SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)
Bugaboo Creek Steak House, Inc.
(Name of Issuer)
Common Stock, Par Value $.01 Per Share
(Title of Class of securities)
120035-10-0
(CUSIP Number)
Margaret D. Farrell
Hinckley, Allen & Snyder
1500 Fleet Center
Providence, Rhode Island 02903
(401) 274-2000
---------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notes and Communications)
June 14, 1996
(Date of Event Which Requires filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of rule 13d-1(b)(3) or (4), check the following box. X .
Check the following box if a fee is being paid with the statement ____.
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1) Name of Reporting Person. Edward P. Grace III
2) Check the appropriate box if a Member of a Group (See Instructions)
(a)
(b) X
3) SEC Use Only
4) Source of Funds (See Instructions). Not Applicable
5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d)or 2(e).
6) Citizenship or Place of Organization. United States
Number of (7) Sole Voting Power 0
----------
Shares Bene-
ficially Owned (8) Shared Voting Power 2,428,332
--------------
By Each
Reporting (9) Sole Dispositive Power 2,428,332
-------------
Person With
(10) Shared Dispositive Power 0
---------
11) Aggregate Amount Beneficially Owned by Each Reporting Person.
2,428,332
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions). Not Applicable
13) Percent of Class Represented by Amount in Row 11. 46.4%
---------
14) Type of Reporting Person (See Instructions). IN
----------
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This statement is filed by Edward P. Grace III pursuant to Rule 13d-1(b)
under the Securities Exchange Act of 1934, as amended, as an amendment to the
Schedule 13G dated February 10, 1995 relating to the Common Stock, par value
$.01 per share of Bugaboo Creek Steak House, Inc. filed on February 14, 1995, as
amended by Amendment No. 1 thereto dated February 12, 1996 filed on February 14,
1996.
Item 1. Security and Issuer
This statement relates to the shares of Common Stock, par value $.01 per
share (the "Common Stock"), of Bugaboo Creek Steak House, Inc., a Delaware
corporation ("Bugaboo"). The address of Bugaboo's principal executive office is
1275 Wampanoag Trail, East Providence, Rhode Island 02915.
Item 2. Identity and Background.
(a), (b), (c) and (f) This filing is being made by Edward P. Grace, III.
Mr. Grace's principal business office address is 1275 Wampanoag Trail, East
Providence, Rhode Island 02915. Mr. Grace is Chairman of the Board, Chief
Executive Officer and President of Bugaboo whose principal business address is
set forth in Item 1 above.
Mr. Grace is a United States citizen.
(d) and (e). During the last five years, Mr. Grace has not been: (i)
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors); or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Mr. Grace acquired his shares of Bugaboo Common Stock on January 1, 1994
upon the initial organization of Bugaboo in exchange for his interest in various
restaurant operating companies, pursuant to an Agreement and Plan of
Reorganization dated December 30, 1993 filed as Exhibit 2 to Bugaboo's
Registration Statement on Form S-1, Registration No. 33-75402.
Item 4. Purpose of Transaction.
On June 14, 1996, Bugaboo Creek Steak House, Inc. ("Bugaboo") announced
that it had entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Longhorn Steaks, Inc. ("Longhorn") and Whip Merger Corporation
("Merger Corp."), a wholly-owned subsidiary of Longhorn. The Merger Agreement
provides that, at the "Effective Time" (as defined in the Merger Agreement),
Merger Corp. shall be merged with and into Bugaboo (the "Merger"). Merger Corp.
will then cease to exist and Bugaboo will continue as the surviving corporation,
as a wholly-owned subsidiary of
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Longhorn. By virtue of the Merger, each share of Bugaboo common stock ("Bugaboo
Common Stock") outstanding immediately prior to the Effective Time shall be
converted into the right to receive shares of the common stock of Longhorn
("Longhorn Common Stock"). The Exchange Ratio for purposes of determining the
number of shares of Longhorn Common Stock to be received by Bugaboo shareholders
for each share of Bugaboo Common Stock owned shall be equal to $10.25 divided by
the Base Period Trading Price of Longhorn Common Stock. The Base Period Trading
Price is defined as the average of the daily last sales prices for shares of
Longhorn Common Stock during the twenty trading day period ending on the fifth
trading day immediately preceding the Closing Date (as defined in the Merger
Agreement), provided that the Base Period Trading Price shall not exceed $27.25
nor be less than $24.00. Accordingly, shareholders of Bugaboo Common Stock will
receive a minimum of 0.376 and a maximum of 0.427 shares of Longhorn Common
Stock per share of Bugaboo Common Stock. Longhorn Common Stock is traded on the
NASDAQ Stock Market's National Market under the symbol "LOHO". The closing sale
price of Longhorn Common Stock on the NASDAQ National Market on June 17, 1996
was $22.765.
It is anticipated that the Merger will be tax-free to the Bugaboo
shareholders and will be accounted for as a pooling-of-interests. In order to
obtain pooling-of-interest treatment, Longhorn will also acquire three
non-Bugaboo restaurants which are owned by Mr. Grace alone or jointly by Mr.
Grace and Mr. Orr, a director of Bugaboo -- Hemenway's Sea Food in Providence,
Rhode Island, Old Grist Mill Tavern in Seekonk, Massachusetts, and Monterey
Restaurant in Warwick, Rhode Island. In addition, Longhorn will acquire the
limited liability company owned by Bugaboo Directors Grace, Orr and Snowden
which holds title to the site of the Bugaboo Creek restaurant located in
Springfield, Virginia, and will acquire from Messrs. Grace and Orr real property
located in Seekonk, Massachusetts, which is leased to Old Grist Mill Tavern.
Longhorn will acquire the three restaurants and related real estate for
approximately $3,825,000 payable in Longhorn Common Stock (valued at the Base
Period Trading Price) and the assumption of approximately $1,575,000 of existing
debt.
The Merger Agreement is subject to termination by either Bugaboo or
Longhorn if the last sale price of Longhorn Common Stock is less than $21.00 per
share for five consecutive trading days prior to the Effective Time. The Merger
Agreement may also be terminated by Longhorn under certain conditions if
Bugaboo, pursuant to the terms of the Merger Agreement and in accordance with
the fiduciary duties of Bugaboo's Board of Directors, considers an alternative
Acquisition Proposal (as defined in the Merger Agreement) and by Bugaboo if the
Bugaboo Board of Directors determines, in the exercise of its fiduciary duties,
to recommend to Bugaboo's shareholders an alternative Acquisition Proposal. If
the Merger Agreement is terminated as a result of Bugaboo's consideration and/or
recommendation of an alternative Acquisition Proposal, Bugaboo must pay the
out-of-pocket expenses of Longhorn incurred in connection with the Merger
Agreement up to a maximum of $750,000. In addition, if within 10 months
following such termination Bugaboo has entered into a Business Combination (as
defined in the Merger Agreement), the third party to such Business
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<PAGE>
Combination must pay to Longhorn the amount of $2,000,000 less any expenses
previously paid by Bugaboo to Longhorn.
The Merger is subject to various conditions customary to transactions of
this type, including the approvals of the shareholders of Bugaboo and Longhorn,
the receipt of liquor license and other governmental permit approvals,
expiration of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, and the consent of Bugaboo's lenders. Subject to these
matters, it is anticipated that the Merger will be consummated in late September
1996.
Item 5. Interest in Securities of the Issuer.
(a) Amount Beneficially Owned. As of June 14, 1996, Mr. Grace
beneficially owned 2,428,332 shares of a total of 5,238,3321 shares of Common
Stock outstanding on such date.
(b) Percent of Class. The shares of Common Stock beneficially owned
by Mr.Grace represent 46.4% of the issuer's outstanding Common Stock.2
(c) Number of Shares of Common Stock as to which Mr. Grace has:
(i) sole power to vote or to direct the vote 0 .
(ii) shared power to vote or to direct the vote 2,428,332 .
(iii) sole power to dispose or to direct the disposition of
2,428,332 .
(iv) shared power to dispose or to direct the disposition of 0 .
(d) Mr. Grace has not effected any transaction in the Common Stock
during the past 60 days.
(e) Not applicable.
(f) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Mr. Grace has entered into a Stockholder Agreement with Longhorn and
Bugaboo dated as of June 14, 1996, pursuant to which he has (i) agreed to vote
all of his shares
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1 Includes 5,225,000 shares outstanding based on the issuer's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1996, plus 13,332 shares acquirable
by Mr. Grace under options exercisable by Mr. Grace as of June 14, 1996.
2 The 2,428,332 shares of Common Stock beneficially owned by Mr. Grace include
13,332 shares issuable upon exercise of options granted to Mr. Grace under
Bugaboo's 1994 Stock Plan.
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<PAGE>
in favor of the Merger and against any Competing Transaction (as defined in the
Stockholder Agreement) and (ii) granted an irrevocable proxy (for the term of
the Stockholder Agreement) to Richard E. Rivera and Anne D. Huemme, Chief
Executive Officer and Chief Financial Officer, respectively, of Longhorn, to
vote his shares in favor of the Merger and against any Competing Transaction. In
addition, Mr. Grace has agreed not to (A) directly or indirectly, solicit,
initiate or encourage the submission of any "takeover proposal" (as defined in
the Stockholder Agreement) or participate in any discussions or negotiations,
furnish information or take any other action to facilitate any inquiries or the
making of a takeover proposal or (B) transfer any shares of Bugaboo Common Stock
or enter into any agreement with respect to the transfer or voting of his
shares. The Stockholder Agreement terminates upon termination of the Merger
Agreement in accordance with its terms.
At closing of the Merger, Mr. Grace will be appointed as a director of
Longhorn and will continue to serve as President of Bugaboo with responsibility
for its operations. As a result of the transactions contemplated by the Merger
Agreement, Mr. Grace will beneficially own between 976,236 shares (9.23%) and
1,108,637 shares (10.21%) of the outstanding Longhorn Common Stock.
The Longhorn Common Stock issued in the Merger will be registered and
available for sale into the public marketplace. However, Mr. Grace will be
subject to a lock-up agreement which prohibits the sale of Longhorn Common Stock
received by him in the Merger until Longhorn publishes financial statements for
a period ending after the Merger which includes at least 30 days of combined
operations of Longhorn and Bugaboo. Bugaboo has stated that it expects this date
to be mid-November 1996. In addition, Mr. Grace will be limited by the
provisions of Section 16 of the Securities Exchange Act of 1934, as amended,
from selling any of the Longhorn Common Stock received by him in the transaction
until six months following the Effective Time of the Merger. Mr. Grace will have
the right to require registration of his Longhorn Common Stock during the
two-year period from the date of the Stockholder Agreement if he ceases to be a
director of Longhorn.
Except as described herein and in Items 4 and 5 of this Schedule 13D,
there are no contracts, arrangements, understandings, or relationships (legal or
otherwise) among the persons named or referred to in Item 2 or between such
person and any person with respect to any securities of Bugaboo.
Item 7. Material to be Filed as Exhibits.
(1) Agreement and Plan of Merger dated as of June 14, 1996, among Bugaboo
Creek Steak House, Inc., Longhorn Steaks, Inc., and Whip Merger Corporation.
(2) Stockholder Agreement dated as of June 14, 1996 among Longhorn
Steaks, Inc., Bugaboo Creek Steak House, Inc. and Edward P. Grace III.
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<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
/s/ Edward P. Grace III
Edward P. Grace III
Dated: June 24, 1996
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<PAGE>
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BUGABOO CREEK STEAK HOUSE, INC.
WHIP MERGER CORPORATION
AND
LONGHORN STEAKS, INC.
Dated as of June 14, 1996
<PAGE>
TABLE OF CONTENTS
Page
Parties.....................................................................1
Preamble....................................................................1
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER................................1
1.1 Merger..................................... ....................1
1.2 Time and Place of Closing ......................................2
1.3 Effective Time..................................................2
ARTICLE 2 - TERMS OF MERGER.................................................2
2.1 Charter.........................................................2
2.2 Bylaws..........................................................2
2.3 Directors and Officers..........................................2
ARTICLE 3 - MANNER OF CONVERTING SHARES.....................................3
3.1 Conversion of Shares............................................3
3.2 Anti-Dilution Provisions........................................3
3.3 Shares Held by BCS or LSI...................................... 4
3.4 Fractional Shares...............................................4
3.5 Conversion of Stock Options.....................................4
ARTICLE 4 - EXCHANGE OF SHARES..............................................5
4.1 Exchange Procedures.............................................5
4.2 Rights of Former BCS Shareholders...............................6
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF BCS...........................6
5.1 Organization, Standing, and Power...............................6
5.2 Authority; No Breach By Agreement................................7
5.3 Capital Stock....................................................7
5.4 BCS Subsidiaries.................................................8
5.5 SEC Filings; Financial Statements................................9
5.6 Absence of Undisclosed Liabilities...............................9
5.7 Absence of Certain Changes or Events............................10
5.8 Tax Matters.....................................................10
5.9 Assets..........................................................11
5.10 Intellectual Property...........................................12
5.11 Environmental Matters...........................................12
5.12 Compliance With Laws............................................13
5.13 Labor Relations.................................................14
5.14 Employee Benefit Plans..........................................14
5.15 Material Contracts..............................................15
5.16 Legal Proceedings...............................................16
5.17 Reports.........................................................16
5.18 Statements True and Correct.....................................17
5.19 Accounting, Tax and Regulatory Matters..........................17
5.20 State Takeover Laws.............................................17
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5.2 Charter Provisions.............................................18
5.22 Shareholders' Agreement........................................18
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF LSI..........................18
6.1 Organization, Standing, and Power..............................18
6.2 Authority; No Breach By Agreement..............................18
6.3 Capital Stock..................................................19
6.4 SEC Filings; Financial Statements..............................19
6.5 Absence of Undisclosed Liabilities.............................20
6.6 Absence of Certain Changes or Events...........................20
6.7 Compliance With Laws...........................................20
6.8 Legal Proceedings..............................................21
6.9 Statements True and Correct....................................21
6.10 Authority of Sub...............................................22
6.11 Reports........................................................22
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION.......................23
7.1 Affirmative Covenants of BCS...................................23
7.2 Negative Covenants of BCS......................................23
7.3 Covenants of LSI...............................................25
7.4 Adverse Changes in Condition...................................25
7.5 Reports........................................................26
ARTICLE 8 - ADDITIONAL AGREEMENTS..........................................26
8.1 Registration Statement; Proxy Statement; Shareholder Approval..26
8.2 Exchange Listing...............................................27
8.3 Applications; Antitrust Notification...........................27
8.4 Filings with State Offices.....................................27
8.5 Agreement as to Efforts to Consummate..........................27
8.6 Investigation and Confidentiality..............................28
8.7 Press Releases.................................................28
8.8 Certain Actions................................................28
8.9 Accounting and Tax Treatment...................................29
8.10 State Takeover Laws............................................29
8.11 Charter Provisions.............................................29
8.12 Agreements of Affiliates.......................................29
8.13 Employee Benefits and Contracts................................30
8.14 Indemnification and Insurance..................................30
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE..............31
9.1 Conditions to Obligations of Each Party........................31
9.2 Conditions to Obligations of LSI...............................32
9.3 Conditions to Obligations of BCS...............................35
ARTICLE 10 - TERMINATION...................................................36
10.1 Termination....................................................36
10.2 Effect of Termination..........................................38
10.3 Non-Survival of Representations and Covenants..................38
<PAGE>
ARTICLE 11 - MISCELLANEOUS.................................................38
11.1 Definitions....................................................38
11.2 Expenses.......................................................45
11.3 Brokers and Finders............................................45
11.4 Entire Agreement...............................................46
11.5 Amendments.....................................................46
11.6 Waivers........................................................46
11.7 Assignment.....................................................47
11.8 Notices........................................................47
11.9 Governing Law..................................................48
11.10 Counterparts...................................................48
11.11 Captions.......................................................48
11.12 Interpretations................................................48
11.13 Enforcement of Agreement.......................................48
11.14 Severability...................................................48
Signatures.................................................................49
<PAGE>
LIST OF EXHIBITS
Exhibit Number Description
1. Form of Shareholders' Agreement. (ss. 5.22).
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of June 14, 1996, by and among BUGABOO CREEK STEAK HOUSE, INC.
("BCS"), a Delaware corporation having its principal office located in East
Providence, Rhode Island; WHIP MERGER CORPORATION ("Sub"), a Georgia Corporation
having its principal office located in Atlanta, Georgia; and LONGHORN STEAKS,
INC. ("LSI"), a Georgia corporation having its principal office located in
Atlanta, Georgia.
Preamble
The Boards of Directors of BCS, Sub and LSI are of the opinion
that the transactions described herein are in the best interests of the parties
and their respective shareholders. This Agreement provides for the acquisition
of BCS by LSI pursuant to the merger of Sub with and into BCS. At the effective
time of such merger, the outstanding shares of the capital stock of BCS shall be
converted into the right to receive shares of the common stock of LSI (except as
provided herein). As a result, shareholders of BCS shall become shareholders of
LSI and BCS shall continue to conduct its business and operations as a
wholly-owned subsidiary of LSI. The transactions described in this Agreement are
subject to the approvals of the shareholders of BCS, the shareholders of LSI,
expiration of the required waiting period under the HSR Act, and the
satisfaction of certain other conditions described in this Agreement. It is the
intention of the parties to this Agreement that the Merger for federal income
tax purposes shall qualify as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code, and for accounting purposes shall qualify
for treatment as a pooling of interests.
Certain terms used in this Agreement are defined in Section 11.1
of this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time, Sub shall be merged with and into BCS in accordance with
the provisions of Section 252 of the DGCL and with the effect provided in
Sections 259 and 261 of the DGCL and Section 1107 of the GBCC and with the
effect provided in Sections 1106 and 1107 of the GBCC (the "Merger"). BCS shall
be the Surviving Corporation resulting from the Merger and shall become a
wholly-owned Subsidiary of LSI and shall continue to be governed by the Laws of
the State of Delaware. The Merger shall be consummated pursuant to the terms of
this Agreement, which has been approved and adopted by the respective Boards of
Directors of BCS, Sub and LSI and by LSI, as the sole shareholder of Sub.
<PAGE>
1.2 Time and Place of Closing. The closing of the transactions
contemplated hereby (the "Closing") will take place at 9:00 A.M. on the date
that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties,
acting through their authorized officers, may mutually agree. The Closing shall
be held at such place as may be mutually agreed upon by the Parties.
1.3 Effective Time. The Merger and other transactions contemplated
by this Agreement shall become effective on the date and at the time the
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Delaware and the Certificate of Merger
reflecting the Merger become effective with the Secretary of State of the State
of Georgia (the "Effective Time"). Subject to the terms and conditions hereof,
unless otherwise mutually agreed upon in writing by authorized officers of each
Party, the Parties shall use their reasonable efforts to cause the Effective
Time to occur on the first business day following the last to occur of (i) the
effective date (including expiration of any applicable waiting period) of the
last required Consent of any Regulatory Authority having authority over and
approving or exempting the Merger, and (ii) the date on which the shareholders
of BCS and LSI approve this Agreement to the extent such approval is required by
applicable Law.
ARTICLE 2
TERMS OF MERGER
2.1 Charter. The Certificate of Incorporation of BCS in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until otherwise amended or repealed.
2.2 Bylaws. The Bylaws of BCS in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation until otherwise
amended or repealed.
2.3 Directors and Officers. The directors of Sub in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation. The officers of BCS in office immediately prior to
the Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the officers of the Surviving Corporation from and after
the Effective Time in accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions
of this Article 3, at the Effective Time, by virtue of the Merger and without
any action on the part of LSI, BCS, Sub or
<PAGE>
the shareholders of any of the foregoing, the shares of the constituent
corporations shall be converted as follows:
(a) Each share of LSI Capital Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(b) Each share of Sub Common Stock issued and outstanding at
the Effective Time shall cease to be outstanding and shall be
converted into one share of BCS Common
Stock.
(c) Each share of BCS Common Stock excluding shares held by any
BCS Company or any LSI Company issued and outstanding at the Effective Time
shall cease to be outstanding and shall be converted into and exchanged for the
right to receive that multiple of a share of LSI Common Stock (the "Exchange
Ratio") obtained by dividing $10.250 (the "Per Share Purchase Price") by the
Base Period Trading Price (defined to mean the average of the daily last sale
prices for the shares of LSI Common Stock for the twenty (20) consecutive
trading days on which such shares are actually traded as over-the-counter
securities and quoted on the Nasdaq National Market (as reported by The Wall
Street Journal or, if not reported thereby, any other authoritative source)
ending at the close of trading on the fifth trading day immediately preceding
the Closing Date) and rounded to the third decimal place; provided, that for
purposes of this calculation, the Base Period Trading Price shall be deemed to
equal (i) $27.250 in the event the Base Period Trading Price is greater than
$27.250 or (ii) $24.000 in the event the Base Period Trading Price is less than
$24.000 (collectively, $27.250 and $24.000 are referred to as the "Base Period
Trading Price Limitations").
3.2 Anti-Dilution Provisions. In the event LSI changes the number
of shares of LSI Common Stock issued and outstanding prior to the Effective Time
as a result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, (i) the Base Period Trading Price Limitations shall be
adjusted to appropriately adjust the ratio under which shares of BCS Common
Stock will be converted into shares of LSI Common Stock pursuant to Section
3.1(c) of this Agreement, (ii) the Minimum Trading Price shall be appropriately
adjusted to reflect such change in the number of shares of LSI Common Stock
outstanding, and (iii) if necessary, the anticipated Effective Time shall be
postponed for an appropriate period of time agreed upon by the parties in order
for the Base Period Trading Price to reflect the market effect of such stock
split, stock dividend, or similar recapitalization.
3.3 Shares Held by BCS or LSI. Each of the shares of BCS Common
Stock held by any BCS Company or by any LSI Company shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
3.4 Fractional Shares. Notwithstanding any other provision of
this Agreement, each holder of shares of BCS Common Stock exchanged pursuant to
the Merger who would
<PAGE>
otherwise have been entitled to receive a fraction of a share of LSI Common
Stock (after taking into account all certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
such fractional part of a share of LSI Common Stock multiplied by the market
value of one share of LSI Common Stock at the Effective Time. The market value
of one share of LSI Common Stock at the Effective Time shall be the last sale
price of LSI Common Stock on the Nasdaq National Market (as reported by The Wall
Street Journal or, if not reported thereby, any other authoritative source) on
the last trading day preceding the Effective Time. No such holder will be
entitled to dividends, voting rights, or any other rights as a shareholder in
respect of any fractional shares.
3.5 Conversion of Stock Options.
(a) At the Effective Time, each option or other right to
purchase shares of BCS Common Stock pursuant to stock options or stock
appreciation rights ("BCS Options") granted by BCS under the BCS Stock Plans,
which are outstanding at the Effective Time, whether or not exercisable, shall
be converted into and become rights with respect to LSI Common Stock, and LSI
shall assume each BCS Option, in accordance with the terms of the BCS Stock Plan
and stock option agreement by which it is evidenced, except that from and after
the Effective Time, (i) LSI and its Stock Option Committee shall be substituted
for BCS and the Committee of BCS's Board of Directors (including, if applicable,
the entire Board of Directors of BCS) administering such BCS Stock Plan, (ii)
each BCS Option assumed by LSI may be exercised solely for shares of LSI Common
Stock (or cash in the case of stock appreciation rights), (iii) the number of
shares of LSI Common Stock subject to such BCS Option shall be equal to the
number of shares of BCS Common Stock subject to such BCS Option immediately
prior to the Effective Time multiplied by the Exchange Ratio, and (iv) the per
share exercise price under each such BCS Option shall be adjusted by dividing
the per share exercise price under each such BCS Option by the Exchange Ratio
and rounding up to the nearest cent. Notwithstanding the provisions of clause
(iii) of the preceding sentence, LSI shall not be obligated to issue any
fraction of a share of LSI Common Stock upon exercise of BCS Options and any
fraction of a share of LSI Common Stock that otherwise would be subject to a
converted BCS Option shall represent the right to receive a cash payment upon
exercise of such converted BCS Option equal to the product of such fraction and
the difference between the market value of one share of LSI Common Stock at the
time of exercise of such Option and the per share exercise price of such Option.
The market value of one share of LSI Common Stock at the time of exercise of an
Option shall be the last sale price of the LSI Common Stock on the Nasdaq
National Market (as reported by The Wall Street Journal or, if not reported
thereby, any other authoritative source) on the last trading day preceding the
date of exercise. In addition, notwithstanding the clauses (iii) and (iv) of the
first sentence of this Section 3.5, each BCS Option which is an "incentive stock
option" shall be adjusted as required by Section 424 of the Internal Revenue
Code, and the regulations promulgated thereunder, so as not to constitute a
modification, extension or renewal of the option, within the meaning of Section
424(h) of the Internal Revenue Code. BCS agrees to take all necessary steps to
effectuate the foregoing provisions of this Section 3.5, including using its
reasonable efforts to obtain from each holder of a BCS Option any Consent or
Contract that may be deemed necessary or advisable in order to effect the
transactions contemplated by this Section 3.5.
<PAGE>
(b) As soon as practicable after the Effective Time, LSI
shall deliver to the participants in each BCS Stock Plan an appropriate notice
setting forth such participant's rights pursuant thereto and the grants subject
to such BCS Stock Plan shall continue in effect on the same terms and conditions
(subject to the adjustments required by Section 3.5(a) after giving effect to
the Merger), and LSI shall comply with the terms of each BCS Stock Plan to
ensure, to the extent required by, and subject to the provisions of, such BCS
Stock Plan, that BCS Options which qualified as incentive stock options prior to
the Effective Time continue to qualify as incentive stock options after the
Effective Time. At or prior to the Effective Time, LSI shall take all corporate
action necessary to reserve for issuance sufficient shares of LSI Common Stock
for delivery upon exercise of BCS Options assumed by it in accordance with this
Section 3.5. As soon as practicable after the Effective Time, LSI shall file a
registration statement on Form S-8 (or any successor or other appropriate
forms), with respect to the shares of LSI Common Stock subject to such options
and shall use its reasonable efforts to maintain the effectiveness of such
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain outstanding.
With respect to those individuals who subsequent to the Merger will be subject
to the reporting requirements under Section 16(a) of the Exchange Act, where
applicable, LSI shall administer the BCS Stock Plan assumed pursuant to this
Section 3.5 in a manner that complies with Rule 16b-3 promulgated under the
Exchange Act to the extent the BCS Stock Plan complied with such rule prior to
the Effective Time.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly after the Effective Time, LSI
and BCS shall cause the exchange agent selected by LSI (the "Exchange Agent") to
mail to the former shareholders of BCS appropriate transmittal materials (which
shall specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of BCS Common Stock shall pass,
only upon proper delivery of such certificates to the Exchange Agent). The
Exchange Agent may establish reasonable and customary rules and procedures in
connection with its duties. After the Effective Time, each holder of shares of
BCS Common Stock (other than shares to be canceled pursuant to Section 3.3 of
this Agreement) issued and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to the Exchange Agent and
shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 3.1 of this Agreement, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 4.2 of this Agreement. To the extent
required by Section 3.4 of this Agreement, each holder of shares of BCS Common
Stock issued and outstanding at the Effective Time also shall receive, upon
surrender of the certificate or certificates representing such shares, cash in
lieu of any fractional share of LSI Common Stock to which such holder may be
otherwise entitled (without interest). LSI shall not be obligated to deliver the
consideration to which any former holder of BCS Common Stock is entitled as a
result of the Merger until such holder surrenders such holder's certificate or
certificates representing the shares of BCS Common Stock for exchange as
provided in this Section 4.1. The certificate or certificates of BCS Common
Stock so surrendered shall be
<PAGE>
duly endorsed as the Exchange Agent may require. Any other provision of this
Agreement notwithstanding, neither LSI, the Surviving Corporation nor the
Exchange Agent shall be liable to a holder of BCS Common Stock for any amounts
paid or property delivered in good faith to a public official pursuant to any
applicable abandoned property Law. Adoption of this Agreement by the
shareholders of BCS shall constitute ratification of the appointment of the
Exchange Agent.
4.2 Rights of Former BCS Shareholders. At the Effective Time, the
stock transfer books of BCS shall be closed as to holders of BCS Common Stock
immediately prior to the Effective Time and no transfer of BCS Common Stock by
any such holder shall thereafter be made or recognized. Until surrendered for
exchange in accordance with the provisions of Section 4.1 of this Agreement,
each certificate theretofore representing shares of BCS Common Stock (other than
shares to be canceled pursuant to Sections 3.3 of this Agreement) shall from and
after the Effective Time represent for all purposes only the right to receive
the consideration provided in Sections 3.1 and 3.4 of this Agreement in exchange
therefor, subject, however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which have been declared or made by BCS in respect of such shares
of BCS Common Stock in accordance with the terms of this Agreement and which
remain unpaid at the Effective Time. Whenever a dividend or other distribution
is declared by LSI on the LSI Common Stock, the record date for which is at or
after the Effective Time, the declaration shall include dividends or other
distributions on all shares of LSI Common Stock issuable pursuant to this
Agreement, but no dividend or other distribution payable to the holders of
record of LSI Common Stock as of any time subsequent to the Effective Time shall
be delivered to the holder of any certificate representing shares of BCS Common
Stock issued and outstanding at the Effective Time until such holder surrenders
such certificate for exchange as provided in Section 4.1 of this Agreement.
However, upon surrender of such BCS Common Stock certificate, both the LSI
Common Stock certificate (together with all such undelivered dividends or other
distributions without interest) and any undelivered dividends and cash payments
payable hereunder (without interest) shall be delivered and paid with respect to
each share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BCS
BCS hereby represents and warrants to LSI as follows:
5.1 Organization, Standing, and Power. BCS is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Delaware, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its Assets. BCS is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of its
Assets or the nature or conduct of its business requires it to be so qualified
or licensed, except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on BCS.
<PAGE>
5.2 Authority; No Breach By Agreement.
(a) BCS has the corporate power and authority necessary to
execute, deliver, and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of BCS, subject
to the approval of this Agreement by the holders of a majority of the
outstanding shares of BCS Common Stock, which is the only shareholder vote
required for approval of this Agreement and consummation of the Merger by BCS.
Subject to such requisite shareholder approval, this Agreement represents a
legal, valid, and binding obligation of BCS, enforceable against BCS in
accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
BCS, nor the consummation by BCS of the transactions contemplated hereby, nor
compliance by BCS with any of the provisions hereof, will (i) conflict with or
result in a breach of any provision of BCS's Certificate of Incorporation or
Bylaws, or (ii) except as disclosed in Section 5.2 of the BCS Disclosure
Memorandum, constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of any BCS
Company under, any Contract or Permit of any BCS Company, except for any such
Default, Consent or Lien that would not have a Material Adverse Effect on BCS or
on any restaurant owned or operated by BCS, or, (iii) subject to receipt of the
requisite Consents referred to in Section 9.1(b) of this Agreement, violate any
Law or Order applicable to any BCS Company or any of their respective material
Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, or under the HSR Act, no notice to, filing with, or Consent of,
any public body or authority is necessary for the consummation by BCS of the
Merger and the other transactions contemplated in this Agreement.
5.3 Capital Stock.
(a) The authorized capital stock of BCS consists of
20,000,000 shares of BCS Common Stock, of which 5,225,000 shares are issued and
outstanding as of the date of this Agreement and not more than 5,225,000 shares,
plus any shares issued as the result of an exercise of an option existing as of
the date of this Agreement, will be issued and outstanding at the Effective
Time. All of the issued and outstanding shares of capital stock of BCS are duly
and validly issued and outstanding and are fully paid and nonassessable under
the DGCL . None of the outstanding shares of capital stock of BCS has been
issued in violation of any preemptive rights of the current or past shareholders
of BCS. BCS has reserved 600,000 shares of BCS Common Stock for issuance under
the BCS Stock Plans, pursuant to which options to purchase not more than 452,194
shares of BCS Common Stock are outstanding.
<PAGE>
(b) Except as set forth in Section 5.3(a) of this Agreement,
or as disclosed in Section 5.3 of the BCS Disclosure Memorandum, there are no
shares of capital stock or other equity securities of BCS outstanding and no
outstanding Rights relating to the capital stock of BCS.
5.4 BCS Subsidiaries. BCS has disclosed in Section 5.4 of the BCS
Disclosure Memorandum all of the BCS Subsidiaries (identifying its jurisdiction
of incorporation, each jurisdiction in which the character of its Assets or the
nature or conduct of its business requires it to be qualified and/or licensed to
transact business, and the number of shares owned and percentage ownership
interest represented by such share ownership). Except as disclosed in Section
5.4 of the BCS Disclosure Memorandum, BCS or one of its wholly-owned
Subsidiaries owns all of the issued and outstanding shares of capital stock (or
other equity interests) of each BCS Subsidiary. No capital stock (or other
equity interest) of any BCS Subsidiary is or may become required to be issued
(other than to another BCS Company) by reason of any Rights, and there are no
Contracts by which any BCS Subsidiary is bound to issue (other than to another
BCS Company) additional shares of its capital stock (or other equity interests)
or Rights or by which any BCS Company is or may be bound to transfer any shares
of the capital stock (or other equity interests) of any BCS Subsidiary (other
than to another BCS Company). There are no Contracts relating to the rights of
any BCS Company to vote or to dispose of any shares of the capital stock (or
other equity interests) of any BCS Subsidiary. All of the shares of capital
stock (or other equity interests) of each BCS Subsidiary held by a BCS Company
are fully paid and nonassessable under the applicable corporation Law of the
jurisdiction in which such Subsidiary is incorporated or organized and are owned
by the BCS Company free and clear of any Lien. Except as disclosed in Section
5.4 of the BCS Disclosure Memorandum, each BCS Subsidiary is a corporation duly
organized, validly existing, and in good standing under the Laws of the
jurisdiction in which it is incorporated, and has the corporate power and
authority necessary for it to own, lease, and operate its Assets and to carry on
its business as now conducted. Each BCS Subsidiary is duly qualified or licensed
to transact business as a foreign corporation in good standing in the States of
the United States and foreign jurisdictions where the character of its Assets or
the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on BCS. The minute book and other organizational
documents for each BCS Subsidiary have been made available to LSI for its
review, and, except as disclosed in Section 5.4 of the BCS Disclosure
Memorandum, are true and complete as in effect as of the date of this Agreement
and accurately reflect all amendments thereto and all proceedings of the Board
of Directors and shareholders thereof.
5.5 SEC Filings; Financial Statements.
(a) BCS has timely filed and made available to LSI all SEC
Documents required to be filed by BCS since December 31, 1992 or such later date
as BCS first filed, or was
first obligated to file, such SEC Documents (the "BCS SEC Reports"). The BCS SEC
Reports (i) at the time filed, complied in all material respects with the
applicable requirements of the Securities Laws and other applicable Laws and
(ii) did not, at the time they were filed (or, if amended or superseded by a
filing, then on the date of such filing) contain any untrue statement of
<PAGE>
a material fact or omit to state a material fact required to be stated in such
BCS SEC Reports or necessary in order to make the statements in such BCS SEC
Reports, in light of the circumstances under which they were made, not
misleading. No BCS Subsidiary is required to file any SEC Documents.
(b) Each of the BCS Financial Statements (including, in each
case, any related notes) contained in the BCS SEC Reports, including any BCS SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published rules
and regulations of the Securities and Exchange Commission (the "SEC") with
respect thereto, was prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except to the extent required by changes
to GAAP or as may be indicated in the notes to such financial statements or, in
the case of unaudited interim statements, as permitted by Form 10-Q of the SEC),
and fairly presented in all material respects the consolidated financial
position of BCS and its Subsidiaries as at the respective dates and the
consolidated results of operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be material in amount or effect and any pro forma financial information
contained in the BCS Financial Statements is not necessarily indicative of the
consolidated financial position of BCS and the BCS Subsidiaries, as the case may
be, as of the respective dates thereof and the consolidated results of
operations and cash flows for the periods indicated.
5.6 Absence of Undisclosed Liabilities. No BCS Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on BCS, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of BCS as of June
25, 1995 and March 31, 1996, included in the BCS Financial Statements delivered
prior to the date of this Agreement or reflected in the notes thereto, or as
disclosed in Section 5.6 of the BCS Disclosure Memorandum. No BCS Company has
incurred or paid any Liability since March 31, 1996, except for such Liabilities
(i) discussed in Section 5.6 of the BCS Disclosure Memorandum or (ii) incurred
or paid (A) in the ordinary course of business consistent with past business
practice and which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on BCS or (B) in connection with the
transactions contemplated by this Agreement. Except as disclosed in Section 5.6
of the BCS Disclosure Memorandum, no BCS Company is directly or indirectly
liable, by guarantee, indemnity, or otherwise, upon or with respect to, or
obligated, by discount or repurchase agreement or in any other way, to provide
funds in respect to, or obligated to guarantee or assume any Liability of any
Person, other than another BCS Company, for any amount in excess of $25,000.
5.7 Absence of Certain Changes or Events. Since June 25, 1995,
except as disclosed in the BCS Financial Statements delivered prior to the date
of this Agreement or as disclosed in Section 5.7 of the BCS Disclosure
Memorandum, (i) there have been no events, changes, or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on BCS, and (ii) there has not been: (A) any material
damage, destruction or loss (not covered by insurance) with respect to any
material assets of any BCS Company that has resulted in a Material Adverse
Effect on BCS, (B) any material change by
<PAGE>
any BCS Company in its accounting methods, principles or practices; (C) any
declaration, setting aside or payment of any dividends or distributions in
respect of shares of BCS Common Stock or the shares of stock of any BCS
Subsidiary or any redemption, repurchase or other reacquisition of any of BCS's
equity securities or any of the equity securities of any BCS Subsidiary; (D) any
material increase in the benefits under, or the establishment or amendment of,
any material bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option (including, without limitation, the
granting of stock options, stock appreciation rights, performance awards, or
restricted stock awards), stock purchase or other employee benefit plan, or any
material increase in the compensation payable or to become payable to directors,
officers or employees of any BCS Company, except for increases in salaries or
wages payable or to become payable in the ordinary course of business and
consistent with past practice and the granting of stock options as reflected in
Section 5.3 hereof.
5.8 Tax Matters.
(a) Except for such matters as would not have a Material
Adverse Effect on BCS, all Tax Returns required to be filed by or on behalf of
any of the BCS Companies have been timely filed or requests for extensions have
been timely filed, granted, and have not expired for periods ended on or before
June 25, 1995, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, and all Tax Returns filed are complete
and accurate in all Material respects. All Taxes shown to be payable on filed
Tax Returns have been paid. To the knowledge of BCS, there is no audit
examination, deficiency, or refund Litigation with respect to any Taxes, except
as reserved against in the BCS Financial Statements delivered prior to the date
of this Agreement or as disclosed in Section 5.8 of the BCS Disclosure
Memorandum. All Taxes and other Liabilities due with respect to completed and
settled examinations or concluded Litigation have been paid.
(b) None of the BCS Companies has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due (excluding such statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) The provision for any Taxes due or to become due for any
of the BCS Companies for the period or periods through and including the date of
the respective BCS Financial Statements that has been made and is reflected on
such BCS Financial Statements is sufficient to cover all such Taxes.
(d) Deferred Taxes of the BCS Companies have been provided
for in accordance with GAAP.
(e) None of the BCS Companies is a party to any Tax
allocation or sharing agreement and none of the BCS Companies has been a member
of an affiliated group filing a consolidated federal income Tax Return (other
than a group the common parent of which was BCS) or has any Liability for Taxes
of any Person (other than BCS and its Subsidiaries) under
<PAGE>
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local
or foreign Law) as a transferee or successor or by Contract or otherwise.
(f) Each of the BCS Companies is in compliance in all
material respects with records contain all information and documents (including
properly completed IRS Forms W-9) necessary to comply in all material respects
with, all applicable information reporting and Tax withholding requirements
under federal, state, and local Tax Laws, and such records identify with
specificity all accounts subject to backup withholding under Section 3406 of the
Internal Revenue Code.
(g) Except as disclosed in Section 5.8 of the BCS Disclosure
Memorandum, none of the BCS Companies has made any payments, is obligated to
make any payments, or is a party to any Contract that could obligate it to make
any payments that would be disallowed as a deduction under Section 280G or
162(m) of the Internal Revenue Code.
(h) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of the BCS Companies that occurred during
or after any Taxable Period in which the Companies incurred a net operating loss
that carries over to any Taxable Period ending after June 25, 1995.
5.9 Assets. Except as disclosed in Section 5.9 of the BCS
Disclosure Memorandum or as disclosed or reserved against in the BCS Financial
Statements delivered prior to the date of this Agreement, the BCS Companies have
good and marketable title, free and clear of all Liens, to all of their
respective Assets. All tangible properties used in the businesses of the BCS
Companies are in good condition, reasonable wear and tear excepted, and are
usable in the ordinary course of business consistent with BCS's past practices.
All items of inventory of the BCS Companies reflected on the most recent balance
sheet included in the BCS Financial Statements delivered prior to the date of
this Agreement and prior to the Effective Time consisted and will consist, as
applicable, of items of a quality and quantity usable and saleable in the
ordinary course of business and conform to generally accepted standards in the
industry in which the BCS Companies are a part. All Assets which are material to
BCS's business on a consolidated basis, held under leases or subleases by any of
the BCS Companies, are held under valid Contracts enforceable in accordance with
their respective terms, and each such Contract is in full force and effect.
Section 5.9 of the BCS Disclosure Memorandum sets forth the scope of coverage of
all of BCS's insurance policies as of the date of this Agreement, the term of
each such policy and the premiums relating thereto. None of the BCS Companies
has received notice from any insurance carrier that (i) such insurance will be
canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. Except as disclosed in Section 5.9 of the BCS Disclosure Memorandum,
there are presently no claims pending under such policies of insurance and no
notices of denial of any material claim have been received by any BCS Company
under such policies. The Assets of the BCS Companies include all Assets required
to operate the business of the BCS Companies as presently conducted.
<PAGE>
5.10 Intellectual Property. Section 5.10 of the BCS Disclosure
Memorandum sets forth a complete and accurate list of, and a brief description
of all governmental registrations or applications for governmental registrations
of, all Intellectual Property owned, used or licensed by or to BCS which are
used in or necessary for the conduct of BCS's business, except as to which the
absence of which would not have a Material Adverse Effect on BCS ("BCS
Intellectual Property"). No Person has asserted a claim in writing to BCS that
BCS has abandoned any BCS Intellectual Property and, to the Knowledge of BCS,
BCS has not abandoned any BCS Intellectual Property. Except as disclosed in
Section 5.10 of the BCS Disclosure Memorandum, an BCS Company owns or has the
lawful right to use the BCS Intellectual Property. All BCS Intellectual Property
licensed to any BCS Company is identified as "licensed" in Section 5.10 of the
BCS Disclosure Memorandum. Except as disclosed in Section 5.10 of the BCS
Disclosure Memorandum, use of the BCS Intellectual Property by any of the BCS
Companies has not to the Knowledge of BCS misappropriated or infringed on any
rights held or owned by any third party, nor has any third party asserted any
such claim. No BCS Company is obligated to pay any royalties to any Person
(other than another BCS Company) with respect to any BCS Intellectual Property.
Except as disclosed in Section 5.10 of the BCS Disclosure Memorandum, every
officer or management employee of any BCS Company is a party to a Contract which
requires such officer or management employee to keep confidential any trade
secrets, proprietary data, customer information, or other business information
of a BCS Company, and, to the Knowledge of BCS, no officer is party to, nor to
the Knowledge of BCS has BCS received any notice of any other management
employee being a party to, any Contract with any Person other than a BCS Company
which requires such officer or management employee to assign any interest in any
Intellectual Property to any Person other than a BCS Company or to keep
confidential any trade secrets, proprietary data, customer information, or other
business information of any Person other than a BCS Company. Except as disclosed
in Section 5.10 of the BCS Disclosure Memorandum, to the Knowledge of BCS, no
officer of any BCS Company is party to, nor to the Knowledge of BCS has BCS
received any notice of any other management employee being a party to, any
Contract which restricts or prohibits such officer or management employee from
engaging in activities competitive with any Person, including any BCS Company.
5.11 Environmental Matters.
(a) Except as would not have a Material Adverse Effect on
BCS, each BCS Company, its Participation Facilities, and its Operating
Properties are, and have been during the period of any BCS Company's ownership
or operation, in compliance with all Environmental Laws.
(b) There is no Litigation pending or, to the Knowledge of
BCS, threatened before any court, governmental agency, or authority or other
forum in which any BCS Company or any of its Operating Properties or
Participation Facilities (or BCS in respect of such Operating Property or
Participation Facility) has been or, with respect to threatened Litigation, may
be named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material, whether or not occurring at, on, under,
adjacent to, or affecting (or potentially affecting) a site owned, leased, or
operated by any BCS Company or any of its Operating Properties or
<PAGE>
Participation Facilities, nor, to the Knowledge of BCS, is there any reasonable
basis for any Litigation of a type described in this sentence.
(c) During the period of (i) any BCS Company's ownership or
operation of any of their respective current properties, (ii) any BCS Company's
participation in the management of any Participation Facility, or (iii) any BCS
Company's holding of a security interest in an Operating Property, there have
been no releases of Hazardous Material in, on, under, adjacent to, or affecting
(or to the Knowledge of BCS reasonably likely to affect) such properties, except
as would not have a Material Adverse Effect on BCS. Prior to the period of (i)
any BCS Company's ownership or operation of any of their respective current
properties, (ii) any BCS Company's participation in the management of any
Participation Facility, or (iii) any BCS Company's holding of a security
interest in a Operating Property, to the Knowledge of BCS, there were no
releases of Hazardous Material in, on, under, or affecting any such property,
Participation Facility or Operating Property, except as would not have a
Material Adverse Effect on BCS.
5.12 Compliance with Laws. Each BCS Company has in effect all
Permits necessary for it to own, lease, or operate its material Assets and to
carry on its business as now conducted, and there has occurred no Default under
any such Permit, except where the failure to possess such Permit or the
occurrence of a Default would not have a Material Adverse Effect on BCS or the
restaurant to which the Permit relates. Except as disclosed in Section 5.12 of
the BCS Disclosure Memorandum, none of the BCS Companies:
(a) is in Default under any of the provisions of its
Certificate of Incorporation or Bylaws (or other governing instruments);
(b) is in Default under any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except for any
Default that would not have a Material Adverse Effect on BCS or any restaurants
owned or operated by BCS; or
(c) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting that
any BCS Company is in Material non-compliance with any of the Laws or Orders
which such governmental authority or Regulatory Authority enforces which have
not been resolved, (ii) threatening to revoke any Permits, or (iii) requiring
any BCS Company to enter into or consent to the issuance of a cease and desist
order, formal agreement, directive, commitment, or memorandum of understanding,
or to adopt any Board resolution or similar undertaking.
Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority have been made available to LSI.
5.13 Labor Relations. Except as disclosed in Section 5.13
of the BCS Disclosure Memorandum, no BCS Company is the subject of any
Litigation asserting that it or any other
<PAGE>
BCS Company has committed an unfair labor practice (within the meaning of the
National Labor Relations Act or comparable state law) or seeking to compel it or
any other BCS Company to bargain with any labor organization as to wages or
conditions of employment, nor is any BCS Company party to any collective
bargaining agreement, nor is there any strike or other labor dispute involving
any BCS Company, pending or threatened, or to the Knowledge of BCS, is there any
activity involving any BCS Company's employees seeking to certify a collective
bargaining unit or engaging in any other organization activity.
5.14 Employee Benefit Plans.
(a) BCS has disclosed in Section 5.14 of the BCS Disclosure
Memorandum, and has delivered or made available to LSI prior to the execution of
this Agreement copies in each case of, all pension, retirement, profit-sharing,
deferred compensation, stock option, employee stock ownership, severance pay,
vacation, bonus, or other incentive plan, all other written employee programs,
arrangements, or agreements, all medical, vision, dental, or other health plans,
all life insurance plans, and all other employee benefit plans or fringe benefit
plans, including "employee benefit plans" as that term is defined in Section
3(3) of ERISA, currently adopted, maintained by, sponsored in whole or in part
by, or contributed to by any BCS Company or ERISA Affiliate thereof for the
benefit of employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries and under which employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
are eligible to participate (collectively, the "BCS Benefit Plans"). Any of the
BCS Benefit Plans which is an "employee pension benefit plan," as that term is
defined in Section 3(2) of ERISA, is referred to herein as a " BCS ERISA Plan."
(b) All BCS Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BCS. Each BCS
ERISA Plan which is intended to be qualified under Section 401(a) of the
Internal Revenue Code has received a favorable determination letter from the
Internal Revenue Service, and BCS is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. No BCS Company
has engaged in a transaction with respect to any BCS Benefit Plan that, assuming
the taxable period of such transaction expired as of the date hereof, would
subject any BCS Company to a Tax imposed by either Section 4975 of the Internal
Revenue Code or Section 502(i) of ERISA.
(c) No BCS ERISA Plan is, and no BCS Company has ever
maintained or contributed to, a "defined benefit plan" (as defined in Section
414(j) of the Internal Revenue Code) or a multiemployer plan within the meaning
of Section 3(37) of ERISA. No BCS Company has provided, or is required to
provide, security to any defined benefit plan or any single-employer plan of any
entity which is considered one employer with BCS under Section 4001 of ERISA or
Section 414 of the Internal Revenue Code or Section 302 of ERISA (whether or not
waived) (an "ERISA Affiliate") pursuant to Section 401(a)(29) of the Internal
Revenue Code.
<PAGE>
(d) No Liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by any BCS Company with respect to any
ongoing, frozen, or terminated single-employer plan or the single-employer plan
of any ERISA Affiliate. No BCS Company has incurred any withdrawal Liability
with respect to a multiemployer plan under Subtitle B of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate). No notice
of a "reportable event," within the meaning of Section 4043 of ERISA for which
the 30-day reporting requirement has not been waived, has been required to be
filed for any BCS Pension Plan or by any ERISA Affiliate within the 12-month
period ending on the date hereof.
(e) Except as disclosed in Section 5.14 of the BCS
Disclosure Memorandum, no BCS Company has any Liability for retiree health and
life benefits under any of the BCS Benefit Plans and there are no restrictions
on the rights of such BCS Company to amend or terminate any such retiree health
or benefit Plan without incurring any Liability thereunder.
(f) Except as disclosed in Section 5.14 of the BCS
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any BCS Company from
any BCS Company under any BCS Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any BCS Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any BCS Company and their respective beneficiaries, other
than entitlements accrued pursuant to funded retirement plans subject to the
provisions of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
have been fully reflected on the BCS Financial Statements to the extent required
by and in accordance with GAAP.
5.15 Material Contracts. Except as disclosed in Section 5.15 of
the BCS Disclosure Memorandum or otherwise reflected in the BCS Financial
Statements, none of the BCS Companies, nor any of their respective Assets,
businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination, consulting,
or retirement Contract providing for payments to any Person, except for
Contracts referred to in Section 5.14(a) of this Agreement and unwritten
Contracts with respect to the employment of hourly personnel terminable at will
or upon statutorily required notice, (ii) any Contract relating to the borrowing
of money by any BCS Company or the guarantee by any BCS Company of any such
obligation (other than Contracts for purchase money indebtedness in an aggregate
amount not exceeding $50,000, Contracts evidencing trade payables, and Contracts
relating to borrowings or guarantees made in the ordinary course of business),
(iii) any Contract which prohibits or restricts any BCS Company from engaging in
any business activities in any geographic area, line of business or otherwise in
competition with any other Person, (iv) any Contract between or among BCS
Companies, (v) any Contract involving Intellectual Property, (vi) any lease of
real property as lessee or lessor, (vii) any Contract relating to the purchase
or sale of any goods or
<PAGE>
services (other than Contracts entered into in the ordinary course of business
and that are either (x) terminable by each BCS Company that is a party thereto
upon not more than sixty (60) days notice without payment or penalty or (y) has
a remaining term of not more than six months from the date of this Agreement and
involves payments not in excess of $20,000 per year), and (viii) any other
Contract or amendment thereto that would be required to be filed as an exhibit
to a Form 10-K filed by BCS with the SEC as of the date of this Agreement
(together with all Contracts referred to in Sections 5.9 and 5.14(a) of this
Agreement, the " BCS Contract"). With respect to each BCS Contract and except as
disclosed in Section 5.15 of the BCS Disclosure Memorandum: (i) the Contract is
in full force and effect; (ii) no BCS Company is in Default thereunder except
for any such Default as would not have a Material Adverse Effect on BCS; (iii)
no BCS Company has repudiated or waived any material provision of any such
Contract; and (iv) no other party to any such Contract is, to the Knowledge of
BCS, in Default in any respect, or has repudiated or waived any material
provision thereunder. Except as disclosed in Section 5.15 of the BCS Disclosure
Memorandum, all of the indebtedness of any BCS Company for money borrowed is
prepayable at any time by such BCS Company without penalty or premium.
5.16 Legal Proceedings. Except as disclosed in Section 5.16 of the
BCS Disclosure Memorandum, there is no Litigation instituted or pending, or, to
the Knowledge of BCS, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any BCS Company, or against any director
(limited, as to directors, to Litigation with respect to which BCS would have an
indemnification obligation under its Certificate of Incorporation or Bylaws) or
employee benefit plan of any BCS Company, or against any Asset, interest, or
right of any of them, nor, except for matters which would not have a Material
Adverse Effect on BCS, are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any BCS Company.
Section 5.16 of the BCS Disclosure Memorandum contains a summary of all
instituted or pending Litigation as of the date of this Agreement to which any
BCS Company is a party and which names a BCS Company as a defendant or
cross-defendant.
5.17 Reports. Since January 1, 1992, or the date of organization
if later, each BCS Company has timely filed all reports and statements, together
with any amendments required to be made with respect thereto, that it was
required to file with Regulatory Authorities (except failures to file which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on BCS. As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied in all material respects with all applicable Laws. As of its respective
date, each such report and document did not, in all material respects, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading,
provided, however, that to the extent that the foregoing relates to facts or
omission regarding Persons other than BCS and its Affiliates, such
representation and warranty is made to BCS's Knowledge.
5.18 Statements True and Correct. No statement,
certificate, instrument, or other writing furnished or to be furnished by any
BCS Company or any Affiliate thereof to LSI pursuant to this Agreement or any
other document, agreement, or instrument referred to herein contains or
<PAGE>
will contain any untrue statement of material fact or will omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. BCS has furnished LSI
with copies of all written BCS Contracts, and such copies are true and correct
copies of the written BCS Contracts as such exist on the date of this Agreement.
None of the information supplied or to be supplied by any BCS Company or any
Affiliate thereof for inclusion in the Registration Statement to be filed by LSI
with the SEC will, when the Registration Statement becomes effective, be false
or misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein not misleading. None of the
information supplied or to be supplied by any BCS Company or any Affiliate
thereof for inclusion in the Joint Proxy Statement to be mailed to each Party's
shareholders in connection with the Shareholders' Meetings, and any other
documents to be filed by a BCS Company or any Affiliate thereof with the SEC or
any other Regulatory Authority in connection with the transactions contemplated
hereby, will, at the respective time such documents are filed, and with respect
to the Joint Proxy Statement, when first mailed to the shareholders of BCS and
LSI, be false or misleading with respect to any material fact, or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or, in the case of the
Joint Proxy Statement or any amendment thereof or supplement thereto, at the
time of the Shareholders' Meetings, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Shareholders' Meetings. All documents that any BCS Company or any
Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.
5.19 Accounting, Tax and Regulatory Matters. No BCS Company or, to
the Knowledge of BCS, any Affiliate thereof has taken any action or has any
Knowledge of any fact or circumstance that is reasonably likely to (i) prevent
the Merger from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) of this Agreement or result in the
imposition of a condition or restriction of the type referred to in the last
sentence of such Section.
5.20 State Takeover Laws. Each BCS Company has taken all necessary
action to exempt the transactions contemplated by this Agreement from any
applicable "moratorium," "fair price," "business combination," "control share,"
or other anti-takeover Laws (collectively, "Takeover Laws"), including Section
203 of the DGCL.
5.21 Charter Provisions. Each BCS Company has taken all action so
that the entering into of this Agreement and the consummation of the Merger and
the other transactions contemplated by this Agreement do not and will not result
in the grant of any rights to any Person under the Certificate of Incorporation,
Bylaws or other governing instruments of any BCS Company or restrict or impair
the ability of LSI or any of its Subsidiaries to vote, or otherwise to exercise
the rights of a shareholder with respect to, shares of any BCS Company that may
be directly or indirectly acquired or controlled by it.
<PAGE>
5.22 Shareholders' Agreement. Edward P. Grace, III has
executed and delivered to LSI an agreement in substantially the form of Exhibit
1.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF LSI
LSI hereby represents and warrants to BCS as follows:
6.1 Organization, Standing, and Power. LSI is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Georgia, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its Assets. LSI is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of its
Assets or the nature or conduct of its business requires it to be so qualified
or licensed, except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on LSI.
6.2 Authority; No Breach By Agreement.
(a) LSI has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of LSI, subject
to the approval of the holders of a majority of the shares of LSI Common Stock
present and voting at a special meeting of LSI shareholders at which a quorum is
present, which is the only shareholder vote required for approval of this
Agreement and consummation of the merger by LSI. Subject to such requisite
shareholder approval, this Agreement represents a legal, valid, and binding
obligation of LSI, enforceable against LSI in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
LSI, nor the consummation by LSI of the transactions contemplated hereby, nor
compliance by LSI with any of the provisions hereof, will (i) conflict with or
result in a breach of any provision of LSI's Articles of Incorporation or
Bylaws, or (ii) constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of any LSI
Company under, any Contract or Permit of any LSI Company or, (iii) subject to
receipt of the requisite approvals referred to in Section 9.1(b) of this
Agreement, violate any Law or Order applicable to any LSI Company or any of
their respective material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, or under the HSR Act, no notice to, filing with, or Consent of,
any public
<PAGE>
body or authority is necessary for the consummation by LSI of the Merger and the
other transactions contemplated in this Agreement.
6.3 Capital Stock.
(a) The authorized capital stock of LSI consists of (i)
25,000,000 shares of LSI Common Stock, of which 8,466,350 shares are issued and
outstanding as of the date of this Agreement, and (ii) 10,000,000 shares of LSI
Preferred Stock, of which no shares are issued and outstanding. All of the
issued and outstanding shares of LSI Capital Stock are, and all of the shares of
LSI Common Stock to be issued in exchange for shares of BCS Common Stock upon
consummation of the Merger, when issued in accordance with the terms of this
Agreement, will be, duly and validly issued and outstanding and fully paid and
nonassessable under the GBCC. None of the outstanding shares of LSI Capital
Stock has been, and none of the shares of LSI Common Stock to be issued in
exchange for shares of BCS Common Stock upon consummation of the Merger will be,
issued in violation of any preemptive rights of the current or past shareholders
of LSI. LSI has reserved 2,018,350 shares of LSI Common Stock for issuance under
the LSI Stock Plans, pursuant to which options to purchase no more than
1,238,031 shares of LSI Common Stock are outstanding.
(b) Except as set forth in Section 6.3(a) of this Agreement
or as disclosed in Section 6.3 of the LSI Disclosure Memorandum, there are no
shares of capital stock or other equity securities of LSI outstanding and no
outstanding Rights relating to the capital stock of LSI.
6.4 SEC Filings; Financial Statements.
(a) LSI has timely filed and made available to BCS all SEC
Documents required to be filed by LSI since December 31, 1992 or such later date
as LSI first filed, or was
first obligated to file, such SEC Documents (the "LSI SEC Reports"). The LSI SEC
Reports (i) at the time filed, complied in all material respects with the
applicable requirements of the Securities Laws and other applicable Laws and
(ii) did not, at the time they were filed (or, if amended or superseded by a
filing, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated in such LSI
SEC Reports or necessary in order to make the statements in such LSI SEC
Reports, in light of the circumstances under which they were made, not
misleading. No LSI Subsidiary is required to file any SEC Documents.
(b) Each of the LSI Financial Statements (including, in each
case, any related notes) contained in the LSI SEC Reports, including any LSI SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except to
the extent required by changes to GAAP or as may be indicated in the notes to
such financial statements or, in the case of unaudited interim statements, as
permitted by Form 10-Q of the SEC), and fairly presented in all material
respects the consolidated financial position of LSI and its Subsidiaries as at
the respective dates and the consolidated results of operations and cash flows
<PAGE>
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount or effect, and any
pro forma financial information contained in the LSI Financial Statements is not
necessarily indicative of the consolidated financial position of LSI and the LSI
Subsidiaries, as the case may be, as of the respective dates thereof and the
consolidated results of operations and cash flows for the period indicated..
6.5 Absence of Undisclosed Liabilities. No LSI Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on LSI, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of LSI as of
December 31, 1995 and March 31, 1996, included in the LSI Financial Statements
or reflected in the notes thereto, or as disclosed in the LSI Disclosure
Memorandum. No LSI Company has incurred or paid any Liability since March 31,
1996, except for such Liabilities (i) disclosed in the LSI Disclosure Memorandum
or (ii) incurred or paid in the ordinary course of business consistent with past
business practice and which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on LSI.
6.6 Absence of Certain Changes or Events. Since December 31, 1995,
except as disclosed in the LSI Financial Statements delivered prior to the date
of this Agreement or as disclosed in Section 6.6 of the LSI Disclosure
Memorandum, (i) there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on LSI, and (ii) the LSI Companies have not taken any
action, or failed to take any action, prior to the date of this Agreement, which
action or failure, if taken after the date of this Agreement, would represent or
result in a material breach or violation of any of the covenants and agreements
of LSI contained in Article 7 of this Agreement.
6.7 Compliance with Laws. Each LSI Company has in effect all
Permits necessary for it to own, lease or operate its material Assets and to
carry on its business as now conducted except where the failure to possess such
Permit would not have a Material Adverse Effect on LSI or the restaurant to
which the Permit relates. Except as disclosed in Section 6.7 of the LSI
Disclosure Memorandum, no LSI Company:
(a) is in Default of any Laws, Orders or Permits applicable
to its business or employees conducting its business, except for any Default
that would not have a Material Adverse Effect on LSI or any restaurants owned or
operated by LSI; or
(b) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting that
any LSI Company is in Material non-compliance with any of the Laws or Orders
which such governmental authority or Regulatory Authority enforces which have
not been resolved, or (iii) requiring any LSI Company to enter into or consent
to the issuance of a cease and desist order, formal agreement, directive,
commitment or memorandum of understanding, or to adopt any Board resolution or
similar undertaking, which restricts materially the conduct of its business.
<PAGE>
Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review (other
than a review by the Securities and Exchange Commission of a public offering of
equity securities by LSI) or enforcement action by a federal or state securities
authority have been made available to BCS.
6.8 Legal Proceedings. Except as disclosed in Section 6.16 of the
LSI Disclosure Memorandum there is no Litigation instituted or pending, or, to
the Knowledge of LSI, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any LSI Company, or against any director,
employee or employee benefit plan of any LSI Company, or against any Asset,
employee benefit plan, interest, or right of any of them, that is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
LSI, nor are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any LSI Company, that are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on LSI.
6.9 Statements True and Correct. No statement, certificate,
instrument or other writing furnished or to be furnished by any LSI Company or
any Affiliate thereof to BCS pursuant to this Agreement or any other document,
agreement or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by any
LSI Company or any Affiliate thereof for inclusion in the Registration Statement
to be filed by LSI with the SEC, will, when the Registration Statement becomes
effective, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to make the statements therein not misleading.
None of the information supplied or to be supplied by any LSI Company or any
Affiliate thereof for inclusion in the Joint Proxy Statement to be mailed to
each Party's shareholders in connection with the Shareholders' Meetings, and any
other documents to be filed by any LSI Company or any Affiliate thereof with the
SEC or any other Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such documents are filed, and
with respect to the Joint Proxy Statement, when first mailed to the shareholders
of BCS and LSI, be false or misleading with respect to any material fact, or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or, in
the case of the Joint Proxy Statement or any amendment thereof or supplement
thereto, at the time of the Shareholders' Meetings, be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Shareholders' Meetings. All documents that any
LSI Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
6.10 Authority of Sub. Sub is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Georgia as
a wholly-owned Subsidiary of LSI. The authorized capital stock of Sub shall
consist of 1,000 shares of Sub Common Stock, all of which
<PAGE>
is validly issued and outstanding, fully paid and nonassessable and is owned by
LSI free and clear of any Lien. Sub has the corporate power and authority
necessary to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of Sub. This
Agreement represents a legal, valid, and binding obligation of Sub, enforceable
against Sub in accordance with its terms.
6.11 Reports. Since January 1, 1992, or the date of organization
if later, each LSI Company has filed all reports and statements, together with
any amendments required to be made with respect thereto, that it was required to
file with (i) the SEC, including, but not limited to, Forms 10-K, Forms 10-Q,
Forms 8-K, and proxy statements, (ii) other Regulatory Authorities, and (iii)
any applicable state securities authorities (except, in the case of state
securities authorities, failures to file which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on LSI). As of
their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report
and document did not, in all material respects, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of BCS. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
unless the prior written consent of LSI shall have been obtained, and except as
otherwise expressly contemplated herein, BCS shall and shall cause each of its
Subsidiaries to (a) operate its business in the usual, regular, and ordinary
course, (b) use its reasonable efforts preserve intact its business organization
and Assets and maintain its rights and franchises, and (c) take no action which
would (i) materially adversely affect the ability of any Party to obtain any
Consents required for the transactions contemplated hereby without imposition of
a condition or restriction of the type referred to in the last sentences of
Section 9.1(b) or 9.1(c) of this Agreement, or (ii) materially adversely affect
the ability of any Party to perform its covenants and agreements under this
Agreement.
7.2 Negative Covenants of BCS. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
BCS covenants and agrees that it will not do or agree or commit to do, or permit
any of its Subsidiaries to do or agree or commit to do, any of the following
without the prior written consent of the chief executive officer or chief
financial officer of LSI, which consent shall not be unreasonably withheld,
conditioned or delayed:
(a) amend the Certificate of Incorporation, Bylaws or
other governing instruments of any BCS Company, or
<PAGE>
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness under BCS's existing credit line or
indebtedness of a BCS Company to another BCS Company) in excess of an aggregate
of $50,000 (for the BCS Companies on a consolidated basis) except in the
ordinary course of the business of BCS Subsidiaries consistent with past
practices, or impose, or suffer the imposition, on any Asset of any BCS Company
of any Lien or permit any such Lien to exist (other than in connection with
Liens in effect as of the date hereof that are disclosed in the BCS Disclosure
Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of any BCS Company, or declare or pay any dividend
or make any other distribution in respect of BCS's capital stock; or
(d) except for this Agreement, or pursuant to the exercise of
stock options outstanding as of the date hereof or granted after the date hereof
pursuant to the General Manager Stock Incentive Program (the "GM Program") and
pursuant to the terms thereof in existence on the date hereof, or as disclosed
in Section 7.2(d) of the BCS Disclosure Memorandum, issue, sell, pledge,
encumber, authorize the issuance of, enter into any Contract to issue, sell,
pledge, encumber, or authorize the issuance of, or otherwise permit to become
outstanding, any additional shares of BCS Common Stock or any other capital
stock of any BCS Company, or any stock appreciation rights, or any option,
warrant, conversion, or other right to acquire any such stock, or any security
convertible into any such stock; or
(e) adjust, split, combine or reclassify any capital stock
of any BCS Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of BCS Common Stock, or sell, lease,
mortgage or otherwise dispose of or otherwise encumber any shares of capital
stock of any BCS Subsidiary (unless any such shares of stock are sold or
otherwise transferred to another BCS Company) or any Asset having a book value
in excess of $10,000 other than in the ordinary course of business for
reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of three
years or less, purchase any securities or make any material investment, either
by purchase of stock of securities, contributions to capital, Asset transfers,
or purchase of any Assets, in any Person other than a wholly-owned BCS
Subsidiary, or otherwise acquire direct or indirect control over any Person,
other than in connection with (i) foreclosures in the ordinary course of
business, or (iii) the creation of new wholly-owned Subsidiaries organized to
conduct or continue activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the
employees or officers of any BCS Company, except in accordance with past
practice as disclosed in Sections 5.14
<PAGE>
and 5.15 of the BCS Disclosure Memorandum or as required by Law; pay any
severance or termination pay or any bonus other than pursuant to written
policies or written Contracts in effect on the date of this Agreement and
disclosed in Section 5.15 of the BCS Disclosure Memorandum; and enter into or
amend any severance agreements with officers of any BCS Company; grant any
material increase in fees or other increases in compensation or other benefits
to directors of any BCS Company except in accordance with past practice
disclosed in Sections 5.14 and 5.15 of the BCS Disclosure Memorandum; or
voluntarily accelerate the vesting of any stock options or other stock-based
compensation or employee benefits; or
(h) enter into or amend any employment Contract between any
BCS Company and any Person (unless such amendment is required by Law and except
for increases in compensation or benefits in accordance with past practice as
disclosed in Section 5.15 of the BCS Disclosure Memorandum) that the BCS Company
does not have the unconditional right to terminate without Liability (other than
Liability for services already rendered), at any time on or after the Effective
Time or upon statutorily required notice;
(i) adopt any new employee benefit plan of any BCS Company
or terminate or withdraw from, or make any material change in or to, any
existing employee benefit plans of any BCS Company other than any such change
that is required by Law or that, in the opinion of counsel, is necessary or
advisable to maintain the tax qualified status of any such plan, or make any
distributions from such employee benefit plans, except as required by Law, the
terms of such plans or consistent with past practice; or
(j) make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as may be appropriate
to conform to changes in Tax Laws or regulatory accounting requirements or GAAP;
or
(k) commence any Litigation other than in accordance with
past practice, settle any Litigation involving any Liability of any BCS Company
for Material money damages or restrictions upon the operations of any BCS
Company; or
(l) enter into, terminate or materially modify or amend any
Contract involving the payment of $50,000 or more, or waive, release, compromise
or assign any material rights or claims, except for: (i) purchases of inventory
in the ordinary course of business under existing Contracts without alteration
or amendment or pursuant to individual purchase orders for one time, spot
purchases; and (ii) Contracts in connection with the construction of restaurants
which are within the BCS capital plan for restaurant expansion as disclosed in
Section 7.2 of the BCS Disclosure Memorandum.
7.3 Covenants of LSI. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, LSI
covenants and agrees that it shall (x) continue to conduct its business and the
business of its Subsidiaries in a manner designed in its reasonable judgment, to
enhance the long-term value of the LSI Common Stock and the business prospects
of the LSI Companies and to the extent consistent therewith use all reasonable
efforts to preserve intact the LSI Companies' core businesses and goodwill with
their respective
<PAGE>
employees and the communities they serve, (y) not declare or pay any dividend or
make any distribution in respect of LSI Common Stock, and (z) take no action
which would (i) materially adversely affect the ability of any Party to obtain
any Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentences of Section 9.1(b) or 9.1(c) of this Agreement, or (ii) materially
adversely affect the ability of any Party to perform its covenants and
agreements under this Agreement; provided, that the foregoing shall not prevent
any LSI Company from discontinuing or disposing of any of its Assets or business
if such action is, in the judgment of LSI, desirable in the conduct of the
business of LSI and its Subsidiaries. LSI further covenants and agrees that it
will not, without the prior written consent of the chief executive officer of
BCS, which consent shall not be unreasonably withheld, amend the Articles of
Incorporation or Bylaws of LSI, in each case, in any manner adverse to the
holders of BCS Common Stock as compared to rights of holders of LSI Common Stock
generally as of the date of this Agreement.
7.4 Adverse Changes in Condition. Each Party agrees to give
written notice promptly to the other Party upon becoming aware of the occurrence
or impending occurrence of any event or circumstance relating to it or any of
its Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.5 Reports. Each Party and its Subsidiaries shall file all
reports required to be filed by it with Regulatory Authorities between the date
of this Agreement and the Effective Time and shall deliver to the other Party
copies of all such reports promptly after the same are filed. If financial
statements are contained in any such reports filed with the SEC, such financial
statements will fairly present the consolidated financial position of the entity
filing such statements as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows for the periods then
ended in accordance with GAAP (subject in the case of interim financial
statements to normal recurring year-end adjustments that are not material). As
of their respective dates, such reports filed with the SEC will comply in all
material respects with the Securities Laws and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to another Regulatory Authority shall
be prepared in accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Shareholder Approval.
As soon as practicable after execution of this Agreement, LSI shall prepare and
file the Registration Statement with the SEC, and shall use its reasonable
efforts to cause the Registration Statement to become effective under the 1933
Act and take any action required to be taken under the applicable state Blue Sky
or securities Laws in connection with the issuance of the shares of LSI
<PAGE>
Common Stock upon consummation of the Merger. BCS shall cooperate in the
preparation and filing of the Registration Statement and shall furnish all
information concerning it and the holders of its capital stock as LSI may
reasonably request in connection with such action. BCS shall call a
Shareholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon adoption of this Agreement and such other related matters as it
deems appropriate. LSI shall call a Shareholders' Meeting, to be held as soon as
reasonably practicable after the Registration Statement is declared effective by
the SEC, for the purpose of voting upon approval of this Agreement and such
other related matters as it deems appropriate. In connection with the
Shareholders' Meetings, (i) BCS and LSI shall prepare and file with the SEC a
Joint Proxy Statement and mail such Joint Proxy Statement to their respective
shareholders, (ii) the Parties shall furnish to each other all information
concerning them that they may reasonably request in connection with such Joint
Proxy Statement, (iii) the Board of Directors of BCS and LSI shall recommend to
their respective shareholders the adoption or approval of this Agreement
(subject to the Board of Directors of BCS, after having consulted with and
considered the advice of outside counsel, reasonably determining in good faith
that the making of such recommendation, or the failure to withdraw or modify its
recommendation, would constitute a breach of fiduciary duties of the members of
such Board of Directors to BCS's shareholder under applicable law), and (iv) the
Board of Directors and officers of BCS and LSI shall use their reasonable
efforts to obtain such shareholders' adoption or approval (subject to the Board
of Directors of BCS, after having consulted with and considered the advice of
outside counsel, reasonably determining in good faith that the taking of such
actions would constitute a breach of fiduciary duties of the members of such
Board of Directors to BCS's shareholder under applicable law). LSI and BCS shall
make all necessary filings with respect to the Merger under the Securities Laws.
8.2 Exchange Listing. LSI shall use its reasonable efforts to
list, prior to the Effective Time, on the Nasdaq National Market the shares of
LSI Common Stock to be issued to the holders of BCS Common Stock pursuant to the
Merger, and LSI shall give all notices and make all filings with the NASD
required in connection with the transactions contemplated herein.
8.3 Applications; Antitrust Notification. LSI shall prepare and
file, and BCS shall cooperate in the preparation and, where appropriate, filing
of, applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement.
To the extent required by the HSR Act, each of the Parties will within fifteen
business days of the date hereof file with the United States Federal Trade
Commission and the United States Department of Justice the notification and
report form required for the transactions contemplated hereby and any
supplemental or additional information which may reasonably be requested in
connection therewith pursuant to the HSR Act and will comply in all material
respects with the requirements of the HSR Act. The Parties shall deliver to each
other copies of all filings, correspondence and orders to and from all
Regulatory Authorities in connection with the transactions contemplated hereby.
8.4 Filings with State Offices. Upon the terms and subject to
the conditions of this Agreement, BCS shall execute and file the Certificate of
Merger with the Secretary of State of the
<PAGE>
State of Delaware and the Certificate of Merger with the Secretary of State of
the State of Georgia in connection with the Closing.
8.5 Agreement as to Efforts to Consummate. Subject to the terms
and conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable efforts to lift or rescind any
Order adversely affecting its ability to consummate the transactions
contemplated herein and to cause to be satisfied the conditions referred to in
Article 9 of this Agreement; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement. Each Party shall use, and
shall cause each of its Subsidiaries to use, its reasonable efforts to obtain
all Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
8.6 Investigation and Confidentiality.
(a) Prior to the Effective Time, each Party shall keep the
other Party advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party.
(b) In addition to the Parties' respective obligations under
the Confidentiality Agreement, which is hereby reaffirmed and adopted, and
incorporated by reference herein each Party shall, and shall cause its advisers
and agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return or certify the destruction of
all documents and copies thereof, and all work papers containing confidential
information received from the other Party.
8.7 Press Releases. Prior to the Effective Time, BCS and LSI shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.7
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.8 Certain Actions. Except with respect to this Agreement and
the transactions contemplated hereby, no BCS Company nor any Affiliate thereof
nor any Representatives thereof retained by any BCS Company shall directly or
indirectly solicit any Acquisition Proposal by any
<PAGE>
Person. No BCS Company nor any Affiliate or Representative thereof shall furnish
any non-public information that is not legally obligated to furnish, negotiate
with respect to, or enter into any Contract with respect to, any Acquisition
Proposal, provided, however, that prior to such time as the shareholders of BCS
shall have adopted and approved this Agreement in accordance with DGCL, nothing
in this Section 8.8 shall prohibit the Board of Directors form (i) furnishing
information to, or entering into discussions or negotiations with, any Person
that makes an unsolicited Acquisition Proposal if and only to the extent that
(A) the Board of Directors of BCS, after having consulted with and considered
the advice of outside counsel, reasonably determines in good faith that such
actions would be required to comply with its fiduciary duties to BCS's
shareholder under applicable Law, and (B) after having consulted with and
considered the advice of outside counsel and BCS's financial advisor, BCS's
Board of Directors reasonably determines in good faith that the potential
Acquiror is highly qualified, or (ii) communicating information about such an
Acquisition Proposal to is shareholders if and to the extent that it is required
to do so in order to comply with its legal obligations as advised by counsel
(included, without limitation, its obligations under Rule 14e-2 promulgated
under the 1934 Act.) BCS shall promptly advise LSI following the receipt of any
Acquisition Proposal and the details thereof, and advise LSI of any developments
with respect to such Acquisition Proposal, including but not limited to, any
decision by the Board of Directors to cause any BCS Company to furnish
non-public information to the Person making such Acquisition Proposal, promptly
upon the occurrence thereof. BCS shall (i) immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any Persons
conducted heretofore with respect to any of the foregoing, and (ii) direct and
use its reasonable efforts to cause all of its Representatives not to engage in
any of the foregoing.
8.9 Accounting and Tax Treatment. Each of the Parties undertakes
and agrees to use its reasonable efforts to cause the Merger, and to take no
action which would cause the Merger not, to qualify for pooling-of-interests
accounting treatment and treatment as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code for federal income tax purposes.
8.10 State Takeover Laws. Each BCS Company shall take all
necessary steps to exempt the transactions contemplated by this Agreement from,
or if necessary to challenge the validity or applicability of, any applicable
Takeover Law, including Section 203 of the DGCL.
8.11 Charter Provisions. Each BCS Company shall take all necessary
action to ensure that the entering into of this Agreement and the consummation
of the Merger and the other transactions contemplated hereby do not and will not
result in the grant of any rights to any Person under the Certificate of
Incorporation, Bylaws or other governing instruments of any BCS Company or
restrict or impair the ability of LSI or any of its Subsidiaries to vote, or
otherwise to exercise the rights of a shareholder with respect to, shares of any
BCS Company that may be directly or indirectly acquired or controlled by it.
8.12 Agreement of Affiliates. BCS has disclosed in Section 8.12 of
the BCS Disclosure Memorandum all Persons whom it reasonably believes is an
"affiliate" of BCS for purposes of Rule 145 under the 1933 Act. BCS shall use
its reasonable efforts to cause each such
<PAGE>
Person to deliver to LSI not later than 30 days after the date of this
Agreement, a written agreement, substantially in the form of Exhibit 3,
providing that such Person will not sell, pledge, transfer, or otherwise dispose
of the shares of BCS Common Stock held by such Person except as contemplated by
such agreement or by this Agreement and will not sell, pledge, transfer, or
otherwise dispose of the shares of LSI Common Stock to be received by such
Person upon consummation of the Merger except in compliance with applicable
provisions of the 1933 Act and the rules and regulations thereunder and until
such time as financial results covering at least 30 days of combined operations
of LSI and BCS have been published within the meaning of Section 201.01 of the
SEC's Codification of Financial Reporting Policies. Shares of LSI Common Stock
issued to such affiliates of BCS in exchange for shares of BCS Common Stock
shall not be transferable until such time as financial results covering at least
30 days of combined operations of LSI and BCS have been published within the
meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies, regardless of whether each such affiliate has provided the written
agreement referred to in this Section 8.12 (and LSI shall be entitled to place
restrictive legends upon certificates for shares of LSI Common Stock issued to
affiliates of BCS pursuant to this Agreement to enforce the provisions of this
Section 8.12). LSI shall not be required to maintain the effectiveness of the
Registration Statement under the 1933 Act for the purposes of resale of LSI
Common Stock by such affiliates.
8.13 Employee Benefits and Contracts. Following the Effective
Time, LSI shall provide generally to officers and employees of the BCS Companies
employee benefits under employee benefit and welfare plans (other than stock
option or other plans involving the potential issuance of LSI Common Stock), on
terms and conditions which when taken as a whole are substantially similar to
those currently provided by the LSI Companies to their similarly situated
officers and employees.. For purposes of participation, vesting and (except in
the case of LSI retirement plans) benefit accrual under LSI's employee benefit
plans, the service of the employees of the BCS Companies prior to the Effective
Time shall be treated as service with a LSI Company participating in such
employee benefit plans. LSI also shall cause the Surviving Corporation and its
Subsidiaries to honor in accordance with their terms all employment, severance,
consulting and other compensation Contracts disclosed in Section 8.13 of the BCS
Disclosure Memorandum to LSI between any BCS Company and any current or former
director, officer, or employee thereof, and all provisions for vested benefits
or other vested amounts earned or accrued through the Effective Time under the
BCS Benefit Plans.
8.14 Indemnification and Insurance.
(a) The Certificate of Incorporation and By-laws of the Surviving
Corporation shall contain the provisions with respect to indemnification set
forth in the Certificate of Incorporation and By-laws of BCS on the date of this
Agreement, which provisions shall not be amended, repealed or otherwise modified
for a period of six years after the Effective Time in any manner that would
adversely affect the rights thereunder of Persons who at any time prior to the
Effective Time were identified as prospective indemnitees (the "Indemnified
Parties") under the Certificate of Incorporation or By-laws of BCS in respect of
actions or omissions occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this Agreement), unless
such modification is required by Law.
<PAGE>
LSI will not permit the provisions with respect to indemnification set
forth in the Certificate of Incorporation and By-laws of any BCS Company on the
date of this Agreement to be amended, repealed or otherwise modified for a
period of six years after the Effective Time in any manner that would adversely
affect the rights thereunder of Indemnified Parties under any such Certificate
of Incorporation or By-laws in respect of actions or omissions occurring at or
prior to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement), unless such modification is required by Law.
(b) LSI hereby guarantees the Surviving Corporation's indemnification
obligations pursuant to the Surviving Corporation's Certificate of Incorporation
and By-laws.
(c) LSI shall, or shall cause the Surviving Corporation to, use its
reasonable efforts (and BCS shall cooperate prior to the Effective Time in these
efforts) to maintain in effect for a period of five years after the Effective
Time BCS's existing directors' and officers' liability insurance policy
(provided that LSI may substitute therefor (i) policies of at least the same
coverage and amounts containing terms and conditions which are substantially no
less advantageous or (ii) with the consent of BCS given prior to the Effective
Time, any other policy) with respect to claims arising from facts or events
which occurred prior to the Effective Time and covering persons who are
currently covered by such insurance; provided, that neither LSI nor the
Surviving Corporation shall be obligated to make aggregate premium payments for
such five-year period in respect of such policy (or coverage replacing such
policy) which exceed, for the portion related to BCS's directors and officers,
200% of the annual premium payments on BCS's current policy in effect as of the
date of this Agreement (the "Maximum Amount").
(d) This Section 8.14 is intended to be for the benefit of, and shall be
enforceable by, the Indemnified Parties referred to herein, their heirs and
personal representatives and shall be binding on LSI and Sub and the Surviving
Corporation and their respective successors and assigns.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived pursuant to Section 11.6 of this
Agreement:
(a) Shareholder Approval. The shareholders of BCS and LSI
shall have adopted or approved this Agreement, and the consummation of the
transactions contemplated hereby, including the Merger, as and to the extent
required by Law, by the provisions of any governing instruments, or by the rules
of the NASD.
(b) Regulatory Approvals. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities required
for consummation of the Merger
<PAGE>
shall have been obtained or made and shall be in full force and effect and all
waiting periods required by Law shall have expired. No Consent obtained from any
Regulatory Authority which is necessary to consummate the transactions
contemplated hereby shall be conditioned or restricted in a manner (including
requirements relating to the raising of additional capital or the disposition of
Assets) which in the reasonable judgment of the Board of Directors of LSI would
so materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement that, had such condition or
requirement been known, LSI would not, in its reasonable judgment, have entered
into this Agreement.
(c) Consents and Approvals. Each Party shall have obtained
any and all Consents required for consummation of the Merger (other than those
referred to in Section 9.1(b) of this Agreement) or for the preventing of any
Default under any Contract or Permit of such Party. No Consent so obtained which
is necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner which in the reasonable judgment of the
Board of Directors of LSI would so materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement that, had
such condition or requirement been known, LSI would not, in its reasonable
judgment, have entered into this Agreement.
(d) Legal Proceedings. No court or governmental or
regulatory authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) or taken any other action which prohibits, restricts
or makes illegal consummation of the transactions contemplated by this
Agreement.
(e) Registration Statement. The Registration Statement shall
be effective under the 1933 Act, no stop orders suspending the effectiveness of
the Registration Statement shall have been issued, no action, suit, proceeding
or investigation by the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, and all necessary approvals under state securities
Laws or the 1933 Act or 1934 Act relating to the issuance or trading of the
shares of LSI Common Stock issuable pursuant to the Merger shall have been
received.
(f) Exchange Listing. The shares of LSI Common Stock
issuable pursuant to the Merger shall have been approved for listing on the
Nasdaq National Market.
(g) Tax Matters. Each Party shall have received a written opinion
of counsel from Alston & Bird, in form reasonably satisfactory to such Parties
(the "Tax Opinion"), to the effect that (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, (ii) the exchange in the Merger of BCS Common Stock for LSI Common Stock
will not give rise to gain or loss to the shareholders of BCS with respect to
such exchange (except to the extent of any cash received), and (iii) none of
BCS, LSI or Sub will recognize gain or loss as a consequence of the Merger
(except for amounts resulting from any required change in accounting methods and
any income and deferred gain recognized pursuant to Treasury regulations issued
under Section 1502 of the
<PAGE>
Internal Revenue Code). In rendering such Tax Opinion, such counsel shall be
entitled to rely upon representations of officers of BCS and LSI reasonably
satisfactory in form and substance to such counsel.
9.2 Conditions to Obligations of LSI. The obligations of LSI to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by LSI pursuant to Section 11.6(a) of this Agreement:
(a) Representations and Warranties. For purposes of this Section
9.2(a), the accuracy of the representations and warranties of BCS set forth in
this Agreement shall be assessed as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties of BCS set forth
in Section 5.3 of this Agreement shall be true and correct (except for
inaccuracies which are de minimus in amount). The representations and warranties
of BCS set forth in Sections 5.19, 5.20, and 5.21 of this Agreement shall be
true and correct in all material respects. There shall not exist (i)
inaccuracies in the representations and warranties of the BCS Parties set forth
in the Acquisition Agreements (including the representations and warranties set
forth in Sections 5.3, 5.19, 5.20, and 5.21 of this Agreement) or (ii) breaches
of agreements and covenants of the BCS Parties set forth in the Acquisition
Agreements, such that the aggregate effect of such inaccuracies or breaches
would have or be reasonably likely to have, a Material Adverse Effect on BCS,
assuming, for this purpose only, that BCS was the owner of all of the Assets and
Liabilities of all of the BCS Parties; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" shall be deemed not to
include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of BCS to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with.
(c) Certificates. BCS shall have delivered to LSI (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions set forth in Section 9.2 of this Agreement as relates to BCS and in
Section 9.2(a) and 9.2(b) of this Agreement have been satisfied, and (ii)
certified copies of resolutions duly adopted by BCS's Board of Directors and
shareholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such reasonable
detail as LSI and its counsel shall request.
<PAGE>
(d) Opinion of Counsel. LSI shall have received an opinion of
Hinckley, Allen & Snyder, counsel to BCS, dated as of the Closing, in form
reasonably satisfactory to LSI, as to the matters set forth in Exhibit 4.
(e) Pooling Letters. LSI shall have received letters, a draft
dated as of the date of filing of the Registration Statement with the SEC and a
final version dated as of the Effective Time, in form and substance reasonably
acceptable to LSI, from KPMG Peat Marwick LLP to the effect that the Merger will
qualify for pooling-of-interests accounting treatment. LSI also shall have
received letters, a draft dated as of the date of filing of the Registration
Statement with the SEC and a final version dated as of the Effective Time, in
form and substance reasonably acceptable to LSI, from KPMG Peat Marwick LLP to
the effect that such firm is not aware of any matters relating to BCS and its
Subsidiaries which would preclude the Merger from qualifying for
pooling-of-interests accounting treatment.
(f) Accountant's Letters. LSI shall have received from KPMG
Peat Marwick LLP letters dated not more than five days prior to (i) the date of
the Joint Proxy Statement and (ii) the Effective Time, with respect to certain
financial information regarding BCS, in form and substance reasonably
satisfactory to LSI, which letters shall be based upon customary specified
procedures undertaken by such firm in accordance with Statement of Auditing
Standard No. 72.
(g) Affiliates Agreements. LSI shall have received from each
affiliate of BCS the affiliates letter referred to in Section 8.12 of this
Agreement, to the extent necessary to assure in the reasonable judgment of LSI
that the transactions contemplated hereby will qualify for pooling-of-interests
accounting treatment.
(h) Shareholders' Equity. BCS's shareholders' equity as of
the Closing/end of the last fiscal quarter preceding Closing shall not be less
than BCS's shareholders' equity as of March 31, 1996, excluding for purposes of
the calculation of such shareholders' equity the effects of (i) all costs, fees
and charges, including fees and charges of BCS's accountants, counsel and
financial advisors, whether or not accrued or paid, that are related to the
transaction contemplated by this Agreement, and (ii) any reductions in BCS's
shareholders' equity resulting from any actions or changes in policies of BCS
taken at the request of LSI.
(i) Fairness Opinion. LSI shall have received from The
Robinson-Humphrey Company, Inc. a letter, dated not more than five business days
prior to the date of the Proxy Statement, to the effect that, in the opinion of
such firm, the consideration to be received by LSI connection with the Merger is
fair, from a financial point of view, to LSI and its shareholders.
(j) Landlord Estoppel Certificates. BCS shall have provided
LSI with an estoppel certificate of the landlord under each lease for the
Capital Grille restaurant sites, and at least eighty percent (80%) of the leases
for the Bugaboo Creek Steak House restaurant sites, which estoppel certificate
shall be dated as close to the date on which the
<PAGE>
Effective Time occurs as LSI shall reasonably request and shall provide in
substance that: (i) the lease is in full force and effect; (ii) the landlord is
not in Default thereunder; (iii) the landlord has not repudiated or waived any
material provision of such lease; and (iv) no party to such lease other than
such landlord is, to the knowledge of the landlord, in Default in any respect
under such lease or has repudiated or waived any material provision thereunder.
(k) Title Matters. BCS shall have delivered to LSI one
or more title commitments for policies of leasehold title insurance with respect
to the leases of restaurant sites to which any of the BCS Subsidiaries is a
party and one or more title commitments for policies of owner's title insurance
with respect to real property owned by any of the BCS Companies, which leasehold
title commitments shall reflect that the landlord of each such site holds title
to the site free of any encumbrance securing debt to any Person other than
Persons with whom the relevant BCS Company has a non-disturbance and attornment
agreement, and no other exception which would have a Material Adverse Effect on
the value of the property or BCS's use thereof and which owner's title
commitments shall reflect no exceptions to title which would have a Material
Adverse Effect on the value of the property or BCS's use thereof. LSI shall
notify BCS of any objections to the exceptions reflected in such title
commitments within Twenty-One (21) days following the date on which BCS shall
deliver to LSI each title commitment, together with copies of all recorded
documents listed as title exceptions therein.
(l) BCS Audit. BCS shall have delivered to LSI the audited
consolidated balance sheet (including related notes and schedules, if any) as of
June 30 , 1996, and the consolidated statements of income, changes in
shareholders' equity, and cash flows (including related notes and schedules, if
any) for the fiscal year then ended of BCS and its Subsidiaries together with
the report of KPMG Peat Marwick LLP thereon, at least thirty (30) days prior to
the Effective Time.
(m) Stock Options. The compensation or other relevant
committee of BCS's Board of Directors shall have taken, or caused to be taken,
all actions, and to do, or cause to be done, all things necessary, proper, or
advisable to effect the conversion of all BCS Options into rights with respect
to LSI Common Stock, as contemplated by Section 3.5 hereof, without any other
change in the terms of the BCS Options, including, but not limited to, any
acceleration (except the automatic acceleration of options granted under the
Bugaboo Creek Steak House, Inc. Non-Employee Director Stock Plan) of the vesting
of the BCS Options.
(n) Acquisition Agreements. Each and all of the agreements
and covenants of the parties to the Acquisition Agreements to be performed and
complied with pursuant to the Acquisition Agreements and the other agreements
and covenants contemplated by the Acquisition Agreements shall be duly performed
and complied with prior to or substantially simultaneously with the Effective
Time.
9.3 Conditions to Obligations of BCS. The obligations of BCS
to perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are
<PAGE>
subject to the satisfaction of the following conditions, unless waived by BCS
pursuant to Section 11.6(b) of this Agreement:
(a) Representations and Warranties. For purposes of this Section
9.3(a), the accuracy of the representations and warranties of LSI set forth in
this Agreement shall be assessed as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties of LSI set forth
in Section 6.3 of this Agreement shall be true and correct (except for
inaccuracies which are de minimus in amount). There shall not exist inaccuracies
in the representations and warranties of LSI set forth in this Agreement
(including the representations and warranties set forth in Sections 6.3.) such
that the aggregate effect of such inaccuracies has, or is reasonably likely to
have, a Material Adverse Effect on LSI; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" shall be deemed not to
include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of LSI to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with.
(c) Certificates. LSI shall have delivered to BCS (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions set forth in Section 9.3 of this Agreement as relates to LSI and in
Section 9.3(a) and 9.3(b) of this Agreement have been satisfied, and (ii)
certified copies of resolutions duly adopted by LSI's Board of Directors and
shareholders and Sub's Board of Directors and shareholders evidencing the taking
of all corporate action necessary to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as BCS and its counsel shall
request.
(d) Opinion of Counsel. BCS shall have received an opinion
of Alston & Bird, counsel to LSI, dated as of the Effective Time, in form
reasonably acceptable to BCS, as to the matters set forth in Exhibit 5.
(e) Accountant's Letters. BCS shall have received from KPMG
Peat Marwick LLP letters dated not more than five days prior to (i) the date of
the Joint Proxy Statement and (ii) the Effective Time, with respect to certain
financial information regarding LSI, in form and substance reasonably
satisfactory to BCS, which letters shall be based upon customary specified
procedures undertaken by such firm.
(f) Fairness Opinion. BCS shall have received from Tucker
Anthony Incorporated a letter, dated not more than five business days prior to
the date of the Proxy
<PAGE>
Statement, to the effect that, in the opinion of such firm, the consideration to
be received by BCS shareholders in connection with the Merger is fair, from a
financial point of view, to such shareholders.
(g) Board Representation. LSI and its Board of Directors
shall have taken such action as is necessary to elect the Chief Executive
Officer of BCS to the LSI Board of Directors effective as of the Effective Time,
and further, shall have taken such action as is necessary to elect an additional
Person to the LSI Board of Directors, as of the Effective Time, which Person
shall be approved by the Chief Executive Officer of BCS.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this
Agreement, and notwithstanding the adoption or approval of this Agreement by the
shareholders of BCS and LSI or both, this Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of LSI
and the Board of Directors of BCS; or
(b) By the Board of Directors of either Party in the event
of a material breach by the other Party of any representation or warranty
contained in this Agreement which cannot be or has not been cured within 30 days
after the giving of written notice to the breaching Party of such breach; or
(c) By the Board of Directors of either Party in the event
of a material breach by the other Party of any covenant or agreement contained
in this Agreement which cannot be or has not been cured within 30 days after the
giving of written notice to the breaching Party of such breach; or
(d) By the Board of Directors of either Party in the event
(i) any Consent of any Regulatory Authority required for consummation of the
Merger and the other transactions contemplated hereby shall have been denied by
final nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) the
shareholders of BCS or LSI fail to adopt or approve this Agreement and the
transactions contemplated hereby as required by the DGCL and GBCC and the rules
of the NASD at the Shareholders' Meetings where the transactions were presented
to such shareholders for adoption or approval and voted upon; or
(e) By the Board of Directors of either Party in the event
that the Merger shall not have been consummated by December 31, 1996, if the
failure to consummate the transactions contemplated hereby on or before such
date is not caused by any breach of this Agreement by the Party electing to
terminate pursuant to this Section 10.1(e); or
<PAGE>
(f) By the Board of Directors of either Party in the event
that any of the conditions precedent to the obligations of such Party to
consummate the Merger cannot be satisfied or fulfilled by the date specified in
Section 10.1(e) of this Agreement; or
(g) By LSI, in the event that BCS shall have notified LSI of the
receipt of any Acquisition Proposal and the determination of the Board of
Directors of BCS to cause any BCS Company to furnish non-public information to
the Person making such Acquisition Proposal and, within thirty (30) days
following BCS 's receipt of such Acquisition Proposal the Board of Directors of
BCS shall have failed to reaffirm its approval of the Merger and the
transactions contemplated by this Agreement (to the exclusion of any other
Acquisition Proposal), or shall have resolved not to reaffirm the Merger, or
shall have affirmed, recommended or authorized entering into any other
Acquisition Proposal or other transaction involving a merger, share exchange,
consolidation or transfer of substantially all of the Assets of BCS; or
(h) By BCS, if prior to such time as the shareholders of BCS
shall have adopted and approved this Agreement in accordance with DGCL, the
Board of Directors of BCS shall have recommended to the shareholders of BCS any
other Acquisition Proposal or resolved to do so in accordance with Section 8.8
hereof, or
(i) By the Board of Directors of either Party in the event
that for any five (5) consecutive trading days prior to the Effective Time the
last sale price of the LSI Common Stock on the Nasdaq National Market (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source) shall be less than $21.00 per share (the "Minimum Trading
Price").
10.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (i) the provisions
of this Section 10.2 and Article 11 and Section 8.6(b) of this Agreement shall
survive any such termination and abandonment, and (ii) a termination pursuant to
Sections 10.1(b), 10.1(c) or 10.1(f) of this Agreement shall not relieve the
breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination.
10.3 Non-Survival of Representations and Covenants. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4 and 11 and Sections 8.12, 8.13 and 8.14 of this Agreement.
<PAGE>
ARTICLE 11
MISCELLANEOUS
11.1 Definitions.
(a) Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933,as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Acquisition Agreements" shall mean this Agreement; the
Merger Agreement,dated as of the date hereof, by and among Bentley's Restaurant,
Inc. ("BRI"), Whip Pooling Corporation ("WPC") and LSI; the Merger Agreement,
dated as of the date hereof, by and among Hemenway's Sea Food, Inc. ("HSF"), WPC
and LSI; the Merger Agreement, dated as of the date hereof, by and among Old
Grist Mill Tavern, Inc. ("OGM"), WPC and LSI; the Merger Agreement, dated as of
the date hereof, by and among GOS Properties L.L.C. ("GOS"), WPC and LSI; and
the Purchase Agreement, dated as of the date hereof, by and between Edward P.
Grace, III, Samuel L. Orr, Jr. and LSI.
"Acquisition Proposal" with respect to a Party shall mean
any tender offer or exchange offer or any proposal for a merger, acquisition of
all of the stock or assets of, or other business combination involving such
Party or any of its Subsidiaries or the acquisition of a substantial equity
interest in, or a substantial portion of the assets of, such Party or a
substantial equity interest in, or all or substantially all of the assets of,
any of its Subsidiaries.
"Affiliate" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any officer,
director, partner, employer, or direct or indirect beneficial owner of any 10%
or greater equity or voting interest of such Person; or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity.
"Agreement" shall mean this Agreement and Plan of Merger,
including the Exhibits, schedules and Disclosure Memoranda delivered pursuant
hereto and incorporated herein by reference.
"Assets" of a Person shall mean all of the assets,
properties, businesses and rights of such Person of every kind, nature,
character and description, whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether or not
carried on the books and records of such Person, and whether or not owned in the
name of such Person or any Affiliate of such Person and wherever located.
"BCS Common Stock" shall mean the $.01 par value common
stock of BCS.
"BCS Companies" shall mean, collectively, BCS and all BCS
Subsidiaries.
"BCS Disclosure Memorandum" shall mean the written
information entitled "Bugaboo Creek Steak Hous, Inc. Disclosure Memorandum"
delivered prior to the date of this Agreement to LSI describing in reasonable
detail the matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement under which
such disclosure is being made. Information disclosed with respect to one Section
shall not be deemed to be disclosed for purposes of any other Section not
<PAGE>
specifically referenced with respect thereto. Where any representation or
warranty contained in the Agreement is limited or qualified by the materiality
of the matters as to which the representation or warranty is given, the
inclusion of any matter in the Disclosure Memorandum does not constitute a
determination by BCS that such matters are material.
"BCS Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of BCS as of
March 31, 1996, and as of June 25, 1995, June 26, 194, and the related
statements of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) for the forty weeks ended March 31, 1996,
and for each of the three fiscal years ended June 25, 1995, June 26, 1994, June
27, 1993, as filed by BCS in SEC Documents, and (ii) the consolidated balance
sheets of BCS (including related notes and schedules, if any) and related
statements of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) included in SEC Documents filed with
respect to periods ended subsequent to March 31, 1996.
"BCS Parties" shall mean BCS, BRI, HSF, OGM, GOS, Edward P.
Grace, III and Samuel L. Orr, Jr.
"BCS Stock Plans" shall mean the existing stock option and
other stock-based compensation plans of BCS designated as follows: Bugaboo Creek
Steak House, Inc. 1994 Stock Plan and Bugaboo Creek Steak House, Inc.
Non-Employee Director Stock Plan.
"BCS Subsidiaries" shall mean the Subsidiaries of BCS, which
shall include the BCS Subsidiaries described in Section 5.4 of this Agreement
and any corporation or other organization acquired as a Subsidiary of BCS in the
future and held as a Subsidiary by BCS at the Effective Time.
"Business Combination" shall mean any of the following
involving BCS or its Subsidiaries: (a) any merger, consolidation, share
exchange, business combination, or other similar transaction (other than the
transactions contemplated by this Agreement); (b) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 20% or more of the assets of
BCS and its Subsidiaries, taken as a whole, in a single transaction or series of
related transactions; (c) any purchase of any equity securities involving an
acquisition of 20% or more of the outstanding shares of capital stock of BCS, or
an aggregate of 20% or more of the outstanding shares of the capital stock of
the BCS Subsidiaries, or (d) any binding agreement pursuant to which BCS or its
Subsidiaries agree to do any of the foregoing.
"Certificate of Merger" shall mean the Certificate of Merger to be
executed by BCS and filed with the Secretary of State of the State of Delaware
relating to the Merger as contemplated by Section 1.1 of this Agreement and/or
the Certificate of Merger to be executed by BCS and filed with the Secretary of
State of the State of Georgia relating to the Merger as contemplated by Section
1.1 of this Agreement.
"Closing Date" shall mean the date on which the Closing
occurs.
"Confidentiality Agreement" shall mean that certain
Confidentiality Agreement, dated April 7, 1996, between BCS and LSI.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person pursuant to
any Contract, Law, Order, or Permit.
<PAGE>
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding or undertaking of any kind or
character, or other document to which any Person is a party or that is binding
on any Person or its capital stock, Assets or business.
"Default" shall mean (i) any breach or violation of or
default under any Contract, Order or Permit, (ii) any occurrence of any event
that with the passage of time or the giving of notice or both would constitute a
breach or violation of or default under any Contract, Order or Permit, or (iii)
any occurrence of any event that with or without the passage of time or the
giving of notice would give rise to a right to terminate or revoke, change the
current terms of, or renegotiate, or to accelerate, increase, or impose any
Liability under, any Contract, Order or Permit.
"DGCL " shall mean the Delaware General Corporation Law.
"Environmental Laws" shall mean all Laws relating to
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata) and which
are administered, interpreted or enforced by the United States Environmental
Protection Agency and state and local agencies with jurisdiction over, and
including common law in respect of, pollution or protection of the environment,
including the Comprehensive Environmental Response Compensation and Liability
Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws
relating to emissions, discharges, releases or threatened releases of any
Hazardous Material, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"Exhibits" 1 through 5, inclusive, shall mean the Exhibits
so marked, copies of which are attached to this Agreement. Such Exhibits are
hereby incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or document
without being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC " shall mean the Georgia Business Corporation Code.
"Hazardous Material" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance or toxic substance (as
those terms are defined by any applicable Environmental Laws) and (ii) any
chemicals, pollutants, contaminants, petroleum, petroleum products, or oil (and
specifically shall include asbestos requiring abatement, removal or
encapsulation pursuant to the requirements of governmental authorities and any
polychlorinated biphenyls).
"HSR Act" shall mean Section 7A of the Clayton Act, as added by
Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"Intellectual Property" shall mean copyrights, patents,
trademarks, service marks, service names, trade names, technology rights and
licenses, computer software
<PAGE>
(including any source or object codes therefor or documentation relating
thereto), trade secrets, franchises, know-how, inventions, and other
intellectual property rights.
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated thereunder.
"Joint Proxy Statement" shall mean the proxy statement used
by BCS and LSI to solicit the adoption or approval of their respective
shareholders of the transactions contemplated by this Agreement, which shall
include the prospectus of LSI relating to the issuance of the LSI Common Stock
to holders of BCS Common Stock.
"Knowledge" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall mean those
facts that are known or should reasonably have been known in the reasonable
exercise of their duties by the Chairman, President, Chief Financial Officer,
Chief Accounting Officer, and Vice Presidents of
Administration and Real Estate of such Person.
"Law" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a Person or
its Assets, Liabilities or business, including those promulgated, interpreted or
enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim, deficiency,
guaranty or endorsement of or by any Person (other than endorsements of notes,
bills, checks, and drafts presented for collection or deposit in the ordinary
course of business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature whatsoever of, on, or with respect to any property or
property interest, other than (i) Liens for current property Taxes not yet due
and payable, and (iii) Liens which do not materially impair the use of or title
to the Assets subject to such Lien.
"Litigation" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution or demand letter, or notice (written or
oral) by any Person
of governmental or other examination or investigation, hearing, inquiry,
administrative or other proceeding alleging potential Liability, or any
Regulatory Authority or other federal, state or local governmental agency or
department requesting information relating to or affecting a Party, its
business, its Assets (including Contracts related to it), or the transactions
contemplated by this Agreement.
"LSI Capital Stock" shall mean, collectively, the LSI Common
Stock, the LSI Preferred Stock and any other class or series of capital stock of
LSI.
"LSI Common Stock" shall mean the no par value common stock
of LSI.
"LSI Companies" shall mean, collectively, LSI and all
vSubsidiaries.
"LSI Disclosure Memorandum" shall mean the written
information entitled "Longhorn Steaks, Inc. Disclosure Memorandum" delivered
prior to the date of this Agreement to BCS describing in reasonable detail the
matters contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which such
disclosure is being made. Information disclosed with respect
<PAGE>
to one Section shall not be deemed to be disclosed for purposes of any other
Section not specifically referenced with respect thereto.
"LSI Financial Statements" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any) of LSI
as of March 31, 1996, and as of December 31, 1995 and 1994, and the related
statements of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) for the three months ended March 31, 1996,
and for each of the three years ended December 31, 1995, 1994, and 1993, as
filed by LSI in SEC Documents, and (ii) the consolidated statements of condition
of LSI (including related notes and schedules, if any) and related statements of
income, changes in shareholders' equity, and cash flows (including related notes
and schedules, if any) included in SEC Documents filed with respect to periods
ended subsequent to March 31, 1996.
"LSI Preferred Stock" shall mean the no par value preferred
stock of LSI.
"LSI Stock Plans" shall mean the existing stock option and
other stock-based compensation plans of LSI designated as follows: LONGHORN
STEAKS, INC. Amended and Restated 1992 Incentive Plan, LONGHORN STEAKS, INC.
Stock Option Agreement with Richard E. Rivera and Longhorn Steaks, Inc. 1996
Stock Plan for Outside Directors.
"LSI Subsidiaries" shall mean the Subsidiaries of LSI and
any corporation or other organization acquired as a Subsidiary of LSI in the
future and held as a Subsidiary by LSI at the Effective Time.
"Material Adverse Effect" on a Party shall mean an event, change
or occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of such Party and its Subsidiaries, taken as
a whole, or (ii) the ability of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement, provided that "material adverse impact" shall not be deemed to
include the impact of (a) changes in Laws of general applicability or
interpretations thereof by courts or governmental authorities, (b) changes in
generally accepted accounting principles or regulatory accounting principles,
(c) actions and omissions of a Party (or any of its Subsidiaries) taken with the
prior informed written Consent of the other Party in contemplation of the
transactions contemplated hereby, and (z) the Merger on the operating
performance of the Parties, including expenses incurred by the Parties in
consummating the transactions contemplated by this Agreement.
"Material" for purposes of this Agreement shall be
determined in light of the facts and circumstances of the matter in question;
provided that any specific monetary amount stated in this Agreement shall
determine materiality in that instance.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Nasdaq National Market" shall mean the Nasdaq Stock
Market's National Market of the National Association of Securities Dealers
Automated Quotations System.
"Operating Property" shall mean any property owned by the
Party in question or by any of its Subsidiaries or in which such Party or
Subsidiary holds a security interest, and, where required by the context,
includes the owner or operator of such property, but only with respect to such
property.
"Order" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award, ruling,
or writ of any federal, state, local
<PAGE>
or foreign or other court, arbitrator, mediator, tribunal, administrative agency
or Regulatory Authority.
"Participation Facility" shall mean any facility or property
in which the Party in question or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner or
operator of such facility or property, but only with respect to such facility or
property.
"Party" shall mean either BCS or LSI, and "Parties" shall
mean both BCS and LSI.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing, franchise,
license, notice, permit, or right to which any Person is a party or that is or
may be binding upon or inure to the benefit of any Person or its securities,
Assets or business.
"Person" shall mean a natural person or any legal,
commercial or governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited liability
company, trust, business association, group acting in concert, or any person
acting in a representative capacity.
"Registration Statement" shall mean the Registration
Statement on Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by LSI
under the 1933 Act with respect to the shares of LSI Common Stock to be issued
to the shareholders of BCS in connection with the transactions contemplated by
this Agreement.
"Regulatory Authorities" shall mean, collectively, the NASD, the
SEC, the Federal Trade Commission, the United States Department of Justice, and
all other federal, state, county, local or other governmental or regulatory
agencies, authorities, instrumentalities, commissions, boards or bodies having
jurisdiction over the Parties and their respective Subsidiaries.
"Representative" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative of a Person.
"Rights" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings, warrants, or
other binding obligations of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of the capital stock of a
Person or by which a Person is or may be bound to issue additional shares of its
capital stock or other Rights.
"SEC Documents" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed, or
required to be filed, by a Party or any of its Subsidiaries with any Regulatory
Authority pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of 1940,
as amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
"Shareholders' Meetings" shall mean the respective meetings
of the shareholders of BCS and LSI to be held pursuant to Section 8.1 of this
Agreement, including any adjournment or adjournments thereof.
"Significant Subsidiary" shall mean any present or future
consolidated Subsidiary of the Party in question, the assets of which constitute
ten percent (10%) or more
<PAGE>
of the consolidated assets of such Party as reflected on such Party's
consolidated statement of condition prepared in accordance with GAAP.
"Sub Common Stock" shall mean the $.01 par value common
stock of Sub.
"Subsidiaries" shall mean all those corporations,
associations, or other business entities of which the entity in question either
(i) owns or controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which 50% or
more of the outstanding equity securities is owned directly or indirectly by its
parent (provided, there shall not be included any such entity the equity
securities of which are owned or controlled in a fiduciary capacity), or (ii) in
the case of partnerships, serves as a general partner.
"Surviving Corporation" shall mean BCS as the surviving
corporation resulting from the Merger.
"Tax Return" shall mean any report, return, information
return, or other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or combined or
unitary group that includes a Party or its Subsidiaries.
"Tax" or "Taxes" shall mean any federal, state, county,
local, or foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, and other taxes,
assessments, charges, fares, or impositions, including interest, penalties, and
additions imposed thereon or with respect thereto.
(b) The terms set forth below shall have the meanings
ascribed thereto in the referenced sections:
Base Period Trading Price Section 3.1(c)
Effective Time Section 1.3
Per Share Purchase Price Section 3.1(c)
BCS Contracts Section 5.15
BCS ERISA Plan Section 5.14
BCS Options Section 3.5
BCS Benefit Plans Section 5.14
Base Period Trading Price Limitation Section 3.1(c)
Closing Section 1.2
ERISA Affiliate Section 5.14(b)
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(c)
GM Program Section 5.3
Maximum Amount Section 8.14
Merger Section 1.1
BCS Intellectual Property Section 5.10
Minimum Trading Price Section 10.1(h)
SEC Section 5.4
Tax Opinion Section 9.1(h)
<PAGE>
(c) Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
11.2 Expenses.
(a) Except as otherwise provided in this Section 11.2, each
of the Parties shall bear and pay all direct costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and fees and
expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that each of the Parties shall bear and pay
one-half of the filing fees payable in connection with the Registration
Statement and the Joint Proxy Statement and printing costs incurred in
connection with the printing of the Registration Statement and the Joint Proxy
Statement.
(b) Notwithstanding the foregoing, if this Agreement is
terminated by LSI pursuant to Section 10.1(g) or by BCS pursuant to Section
10.1(h), then BCS shall promptly pay all the out-of-pocket costs and expenses of
LSI, including costs of counsel, investment bankers, actuaries and accountants
up to but not exceeding $750,000, upon presentation of such supporting
documentation as BCS may reasonably request.
(c) In addition to the foregoing, if, after the date of this
Agreement and within ten (10) months following any termination of this Agreement
by LSI pursuant to Section 10.1(g) or by BCS pursuant to Section 10.1(h) any
third-party shall enter into any Business Combination with BCS or its
Subsidiaries, such third-party that is a party to the Business Combination shall
pay to LSI, prior to the earlier of consummation of the Business Combination or
execution of any letter of intent or definitive agreement with BCS relating to
such Business Combination, an amount in cash equal to the sum of
(y) Two Million Dollars ($2,000,000), less
(z) any amounts previously paid by BCS to LSI
pursuant to subsection (b) of this Section 11.2,
which sum represents additional compensation for LSI's loss as the result of the
transactions contemplated by this Agreement not being consummated. In the event
such third-party shall refuse to pay such amounts, the amounts shall be an
obligation of BCS and shall be paid by BCS promptly upon notice to BCS by LSI.
11.3 Brokers and Finders. Except for Tucker Anthony Incorporated
as to BCS and except for The Robinson-Humphrey Company, Inc. as to LSI, each of
the Parties represents and warrants that neither it nor any of its officers,
directors, employees, or Affiliates has employed on its behalf any broker or
finder or incurred any Liability for any financial advisory fees, investment
bankers' fees, brokerage fees, commissions, or finders' fees in connection with
this Agreement or the transactions contemplated hereby. In the event of a claim
by any broker or finder based upon
<PAGE>
his or its representing or being retained by or allegedly representing or being
retained by BCS or LSI, each of BCS and LSI, as the case may be, agrees to
indemnify and hold the other Party harmless of and from any Liability in respect
of any such claim.
11.4 Entire Agreement. Except as otherwise expressly provided
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except, as to Section
8.6(b) of this Agreement, for the Confidentiality Agreement). Nothing in this
Agreement expressed or implied, is intended to confer upon any Person, other
than the Parties or their respective successors, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, other than as
provided in Sections 8.13 and 8.14 of this Agreement.
11.5 Amendments. To the extent permitted by Law, this Agreement
may be amended by a subsequent writing signed by each of the Parties upon the
approval of the Boards of Directors of each of the Parties, whether before or
after shareholder approval of this Agreement has been obtained; provided, that
after any such approval by the holders of BCS Common Stock, there shall be made
no amendment that pursuant to Section 251(d) of the DGCL requires further
approval by such shareholders without the further approval of such shareholders.
11.6 Waivers.
(a) Prior to or at the Effective Time, LSI, acting through
its Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term of this
Agreement by BCS, to waive or extend the time for the compliance or fulfillment
by BCS of any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of LSI under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing signed
by a duly authorized officer of LSI.
(b) Prior to or at the Effective Time, BCS, acting through
its Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term of this
Agreement by LSI, to waive or extend the time for the compliance or fulfillment
by LSI of any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of BCS under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing signed
by a duly authorized officer of BCS.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
<PAGE>
11.7 Assignment. Except as expressly contemplated hereby, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
11.8 Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the addresses
set forth below (or at such other address as may be provided hereunder), and
shall be deemed to have been delivered as of the date so delivered:
BCS: Bugaboo Creek Steak House, Inc.
1275 Wampanoag Trail
East Providence, Rhode Island 02915
Telecopy Number: (401) 433-5986
Attention: Edward P. Grace, III
Copy to Counsel: Hinckley, Allen & Snyder
1500 Fleet Center
Providence, Rhode Island 02903
Telecopy Number: (401) 277-9600
Attention: Margaret D. Farrell
LSI: Longhorn Steaks, Inc.
8215 Roswell Road, Building 200
Atlanta, Georgia 30350
Telecopy Number: (770) 399-7796
Attention: Richard E. Rivera
Copy to Counsel:Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Telecopy Number: (404) 881-7777
Attention: William H. Avery
11.9 Governing Law. This Agreement shall be governed by
and construed in accordance with the Laws of the State of Delaware, without
regard to any applicable conflicts of Laws.
<PAGE>
11.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 Captions. The captions contained in this Agreement
are for reference purposes only and are not part of this Agreement.
11.12 Interpretations. Neither this Agreement nor any uncertainty
or ambiguity herein shall be construed or resolved against any party, whether
under any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated and accepted by all parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
11.13 Enforcement of Agreement. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
11.14 Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement
to be executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
ATTEST: BUGABOO CREEK STEAK HOUSE, INC.
_/s/Corinne A. Sylvia By: /s/ Edward P. Grace III
Secretary President
[CORPORATE SEAL]
<PAGE>
ATTEST: LONGHORN STEAKS, INC.
/s/ Anne D. Huemme By: Richard E. Rivera
Secretary President
[CORPORATE SEAL]
ATTEST: WHIP MERGER CORPORATION
/s/ F. Fitzhugh Taylor III By: /s/ Richard E. Rivera
Secretary President
[CORPORATE SEAL]
<PAGE>
EXHIBIT 2: Form of Stockholders' Agreement.
<PAGE>
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT (this "Agreement") is made and entered into as
of June 14, 1996, by and between Longhorn Steaks, Inc.Whip, Inc., a Georgia
Georgiacorporation ("LSIWSI"), Bugaboo Creek Steak House, Inc.Moxie, Inc., a
Delaware Delawarecorporation ("BCSMI"), and the undersigned (the "Stockholder").
WHEREAS, the Stockholder desires that, Whip Merger CorporationWhip Merger
Corporation, a wholly owned subsidiary of LSI ("SubSub"), and BCS enter into an
Agreement and Plan of Merger dated the date hereof (as the same may be amended
or supplemented, the "Merger Agreement") with respect to the merger of Sub with
and into BCS (the "Merger"); and
WHEREAS, the Stockholder and BCS are executing this Agreement as an
inducement to LSI to enter into and execute, and to cause Sub to enter into and
execute, the Merger Agreement;
NOW, THEREFORE, in consideration of the execution and delivery by LSI and
Sub of the Merger Agreement and the mutual covenants, conditions and agreements
contained herein and therein, the parties agree as follows:
1. Representations and Warranties. The Stockholder represents and
warrants to LSI as follows:
(a) The Stockholder is the record and beneficial owner of the
number of shares (such "Stockholder's Shares") of common stock, $.01
par value, of BCS ("BCS Stock") set forth below such Stockholder's name
on the signature page hereof. Except for the Stockholder's Shares and
any other shares of BCS Stock subject hereto, the Stockholder is not
the record or beneficial owner of any shares of BCS Stock. This
Agreement has been
duly executed and delivered by, and constitutes a valid and binding
agreement of, the Stockholder, enforceable against him in accordance with its
terms.
(b) Neither the execution and delivery of this Agreement nor the
consummation by the Stockholder of the transactions contemplated hereby
will result in a violation of, or a default under, or conflict with,
any contract, trust, commitment, agreement, understanding, arrangement
or restriction of any kind to which the Stockholder is a party or bound
or to which the Stockholder's Shares are subject. If the Stockholder is
married
and the Stockholder's Shares constitute community property, this
Agreement has been duly executed and delivered by, and constitutes a
valid and binding agreement of, the Stockholder's spouse, enforceable
against such person in accordance with its terms.
Consummation by the Stockholder of the transactions contemplated hereby
will not violate, or require any consent, approval, or notice under,
any provision of any judgment, order, decree, statute, law, rule or
regulation applicable to the Stockholder or the Stockholder's Shares.
<PAGE>
(c) The Stockholder's Shares and the certificates representing
such Shares are now, and at all times during the term hereof will be,
held by the Stockholder, or by a nominee or custodian for the benefit
of such Stockholder, free and clear of all liens, claims, security
interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever, except for any such
encumbrances or proxies arising hereunder.
(d) No broker, investment banker, financial adviser or other
person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the
Stockholder.
(e) The Stockholder is not acquiring any LSI Common Stock with a
view to, or for offer or sale in connection with, any distribution
thereof (within the meaning of the 1933 Act) that would be in violation
of the securities laws of the United States of America or any state
thereof. The Stockholder acknowledges that he, she or it (i) has such
knowledge and experience in business and financial matters and with
respect to investments in securities to enable the Stockholder to
understand and evaluate the risks of an investment in the LSI Common
Stock to be acquired by the Stockholder and to form an investment
decision with respect thereto and is able to bear the risk of such
investment for an indefinite period and to afford a complete loss
thereof and (ii) is an "accredited investor" as defined in Rule 501 of
Regulation D under the 1933 Act.
(f) The Stockholder understands and acknowledges that LSI is
entering into, and causing Sub to enter into, the Merger Agreement in
reliance upon the Stockholder's execution and delivery of this
Agreement. The Stockholder acknowledges that the irrevocable proxy set
forth in Section 4 is granted in consideration for the execution and
delivery of the Merger Agreement by LSI and Sub.
2. Voting Agreements. While this Agreement is in effect, the
Stockholder agrees with, and covenants to, LSI as follows:
(a) At any meeting of stockholders of BCS called to vote upon the
Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought (the
"Stockholders' Meeting"), the Stockholder shall vote (or cause to be
voted) the Stockholder's Shares in favor of the Merger, the execution
and delivery by BCS of the Merger Agreement, and the approval of the
terms thereof and each of the other transactions contemplated by the
Merger Agreement, provided that the terms of the Merger Agreement shall
not have been amended to reduce the consideration payable in the Merger
to a lesser amount of LSI Common Stock or otherwise to materially and
adversely impair the Stockholder's rights or increase the Stockholder's
obligations thereunder.
(b) At any meeting of stockholders of BCS or at any adjournment
thereof or in any other circumstances upon which their vote, consent or
other approval is sought, the
<PAGE>
Stockholder shall vote (or cause to be voted) such Stockholder's Shares
against (i) any merger agreement or merger (other than the Merger
Agreement and the Merger), consolidation, combination, sale of
substantial assets, reorganization, recapitalization, dissolution,
liquidation or winding up of or by BCS or (ii) any amendment of BCS's
Articles of Incorporation or Bylaws or other proposal or transaction
involving BCS or any of its subsidiaries which amendment or other
proposal or transaction would in any manner impede, frustrate, prevent
or nullify the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement (each of the
foregoing in clause (i) or (ii) above, a "Competing Transaction").
3. Covenants. While this Agreement is in effect, the Stockholder
agrees with, and covenants to, LSI as follows:
(a) The Stockholder shall not (i) transfer (which term shall
include, without limitation, for the purposes of this Agreement, any
sale, gift, pledge or other disposition), or consent to any transfer
of, any or all of the Stockholder's Shares or any interest therein,
except pursuant to the Merger; (ii) enter into any contract, option or
other agreement or understanding with respect to any transfer of any or
all of such Shares or any interest therein, (iii) grant any proxy,
power of attorney or other authorization in or with respect to such
Shares, except for this Agreement, or (iv) deposit such Shares into a
voting trust or enter into a voting agreement or arrangement with
respect to such Shares; provided, that the Stockholder may transfer (as
defined above) any of the Stockholder's Shares to any other person who
is on the date hereof, or to any family member of a person or
charitable institution which prior to the Stockholders Meeting and
prior to such transfer becomes, a party to this Agreement bound by all
the obligations of the "Stockholder" hereunder; provided, that the
Stockholder shall not transfer any of the Stockholder's Shares pursuant
to the preceding proviso and shall not transfer any other shares of BCS
Stock if any such transfer, either alone or in the aggregate with other
transfers by other persons who may be affiliates of BCS, would preclude
LSI's ability to account for the business combination to be effected by
the Merger as a pooling of interests.
(b) If a majority of the holders of BCS Stock approve the Merger
and the Merger Agreement, the Stockholder's Shares shall, pursuant to
the terms of the Merger Agreement, be exchanged for the consideration
provided in the Merger Agreement. The Stockholder hereby waives any
rights of appraisal, or rights to dissent from the Merger, that such
Stockholder may have.
(c) The Stockholder shall not, nor shall it permit any investment
banker, attorney or other adviser or representative of the Stockholder
to, directly or indirectly, (i) solicit, initiate or encourage the
submission of, any takeover proposal or (ii) participate in any
discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any takeover proposal. For all
purposes hereof, "takeover proposal" means any proposal for a merger or
other business combination involving BCS or any of its subsidiaries or
any proposal or
<PAGE>
offer to acquire in any manner, directly or indirectly, an equity
interest in any voting securities of, or a substantial portion of the
assets of BCS or any of its subsidiaries, other than the Merger and the
other transactions contemplated by the Merger Agreement and other than
any transfer expressly permitted by the proviso to Section 3(a).
4. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) While this Agreement is in effect, the Stockholder hereby
irrevocably grants to, and appoints, LSI and Richard E. Rivera, President of
LSI, and Anne D. Huemme, Chief Financial Officer of LSI, in their respective
capacities as officers of LSI, and any individual who shall hereafter succeed to
any such office of LSI, and each of them individually, the Stockholder's proxy
and attorney-in-fact (with full power of substitution), for and in the name,
place and stead of the Stockholder, to vote the Stockholder's Shares, or grant a
consent or approval in respect of such Shares (i) in favor of the Merger, the
execution and delivery of the Merger Agreement and approval of the terms thereof
and each of the other transactions contemplated by the Merger Agreement,
provided that the terms of the Merger Agreement shall not have been amended to
reduce the consideration payable in the Merger to a lesser amount of LSI Common
Stock or otherwise to materially and adversely impair the Stockholder's rights
or increase the Stockholder's obligations thereunder, and (ii) against any
Competing Transaction.
(b) The Stockholder represents that any proxies heretofore given
in respect of the Stockholder's shares are not irrevocable, and that any such
proxies are hereby revoked.
(c) The Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 4 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of the Stockholder under this Agreement. The Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked while this Agreement is in effect. The
Stockholder hereby ratifies and confirms all that such irrevocable proxy may
lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is
executed and intended to be irrevocable in accordance with the provisions of
Section 212 of the Delaware General Corporation Law as long as this Agreement is
in effect.
5. Certain Events. The Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including without
limitation the Stockholder's successors or assigns. In the event of any stock
split, stock dividend, merger, reorganization, recapitalization or other change
in the capital structure of BCS affecting the BCS Stock, or the acquisition of
additional shares of BCS Stock or other voting securities of BCS by any
Stockholder, the number of Shares subject to the terms of this Agreement shall
be adjusted appropriately and this Agreement and the obligations hereunder shall
attach to any additional shares of BCS Stock or other voting securities of BCS
issued to or acquired by the Stockholder.
<PAGE>
6. Stop Transfer. BCS agrees with, and covenants to, LSI that BCS shall
not register the transfer of any certificate representing any of the
Stockholder's Shares, unless such transfer is made to LSI or Sub or otherwise in
compliance with this Agreement. The Stockholder agrees that, if any certificates
representing Stockholder's Shares are released by the pledgee thereof, the
Stockholder will tender to BCS, within five business days after the date
thereof, any and all certificates representing such Stockholder's Shares and BCS
will inscribe upon such certificates the following legend: "The shares of Common
Stock, $.01 par value, of Bugaboo Creek Steak House, Inc. represented by this
certificate are subject to a Stockholders Agreement dated as of _______, 1996,
and may not be sold or otherwise transferred, except in accordance therewith.
Copies of such Agreement may be obtained at the principal executive offices of
Bugaboo Creek Steak House, Inc."
7. Registration Rights.
(a) Registration on Request. Subject to the terms and
conditions set forth herein, for a period of two years from the date of this
Agreement, if Stockholder ceases to be director of Longhorn Steaks, upon written
notice of the Stockholder requesting that LSI effect the registration under the
Securities Act, of all or part of the LSI Common Stock issued to Stockholder in
the Merger ("Registrable Securities") held by Stockholder, which notice shall
specify the intended method or methods of disposition of such Registrable
Securities, LSI will use its reasonable efforts to effect (at the earliest
practicable date) the registration, under the Securities Act, of such
Registrable Securities for disposition in accordance with the intended method or
methods of disposition stated in such request, provided that:
(i) if LSI shall have previously effected a
registration with respect to Registrable Securities pursuant to Section 7(c)
hereof, LSI shall not be required to effect a registration pursuant to this
Section 7(a) until a period of 180 days shall have elapsed from the effective
date of the most recent such previous registration;
(ii) if, upon receipt of a registration request
pursuant to this Section 8(a), LSI is advised in writing by a recognized
national independent investment banking firm selected by LSI that, in such
firm's opinion, a registration at the time and on the terms requested would
adversely affect any public offering of securities of LSI by LSI (other than in
connection with employee benefit and similar plans) or by or on behalf of any
shareholder of LSI exercising a demand registration right (collectively, an "LSI
Offering") with respect to which LSI has commenced preparations for a
registration prior to the receipt of a registration request pursuant to this
Section 7(a), LSI shall not be required to effect a registration pursuant to
this Section 7(a) until 90 days after the completion of such LSI Offering;
(iii) if, while a registration request pursuant to
this Section 7(a) is pending, LSI determines in the good faith judgment of the
principal securities counsel or outside securities counsel of LSI that the
filing of a registration statement would require disclosure of material
information which LSI has a bona fide business purpose for preserving as
confidential, LSI shall not be required to effect a registration pursuant to
this Section 7(a) until the date upon which such material information is
disclosed to the public or ceases to be material; and
<PAGE>
(iv) Stockholder shall exercise registration
rights pursuant to this Section 7(a) one time only; provided, that a
registration will not count as an exercise of registration rights under this
Section 7(a) until the registration statement relating to such exercise has
become effective; provided, further that the number of shares of LSI Common
Stock registered pursuant to a requested pursuant to this Section 7(a) shall be
no less than 2% of the total outstanding number of shares of LSI Common Stock
outstanding at the time of such request.
(v) the Company shall only be obligated to effect a
registration requested pursuant to this Section 7(a) by the filing of a
registration statement on Form S-3 or any successor form which the Company is
eligible to use containing similar disclosure items and incorporation by
reference provisions, such form to be selected by the Company, after
consultation with counsel.
(b) Registration Expenses. "Registration Expenses" for a
request pursuant to this Section 7(a) shall be paid by Stockholder. Registration
Expenses shall mean all expenses incident to LSI's performance of or compliance
with the registration requirements set forth in this Agreement regardless of
whether any such registration becomes effective including, without limitation,
the following: (i) all fees, disbursements, and expenses of counsel for LSI
(United States and foreign), all reasonable fees, disbursements and expenses of
(a) counsel for Stockholder and (b) LSI's independent certified public
accountants in connection with the registration of Registrable Securities to be
disposed of under the Securities Act; (ii) all fees and expenses in connection
with the preparation, printing and filing of the registration statement, any
preliminary prospectus or final prospectus, any other offering document and
amendments and supplements thereto (including, if applicable, the fees and
expenses of any "qualified independent underwriter" and its counsel that may be
required by the rules and regulations of the NASD) and the mailing and
delivering of copies thereof to the underwriters and dealers; (iii) all cost of
printing or producing any agreements among underwriters, underwriting agreements
and blue sky or legal investment memoranda, any selling agreements and any other
documents in connection with the offering, sale or delivery of Registrable
Securities to be disposed of; (iv) all expenses in connection with the
qualification of Registrable Securities to be disposed of for offering and sale
under state blue sky or securities laws, including the fees and disbursements of
counsel or the underwriters in connection with such qualification and in
connection with any blue sky and legal investment surveys; (v) any filing fees
incident to securing any required review by the NASD of the terms of the sale of
Registrable Securities to be disposed of; and (vi) all application and filing
fees in connection with listing the Registrable Securities on a national
securities exchange or automated quotation system pursuant to the requirements
hereof.
(c) Incidental Registration. For a period of two years from
the date of this Agreement, if Stockholder ceases to be a director of Longhorn
Steaks, LSI proposes to register any of its common stock for public sale under
the Securities Act, on a form and in a manner which would permit registration of
Registrable Securities for sale to the public under the Securities Act, LSI will
give prompt written notice to Stockholder of its intention to do so, and upon
the written request of Stockholder delivered to LSI within 10 business days
after the giving of any such notice (which request shall specify the amount of
Registrable Securities intended to be disposed of
<PAGE>
by Stockholder and the intended method of disposition thereof), LSI will use its
reasonable efforts to effect, in connection with the registration of the LSI
Common Stock, the registration under the Securities Act of all Registrable
Securities which LSI has been so requested to register by Stockholder, to the
extent required to permit the disposition (in accordance with the intended
method or methods thereof as aforesaid) of Registrable Securities so to be
registered; provided that:
(i) if, at any time after giving such written
notice of its intention to register any LSI Common Stock and prior to the
effective date of the registration statement filed in connection with such
registration, LSI shall determine for any reason not to register the LSI Common
Stock LSI may, at its election, give written notice of such determination to
Stockholder and thereupon LSI shall be relieved of its obligation to register
such Registrable Securities in connection with the registration of such LSI
Common Stock;
(ii) LSI shall not be required to effect any
registration of Registrable Securities under this Section 7(c) incidental to the
registration of any of its securities solely in connection with mergers,
acquisitions, exchange offers, recapitalizations, reclassifications,
subscription offers, dividend reinvestment plans or stock option or other
benefit plans; and
(iii) in the event that Stockholder
requests the registration of Registrable Securities in connection with any
underwritten registration of LSI Common Stock and the managing underwriter of
such registration informs Stockholder and any other holder of securities of LSI
requesting registration in connection with such registration of LSI Common Stock
in writing of its belief that the distribution of all or a specified number of
such Registrable Securities concurrently with the securities being distributed
by such underwriters would interfere with the successful marketing of the
securities being distributed by such underwriters, then LSI may, upon written
notice to Stockholder and all such other requesting holders, reduce pro rata (if
and to the extent stated by such managing underwriter to be necessary to
eliminate such effect) the number of such securities, the registration of which
shall have been requested by Stockholder and each such other holder so that the
resultant aggregate number of such securities so included in such registration
shall be equal to the number of securities stated in such managing underwriter's
letter.
No registration of Registrable Securities effected under this Section 7(c) shall
relieve LSI of its obligation to effect the one demand registration of
Registrable Securities pursuant to Section 7(a).
(d) Registration Expenses. Stockholder will pay all
incremental Registration Expenses in connection with any registration pursuant
to Section 7(c) that are attributable to Stockholder's participation in such
registration, including, specifically, fees and expenses of counsel for
Stockholder.
(e) Registration and Qualification. In connection with
the filing of a Registration Statement pursuant to Section 7(a), and in
supplementation and not in limitation of the provisions hereof, Longhorn Steaks
shall:
<PAGE>
(i) notify the Stockholder as to the filing of
the Registration Statement and of all amendments or supplements thereto filed
prior to the effective date of such Registration Statement;
(ii) notify the Stockholder, promptly after
Longhorn Steaks shall receive notice thereof, of the time when said Registration
Statement became effective or when any amendment or supplement to any prospectus
forming a part of such Registration Statement has been prepared or filed and use
its reasonable efforts to ensure that the Registration Statement remains
effective for 120 days;
(iii) notify the Stockholder promptly of any
request by the SEC for the amending or supplementing of such Registration
Statement or prospectus or for additional information;
(iv) prepare and promptly file with the SEC and
promptly notify the Stockholder of the filing of any amendments or supplements
to such Registration Statement or prospectus as may be necessary to correct any
statements or omissions if, at any time when a prospectus relating to the
Registrable Securities is required to be delivered under the Securities Act, any
event with respect to Longhorn Steaks shall have occurred as a result of which
any such prospectus or any other prospectus as then in effect would include an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading; and, in addition, prepare and
file with the SEC, promptly upon the Stockholder' written request, any
amendments or supplements to such Registration Statement or prospectus which may
be reasonably necessary or advisable in connection with the distribution of the
Registrable Securities;
(v) prepare, promptly upon request of the
Stockholder or any underwriters for the Stockholder, such amendment or
amendments to such Registration Statement and such prospectus or prospectuses as
may be reasonably necessary to permit compliance with the requirements of
Section 10(a)(3) of the Securities Act;
(vi) advise the Stockholder promptly after
Longhorn Steaks shall receive notice or obtain knowledge of the issuance of any
stop order by the SEC suspending the effectiveness of any such Registration
Statement or amendment thereto or of the initiation or threatening of any
proceeding for that purpose, and promptly use its reasonable efforts to prevent
the issuance of any stop order or obtain its withdrawal promptly if such stop
order should be issued;
(vii) use its reasonable efforts to qualify,
as soon as reasonably practicable, the Registrable Securities for sale under the
securities or Blue Sky laws of such states and jurisdictions within the United
States as shall be reasonably requested by the Stockholder (or any underwriter
therefor); provided, that Longhorn Steaks shall not be required in connection
therewith or as a condition thereto to qualify to do business, to become subject
to taxation or to file a consent to service of process generally in any of the
aforesaid states or jurisdictions;
<PAGE>
(viii) furnish the Stockholder (and any
underwriter therefor), as soon as available, copies of any Registration
Statement and each preliminary or final prospectus, or supplement or amendment
required to be prepared pursuant hereto, all in such quantities as the
Stockholder (or such underwriters) may, from time to time, reasonably request;
(ix) if requested by the Stockholder, enter into
an agreement with the underwriters of the Registrable Securities being
registered containing customary provisions and reflecting the foregoing; and
(f) Blackout Periods. (a) At any time when a
registration statement effected pursuant to Section 8(a) hereunder relating to
Registrable Securities is effective, upon written notice from LSI to Stockholder
that either:
(i) LSI has determined to engage in a LSI
Offering and has been advised in writing (with a copy to Stockholder) by a
recognized national independent investment banking firm selected by LSI that, in
such firm's opinion, Stockholder's sale of Registrable Securities pursuant to
the registration statement would adversely affect LSI's own immediately planned
LSI Offering (a "Transaction Blackout"); or
(ii) LSI determines in the good faith judgment
of the principal securities counsel or outside securities counsel of LSI that
Stockholder's sale of Registrable Securities pursuant to the registration
statement would require disclosure of material information which LSI has a bona
fide business purpose for preserving as confidential (an "Information
Blackout"),
Stockholder shall suspend sales of Registrable Securities pursuant to such
registration statement until the earlier of:
(X) (i) in the case of a
Transaction Blackout, the earlier of (A) 30 days after the completion of such
LSI Offering, (B) the termination of any "black out" period required by the
underwriters to be applicable to Stockholder, if any, in connection with such
LSI Offering, (C) promptly after abandonment of such LSI Offering and (D) 60
days after the date of LSI's written notice of Transaction Blackout or
(ii) in the case of an
Information Blackout, the earlier of (A) the date upon which such material
information is disclosed to the public or ceases to be material or (B) 60 days
after LSI makes such good faith determination and
(Y) such time as LSI notifies
Stockholder that sales pursuant to such registration statement may be resumed
(the number of days from such suspension of sales of Stockholder until the day
when such sales may be resumed hereunder is hereinafter called a "Sales Blackout
Period"); provided, that LSI may not impose a Transaction Blackout following the
printing and distribution of a preliminary prospectus in any underwritten public
offering of Registrable Securities until the termination of the distribution of
such Registrable Securities.
<PAGE>
(iii) If there is a Transaction Blackout
or an Information Blackout, the time period set forth in Section 8(e)(ii) shall
be extended for a number of days equal to the number of days in the Sales
Blackout Period.
(g) Preparation; Reasonable Investigation. In connection with
the preparation and filing of a registration statement registering Registrable
Securities under the Securities Act, LSI will give Stockholder and the
underwriters, if any, and their respective counsel and accountants, such
reasonable and customary access to its books and records and such opportunities
to discuss the business of LSI with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of Stockholder and such underwriters or their respective counsel,
to conduct a reasonable investigation within the meaning of the Securities Act.
(h) Non-exclusive Means of Sale. Nothing in this Agreement
shall be deemed to preclude Stockholder from selling any Registrable Securities
in accordance with the provisions of Rule 144 or Rule 145(d) (or any successor
provision thereto) under the Securities Act in accordance with the provisions
hereof.
(i) Stockholder agrees that for a period of up to 90 days (or
such other period, not to exceed 180 days, as Longhorn Steaks may agree with the
managing underwriter) after the effective date of any underwritten public
offering of Longhorn Steaks Common Stock, Stockholder will not, directly or
indirectly, sell, offer to sell or otherwise dispose of any Longhorn Steaks
Common Stock other than any of Stockholder's Longhorn Steaks Common Stock
included in such public offering unless otherwise consented by the
representative of the underwriters in such public offering.
8. Regulatory Approvals. Each of the provisions of this Agreement
is subject to compliance with applicable regulatory conditions and receipt of
any required regulatory approvals.
9. Further Assurances. The Stockholder shall, upon request of LSI,
execute and deliver any additional documents and take such further actions as
may reasonably be deemed by LSI to be necessary or desirable to carry out the
provisions hereof and to vest the power to vote such Stockholder's Shares as
contemplated by Section 4 in LSI and the other irrevocable proxies described
therein at the expense of LSI.
10. Termination. This Agreement, and all rights and obligations of
the parties hereunder; shall terminate upon the first to occur of (x) the
Effective Time of the Merger or (y) the date upon which the Merger Agreement is
terminated in accordance with its terms.
11. Miscellaneous.
(a) Capitalized terms used and not otherwise defined in this
Agreement shall have the respective meanings assigned to them in the Merger
Agreement.
<PAGE>
(b) All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice): (i) if to LSI, to the address
set forth in Section 11.8 of the Merger Agreement; and (ii) if to the
Stockholder; to its address shown below its signature on the last page hereof.
(c) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(d) This Agreement may be executed in two or more counterparts,
all of which shall be considered one and the same agreement.
(e) This Agreement (including the documents and instruments
referred to herein) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
(f) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
(g) Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties without the prior written
consent of the other parties, except as expressly contemplated by Section 3(a)
hereof. Any assignment in violation of the foregoing shall be void.
(h) The Stockholder agrees that irreparable damage would occur and
that LSI would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that LSI
shall be entitled to an injunction or injunctions to prevent breaches by the
Stockholder of this Agreement and to enforce specifically the terms and
provisions of this Agreement in the Chancery Court of the State of Delaware (and
any appellate courts therefrom), this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, each of the parties
hereto (i) consents to submit such party to the personal jurisdiction of the
Chancery Court of the State of Delaware (and any appellate courts therefrom) in
the event any dispute arises out of this Agreement or any of the transactions
contemplated hereby, (ii) agrees that such party will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court and (iii) agrees that such party will not bring any action relating
to this Agreement or any of the transactions contemplated hereby in any court
other than such court.
(i) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any extent, be held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions herein and the
application thereof to any other circumstances, shall remain in full force and
effect,
<PAGE>
shall not in any way be affected, impaired or invalidated, and shall be enforced
to the fullest extent permitted by law.
(j) No amendment, modification or waiver in respect of this
Agreement shall be effective against any party unless it shall be in writing and
signed by such party.
IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Stockholders Agreement as of the day and year first above written.
LONGHORN STEAKS, INC.
By:/s/ Richard E. Rivera
President
BUGABOO CREEK STEAK HOUSE, INC.
By:/s/ Edward P. Grace, III
President
STOCKHOLDER:
/s/ Edward P. Grace, III
Name: Edward P. Grace, III
Address: 5091 Isleworth Country Club Dr.
Windermere, FL 34786
Number of Shares
Beneficially Owned: 2,415,000
<PAGE>
