quarterly basis for all
reasonable legal or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Underwriters' obligation to reimburse the Company (and, to
the extent applicable, each officer, director, controlling person or the Selling
Stockholders) for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, the Company (and, to the extent applicable, each officer, director,
controlling person or the Selling Stockholders) shall promptly return it to the
Underwriters together with interest, compounded daily, determined on the basis
of the Prime Rate. Any such interim reimbursement payments which are not made to
the Company within 30 days of a request for reimbursement, shall bear interest
at the Prime Rate from the date of such request. This indemnity agreement will
be in addition to any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof,
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section or to the
extent it is not prejudiced as a proximate result of such failure. In case any
such action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with all other indemnifying parties similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal
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defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 11 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel, approved
by the Underwriters in the case of paragraph (a), representing the indemnified
parties who are parties to such action) or (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 11 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a), (b) or
(c) in respect of any losses, claims, damages, liabilities or expenses referred
to herein, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, the Selling Stockholders and the Underwriters from the offering of the
Common Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company, the Selling Stockholders and the Underwriters in
connection with the statements or omissions or inaccuracies in the
representations and warranties herein which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The respective relative benefits received by the Company, the
Selling Stockholders and the Underwriters shall be deemed to be in the same
proportion, in the case of the Company and the Selling Stockholders as the total
price paid to the Company and to each Selling Stockholder, respectively, for the
Common Shares sold by them to the Underwriters (net of underwriting commissions
but before deducting expenses) bears to the total price to the public set forth
on the cover of the Prospectus, and in the case of the Underwriters as the
underwriting commissions received by them bears to the total price to the public
set forth on the cover of the Prospectus. The relative fault of the Company,
the Selling Stockholders and the Underwriters shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact or
the inaccurate or the alleged inaccurate representation and/or warranty relates
to information supplied by the Company, the Selling Stockholders or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to
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above shall be deemed to include, subject to the limitations set forth in
subparagraph (c) of this Section 11, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim. The provisions set forth in subparagraph (c) of this
Section 11 with respect to notice of commencement of any action shall apply if a
claim for contribution is to be made under this subparagraph (d); provided,
however, that no additional notice shall be required with respect to any action
for which notice has been given under subparagraph (c) for purposes of
indemnification. The Company, the Selling Stockholders and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 11 were determined solely by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. Notwithstanding the
provisions of this Section 11, no Underwriter shall be required to contribute
any amount in excess of the amount of the total underwriting commissions
received by such Underwriter in connection with the Common Shares underwritten
by it and distributed to the public. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 11 are several in proportion to their respective underwriting
commitments and not joint.
(e) It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in Sections 11(a) and 11(b) hereof,
including the amounts of any requested reimbursement payments and the method of
determining such amounts, shall be settled by arbitration conducted under the
provisions of the Constitution and Rules of the Board of Governors of the New
York Stock Exchange, Inc. or pursuant to the Code of Arbitration Procedure of
the NASD. Any such arbitration must be commenced by service of a written demand
for arbitration or written notice of intention to arbitrate, therein electing
the arbitration tribunal. In the event the party demanding arbitration does not
make such designation of an arbitration tribunal in such demand or notice, then
the party responding to said demand or notice is authorized to do so. Such an
arbitration would be limited to the operation of the interim reimbursement
provisions contained in Sections 11(a) and 11(b) hereof and would not resolve
the ultimate propriety or enforceability of the obligation to reimburse expenses
which is created by the provisions of such Sections 11(a) and 11(b) hereof.
Section 12. Default of Underwriters. It shall be a condition to this
Agreement and the obligation of the Company and the Selling Stockholders to sell
and deliver the Common Shares hereunder, and of each Underwriter to purchase the
Common Shares in the manner as described herein, that, except as hereinafter in
this paragraph provided, each of the Underwriters shall purchase and pay for all
the Common Shares agreed to be purchased by such Underwriter hereunder upon
tender to the Representatives of all such shares in accordance with the terms
hereof. If any Underwriter defaults in its obligations to purchase Common
Shares hereunder on either the First or Second Closing Date and the aggregate
number of Common Shares which such defaulting Underwriter agreed but failed to
purchase on such Closing Date does not exceed 10% of the total
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number of Common Shares which the Underwriters are obligated to purchase on such
Closing Date, the non-defaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Common
Shares which such defaulting Underwriter agreed but failed to purchase on such
Closing Date. If any Underwriter defaults and the aggregate number of Common
Shares with respect to which such default occurs is more than the above
percentage and arrangements satisfactory to the Representatives and the Company
for the purchase of such Common Shares by other persons are not made within 48
hours after such default, this Agreement will terminate without liability on the
part of any non-defaulting Underwriter or the Company or the Selling
Stockholders except for the expenses to be paid by the Company and the Selling
Stockholders pursuant to Section 7 hereof and except to the extent provided in
Section 11 hereof.
In the event that Common Shares to which a default relates are to be
purchased by the non-defaulting Underwriter or by another party or parties, the
Representatives or the Company shall have the right to postpone the First or
Second Closing Date, as the case may be, for not more than five business days in
order that the necessary changes in the Registration Statement, Prospectus and
any other documents, as well as any other arrangements, may be effected. As
used in this Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
Section 13. Effective Date. This Agreement shall become effective
immediately as to Sections 7, 9, 11, 14 and 16 and, as to all other provisions,
(i) if at the time of execution of this Agreement the Registration Statement has
not become effective, at 2:00 P.M., California time, on the first full business
day following the effectiveness of the Registration Statement, or (ii) if at the
time of execution of this Agreement the Registration Statement has been declared
effective, at 2:00 P.M., California time, on the first full business day
following the date of execution of this Agreement; but this Agreement shall
nevertheless become effective at such earlier time after the Registration
Statement becomes effective as you may determine on and by notice to the Company
or by release of any of the Common Shares for sale to the public. For the
purposes of this Section 13, the Common Shares shall be deemed to have been so
released upon the release for publication of any newspaper advertisement
relating to the Common Shares or upon the release by you of telegrams (i)
advising Underwriters that the Common Shares are released for public offering,
or (ii) offering the Common Shares for sale to securities dealers, whichever may
occur first.
Section 14. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you and
the Selling Stockholders or by you by notice to the Company and the Selling
Stockholders at any time prior to the time this Agreement shall become effective
as to all its provisions, and any such termination shall be without liability on
the part of the Company or the Selling Stockholders to any Underwriter (except
for the expenses to be paid or reimbursed by the Company and the Selling
Stockholders pursuant to Sections 7 and 9 hereof and except to the extent
provided in Section 11 hereof) or of any
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Underwriter to the Company or the Selling Stockholders (except to the extent
provided in Section 11 hereof).
(b) This Agreement may also be terminated by you prior to the First Closing
Date by notice to the Company (i) if additional material governmental
restrictions, not in force and effect on the date hereof, shall have been
imposed upon trading in securities generally or minimum or maximum prices shall
have been generally established on the New York Stock Exchange or on the
American Stock Exchange or in the over the counter market by the NASD, or
trading in securities generally shall have been suspended on either such
exchange or in the over the counter market by the NASD, or a general banking
moratorium shall have been established by federal, New York or California
authorities, (ii) if an outbreak of major hostilities or other national or
international calamity or any substantial change in political, financial or
economic conditions shall have occurred or shall have accelerated or escalated
to such an extent, as, in the judgment of the Representatives, to materially and
adversely affect the marketability of the Common Shares, (iii) if any adverse
event shall have occurred or shall exist which makes untrue or incorrect in any
material respect any statement or information contained in the Registration
Statement or Prospectus or which is not reflected in the Registration Statement
or Prospectus but should be reflected therein in order to make the statements or
information contained therein not misleading in any material respect, or (iv) if
there shall be any action, suit or proceeding pending or threatened, or there
shall have been any development or prospective development involving
particularly the business or properties or securities of the Company or any of
its subsidiaries or the transactions contemplated by this Agreement, which, in
the reasonable judgment of the Representatives, may materially and adversely
affect the Company's business or earnings and makes it impracticable or
inadvisable to offer or sell the Common Shares. Any termination pursuant to
this subsection (b) shall be without liability on the part of any Underwriter to
the Company or the Selling Stockholders or on the part of the Company or the
Selling Stockholders to any Underwriter (except for expenses to be paid or
reimbursed by the Company and the Selling Stockholders pursuant to Sections 7
and 9 hereof and except to the extent provided in Section 11 hereof).
(c) This Agreement shall also terminate at 5:00 P.M., California time, on
the tenth full business day after the Registration Statement shall have become
effective if the initial public offering price of the Common Shares shall not
then as yet have been determined as provided in Section 5 hereof. Any
termination pursuant to this subsection (c) shall be without liability on the
part of any Underwriter to the Company or the Selling Stockholders or on the
part of the Company or the Selling Stockholders to any Underwriter (except for
expenses to be paid or reimbursed by the Company and the Selling Stockholders
pursuant to Sections 7 and 9 hereof and except to the extent provided in Section
11 hereof).
Section 15. Failure of the Selling Stockholders to Sell and Deliver. If
any of the Selling Stockholders shall fail to sell and deliver to the
Underwriters the Common Shares to be sold and delivered by such Selling
Stockholder at the First Closing Date under the terms of this Agreement, then
the Underwriters may at their option, by written notice from you to the Company
and the
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Selling Stockholders, either (i) terminate this Agreement without any liability
on the part of any Underwriter or, except as provided in Sections 7, 9 and 11
hereof, the Company or the Selling Stockholders, or (ii) purchase the shares
which the Company has agreed to sell and deliver in accordance with the terms
hereof. In the event of a failure by any of the Selling Stockholders to sell and
deliver as referred to in this Section, either you or the Company shall have the
right to postpone the First Closing Date for a period not exceeding seven
business days in order that the necessary changes in the Registration Statement,
Prospectus and any other documents, as well as any other arrangements, may be
effected.
Section 16. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Stockholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriters or the Company or any of its or their partners,
officers or directors or any controlling person, or the Selling Stockholders, as
the case may be, and will survive delivery of and payment for the Common Shares
sold hereunder and any termination of this Agreement.
Section 17. Notices. All communications hereunder shall be in writing
and, if sent to the Underwriters shall be mailed, delivered or telegraphed and
confirmed to you at 600 Montgomery Street, San Francisco, California 94111,
Attention: Karl Matthies, with a copy to Andrews & Kurth L.L.P., 4200 Chase
Tower, Houston, Texas 77002, Attn: Thomas P. Mason, Esq.; and if sent to the
Company or the Selling Stockholders shall be mailed, delivered or telegraphed
and confirmed to the Company at 1400 Post Oak Boulevard, Suite 1010, Houston,
Texas 77056, Attention: Tilman J. Fertitta, with a copy to Winstead Sechrest &
Minick P.C., 910 Travis, Suite 1700, Houston, Texas 77002, Attention: Arthur S.
Berner; Esq. The Company, the Selling Stockholder or you may change the address
for receipt of communications hereunder by giving notice to the others.
Section 18. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 12 hereof, and to the benefit of the officers and directors
and controlling persons referred to in Section 11, and in each case their
respective successors, personal representatives and assigns, and no other person
will have any right or obligation hereunder. No such assignment shall relieve
any party of its obligations hereunder. The term "successors" shall not include
any purchaser of the Common Shares as such from any of the Underwriters merely
by reason of such purchase.
Section 19. Representation of Underwriters. You will act as
Representatives for the several Underwriters in connection with all dealings
hereunder, and any action under or in respect of this Agreement taken by you
jointly or by Montgomery Securities, as Representatives, will be binding upon
all the Underwriters.
Section 20. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other
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Section, paragraph or provision hereof. If any Section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.
Section 21. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of Delaware.
Section 22. General. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in several
counterparts' each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Stockholders and you.
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If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed copies hereof, whereupon it will
become a binding agreement among the Company, the Selling Stockholders and the
several Underwriters including you, all in accordance with its terms.
Very truly yours,
LANDRY'S SEAFOOD
RESTAURANTS, INC.
By:___________________________________
Tilman J. Fertitta, President
and Chief Executive Officer
SELLING STOCKHOLDERS:
--------------------------------------
Tilman J. Fertitta
--------------------------------------
E.A. Jaksa, Jr.
--------------------------------------
Paul S. West
--------------------------------------
Steven L. Scheinthal
The foregoing Underwriting Agreement
is hereby confirmed and accepted by us
in San Francisco, California as of the
date first above written.
NATIONSBANC MONTGOMERY SECURITIES LLC
MORGAN STANLEY & CO. INCORPORATED
J.C. BRADFORD & CO.
PIPER JAFFRAY INC.
SANDERS MORRIS MUNDY INC.
ACTING AS REPRESENTATIVES OF THE
SEVERAL UNDERWRITERS NAMED IN
THE ATTACHED SCHEDULE A.
BY: NATIONSBANC MONTGOMERY SECURITIES LLC
By:_________________________________
Richard A. Smith
Managing Director
-34-
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF FIRM
COMMON SHARES
TO BE PURCHASED
NAME OF UNDERWRITER BY UNDERWRITERS
- --------------------------------------- ---------------
<S> <C>
NationsBanc Montgomery Securities LLC.................
Morgan Stanley & Co. Incorporated.....................
J.C. Bradford & Co....................................
Piper Jaffray Inc.....................................
Sanders Morris Mundy Inc..............................
TOTAL.................................. 3,833,000
</TABLE>
-35-
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION> NUMBER OF FIRM
COMMON SHARES
NAME OF SELLING STOCKHOLDER TO BE SOLD
- ----------------------------- --------------
<C>
<S>
Tilman J. Fertitta ................................... 700,000
E.A. Jaksa, Jr. ...................................... 62,000
Paul S. West ......................................... 37,000
Steven L. Scheinthal ................................. 34,000
-------
833,000
=======
</TABLE>
-36-
<PAGE>
SCHEDULE C
SUBSIDIARIES OF LANDRY'S SEAFOOD RESTAURANTS, INC.
SIGNIFICANT SUBSIDIARIES:
- ------------------------
Landry's G.P., Inc., a Delaware corporation
Landry's Limited, Inc., a Delaware corporation
Landry's Trademark, Inc., a Delaware corporation
LSRI Holdings, Inc., a Delaware corporation
Landry's Management, L.P., a Delaware limited partnership
OTHER SUBSIDIARIES NOT LISTED ON EXHIBIT 21 TO THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996:
[to come]
-37-
<PAGE>
[LETTERHEAD OF WINSTEAD SECHREST & MINICK APPEARS HERE]
February 19, 1998
Board of Directors
Landry's Seafood Restaurants, Inc.
Suite 1010
1400 Post Oak Boulevard
Houston, Texas 77056
Gentlemen:
You have requested our opinion as to the legality of the issuance of the
3,000,000 shares (the "Company Shares") of the Common Stock ($.01 par value) of
Landry's Seafood Restaurants, Inc. (the "Company") which are the subject of a
Registration Statement on Form S-3, (the "Registration Statement") filed by the
Company with the Securities and Exchange Commission ("SEC") pursuant to the
Securities Act of 1933, as amended. You have also asked us to render an opinion
concerning the 833,000 shares (the "Selling Stockholder Shares") to be sold by
certain Selling Stockholders (the "Selling Stockholders") pursuant to the
Registration Statement. (Collectively, the Company Shares and the Selling
Stockholders' Shares are herein called the "Shares"). You have also requested
our opinion as to whether the Shares, either issued or to be issued are, or will
be, fully-paid and non-assessable.
We have examined the Certificate of Incorporation of the Company, the
Bylaws and such other corporate records, documents and proceedings (including
the proposed Underwriting Agreement and the resolutions adopted by the Board of
Directors of the Company in connection with the issuance, sale and delivery of
the Shares) as we have deemed necessary for the purposes of this opinion.
On the basis of the foregoing, it is our opinion that the 3,000,000 Company
Shares to be issued and sold by the Company and the 833,000 Selling Stockholder
Shares which will be sold pursuant to the Registration Statement have been duly
and validly authorized by all necessary corporate action of the Company and,
insofar as the Company Shares and certain of the Selling Stockholders' shares
which will be issued upon exercise of outstanding stock options (the "Option
Shares"), subject to payment therefor pursuant to the Underwriting Agreement
relating to such Company Shares and insofar as the Option Shares, pursuant to
the Company Stock Option Plan under which they were granted, and insofar as the
Selling Stockholders Shares which have
<PAGE>
Board of Directors
Landry's Seafood Restaurants, Inc.
Febuary 19, 1998
Page 2
previously been issued, each of such Shares are, or will be, duly and validly
issued, fully-paid and non-assessable shares of Common Stock of the Company.
We know that we are named in the Registration Statement and we hereby
consent to the use of our name in the Registration Statement and to the filing
of this opinion as Exhibit 5 to the Registration Statement.
Very truly yours,
WINSTEAD SECHREST & MINICK P.C.
By: /s/ ARTHUR S. BERNER
------------------------------------
Arthur S. Berner
For the Firm
ASB:mcs
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 16, 1998
included in Landry's Seafood Restaurants, Inc.'s Form 10-K for the year ended
December 31, 1997 and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Houston, Texas
February 20, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have issued our report dated March 8, 1996, accompanying the consolidated
financial statements of Bayport Restaurant Group, Inc. included in the Annual
Report of Landry's Seafood Restaurants, Inc. onForm 10-K for the year ended
December 31, 1997. We hereby consent to the incorporation by reference of said
report in the Registration Statement of Landry's Seafood Restaurants, Inc. on
Form S-3 and to the use of our name as it appears under the caption "Experts".
GRANT THORNTON LLP
Miami, Florida
February 16, 1998
