SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
September 4, 1995
TPI ENTERPRISES, INC.
(Exact name of registrant as specified in its Charter)
NEW JERSEY 0-7961 22-1899681
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
3950 RCA Boulevard
Suite 5001
Palm Beach Gardens, Florida 33401
(Address of principal executive offices) (Zip Code)
(407) 691-8800
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS.
The Company entered into a letter of intent
dated September 3, 1995 with Shoney's, Inc. regarding a
proposed merger of the Company with and into a wholly
owned subsidiary of Shoney's, Inc. Except for certain
provisions contained therein, the letter of intent is
nonbinding on the parties. The Company and Shoney's, Inc.
issued a press release on September 5, 1995 announcing that
such letter of intent was agreed upon. The letter of intent
and the press release are attached hereto as Exhibits
99.1 and 99.2, respectively.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) Exhibits
Exhibit No.
99.1 Letter of Intent dated September 3, 1995 by and
between Shoney's, Inc. and TPI Enterprises,
Inc.
99.2 Press release dated September 5, 1995.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
TPI Enterprises, Inc.
By: /s/ Frederick W. Burford
Frederick W. Burford
Executive Vice President and
Chief Financial Officer
Date: September 6, 1995
EXHIBIT INDEX
Sequential
Exhibit No. Description Page No.
99.1 Letter of Intent dated September 3,
1995 by and between Shoney's, Inc.
and TPI Enterprises, Inc.
99.2 Press Release dated September 5, 1995
Exhibit 99.1
September 3, 1995
Mr. J. Gary Sharp
President and
Chief Executive Officer
TPI Enterprises, Inc.
3950 RCA Boulevard, Suite 5001
Palm Beach Gardens, FL 33410
Dear Gary:
This Letter of Intent will serve to set forth
our mutual understandings with respect to the proposed
merger (the "Merger") of TPI Enterprises, Inc., a New
Jersey corporation ("TPI"), with and into a subsidiary of
Shoney's, Inc. ("Shoney's").
Our intention to consummate the Merger is subject to
the following terms and conditions:
1. STRUCTURE. The Merger will be structured as a
reorganization in which TPI will be merged into a
subsidiary of Shoney's ("Newco"), with TPI's shareholders
to receive the Merger Consideration described below. TPI
hereby confirms that the affirmative vote of a majority
of the outstanding shares of TPI Common Stock will be
necessary to approve the Merger and that no holder of TPI
Common Stock may exercise dissenters rights with respect
to the Merger. Shoney's hereby confirms that the
affirmative vote of a majority of the outstanding shares
of Shoney's Common Stock will be necessary to approve the
Merger and that no holder of Shoney's Common Stock may
exercise dissenters rights with respect to the Merger.
2. MERGER AGREEMENT. The transaction will be
effected pursuant to a definitive merger agreement (the
"Merger Agreement") among Shoney's, Newco, and TPI. The
Merger Agreement will contain representations,
warranties, covenants, and other terms and conditions
customarily contained in mergers of publicly held
corporations as well as (i) mutually agreed disposition
of outstanding TPI stock options, warrants and
convertible debentures in accordance with the provisions
of the governing instruments, (ii) appropriate control of
the Litigation (as defined in Exhibit A hereto) for a
five year period to ensure the protection of TPI
shareholders, and (iii) a provision prohibiting Shoney's
from selling or transferring Maxcell Telecom Plus, Inc.
following the Merger (to any person or entity other than
a wholly-owned subsidiary of Shoney's).
3. MERGER CONSIDERATION. The Merger Agreement
will provide that, upon consummation of the Merger, the
outstanding shares of TPI Common Stock, $.01 par value
per share (the "TPI Common Stock") (other than treasury
shares which will be cancelled) will be exchanged for the
following (collectively, the "Merger Consideration").
(a) SHARE EXCHANGE. Each issued and
outstanding share of TPI Common Stock shall be converted
into .28 (the "Exchange Ratio") fully paid and
nonassessable shares of Shoney's common stock, $1.00 par
value per share (the "Shoney's Common Stock") (the
"Exchange Shares").
(b) WARRANTS. In addition to the Exchange
Shares, one warrant (a "Transaction Warrant") shall be
issued for every 3.125 issued and outstanding shares of
TPI Common Stock. Each Transaction Warrant shall grant
the holder thereof the right, within five (5) years from
the date of issuance of the Transaction Warrant, to
purchase one share of Shoney's Common Stock at a warrant
exercise price of $21.50 per share.
(c) CONTINGENT SHARES. Within ten (10)
business days after the Realization Date (as defined in
Exhibit A hereto), in addition to the Exchange Shares and
the Transaction Warrants, Shoney's will issue and deliver
to the holders of the issued and outstanding TPI Common
Stock as of the Closing Date a certain number of
additional shares of Shoney's Common Stock (the
"Contingent Shares") which shall not exceed the number of
Exchange Shares. The actual number of Contingent Shares
issued (subject to the foregoing limitation) shall be
determined by dividing the Net After Tax Proceeds (as
defined in Exhibit A hereto) by the Average Price (as
defined in Exhibit A hereto). In the event that the
Gross Proceeds (as defined in Exhibit A hereto) are not
received on or before that date which is five (5) years
from the date of the Closing of the Merger, no Contingent
Shares shall be issued. In the event of a settlement of
the Civil Action (as defined in Exhibit A hereto) for
proceeds other than cash, the Gross Proceeds (as defined
in Exhibit A hereto) shall not be deemed received until
the settlement proceeds are converted to cash.
(d) FRACTIONAL SHARES AND WARRANTS;
DEFINITIONS. No fractional shares of Shoney's Common
Stock or fractional Transaction Warrants and no
certificates or scrip therefor, or other evidence of
ownership thereof, will be issued in the Merger; instead
Shoney's shall pay to each holder of TPI Common Stock
exchanged in the Merger pursuant to this Plan who would
otherwise be entitled to a fractional share of Shoney's
Common Stock or a fractional Transaction Warrant an
amount in cash. The definitions set forth on Exhibit A
hereto are an integral part of paragraph 3(c) above.
4. CLOSING. The closing of the transaction (the
"Closing") shall take place on or before December 31,
1995 (the "Closing Date").
5. CONDITIONS TO CLOSING. Completion of the
Merger shall be subject to certain conditions, which
shall include, without limitation, the completion or
satisfaction of the following:
(a) DUE DILIGENCE BY SHONEY'S. Shoney's shall
have completed to its satisfaction its due diligence
review of TPI and each of TPI's subsidiaries, and their
respective businesses, assets, and liabilities, and TPI
shall have furnished to Shoney's and its representatives
such information as may reasonably be required for such
purpose, including, without limitation, information with
respect to litigation and loss contingencies, employee
matters, environmental matters, tax and ERISA matters,
vendors and customer information, legal and regulatory
compliance, licenses, insurance, contracts, and other
matters.
(b) DUE DILIGENCE BY TPI. TPI shall have
completed to its satisfaction its due diligence review of
Shoney's and each of Shoney's subsidiaries, and their
respective businesses, assets, and liabilities, and
Shoney's shall have furnished to TPI and its
representatives such information as TPI may reasonably
require for such purpose, including, without limitation,
information with respect to litigation and loss
contingencies, employee matters, environmental matters,
tax and ERISA matters, vendors and customer information,
legal and regulatory compliance, licenses, insurance,
contracts, and other matters.
(c) DOCUMENTATION. The negotiation,
execution, and delivery of a definitive Merger Agreement
setting forth the terms and conditions of the proposed
Merger and containing customary provisions,
representations, warranties, and covenants; and the
receipt by the parties of such ancillary documents,
including opinions of counsel, as shall be reasonably
acceptable to the parties and their respective counsel.
(d) APPROVALS. The Merger shall have been
approved by the Shoney's Board of Directors and by
Shoney's lenders. In addition,the proposed Merger shall
have been approved by all necessary corporate action of
TPI, including the approval of its shareholders.
(e) FAIRNESS. Each of Shoney's and TPI shall
have received an opinion satisfactory to their respective
boards of directors that the Merger Consideration is fair
to their respective shareholders from a financial point
of view.
6. MAINTENANCE OF BUSINESS. 6.1 Until September
30, 1995, TPI and TPI's subsidiaries shall (a) continue
to operate their respective businesses in the customary
and ordinary manner, (b) use their reasonable efforts to
preserve their business operations intact, to keep
available the services of their present personnel, and to
preserve the goodwill and relationships of their
suppliers, customers, and others having business
relations with TPI or TPI's subsidiaries, as applicable,
(c) notify Shoney's in writing of any event involving TPI
or a subsidiary thereof which has had or may be
reasonably expected to have a material adverse effect on
the business or financial condition of TPI or any of
TPI's subsidiaries, (d) not sell, encumber, or otherwise
dispose of any of their assets except in the ordinary
course of their respective businesses, (e) not enter into
any employment agreements with any person or amend the
terms of any existing employment agreement, (f) not
merge, restructure, or reorganize either TPI nor any of
its subsidiaries in any manner that shall have the effect
of changing any aspect of, or ownership rights in, the
TPI Common Stock, including, without limitation, creating
appraisal rights or diluting TPI shareholders' interest,
or (g) not issue any additional shares of capital stock
of any designation or class (except pursuant to the
exercise or conversion of options, rights and/or warrants
existing on the date hereof or pursuant to the terms of
401(k) or SECTION 423 stock purchase plans of TPI and its
subsidiaries existing on the date hereof).
6.2 Until September 30, 1995, Shoney's and Shoney's
subsidiaries shall (a) continue to operate their
respective businesses in the customary and ordinary
manner (which includes, without limitation, all publicly
announced plans to divest certain businesses), (b) notify
TPI in writing of any event involving Shoney's or a
subsidiary thereof which has had or may be reasonably
expected to have a material adverse effect on the
business or financial condition of Shoney's or any of
Shoney's subsidiaries, or (c) not merge, restructure, or
reorganize either Shoney's nor any of its subsidiaries in
any manner that shall have the effect of diluting the
value of Shoney's Common Stock.
7. EXCLUSIVITY. Until September 30, 1995 (or such
earlier date on which Shoney's ends its active efforts to
consummate the proposed Merger), neither TPI nor any of
its officers, directors, or affiliates shall initiate
negotiations nor negotiate directly or indirectly with
any other party in respect of any business combination
involving TPI or a subsidiary thereof or the sale of any
of the assets of TPI or a subsidiary thereof or the sale
of a controlling interest in TPI or a subsidiary thereof.
Shoney's acknowledges that TPI directors may have a
competing fiduciary obligation to the shareholders of TPI
under certain circumstances, and nothing in this Letter
of Intent is intended to conflict with the exercise of
that fiduciary duty.
8. CONFIDENTIALITY. Each of TPI and Shoney's
hereby reaffirms the terms and provisions of the
confidentiality letters each dated July 26, 1995 with
respect to the exchange of confidential information
between the parties.
9. CONDUCT TO CONSUMMATE. It is the intention of
the parties that following execution and delivery of this
Letter of Intent, the parties will use all reasonable
efforts to satisfy the conditions set forth in Paragraph
5 hereof which are within their respective control and
cooperate in the negotiation and preparation of the
Merger Agreement and other necessary documentation. Each
party shall bear its own expenses with no liability for
such expenses to the other party, whether or not the
Merger Agreement is executed.
10. PUBLIC ANNOUNCEMENTS. It is the intention of
the parties to use reasonable efforts to reach agreement
on the wording of any news releases or other public
announcements by Shoney's or TPI, or any of their
respective affiliates, pertaining to this Letter of
Intent, the proposed Merger, or the negotiations
concerning the proposed Merger. In the absence of
circumstances requiring otherwise, any such releases or
public announcements shall be submitted to the other
party for its comment prior to issuance.
11. BINDING AND NONBINDING NATURE OF THIS LETTER.
It is understood that this Letter of Intent merely
constitutes a statement of the mutual intentions of the
parties with respect to the proposed Merger, does not
contain all matters upon which agreement must be reached
in order for the proposed Merger to be consummated and,
except as respects Paragraphs 6, 7, 8, 9 and 10 above,
creates no binding rights in favor of either party. A
binding commitment with respect to the proposed Merger
will result only after execution and delivery of
definitive Merger Agreement, subject to the terms and
conditions contained therein.
If the foregoing is acceptable to you, please so
indicate by signing a copy of this Letter of Intent and
returning it to the undersigned. This Letter of Intent
will be void unless it is fully executed and returned to
Shoney's by 6:00 p.m. (Central Daylight Time) on
September 4, 1995.
Very truly yours,
SHONEY'S, INC.
By: /s/ W. Craig Barber
W. Craig Barber
Senior Executive Vice
President and Chief
Financial officer
ACCEPTED AND AGREED TO:
TPI ENTERPRISES, INC.
By: /s/ J. Gary Sharp
Title: President
Date: 9/4/95
EXHIBIT A
Definitions relating to the Issuance of Contingent Shares
"Average Price" shall mean the arithmetic average of the
Closing Market Price on the ten trading days immediately
preceding the Realization Date and the ten trading days
immediately following the Realization Date.
"Civil Action" means that certain litigation pending in
the Circuit Court of the Fifteenth Judicial Circuit in
and for Palm Beach County, Florida styled Maxcell Telecom
Plus, Inc., et al., v. McCaw Cellular Communications,
Inc., et al.
"Closing Market Price" means the per share price of the
last trade of the Shoney's Common Stock on the New York
Stock Exchange (the "NYSE") as reported by The Wall
Street Journal; provided, however, that, if there shall
be any material alteration in the present system of
reporting sales of the Shoney's Common Stock, or if the
Shoney's Common Stock shall no longer be listed on the
NYSE, the market value per share of the Shoney's Common
Stock as of a particular date shall be determined in such
a method as may be mutually agreeable to the parties.
"Effective Tax Rate" means the result reached by dividing
the provision for income taxes into income before income
taxes on Shoney's audited consolidated statement of
income as released in Shoney's annual report to
shareholders, subject to adjustment to income before
income taxes and/or the provision for income taxes for
any amount of the Litigation Expenses that are not
deducted in the provision for income taxes for financial
reporting purposes and/or Litigation Expenses that may
not be allowed to be deducted in full.
"Gross Proceeds" means the cash actually received from
the defendants in the Civil Action through a final, non-
appealable judgment or settlement.
"Litigation Expenses" means any and all expenses incurred
after September 4, 1995 in: (i) instituting,
prosecuting, defending any counterclaim with respect to,
and, if applicable, negotiating a settlement of and
settling the Civil Action (including, without limitation,
attorneys' fees and expenses, witness fees, and
consulting fees); and (ii) collecting any judgment
received in the Civil Action.
"Net After Tax Proceeds" means the product of multiplying
(i) the Gross Proceeds minus the Litigation Expenses by
(ii) the result of subtracting the Effective Tax Rate on
the Realization Date from One (1.00).
"Realization Date" means the date on which Shoney's (or
any of Shoney's subsidiaries) receives the Gross
Proceeds.
Exhibit 99.2
NEWS
FOR IMMEDIATE RELEASE Contact: SHONEY'S, INC.
W. Craig Barber
(615) 391-5201
or
TPI ENTERPRISES, INC.
Frederick W. Burford
(407) 835-8888
SHONEY'S, INC. AND TPI ENTERPRISES ANNOUNCE
LETTER OF INTENT FOR MERGER
NASHVILLE, TN., September 5, 1995 - Shoney's, Inc. and TPI
Enterprises, Inc. today announced they have signed a letter of
intent to merge TPI with a subsidiary of Shoney's. TPI is the
largest franchisee of Shoney's, operating 188 Shoney's
Restaurants and 69 Captain D's Seafood restaurants.
C. Stephen Lynn, chairman and chief executive officer of
Shoney's, Inc., commented, "The proposed merger with TPI
reaffirms management's strong belief in the Shoney's Restaurant
concept as a vehicle for creating attractive shareholder returns.
We are also very pleased with the addition of TPI's Captain D's
restaurants, which have had operating performance very comparable
to our company-owed Captain D's. This merger is another step in
the Company's ongoing commitment toward a more focused strategy."
J. Gary Sharp, president and chief executive officer of TPI,
said, "We are excited about the prospect of a merger with
Shoney's, Inc. We believe in the vision articulated by Shoney's
management and look forward to working together to deliver
excellence to our customers at both Shoney's and Captain D's
restaurants."
TPI will merge with Shoney's through an exchange of (i) 0.28
shares of Shoney's stock for each outstanding share of TPI and
(ii) one warrant for every 3.125 outstanding shares of TPI. The
warrants will have a term of five years and permit the holder to
acquire Shoney's stock at an exercise price of $21.50 per share.
In addition, TPI shareholders will have the right to receive
contingent shares that will permit TPI shareholders to receive,
on a pro rata basis, any cash proceeds resulting from TPI's
ongoing lawsuit through its subsidiary, Maxcell Telecom Plus,
Inc. against McCaw Cellular Communications, Inc. The contingent
shares are limited to a maximum of the aggregate shares issued
pursuant to the 0.28 exchange ratio. Also, Shoney's will assume
$95 million of TPI net debt.
Shoney's indicated that the Company expected the transaction to
be only slightly dilutive in fiscal 1996. "Once we have fully
integrated the two businesses, which we anticipate will occur
within six months, we expect the merger will not be dilutive for
Shoney's shareholders because of distribution and administrative
synergies," said W. Craig Barber, senior executive vice president
and chief financial officer of Shoney's, Inc. "Moreover, our
determination that the transaction would not be dilutive over the
long run does not include any improvement in the performance of
TPI's restaurant operations."
The two parties expect to work toward a definitive agreement in
the near future. The transaction is expected to close by the end
of 1995 and will be subject to approval by Shoney's and TPI's
shareholders and their respective lenders. In addition, certain
regulatory approvals must be obtained.
For the latest twelve months ending July 9, 1995, TPI had
revenues of $280.4 million and a net loss of $7.1 million. TPI,
headquartered in West Palm Beach, Florida, operates 257 units in
11 states. TPI's common stock is traded on the NASDAQ National
Market System under the symbol "TPIE".
For the latest twelve months ending May 14, 1995, Shoney's had
revenues of $1.069 billion and net income of $49.6 million.
Shoney's operates and franchises 1,850 restaurants in 35 states
and Canada, including 799 company-owned and 1.051 franchised
restaurants. Shoney's common stock is traded on the New York
Stock Exchange under the symbol "SHN".
