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EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MORTON'S HOLDINGS, INC.,
MORTON'S ACQUISITION COMPANY
AND
MORTON'S RESTAURANT GROUP, INC.
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DATED AS OF MARCH 26, 2002
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TABLE OF CONTENTS
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PAGE
ARTICLE I THE MERGER..............................................................................................2
1.1. The Merger.........................................................................................2
1.2. Effective Time of the Merger.......................................................................2
1.3. Directors and Officers.............................................................................2
1.4. Closing............................................................................................3
1.5. Additional Actions.................................................................................3
ARTICLE II CONVERSION OF SECURITIES...............................................................................3
2.1. Conversion of Capital Stock........................................................................3
2.2. Payment of Cash Merger Consideration...............................................................4
2.3. Appraisal Rights...................................................................................6
2.4. Stock Options......................................................................................7
2.5. Further Assurances.................................................................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................8
3.1. Organization.......................................................................................8
3.2. Capitalization....................................................................................10
3.3. Authorization; Validity of Agreement; Company Action..............................................12
3.4. Consents and Approvals; No Violations.............................................................12
3.5. SEC Reports and Financial Statements..............................................................13
3.6. No Undisclosed Liabilities........................................................................14
3.7. Absence of Certain Changes........................................................................14
3.8. Taxes ...........................................................................................15
3.9. Title to Properties; Owned and Leased Real Properties; No Liens...................................18
3.10. Intellectual Property.............................................................................19
3.11. Agreements, Contracts and Commitments.............................................................21
3.12. Litigation........................................................................................23
3.13. Environmental Matters.............................................................................23
3.14. Employee Benefit Plans............................................................................24
3.15. Compliance with Laws..............................................................................25
3.16. Permits; Liquor Licenses..........................................................................26
3.17. Labor Matters.....................................................................................26
3.18. Insurance.........................................................................................27
3.19. Suppliers.........................................................................................28
3.20. Franchise Matters.................................................................................28
3.21. Information in Proxy Statement....................................................................28
3.22. Brokers...........................................................................................28
3.23. State Takeover Statutes...........................................................................28
3.24. Voting Requirements...............................................................................29
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3.25. Rights Agreement..................................................................................29
3.26. Opinion of Financial Advisor......................................................................29
3.27. Cumulative Breach.................................................................................29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE TRANSITORY SUBSIDIARY.............................30
4.1. Organization......................................................................................30
4.2. Capitalization....................................................................................30
4.3. Authorization; Validity of Agreement; Necessary Action............................................30
4.4. Consents and Approvals; No Violations.............................................................31
4.5. Information in Proxy Statement....................................................................31
4.6. Equity Commitment.................................................................................32
ARTICLE V COVENANTS..............................................................................................32
5.1. Interim Operations of the Company.................................................................32
5.2. Confidentiality...................................................................................36
5.3. No Solicitation of Other Offers...................................................................36
5.4. Access to Information.............................................................................40
5.5. Special Meeting...................................................................................40
5.6. Proxy Statement...................................................................................41
5.7. Reasonable Best Efforts...........................................................................42
5.8. Public Disclosure.................................................................................45
5.9. Employee Stock Purchase Plan......................................................................45
5.10. Other Employee Benefits...........................................................................45
5.11. Directors' and Officers' Insurance and Indemnification............................................46
5.12. Notification of Certain Matters...................................................................48
5.13. Rights Agreement..................................................................................48
5.14. Subsequent Filings................................................................................48
5.15. Communication to Employees........................................................................49
ARTICLE VI CONDITIONS TO EFFECT THE MERGER.......................................................................49
6.1. Conditions to Each Party's Obligation to Effect the Merger........................................49
6.2. Conditions to the Buyer's and the Transitory Subsidiary's Obligation to Effect the Merger.........49
6.3. Conditions to the Company's Obligation to Effect the Merger.......................................51
ARTICLE VII TERMINATION..........................................................................................52
7.1. Termination.......................................................................................52
7.2. Effect of Termination.............................................................................54
7.3. Fees and Expenses.................................................................................55
7.4. Amendment.........................................................................................56
7.5. Extension; Waiver.................................................................................56
ARTICLE VIII DEFINITIONS.........................................................................................57
8.1. Definitions.......................................................................................57
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ARTICLE IX MISCELLANEOUS.........................................................................................60
9.1. Nonsurvival of Representations and Warranties.....................................................60
9.2. Notices...........................................................................................60
9.3. Entire Agreement..................................................................................61
9.4. No Third Party Beneficiaries......................................................................61
9.5. Assignment........................................................................................62
9.6. Interpretation....................................................................................62
9.7. Counterparts......................................................................................62
9.8. Severability......................................................................................62
9.9. Governing Law.....................................................................................62
9.10. Submission to Jurisdiction........................................................................62
9.11. Remedies..........................................................................................63
9.12. Waiver of Jury Trial..............................................................................63
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ANNEX A: Definition of "Consolidated Adjusted EBITDA"
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AGREEMENT AND PLAN OF MERGER
AGREEMENT entered into as of March 26, 2002 (as amended,
modified or supplemented from time to time, this "AGREEMENT") by and among
Morton's Holdings, Inc., a Delaware corporation (the "BUYER"), Morton's
Acquisition Company, a Delaware corporation and a direct wholly-owned subsidiary
of the Buyer (the "TRANSITORY SUBSIDIARY"), and Morton's Restaurant Group, Inc.,
a Delaware corporation (the "COMPANY"). The Buyer, the Transitory Subsidiary and
the Company are individually referred to herein as a "PARTY" and collectively
referred to herein as the "PARTIES".
PRELIMINARY STATEMENT
WHEREAS, the respective Boards of Directors of the Company,
the Buyer and the Transitory Subsidiary deem it advisable and in the best
interests of their respective corporations and their respective stockholders
that the Buyer acquire the Company on the terms and subject to the conditions
set forth in this Agreement;
WHEREAS, the acquisition of the Company shall be effected
through a merger (the "MERGER") of the Transitory Subsidiary with and into the
Company on the terms and subject to the conditions set forth in this Agreement
and the General Corporation Law of the State of Delaware (as in effect from time
to time, the "DGCL"), as a result of which the Company shall become a
wholly-owned subsidiary of the Buyer;
WHEREAS, a Special Committee of the Board of Directors of the
Company, duly authorized and constituted and comprised solely of directors of
the Company who are not employees of the Company (the "SPECIAL COMMITTEE"),
after receiving the written opinion of Greenhill & Co., LLC, the financial
advisor to the Special Committee ("GREENHILL"), at a meeting thereof duly called
and held, (i) unanimously determined that the Merger and the other transactions
contemplated herein are fair to, and in the best interests of, the Company and
the stockholders of the Company, and has declared the Merger advisable, (ii)
unanimously approved the Merger and this Agreement, and (iii) unanimously
recommended to the Board of Directors of the Company to approve and adopt the
Merger and this Agreement;
WHEREAS, the Board of Directors of the Company, based in part
on the unanimous recommendation of the Special Committee and the written opinion
of Greenhill, at a meeting thereof duly called and held, (i) determined that the
Merger and the other transactions contemplated herein are fair to, and in the
best interests of, the Company and the stockholders of the Company, and has
declared the Merger advisable, (ii) approved the Merger and this Agreement and
(iii) resolved to recommend that the stockholders of the Company vote to approve
and adopt the Merger and this Agreement in conjunction with their approval of
the principal terms of the Merger; and
WHEREAS, the respective Boards of Directors of the Buyer (on
its own behalf as a Party to this Agreement and as the sole stockholder of the
Transitory Subsidiary) and the Transitory Subsidiary have approved and adopted
this Agreement in conjunction with their approval of the principal terms of the
Merger;
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NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
below, the Parties agree as follows:
ARTICLE I
THE MERGER
1.1. THE MERGER. On the terms and subject to the conditions
set forth in this Agreement, at the Effective Time (as defined in Section 1.2),
the Company and the Transitory Subsidiary shall consummate the Merger pursuant
to which (a) the Transitory Subsidiary shall be merged with and into the Company
and the separate corporate existence of the Transitory Subsidiary shall
thereupon cease, (b) the Company shall be the successor or surviving corporation
in the Merger (the "SURVIVING CORPORATION") and shall continue to be governed by
the laws of the State of Delaware, (c) the Amended and Restated Certificate of
Incorporation of the Company shall be amended in its entirety to read as the
Certificate of Incorporation of the Transitory Subsidiary, as in effect
immediately prior to the Effective Time; PROVIDED that Article I of the
Certificate of Incorporation of the Surviving Corporation shall read in its
entirety as follows: "The name of the corporation is: Morton's Restaurant Group,
Inc.", and as so amended shall be the Certificate of Incorporation of the
Surviving Corporation until further amended in accordance with the terms thereof
and the DGCL, and (d) the By-laws of the Transitory Subsidiary, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until further amended in accordance with the terms thereof and the
DGCL. The Merger shall have the effects set forth in Section 259(a) of the DGCL.
1.2. EFFECTIVE TIME OF THE MERGER. On the terms and subject to
the conditions set forth in this Agreement, prior to the Closing (as defined in
Section 1.4), the Transitory Subsidiary and the Company shall prepare, execute,
and on the Closing Date (as defined in Section 1.4) shall cause to be filed with
the Secretary of State of the State of Delaware, a certificate of merger in such
form as is required by the relevant provisions of the DGCL (the "CERTIFICATE OF
MERGER"). The Merger shall become effective upon the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware or at such later
time as is established by the Parties and set forth in the Certificate of Merger
(the "EFFECTIVE TIME").
1.3. DIRECTORS AND OFFICERS. The directors of the Transitory
Subsidiary immediately prior to the Effective Time shall, from and after the
Effective Time, be the directors of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and By-laws of the
Surviving Corporation, until such director's successor is duly elected or
appointed and qualified or until his or her earlier death, resignation or
removal in accordance with the Certificate of Incorporation and the By-laws of
the Surviving Corporation. The officers of the Company immediately prior to the
Effective Time shall be, from and after the Effective Time, the officers of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, until such officer's
successor is duly elected or appointed and qualified or until his or her earlier
death, resignation or removal in accordance with the Certificate of
Incorporation and the By-laws of the Surviving Corporation.
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1.4. CLOSING. Unless this Agreement shall have been terminated
and the transactions contemplated hereby shall have been abandoned pursuant to
Article VII, and subject to the satisfaction or waiver (to the extent permitted
by applicable law) of all of the conditions set forth in Article VI, the closing
of the Merger (the "CLOSING") shall take place at 10:00 a.m. on a date to be
specified by the Parties, which shall be no later than two (2) Business Days (as
defined below) following the satisfaction or waiver (to the extent permitted by
applicable law) of all of the conditions set forth in Article VI other than such
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver (to the extent permitted by applicable law) of
those conditions (the "CLOSING DATE"), at the offices of Schulte Roth & Zabel
LLP, 919 Third Avenue, New York, New York 10022, unless another date, place or
time is agreed to in writing by the Parties. For purposes of this Agreement, the
term "BUSINESS DAY" means any day except a Saturday, a Sunday or any other day
on which commercial banks are required or authorized to close in New York, New
York.
1.5. ADDITIONAL ACTIONS. The Surviving Corporation may, at any
time after the Effective Time, take any action (including, without limitation,
executing and delivering any document in the name and on behalf of the Company)
in order to consummate the transactions contemplated by this Agreement.
ARTICLE II
CONVERSION OF SECURITIES
2.1. CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of any Party or the
holders of any shares of common stock, par value $0.01 per share, of the Company
(collectively, the "COMMON STOCK" or the "SHARES" and, individually, a "SHARE")
or holders of any shares of common stock, par value $0.01 per share, of the
Transitory Subsidiary (collectively, the "TRANSITORY SUBSIDIARY COMMON STOCK"):
(a) CAPITAL STOCK OF THE TRANSITORY SUBSIDIARY. Each issued
and outstanding share of Transitory Subsidiary Common Stock shall be converted
into and become one fully paid and nonassessable share of common stock, par
value $0.01 per share, of the Surviving Corporation and shall be the only issued
and outstanding capital stock of the Surviving Corporation. From and after the
Effective Time, each outstanding certificate theretofore representing shares of
Transitory Subsidiary Common Stock shall be deemed for all purposes to evidence
ownership and to represent the same number of shares of common stock of the
Surviving Corporation;
(b) CANCELLATION OF TREASURY STOCK AND BUYER-OWNED STOCK. All
Shares that are owned by the Company or by any Subsidiary (as defined in Section
3.1(b)) or held in the Company's treasury and any Shares owned by the Buyer, the
Transitory Subsidiary or any other subsidiary of the Buyer, immediately prior to
the Effective Time, shall be cancelled and shall cease to exist and no
consideration shall be delivered in exchange therefor; and
(c) EXCHANGE OF SHARES. Each issued and outstanding Share
(other than (i) Shares to be cancelled in accordance with Section 2.1(b) and
(ii) any Appraisal Shares (as
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defined in Section 2.3(c))) shall be converted into the right to receive $12.60
in cash without interest (the "CASH MERGER CONSIDERATION"), payable to the
holder thereof. Such Cash Merger Consideration shall be paid upon surrender of
the certificate formerly representing such Share pursuant to Section 2.2. The
Shares converted into the right to receive the Cash Merger Consideration are
hereinafter referred to collectively as the "CASH MERGER SHARES". All such Cash
Merger Shares, from and after the Effective Time, shall no longer be outstanding
and shall automatically be cancelled and retired and shall cease to exist, and
each holder of a certificate representing any Cash Merger Shares shall cease to
have any rights with respect thereto, except the right to receive the Cash
Merger Consideration therefor upon the surrender of such certificate in
accordance with Section 2.2, without interest.
2.2. PAYMENT OF CASH MERGER CONSIDERATION. (a) PAYING AGENT.
At or prior to the Effective Time, the Buyer shall (i) designate a bank or trust
company located in the United States of America to act as paying agent for the
holders of the Cash Merger Shares in connection with the Merger (the "PAYING
AGENT") to receive the funds to which holders of the Cash Merger Shares shall
become entitled pursuant to Section 2.1(c) and (ii) deposit in trust with the
Paying Agent cash in an aggregate amount sufficient to pay the Cash Merger
Consideration and to enable the Paying Agent to make payments pursuant to
Section 2.1(c) and this Section 2.2 (such amount being hereinafter referred to
as the "PAYMENT FUND"). The Payment Fund shall be invested by the Paying Agent
as directed by the Buyer (x) in direct obligations of the United States of
America, obligations for which the full faith and credit of the United States is
pledged to provide for the payment of principal and interest, commercial paper
of an issuer organized under the laws of a state of the United States of America
rated of the highest quality by Moody's Investors Service, Inc., or Standard &
Poor's Ratings Group, or certificates of deposit, bank repurchase agreements or
bankers' acceptances of a United States commercial bank having at least
$1,000,000,000 in assets (collectively, "PERMITTED INVESTMENTS"), or (y) in
money market funds which are invested in Permitted Investments, and any net
earnings with respect thereto shall be paid to the Buyer as and when requested
by the Buyer. The Paying Agent shall, pursuant to irrevocable instructions, make
the payments referred to in Section 2.1(c) and this Section 2.2 out of the
Payment Fund. The Payment Fund shall not be used for any other purpose except as
otherwise agreed to by the Buyer. If the amount of cash in the Payment Fund is
insufficient to pay all of the amounts required to be paid pursuant to Section
2.1(c) and this Section 2.2, the Buyer from time to time after the Effective
Time shall promptly take all steps necessary to enable and cause the Surviving
Corporation to deposit in trust additional cash with the Paying Agent sufficient
to make all such payments.
(b) EXCHANGE PROCEDURES.
(i) Within five (5) Business Days following the Effective
Time, the Buyer shall cause the Paying Agent to mail to each holder of record of
a certificate or certificates that immediately prior to the Effective Time
represented outstanding Cash Merger Shares (collectively, the "CERTIFICATES"),
whose Shares were converted pursuant to Section 2.1(c) into the right to receive
the Cash Merger Consideration, (A) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon actual delivery of the Certificates to the Paying Agent,
and shall otherwise be in customary form), and (B) instructions for use in
effecting the surrender of the Certificates in exchange for payment of the Cash
Merger Consideration.
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(ii) Upon surrender of a Certificate for cancellation to
the Paying Agent or to such other agent or agents as may be appointed by the
Surviving Corporation, together with such letter of transmittal, duly executed
and completed in accordance with the instructions thereon, together with any
other items specified by the letter of transmittal or otherwise reasonably
required by the Paying Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor the Cash Merger Consideration for each Share
formerly represented by such Certificate, and the Certificate so surrendered
shall forthwith be cancelled. Until so surrendered, each Certificate shall be
deemed, for all corporate purposes, to evidence only the right to receive upon
such surrender the Cash Merger Consideration deliverable in respect thereof to
which the holder thereof is entitled pursuant to Section 2.1(c) and this Section
2.2. No interest will be paid or will accrue in respect of any cash payable upon
the surrender of any Certificate.
(iii) If any Certificate shall have been lost, stolen or
destroyed, then, upon the making of an affidavit of that fact by the Person (as
defined in Section 9.6) claiming such Certificate to be lost, stolen or
destroyed, the Buyer shall cause the Paying Agent to pay in exchange for such
lost, stolen or destroyed Certificate the Cash Merger Consideration deliverable
in respect thereof to which the holder thereof is entitled pursuant to Section
2.1(c) and this Section 2.2; PROVIDED that the Person to whom any such Cash
Merger Consideration is paid shall, as a condition precedent to the payment
thereof, give the Surviving Corporation a bond in such sum as it may direct or
otherwise indemnify the Surviving Corporation in a manner reasonably
satisfactory to it against any claim that may be made against the Surviving
Corporation with respect to the Certificate claimed to have been lost, stolen or
destroyed.
(iv) If payment of Cash Merger Consideration is to be made
to a Person other than the Person in whose name the surrendered Certificate is
registered, it shall be a condition of payment that the Certificate so
surrendered be properly endorsed or be otherwise in proper form for transfer and
that the Person requesting such payment shall have paid any transfer and other
taxes required by reason of the payment of Cash Merger Consideration to a Person
other than the registered holder of the Certificate surrendered or shall have
established to the satisfaction of the Surviving Corporation that such tax
either has been paid or is not applicable. Each of the Paying Agent, the Buyer
and the Surviving Corporation shall be entitled to deduct and withhold, or cause
to be deducted and withheld, from any consideration payable or otherwise
deliverable pursuant to this Agreement to any holder or former holder of Cash
Merger Shares such amounts as may be required to be deducted and withheld
therefrom under the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder (the "CODE") or any provision of state, local
or foreign tax law or under any other applicable legal requirement. To the
extent such amounts are so deducted or withheld, such amounts shall be treated
for all purposes under this Agreement as having been paid to the Person to whom
such amounts would otherwise have been paid and shall be paid to the appropriate
governmental entity on behalf of such Person.
(v) The Surviving Corporation shall pay all charges and
expenses of the Paying Agent in connection with the exchange of the Cash Merger
Consideration for the Cash Merger Shares.
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(c) NO FURTHER TRANSFER OR OWNERSHIP RIGHTS IN THE SHARES.
From and after the Effective Time, the stock transfer books of the Company shall
be closed with respect to Shares and there shall be no further registration of
transfers of the Cash Merger Shares on the records of the Company (or the
Surviving Corporation) or its transfer agent of Certificates representing
Shares, and if any such Certificates are presented to the Company (or the
Surviving Corporation) for transfer, they shall be cancelled and exchanged as
provided in this Article II, subject to applicable law in the case of Appraisal
Shares. From and after the Effective Time, the holders of Certificates
evidencing ownership of Cash Merger Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares except
as otherwise provided for herein or by applicable law. All Cash Merger
Consideration paid upon the surrender for exchange of Certificates in accordance
with the terms of this Article II shall be deemed to have been issued (and paid)
in full satisfaction of all rights pertaining to the Shares exchanged for Cash
Merger Consideration theretofore represented by such Certificates.
(d) TERMINATION OF FUND; NO LIABILITY. At any time following
the date which is the six (6) month anniversary of the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds (including, without limitation, any and all interest and other
income received with respect thereto) that had been made available to the Paying
Agent and that have not been disbursed to holders of Certificates, and
thereafter, such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar laws) with respect to
the Cash Merger Consideration payable upon due surrender of their Certificates,
without any interest thereon; PROVIDED that such holders shall have no greater
rights against the Surviving Corporation than may be accorded to general
creditors of the Surviving Corporation under applicable laws. Any portion of the
Payment Fund remaining unclaimed as of a date which is immediately prior to such
time as such amounts would otherwise escheat to or become property of any
government entity shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation free and clear of any claims or interest
of any Person previously entitled thereto. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
Person for any amounts delivered to a public official pursuant to any applicable
abandoned property, escheat or other similar laws.
2.3. APPRAISAL RIGHTS. (a) Notwithstanding anything to the
contrary contained in this Agreement but only to the extent required by the
DGCL, any Shares that constitute Appraisal Shares shall not be converted into or
represent the right to receive the Cash Merger Consideration in accordance with
Sections 2.1(c) and 2.2, and each holder of Appraisal Shares shall be entitled
only to such rights with respect to such Appraisal Shares as may be granted to
such holder pursuant to Section 262 of the DGCL. From and after the Effective
Time, a holder of Appraisal Shares shall not have and shall not be entitled to
exercise any of the voting rights or other rights of a stockholder of the
Surviving Corporation. If any holder of Appraisal Shares shall effectively
withdraw or lose (through failure to perfect or otherwise) such holder's right
to appraisal under Section 262 of the DGCL, then (i) any right of such holder to
a judicial appraisal of such Shares shall be extinguished, and (ii) such Shares
shall automatically be converted into and shall represent only the right to
receive (upon the surrender of the certificate or certificates representing such
Shares) the Cash Merger Consideration, without interest, in accordance with
Sections 2.1(c) and 2.2.
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(b) The Company shall give the Buyer (i) prompt notice of any
demand for appraisal pursuant to the DGCL received by the Company, withdrawals
of such demands and copies of any related documents or instruments received by
the Company, and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal. The Company shall not, except with the
prior written consent of the Buyer, voluntarily make any payment with respect to
any demands for appraisal or settle or offer to settle any such demands for
appraisal.
(c) For purposes of this Agreement, "APPRAISAL SHARES" shall
refer to any Shares outstanding immediately prior to the Effective Time that are
held by stockholders who are entitled to demand and who properly demand
appraisal of such Shares pursuant to, and who comply with the applicable
provisions of, Section 262 of the DGCL.
2.4. STOCK OPTIONS. With respect to any options to purchase
Common Stock outstanding on the Closing Date (collectively, the "OPTIONS"),
prior to the Effective Time, the Company shall take such action as shall be
required to effectuate (i) the cancellation, as of the Effective Time, of all
Options (whether or not then exercisable and without regard to the exercise
price of such Options) granted under any stock option plan or agreement of the
Company or otherwise (collectively, the "STOCK PLANS") and to cause, pursuant to
the Stock Plans, all outstanding Options to represent solely the right to
receive, in accordance with this Section 2.4, a cash payment in the amount of
the Option Consideration (as defined below), if any, with respect to any such
Option and to no longer represent the right to receive Common Stock or any other
equity securities of the Company, the Buyer, the Surviving Corporation or any
other Person or any other consideration, (ii) the termination, as of the
Effective Time, of the Stock Plans and any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock or equity of the Company or any affiliate thereof (collectively,
with the Stock Plans, the "STOCK INCENTIVE PLANS") and (iii) the amendment, as
of the Effective Time, of the provisions of any Company Employee Plan (as
defined in Section 3.14(a)) or any Executive Agreement (as defined in Section
3.14(b)) providing for the issuance, transfer or grant of any capital stock or
equity of the Company or any such affiliate, or any interest in respect of any
capital stock or equity of the Company or any such affiliate, to provide no
continuing rights to acquire, hold, transfer or grant any capital stock or
equity of the Company or any such affiliate or any interest in the capital stock
or equity of the Company or any such affiliate. The forgoing actions shall take
effect immediately prior to the Effective Time. Each holder of an Option shall
receive from the Company, in respect and in consideration of each Option so
cancelled, as soon as practicable following the Effective Time, an amount (net
of applicable taxes) equal to the excess, if any, of the Cash Merger
Consideration over the exercise price of such Option, multiplied by the number
of Shares subject to such Option, without any interest thereon (the "OPTION
CONSIDERATION"). As soon as practicable following the execution of this
Agreement, the Company shall mail to each person who is a holder of such Options
a letter describing the treatment of and payments for such Options pursuant to
this Section 2.4 and providing instructions for use in obtaining payment for
such Options. The Company shall take all steps to ensure that neither it nor any
of its affiliates is or shall be bound by any Options, other options, warrants,
rights or agreements which would entitle any Person, other than the Buyer or its
affiliates, to own any capital stock or equity of the Company or any of the
Subsidiaries or to receive any payment in respect thereof, except as expressly
contemplated by this Section 2.4. Except as otherwise contemplated herein, any
then outstanding stock appreciation rights or
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limited stock appreciation rights, and any other rights or interest in respect
of the capital stock or equity of the Company or any affiliate thereof issued by
the Company or any affiliate thereof shall be cancelled immediately prior to the
Effective Time without any payment therefor.
2.5. FURTHER ASSURANCES. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the constituent corporations in the Merger, or (b) otherwise to carry
out the purposes of this Agreement, the Surviving Corporation and its proper
officers and directors or their designees shall be authorized to execute and
deliver, in the name and on behalf of either of the constituent corporations in
the Merger, all such deeds, bills of sale, assignments and assurances and do, in
the name and on behalf of such constituent corporations, all such other acts and
things necessary, desirable or proper, consistent with the terms of this
Agreement, to vest, perfect or confirm its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
such constituent corporations and otherwise to carry out the purposes of this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Buyer and
the Transitory Subsidiary that the statements contained in this Article III are
true and correct. The Company has delivered to the Buyer a Disclosure Letter,
dated the date hereof (the "COMPANY DISCLOSURE LETTER"), receipt of which has
been acknowledged in writing thereon by the Buyer, which Company Disclosure
Letter is arranged in sections corresponding to the numbered and lettered
Sections contained in this Article III (it being understood and agreed that any
matter disclosed in any section of the Company Disclosure Letter shall be deemed
to be disclosed and incorporated in any other section of the Company Disclosure
Letter when the appropriateness of such disclosure and incorporation is readily
apparent from the context).
3.1. ORGANIZATION. (a) The Company and each of the
Subsidiaries is an entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization and has all requisite power
and authority to own, lease and operate its properties and assets and to carry
on its business as now being conducted. The Company and each of the Subsidiaries
is duly qualified or licensed to do business, and is in good standing as a
foreign entity in each jurisdiction where the character of its properties or
assets owned, operated and leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or licensed
or in good standing has not resulted in and would not reasonably be likely to
result in, individually or in the aggregate, a Company Material Adverse Effect
(as defined below). The Company has, prior to the date of this Agreement,
delivered to the Buyer and the Transitory Subsidiary (or made available to the
Buyer and the Transitory Subsidiary in the data room established by the Company
for purposes of the due diligence investigation of the Buyer and the Transitory
Subsidiary during the periods of time that the representatives of the Buyer and
the Transitory Subsidiary visited the data room) true, complete and correct
copies of the Certificate of Incorporation and the By-laws of the Company and
the comparable governing
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documents of each of the Subsidiaries, in each case as amended and in full force
and effect as of the date of this Agreement. The respective certificates of
incorporation and by-laws or other organizational documents of the Subsidiaries
do not contain any provision limiting or otherwise restricting the ability of
the Company to control such Subsidiaries. For purposes of this Agreement, the
term "COMPANY MATERIAL ADVERSE EFFECT" means any event, change, occurrence,
effect, fact, violation, development or circumstance having or resulting in a
material adverse effect on (i) the ability of the Company to duly perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby on a timely basis or (ii) the business, properties, assets, liabilities,
financial condition or results of operations of the Company and the
Subsidiaries, taken as a whole; PROVIDED that the following shall not be taken
into account in determining whether there has been or would reasonably be likely
to be a "Company Material Adverse Effect" under this Agreement:
(i) adverse changes in the stock price of the Company (as
quoted on the New York Stock Exchange), in and of themselves, but only so long
as any such adverse changes do not reflect any other event, change, occurrence,
effect, fact, violation, development or circumstance that has had or would
reasonably be likely to have, individually or in the aggregate, a material
adverse effect on (A) the ability of the Company to duly perform its obligations
under this Agreement or to consummate the transactions contemplated hereby on a
timely basis or (B) the business, properties, assets, liabilities, financial
condition or results of operations of the Company and the Subsidiaries, taken as
a whole, in each case, other than those events, changes, occurrences, effects,
facts, developments or circumstances described in any of subclauses (x) through
(z), inclusive, of immediately succeeding clause (ii); and
(ii) other than as may relate to or arise from any
disruption in the availability of, or public health and safety concerns with
respect to ordinary consumption of, the primary foods and/or beverages supplied
to or served by the Company or any of the Subsidiaries, the following:
(x) events, changes, occurrences, effects,
facts, developments or circumstances generally adversely
affecting the economy of a city, state, country or
jurisdiction where the Company and the Subsidiaries operate
and which do not affect the Company and the Subsidiaries
disproportionately;
(y) events, changes, occurrences, effects,
facts, developments or circumstances generally adversely
affecting the United States securities markets or the fine
dining restaurant industry in general and which do not affect
the Company and the Subsidiaries disproportionately; and
(z) any failure to meet third party
analysts' estimates with respect to the performance or
condition of the Company and the Subsidiaries, taken as a
whole.
(b) Section 3.1(b) of the Company Disclosure Letter sets forth
a complete and accurate list of the Subsidiaries and a description of the
Company's direct or indirect equity interest(s) therein. As used in this
Agreement, the term "SUBSIDIARY" shall mean all corporations
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or other entities in which the Company owns a majority of the issued and
outstanding capital stock or similar interests normally entitled to vote in an
election of directors or similar governing body, as applicable. Except for the
Company's interest in the Subsidiaries and other than loans, extensions of
credit or advances constituting trade receivables arising in the ordinary course
of business consistent with past practice, or as set forth in Section 3.1(b) of
the Company Disclosure Letter, neither the Company nor any of the Subsidiaries
owns directly or indirectly any interest or investment (whether equity or debt)
in, nor is the Company or any of the Subsidiaries subject to any obligation or
requirement to provide for or to make any investment (whether equity or debt) to
or in, any Person.
3.2. CAPITALIZATION. (a) The authorized capital stock of the
Company consists of (a) 25,000,000 shares of Common Stock, (b) 3,000,000 shares
of preferred stock, par value $0.01 per share, and (c) 3,000,000 shares of
nonvoting common stock, par value $0.01 per share. As of the close of business
on the date hereof, (i) with respect to Common Stock, 4,182,475 shares are
issued and outstanding, 2,612,326 shares are issued and held in the treasury of
the Company and 1,142,274 shares are reserved for issuance upon exercise of
outstanding options granted under the Company's stock option plans or otherwise;
(ii) with respect to preferred stock, no shares are issued and outstanding, or
held in the treasury of the Company and 200,000 shares are designated Series A
Junior Participating Preferred Stock and are reserved for issuance in connection
with the Company's stockholder rights plan pursuant to the Amended and Restated
Rights Agreement, dated as of March 22, 2001 (as in effect on the date hereof
and without giving any effect to any amendments, modifications or supplements
after the date hereof, the "RIGHTS AGREEMENT"), by and between the Company and
Equiserve Trust Company (formerly known as The First National Bank of Boston),
as rights agent thereunder; and (iii) with respect to nonvoting common stock, no
shares are issued and outstanding, or held in the treasury of the Company or
reserved for issuance. Section 3.2(a) of the Company Disclosure Letter sets
forth the exercise price, grant date, expiration date for and number of shares
subject to all outstanding Options. All outstanding shares of capital stock or
other equity interests, as the case may be, of the Company and each of the
Subsidiaries are duly authorized, validly issued, fully paid and non-assessable,
and are not subject to, nor were issued in violation of, any preemptive rights,
purchase option, call option, right of first refusal, subscription right or any
similar right, in each case granted by the Company or any Subsidiary or, to the
Company's Knowledge (as defined below), any other Person, and were issued in
compliance with applicable securities laws and regulations. All shares of
capital stock of the Company subject to issuance on the terms and conditions set
forth in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and non-assessable, and will not be
subject to, nor issued in violation of, any preemptive rights, purchase option,
call option, right of first refusal, subscription right or any similar right,
and will be issued in compliance with applicable securities laws and
regulations. Except for the transactions contemplated by this Agreement, (i)
there are no shares of capital stock or other securities (voting or nonvoting)
of the Company or any of the Subsidiaries authorized, issued or outstanding,
(ii) there are no outstanding or authorized options (other than the Options
described in Section 3.2(a) of the Company Disclosure Letter), warrants, calls,
preemptive rights, subscriptions or other rights, convertible or exchangeable
securities, "phantom" stock rights, stock appreciation rights ("SARS"),
stock-based performance units, agreements, arrangements, commitments or claims
of any character, contingent or otherwise, relating to the issued or unissued
capital stock of the Company or any of the Subsidiaries or obligating the
Company or any of the Subsidiaries to issue, transfer or sell or cause to be
issued,
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transferred or sold any shares of capital stock or other equity interests in the
Company or any of the Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company or
any of the Subsidiaries to grant, extend or enter into any such option, warrant,
call, preemptive right, subscription or other right, convertible or exchangeable
security, agreement, arrangement, commitment or claim, (iii) there are no
outstanding contractual obligations of the Company or any of the Subsidiaries to
repurchase, redeem or otherwise acquire any Shares or any capital stock of the
Company or any Subsidiary or to provide funds to make any investment (whether
equity or debt) in any Subsidiary or any other entity, and (iv) neither the
Company nor any of the Subsidiaries has authorized or outstanding bonds,
debentures, notes or other indebtedness or obligations which entitle the holders
thereof to vote (or which are convertible into or exercisable or exchangeable
for securities which entitle the holders thereof to vote) with the stockholders
of the Company or such Subsidiary, as the case may be, on any matter
(collectively, "VOTING DEBT"). For purposes of this Agreement, "TO THE COMPANY'S
KNOWLEDGE" or any other phrase of similar import shall be deemed to refer to the
actual knowledge, after due inquiry, of any of (w) Allen J. Bernstein, (x)
Thomas J. Baldwin, (y) John T. Bettin and (z) Agnes Longarzo; PROVIDED that "TO
THE COMPANY'S KNOWLEDGE" or any other phrase of similar import shall be deemed
to also include matters that come to the actual knowledge, after due inquiry, of
any of (x) Allan C. Schreiber and (y) Klaus W. Fritsch, after the date of this
Agreement.
(b) All of the outstanding shares of capital stock or other
equity interests of each of the Subsidiaries are owned, of record and
beneficially, by the Company, directly or indirectly, and all such shares or
ownership interests have been duly authorized, validly issued, fully paid and
non-assessable, and are not subject to, nor were issued in violation of, any
preemptive rights and all such shares or ownership interests are owned, of
record and beneficially, by either the Company or one or more of the
Subsidiaries, in each case free and clear of all liens, security interests,
charges, claims or encumbrances of any kind or nature. No shares of capital
stock of, or ownership interests in, any of the Subsidiaries are reserved for
issuance.
(c) There are no voting trusts, proxies, registration rights
agreements, or other agreements, commitments, arrangements or understandings of
any character by which the Company or any of the Subsidiaries is bound with
respect to the voting of any shares of capital stock or other equity interests
of the Company or any of the Subsidiaries or with respect to the registration of
the offering, sale or delivery of any shares of capital stock or other equity
interests of the Company or any of the Subsidiaries under the Securities Act of
1933, as amended (including the rules and regulations promulgated thereunder)
(the "SECURITIES ACT").
(d) None of the Company or its Subsidiaries is required to
redeem, repurchase or otherwise acquire shares of capital stock or other equity
interests of the Company or any of its Subsidiaries as a result of the
transactions contemplated by this Agreement.
(e) Except as contemplated by the Company Senior Credit
Agreement (as defined below), there are no restrictions of any kind which
prevent or restrict the payment of dividends by the Company or any of the
Subsidiaries other than those imposed by laws of general applicability of their
respective jurisdictions of organization. For purposes of this Agreement, the
term "COMPANY SENIOR CREDIT AGREEMENT" means the Second Amended and
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Restated Revolving Credit and Term Loan Agreement, dated as of June 19, 1995, by
and among the Company, Peasant Holding Corp. and Morton's of Chicago, Inc.
(collectively as borrowers thereunder), Fleet National Bank, as agent for the
lenders thereunder, and Fleet National Bank, in its individual capacity as a
lender thereunder, and the other lenders party thereto, as such agreement is in
effect on the date hereof and without giving any effect to any amendments,
modifications or supplements after the date hereof.
3.3. AUTHORIZATION; VALIDITY OF AGREEMENT; COMPANY ACTION. The
Company has full corporate power and authority to execute and deliver this
Agreement and each instrument required hereby to be executed and delivered by
the Company prior to or at the Effective Time, and, subject to obtaining
stockholder approval to the extent (if any) required by the DGCL, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance by the Company of
this Agreement and each instrument required hereby to be executed and delivered
by the Company prior to or at the Effective Time and the performance of its
obligations hereunder and thereunder and the consummation by it of the
transactions contemplated hereby have been duly authorized by its Board of
Directors, and, except for obtaining the approval of its stockholders as
contemplated by Section 5.5, no other corporate action on the part of the
Company is necessary to authorize the execution, delivery and performance by the
Company of this Agreement and the consummation by it of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Company and, assuming due and valid authorization, execution and delivery hereof
by the Buyer and the Transitory Subsidiary, is a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms.
3.4. CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and
delivery of this Agreement by the Company does not, and the consummation by the
Company of the transactions contemplated by this Agreement and the compliance by
the Company with the applicable provisions of this Agreement will not:
(i) subject to the obtaining of the approval of the
stockholders of the Company to the extent required by the DGCL, violate or
conflict with or result in any breach of any provision of the Certificate of
Incorporation or the By-laws of the Company or the comparable governing
documents of any of the Subsidiaries;
(ii) require any filing, recordation, declaration or
registration with, or permit, order, authorization, consent or approval of, or
action by or in respect of, or the giving of notice to (each, a "GOVERNMENTAL
APPROVAL"), any federal, state, local or foreign government, any court, arbitral
tribunal, administrative agency or commission or other governmental or other
regulatory authority, commission or agency or any non-governmental,
self-regulatory authority, commission or agency (each, a "GOVERNMENTAL ENTITY"),
except for (1) the filing by the Company of a premerger notification and report
form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR ACT") and the expiration or termination of any waiting periods under
the HSR Act; (2) the filing with the Securities and Exchange Commission (the
"SEC") of (A) the Proxy Statement (as defined in Section 5.6(a)), and (B) such
reports under Section 13, 14(f), 15(d) or 16(a) of the Securities and Exchange
Act of 1934, as amended (including the rules and regulations promulgated
thereunder, the "EXCHANGE ACT"), as may be required in connection with this
Agreement and the transactions contemplated by this
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Agreement; (3) the receipt of Governmental Approvals with respect to Liquor
Licenses (as defined in Section 3.16(b)); and (4) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which the Company and
the Subsidiaries are qualified to do business;
(iii) subject to obtaining the third party consents
identified in Section 3.4(iii) of the Company Disclosure Letter, result in a
violation or breach of, conflict with, constitute (with or without due notice or
lapse of time or both) a default under, give rise to any penalty, right of
amendment, modification, renegotiation, termination, cancellation, payment or
acceleration or any right or obligation or loss of any material benefit or right
under, or result in the creation of any pledges, claims, equities, options
(other than the Options described in Section 3.2(a) of the Company Disclosure
Letter), liens, charges, mortgages, easements, rights-of-way, call rights,
rights of first refusal, "tag"- or "drag"- along rights, encumbrances, security
interests or other similar restrictions of any kind or nature whatsoever
(collectively, "LIENS") upon any of the properties or assets of the Company or
any of the Subsidiaries under any of the terms, conditions or provisions of any
loan or credit agreement, note, bond, mortgage, indenture, lease, license,
sublicense, franchise, permit, concession, agreement, contract, obligation,
commitment, understanding, arrangement, franchise agreement or other instrument,
obligation or authorization applicable to the Company or any of the
Subsidiaries, or by which any such Person or any of its properties or assets may
be bound; or
(iv) violate or conflict with any judgment, order, writ,
injunction, decree, law, statute, ordinance, rule or regulation applicable to
the Company or any of the Subsidiaries or by which any of their properties or
assets may be bound;
excluding from preceding clauses (ii), (iii) and (iv) such matters that have not
resulted in and would not reasonably be likely to result in, individually or in
the aggregate, a Company Material Adverse Effect.
3.5. SEC REPORTS AND FINANCIAL STATEMENTS. The Company has
timely filed with the SEC all forms, reports, schedules, statements and other
documents (including, in each case, exhibits, schedules, amendments or
supplements thereto, and any other information incorporated by reference
therein) required to be filed by it since January 1, 1999 under the Exchange Act
or the Securities Act (as such documents have been amended or supplemented
between the time of their respective filing and the date hereof, collectively,
the "COMPANY SEC DOCUMENTS". The term "Company SEC Documents" shall also include
the draft form of the Company's Form 10-K for the fiscal year ended December 30,
2001, to the extent and in the form that such draft form has been provided to
the Buyer prior to the date hereof). The Company has, prior to the date of this
Agreement, provided the Buyer and the Transitory Subsidiary with (or made
available to the Buyer and the Transitory Subsidiary in the data room
established by the Company for purposes of the due diligence investigation of
the Buyer and the Transitory Subsidiary during the periods of time that the
representatives of the Buyer and the Transitory Subsidiary visited the data
room) true, complete and correct copies of all portions of any Company SEC
Documents not publicly available. Except to the extent amended or superseded by
a subsequent filing with the SEC made prior to the date hereof, as of their
respective dates (and if so amended or superseded, then on the date of such
filing prior to the date hereof), the Company SEC Documents (including, without
limitation, any financial
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statements or schedules included therein) and any forms, reports, schedules,
statements, registration statements, proxy statements and other documents
(including in each case, exhibits, schedules, amendments or supplements thereto,
and any other information incorporated by reference therein) filed by the
Company with the SEC subsequent to the date hereof (collectively, the
"SUBSEQUENT FILINGS") (a) did not, and in the case of Subsequent Filings will
not, contain any untrue statement of a material fact or omit, or in the case of
Subsequent Filings will not 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 and (b) complied, and
in the case of Subsequent Filings will comply, in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information supplied by the Buyer or the Transitory
Subsidiary in writing relating to the Buyer, the Transitory Subsidiary or any
affiliate thereof (other than the Company or any of the Subsidiaries), as the
case may be, expressly for inclusion or incorporation by reference in the Proxy
Statement. None of the Subsidiaries is required to file any forms, reports or
other documents with the SEC. Each of the financial statements contained or to
be contained in the Company SEC Documents (including, in each case, any related
notes and schedules) has been prepared from, and is in accordance with, the
books and records of the Company and its consolidated Subsidiaries, complies in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, has been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) ("GAAP") and fairly presents the
consolidated financial position and the consolidated results of operations and
cash flows of the Company and its consolidated Subsidiaries at the dates and for
the periods covered thereby. The Company has heretofore provided the Buyer with
true and correct copies of any filings or any amendments or modifications to any
Company SEC Documents (in final form or, if such final form is not available,
then in draft form) which have not yet been filed with the SEC but that are
required to be filed with the SEC as of the date hereof, in accordance with
applicable requirements of the federal securities laws and the SEC rules and
regulations promulgated thereunder.
3.6. NO UNDISCLOSED LIABILITIES. Except as disclosed on
Section 3.6 of the Company Disclosure Letter or as accrued on the December 30,
2001 balance sheet included in the Company SEC Documents, the Company and its
Subsidiaries do not have any claims, liabilities, indebtedness or obligations of
any nature (whether known, accrued, absolute, contingent, asserted, liquidated
or otherwise) which would be required to be reflected in or reserved against in
financial statements prepared in accordance with GAAP, whether due or to become
due, except for any claims, liabilities, indebtedness or obligations that have
not resulted in and would not reasonably be likely to result in, individually or
in the aggregate, a Company Material Adverse Effect.
3.7. ABSENCE OF CERTAIN CHANGES. Since December 30, 2001, the
Company and its Subsidiaries have conducted their respective businesses only in
the ordinary and usual course and:
(a) there has not occurred any event, change, occurrence,
effect, fact, violation, development or circumstance that has resulted in or
would reasonably be likely to
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result in, individually or in the aggregate, a Company Material Adverse Effect;
(b) there has been no declaration, setting aside or payment of
any dividend or other distribution payable in cash, securities or other property
with respect to, or split, combination, redemption, reclassification, purchase
or other acquisition of, any shares of capital stock (or other equity interests)
or other securities of the Company or any of the Subsidiaries, other than those
payable by a wholly-owned Subsidiary solely to the Company or to another
wholly-owned Subsidiary, or any other change in the capital structure of the
Company or any of the Subsidiaries;
(c) there has been no change by the Company or any of the
Subsidiaries in any accounting practices, policies or procedures or any methods
of reporting income, deductions or other items for income tax purposes (except
insofar as may have been required by applicable law, GAAP or SEC position);
(d) (i) any granting by the Company to any officer or director
of the Company or any of the Subsidiaries of any increase in compensation
(including, without limitation, wages, salaries, bonuses or any other
remuneration), except in the ordinary course of business consistent with past
practice or as was required under employment agreements in effect as of the date
of the most recent audited financial statements included in the Company SEC
Documents, (ii) any granting by the Company or any of the Subsidiaries to any
such officer or director of any increase in severance or termination pay, except
as was required under employment, severance or termination agreements in effect
as of the date of the most recent audited financial statements included in the
Company SEC Documents or (iii) any entry by the Company or any of the
Subsidiaries into any employment, severance or termination agreement with any
such officer or director; or
(e) neither the Company nor any of the Subsidiaries has taken
any action which, if taken subsequent to the execution and delivery of this
Agreement and on or prior to the Closing Date, would constitute a breach of the
covenants set forth in Section 5.1.
3.8. TAXES. (a) TAX RETURNS. Except as set forth in Section
3.8(a) of the Company Disclosure Letter, the Company has timely filed or caused
to be timely filed with the appropriate taxing authorities all income Tax
Returns and other material Tax Returns (as defined in Section 3.8(d)) that are
required to be filed by, or with respect to, the Company and the Subsidiaries on
or prior to the Closing Date.
(b) PAYMENT OF TAXES. Except as set forth in Section 3.8(b) of
the Company Disclosure Letter, all material Taxes and Tax liabilities due by or
with respect to the income, assets or operations of the Company and the
Subsidiaries for all taxable years or other taxable periods that end on or
before the Closing Date have been either timely paid or will be timely paid in
full on or prior to the Closing Date or accrued and adequately disclosed and
fully provided for in the Company SEC Documents in accordance with GAAP. With
respect to any taxable year or other taxable period beginning on or before and
ending after the Closing Date, neither the Company nor any of the Subsidiaries
has incurred any material Tax liability outside of the ordinary course of
business with respect to the portion of such taxable year or other taxable
period ending on and including the Closing Date.
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(c) OTHER TAX MATTERS. Except as set forth in Section 3.8(c)
of the Company Disclosure Letter:
(1) (i) Neither the Company nor any of the
Subsidiaries is currently the subject of an audit or other examination
of Taxes by the tax authorities of any nation, state or locality, (ii)
no such audit is pending, or to the Company's Knowledge, threatened,
and (iii) neither the Company nor any of the Subsidiaries has received
any written notices from any taxing authority relating to any issue
which would have or would be reasonably likely to have a material
adverse effect on the Tax liability of the Company or any of the
Subsidiaries.
(2) Neither the Company nor any of the Subsidiaries
(i) has entered into an agreement or waiver in effect as of the Closing
Date or been requested to enter into an agreement or waiver extending
any statute of limitations relating to the payment or collection of
Taxes of the Company or any of the Subsidiaries, or (ii) is presently
contesting the Tax liability of the Company or any of the Subsidiaries
before any court, tribunal or agency.
(3) Neither the Company nor any of the Subsidiaries
has been included in any "consolidated", "unitary" or "combined" Tax
Return with any Person (other than the Company or any current
Subsidiary) provided for under the law of the United States, any
foreign jurisdiction or any state or locality with respect to Taxes for
any taxable period for which the statute of limitations has not
expired.
(4) All material Taxes which the Company and each or
any of the Subsidiaries is (or was) required by law to withhold or
collect in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party have
been duly withheld or collected, and have been timely paid over to the
proper authorities to the extent due and payable.
(5) No claim has been made in writing with respect to
the 1995 tax year or subsequent tax years or, to the Company's
Knowledge, with respect to any tax year prior to the 1995 tax year by
any taxing authority in a jurisdiction where the Company or any of the
Subsidiaries does not file Tax Returns that the Company or any of the
Subsidiaries is or may be subject to taxation by that jurisdiction.
(6) There are no tax sharing, allocation,
indemnification or similar agreements in effect as between the Company
or any of the Subsidiaries or any predecessor or affiliate thereof
(other than the Buyer and its affiliates) and any other party under
which the Buyer, the Transitory Subsidiary, the Company or any of the
Subsidiaries could be liable for any Taxes or other claims of any party
after the Closing Date.
(7) Neither the Company nor any of the Subsidiaries
has applied for, been granted, or agreed to any accounting method
change for which it will be required to take into account any
adjustment under Section 481 of the Code or any
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similar provision of the Code or the corresponding tax laws of any
nation, state or locality.
(8) No election under Section 341(f) of the Code has
been made or shall be made prior to the Closing Date to treat the
Company or any of the Subsidiaries as a consenting corporation, as
defined in Section 341 of the Code.
(9) Neither the Company nor any of the Subsidiaries
is a party to any agreement that would require (including, without
limitation, as a result of the execution and delivery of this Agreement
or the consummation of the Merger or any of the other transactions
contemplated by this Agreement) the Company or any of the Subsidiaries
or any affiliate thereof to make any payment that would constitute an
"excess parachute payment" for purposes of Sections 280G and 4999 of
the Code or that would not be deductible pursuant to Section 162(m) of
the Code.
(10) The Company and each Subsidiary have delivered
to the Buyer and the Transitory Subsidiary (or made available to the
Buyer and the Transitory Subsidiary in the data room established by the
Company for purposes of the due diligence investigation of the Buyer
and the Transitory Subsidiary during the periods of time that the
representatives of the Buyer and the Transitory Subsidiary visited the
data room) true, complete and correct copies of each of the Tax Returns
for income Taxes filed on behalf of the Company and each Subsidiary for
the 1998 tax year or subsequent tax years.
(11) (i) There are no deferred intercompany
transactions between the Company and any of the Subsidiaries or between
the Subsidiaries and there is no excess loss account (within the
meaning of Treasury Regulations Section 1.1502-19 with respect to the
stock of the Company or any of the Subsidiaries) which will or may
result in the recognition of income upon the consummation of the
transaction contemplated by this Agreement, and (ii) there are no other
transactions or facts existing with respect to the Company and/or the
Subsidiaries which by reason of the consummation of the transaction
contemplated by this Agreement will result in the Company and/or the
Subsidiaries recognizing income.
(12) No indebtedness of the Company or any of the
Subsidiaries consists of "corporate acquisition indebtedness" within
the meaning of Section 279 of the Code.
(13) The Company and each of the Subsidiaries is in
substantial compliance with any and all material requirements with
respect to the reporting, withholding, payment of employment Taxes and
filing of Tax Returns with respect to tips received by the employees of
the Company and the Subsidiaries.
(d) DEFINITIONS. For purposes of this Agreement, (i) the term
"TAXES" means all taxes, charges, fees, levies or other similar assessments or
liabilities (whether payable directly or by withholding and whether or not
requiring the filing of a Tax Return), including, without limitation, duties,
income, gross receipts, ad valorem, premium, value-added, excise, real property,
personal property, sales, use, services, transfer, withholding, employment,
payroll,
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franchise, profits, capital gains, capital stock, occupation, severance,
windfall profits, stamp, license, social security and other taxes imposed by the
United States or any state, local or foreign government, or any agency thereof,
or other political subdivision of the United States or any such government, and
any interest, fines, penalties, assessments or additions to tax resulting from,
attributable to or incurred in connection with any tax or any contest or dispute
thereof and any liability for such amounts as a result either of being a member
of a combined, consolidated, unitary or affiliated group or of a contractual
obligation to indemnify any Person and (ii) the term "TAX RETURNS" means all
material tax returns, statements, forms and reports (including elections,
declarations, disclosures, schedules, estimates and information Tax returns and
other information required to be supplied to a taxing authority in connection
with Taxes) for Taxes that are required to be filed by, or with respect to, the
Company and the Subsidiaries on or prior to the Closing Date.
3.9. TITLE TO PROPERTIES; OWNED AND LEASED REAL PROPERTIES; NO
LIENS. (a) The Company and each of the Subsidiaries has good, and in the case of
owned real property, marketable fee simple, title to, or, in the case of leased
properties and assets, valid leasehold interests in, (A) all of its material
tangible properties and assets (real and personal), including, without
limitation, all such properties and assets reflected in the Company's
consolidated balance sheet as of December 30, 2001 contained in the Company SEC
Documents, except as indicated in the notes thereto or as sold or otherwise
disposed of in the ordinary course of business after such date, and (B) all the
material tangible properties and assets that have been purchased by the Company
or any of the Subsidiaries since December 30, 2001, except for such properties
and assets that have been sold or otherwise disposed of in the ordinary course
of business, in each case subject to no Liens, except for (1) Liens reflected in
the Company's consolidated balance sheet as of December 30, 2001 contained in
the Company SEC Documents (including the notes thereto), (2) Liens consisting of
zoning or planning restrictions, easements, permits and other restrictions or
limitations on the use of real property or irregularities in title thereto that
do not materially detract from the value of, or materially impair the use of,
such property by the Company or any of the Subsidiaries in the operation of its
respective business, (3) statutory liens or liens of landlords, carriers,
warehousemen, mechanics, suppliers, materialmen or repairmen arising in the
ordinary course of business or (4) Liens for current taxes, assessments or
governmental charges or levies on property not yet due and delinquent, all of
such Liens referred to in preceding clauses (1) through (4), inclusive, having
not resulted in and would not reasonably be likely to result in, individually or
in the aggregate, a Company Material Adverse Effect (such Liens, collectively,
"PERMITTED LIENS").
(b) Section 3.9(b) of the Company Disclosure Letter sets forth
a complete and correct list of the addresses of all real property owned in whole
or in part by the Company or any Subsidiary (collectively, the "OWNED REAL
PROPERTY").
(c) Section 3.9(c) of the Company Disclosure Letter sets forth
a complete and correct list of the addresses of all real property leased,
subleased or licensed by the Company or any of the Subsidiaries (as lessor or
lessee or under which the Company or any of the Subsidiaries has any liability)
(collectively, the "LEASED REAL PROPERTY" and, together with the Owned Real
Property, collectively, the "COMPANY REAL PROPERTY"). The Company or one of the
Subsidiaries has valid leasehold interests in all Leased Real Property described
in Section 3.9(c) of the Company Disclosure Letter (or required to be set forth
in Section 3.9(c) of the Company
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Disclosure Letter), free and clear of any and all Liens except for Permitted
Liens. Except as set forth in Section 3.9(c) of the Company Disclosure Letter,
each lease with respect to the premises set forth in Section 3.9(c) of the
Company Disclosure Letter (or required to be set forth in Section 3.9(c) of the
Company Disclosure Letter) is in full force and effect in accordance with its
terms in all material respects; in each case, the lessee has been in peaceable
possession since the commencement of the original term of such lease and is not
in default thereunder in any material respect, and there exists no default or
event, occurrence, condition or act (including the Merger and transactions
contemplated hereby) which, with the giving of notice, the lapse of time or the
happening of any further event or condition (including, without limitation, the
Merger and the other transactions contemplated by this Agreement), would become
a default in any material respect under such lease. Except as set forth in
Section 3.9(c) of the Company Disclosure Letter, neither the Company nor any of
the Subsidiaries has violated any of the terms or conditions under any such
lease in any material respect, and, to the Company's Knowledge, all of the
covenants to be performed by any other party under any such lease have been
fully performed in all material respects. The Company has, prior to the date of
this Agreement, provided to the Buyer true, complete and correct copies of each
lease or other agreement (including, in each case, any and all amendments,
modifications and supplements thereto except for any immaterial amendments,
modifications or supplements) with respect to each of the premises set forth in
Section 3.9(c) of the Company Disclosure Letter.
(d) All of the buildings, structures and appurtenances
situated on the Company Real Property are in good operating condition and in a
state of good maintenance and repair (ordinary wear and tear excepted), are
adequate and suitable for the purposes for which they are presently being used
and, with respect to each, the Company or one of the Subsidiaries has adequate
rights of ingress and egress for operation of the business of the Company or
such Subsidiary in the ordinary course, except as has not resulted in and would
not reasonably be likely to result in, individually or in the aggregate, a
Company Material Adverse Effect. None of such buildings, structures or
appurtenances (or any equipment therein), nor the operation or maintenance
thereof, violates any restrictive covenant or any provision of any law,
ordinance, regulation, code, permit, license or order, or encroaches on any
property owned by others, except as has not resulted in and would not reasonably
be likely to result in, individually or in the aggregate, a Company Material
Adverse Effect. No condemnation, expropriation, eminent domain or similar
proceeding is pending or, to the Company's Knowledge, threatened which would
preclude or impair the use of any such Company Real Property by the Company or
such Subsidiary for the purposes for which it is currently used. None of the
Company nor any of the Subsidiaries is obligated under or bound by any option,
right of first refusal, purchase contract, or other agreement or commitment to
sell or otherwise dispose any Company Real Property or any other interest in any
Company Real Property.
3.10. INTELLECTUAL PROPERTY. (a) Except as set forth in
Section 3.10 of the Company Disclosure Letter, the Company and the Subsidiaries
own, license or otherwise possess legally enforceable rights to use all
Intellectual Property (as defined below) used in or necessary to the conduct of
the business of the Company and the Subsidiaries, including rights to make,
exclude others from using, reproduce, modify, adapt, create derivative works of,
translate, distribute (directly or indirectly), transmit, display, perform,
license, rent, lease, and, with respect to Intellectual Property owned by the
Company, assign and sell such Intellectual Property (collectively, the "COMPANY
INTELLECTUAL PROPERTY"), except where the failures to own, license or
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have rights to use such Company Intellectual Property have not resulted in and
would not reasonably be likely to result in, individually or in the aggregate, a
Company Material Adverse Effect. To the Company's Knowledge, there is no pending
or extant claim, allegation or dispute asserted in writing regarding the right
of the Company or any Subsidiary to use the Company Intellectual Property as
currently used by the Company or any Subsidiary. For purposes of this Agreement,
the term "INTELLECTUAL PROPERTY" means foreign and domestic (i) patents,
registered and unregistered trademarks, service marks, brand names, trade dress
and trade names, domain names, registered and unregistered copyrights
(including, without limitation, software) and designs, (ii) any applications for
(and registrations of) such patents, trademarks, service marks, trade names,
domain names, copyrights and designs, (iii) trade secrets and other tangible or
intangible proprietary or confidential information and material, and (iv) any
goodwill associated with any of the foregoing.
(b) Section 3.10(b) of the Company Disclosure Letter sets
forth a complete and correct list of all Registered Company Intellectual
Property (as defined below) or Company Intellectual Property material to the
conduct of the business of the Company and the Subsidiaries (excluding
off-the-shelf software otherwise available to the general public under
shrinkwrap or clickwrap agreements); PROVIDED that the list of such Intellectual
Property that is owned by Persons other than the Company or any of the
Subsidiaries is complete and correct to the Company's Knowledge with respect to
the identity of the owner of such Intellectual Property. For purposes of this
Agreement, "REGISTERED COMPANY INTELLECTUAL PROPERTY" means Company Intellectual
Property issued, registered, renewed or the subject of a pending application, or
the substantive equivalent, without regard to the owner, assignee or registrant
thereof. Each item of Registered Company Intellectual Property owned by the
Company or any of the Subsidiaries has not been abandoned or cancelled, and
remains in full force and effect. There are no actions that must be taken or
payments that must be made by the Company or any of the Subsidiaries within
ninety (90) days following the Closing Date that, if not taken, would reasonably
be likely to have a material adverse effect on any Company Intellectual Property
or on the right of the Company or any Subsidiary to use any Company Intellectual
Property as and where used by the Company or the Subsidiaries.
(c) The execution and delivery of this Agreement and
consummation of the transactions contemplated hereby will not result in the
breach of, or create on behalf of any third party the right to terminate or
modify, any license, sublicense or other agreement relating to any Company
Intellectual Property, except for such breaches and rights to terminate or
modify that have not resulted in and would not reasonably be likely to result
in, individually or in the aggregate, a Company Material Adverse Effect, and
excluding for the purposes of this Section 3.10(c) all such agreements between
the Company and/or the Subsidiaries. Except as set forth in Section 3.10 of the
Company Disclosure Letter, neither the Company nor any of the Subsidiaries has
received or has Knowledge of any written notice or claim from any Person
challenging the right of the Company or any of the Subsidiaries to use any of
the Company Intellectual Property and (ii) to the extent any Intellectual
Property is used under license in the business of the Company and/or any of the
Subsidiaries, no notice of material default has been sent or received by the
Company or any of the Subsidiaries under any such license which remains uncured.
(d) Except for those that have not resulted in and would not
reasonably be likely to result in, individually or in the aggregate, a Company
Material Adverse Effect, (i) all
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patents and registrations and applications for registered trademarks, service
marks and copyrights that are held by the Company or any of the Subsidiaries are
valid, enforceable and subsisting and (ii) the Company and the Subsidiaries have
taken reasonable measures to protect the proprietary nature of the Company
Intellectual Property. To the Company's Knowledge, no other Person (including,
without limitation, any employee or former employee of the Company or the
Subsidiaries) is infringing, violating or misappropriating any of the Company
Intellectual Property, except for infringements, violations or misappropriations
that have not resulted in and would not reasonably be likely to result in,
individually or in the aggregate, a Company Material Adverse Effect. None of the
business or activities conducted by the Company or any of the Subsidiaries
infringes, violates or constitutes a misappropriation of any Intellectual
Property of any third party, except for infringements, violations or
misappropriations that have not resulted in and would not reasonably be likely
to result in, individually or in the aggregate, a Company Material Adverse
Effect. Neither the Company nor any of the Subsidiaries has received any written
(and the Company has no Knowledge of any) complaint, claim or notice alleging
any such infringement, violation or misappropriation.
(e) The Company and/or the Subsidiaries (i) owns the entire
right and interest in and to, or is licensed to use, all Company Intellectual
Property, free and clear of any Liens (other than Liens with respect to the
Company Senior Credit Agreement and related security documents), (ii) is in
compliance with each license of Company Intellectual Property, and (iii) except
as disclosed in Section 3.10(e) of the Company Disclosure Letter, is the
beneficiary of either (x) a representation and warranty as to the absence of
infringement and/or (y) an indemnity, limited or full, under each such license
for costs and liabilities arising from infringement of third party Intellectual
Property rights by the subject matter of such license, except that no
representation is made under Sections 3.10(e)(ii) and (iii) with respect to
licenses where failure of such representations and warranties have not resulted
in and would not reasonably be likely to result in, individually or in the
aggregate, a Company Material Adverse Effect.
3.11. AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as set
forth in Section 3.11 of the Company Disclosure Letter or filed or incorporated
by reference as exhibits to the Company SEC Documents on the date of this
Agreement, neither the Company nor any of the Subsidiaries is currently a party
to or bound by any contracts, agreements, instruments, arrangements, guarantees,
licenses, executory commitments or understandings that continue to be binding on
the Company or its Subsidiaries (each, a "CONTRACT") of the following nature
(collectively, the "COMPANY MATERIAL CONTRACTS"):
(i) Contracts with any current or former employee,
director or officer of the Company or any of the Subsidiaries;
(ii) Contracts that involve the performance of services of
an amount, payments or value (as measured by the revenue derived therefrom
during the fiscal year ended December 30, 2001) in excess of $250,000 annually,
unless terminable by the Company on not more than ninety (90) days notice
without material penalty;
(iii) Contracts (x) for the sale of assets of the Company
or any of the Subsidiaries involving aggregate consideration of $150,000 or
more, or (y) for the grant to any
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Person of any preferential rights to purchase any material amount of assets of
the Company or any of the Subsidiaries;
(iv) Contracts for the acquisition, by merging or
consolidating with, by purchasing an equity interest in or a portion of the
assets of, or by any other manner, any business or any Person or assets of any
Person (other than the purchase of equipment, inventories and supplies in the
ordinary course of business consistent with past practice);
(v) Contracts (including, without limitation, loan
agreements, credit agreements, notes, bonds, mortgages or other agreements,
indentures or instruments) relating to indebtedness for borrowed money, letters
of credit, the deferred purchase price of property, conditional sale
arrangements, capital lease obligations, obligations secured by a Lien, or
interest rate or currency hedging activities (including guarantees or other
contingent liabilities in respect of any of the foregoing but in any event
excluding trade payables arising in the ordinary course of business consistent
with past practice, intercompany indebtedness and immaterial leases for
telephones, copy machines, facsimile machines and other office equipment);
(vi) Loans or advances to (other than advances to
employees in respect of travel and entertainment expenses in the ordinary course
of business in amounts of $12,500 or less to any individual on any date of
determination, and $150,000 in the aggregate on any date of determination), or
investments in, any Person, other than the Company or a Subsidiary, or any
Contracts relating to the making of any such loans, advances or investments or
any Contracts involving a sharing of profits (except for bonus arrangements with
employees entered into in the ordinary course of business consistent with past
practice);
(vii) Contracts relating to any material joint venture,
partnership, strategic alliance or similar arrangement (including, without
limitation, any franchising agreement);
(viii) Contracts to be performed relating to capital
expenditures with a value in excess of $250,000 in any calendar year, or in the
aggregate capital expenditures with a value in excess of $1,000,000;
(ix) Contracts relating to any Liquor License of any
Company Restaurant (as defined in Section 3.16(b));
(x) Contracts which contain restrictions with respect to
payment of dividends or any other distribution in respect of its capital stock
(other than the Company Senior Credit Agreement);
(xi) Contracts containing covenants purporting to restrict
the Company or any of its affiliates from competing with any Person or which
restrict any other Person from competing with the Company or any of its
affiliates;
(xii) Contracts which are material to the Company or any
of the Subsidiaries and which restrict the Company or any of the Subsidiaries
from disclosing any information concerning or obtained from any other Person
(other than Contracts entered into in the ordinary course of business);
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(xiii) Contracts that would be required to be disclosed
under Item 404 of Regulation S-K under the Securities Act; or
(xiv) Contracts of the type described under Item
601(b)(10) of Regulation S-K under the Securities Act.
Each Company Material Contract is in full force and effect, is a valid and
binding obligation of the Company or the Subsidiary party thereto and, to the
Company's Knowledge, each other party thereto. There exists no default or event
of default or event, occurrence, condition or act (including the consummation of
the transactions contemplated hereby) on the part of the Company or any
Subsidiary or, to the Company's Knowledge, on the part of any other party to any
Company Material Contract that, with the giving of notice or the lapse of time
or both, would become a default or event of default under any Company Material
Contract, except for such defaults or events of default which have not resulted
in and would not reasonably be likely to result in, individually or in the
aggregate, a Company Material Adverse Effect.
3.12. LITIGATION. Except as set forth in Section 3.12 of the
Company Disclosure Letter, there is no action, suit, proceeding, claim,
arbitration or investigation pending or, to the Company's Knowledge, threatened
against or binding on the Company or any of the Subsidiaries, or any of their
respective properties or rights, or judgment, order or decree outstanding
against or binding on the Company or any of its Subsidiaries, or any of their
respective properties or rights, except for actions, suits, proceedings, claims,
arbitrations and investigations, and judgments, orders and decrees that have not
resulted in and would not reasonably be likely to result in, individually or in
the aggregate, a Company Material Adverse Effect. Except as set forth in Section
3.12 of the Company Disclosure Letter, there are no actions, suits, claims,
proceedings or investigations pending or, to the Company's Knowledge,
threatened, seeking to prevent or challenging the transactions contemplated by
this Agreement, that could reasonably be expected to result in, individually or
in the aggregate, a Company Material Adverse Effect.
3.13. ENVIRONMENTAL MATTERS. (a) Except as has not resulted in
and would not reasonably be likely to result in, individually or in the
aggregate, a Company Material Adverse Effect: (i) the Company and each of the
Subsidiaries have all permits, licenses and approvals required under
Environmental Laws (as defined in Section 3.13(b)) to operate and conduct their
respective businesses in material compliance with all Environmental Laws
(collectively, "ENVIRONMENTAL PERMITS"); (ii) the Company and each of the
Subsidiaries have complied in all material respects with all, and are not
currently in material violation of any, applicable Environmental Laws and the
requirements of all Environmental Permits; (iii) there are no claims,
proceedings, investigations or actions by any Governmental Entity or other
Person pending, or to the Company's Knowledge threatened, against the Company or
the Subsidiaries under any Environmental Law; and (iv) there are no facts,
circumstances or conditions relating to the past or present business or
operations of the Company or any of the Subsidiaries (including the disposal of
any wastes, hazardous substances or other materials), or to any real property
currently or formerly owned or operated by the Company or any of the
Subsidiaries, that would reasonably be expected to give rise to a material
claim, proceeding or action, or to any liability, under any Environmental Law.
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(b) For purposes of this Agreement, "ENVIRONMENTAL LAW" means
any federal, state, local or foreign law, regulation, order, decree, permit,
authorization, opinion, common law or agency requirement of any jurisdiction
relating to: (i) the protection, investigation or restoration of the
environment, human health and safety, or natural resources, (ii) the handling,
use, storage, treatment, manufacture, transportation, presence, disposal,
release or threatened release of any hazardous substance or (iii) noise, odor,
wetlands, pollution, contamination or any injury or threat of injury to persons
or property.
3.14. EMPLOYEE BENEFIT PLANS. (a) Section 3.14(a) of the
Company Disclosure Letter sets forth a true, complete and correct list of all
employee benefit or fringe benefit plans, programs, and/or arrangements
maintained, or contributed to (or required to be contributed to), by the Company
and/or any of the Subsidiaries and, with respect to plans subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), all
employers (whether or not incorporated) that would be treated together with the
Company and/or any Subsidiary as a single employer within the meaning of Section
414 of the Code) (collectively, the "COMPANY EMPLOYEE PLANS"). (i) Each Company
Employee Plan is in substantial compliance with all applicable laws including,
without limitation, ERISA and the Code) and has been administered and operated
in all material respects in accordance with its terms; (ii) neither the Company
nor any Subsidiary has ever maintained or contributed to, or had any obligation
to contribute to (or borne any liability with respect to) any "multiemployer
plan" (as defined in Section 4001(a)(3) of ERISA) or any plan covered by Title
IV of ERISA or subject to Section 412 of the Code or Section 302 of ERISA; (iii)
neither the Company nor any Subsidiary has incurred or expects to incur any
material liability (including, without limitation, additional contributions,
fines, taxes or penalties) as a result of a failure to administer or operate any
Company Employee Plan that is a "group health plan" (as such term is defined in
Section 607(1) of ERISA or Section 5000(b)(1) of the Code) in compliance with
the applicable requirements of Part 6 of Subtitle B of Title I of ERISA or
Section 4980B of the Code ("COBRA"); (iv) no Company Employee Plan or Executive
Agreement provides for post-employment or retiree health, life insurance or
other welfare benefits (except to the extent required by COBRA); (v) neither the
Company nor any Subsidiary has any unfunded liabilities pursuant to any Company
Employee Plan which is an "employee pension benefit plan" (within the meaning of
Section 3(2) of ERISA) that is not intended to be qualified under Section 401(a)
of the Code; (vi) each Company Employee Plan which is intended to be "qualified"
within the meaning of Section 401(a) of the Code has as currently in effect been
determined to be so qualified by the Internal Revenue Service (or has submitted
within the remedial amendment period, or is within the remedial amendment period
for submitting, an application to the Internal Revenue Service for such a
determination) and since the date of each such determination (or submission, if
applicable), no event has occurred and no condition or circumstance has existed
that resulted or is likely to result in the revocation of such determination (or
the refusal of the Internal Revenue Service to issue such a favorable
determination); (vii) no liability, claim, action, litigation, audit,
examination, investigation or administrative proceeding has been made, commenced
or, to the Company's Knowledge, threatened, with respect to any Company Employee
Plan (other than routine claims for benefits payable in the ordinary course)
which could result in a material liability of the Company or any Subsidiary
thereof; (viii) neither the Company nor any Subsidiary, nor any of their
respective directors, officers or employees, nor, to the Company's Knowledge,
any other "disqualified person" or "party in interest" (as defined in Section
4975(e)(2) of the Code and Section 3(14) of ERISA, respectively) has engaged in
any
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transaction, act or omission to act in connection with any Company Employee Plan
that could reasonably be expected to result in the imposition of a material
penalty or fine pursuant to Section 502 of ERISA, damages pursuant to Section
409 of ERISA or a tax pursuant to Section 4975 of the Code; and (ix) except as
required to maintain the tax qualified status of any Company Employee Plan
intended to qualify under Section 401(a) of the Code, no condition or
circumstance exists that would prevent the amendment or termination of any
Company Employee Plan.
(b) Neither the Company nor any Subsidiary is a party to any
oral or written (i) agreement with any executive officer or employee of the
Company (A) the benefits of which are contingent, or the payment or terms of
which are accelerated or materially altered, upon the occurrence of a
transaction involving the Company or any Subsidiary of the nature of any of the
transactions contemplated by this Agreement, (B) providing any term of
employment or compensation guarantee or (C) providing severance benefits or
other benefits after the termination of employment of such executive officer or
employee; or (ii) agreement or plan binding the Company or any Subsidiary,
including any stock option plan, stock appreciation right plan, restricted stock
plan, stock purchase plan or severance benefit plan, any of the benefits of
which shall be increased, or the vesting of the benefits of which shall be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement (either alone or upon the occurrence of any additional or subsequent
event) or the value of any of the benefits of which shall be calculated on the
basis of any of the transactions contemplated by this Agreement (such agreements
and plans referred to in clause (i) or (ii), collectively, the "EXECUTIVE
AGREEMENTS"). For purposes of this Section 3.14, the term "EXECUTIVE OFFICER"
shall have the meaning set forth in Rule 3b-7 of the Exchange Act.
(c) The Company has provided to the Buyer and the Transitory
Subsidiary (or made available to the Buyer and the Transitory Subsidiary in the
data room established by the Company for purposes of the due diligence
investigation of the Buyer and the Transitory Subsidiary during the periods of
time that the representatives of the Buyer and the Transitory Subsidiary visited
the data room) true, complete and correct copies of each Company Employee Plan
and each Executive Agreement, together with all amendments thereto, and, to the
extent applicable, (i) all current summary plan descriptions; (ii) the annual
report on Internal Revenue Service Form 5500-series, including any attachments
thereto, for each of the last three (3) plan years; and (iii) the most recent
Internal Revenue Service determination letter.
3.15. COMPLIANCE WITH LAWS. The Company and each of the
Subsidiaries have complied with, are not in violation of, and have not received
any notice alleging any such violation with respect to, any applicable
provisions of any federal, state, local or foreign statute, order, judgment,
decree, law, rule, regulation or ordinance (including, without limitation, as
the same relates to food preparation and handling) applicable to the conduct of
their businesses or the ownership or operation of their properties or assets,
except for such failures to comply and violations which have not resulted in and
would not reasonably be likely to result in, individually or in the aggregate, a
Company Material Adverse Effect. No investigation or review by any Governmental
Entity with respect to the Company or any of the Subsidiaries is pending or, to
the Company's Knowledge, threatened, nor, to the Company's Knowledge, has any
Governmental Entity indicated an intention to conduct the same, other than, in
each case, those which have not
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resulted in and would not reasonably be likely to result in, individually or in
the aggregate, a Company Material Adverse Effect.
3.16. PERMITS; LIQUOR LICENSES. (a) The Company and each of
the Subsidiaries have complied with and are in compliance with all permits,
approvals, licenses, authorizations, certificates, rights, exemptions, orders
and franchises from Governmental Entities necessary for the ownership of their
assets and lawful conduct of their businesses as now conducted, including those
relating to, among others, food preparation and handling, alcoholic beverage
control, public health and safety, zoning and fire codes (collectively, the
"COMPANY PERMITS"), and there has not occurred any default under any such
Company Permit, except to the extent that any failure to hold Company Permits
and any such defaults have not resulted in and would not reasonably be likely to
result in, individually or in the aggregate, a Company Material Adverse Effect.
(b) Section 3.16(b) of the Company Disclosure Letter sets
forth a complete and correct list of all liquor licenses (including, without
limitation, beer and wine licenses) held or used by the Company or any of the
Subsidiaries (collectively, the "LIQUOR LICENSES") in connection with the
operation of each restaurant owned or operated by the Company or any of the
Subsidiaries (each, a "COMPANY RESTAURANT"), along with the address of each such
Company Restaurant and the expiration date of each such Liquor License. To the
extent required by applicable law, rule, regulation or ordinance, each Company
Restaurant currently in operation possesses a Liquor License. The Company has no
reason to believe that it will not be able to obtain Liquor Licenses for
restaurants currently being brought into operation identified in Section 3.16(b)
of the Company Disclosure Letter. Each of the Liquor Licenses has been validly
issued and is in full force and effect and is adequate for the current conduct
of the operations at the Company Restaurant for which it is issued. Neither the
Company nor any of the Subsidiaries has received any written notice of any
pending or, to the Company's Knowledge, threatened modification, suspension or
cancellation of a Liquor License or any proceeding related thereto that would
reasonably be expected to have any material adverse impact on any Company
Restaurant, the ability to maintain or renew any Liquor License or the nature or
level of discipline imposed on account of future violations of the laws related
to sales and service of alcoholic beverages. Since January 31, 1999, there have
been no such proceedings relating to any of the Liquor Licenses. There are no
pending disciplinary actions or past disciplinary actions that would reasonably
be expected to have any material adverse impact on any Company Restaurant, the
ability to maintain or renew any Liquor License or the nature or level of
discipline imposed on account of future violations of the laws related to sales
and service of alcoholic beverages.
3.17. LABOR MATTERS. Neither the Company nor any of the
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization. To the Company's Knowledge, there is no material pending or
threatened labor strike, or dispute, walkout, work stoppage, slow-down, lockout
or organizational effort involving employees of the Company or any of the
Subsidiaries. There is no unfair labor practice charge or complaint against the
Company or any of the Subsidiaries, either pending or, to the Company's
Knowledge, threatened that has resulted in or would reasonably be likely to
result in, individually or in the aggregate, a Company Material Adverse Effect;
no union is currently certified, and there is no union representation question
and
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no union or other organizational activity that would be subject to the National
Labor Relations Act (20 U.S.C. ss.151 ET SEQ.) exists or, to the Company's
Knowledge, is threatened with respect to the Company's or any of the
Subsidiaries' operations; neither the Company nor any of the Subsidiaries has
any Equal Employment Opportunity Commission charges or other claim of employment
discrimination pending or, to the Company's Knowledge, currently threatened
against them that has resulted in or would reasonably be likely to result in,
individually or in the aggregate, a Company Material Adverse Effect; no wage and
hour department investigation has been made of the Company or any of the
Subsidiaries that has resulted in or would reasonably be likely to result in,
individually or in the aggregate, a Company Material Adverse Effect; there are
no occupational health and safety claims against the Company or any of the
Subsidiaries that has resulted in or would reasonably be likely to result in,
individually or in the aggregate, a Company Material Adverse Effect; neither the
Company nor any of the Subsidiaries has effectuated (i) a "PLANT CLOSING" (as
defined in the Worker Adjustment and Retraining Notification Act (as amended,
the "WARN ACT")) affecting any site of employment or one or more facilities or
operating units within any site of employment of the Company or any Subsidiary;
or (ii) a "MASS LAYOFF" (as defined in the WARN Act) affecting any site of
employment or facility of the Company or any Subsidiary; nor has the Company
been engaged in layoffs or employment terminations sufficient in number to
trigger application of any similar state or local law; and none of the affected
employees has suffered an "EMPLOYMENT LOSS" (as defined in the WARN Act) since
ninety (90) days prior to the date hereof; the Company and the Subsidiaries are
in compliance with the terms and provisions of the Immigration Reform and
Control Act of 1986, as amended, and all related regulations promulgated
thereunder, the failure of which has not resulted in and would not reasonably be
likely to result in, individually or in the aggregate, Company Material Adverse
Effect.
3.18. INSURANCE. Section 3.18 of the Company Disclosure Letter
sets forth the material insurance coverages maintained by the Company and the
Subsidiaries. The Company has provided to the Buyer and the Transitory
Subsidiary (or made available to the Buyer and the Transitory Subsidiary in the
data room established by the Company for purposes of the due diligence
investigation of the Buyer and the Transitory Subsidiary during the periods of
time that the representatives of the Buyer and the Transitory Subsidiary visited
the data room) copies of all insurance policies which are owned by the Company
or the Subsidiaries or which name the Company or any of the Subsidiaries as an
insured, additional insured or loss payee (including, without limitation, those
pertaining to the Company's or any of the Subsidiaries' assets, employees or
operations) (collectively, the "INSURANCE POLICIES"). (i) Each of the Insurance
Policies is in full force and effect and is valid, outstanding and enforceable,
and all premiums due thereon have been paid in full and cover against the risks
of the nature normally insured against by entities in the same or similar lines
of business in coverage amounts typically and reasonably carried by such
entities, (ii) none of the Insurance Policies shall terminate or lapse (or be
affected in any other adverse manner) by reason of the transactions contemplated
by this Agreement, (iii) each of the Company and the Subsidiaries has complied
in all material respects with the provisions of each Insurance Policy under
which it is the insured party, (iv) no insurer under any Insurance Policy has
cancelled or generally disclaimed liability under any such Insurance Policy or
indicated any intent to do so or not to renew any such Insurance Policy and (v)
all material claims under the Insurance Policies have been filed in a timely
fashion.
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3.19. SUPPLIERS. No supplier of the Company or any of the
Subsidiaries whose failure to continue to be a supplier of the Company or its
Subsidiaries and would reasonably be likely to result in, individually or in the
aggregate, a Company Material Adverse Effect has indicated to the Company or any
of the Subsidiaries that it will stop, or materially decrease the rate of,
supplying products or services to the Company or any of the Subsidiaries.
3.20. FRANCHISE MATTERS. Except as set forth in Section 3.20
of the Company Disclosure Letter, neither the Company nor any of the
Subsidiaries has granted to any Person any development, franchise or license
rights to operate restaurants.
3.21. INFORMATION IN PROXY STATEMENT. The Proxy Statement will
comply in all material respects with the requirements of the Exchange Act and
any other applicable laws. If at any time prior to the date of the Special
Meeting (as defined in Section 5.5) any event occurs which should be described
in an amendment or supplement to the Proxy Statement, the Company will file and
disseminate, as required, an amendment or supplement which complies in all
material respects with the Exchange Act and any other applicable laws. Prior to
its filing with the SEC, the amendment or supplement shall be delivered to the
Buyer and its outside counsel. The information contained in the Proxy Statement,
any amendment or supplement thereto or any other documents filed with the SEC by
the Company in connection with the Merger, when filed with the SEC and, in case
of the Proxy Statement, when mailed to the stockholders of the Company and at
the time of the Special Meeting (except for information supplied by the Buyer or
the Transitory Subsidiary in writing relating to the Buyer or the Transitory
Subsidiary or any affiliate thereof (other than the Company or any of the
Subsidiaries), as the case may be, expressly for inclusion or incorporation by
reference therein, as to which no representation by the Company is made), will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information supplied by the Buyer or the
Transitory Subsidiary in writing relating to the Buyer or the Transitory
Subsidiary or any affiliate thereof (other than the Company or any of the
Subsidiaries), as the case may be, expressly for inclusion or incorporation by
reference in the Proxy Statement.
3.22. BROKERS. Except for the fees and expenses of Greenhill
(whose fees and expenses shall be paid by the Company in accordance with the
Company's agreement with such firm, a true, complete and correct copy of which
has been previously delivered to the Buyer by the Company), no agent, broker,
Person or firm acting on behalf of the Company, the Special Committee or the
Board of Directors of the Company is or will be entitled to any advisory
commission or broker's or finder's fee from any of the Parties (or their
respective affiliates) in connection with this Agreement or any of the
transactions contemplated hereby.
3.23. STATE TAKEOVER STATUTES. The Special Committee and the
Board of Directors of the Company have approved the Merger and this Agreement,
and such approval is sufficient to render the restrictions contained in Section
203 of the DGCL inapplicable to the Merger and this Agreement (including all of
the other transactions contemplated hereby). Except for Section 203 of the DGCL
(which has been rendered inapplicable), no other "fair price", "moratorium",
"control share acquisition", "business combination" or other state takeover
statute
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or similar statute, rule or regulation is applicable or purports to be
applicable to the Merger, this Agreement or any of the other transactions
contemplated hereby.
3.24. VOTING REQUIREMENTS. The affirmative vote of the holders
of at least a majority of the outstanding shares of Common Stock (voting as one
class, with each share of Common Stock having one (1) vote) entitled to be cast
in adopting this Agreement is the only vote of the holders of any class or
series of the Company's capital stock or other securities of the Company
necessary under applicable law or stock exchange (or similar self-regulatory
organization) regulations to adopt this Agreement and approve the transactions
contemplated by this Agreement and for consummation by the Company of the
transactions contemplated by this Agreement.
3.25. RIGHTS AGREEMENT. The Company and the Board of Directors
of the Company have taken all necessary action to amend the Rights Agreement
(without redeeming the Rights identified therein), and shall maintain in effect
all necessary action (i) to render the Rights Agreement inapplicable with
respect to the Merger, this Agreement and the other transactions contemplated
hereby and (ii) to ensure that (x) neither the Buyer nor the Transitory
Subsidiary nor any of their "AFFILIATES" (as such term is defined in the Rights
Agreement) or "ASSOCIATES" (as such term is defined in the Rights Agreement) is
considered to be an "ACQUIRING PERSON" (as such term is defined in the Rights
Agreement) and (y) the provisions of the Rights Agreement, including the
occurrence of a "DISTRIBUTION DATE" (as such term is defined in the Rights
Agreement), are not and shall not be triggered by reason of the announcement or
consummation of the Merger, this Agreement or the consummation of any of the
other transactions contemplated hereby. The Company has delivered to the Buyer a
true, complete and correct copy of the Rights Agreement, as amended, and the
Rights Agreement has not been further modified or amended.
3.26. OPINION OF FINANCIAL ADVISOR. The Special Committee and
the Board of Directors of the Company have received the written opinion of
Greenhill, dated March 26, 2002, a true, complete and correct signed copy of
which shall be delivered to the Buyer promptly after receipt of a written copy
thereof by the Company, to the effect that, as of the date of such written
opinion and on the basis of and subject to the assumptions set forth therein,
the Cash Merger Consideration to be received in the Merger by the holders of
Shares, other than the Buyer and the Transitory Subsidiary, is fair to such
holders from a financial point of view, and such opinion has not been withdrawn
or modified as of the date of this Agreement. The Company has been authorized by
Greenhill to permit the inclusion of such fairness opinion in the Proxy
Statement.
3.27. CUMULATIVE BREACH. The breaches, if any, of the
representations and warranties made by the Company in this Agreement that would
occur if all references in such representations and warranties to phrases
concerning materiality, including references to the qualification "Company
Material Adverse Effect" were deleted, in the aggregate, have not resulted in
and would not reasonably be likely to result in, individually or in the
aggregate, a Company Material Adverse Effect.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE BUYER AND THE TRANSITORY SUBSIDIARY
Each of the Buyer and the Transitory Subsidiary hereby
represents and warrants to the Company that the statements contained in this
Article IV are true and correct.
4.1. ORGANIZATION. Each of the Buyer and the Transitory
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has all
requisite corporate power and authority to own, lease and operate its properties
and assets and to carry on its business as it is currently being conducted. Each
of the Buyer and the Transitory Subsidiary is duly qualified or licensed to do
business, and is in good standing as a foreign corporation in each jurisdiction
where the character of its properties or assets owned, operated and leased or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified or licensed or in good standing has not resulted
in and would not reasonably be likely to result in, individually or in the
aggregate, a material adverse effect on either the Buyer or the Transitory
Subsidiary or materially impair the ability of either the Buyer or the
Transitory Subsidiary to consummate the transactions contemplated hereby.
4.2. CAPITALIZATION. The authorized capital stock of the
Transitory Subsidiary consists of 1,000 shares of Transitory Subsidiary Common
Stock, all of which are outstanding, owned by the Buyer and are duly authorized,
validly issued and outstanding and fully paid and nonassessable. As of the date
of this Agreement, all of the outstanding capital stock of the Buyer and the
Transitory Subsidiary is owned directly or indirectly by Castle Harlan Partners
III, L.P., a Delaware limited partnership.
4.3. AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY ACTION.
Each of the Buyer and the Transitory Subsidiary has full corporate power and
authority to execute and deliver this Agreement and each instrument required
hereby to be executed and delivered by it prior to or at the Effective Time, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
each of the Buyer and the Transitory Subsidiary of this Agreement and each
instrument required hereby to be executed and delivered by it prior to or at the
Effective Time and the performance of its obligations hereunder and thereunder
and the consummation by it of the transactions contemplated hereby have been
duly authorized by the Board of Directors of each of the Buyer and the
Transitory Subsidiary, by the stockholders of the Buyer and by the Buyer as the
sole stockholder of the Transitory Subsidiary, and no other corporate action on
the part of the Buyer or the Transitory Subsidiary is necessary to authorize the
execution, delivery and performance by the Buyer and the Transitory Subsidiary
of this Agreement and the consummation by them of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by each of the Buyer
and the Transitory Subsidiary and, assuming due and valid authorization,
execution and delivery hereof by the Company, is a valid and binding obligation
of each of the Buyer and the Transitory Subsidiary enforceable against each of
them in accordance with its terms.
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4.4. CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and
delivery of this Agreement by the Buyer and the Transitory Subsidiary does not,
and the consummation by the Buyer and the Transitory Subsidiary of the
transactions contemplated by this Agreement and the compliance by the Buyer and
the Transitory Subsidiary with the applicable provisions of this Agreement will
not:
(i) violate or conflict with or result in any breach of
any provision of the Certificate of Incorporation or the By-laws of the Buyer or
the Transitory Subsidiary;
(ii) require any filing, recordation, declaration or
registration with, or permit, order, authorization, consent or approval of, or
action by or in respect of, or the giving of notice to, any Governmental Entity,
except for (1) the filing by the Buyer of a premerger notification and report
form under the HSR Act and the expiration or termination of any waiting periods
under the HSR Act; (2) the filing with the SEC of (A) the Proxy Statement, and
(B) such reports under Section 13, 14(f), 15(d) or 16(a) of the Exchange Act, as
may be required in connection with this Agreement and the transactions
contemplated by this Agreement; (3) the receipt of Governmental Approvals with
respect to Liquor Licenses; and (4) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware and appropriate documents with
the relevant authorities of other states in which the Buyer and the Transitory
Subsidiary are qualified to do business;
(iii) result in a violation or breach of, conflict with,
constitute (with or without due notice or lapse of time or both) a default
under, give rise to any penalty, right of amendment, modification,
renegotiation, termination, cancellation, payment or acceleration or any right
or obligation or loss of any material benefit or right under, or result in the
creation of any Liens upon any of the properties or assets of the Buyer or the
Transitory Subsidiary under, any of the terms, conditions or provisions of any
loan or credit agreement, note, bond, mortgage, indenture, lease, license,
sublicense, franchise, permit, concession, agreement, contract, obligation,
commitment, understanding, arrangement, franchise agreement or other instrument,
obligation or authorization applicable to the Buyer or the Transitory
Subsidiary, or by which any such Person or any of its properties or assets may
be bound; or
(iv) violate or conflict with any judgment, order, writ,
injunction, decree, law, statute, ordinance, rule or regulation applicable to
the Buyer or the Transitory Subsidiary or by which any of their properties or
assets may be bound;
excluding from preceding clauses (ii), (iii) and (iv) such matters that have not
resulted in and would not reasonably be likely to result in, individually or in
the aggregate, a material adverse effect on either the Buyer or the Transitory
Subsidiary and would not materially impair the ability of either the Buyer or
the Transitory Subsidiary to consummate the transactions contemplated hereby.
4.5. INFORMATION IN PROXY STATEMENT. None of the information
supplied or to be supplied by the Buyer and the Transitory Subsidiary in writing
relating to the Buyer, the Transitory Subsidiary or any affiliate thereof (other
than the Company or any of the Subsidiaries), as the case may be, expressly for
inclusion or incorporation by reference in the Proxy Statement, any amendment or
supplement thereto or any other documents filed with the
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SEC by the Company in connection with the Merger, when supplied to the Company,
when filed with the SEC and, in case of the Proxy Statement, when mailed to the
stockholders of the Company and at the time of the Special Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
Notwithstanding the foregoing, the Buyer and the Transitory Subsidiary make no
representation or warranty with respect to any information supplied by the
Company in writing relating to the Company or any affiliate thereof (other than
the Buyer or the Transitory Subsidiary) expressly for inclusion or incorporation
by reference in the Proxy Statement.
4.6. EQUITY COMMITMENT. On or prior to the date of this
Agreement, the Buyer has provided to the Company a true, complete and correct
copy of a letter from the Buyer's equity investor, pursuant to which the Buyer's
equity investor has agreed to subscribe for equity in the Buyer as described and
subject to the conditions and limitations therein (the "EQUITY COMMITMENT
LETTER") sufficient to provide to the Buyer the funds necessary to consummate
the transactions contemplated by this Agreement assuming the satisfaction of the
conditions set forth in Sections 6.1 and 6.2. Such letter is in full force and
effect. Neither the Buyer, the Transitory Subsidiary, nor any of their
affiliates, will terminate or amend in any respect the Equity Commitment Letter
in a manner which would adversely affect the probability that the CHP Equity
Financing (as defined therein) will be funded, or the timing thereof, without
the prior written consent of the Company. The Buyer will use its reasonable best
efforts to cause the conditions to funding set forth in such letter to be
fulfilled on a timely basis and to obtain such funding to permit the Closing to
occur hereunder. Subject to the satisfaction of the conditions to funding under
the Equity Commitment Letter and the conditions set forth in Article VI, the
Buyer will draw the funds available to it pursuant to the terms of the Equity
Commitment Letter on the Closing Date.
ARTICLE V
COVENANTS
5.1. INTERIM OPERATIONS OF THE COMPANY. Except as expressly
provided herein or as consented to in writing by the Buyer or the Transitory
Subsidiary, from and after the date of this Agreement until the earlier of the
termination of this Agreement in accordance with its terms or the Effective
Time, the Company shall, and shall cause each of its Subsidiaries to, act and
carry on its business only in the ordinary course of business consistent with
past practice and use reasonable best efforts to maintain and preserve its
business organization, assets and properties, keep available the services of its
officers and key employees and maintain and preserve its advantageous business
relationships with suppliers, landlords and others having material business
dealings with it. Without limiting the generality of the foregoing, except as
expressly set forth in Section 5.1 of the Company Disclosure Letter, from and
after the date of this Agreement until the earlier of the termination of this
Agreement in accordance with its terms or the Effective Time, the Company shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly, do
any of the following without the prior written consent of the Buyer or the
Transitory Subsidiary:
(a) except as contemplated by Section 1.1, amend its
Certificate of
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Incorporation or By-laws or comparable governing documents;
(b) sell, transfer or pledge or agree to sell, transfer or
pledge any shares of capital stock or other equity interests owned by it in any
other Person;
(c) declare, set aside or pay any dividend or other
distribution payable in cash, securities or other property with respect to, or
split, combine, redeem or reclassify, or purchase or otherwise acquire, any
shares of its capital stock (or other equity interests) or other securities of
the Company or any of the Subsidiaries (other than the making of a dividend or
other distribution by a wholly-owned Subsidiary to another wholly-owned
Subsidiary or to the Company);
(d) except as contemplated by Sections 1.1 and 2.1, issue or
sell, or authorize to issue or sell, any shares of its capital stock or any
other securities, or issue or sell, or authorize to issue or sell, any
securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to purchase or subscribe for, or enter into
any arrangement or contract with respect to the issuance or sale of, any shares
of its capital stock of any class of the Company or Voting Debt or other
securities, or make any other change in its capital structure, except for the
possible issuance by the Company of shares of Common Stock pursuant to the terms
of any Options outstanding on the date hereof;
(e) acquire, make (or commit to make) any investment in, or
make capital contribution to, any Person other than in the ordinary course of
business consistent with past practice, other than transactions between a
wholly-owned Subsidiary and the Company or between wholly-owned Subsidiaries;
(f) make (or commit to make), or enter into any Contracts (or
any amendments, modifications, supplements or replacements to existing
Contracts) to be performed relating to, capital expenditures with a value in
excess of $100,000 in any calendar year, or in the aggregate capital
expenditures with a value in excess of $250,000; PROVIDED that, other than as
expressly set forth in Section 5.1 of the Company Disclosure Letter, in no event
shall the Company or any of the Subsidiaries make (or commit to make), or enter
into any Contracts (or any amendments, modifications, supplements or
replacements to existing Contracts) to be performed relating to, capital
expenditures with respect to any new restaurants or maintenance of existing
restaurants;
(g) acquire, by merging or consolidating with, by purchasing
an equity interest in or a portion of the assets of, or by any other manner, any
business or any Person, or otherwise acquire any assets of any Person (other
than the purchase of equipment, inventories and supplies in the ordinary course
of business consistent with past practice);
(h) transfer, lease, license, guarantee, sell, mortgage,
pledge, dispose of, subject to any Lien (other than a Permitted Lien) or
otherwise encumber any material assets other than with respect to (i)
transactions between a wholly-owned Subsidiary and the Company or between
wholly-owned Subsidiaries, (ii) dispositions of excess or obsolete assets in the
ordinary course of business consistent with past practice and (iii) leases,
licenses or sales in the ordinary course of business consistent with past
practice;
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(i) except to the extent required under existing employee and
director benefit plans, agreements or arrangements in effect on the date of the
most recent audited financial statements included in the Company SEC Documents
or required by applicable law or contemplated by Section 2.4, increase the
compensation or fringe benefits of any of its directors, officers or employees,
except for immaterial increases to employees who are not officers of the Company
or any of the Subsidiaries in the ordinary course of business consistent with
past practice, or grant any severance or termination pay not currently required
to be paid under existing severance plans, or enter into any employment,
consulting or severance agreement or arrangement with any present or former
director, officer or other employee of the Company or any of the Subsidiaries,
or establish, adopt, enter into or amend, modify, supplement, replace or
terminate any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the collective benefit of any directors,
officers or employees (it being understood and agreed that in no event shall the
Company or any of the Subsidiaries amend, modify, supplement, replace or
terminate the policy in effect on the date hereof and previously disclosed to
the Buyer with respect to suspension of any increases in the compensation or
other remuneration of officers and other employees of the Company and the
Subsidiaries);
(j) enter into or amend, modify, supplement or replace any
employment, consulting, severance or similar agreement (including any change of
control agreement) with any Person, except with respect to new hires of
non-officer employees in the ordinary course of business;
(k) except as may be required by applicable law, GAAP or SEC
position, make any change in any of its accounting practices, policies or
procedures or any of its methods of reporting income, deductions or other items
for income tax purposes;
(l) except as contemplated by Sections 1.1 and 2.1, adopt or
enter into a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any Subsidiary (other than as may exclusively involve one or more
wholly-owned Subsidiaries but only so long as the same shall not have and would
not reasonably be likely to have (x) a material adverse effect on the Tax
liability of the Company and the Subsidiaries or (y) a material adverse effect
on the operations of the Company and the Subsidiaries) or any agreement relating
to an Acquisition Proposal, except as expressly permitted in Section 5.3;
(m) except as contemplated by Section 5.7(a)(i), (i) incur,
assume, modify or prepay any indebtedness for borrowed money, issue any debt
securities or warrants or other rights to acquire debt securities, or guarantee,
endorse or otherwise become liable or responsible for the obligations or
indebtedness of another Person, other than indebtedness owing to or guarantees
of indebtedness owing to the Company or any direct or indirect wholly-owned
Subsidiary, or enter into any capital lease, or (ii) make any loans, extensions
of credit or advances to any other Person, other than to the Company or to any
direct or indirect wholly-owned Subsidiary, except, (A) in the case of preceding
clause (i), for (x) borrowings under the Company Senior Credit Agreement in the
ordinary course of business consistent with past practice and (y) the making of
scheduled amortization payments to the extent required by
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the Company Senior Credit Agreement and ordinary course repayments of borrowings
under the working capital facility of the Company Senior Credit Agreement, (B)
in the case of preceding clauses (i) and (ii), for loans, extensions of credit
or advances constituting trade payables or receivables arising in the ordinary
course of business and (C) in the case of preceding clause (ii), for advances to
employees in respect of travel and entertainment expenses in the ordinary course
of business in amounts of $12,500 or less to any individual on any date of
determination and $150,000 in the aggregate on any date of determination;
(n) except as permitted by Section 2.4, accelerate the
payment, right to payment or vesting of any bonus, severance, profit sharing,
retirement, deferred compensation, stock option, insurance or other compensation
or benefits;
(o) pay, discharge, settle or satisfy any claims, litigation,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise) other than (i) the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past practice,
of (1) liabilities reflected or reserved against in the December 30, 2001
balance sheet included in the Company SEC Documents or (2) liabilities (other
than litigation) subsequently incurred in the ordinary course of business
consistent with past practice and (ii) other claims, litigation, liabilities or
obligations (qualified as aforesaid) that in the aggregate do not exceed
$250,000.
(p) other than as disclosed in Company SEC Documents filed
prior to the date hereof, plan, announce, implement or effect any material
reduction in force, lay-off, early retirement program, severance program or
other program or effort concerning the termination of employment of employees of
the Company or the Subsidiaries; PROVIDED that routine employee terminations in
the ordinary course of business shall not be considered subject to this
subclause;
(q) take any action or non-action (including, without
limitation, the adoption of any shareholder-rights plan or amendments to its
Certificate of Incorporation or By-laws (or comparable governing documents))
which would, directly or indirectly, restrict or impair the ability of the Buyer
to vote or otherwise to exercise the rights and receive the benefits of a
stockholder with respect to securities of the Company that may be acquired or
controlled by the Buyer or the Transitory Subsidiary, or any action which would
permit any Person to acquire securities of the Company on a basis not available
to the Buyer or the Transitory Subsidiary;
(r) take any action or non-action which (x) constitutes a
violation of any Liquor License, which violation would result in or would
reasonably be likely to result in, individually or in the aggregate, the
modification, suspension, cancellation, termination of any one or more Liquor
Licenses or otherwise have or would reasonably be likely to have a material
adverse impact on any Company Restaurant or the nature or level of discipline
imposed on account of future violations of the laws related to sales and service
of alcoholic beverages or (y) would (or would reasonably be likely to)
materially impede, delay, hinder or make more burdensome for the Buyer to obtain
and maintain any and all authorizations, approvals, consents or orders from any
Governmental Entity or other third party necessary or required to maintain the
Liquor Licenses in effect at all times following the Merger on the same terms as
in effect on the date of this Agreement;
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(s) enter into any new material line of business or enter into
any agreement that restrains, limit or impedes the Company's or any Subsidiary's
ability to compete with or conduct any business or line of business;
(t) (i) file or cause to be filed any materially amended Tax
Returns or claims for refund; (ii) make or rescind any material tax election or
otherwise fail to prepare all Tax Returns in a manner which is consistent with
the past practices of the Company and each Subsidiary, as the case may be, with
respect to the treatment of items on such Tax Returns except to the extent that
any inconsistency (1) would not or may not materially increase the Buyer's, the
Company's, or any Subsidiary's liability for Taxes for any period or (2) is
required by law; (iii) incur any material liability for Taxes other than in the
ordinary course of business; or (iv) enter into any settlement or closing
agreement with a taxing authority that materially increases or would reasonably
be likely to materially increase the Tax liability of the Company or any of the
Subsidiaries for any period;
(u) fail to maintain with current or other financially
responsible insurance companies insurance on its tangible assets and its
businesses in such amounts and against such risks and losses as are consistent
with past practice; or
(v) authorize, agree or announce an intention, in writing or
otherwise, to take any of the foregoing actions.
5.2. CONFIDENTIALITY. The Parties acknowledge that Castle
Harlan, Inc. and the Company have previously executed a confidentiality
agreement, dated as of August 23, 2001 (as in effect from time to time, the
"CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement shall continue in
full force and effect in accordance with its terms, except as expressly modified
herein or pursuant hereto.
5.3. NO SOLICITATION OF OTHER OFFERS. (a) Each of the Company
and the Subsidiaries shall, and shall use reasonable best efforts to cause its
affiliates and each of its and their respective officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants and
other agents to, immediately cease any discussions or negotiations with any
other Person or Persons that may be ongoing with respect to any Acquisition
Proposal. Each of the Company and the Subsidiaries shall not take, and shall
cause its affiliates and each of its and their respective officers, directors,
employees, representatives, consultants, investment bankers, attorneys,
accountants and other agents not to take, any action (i) to encourage, solicit,
initiate or facilitate, directly or indirectly, the making or submission of any
Acquisition Proposal (including, without limitation, by taking any action that
would make the Rights Agreement inapplicable to an Acquisition Proposal), (ii)
to enter into any agreement, arrangement or understanding with respect to any
Acquisition Proposal, other than a confidentiality agreement referred to below,
in accordance with the terms and under the circumstances contemplated below in
this Section 5.3(a), or to agree to approve or endorse any Acquisition Proposal
or enter into any agreement, arrangement or understanding that would require the
Company to abandon, terminate or fail to consummate the Merger or any other
transaction contemplated by this Agreement, (iii) to initiate or participate in
any way in any discussions or negotiations with, or furnish or disclose any
information to, any Person (other than the Buyer or the Transitory Subsidiary)
in furtherance of any proposal that constitutes, or could reasonably be expected
to
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lead to, any Acquisition Proposal, (iv) to facilitate or further in any other
manner any inquiries or the making or submission of any proposal that
constitutes, or could reasonably be expected to lead to, any Acquisition
Proposal, or (v) to grant any waiver or release under any standstill,
confidentiality or similar agreement entered into by the Company or any of its
affiliates or representatives; PROVIDED that so long as there has been no breach
of this Section 5.3(a), prior to the Special Meeting the Company, in response to
an unsolicited Acquisition Proposal and otherwise in compliance with its
obligations under Section 5.3(c), may (x) request clarifications from, or
furnish information to, (but not enter into discussions with) any Person which
makes such unsolicited Acquisition Proposal if (A) such action is taken subject
to a confidentiality agreement with the Company containing customary terms and
conditions; PROVIDED that if such confidentiality agreement contains provisions
that are less restrictive than the comparable provisions of the Confidentiality
Agreement, or omits restrictive provisions contained in the Confidentiality
Agreement, then the Confidentiality Agreement shall be deemed to be
automatically amended to contain in substitution for such comparable provisions
such less restrictive provisions, or to omit such restrictive provisions, as the
case may be, and in connection with the foregoing, the Company agrees not to
waive any of the provisions in any such confidentiality agreement without
waiving the similar provisions in the Confidentiality Agreement to the same
extent, (B) such action is taken solely for the purpose of obtaining information
reasonably necessary to ascertain whether such Acquisition Proposal is, or is
reasonably likely to lead to, a Superior Proposal (as defined in Section
5.3(b)), and (C) the Board of Directors of the Company reasonably determines in
good faith, after receiving advice from outside nationally recognized legal
counsel (which may be its current outside legal counsel) and based on the good
faith recommendation of the Special Committee, which has also received advice
from its outside nationally recognized legal counsel (which may be its current
outside legal counsel), that it is necessary to take such actions in order to
comply with its fiduciary duties under applicable law or (y) participate in
discussions with, request clarifications from, or furnish information to, any
Person which makes such unsolicited Acquisition Proposal if (A) such action is
taken subject to a confidentiality agreement with the Company containing
customary terms and conditions; PROVIDED that if such confidentiality agreement
contains provisions that are less restrictive than the comparable provisions of
the Confidentiality Agreement, or omits restrictive provisions contained in the
Confidentiality Agreement, then the Confidentiality Agreement shall be deemed to
be automatically amended to contain in substitution for such comparable
provisions such less restrictive provisions, or to omit such restrictive
provisions, as the case may be, and in connection with the foregoing, the
Company agrees not to waive any of the provisions in any such confidentiality
agreement without waiving the similar provisions in the Confidentiality
Agreement to the same extent, (B) the Board of Directors of the Company
reasonably determines in good faith, after receiving advice from outside
nationally recognized legal counsel
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(which may be its current outside legal counsel), advice from Greenhill or
another independent nationally recognized investment bank and based on the good
faith recommendation of the Special Committee, which has also received advice
from its outside nationally recognized legal counsel (which may be its current
outside legal counsel) and advice from Greenhill or another independent
nationally recognized investment bank, that such Acquisition Proposal is a
Superior Proposal and (C) the Board of Directors of the Company reasonably
determines in good faith, after receiving advice from outside nationally
recognized legal counsel (which may be its current outside legal counsel) and
based on the good faith recommendation of the Special Committee, which has also
received advice from its outside nationally recognized legal counsel (which may
be its current outside legal counsel), that it is necessary to take such actions
in order to comply with its fiduciary duties under applicable law. Without
limiting the foregoing, the Buyer, the Transitory Subsidiary and the Company
agree that any violation of the restrictions set forth in this Section 5.3(a) by
any affiliate, officer, director, employee, representative, consultant,
investment banker, attorney, accountant or other agent of the Company or any of
the Subsidiaries or their respective affiliates (other than any such Person who
is an affiliate or employee of the Buyer or of any of its affiliates), whether
or not such Person is purporting to act on behalf of the Company or any of the
Subsidiaries or their respective affiliates, shall constitute a breach by the
Company of this Section 5.3(a). The Company shall enforce, to the fullest extent
permitted under applicable law, the provisions of any standstill,
confidentiality or similar agreement entered into by the Company or any of the
Subsidiaries or their respective affiliates or representatives, including,
without limitation, where necessary, obtaining injunctions to prevent any
breaches of such agreements and to enforce specifically the terms and provisions
thereof in any court having jurisdiction.
(b) Neither the Board of Directors of the Company nor any
committee thereof (including, without limitation, the Special Committee) shall
(i) withdraw, modify or amend, or propose to withdraw, modify or amend, in a
manner adverse to the Buyer or the Transitory Subsidiary, the approval, adoption
or recommendation, as the case may be, of the Merger, this Agreement or any of
the other transactions contemplated hereby, (ii) approve or recommend, or
propose to approve or recommend, any Acquisition Proposal, (iii) cause the
Company to accept such Acquisition Proposal and/or enter into any letter of
intent, agreement in principle, acquisition agreement or other similar agreement
(each, an "ACQUISITION AGREEMENT") related to such Acquisition Proposal, or (iv)
resolve to do any of the foregoing; PROVIDED that the Board of Directors of the
Company, based on the recommendation of the Special Committee, may take such
actions prior to the Special Meeting if (w) the Company has complied with its
obligations under this Section 5.3, (x) the Acquisition Proposal is a Superior
Proposal, (y) the Board of Directors of the Company reasonably determines in
good faith, after receiving advice from outside nationally recognized legal
counsel (which may be its current outside legal counsel) and based on the good
faith recommendation of the Special Committee, which has also received advice
from its outside nationally recognized legal counsel (which may be its current
outside legal counsel), that it is necessary to take such actions in order to
comply with its fiduciary duties under applicable law, all the conditions to the
Company's right to terminate this Agreement in accordance with Section 7.1(f)
have been satisfied (including the expiration of the five (5) Business Day
period described therein and the payment of all amounts required pursuant to
Section 7.3) and (z) simultaneously or substantially simultaneously with such
withdrawal, modification or recommendation, this Agreement is terminated in
accordance with Section 7.1(f).
For purposes of this Agreement, the term "ACQUISITION
PROPOSAL" means (i) any inquiry, proposal or offer (including, without
limitation, any proposal to stockholders of the Company) from any Person or
group relating to any direct or indirect acquisition or purchase of fifteen
percent (15%) or more of the consolidated assets of the Company and the
Subsidiaries or fifteen percent (15%) or more of any class of equity securities
of the Company or any of the Subsidiaries in a single transaction or a series of
related transactions, (ii) any tender offer (including a self tender offer) or
exchange offer that, if consummated, would result in any Person or group
beneficially owning fifteen percent (15%) or more of any class of equity
securities of
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the Company or any of the Subsidiaries or the filing with the SEC of a
registration statement under the Securities Act or any statement, schedule or
report under the Exchange Act in connection therewith, (iii) any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of the Subsidiaries, (iv)
any other transaction the consummation of which could reasonably be expected to
impede, interfere with, prevent or materially delay the Merger or which could
reasonably be expected to materially dilute the benefits to the Buyer of the
transactions contemplated hereby or (v) any public announcement by or on behalf
of the Company, any of the Subsidiaries or any of their respective affiliates
(or any of their respective officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants and other agents) or by
any third party of a proposal, plan or intention to do any of the foregoing or
any agreement to engage in any of the foregoing.
For purposes of this Agreement, the term "SUPERIOR PROPOSAL"
means a bona fide written offer which is binding on the offeror and not
solicited by or on behalf of the Company, any of the Subsidiaries or any of
their respective affiliates (or any of their respective officers, directors,
employees, representatives, consultants, investment bankers, attorneys,
accountants and other agents) made by a third party to acquire, directly or
indirectly, all of the Shares pursuant to a tender offer followed by a merger, a
merger or a purchase of all or substantially all of the assets of the Company
and the Subsidiaries (i) on terms which the Board of Directors of the Company
reasonably determines in good faith, after receiving the advice of Greenhill or
another independent nationally recognized investment bank and based on the good
faith determination of the Special Committee (after receiving the advice of
Greenhill or another independent nationally recognized investment bank), to be
more favorable from a financial point of view to the Company and its
stockholders (in their capacity as such) than the transactions contemplated
hereby (to the extent the transactions contemplated hereby are proposed to be
modified by the Buyer in accordance with Section 7.1(f)), (ii) which is
reasonably capable of being consummated (taking into account such factors as the
Board of Directors of the Company and the Special Committee in good faith deems
relevant, including, without limitation, all legal, financial, regulatory and
other aspects of such proposal (including the terms of any financing and the
likelihood that the transaction would be consummated) and the identity of the
Person making such proposal) and (iii) which is not conditioned on any
financing, the obtaining of which in the reasonable good faith determination of
the Board of Directors of the Company based on the recommendation of the Special
Committee is less likely to be obtained than the effectiveness of the Fifteenth
Amendment to Company Senior Credit Agreement (as defined in Section 6.2(g)).
(c) In addition to the obligations of the Company set forth in
paragraph (a), on the date of receipt or occurrence thereof, the Company shall
advise the Buyer of any request for information with respect to any Acquisition
Proposal or of any Acquisition Proposal, or any inquiry, proposal, discussions
or negotiation with respect to any Acquisition Proposal, the terms and
conditions of such request, Acquisition Proposal, inquiry, proposal, discussion
or negotiation and the Company shall, within one (1) calendar day of the receipt
thereof, promptly provide to the Buyer copies of any written materials received
by the Company in connection with any of the foregoing, and the identity of the
Person making any such Acquisition Proposal or such request, inquiry or proposal
or with whom any discussions or negotiations are taking place. The Company shall
keep the Buyer fully informed of the status and material details (including
amendments or proposed amendments) of any such request or Acquisition Proposal
and keep the
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Buyer fully informed as to the material details of any information requested of
or provided by the Company and as to the details of all discussions or
negotiations with respect to any such request, Acquisition Proposal, inquiry or
proposal, and shall provide to the Buyer within one (1) calendar day of receipt
thereof all written materials received by the Company with respect thereto. The
Company shall promptly provide to the Buyer any non-public information
concerning the Company provided to any other Person in connection with any
Acquisition Proposal, which was not previously provided to the Buyer.
(d) The Company shall promptly request in writing each Person
which has heretofore executed a confidentiality agreement in connection with its
consideration of acquiring the Company or any portion thereof to return all
confidential information heretofore furnished to such Person by or on behalf of
the Company, and the Company shall use its reasonable best efforts to have such
information returned or destroyed (to the extent destruction of such information
is permitted by such confidentiality agreement).
5.4. ACCESS TO INFORMATION. The Company shall (and shall cause
each of its Subsidiaries to) afford to the Buyer's officers, employees,
accountants, consultants, financing sources, counsel and other agents and
representatives reasonable access, upon reasonable advance notice, during normal
business hours during the period prior to the Effective Time, to all of the
properties, books, contracts, commitments, personnel and records and accountants
of the Company and its Subsidiaries and, during such period, the Company shall
(and shall cause each of the Subsidiaries to) furnish to the Buyer (a) a copy of
each report, schedule, registration statement and other document filed or
received by it or any of the Subsidiaries during such period pursuant to the
requirements of federal or state securities laws and (b) all other information
concerning business, properties, assets and personnel of the Company and the
Subsidiaries as the Buyer may reasonably request. The Buyer, the Transitory
Subsidiary and their affiliates and representatives will hold any such
information that is nonpublic in confidence in accordance with the
Confidentiality Agreement. No information or knowledge obtained in any
investigation pursuant to this Section 5.4 or otherwise shall affect or be
deemed to modify any representation or warranty contained in this Agreement or
the conditions to the obligations of the Parties to consummate the Merger.
5.5. SPECIAL MEETING. As promptly as practicable after the
execution and delivery of this Agreement, the Company, acting through its Board
of Directors, shall, in accordance with applicable law, duly call, give notice
of, convene and hold a special meeting of its stockholders (the "SPECIAL
MEETING"), which meeting shall be held as promptly as practicable following the
preparation of the Proxy Statement, for the purpose of considering and taking
action upon the approval of this Agreement and the Merger, and the Company
agrees that this Agreement and the Merger shall be submitted at such meeting.
Subject to Section 5.3(b), the Company shall use its reasonable best efforts to
solicit and obtain from its stockholders proxies, and shall take all other
action necessary and advisable to secure the vote of stockholders required by
applicable law and by the Certificate of Incorporation of the Company or the
By-laws of the Company to obtain their adoption of this Agreement and approval
of the Merger, and the Board of Directors of the Company shall recommend that
the stockholders of the Company vote in favor of the adoption of this Agreement
and the approval of the Merger at the Special Meeting, and the Company agrees
that it shall include in the Proxy Statement such recommendation of the Board of
Directors of the Company that the stockholders of the Company adopt this
Agreement
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and approve the Merger. Without limiting the generality of the foregoing, the
Company agrees that its obligations pursuant to the first sentence of this
Section 5.5 shall not be affected by (i) the commencement, public proposal,
public disclosure or communication to the Company, any of the Subsidiaries or
any of their respective affiliates (or any of their respective officers,
directors, employees, representatives, consultants, investment bankers,
attorneys, accountants and other agents) of any Acquisition Proposal or (ii) the
withdrawal or modification by the Board of Directors of the Company of its
approval or recommendation of this Agreement or the Merger. The Buyer will cause
all Shares owned by the Buyer and its subsidiaries (including the Transitory
Subsidiary), if any, to be voted in favor of the Merger.
5.6. PROXY STATEMENT. As promptly as practicable after the
execution and delivery of this Agreement, the Company shall:
(a) prepare and, after consultation with and review by the
Buyer, file with the SEC a preliminary proxy statement relating to the Merger
and this Agreement and use its reasonable best efforts (i) to obtain and furnish
the information required to be included by the SEC in the Proxy Statement and,
after consultation with and review by the Buyer, to respond promptly to any
comments made by the SEC with respect to the preliminary proxy statement and
promptly cause a definitive proxy statement (the "PROXY STATEMENT") to be mailed
to its stockholders and, if necessary, after the definitive Proxy Statement
shall have been so mailed, promptly circulate amended or supplemental proxy
material and, if required in connection therewith, resolicit proxies; PROVIDED
that no such amended or supplemental proxy material will be mailed by the
Company without consultation with and review by the Buyer and (ii) to obtain the
necessary approvals of the Merger and this Agreement by its stockholders;
(b) promptly notify the Buyer of the receipt of the comments
of the SEC and of any request from the SEC for amendments or supplements to the
preliminary proxy statement or the definitive Proxy Statement or for additional
information, and will promptly supply the Buyer with copies of all written
correspondence between the Company or its representatives, on the one hand, and
the SEC or members of its staff, on the other hand, with respect to the
preliminary proxy statement, the definitive Proxy Statement or the Merger;
(c) promptly inform the Buyer if at any time prior to the
Special Meeting any event should occur that is required by applicable law to be
set forth in an amendment of, or a supplement to, the Proxy Statement, in which
case, the Company, with the cooperation of and in consultation with the Buyer,
will, upon learning of such event, promptly prepare and mail such amendment or
supplement; and
(d) it is expressly understood and agreed that (i) the Buyer,
the Transitory Subsidiary and the Company will cooperate with each other in
connection with all aspects of the preparation, filing and clearance by the SEC
of the Proxy Statement (including the preliminary proxy and any and all
amendments or supplements thereto), (ii) the Company shall give the Buyer and
its outside counsel the opportunity to review the Proxy Statement prior to it
being filed with the SEC and shall give the Buyer and its outside counsel the
opportunity to review all amendments and supplements to the Proxy Statement and
all responses to requests for additional information and replies to comments
prior to their being filed with, or sent to, the SEC and each of the Company and
the Buyer agrees to use its reasonable best efforts, after consultation with
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the other, to respond promptly to all such comments of and requests by the SEC,
(iii) to the extent practicable, the Company and its outside counsel shall (and
the Company shall cause the Special Committee and its outside counsel to) permit
the Buyer and its outside counsel to participate in all communications with the
SEC and its staff (including, without limitation, all meetings and telephone
conferences) relating to the Proxy Statement, this Agreement or any of the
transactions contemplated thereby (PROVIDED that in the event that such
participation by the Buyer is not practicable, the Company shall promptly inform
the Buyer and its counsel of the content of all such communications and the
participants involved therein), and (iv) the Company will not file with, or send
to, the SEC the Proxy Statement (including the preliminary proxy statement and
any and all amendments or supplements thereto and any and all responses to
requests for additional information and replies to comments relating thereto) or
mail any Proxy Statement (including the preliminary proxy statement and any and
all amendments or supplements thereto) or use any proxy material in connection
with the Special Meeting, in each case without the Buyer's prior approval (not
to be unreasonably withheld).
5.7. REASONABLE BEST EFFORTS. Subject to the terms and
conditions provided herein, each of the Company, the Buyer and the Transitory
Subsidiary shall, and the Company shall cause each of the Subsidiaries to,
cooperate and use their reasonable best efforts to take, or cause to be taken,
all appropriate action, and do, or cause to be done, and assist and cooperate
with the other Parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Merger and the other transactions contemplated by this Agreement (including,
without limitation, the satisfaction of the respective conditions set forth in
Article VI), and to make, or cause to be made, all filings necessary, proper or
advisable under applicable laws, rules and regulations to consummate and make
effective the transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, each of the Company, the Buyer and the Transitory
Subsidiary shall, and the Company shall cause each of the Subsidiaries to,
cooperate and use their reasonable best efforts to promptly:
(a) make any and all filings, recordations, declarations or
registrations with, obtain any and all actions or non-actions, licenses,
permits, consents, approvals, waivers, authorizations, qualifications and orders
of, give any and all notices to, take reasonable steps to avoid an action or
proceeding by, any and all Governmental Entities (including, without limitation,
all filings under the HSR Act) and parties to contracts with the Company and the
Subsidiaries, in each case prior to the Closing Date, as are necessary, proper
or advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement; it being understood and agreed that:
(i) the Company and the Subsidiaries shall use their
reasonable best efforts to cooperate with the Buyer in any manner reasonably
requested by the Buyer in connection with obtaining at or prior to the Closing
of approvals, consents or waivers (collectively, the "REQUIRED CONSENTS") under
each of the Contracts identified in Section 5.7(a)(i) of the Company Disclosure
Letter (collectively, the "IDENTIFIED CONTRACTS") with respect to the Merger
(including the change of control resulting therefrom) and the other transactions
contemplated by this Agreement (no such Required Consent to be conditioned on
any increase in the amount payable under the applicable Identified Contract or
any reduction in the term thereof or any other material changes in the
provisions thereof, except as may be required by the express
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terms of the applicable Identified Contract, and such Required Consent shall
otherwise be on terms and conditions reasonably satisfactory to the Buyer); in
connection with the foregoing, neither the Company nor any of the Subsidiaries
shall, without the prior written consent of the Buyer, make (or commit to make)
any payment or otherwise provide (or commit to provide) any value or benefit to
any Person in connection with obtaining any Required Consent (except as may be
required by the express terms of the respective Identified Contracts); PROVIDED
that, notwithstanding anything to the contrary set forth in Section 5.1, with
the prior written consent of the Buyer (not to be unreasonably withheld or
delayed; it being understood and agreed that any objection to a refinancing
raised by any lender under the Company Senior Credit Agreement shall be a
reasonable basis for withholding or delaying consent), the Company shall be
permitted to enter into one or more Contracts (collectively, the "REPLACEMENT
CONTRACTS") to refinance any Identified Contract on terms not materially less
favorable (after taking into account any and all fees and expenses incurred in
connection with such refinancing) to the Company (or the applicable Subsidiary)
or the Surviving Corporation than the terms of such Identified Contract,
whereupon the respective Replacement Contract shall be deemed to be disclosed on
Section 5.7(a)(i) of the Company Disclosure Letter and to constitute an
Identified Contract for purposes of this Section 5.7(a)(i) (it being understood
and agreed that fees paid to refinance any Identified Contract as contemplated
above shall be counted for purposes of the last sentence of this Section 5.7).
(ii) each of the Parties shall expeditiously give and make
any and all notices and reports required to be made by such Party to the
appropriate Persons with respect to the Liquor Licenses and each of the Parties
shall, prior to the Effective Time, use its reasonable best efforts to cooperate
with the other in any manner reasonably requested by the other in connection
with obtaining at or prior to the Closing the regulatory approvals or consents
as may be required by any Governmental Entities in order to obtain and maintain
in effect at all times following the Effective Time all Liquor Licenses and
other permits necessary to maintain continuity of service of alcoholic beverages
at each Company Restaurant; without limiting the foregoing, each of the Parties
shall, to the extent necessary of such Party, (1) duly and promptly file and
process any and all applications necessary to obtain all required regulatory
approvals or consents as a result of the consummation of the transactions
contemplated by this Agreement, including, without limitation, the amendment of
any and all documents required to be amended with respect to the existing
licensees under the Liquor Licenses, (2) duly and promptly file and process
Liquor License applications with respect to each of the restaurants being
brought into operation at any time prior to the Effective Time and to duly and
promptly file appropriate amendments, if any, as a result of the consummation of
the transactions contemplated by this Agreement, and (3) duly and promptly file
with all appropriate Governmental Entities, and thereafter duly process renewal
applications for all of the licensed Subsidiaries whose licenses will expire
during the period from the date of this Agreement and until all of the
respective applications shall have been approved; PROVIDED that, without the
Company's prior consent (not to be unreasonably withheld or delayed), neither
the Buyer nor the Transitory Subsidiary shall, from and after the date hereof,
until the Effective Time, (1) add any officer or director of the Buyer or the
Transitory Subsidiary (other than (x) any individual who is currently an officer
or director of the Company or any of the Subsidiaries or (y) any individual who
is an officer or director of an affiliate of Castle Harlan, Inc., which
affiliate has at any time during which such individual is or was an officer or
director of such affiliate received regulatory approval or consent to obtain,
renew or maintain in effect a liquor license) or (2) issue or sell any equity
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interest in the Buyer or the Transitory Subsidiary to any Person (other than
their current stockholders or any individual who is currently an officer or
director of the Company or any of the Subsidiaries), if, in the case of either
(1) or (2) above, the Buyer is aware, after due inquiry, that such action would
or would be reasonably likely to materially impede, delay, hinder or make more
burdensome the obtaining and maintaining of any and all authorizations,
approvals, consents or orders from any Governmental Entity or other third party
necessary to maintain continuity of service of alcoholic beverages at each
Company Restaurant in effect for a reasonable period of time following the
Effective Time on terms no less favorable to the Company or the Surviving
Corporation than those in effect on the date of this Agreement; and
(iii) the Company and its Board of Directors shall (A)
take all action within its power to make any "fair price", "moratorium",
"control share acquisition", "business combination" or other state takeover
statute or similar statute, rule or regulation inapplicable to the Merger, this
Agreement or any of the other transactions contemplated hereby and (B) if any
state takeover statute or similar statute, rule or regulation becomes applicable
to the Merger, this Agreement or any of the other transactions contemplated
hereby, take all action within its power to ensure that the Merger and such
other transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
statute, rule or regulation on the Merger and such other transactions;
(b) defend any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
any of the transactions contemplated hereby (including seeking to have any stay
or temporary restraining order entered by any court or other Governmental Entity
vacated or reversed); it being understood and agreed that the Company shall
promptly notify the Buyer of any litigation (including any stockholder
litigation), other than where the Buyer is the adverse party, against the
Company and/or its directors relating to any of the transactions contemplated by
this Agreement and the Company shall give the Buyer the opportunity to
participate in the defense or settlement of any such litigation; PROVIDED that
no settlement with respect to any such litigation shall be agreed to without the
Buyer's prior consent (which shall not be unreasonably withheld); and
(c) execute and deliver any additional instruments necessary
to consummate the transactions contemplated by this Agreement and to fully carry
out the purposes of this Agreement.
Notwithstanding the foregoing to the contrary, except as may be required by the
Fifteenth Amendment to Company Senior Credit Agreement (as defined in Section
6.2(g)), no loan agreement or contract for borrowed money shall be repaid, in
whole or in part, except by payment of an immaterial sum (in any event not to
exceed a basket amount equal to $100,000 in the aggregate with respect to all
such loan agreements and contracts for borrowed money, after taking into account
any and all amounts payable pursuant to the immediately succeeding parenthetical
or pursuant to Section 5.7(a)(i)) or as currently required by its terms, and no
material Contract shall be amended, modified, supplemented or replaced to
increase the amount payable thereunder (other than by an amount not to exceed a
basket amount equal to $100,000 in the aggregate with respect to all such
material Contracts, after taking into account any and all amounts payable
pursuant to the immediately preceding parenthetical or pursuant to Section
5.7(a)(i)) or otherwise to be more burdensome (other than in an immaterial
manner) to the
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Company or any of the Subsidiaries in order to obtain any such consent, approval
or authorization without first obtaining the written approval of the Buyer,
which shall not be unreasonably withheld.
5.8. PUBLIC DISCLOSURE. The press release announcing the
execution of this Agreement shall be issued only in such form as shall be
mutually agreed upon by the Company and the Buyer and (b) each of the Company
and the Buyer shall consult with, and obtain the consent of, the other Party
before issuing any other press release or otherwise making any public statement
with respect to the Merger or this Agreement and shall not issue any such press
release or make any such public statement prior to consulting with and obtaining
the prior consent of the other Party; PROVIDED that a Party may, without
consulting with or obtaining the prior consent of the other Party, issue such
press release or make such public statement as may be required by applicable
law, rule or regulation or by any listing agreement with a national securities
exchange or automated quotation system to which the Buyer (or an affiliate
thereof) or the Company, as the case may be, is a party, if such Party has used
reasonable best efforts to consult with the other Party and to obtain such other
Party's consent, but has been unable to do so in a timely manner.
5.9. EMPLOYEE STOCK PURCHASE PLAN. As of the end of the
Offering Period (within the meaning of the Company's Employee Stock Purchase
Plan (the "ESPP")) ending March 31, 2002, the ESPP shall be terminated. Prior to
the end of such Offering Period, the Company shall take all actions (including
preventing any payroll deductions under the ESPP with respect to any period
after such Offering Period and, if appropriate, amending the terms of the ESPP)
that are necessary to effect such termination.
5.10. OTHER EMPLOYEE BENEFITS. (a) For a period of one (1)
year following the Effective Time, the Buyer shall or shall cause the Surviving
Corporation to maintain in effect employee benefit plans and arrangements for
employees of the Surviving Corporation (to the extent that such plans and
arrangements have heretofore been disclosed by the Company to the Buyer) that,
taken as a whole, provide a level of benefits that is substantially comparable
to the level of the benefits, taken as a whole, provided by the Company Employee
Plans immediately prior to the date of this Agreement (other than stock option
or stock-based plans or arrangements); PROVIDED that employees covered by
collective bargaining agreements need not be provided with any such benefits.
The provisions of this Section 5.10(a) shall not create in any current or former
employee of the Company or any of the Subsidiaries any rights to employment or
continued employment with the Buyer, the Surviving Corporation or the Company or
any of their respective subsidiaries or affiliates or any right to specific
terms or conditions of employment. Notwithstanding anything in this Agreement to
the contrary, subject to any existing employment contracts disclosed in Section
5.10 of the Company Disclosure Letter, from and after the Effective Date, the
Surviving Corporation shall have sole discretion over the hiring, promotion,
retention, termination and other terms and conditions of the employment of the
employees of the Surviving Corporation.
(b) The Buyer shall ensure that employees of the Company as of
the Effective Time receive credit (for all purposes including eligibility to
participate, vesting, vacation entitlement and severance benefits) for service
with the Company or the Subsidiaries (to the same extent such service credit was
granted under the Company Employee Plans immediately prior to the date of this
Agreement) under the comparable employee benefit plans, programs and
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policies of the Buyer and the Surviving Corporation in which such employees
shall become participants as contemplated by Section 5.10(a) (other than benefit
accrual under any pension plan).
(c) The Buyer shall cause the Surviving Corporation to assume
and honor in accordance with their respective terms all written employment,
severance, retention and termination agreements (including any change in control
provisions therein) applicable to employees of the Company; PROVIDED that
nothing herein shall obligate the Buyer or the Surviving Corporation to maintain
any particular plan or arrangement in accordance with its terms after the
Effective Date (other than the existing employment, severance, retention and
termination agreements disclosed in Section 5.10 of the Company Disclosure
Letter).
5.11. DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION.
(a) After the Effective Time, subject to Section 5.11(b), the Surviving
Corporation (or any successor to the Surviving Corporation) shall indemnify,
defend and hold harmless the present and former officers and directors of the
Company and the Subsidiaries who are covered on the date of this Agreement by
the Company's directors' and officers' liability insurance policy (each, an
"INDEMNIFIED PARTY") against all losses, claims, damages, liabilities, fees and
expenses (including reasonable fees and disbursements of counsel) and judgments,
fines, losses, claims, liabilities and amounts paid in settlement (PROVIDED that
any such settlement is effected with the written consent of the Surviving
Corporation, such consent not to be unreasonably withheld) arising out of
actions or omissions arising out of such individuals' services as officers,
directors, employees or agents of the Company or any of the Subsidiaries or as
trustees or fiduciaries of any plan for the benefit of employees of the Company
or any of the Subsidiaries, occurring at or prior to the Effective Time to the
full extent permitted under Delaware law, such right to include advancement of
expenses incurred in the defense of any action or suit; PROVIDED that any
determination required to be made with respect to whether such Indemnified Party
is entitled to indemnity hereunder (including, without limitation, whether, with
respect to the indemnification of such Indemnified Party by the Surviving
Corporation, an Indemnified Party's conduct complies with the standards set
forth under the DGCL), shall be made at the Surviving Corporation's expense by
independent counsel mutually acceptable to the Surviving Corporation and the
Indemnified Party; PROVIDED, FURTHER, that nothing herein shall impair any
rights or obligations of any present or former directors or officers of the
Company or any of its Subsidiaries.
(b) For a period of not less than six (6) years after the
Effective Date, the Surviving Corporation shall either (i) maintain the
Company's existing officers' and directors' liability insurance covering claims
arising from facts or events that occurred at or prior to the Effective Time (a
true and correct copy of which has been previously delivered to the Buyer) ("D&O
INSURANCE"); PROVIDED that in no event shall the Buyer be required to expend in
any one (1) year an amount in excess of two hundred percent (200%) of the annual
premiums currently paid by the Company for such insurance (in this regard, the
Company represents that the premiums currently paid by the Company for such
insurance with respect to the thirty-six (36) month period ending on June 3,
2003 to be $253,500); PROVIDED, FURTHER, that if the annual premiums of such
insurance coverage exceed such amount, the Surviving Corporation shall be
obligated to obtain a policy with the greatest coverage available for a cost not
exceeding such amount; PROVIDED, FURTHER, that the Surviving Corporation may
substitute for such Company
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policies other policies of substantially similar coverage and amounts containing
terms no less favorable, taken as a whole, to such former directors or officers;
PROVIDED, FURTHER, that if the existing D&O Insurance expires, is terminated or
cancelled during such period, the Surviving Corporation will obtain
substantially similar D&O Insurance or (ii) cause the Buyer's directors' and
officers' liability insurance then in effect to cover the Indemnified Parties
with respect to those matters covered by, and on terms no less favorable, taken
as a whole, than those set forth in, the Company's directors' and officers'
liability insurance policy.
(c) To the extent permitted by applicable law, the Certificate
of Incorporation and the By-laws of the Surviving Corporation for so long as the
Surviving Corporation shall continue to exist shall contain the provisions with
respect to advancement of expenses, indemnification and exculpation from
liability set forth in the Certificate of Incorporation and By-laws of the
Company on the date of this Agreement, which provisions shall not be amended,
repealed or otherwise modified for a period of six (6) years from the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who on or prior to the Effective Time were directors or officers of
the Company, unless such modification is required by law or regulation.
(d) In the event the Surviving Corporation or any of its
respective successors or assigns (i) consolidates with or merges into any other
Person and shall not be the continuing or surviving corporation or entity in
such consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each case, proper provision
shall be made so that the successors and assigns of the Surviving Corporation
honor the indemnification obligations set forth in this Section 5.11.
(e) The obligations of the Surviving Corporation under this
Section 5.11 shall not be terminated, modified or assigned in such a manner as
to adversely affect any current or former director or officer to whom this
Section 5.11 applies without the consent of such affected director or officer
(it being expressly agreed that the directors and officers to whom this Section
5.11 applies shall be third-party beneficiaries of this Section 5.11).
(f) Any Indemnified Party entitled to and wishing to claim
indemnification under Section 5.11(a), upon learning of any such claim, action,
suit, proceeding or investigation after the Effective Time, shall promptly
notify the Surviving Corporation thereof (PROVIDED that the failure to provide
prompt notice shall not relieve the Surviving Corporation of its obligations
pursuant to this Section 5.11 except to the extent that it has been prejudiced
thereby). In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) the
Surviving Corporation shall have the right, from and after the Effective Time,
to assume the defense thereof (with counsel engaged by the Surviving Corporation
to be reasonably acceptable to the relevant Indemnified Party), and the
Surviving Corporation shall not be liable to such Indemnified Party for any
legal expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Party in connection with the defense thereof, (ii) such
Indemnified Party shall cooperate in the defense of any such matter and (iii)
the Surviving Corporation shall not be liable for any settlement effected
without its prior written consent; PROVIDED that the Surviving Corporation shall
not have any obligation under Section 5.11(a) to any Indemnified Party when and
if it is determined in accordance with Section 5.11(a) that the Indemnified
Party is not entitled to indemnity hereunder.
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5.12. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to the Buyer and the Buyer shall give prompt notice to the
Company, of (a) the occurrence or non-occurrence of any event known to such
Party, the occurrence or non-occurrence of which has resulted in, or is
reasonably likely to result in, any representation or warranty set forth in this
Agreement made by such Party that is qualified as to materiality to be untrue or
inaccurate, or any such representation and warranty that is not so qualified to
be untrue or inaccurate in any material respect; (b) any material failure by
such Party to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; or (c) any action, suit, proceeding,
inquiry or investigation pending or, to the knowledge of such Party, threatened
which questions or challenges this Agreement or the consummation of any of the
transactions contemplated hereby; PROVIDED that the delivery of any notice
pursuant to this Section 5.12 shall not limit or otherwise affect the remedies
available hereunder to the Party receiving such notice and that no such
notification shall modify the representations or warranties of any Party or the
conditions to the obligations of any Party hereunder. Each of the Company, the
Buyer and the Transitory Subsidiary shall give prompt notice to the other
Parties of any notice or other communication from any third party alleging that
the consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement.
5.13. RIGHTS AGREEMENT. Subject to the Company's right to
terminate this Agreement and abandon the Merger and the other transactions
contemplated by this Agreement pursuant to and in accordance with Section
7.1(f), and other than in connection with the transactions contemplated hereby,
the Company shall not (i) redeem the Rights, (ii) amend (other than to delay the
"Distribution Date" (as such term is defined in the Rights Agreement) or to
render the Rights inapplicable to the Merger) or terminate the Rights Agreement
prior to the Effective Time, unless required to do so by a court of competent
jurisdiction or (iii) take any action which would allow any "PERSON" (as such
term is defined in the Rights Agreement) other than the Buyer or the Transitory
Subsidiary (or their affiliates) to be the "BENEFICIAL OWNER" (as such term is
defined in the Rights Agreement) of fifteen percent (15%) or more of the Common
Stock without causing a "Distribution Date" (as such term is defined in the
Rights Agreement) or a "STOCK ACQUISITION DATE" (as such term is defined in the
Rights Agreement) to occur.
5.14. SUBSEQUENT FILINGS. Until the Effective Time, the
Company will timely file with the SEC each Subsequent Filing required to be
filed by the Company and will promptly deliver to the Buyer and the Transitory
Subsidiary copies of each such Subsequent Filing filed with the SEC. As of their
respective dates, none of such Subsequent Filings (a) shall 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 and (b) shall
comply, in all material respects with all applicable requirements of the federal
securities laws and the SEC rules and regulations promulgated thereunder.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information supplied by the Buyer or the Transitory
Subsidiary in writing relating to the Buyer or the Transitory Subsidiary, as the
case may be, expressly for inclusion or incorporation by reference in the Proxy
Statement. Each of the audited consolidated financial statements and unaudited
interim financial statements (including, in each case, any related notes and
schedules) contained or to be contained in the Subsequent Filings shall be
prepared from, and shall be in accordance with, the books and records of the
Company and its consolidated Subsidiaries, shall comply in all material respects
with applicable accounting requirements and
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with the published rules and regulations of the SEC with respect thereto, shall
be prepared in accordance with GAAP (except as may be indicated in the notes
thereto) and shall fairly present the consolidated financial position and the
consolidated results of operations and cash flows of the Company and its
consolidated Subsidiaries at the dates and for the periods covered thereby.
5.15. COMMUNICATION TO EMPLOYEES. The Company and the Buyer
will cooperate with each other with respect to, and endeavor in good faith to
agree in advance upon the method and content of, all written or oral
communications or disclosure to employees of the Company or any of the
Subsidiaries with respect to the Merger and any other transactions contemplated
by this Agreement.
ARTICLE VI
CONDITIONS TO EFFECT THE MERGER
6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each Party to this Agreement to effect the
Merger shall be subject to the satisfaction or waiver (to the extent permitted
by applicable law) on or prior to the Closing Date of each of the following
conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the Merger shall
have been duly adopted and approved by the requisite affirmative vote of the
Company's stockholders in accordance with applicable law, the Company's
Certificate of Incorporation and the Company's By-laws;
(b) GOVERNMENTAL APPROVALS. Other than the filing of the
Certificate of Merger as contemplated by Section 1.2, all authorizations,
consents, orders or approvals of, or declarations or filings with, or
expirations of waiting periods imposed by, any Governmental Entity in connection
with the Merger and the consummation of the other transactions contemplated by
this Agreement, the failure of which to file, obtain or occur, individually or
in the aggregate, would result or would reasonably be likely to result in a
Company Material Adverse Effect, shall have been filed, been obtained or
occurred and shall not have expired or been withdrawn (including any filings
under the HSR Act and the expiration or termination of any waiting periods
imposed or required by the HSR Act); PROVIDED that the right to assert this
condition shall not be available to a Party whose material failure to fulfill
any obligation under this Agreement has been the principal cause of or resulted
in the failure of this condition to be satisfied.
(c) INJUNCTIONS. There shall be no preliminary or permanent
order or injunction of a court or other Governmental Entity of competent
jurisdiction precluding, restraining, enjoining or prohibiting consummation of
the Merger.
6.2. CONDITIONS TO THE BUYER'S AND THE TRANSITORY SUBSIDIARY'S
OBLIGATION TO EFFECT THE MERGER. The obligation of the Buyer and the Transitory
Subsidiary to effect the Merger shall be subject to the satisfaction on or prior
to the Closing Date of each of the following conditions, any and all of which
may be waived in whole or in part by the Buyer or the Transitory Subsidiary to
the extent permitted by applicable law:
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(a) REPRESENTATIONS AND WARRANTIES. (i) The representations
and warranties of the Company set forth in this Agreement that are qualified by
references to the qualification "Company Material Adverse Effect" shall be true
and correct when made and on the Closing Date (except for representations and
warranties made as of a specified date, which need be true and correct only as
of the specified date), as if made on and as of such date and (ii) all other
representations and warranties of the Company set forth in this Agreement shall
have been true and correct when made and on and as of the Closing Date (except
for representations and warranties made as of a specified date, which need be
true and correct only as of the specified date) as if made on and as of such
date, except for such inaccuracies as have not resulted in and would not
reasonably be likely to result in, individually or in the aggregate, a Company
Material Adverse Effect. The Company shall have delivered to the Buyer and the
Transitory Subsidiary a certificate, signed on behalf of the Company by the
Chief Executive Officer of the Company, to such effect.
(b) COVENANTS. The Company shall have performed or complied in
all material respects with all obligations, agreements or covenants required to
be performed under this Agreement on or prior to the Closing Date. The Company
shall have delivered to the Buyer and the Transitory Subsidiary a certificate,
signed on behalf of the Company by the Chief Executive Officer of the Company,
to such effect.
(c) ILLEGALITY. There shall have been no action taken, or
statute, rule, regulation, judgment or executive order promulgated, entered,
enforced, enacted, issued or deemed applicable to the Merger by any Governmental
Entity that directly or indirectly prohibits or makes illegal the consummation
of the Merger or the other transactions contemplated by this Agreement.
(d) LITIGATION. (i) There shall not be any threatened,
instituted or pending action or proceeding by any Governmental Entity before any
court of competent jurisdiction or Governmental Entity, domestic or foreign,
challenging, threatening or seeking to make illegal, impede, delay or otherwise
directly or indirectly restrain, prohibit or make materially more costly the
Merger or seeking to obtain material damages (all as determined in the Buyer's
good faith judgment); and (ii) there shall not be pending or instituted before
any court of competent jurisdiction or Governmental Entity, domestic or foreign,
any action, suit or proceeding brought by any third party against the Company or
any of the Subsidiaries, except for, in the case of this subclause (ii),
actions, suits and proceedings that could not reasonably be expected to result
in, individually or in the aggregate, a Company Material Adverse Effect.
(e) COMPANY MATERIAL ADVERSE EFFECT. There shall not have
occurred any event, change, occurrence, effect, fact, violation, development or
circumstance that has resulted in or would reasonably be likely to result in,
individually or in the aggregate, a Company Material Adverse Effect. The Company
shall have delivered to the Buyer and the Transitory Subsidiary a certificate,
signed on behalf of the Company by the Chief Executive Officer of the Company,
to such effect.
(f) MINIMUM CONSOLIDATED ADJUSTED EBITDA. The Consolidated
Adjusted EBITDA (as defined on ANNEX A attached hereto) for the trailing twelve
month period ending on June 30, 2002 (the "LTM PERIOD") shall not be less than
$23,000,000, and the Company shall
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have furnished to the Buyer evidence (in reasonable detail) thereof reasonably
satisfactory in form and substance to the Buyer, which evidence shall be subject
to review and confirmation by the Buyer's accountants to the reasonable
satisfaction of the Buyer.
(g) FIFTEENTH AMENDMENT TO COMPANY SENIOR CREDIT AGREEMENT.
Amendment No. 15 to Second Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of March 26, 2002 (the "FIFTEENTH AMENDMENT TO COMPANY
SENIOR CREDIT AGREEMENT"), by and among the Company and certain of the
Subsidiaries (as borrowers thereunder) and certain financial institutions
identified therein shall have become effective and binding on the parties
thereto in accordance with its terms, subject only to the satisfaction of
conditions to effectiveness thereof that, by their nature, are to be satisfied
at the Closing.
(h) MATERIAL CONSENTS. The Company shall have filed and/or
obtained (and furnished to the Buyer evidence thereof reasonably satisfactory to
the Buyer) the following (each of which shall be required to be in form and
substance reasonably satisfactory to the Buyer):
(i) any and all authorizations, approvals, consents or
orders from any Governmental Entity or other third party relating to or
constituting Required Consents, and such authorizations, approvals, consents and
orders shall have become effective and binding in accordance with their terms
and shall not have expired or been withdrawn;
(ii) any and all authorizations, approvals, consents or
orders from any Governmental Entity or other third party (including, to the
extent permitted by applicable law, the Company or any of the Subsidiaries)
necessary or required in order to obtain and maintain in effect for a reasonable
period of time following the Effective Time all Liquor Licenses and other
permits necessary to maintain continuity of service of alcoholic beverages at
each Company Restaurant (in each case, on terms no less favorable than the terms
in effect on the date of this Agreement), and such authorizations, approvals,
consents and orders shall have become effective and binding in accordance with
their terms and shall not have expired or been withdrawn; and
(iii) other than with respect to (x) the Required Consents
and (y) the Liquor Licenses, any and all authorizations, approvals or consents
of other third parties (other than with respect to real estate leases or
subleases identified on Section 3.9(c) of the Company Disclosure Letter) in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement, the failure of
which to obtain or file would result in or would reasonably be likely to result
in, individually or in the aggregate, a Company Material Adverse Effect; and
such authorizations, approvals and consents (subject to such exception) shall
have become effective and binding in accordance with their terms and shall not
have expired or been withdrawn.
6.3. CONDITIONS TO THE COMPANY'S OBLIGATION TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the satisfaction on or prior to the Closing Date of each of the following
conditions, any and all of which may be waived in whole or in part by the
Company, to the extent permitted by applicable law:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Buyer and the Transitory Subsidiary set forth in this
Agreement shall have been true and correct
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when made and on and as of the Closing Date (except for representations and
warranties made as of a specified date, which need be true and correct only as
of the specified date) as if made on and as of such date, except for such
inaccuracies as have not resulted in and would not reasonably be likely to
result in, individually or in the aggregate, a material adverse effect on either
the Buyer or the Transitory Subsidiary and would not materially impair the
ability of either the Buyer or the Transitory Subsidiary to consummate the
transactions contemplated by this Agreement. The Buyer and the Transitory
Subsidiary shall have delivered to the Company a certificate, signed on behalf
of the Buyer and the Transitory Subsidiary by the Chief Executive Officer of the
Buyer and the Transitory Subsidiary, to such effect.
(b) COVENANTS. The Buyer and the Transitory Subsidiary shall
have performed or complied in all material respects with all obligations,
agreements or covenants required to be performed under this Agreement on or
prior to the Closing Date. The Buyer and the Transitory Subsidiary shall have
delivered to the Company a certificate, signed on behalf of the Buyer and the
Transitory Subsidiary by the Chief Executive Officer of the Buyer and the
Transitory Subsidiary, to such effect.
(c) ILLEGALITY. There shall have been no action taken, or
statute, rule, regulation, judgment or executive order promulgated, entered,
enforced, enacted, issued or deemed applicable to the Merger by any Governmental
Entity that directly or indirectly prohibits or makes illegal the consummation
of the Merger or the other transactions contemplated by this Agreement.
ARTICLE VII
TERMINATION
7.1. TERMINATION. This Agreement may be terminated and the
Merger and the other transactions contemplated by this Agreement may be
abandoned at any time prior to the Effective Time, by written notice by the
terminating Party to the other Parties, whether before or after Company
stockholder approval thereof, as follows:
(a) by mutual written consent of the Buyer and the Company;
(b) by either the Buyer or the Company, if the Merger shall
not have been consummated on or prior to 180 days after the signing of this
Agreement (or such later date as may be agreed to in writing by the Buyer and
the Company) (as the same may be extended from time to time as contemplated
below, the "TERMINATION DATE"), unless the Merger shall not have been
consummated because of a material breach of any representation, warranty,
obligation, covenant or agreement set forth in this Agreement on the part of the
Party seeking to terminate this Agreement (it being understood and agreed that
the Buyer shall have the unilateral right (but not the obligation), in its sole
discretion, by notice to the Company to be delivered on or prior to the
Termination Date then in effect, to extend the Termination Date from time to
time (but in any event not beyond the date that is 270 days after the signing of
this Agreement) if (A) all of the conditions set forth in Sections 6.1 and 6.2
shall have then been satisfied (or are capable of being satisfied, subject only
to the filing of the Certificate of Merger in the case of the conditions set
forth in Sections 6.1(b) and 6.2(g)) or waived (to the extent permitted by
applicable law) other
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than the condition set forth in Section 6.2(h)(ii) and (B) the Buyer is then
still attempting in good faith to obtain the authorizations, approvals,
consents, orders and certificates contemplated by such Section 6.2(h)(ii));
(c) by either the Buyer or the Company, if a Governmental
Entity or court of competent jurisdiction shall have issued a nonappealable
final order, decree or ruling or taken any other nonappealable final action, in
each case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger or the other transactions contemplated by this Agreement
(PROVIDED that the right to terminate this Agreement under this Section 7.1(c)
shall not be available to any Party whose material failure to fulfill any
obligation under this Agreement has been the principal cause of or resulted in
such order, decree ruling or action);
(d) by either the Buyer or the Company, if at the Special
Meeting (including any adjournment or postponement thereof permitted by this
Agreement), the requisite vote of the stockholders of the Company approving this
Agreement and the Merger shall not have been obtained;
(e) by the Buyer, if (w) the Company shall have (A) withdrawn,
modified or amended, or proposed to withdraw, modify or amend, in a manner
adverse to the Buyer or the Transitory Subsidiary, the approval, adoption or
recommendation, as the case may be, of the Merger, this Agreement or any of the
other transactions contemplated hereby or (B) approved or recommended, or
proposed to approve or recommend, or entered into any agreement, arrangement or
understanding with respect to, any Acquisition Proposal; (x) the Company's Board
of Directors or any committee thereof shall have resolved to take any of the
actions set forth in preceding subclause (w); (y) if after an Acquisition
Proposal has been made, the Board of Directors of the Company or the Special
Committee fail to affirm their recommendation and approval of the Merger and
this Agreement within three (3) Business Days of any request by the Buyer to do
so; or (z) if a tender offer or exchange offer constituting an Acquisition
Proposal is commenced and the Board of Directors of the Company or the Special
Committee do not recommend against acceptance of such offer by the Company's
stockholders (including by taking no position or a neutral position with respect
thereto);
(f) by the Company, if a Superior Proposal is received and the
Board of Directors of the Company reasonably determines in good faith, after
receiving advice from outside nationally recognized legal counsel (which may be
its current outside legal counsel) and based on the good faith recommendation of
the Special Committee, which has also received advice from its outside
nationally recognized legal counsel (which may be its current outside legal
counsel), that it is necessary to terminate this Agreement and enter into an
agreement to effect the Superior Proposal in order to comply with its fiduciary
duties under applicable law; PROVIDED that the Company may not terminate this
Agreement pursuant to this Section 7.1(f) unless the Company has complied with
its obligations under Section 5.3 and until (x) five (5) Business Days have
elapsed following delivery to the Buyer of a written notice of such
determination by the Board of Directors of the Company and during such five (5)
Business Day period the Company has fully cooperated with the Buyer (including,
without limitation, informing the Buyer of the terms and conditions of such
Superior Proposal and the identity of the Person making such Superior Proposal)
with the intent of enabling the Parties to agree to a modification of the terms
and conditions of this Agreement so that the transactions contemplated
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hereby may be effected, (y) at the end of such five (5) Business Day period, the
Acquisition Proposal continues to constitute a Superior Proposal, and the Board
of Directors of the Company continues to reasonably determine in good faith,
after receiving advice from outside nationally recognized legal counsel (which
may be its current outside legal counsel) and based on the good faith
recommendation of the Special Committee, which has also received advice from its
outside nationally recognized legal counsel (which may be its current outside
legal counsel), that it is necessary to terminate this Agreement and enter into
an agreement to effect the Superior Proposal in order to comply with its
fiduciary duties under applicable law and (z) (A) prior to such termination, the
Buyer has received all fees and expense reimbursements set forth in Section 7.3
by wire transfer in same day funds and (B) simultaneously or substantially
simultaneously with such termination the Company enters into a definitive
acquisition, merger or similar agreement to effect the Superior Proposal;
(g) by the Buyer, if there shall have been a breach by the
Company of any provision of Section 5.3;
(h) by the Buyer, if there has been a breach of or failure to
perform any representation, warranty, covenant or agreement on the part of the
Company set forth in this Agreement, which breach or failure to perform (i)
would cause the conditions set forth in Section 6.2(a) or 6.2(b) not to be
satisfied, and (ii) cannot or has not been cured prior to the earlier of (x) the
fifteenth (15th) calendar day following receipt by the Company of written notice
of such breach from the Buyer and (y) the Termination Date; or
(i) by the Company, if there has been a breach of or failure
to perform any representation, warranty, covenant or agreement on the part of
the Buyer or the Transitory Subsidiary set forth in this Agreement, which breach
or failure to perform (i) would cause the conditions set forth in Section 6.3(a)
or 6.3(b) not to be satisfied, and (ii) cannot or has not been cured prior to
the earlier of (x) the fifteenth (15th) calendar day following receipt by the
Buyer of written notice of such breach from the Company and (y) the Termination
Date.
The right of any Party to terminate this Agreement pursuant to this Section 7.1
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Party, any Person controlling any such
Party or any of their respective officers or directors, whether prior to or
after the execution of this Agreement.
7.2. EFFECT OF TERMINATION. In the event of termination of
this Agreement as provided in Section 7.1, written notice thereof shall
forthwith be given to the other Party or Parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement shall immediately
become void and there shall be no liability or obligation on the part of the
Buyer, the Company, the Transitory Subsidiary or their respective officers,
directors, stockholders or affiliates; PROVIDED that (i) any such termination
shall not relieve any Party from liability for any willful breach of this
Agreement and (ii) the provisions of Section 3.22, the provisos set forth in
Sections 5.3(a)(x)(A) and 5.3(a)(y)(A), the provisions of Sections 5.2, 5.8,
this Section 7.2, Section 7.3, Article VIII and Article IX and the
Confidentiality Agreement shall remain in full force and effect and survive any
termination of this Agreement.
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7.3. FEES AND EXPENSES. (a) Except as set forth in this
Section 7.3, all fees and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Party incurring
such fees and expenses, whether or not the Merger is consummated.
(b) (i) If this Agreement is terminated:
(1) at a time when the Buyer is entitled to terminate
this Agreement in accordance with either Section 7.1(b) or Section
7.1(d) and an Acquisition Proposal (or an intention to make an
Acquisition Proposal) has been made, proposed, communicated or
disclosed, after the date of this Agreement, in a manner which is or
otherwise becomes public (including being known to unaffiliated
stockholders of the Company);
(2) at a time when the Buyer is entitled to terminate
this Agreement in accordance with Section 7.1(b) or Section 7.1(d) and,
within twelve (12) months of such termination, the Company enters into
an agreement, arrangement or understanding (including a letter of
intent) with respect to or consummates any Acquisition Proposal; or
(3) pursuant to Section 7.1(e), Section 7.1(f) or
Section 7.1(g);
then the Buyer shall be entitled to receive (in accordance with Section
7.3(c)) from the Company (x) reimbursement for the out-of-pocket
expenses of the Buyer and the Transitory Subsidiary (including, without
limitation, printing fees, filing fees and fees and expenses of its
legal and financial advisors and all fees and expenses payable to any
financing sources) related to this Agreement and the transactions
contemplated hereby and any related financing (such reimbursement
amount for all purposes of this Section 7.3(b) not to exceed
$1,320,000, the "EXPENSE REIMBURSEMENT") and (y) an amount (the
"TERMINATION FEE"), in no event less than $0, equal to (A) $1,320,000
MINUS (B) the Expense Reimbursement.
(ii) If this Agreement is terminated at a time when the
Buyer is entitled to terminate this Agreement in accordance with Section 7.1(b)
whether or not any Acquisition Proposal (or an intention to make an Acquisition
Proposal) shall have then been made, proposed, communicated or disclosed in a
manner which is or otherwise has become public (including being known to
unaffiliated stockholders of the Company) or pursuant to Section 7.1(h), then
the Buyer shall be entitled to receive (in accordance with Section 7.3(c)) from
the Company the Expense Reimbursement.
(c) Any amounts owing by the Company to the Buyer pursuant to
Section 7.3(b) shall be paid as follows:
(i) if the Company shall have terminated this Agreement
(but only to the extent it is entitled to do so) pursuant to the circumstances
contemplated by Section 7.3(b)(i)(1), Section 7.3(b)(i)(3) or Section
7.3(b)(ii), then such amounts shall be paid by the Company to the Buyer by wire
transfer of same day funds on the date of such termination and as a condition
precedent for such termination;
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(ii) if the Buyer shall have terminated this Agreement
(but only to the extent it is entitled to do so) pursuant to the circumstances
contemplated by Section 7.3(b)(i)(1), Section 7.3(b)(i)(3) or Section
7.3(b)(ii), then such amounts shall be paid by the Company to the Buyer by wire
transfer of same day funds no later than the first Business Day next succeeding
the date of such termination; and
(iii) if the Buyer or the Company shall have terminated
this Agreement (but only to the extent such Party is entitled to do so) pursuant
to the circumstances contemplated by Section 7.3(b)(i)(2), then such amounts
shall be paid by the Company to the Buyer by wire transfer of same day funds on
the date on which the Company shall have entered into an agreement, arrangement
or understanding (including a letter of intent) with respect to any Acquisition
Proposal or, if earlier, the date of consummation of any Acquisition Proposal.
(d) The Company acknowledges that the Termination Fee and
Expense Reimbursement provided for in this Section 7.3 are an integral part of
the transactions contemplated by this Agreement and not a penalty, and that,
without the Termination Fee and Expense Reimbursement provided for above,
neither the Buyer nor the Transitory Subsidiary would enter into this Agreement.
Furthermore, nothing in this Section 7.3 shall be deemed to limit any liability
of any Party for any breach in any material respect of any representations,
warranties or covenants contained in this Agreement that occurs prior to
termination of this Agreement.
7.4. AMENDMENT. To the extent permitted by applicable law,
this Agreement may be amended by the Parties, by action taken or authorized by
their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Merger by the stockholders of the
Company; PROVIDED that after any such approval, no amendment shall be made that
by law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the Parties.
7.5. EXTENSION; WAIVER. At any time prior to the Effective
Time, the Parties, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other Parties, (ii)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto and (iii) waive compliance with any of
the agreements or conditions contained herein; PROVIDED that after the approval
of the Merger by the stockholders of the Company, no extension or waiver shall
be made that by law requires further approval by such stockholders without such
further approval. Any agreement on the part of a Party to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such Party. The failure of any Party to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights.
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ARTICLE VIII
DEFINITIONS
8.1. DEFINITIONS. For purposes of this Agreement, each of the
defined terms is defined in the Section of this Agreement indicated below:
Index of Defined Terms
<Table>
Acquiring Person.............................................................................................. 3.25
Acquisition Agreement...................................................................................... 5.3(b)
Acquisition Proposal.........................................................................................5.3(b)
Affiliates.................................................................................................... 3.25
Agreement............................................................................................ Introduction
Appraisal Shares.............................................................................................2.3(c)
Associates.................................................................................................... 3.25
Beneficial Owner............................................................................................. 5.13
Business Day................................................................................................... 1.4
Buyer................................................................................................ Introduction
Cash Merger Consideration................................................................................... 2.1(c)
Cash Merger Shares.......................................................................................... 2.1(c)
Certificate of Merger.......................................................................................... 1.2
Certificates............................................................................................. 2.2(b)(i)
Closing.........................................................................................................1.4
Closing Date................................................................................................... 1.4
COBRA.......................................................................................................3.14(a)
Code.....................................................................................................2.2(b)(iv)
Common Stock................................................................................................... 2.1
Company............................................................................................... Introduction
Company Disclosure Letter.............................................................................. Article III
Company Employee Plans......................................................................................3.14(a)
Company Intellectual Property...............................................................................3.10(a)
Company Material Adverse Effect..............................................................................3.1(a)
Company Material Contracts.....................................................................................3.11
Company Permits............................................................................................ 3.16(a)
Company Real Property....................................................................................... 3.9(c)
Company Restaurant........................................................................................ 3.16(b)
Company SEC Documents.......................................................................................... 3.5
Company Senior Credit Agreement............................................................................. 3.2(e)
Company's Knowledge......................................................................................... 3.2(a)
Confidentiality Agreement...................................................................................... 5.2
Consolidated Adjusted EBITDA.............................................................................. Annex A
Contract...................................................................................................... 3.11
D&O Insurance.............................................................................................. 5.11(b)
DGCL......................................................................................... Preliminary Statement
Distribution Date............................................................................................. 3.25
Effective Time..................................................................................................1.2
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employment loss............................................................................................... 3.17
Environmental Law...........................................................................................3.13(b)
Environmental Permits...................................................................................... 3.13(a)
Equity Commitment Letter...................................................................................... 4.6
ERISA.......................................................................................................3.14(a)
ESPP........................................................................................................... 5.9
Exchange Act............................................................................................... 3.4(ii)
Executive Agreements....................................................................................... 3.14(b)
executive officer.......................................................................................... 3.14(b)
Expense Reimbursement................................................................................ 7.3(b)(i)(3)
Fifteenth Amendment to Company Senior Credit Agreement..................................................... 6.2(g)
GAAP.......................................................................................................... 3.5
Governmental Approval...................................................................................... 3.4(ii)
Governmental Entity........................................................................................ 3.4(ii)
Greenhill.................................................................................... Preliminary Statement
HSR Act.................................................................................................... 3.4(ii)
Identified Contracts..................................................................................... 5.7(a)(i)
Indemnified Party.......................................................................................... 5.11(a)
Insurance Policies............................................................................................ 3.18
Intellectual Property...................................................................................... 3.10(a)
Leased Real Property........................................................................................ 3.9(c)
Liens......................................................................................................3.4(iii)
Liquor Licenses............................................................................................ 3.16(b)
LTM Period.................................................................................................. 6.2(f)
mass layoff................................................................................................... 3.17
Merger....................................................................................... Preliminary Statement
Merger Agreement.......................................................................................... Annex A
Option Consideration........................................................................................... 2.4
Options........................................................................................................ 2.4
Owned Real Property......................................................................................... 3.9(b)
Parties................................................................................................Introduction
Party................................................................................................. Introduction
Paying Agent................................................................................................ 2.2(a)
Payment Fund................................................................................................ 2.2(a)
Permitted Investments....................................................................................... 2.2(a)
Permitted Liens............................................................................................. 3.9(a)
Person....................................................................................................... 5.13
plant closing................................................................................................. 3.17
Proxy Statement............................................................................................. 5.6(a)
Registered Company Intellectual Property................................................................... 3.10(b)
Replacement Contracts.................................................................................... 5.7(a)(i)
Required Consents........................................................................................ 5.7(a)(i)
Rights Agreement............................................................................................ 3.2(a)
SARs........................................................................................................ 3.2(a)
SEC........................................................................................................ 3.4(ii)
Securities Act.............................................................................................. 3.2(c)
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Share...........................................................................................................2.1
Shares......................................................................................................... 2.1
Special Committee.............................................................................Preliminary Statement
Special Meeting................................................................................................ 5.5
Stock Acquisition Date....................................................................................... 5.13
Stock Incentive Plans.......................................................................................... 2.4
Stock Plans.................................................................................................... 2.4
Subsequent Filings............................................................................................. 3.5
Subsidiary...................................................................................................3.1(b)
Superior Proposal........................................................................................... 5.3(b)
Surviving Corporation.......................................................................................... 1.1
Tax Returns................................................................................................. 3.8(d)
Taxes....................................................................................................... 3.8(d)
Termination Date........................................................................................... 7.1(b)
Termination Fee...................................................................................... 7.3(b)(i)(3)
Transitory Subsidiary................................................................................. Introduction
Transitory Subsidiary Common Stock............................................................................. 2.1
Voting Debt................................................................................................. 3.2(a)
WARN Act..................................................................................................... 3.17
</Table>
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ARTICLE IX
MISCELLANEOUS
9.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
respective representations and warranties of the Company, on the one hand, and
each of the Buyer and the Transitory Subsidiary, on the other hand, contained in
this Agreement or in any document, certificate or instrument delivered prior to
or at the Closing shall not be deemed waived or otherwise affected by any
investigation made by any Party. Each and every such representation and warranty
shall expire with, and be terminated and extinguished by, the Closing, and
thereafter none of the Company, the Buyer or the Transitory Subsidiary shall be
under any liability whatsoever with respect to any such representation and
warranty. This Section 9.1 shall have no effect upon any other obligations of
the Parties, whether to be performed before or after the Effective Time.
9.2. NOTICES. All notices, requests, claims and demands and
other communications hereunder shall be in writing and shall be deemed duly
delivered (i) four (4) Business Days after being sent by registered or certified
mail, return receipt requested, postage prepaid, or (ii) one (1) Business Day
after being sent for next business day delivery, fees prepaid, via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:
(a) if to the Buyer or the Transitory Subsidiary, to:
Morton's Holdings, Inc.
Morton's Acquisition Company
150 East 58th Street
New York, New York 10155
Attention: Justin B. Wender
Telephone: (212) 317-6442
Facsimile: (212) 207-8042
with a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: Timothy B. Goodell, Esq.
Gregory Pryor, Esq.
Telephone: (212) 819-8200
Facsimile: (212) 354-8113; and
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(b) if to the Company, to:
Morton's Restaurant Group, Inc.
3333 New Hyde Park Road
New Hyde Park, New York 11042
Attention: Allen J. Bernstein
Telephone: (516) 627-1515
Facsimile: (516) 627-1898
with a copy to:
Richards, Layton & Finger, P.A.
One Rodney Square, P.O. Box 551
Wilmington, Delaware 19899
Attention: C. Stephen Bigler, Esq.
Telephone: (302) 651-7700
Facsimile: (302) 651-7701
and a copy to:
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Attention: Marc Weingarten, Esq.
Telephone: (212) 756-2000
Facsimile: (212) 593-5955.
Any Party may give any notice or other communication hereunder using any other
means (including personal delivery, messenger service, facsimile or ordinary
mail), but no such notice or other communication shall be deemed to have been
duly given unless and until it actually is received by the Party for whom it is
intended. Any Party may change the address to which notices and other
communications hereunder are to be delivered by giving the other Parties to this
Agreement notice in the manner herein set forth.
9.3. ENTIRE AGREEMENT. This Agreement (including the Company
Disclosure Letter and the other documents and instruments referred to herein
that are to be delivered at the Closing, together with that certain letter
agreement dated the date hereof among the Parties regarding reimbursement of
certain amendment costs) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements or representations by or among
the Parties, or any of them, written or oral, with respect to the subject matter
hereof; PROVIDED that the Confidentiality Agreement shall remain in effect in
accordance with its terms.
9.4. NO THIRD PARTY BENEFICIARIES. This Agreement is not
intended, and shall not be deemed, to confer any rights or remedies upon any
Person other the Parties and their respective successors and permitted assigns,
to create any agreement of employment with any Person or to otherwise create any
third-party beneficiary hereto, except as specifically stated in Section
5.11(e).
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9.5. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned or delegated, 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, and any such assignment without
such prior written consent shall be null and void, except that the Buyer may
substitute any direct or indirect wholly-owned subsidiary of the Buyer for the
Transitory Subsidiary without consent of the Company and, at any time prior to
the first filing or notice made by the Buyer in connection with obtaining any
regulatory consent or approval with respect to Liquor Licenses required in
connection with the Merger, the Buyer may assign its rights and obligations
under this Agreement to a newly formed affiliate of the Buyer; PROVIDED that the
Buyer and/or the Transitory Subsidiary, as the case may be, shall remain liable
for all of its obligations under this Agreement. 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.
9.6. INTERPRETATION. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation." As used in this Agreement, (x) the term
"AFFILIATE(S)" shall have the meaning set forth in Rule 12b-2 of the Exchange
Act and (y) the term "PERSON" means and includes an individual, a partnership, a
joint venture, a corporation, a trust, a limited liability company, an
unincorporated organization and a government or other department or agency
thereof.
9.7. COUNTERPARTS. This Agreement may be executed in two (2)
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two (2) or more counterparts have been
signed by each of the Parties and delivered to the other Parties.
9.8. SEVERABILITY. If any term, provision, agreement, covenant
or restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, agreements, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not effected in any manner materially adverse to any
Party. Upon such a determination, the Parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the Parties as
closely as possible in an acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.
9.9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
laws of any jurisdictions other than those of the State of Delaware.
9.10. SUBMISSION TO JURISDICTION. Any suit, action or
proceeding seeking to enforce any provision of, or based on any matter arising
out of or in connection with, this Agreement or the transactions contemplated
hereby shall be brought exclusively in any federal or
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state court located in the State of Delaware, and each of the Parties hereby
consents to the jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient form. Process in any such suit,
action or proceeding may be served on any Party anywhere in the world, whether
within or without the jurisdiction of any such court. Without limiting the
foregoing, each Party agrees that service of process on such Party as provided
in Section 9.2 as to giving notice hereunder shall be deemed effective service
of process on such Party.
9.11. REMEDIES. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a Party shall be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or equity
upon such Party. No failure or delay on the part of any Party in the exercise of
any right hereunder shall impair such right or be construed to be a waiver of,
or acquiescence in, any breach of any representation, warranty or agreement
herein, nor shall any single or partial exercise of any such right preclude
other or further exercise thereof or of any other right. The Company agrees that
irreparable damage would occur to the Buyer and the Transitory Subsidiary in the
event that any of the provisions of this Agreement were not performed by the
Company in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the Buyer and the Transitory Subsidiary 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 federal or
state court located in the State of Delaware (as to which the Parties agree to
submit jurisdiction of the purposes of such action), this being in addition to
any other remedy to which they are entitled at law or in equity including those
set forth in Section 7.3. The Company further agrees to waive any requirement
for the securing or posting of any bond in connection with obtaining any such
injunction or other equitable relief.
9.12. WAIVER OF JURY TRIAL. EACH OF THE BUYER, THE TRANSITORY
SUBSIDIARY AND THE COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THE ACTIONS OF THE BUYER, THE TRANSITORY SUBSIDIARY OR
THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF
THIS AGREEMENT.
[Remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, the Company, the Buyer and the Transitory
Subsidiary have caused this Agreement to be signed by their respective officers
thereunto duly authorized as of the date first written above.
MORTON'S RESTAURANT GROUP, INC.
By: /s/ Allen J. Bernstein
--------------------------------------
Name: Allen J. Bernstein
Title: Chairman of the Board of
Directors, President and Chief
Executive Officer
MORTON'S HOLDINGS, INC.
By: /s/ Justin B. Wender
--------------------------------------
Name: Justin B. Wender
Title: President and Chief Executive
Officer
MORTON'S ACQUISITION COMPANY
By: /s/ Justin B. Wender
--------------------------------------
Name: Justin B. Wender
Title: President and Chief Executive
Officer
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ANNEX A
DEFINITION OF
"CONSOLIDATED ADJUSTED EBITDA"
For purposes of Section 6.2(f) of the Agreement and Plan of Merger (the
"MERGER AGREEMENT") to which this ANNEX A is attached, (a) "CONSOLIDATED
ADJUSTED EBITDA" shall mean Consolidated EBITDA (as defined in the Company
Senior Credit Agreement) plus (or minus) the following items (but only to the
extent that the respective items reduce (increase) Consolidated EBITDA), without
duplication:
(i) any losses (or income) of the Company associated with
personal property insurance (not including amounts related to business
interruption insurance, except to the extent that such amounts exceed
$990,000 of income in the aggregate for the period from December 31,
2001 through June 30, 2002) claims for the Company's 90 West Street,
New York, NY restaurant;
(ii) expenses actually incurred by the Company in connection
with the Merger Agreement and the transactions contemplated thereby,
including (x) expenses actually incurred by the Company in connection
with the preparation, execution and delivery of the Fifteenth Amendment
to Company Senior Credit Agreement and related documents and
instruments, and (y) expenses actually incurred by the Company from
December 31, 2001 through the date of the Merger Agreement related to
the Company's exploration of strategic alternatives; PROVIDED that
expenses actually incurred by the Company from December 31, 2001
through June 30, 2002 in connection with any defense of a potential
proxy contest (including stockholders' lawsuits in connection with this
transaction which are actively being defended by the Company but in no
event including settlement thereof or judgment with respect thereto)
with respect to the Company shall, for purposes of calculating
"Consolidated Adjusted EBITDA" pursuant to this ANNEX A, in no event
exceed $1,000,000 in the aggregate;
(iii) any reversal of accruals or reserves taken subsequent to
December 30, 2001 that were determined to be established prior to
December 31, 2001, as determined in accordance with GAAP and consistent
with past practices; and
(iv) legal and/or settlement expenses actually incurred by the
Company from December 31, 2001 through June 30, 2002 related to
existing employee litigation matters, in any event not to exceed
$250,000 in the aggregate.
(b) The Parties hereby agree that, for the purposes of calculating
Consolidated Adjusted EBITDA as provided above, without duplication:
(i) all adjustments to Consolidated Net Income (as defined in
the Company Senior Credit Agreement) to arrive at Consolidated Adjusted
EBITDA shall be prepared in accordance with GAAP and consistent with
past practices;
<Page>
(ii) only extraordinary income and expenses classified as such
by GAAP will be eliminated to arrive at Consolidated Net Income (as
defined in the Company Senior Credit Agreement);
(iii) Interest Charges (as defined in the Company Senior
Credit Agreement) will be net of any interest income; and
(iv) notwithstanding anything to the contrary set forth on
this ANNEX A, Consolidated Adjusted EBITDA for the fiscal months
specified below shall be determined exclusively in accordance with the
following table (with no adjustments thereto):
<Table>
<Caption>
CONSOLIDATED
PERIOD ADJUSTED EBITDA
--------------------------------------------------------------- ---------------
Fiscal month ended closest to July 31, 2001 $ 566,000
Fiscal month ended closest to August 31, 2001 $ 485,000
Fiscal month ended closest to September 30, 2001 $ 630,000
Fiscal month ended closest to October 31, 2001 $ 2,490,000
Fiscal month ended closest to November 30, 2001 $ 1,585,000
Fiscal month ended closest to December 31, 2001 $ 4,066,000
</Table>