SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported): SEPTEMBER 9, 1996
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TPI ENTERPRISES, INC.
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(Exact name of registrant as specified in its charter)
NEW JERSEY 0-7961 22-1899681
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
50 NORTH FRONT STREET, SUITE 600
MEMPHIS, TENNESSEE 38173
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(Address of principal executive offices) (Zip Code)
(407) 691-9900
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(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
General
On September 9, 1996, the registrant ("Enterprises") consummated the
sale of substantially all of its assets (the "Transaction") to Shoney's, Inc.,
a Tennessee corporation ("Shoney's"), pursuant to the terms of the Plan of
Tax-Free Reorganization under Section 368(a)(1)(C) of the Internal Revenue Code
and Agreement, dated March 15, 1996, as amended, by and among Enterprises,
Shoney's and TPI Restaurants Acquisition Corporation, a wholly-owned subsidiary
of Shoney's (the "Reorganization Agreement").
Consideration
In exchange for substantially all of the assets of Enterprises,
including the shares of capital stock of TPI Restaurants, Inc. ("TPIR"), TPI
Entertainment, Inc. and TPI Insurance Corporation, at the closing of the
Transaction (the "Closing"), Enterprises received from Shoney's an aggregate of
6,785,114 shares of common stock of Shoney's, $1.00 par value per share
("Shoney's Common Stock"), and was permitted to retain approximately $4,650,000
in cash, plus certain additional cash to pay Enterprises' remaining Specified
Wind-up Expenses (as defined in the Reorganization Agreement).
The Reorganization Agreement entitled Enterprises to retain up to
$7,500,000 in cash ("Retained Cash") and up to $7,350,000 to pay Specified
Wind-up Expenses, in each case subject to certain adjustments. Approximately
$1,150,000 in Retained Cash was exchanged for additional shares of Shoney's
Common Stock pursuant to the Reorganization Agreement, thereby reducing the
amount of Retained Cash to approximately $6,350,000. Specified Wind-up Expenses
are currently estimated to be approximately $1,700,000 in excess of the
$7,350,000 allotment, which excess includes an approximately $1,300,000
payment to Shoney's at the Closing in settlement of certain liabilities or
contingent liabilities which exceeded the liabilities agreed to be retained by
Shoney's in the Reorganization Agreement, including an approximately $550,000
payment to Shoney's for Excess Repair and Maintenance Expenses (as defined in
the Reorganization Agreement). As a result, Retained Cash is currently estimated
to be approximately $4,650,000.
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Based on the assumptions set forth in the footnotes to the following
table, and subject to the other qualifications discussed below, it is
anticipated that Enterprises' shareholders will receive the following
consideration per share of common stock, $.01 par value per share ("Enterprises
Common Stock"), in various installments following the Closing in connection
with the liquidation of Enterprises:
<TABLE>
<CAPTION>
Aggregate Amount Amount Per Share(1)
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<S> <C> <C>
Fixed Portion - Shoney's Common Stock 5,577,102 .2699*
Variable Portion - Shoney's Common Stock(2) 1,034,929 .0501*
Adjusted Portion - Shoney's Common Stock(3) 173,083 .0083*
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Total Shares of Shoney's Common Stock 6,785,114 .3283*
Cash(4) $4,650,000 $0.205
</TABLE>
* To be paid in shares of Shoney's Common Stock, except for fractional
shares which will be paid in cash.
(1) Based on 20,664,512 shares of Enterprises Common Stock outstanding
on September 9, 1996.
(2) Based on $10,000,000 divided by $9.6625, the Average Closing Market
Price (as defined in the Reorganization Agreement) in effect.
(3) Based on (x) the exchange of $1,138,956 into 117,874 shares of
Shoney's Common Stock, based on $9.6625, the Average Closing Market
Price in effect, and (y) the issuance by Shoney's of 55,209 shares of
Shoney's Common Stock based on the number of shares of Enterprises
Common Stock issued, transferred from treasury or allocated in
connection with certain of Enterprises' benefits plans.
(4) Assumes that the options of Enterprises which were assumed by Shoney's
in the Transaction ("Shoney's Options") are exercised prior to the
complete liquidation of Enterprises and no liabilities of Enterprises
other than those presently known arise prior to its dissolution. The
estimated amount of the cash has been rounded for presentation
purposes.
Of the $4,650,000 in Retained Cash, a maximum of approximately
$400,000 will be required to be retained by Enterprises for the benefit of
holders of Shoney's Options until such time as such options are exercised, are
terminated or expire. Under Enterprises' Plan of Complete Liquidation, if
Shoney's Options are not exercised prior to the final liquidating distribution
record date, such cash, after providing for the expenses of the distribution
thereof, will be distributed to Enterprises' shareholders. The final
liquidating distribution record date will occur no earlier than December 31,
1998.
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Initial Distribution
On September 6, 1996, the Board of Directors of Enterprises (the
"Enterprises Board") authorized, subject to the Closing, an initial
distribution of all of the shares of Shoney's Common Stock received by
Enterprises in the Transaction (the "Initial Distribution") to holders of
record of Enterprises Common Stock on September 24, 1996. It is anticipated
that the Initial Distribution will be made on or about October 1, 1996.
Dissolution of Enterprises
The Enterprises Board intends to dissolve Enterprises promptly after
the Closing in accordance with the provisions of the New Jersey Business
Corporation Act (the "NJBCA") by obtaining tax clearance and by causing a
certificate of dissolution to be filed in the office of the Secretary of State
of the State of New Jersey. It is currently anticipated that this process could
take two to three months, although there can be no assurance that the State of
New Jersey will not take longer to dissolve Enterprises.
Pursuant to the NJBCA, promptly after Enterprises has been dissolved,
it will give notice requiring all creditors of Enterprises to present their
claims in writing. Such notice will also be published in newspapers of general
circulation as provided in the NJBCA. This notice is required by the NJBCA to
be published three times, once a week for three consecutive weeks, in a
newspaper of general circulation in the county in which the registered office
of the corporation is located and shall state that all persons who are
creditors of the corporation shall present written proof of their claims to the
corporation at a place and on or before a date named in the notice, which date
shall not be less than six months after the date of the first publication. On
or before the date of the first publication of the notice, the corporation
shall mail a copy of the notice to each known creditor of the corporation.
Generally, any creditor who does not file a claim as provided in the notice,
and all those claiming through and under such creditor, would be forever barred
from suing on such claim or otherwise realizing upon or enforcing it.
Subsequent Distributions
The Enterprises Board does not currently intend to make any cash
distributions to its shareholders until such time as the period for creditors of
Enterprises to present written proof of their claims shall have expired. At such
time, the Enterprises Board intends to review the assets and liabilities of
Enterprises and consider the effect of all then known or anticipated liabilities
and, after paying or making provision for all then known or anticipated
liabilities, it intends to declare a distribution consisting of all of the then
remaining cash other than the cash required to be retained for holders of
Shoney's Options. It is expected that such distribution will occur by the middle
of 1997.
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Material Relationships
Certain directors and officers of Enterprises had material
relationships with Shoney's that were in addition to the relationships that
such persons had as directors and officers of Enterprises, generally, and which
may have created perceived conflicts of interests. These interests include the
payment by Enterprises, as wind-up expenses, or the assumption by Shoney's of
certain employment and severance obligations of Enterprises, the repayment
and/or assumption of certain debt held by investors related to certain
directors of Enterprises, the fact that such investors own equity and debt
securities of Shoney's and the fact that a director and an executive officer of
Enterprises were each retained as a consultant to Shoney's. These relationships
are discussed below.
The employment agreements of J. Gary Sharp, who until the Closing was
the President, Chief Executive Officer and a director of Enterprises, and
Frederick W. Burford, who until the Closing was the Executive Vice President,
Chief Financial Officer, Secretary and a director of Enterprises, were with
both Enterprises and TPIR, and the severance provisions therein were triggered
by the Transaction. Mr. Sharp and Mr. Burford received severance payments at
the Closing, which were paid out of the cash allocated to Enterprises for
Specified Wind-up Expenses. The amounts paid to Messrs. Sharp and Burford were
approximately $850,000 and $345,000, respectively. The terms of the employment
agreements of Messrs. Sharp and Burford provided that each will be deemed to be
an "employee" of TPIR for a period of one year following the termination of his
employment agreement solely for purposes of retaining the exerciseability of his
stock options assumed by Shoney's during that period.
Mr. Sharp has had preliminary discussions with Shoney's regarding the
possibility of becoming a Shoney's franchisee after the Closing. In connection
with these discussions, Shoney's and Mr. Sharp have discussed the repayment
terms of a promissory note of Mr. Sharp's two sons payable to Shoney's in
connection with a Shoney's franchise owned by them. The note is in the
outstanding principal amount, as of July 16, 1996, of approximately $179,000,
has been guaranteed by Mr. Sharp and is currently in arrears. Shoney's and Mr.
Sharp have agreed that the payment terms of the note will be resolved as part
of the final determination with respect to the possible Shoney's franchise.
Pursuant to an agreement dated as of September 9, 1996, Mr. Burford
agreed to serve as the President, Chief Financial Officer and Secretary of
Enterprises from and after the Closing until the later to occur of (i) six
months following publication of the notice of dissolution of Enterprises
required under the NJBCA and (ii) the second distribution to the shareholders
of Enterprises (the "Resignation Date"). Mr. Burford shall be primarily
responsible for performing administrative functions in connection with the
dissolution and liquidation of Enterprises. For his services from the Closing
through the Resignation Date, Mr. Burford will receive a payment of $170,000,
less applicable withholding, which amount includes reimbursement of Mr.
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Burford's reasonable out-of-pocket expenses. Expenses will be reimbursed as
incurred, subject to prior approval of the Enterprises Board, and the remaining
portion of the $170,000, less applicable withholding, will be payable in a lump
sum on the Resignation Date.
Douglas K. Bratton, Thomas M. Taylor and John L. Marion, Jr.,
directors of Enterprises, are affiliated with The Airlie Group L.P. The Airlie
Group L.P. and certain related investors (collectively, the "Investor Group")
own 1,889,120 shares of Enterprises Common Stock and, prior to the Closing,
owned warrants to acquire an additional 1,000,000 shares of Enterprises Common
Stock. The warrants were voluntarily canceled by the Investor Group at the
Closing. All of the $15,000,000 in principal amount of 5% debentures of
Enterprises held by the Investor Group were redeemed by Shoney's at the
Closing, and the redemption premium associated with such debentures was waived
by the Investor Group. In addition, an aggregate of $7,100,000 in principal
amount of the 8.25% Debentures of Shoney's owned by the Investor Group were
assumed by Shoney's at the Closing. Prior to the Closing, the Investor Group
owned an aggregate of 901,300 shares of Shoney's Common Stock and $10,000,000
in principal amount of Shoney's Subordinated Zero Convertible Debentures.
A partnership (Levy Food Service Limited Partnership) affiliated with
Lawrence F. Levy, a director of Enterprises, was retained as a consultant to
Shoney's in connection with "Shoney's" Restaurants concept development and
certain related issues on a month to month basis, effective March 1, 1996, for
a fee of $15,000 per month. In addition, a corporation (Levy Restaurants, Inc.)
affiliated with Mr. Levy has a consulting arrangement with The Airlie Group
L.P. to provide general advice on the restaurant industry (including advice
relating to Enterprises) for which it is compensated, and a corporation owned
by Mr. Taylor has had discussions with Mr. Levy regarding the formation of a
partnership for investment in restaurant companies (other than Enterprises and
Shoney's) in which both Mr. Levy and such corporation would invest.
Haney Long, Vice President of Procurement and Distribution of TPIR and
an executive officer of Enterprises prior to the Closing, became a consultant
to Shoney's, effective June 5, 1996, and accepted an offer of employment with
Shoney's following the Closing.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) Exhibits
Exhibit No.
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10.1 Plan of Tax-Free Reorganization under Section 368(a)(1)(C) of the
Internal Revenue Code and Agreement dated March 15, 1996 by and among
Shoney's, Inc., TPI Restaurants Acquisition Corporation and TPI
Enterprises, Inc. (incorporated herein by reference to Exhibit 10.1 to
the Current Report on Form 8-K filed by the registrant with the
Securities and Exchange Commission on March 19, 1996)
10.2 Amendment No. 1 to Plan of Tax-Free Reorganization under Section
368(a)(1)(C) of the Internal Revenue Code and Agreement dated as of
June 14, 1996 by and among Shoney's, Inc., TPI Restaurants Acquisition
Corporation and TPI Enterprises, Inc. (incorporated herein by
reference to Exhibit 10.1 to the Current Report on Form 8-K filed by
the registrant with the Securities and Exchange Commission on June 19,
1996)
Amendment No. 2 to Plan of Tax-Free Reorganization under Section
10.3 368(a)(1)(C) of the Internal Revenue Code and Agreement dated as of
July 18, 1996 by and among Shoney's, Inc., TPI Restaurants Acquisition
Corporation and TPI Enterprises, Inc.
Amendment No. 3 to Plan of Tax-Free Reorganization under Section
10.4 368(a)(1)(C) of the Internal Revenue Code and Agreement dated as of
August 21, 1996 by and among Shoney's, Inc., TPI Restaurants
Acquisition Corporation and TPI Enterprises, Inc. (incorporated herein
by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q
filed by the registrant with the Securities and Exchange Commission on
August 28, 1996)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TPI ENTERPRISES, INC.
By: /s/ Frederick W. Burford
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Frederick W. Burford
President, Chief Financial Officer
and Secretary
Date: September 23, 1996
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
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10.3 Amendment No. 2 to Plan of Tax-Free Reorganization under Section
368(a)(1)(C) of the Internal Revenue Code and Agreement dated as of
July 18, 1996 by and among Shoney's, Inc., TPI Restaurants Acquisition
Corporation and TPI Enterprises, Inc.
Exhibit 10.3
AMENDMENT NO. 2 TO
PLAN OF TAX-FREE REORGANIZATION UNDER
SECTION 368(A)(1)(C)
OF THE INTERNAL REVENUE CODE
AND AGREEMENT
This Amendment No. 2 ("Amendment"), dated July 18, 1996, amends the
Plan of Tax-Free Reorganization under Section 368(a)(1)(C) of the Internal
Revenue Code and Agreement ("Agreement") made and entered into as of the 15th
day of March, 1996, as amended by Amendment No. 1, dated June 14, 1996, by and
among Shoney's, Inc., a Tennessee corporation, ("Shoney's"), TPI Restaurants
Acquisition Corporation, a Tennessee corporation ("TPAC"), and TPI Enterprises,
Inc., a New Jersey corporation ("Enterprises").
WHEREAS, the parties mutually desire to change the period for
determining the Average Closing Market Price, as that term is used in the
Agreement;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, Shoney's, TPAC and Enterprises agree as follows:
Amendment to ARTICLE I. The definition of "Average Closing Market
Price" appearing in ARTICLE I of the Agreement is hereby amended to read in its
entirety as follows:
"Average Closing Market Price" means the average per share price
of the last trade of Shoney's Common Stock on the NYSE as
reported by The Wall Street Journal for the ten trading days
ending on the third business day immediately preceding the date
on which the meetings of shareholders of Enterprises and Shoney's
are convened in accordance with Section 7.3 of the Agreement;
provided, however, that, if there shall be any material
alteration in the present system of reporting sales of Shoney's
Common Stock, or if Shoney's Common Stock shall no longer be
listed on the NYSE, the market value per share of the Shoney's
Common Stock as of a particular date shall be determined in such
a method as shall be mutually agreeable to the parties.
Scheduling Shareholders' Meetings. Shoney's and Enterprises agree to
coordinate the meetings of their respective shareholders to be held pursuant to
Section 7.3 of the Agreement so that such meetings will be convened on the same
date.
Reaffirmation of Other Terms and Conditions. Except as modified by
this Amendment, all other terms and conditions of the Agreement, as in effect
prior to the execution of this Amendment, shall remain in full force and effect
and the same are hereby reaffirmed and ratified as if fully set forth herein.
<PAGE>
IN WITNESS WHEREOF, Shoney's, Enterprises and TPAC have caused this
Amendment No. 2 to the Agreement to be signed by their respective officers
thereunto duly authorized, on this 18th day of July, 1996.
TPI ENTERPRISES, INC.
By: /s/ J. Gary Sharp
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J. Gary Sharp, President and CEO
SHONEY'S, INC.
By: /s/ W. Craig Barber
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W. Craig Barber, Senior Executive
Vice President and Chief Financial Officer
TPI RESTAURANTS ACQUISITION CORP.
By: /s/ W. Craig Barber
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W. Craig Barber, Vice President
