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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
LOGAN'S ROADHOUSE, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: .
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(2) Form, Schedule or Registration Statement No.: .
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(3) Filing Party: .
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(4) Date Filed: .
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[LOGAN'S LOGO]
January 7, 1999
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders
(the "Special Meeting") of Logan's Roadhouse, Inc. ("Logan's") on February 5,
1999. Details as to the time and place of the Special Meeting are set forth in
the accompanying Notice of Special Meeting of Shareholders.
The purpose of the Special Meeting is to consider and vote upon the
approval of the Agreement and Plan of Merger, dated as of December 10, 1998 (the
"Merger Agreement"), providing for the merger (the "Merger") of LRI Merger
Corporation, a Tennessee corporation and wholly-owned subsidiary of CBRL Group,
Inc., a Tennessee corporation ("CBRL"), with and into Logan's, with Logan's
being the surviving corporation. If the Merger is consummated, each outstanding
share of Logan's Common Stock will be converted into the right to receive $24.00
in cash.
After careful consideration, the Board of Directors has unanimously
approved the Merger Agreement and has determined that the proposed Merger is in
the best interests of Logan's shareholders and recommends that you vote FOR the
approval of the Merger Agreement. SunTrust Equitable Securities Corporation,
financial advisor to Logan's in connection with the Merger, has delivered to the
Logan's Board of Directors a written opinion dated December 10, 1998 to the
effect that, as of the date of such opinion and based upon and subject to
certain matters stated therein, the Merger consideration to be received by
Logan's shareholders pursuant to the Merger was fair, from a financial point of
view, to such shareholders.
The attached Proxy Statement describes the Merger Agreement and the
proposed Merger more fully and includes other information about CBRL and
Logan's. Please give this information your thoughtful attention.
Approval of the Merger Agreement requires the affirmative vote of the
holders of a majority of the outstanding shares of Logan's Common Stock entitled
to be cast at the Special Meeting. Therefore, you are urged to mark, sign, date
and return promptly the accompanying proxy card for the Meeting even if you plan
to attend. You may vote in person at that time if you so desire even if you have
previously returned your proxy.
Sincerely,
EDWIN W. MOATS, JR.
Chairman, Chief Executive Officer and President
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR PROXY
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LOGAN'S ROADHOUSE, INC.
565 MARRIOTT DRIVE, SUITE 490
NASHVILLE, TENNESSEE 37214
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
A Special Meeting of Shareholders (the "Special Meeting") of Logan's
Roadhouse, Inc. ("Logan's") will be held at the Marriott Hotel, Memphis Room,
600 Marriott Drive, Nashville, Tennessee on February 5, 1999, at 8:30 a.m.,
local time, for the following purposes:
1. To consider and vote upon a proposal to approve the Agreement and
Plan of Merger, dated as of December 10, 1998 (the "Merger Agreement"), among
Logan's, CBRL Group, Inc. ("CBRL"), Cracker Barrel Old Country Store, Inc. and
LRI Merger Corporation ("LRI"), pursuant to which, among other things, (i) LRI
will be merged with and into Logan's upon the terms and subject to the
conditions contained in the Merger Agreement (the "Merger"), with Logan's being
the surviving corporation, (ii) each share of Common Stock of Logan's issued and
outstanding immediately prior to the effective time of the Merger will be
converted into the right to receive $24.00 in cash, without interest, and (iii)
all outstanding stock options previously issued to purchase shares of Logan's
Common Stock held by Logan's directors, officers and employees will become
exercisable at the exercise price set forth in such options and be converted
into the right to receive $24.00 per share in cash, without interest. The
aggregate Merger consideration to be paid by CBRL is approximately $179 million.
The Merger is more completely described in the accompanying Proxy Statement and
a copy of the Merger Agreement is attached as Annex A.
2. To transact such other business as may properly come before the
Special Meeting or any adjournment thereof.
Holders of record of Logan's Common Stock, at the close of business on
January 4, 1999 (the "Record Date") are entitled to notice of, and to vote at,
the Special Meeting or any adjournment thereof. The affirmative vote of the
holders of a majority of the outstanding shares of Logan's Common Stock entitled
to be cast at the Special Meeting is necessary to approve the Merger Agreement.
PLEASE COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY AND RETURN IT
PROMPTLY. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE
IN PERSON IF YOU DESIRE TO DO SO, BUT ATTENDANCE AT THE SPECIAL MEETING DOES NOT
ITSELF SERVE TO REVOKE YOUR PROXY.
By Order of the Board of Directors,
EDWIN W. MOATS, JR.
Chairman, Chief Executive Officer and President
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY
PROMPTLY, WHETHER YOU PLAN TO ATTEND THE
SPECIAL MEETING OR NOT.
A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
Nashville, Tennessee
January 7, 1999
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LOGAN'S ROADHOUSE, INC.
PROXY STATEMENT
FOR THE
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 5, 1999
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This Proxy Statement is being furnished to the holders of Common Stock
of Logan's Roadhouse, Inc., a Tennessee corporation ("Logan's" or the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of Logan's (the "Logan's Board"), for use in connection with a special
meeting of shareholders of Logan's (the "Special Meeting"), which is to be held
on February 5, 1999, or any adjournment or postponement thereof. At such
meeting, the shareholders of Logan's will consider and vote upon a proposal to
approve an Agreement and Plan of Merger, dated as of December 10, 1998, by and
among CBRL Group, Inc., a Tennessee corporation ("CBRL"), Cracker Barrel Old
Country Store, Inc., a Tennessee corporation and wholly-owned subsidiary of CBRL
("Cracker Barrel"), LRI Merger Corporation, a Tennessee corporation and
wholly-owned subsidiary of CBRL ("LRI"), and Logan's (the "Merger Agreement"),
pursuant to which LRI will be merged with and into Logan's (the "Merger"), with
Logan's being the surviving corporation. As a result of the Merger, each of the
then outstanding shares of Common Stock, par value $.01 per share, of Logan's
(the "Logan's Common Stock"), will be converted into the right to receive $24.00
in cash, without interest.
The Merger is subject to the satisfaction of a number of conditions,
including, among others, approval of the Merger Agreement and the Merger by the
affirmative vote of a majority of the outstanding shares of Logan's Common Stock
entitled to be cast at the Special Meeting. For a more complete description of
the terms of the Merger, see "THE MERGER" and "THE MERGER AGREEMENT."
This Proxy Statement and the form of Proxy are first being mailed to
holders of Logan's Common Stock on or about January 7, 1999.
The date of this Proxy Statement is January 7, 1999.
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TABLE OF CONTENTS
Page
AVAILABLE INFORMATION.............................................................................................5
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.................................................................5
SUMMARY...........................................................................................................6
SELECTED FINANCIAL DATA..........................................................................................11
THE SPECIAL MEETING..............................................................................................12
General.....................................................................................................12
Date, Place and Time........................................................................................12
Record Date; Quorum.........................................................................................12
Votes Required..............................................................................................12
Voting and Revocation of Proxies............................................................................13
Solicitation of Proxies.....................................................................................13
THE MERGER.......................................................................................................13
Background of the Merger....................................................................................13
Reasons for the Merger; Recommendations of the Board of Directors...........................................15
Opinion of SunTrust Equitable Securities Corporation........................................................16
Interests of Certain Persons in the Merger..................................................................20
Accounting Treatment........................................................................................22
Federal Income Tax Consequences.............................................................................22
Regulatory Approvals........................................................................................23
Financing the Merger........................................................................................24
THE MERGER AGREEMENT.............................................................................................24
General.....................................................................................................24
The Merger..................................................................................................24
Conversion of Shares........................................................................................25
Representations and Warranties..............................................................................26
Covenants...................................................................................................26
Conditions Precedent........................................................................................27
Termination Fee.............................................................................................28
Termination.................................................................................................28
Effective Time of the Merger................................................................................28
Amendment...................................................................................................28
MARKET PRICE DATA................................................................................................29
DIVIDENDS........................................................................................................29
BUSINESS OF LOGAN'S..............................................................................................29
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF..................................................................32
INDEPENDENT AUDITORS.............................................................................................33
OTHER MATTERS....................................................................................................33
Annex A Agreement and Plan of Merger among Logan's Roadhouse, Inc., CBRL Group,
Inc., Cracker Barrel Old Country Store, Inc. and LRI Merger Corporation.......................A-1
Annex B Opinion of SunTrust Equitable Securities Corporation..........................................B-1
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AVAILABLE INFORMATION
Logan's is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files periodic reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Copies of such
reports, proxy statements and other information, can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the regional
offices of the Commission located at Seven World Trade Center, New York, New
York 10048, and 500 West Madison Street, Suite 1400, Citicorp Center, Chicago,
Illinois 60601. Copies of such material can be obtained at prescribed rates from
the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Logan's Common Stock is quoted on the Nasdaq
National Market, and such reports, proxy statements and other information with
respect to Logan's can be inspected at the offices of Nasdaq Operations, 1735 K
Street, N.W., Washington, D.C. 20006. The Commission maintains a Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
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Logan's was incorporated in Tennessee in March 1995. Unless the context
requires otherwise, references in this Proxy Statement to "Logan's" or to the
"Company" refer to Logan's Roadhouse, Inc. and its subsidiaries. Logan's
executive offices are located at 565 Marriott Drive, Suite 490, Nashville,
Tennessee 37214, and its telephone number is (615) 885-9056.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
This Proxy Statement incorporates documents by reference which are not
presented herein or delivered herewith. Copies of such reports, proxy statements
and other information filed by Logan's, other than exhibits to such documents
unless such exhibits are specifically incorporated herein by reference, are
available without charge, upon written or oral request, from the Secretary of
Logan's, 565 Marriott Drive, Suite 490, Nashville, Tennessee 37214, telephone
(615) 885-9056.
The following documents previously filed by Logan's with the Commission
are incorporated by reference into this Proxy Statement:
1. Logan's Annual Report on Form 10-K for the fiscal year
ended December 28, 1997.
2. Logan's Quarterly Reports on Form 10-Q for the quarters
ended April 19, July 12 and October 4, 1998.
3. Logan's Current Report on Form 8-K filed December 14, 1998.
All documents filed by Logan's pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Proxy Statement and prior to
the date of the Special Meeting shall be deemed to be incorporated by reference
into this Proxy Statement and to be made a part hereof from the date of the
filing of such documents. Any statement contained in a document incorporated by
reference herein shall be deemed to be modified or superseded for the purpose
hereof to the extent that a statement contained herein (or in any other
subsequently filed document which also is incorporated by reference herein) is
modified or superseded by such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof except as so modified
or superseded.
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All information contained in this Proxy Statement or incorporated
herein by reference with respect to Logan's and its subsidiaries was supplied by
Logan's, and all information contained in this Proxy Statement with respect to
CBRL and its subsidiaries was supplied by CBRL. Although neither Logan's nor
CBRL has actual knowledge that would indicate that any statements or information
(including financial statements) relating to the other party contained herein,
or with respect to Logan's, incorporated by reference herein, are inaccurate or
incomplete, neither Logan's nor CBRL warrants the accuracy or completeness of
such statements or information as they relate to the other party.
SUMMARY
The following is a brief summary of certain information contained
elsewhere in this Proxy Statement, including the Annexes hereto, which are a
part of this Proxy Statement. This Summary does not purport to be complete and
is qualified in its entirety by reference to the more detailed information
contained in this Proxy Statement, the Annexes hereto and the documents
incorporated by reference herein. Certain capitalized terms used in this Summary
are defined elsewhere in this Proxy Statement.
THE COMPANIES
Logan's Roadhouse, Inc. Logan's operates 41 Company-owned Logan's
Roadhouse restaurants and four franchised restaurants, all of which feature
steaks, ribs, chicken and seafood dishes in a distinctive atmosphere reminiscent
of an American roadhouse. The Logan's Roadhouse concept is designed to appeal to
a broad range of customers by offering a wide variety of items in a very casual,
relaxed dining atmosphere that is lively and entertaining. The lively, country
"honky-tonk" atmosphere of Logan's Roadhouse restaurants seeks to appeal to
families, couples, single adults and business persons. The Company's spacious
restaurants are constructed of rough-hewn cedar siding in combination with bands
of corrugated metal outlined in double-striped, red neon. The interiors are
decorated with hand-painted murals depicting typical scenes from American
roadhouses of the 1940s and 1950s, concrete and wooden planked floors and neon
signs and feature Wurlitzer (TM) jukeboxes playing contemporary country hits.
The restaurants also feature a display cooking grill and an old-fashioned meat
counter displaying steaks, ribs, seafood and salads, and include a spacious,
comfortable bar area with a large-screen television. Since the first Logan's
Roadhouse restaurant opened in 1991 in Lexington, Kentucky (which was acquired
by the Company in 1992), the Company has opened 40 additional Logan's Roadhouse
restaurants in Alabama, Florida, Georgia, Indiana, Kentucky, Louisiana,
Tennessee, Virginia and West Virginia, and has franchised two Logan's Roadhouse
restaurants in Oklahoma, one in North Carolina and one in South Carolina. See
"BUSINESS OF LOGAN'S."
CBRL Group, Inc. CBRL is a holding company whose subsidiaries own
restaurants, which currently include Cracker Barrel and Carmine's Gourmet Market
( two full service markets featuring separate departments with strong Italian
flavor). The purpose of establishing CBRL was to provide the greater business
flexibility of a holding company structure. After the recent reorganization by
which Cracker Barrel became a wholly-owned subsidiary of CBRL, Cracker Barrel's
business continued and will continue unchanged under the name Cracker Barrel Old
Country Store, Inc., with the same management and employees as before the
reorganization. CBRL is a Tennessee corporation with its principle executive
offices located at 106 Castle Heights Avenue North, Lebanon, Tennessee 37087
(615-444-5533).
Cracker Barrel Old Country Store, Inc. Cracker Barrel, a Tennessee
corporation organized in 1969, together with its affiliates, owns and operates
over 375 full service "country store" restaurants in 36 states. The stores are
located along interstate highways, except for 10 stores that are located at
"tourist destinations." The restaurants serve breakfast, lunch and dinner and
feature homestyle country cooking prepared on the premises from Cracker Barrel's
own recipes using quality
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ingredients and emphasizing authenticity. The stores are constructed in a
rustic, country store design and feature a separate retail area offering a wide
variety of decorative and functional items, specializing in hand-blown
glassware, cast iron cookware, toys and wood crafts, as well as various old
fashion candies, jellies and other foods. Cracker Barrel's principal executive
offices are located at Hartmann Drive, P. O. Box 787, Lebanon, Tennessee 37088
(615-444-5533).
LRI Merger Corporation. LRI is a newly incorporated Tennessee
corporation. To date, LRI has not conducted any business other than that
incident to its formation, the execution and delivery of the Merger Agreement,
and the consummation of the transactions contemplated thereby. Accordingly,
there is no meaningful financial information with respect to LRI. LRI is a
wholly-owned subsidiary of CBRL. The principle executive offices of LRI are
located at Hartmann Drive, P. O. Box 787, Lebanon, Tennessee 37088
(615-444-5533).
SPECIAL MEETING
At the Special Meeting, the holders of Logan's Common Stock will
consider and vote upon the recommendation of the Logan's Board to approve the
Merger Agreement. Holders of record of Logan's Common Stock at the close of
business on January 4, 1999 (the "Record Date") are entitled to notice of, and
to vote at, the Special Meeting and any adjournment thereof. As of the Record
Date, there were 7,199,150 shares of Logan's Common Stock issued and
outstanding. Each share of Logan's Common Stock is entitled to one vote at the
Special Meeting. For additional information relating to the Special Meeting, see
"THE SPECIAL MEETING."
VOTES REQUIRED
Approval of the Merger Agreement by the shareholders of Logan's
requires the affirmative vote of the holders of a majority of the outstanding
shares of Logan's Common Stock entitled to be cast at the Special Meeting. As of
the Record Date, the directors and executive officers of Logan's and other
affiliates of Logan's beneficially owned an aggregate of 304,277 shares of
Logan's Common Stock (excluding shares issuable upon exercise of options), or
approximately 4.2% of the shares of Logan's Common Stock.
In the event that the Merger Agreement is not approved by Logan's
shareholders, the Merger Agreement may be terminated by Logan's or CBRL in
accordance with its terms. See "THE SPECIAL MEETING--Votes Required" and "THE
MERGER AGREEMENT--Termination."
THE MERGER
Recommendation of the Board of Directors. The Logan's Board has
approved the Merger Agreement and recommends a vote FOR approval of the Merger
Agreement by the shareholders of Logan's. The Logan's Board believes that the
terms of the Merger are in the best interests of Logan's and its shareholders.
Opinion of Financial Advisor. SunTrust Equitable Securities Corporation
("STES") has acted as financial advisor to Logan's in connection with the Merger
and has delivered to the Logan's Board its written opinion (the "STES Opinion")
dated December 10, 1998 to the effect that, as of the date of such opinion and
based upon and subject to certain matters stated therein, the Merger
consideration of $24.00 per share was fair, from a financial point of view, to
the holders of Logan's Common Stock. The full text of the written opinion of
STES, which sets forth the assumptions made, matters considered and limitations
on the review undertaken, is attached as Annex B to this Proxy Statement and
should be read carefully and in its entirety. The STES opinion is directed only
to the fairness of the Merger consideration from a financial point of view, does
not address the fairness of any other aspect of the Merger or related
transactions and does not constitute a recommendation to
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any shareholder as to how such shareholder should vote at the Special Meeting.
See "THE MERGER--Opinion of SunTrust Equitable Securities Corporation."
Interests of Certain Persons in the Merger. In considering the
recommendation of the Logan's Board with respect to the Merger Agreement and the
transactions contemplated thereby, shareholders should be aware that certain
members of the management of Logan's and the Logan's Board have interests in the
Merger that are in addition to the interests of shareholders of Logan's
generally. Jerry O. Bradley, a director of Logan's, abstained from the vote by
the Logan's Board with respect to the Merger because of his ownership interest
in CBRL. In addition, the executive officers and directors of Logan's own
options to purchase 475,500 shares of Logan's Common Stock, including options to
purchase 235,875 shares that will become exercisable upon the affirmative vote
of a majority of Logan's shareholders for approval of the Merger Agreement.
After the Merger, Edwin W. Moats, Jr., the current President and Chief Executive
Officer of Logan's, will serve as President and Chief Operating Officer of
Logan's; Peter W. Kehayes, the current Executive Vice President and Chief
Operating Officer of Logan's, will serve as Executive Vice President of
Operations; Ralph W. McCracken, the current Senior Vice President of
Development, will continue to serve in that capacity; and David J. McDaniel, the
current Senior Vice President of Finance and Chief Financial Officer of Logan's,
will continue to serve in that capacity. See "THE MERGER--Interests of Certain
Persons in the Merger."
Accounting Treatment. The Merger will be accounted for as a purchase
under generally accepted accounting principles ("GAAP").
Federal Income Tax Consequences. For federal income tax purposes, an
individual holder of shares of Logan's Common Stock who exchanges such shares
for cash pursuant to the Merger will be treated as having sold his or her shares
of Logan's Common Stock for cash in a taxable transaction. Gain or loss will be
recognized on the exchange in an amount equal to the difference between the cash
received and the holder's adjusted tax basis in the shares of Logan's Common
Stock exchanged therefor. Such gain or loss will be a capital gain or loss if
the holder of the shares of Logan's Common Stock held such shares as a capital
asset at the Effective Time, and may qualify as long-term capital gain or loss
if such holder held the shares of Logan's Common Stock for a period greater than
12 months at the Effective Time. See "THE MERGER--Federal Income Tax
Consequences" for a more detailed description of the above federal income tax
matters.
Regulatory Approvals. The Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), provides that certain business combinations
(including the Merger) may not be consummated until certain information has been
furnished to the Department of Justice (the "DOJ") and the Federal Trade
Commission (the "FTC") and certain waiting period requirements have been
satisfied. On January 5, 1999, CBRL and Logan's made their respective filings
with the DOJ and the FTC with respect to the Merger. Under the HSR Act, the
filings commenced a 30-day waiting period during which the Merger cannot be
consummated, which waiting period will expire on February 4, 1999.
Notwithstanding the expiration of the HSR Act waiting period, at any time before
or after the Effective Time, the FTC, the DOJ or others could take action under
the antitrust laws, including requesting additional information, seeking to
enjoin the consummation of the Merger or seeking the divestiture by CBRL of all
or any part of the stock or assets of Logan's. There can be no assurance that a
challenge to the Merger on antitrust grounds will not be made or, if such a
challenge were made, that it would not be successful.
Financing the Merger. The total amount of funds required by CBRL and
LRI to consummate the Merger will be approximately $179 million, excluding fees
and expenses. CBRL intends to utilize cash from operations and its existing
credit facility with a commercial bank to fund the Merger consideration.
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THE MERGER AGREEMENT
Terms of the Merger. Pursuant to the Merger Agreement, LRI will merge
with and into Logan's at the effective time of the Merger (the "Effective
Time"), with Logan's being the surviving corporation (the "Surviving
Corporation"). Logan's Amended and Restated Charter, as amended and existing at
the Effective Time, and the Bylaws of Logan's in effect at the Effective Time,
will govern the Surviving Corporation until amended or repealed in accordance
with applicable law. At the Effective Time, each outstanding share of Logan's
Common Stock will be converted into the right to receive $24.00 in cash, without
interest. See "THE MERGER AGREEMENT."
In addition, on the date of the Special Meeting, provided Logan's
shareholders vote to approve the Merger Agreement, all options to purchase
shares of Logan's Common Stock which are outstanding at such time, whether or
not then vested or exercisable, will immediately become exercisable at the
exercise price set forth in such options and be converted into the right to
receive $24.00 cash per share.
Conversion of Shares. At the Effective Time, (i) each share of Logan's
Common Stock issued and outstanding immediately prior to the Effective Time
will, by virtue of the Merger, automatically and without any action on the part
of Logan's or the holder thereof, be converted into the right to receive $24.00
in cash, without interest, (ii) each share of Logan's Common Stock, if any, held
in the treasury of Logan's will be canceled and (iii) each issued and
outstanding share of Common Stock of LRI will be converted into one share of
Common Stock of the Surviving Corporation. See "THE MERGER AGREEMENT--Conversion
of Shares."
Representations and Warranties. The Merger Agreement contains certain
representations and warranties made by each of the parties thereto. See "THE
MERGER AGREEMENT--Representations and Warranties."
Covenants. The Merger Agreement contains certain covenants of Logan's
and CBRL, Cracker Barrel and LRI that are applicable during the period from
December 10, 1998 until the Effective Time. See "THE MERGER
AGREEMENT--Covenants."
Termination Fee. In the event that the Logan's Board, in the exercise
of its fiduciary duties under applicable law, terminates the Merger Agreement
and within one year after the effective date of such termination, Logan's
executes a definitive agreement with respect to an Alternative Transaction (as
hereinafter defined), then at the time of such execution, Logan's shall pay CBRL
a termination fee in the amount of $5,500,000. See "THE MERGER
AGREEMENT--Termination Fee."
Conditions to the Merger. The obligations of CBRL and Logan's to
consummate the Merger are subject to the satisfaction of certain conditions,
including, among others, (i) obtaining the requisite approval of Logan's
shareholders, (ii) the absence of any injunction prohibiting consummation of the
Merger and (iii) receipt of all governmental and other consents and approvals
necessary to permit consummation of the Merger, including the expiration of all
applicable waiting periods (or extensions thereof) under the HSR Act. See "THE
MERGER AGREEMENT--Conditions Precedent." Except for conditions relating to the
approval of the Merger Agreement by Logan's shareholders, obtaining all
necessary consents and approvals relating to the Merger and the Merger Agreement
(except for the filing of the Articles of Merger), and the expiration of the
applicable waiting period under the HSR Act, each party may, at its option,
waive in writing any of the conditions to its obligations to consummate the
Merger. In the event that the waiver of a condition by Logan's would materially
and adversely affect the Merger consideration, or any other terms of the
transaction, Logan's would provide supplemental proxy information to its
shareholders and, if the Special Meeting has not been held, the opportunity to
revoke previously delivered proxies or, if the Special Meeting has been held,
notice of another Special Meeting to consider the Merger.
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Termination. The Merger Agreement may be terminated at any time prior
to the Effective Time in a number of circumstances, which include, among others:
(a) by the mutual consent of Logan's and CBRL; (b) by either Logan's or CBRL if
(i) a court or other governmental entity shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or otherwise
prohibiting the Merger and such order shall have become final and nonappealable,
or (ii) the conditions to the obligations of such party shall be satisfied and
such obligations of the other party are not capable of being satisfied by March
25, 1999; or (c) by Logan's if the Logan's Board, in the exercise of its good
faith judgment as to its fiduciary duties to its shareholders imposed by law,
determines that an Alternative Transaction is more advantageous to Logan's
shareholders than the Merger. See "THE MERGER AGREEMENT--Termination."
Effective Time of the Merger. The Merger will become effective upon the
filing by CBRL, LRI and Logan's, and acceptance for record, of the Articles of
Merger under the Tennessee Business Corporation Act (the "TBCA"), or at such
later time as may be specified in such Articles of Merger. The Merger Agreement
requires that this filing be made as soon as practicable following satisfaction
or waiver of the various conditions to the Merger set forth in the Merger
Agreement, or at such other time as may be agreed by CBRL and Logan's. See "THE
MERGER AGREEMENT--Conditions Precedent" and "--Effective Time of the Merger."
MARKET AND MARKET PRICE
Logan's Common Stock is listed under the symbol "RDHS" on the Nasdaq
National Market. The closing sale price of Logan's Common Stock as reported on
the Nasdaq National Market on December 10, 1998, the last business day preceding
public announcement of the Merger, was $21.06.
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SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth selected financial data of the Company
and Logan's Partnership (the "Predecessor") as of and for the fiscal years ended
December 26, 1993, December 25, 1994, December 31, 1995, December 29, 1996 and
December 28, 1997, and for the 40 weeks (third quarter) ended October 5, 1997
and October 4, 1998. The statement of earnings data for the 40 weeks ended
October 5, 1997 and October 4, 1998 and the balance sheet data at October 5,
1997 and October 4, 1998 are derived from unaudited financial statements which,
in the opinion of management, include all adjustments, consisting only of normal
recurring accruals, necessary for a fair presentation of financial condition and
the results of operations. Operating results for the 40 weeks ended October 4,
1998 are not necessarily indicative of the results that may be expected for the
fiscal year ending December 27, 1998. The financial data for 1993, 1994, and in
1995 through July 25, 1995 included herein are those of the Predecessor. The
financial data since July 26, 1995 included herein are those of the Company. The
assets and liabilities transferred from the Predecessor to the Company were at
the amounts recorded in the accounts of the Predecessor. The following data
should be read in conjunction with the Company's Financial Statements and the
related Notes thereto incorporated herein by reference.
FISCAL YEARS (1) THIRD QUARTER ENDED(2)
---------------------------------------------------------- -----------------------
OCTOBER 5, OCTOBER 4,
1993 1994 1995 1996 1997 1997 1998
------ ------- ------- ------- ------- ---------- ----------
(unaudited)
STATEMENT OF EARNINGS DATA:
Net restaurant sales........... $8,810 $15,005 $27,900 $41,044 $66,530 $49,936 $73,677
Cost of restaurant sales:
Food and beverage............ 3,269 5,336 9,953 13,662 21,884 16,408 24,092
Labor and benefits........... 2,476 4,060 7,506 11,212 18,583 13,851 21,138
Occupancy and other costs.... 1,701 2,691 4,594 5,974 9,549 7,264 10,870
Depreciation and amortization 266 384 990 1,870 3,598 2,709 3,677
General and administrative
expenses..................... 454 777 1,728 2,449 3,568 2,639 4,161
------ ------- ------- ------- ------- ------- -------
Total costs and expenses.. 8,166 13,248 24,771 35,167 57,182 42,871 63,938
------ ------- ------- ------- ------- ------- -------
Income from operations.. 644 1,757 3,129 5,877 9,348 7,065 9,739
Other income (expense):
Interest, net................ (95) (142) (178) 309 601 375 323
Franchise income............. - -- -- 125 204 152 234
------ ------- ------- ------- ------- ------- -------
(95) (142) (178) 434 805 527 557
------ ------- ------- ------- ------- ------- -------
Earnings before income
taxes(3)................ 549 1,615 2,951 6,311 10,153 7,592 10,296
Income tax expense(3).......... 191 572 1,046 2,162 3,518 2,681 3,624
------ ------- ------- ------- ------- ------- -------
Net earnings(3)......... $ 358 $ 1,043 $ 1,905 $ 4,149 $ 6,635 $ 4,911 $ 6,672
====== ======= ======= ======= ======= ======= =======
Net earnings per share(3):
Basic....................... $ 0.11 $ 0.34 $ 0.50 $ 0.73 $ 1.02 $ 0.78 $ 0.93
====== ======= ======= ======= ======= ======= =======
Diluted:.................... $ 0.11 $ 0.34 $ 0.50 $ 0.71 $ 0.99 $ 0.75 $ 0.90
====== ======= ======= ======= ======= ======= =======
Weighted average shares
outstanding(4)(5)
Basic........................ 3,068 3,068 3,775 5,652 6,505 6,314 7,163
Diluted...................... 3,068 3,068 3,834 5,826 6,726 6,551 7,377
BALANCE SHEET DATA:
Total assets................... $1,350 $ 4,036 $19,869 $45,459 $78,523 $74,221 $87,966
Long-term debt, less current
portion...................... 168 283 1,418 -- -- -- --
Capitalized lease obligations,
less current portion......... 437 704 522 -- -- -- --
Total partners' equity (deficit)
or shareholders' equity...... (79) 817 15,055 40,002 71,625 69,726 78,797
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- --------------------
(1) For accounting purposes, the Company has adopted a 52/53 week fiscal year
ending on the last Sunday in December.
(2) For accounting purposes, the first quarter consists of 16 weeks, with the
second, third and fourth quarters each consisting of 12 weeks (13 weeks in
the fourth quarter of 1995 because it was a 53-week year).
(3) Prior to the Company's initial public offering on July 25, 1995, the
Predecessor operated the Company's restaurants as a general partnership and
was not subject to corporate income taxes. Pro forma adjustments have been
made to earnings for 1995 and prior years to give effect to federal and
state income taxes as though the Company had been subject to corporate
income taxes for the periods presented.
(4) Shares outstanding give effect to the acquisition by the Company of the
partnership interests in the Predecessor as if such acquisition occurred as
of the beginning of 1993.
(5) All earnings per share data has been restated to reflect the Company's
adoption of Statement of Financial Accounting Standards No. 128, "Earnings
per Share."
THE SPECIAL MEETING
GENERAL
This Proxy Statement is being furnished to holders of Logan's Common
Stock in connection with the solicitation of proxies by the Logan's Board for
use at the Special Meeting to consider and vote upon a proposal to approve the
Merger Agreement.
Each copy of this Proxy Statement mailed to holders of Logan's Common
Stock is accompanied by a form of Proxy to be used at the Special Meeting.
DATE, PLACE AND TIME
The Special Meeting will be held at the Marriott Hotel, Memphis Room,
600 Marriott Drive, Nashville, Tennessee, on February 5, 1999, at 8:30 a.m.,
local time.
RECORD DATE; QUORUM
The Logan's Board has fixed the close of business on January 4, 1999
for the determination of holders of Logan's Common Stock entitled to receive
notice of and to vote at the Special Meeting. The presence, in person or by
proxy, of a majority of the shares of Logan's Common Stock will constitute a
quorum at the Special Meeting. Abstentions (but not broker non-votes) will be
counted for purposes of determining the presence of a quorum at the Special
Meeting.
VOTES REQUIRED
As of the Record Date, there were outstanding and entitled to vote
7,199,150 shares of Logan's Common Stock (held of record by 135 persons). As of
such date, the directors and executive officers of Logan's and their affiliates
beneficially owned an aggregate of 304,277 shares of Logan's Common Stock
(excluding shares issuable upon exercise of options), or approximately 4.2% of
the shares of Logan's Common Stock outstanding on such date. As of the Record
Date, neither CBRL nor its affiliates beneficially owned any shares of Logan's
Common Stock. See "THE MERGER--Interests of Certain Persons in the Merger."
Approval of the Merger Agreement requires the affirmative vote of a
majority of the holders of the outstanding shares of Logan's Common Stock
entitled to be cast at the Special Meeting. At a special meeting held on
December 10, 1998, the Logan's Board determined that the proposed Merger, and
the terms and conditions of the Merger Agreement, were in the best interests of
Logan's and its shareholders. The Merger Agreement was adopted and approved by
the Logan's Board, which also recommended that the holders of Logan's Common
Stock vote FOR approval of the Merger Agreement.
In the event that the Merger Agreement is not approved by the Logan's
shareholders, the Merger Agreement may be terminated by CBRL or Logan's in
accordance with its terms. See "THE MERGER AGREEMENT--Termination."
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VOTING AND REVOCATION OF PROXIES
The shares of Logan's Common Stock represented by a Proxy properly
signed and received at or prior to the Special Meeting, unless subsequently
revoked, will be voted in accordance with the instructions thereon. IF A PROXY
FOR THE SPECIAL MEETING IS PROPERLY EXECUTED AND RETURNED WITHOUT INDICATING ANY
VOTING INSTRUCTIONS, SHARES OF LOGAN'S COMMON STOCK REPRESENTED BY THE PROXY
WILL BE VOTED FOR APPROVAL OF THE MERGER AGREEMENT. Any Proxy given pursuant to
the solicitation may be revoked by the person giving it at any time before the
Proxy is voted by the filing with the Secretary of Logan's an instrument
revoking it or a duly executed Proxy bearing a later date, prior to or at the
Special Meeting, or by voting in person at the Special Meeting. Attendance at
the Special Meeting will not in and of itself constitute a revocation of a
Proxy. Only votes cast for approval of the Merger Agreement or other matters
constitute affirmative votes. Abstentions and broker non-votes will, therefore,
have the same effect as votes against approval of the Merger Agreement at the
Special Meeting.
The Logan's Board is not aware of any business to be acted upon at the
Special Meeting other than as described herein. If, however, other matters are
properly brought before the Special Meeting, or any adjournments or
postponements thereof, the persons appointed as proxies will have discretion to
vote or act thereon according to their best judgment and subject to applicable
rules of Tennessee law. Discretionary authority will not be used to vote in
favor of adjournment of the Special Meeting. Votes against approval of the
Merger Agreement will not be voted for adjournment of the Special Meeting.
SOLICITATION OF PROXIES
In addition to solicitation by mail, directors, officers and employees
of Logan's, who will not be specifically compensated for such services, may
solicit proxies from the holders of Logan's Common Stock, personally or by
telephone or telegram or other form of communication. Nominees, fiduciaries and
other custodians will be requested to forward soliciting materials to beneficial
owners and will be reimbursed for their reasonable expenses incurred in doing
so.
Logan's will bear its own expenses in connection with the solicitation
of proxies for its Special Meeting.
SHAREHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR PROXY CARDS.
THE MERGER
The description of the Merger contained in this Proxy Statement
summarizes the material provisions of the Merger Agreement; it is not complete
and is qualified in its entirety by reference to the Merger Agreement, the full
text of which is attached hereto as Annex A and incorporated herein by
reference. All shareholders are urged to read Annex A in its entirety.
BACKGROUND OF THE MERGER
In November 1996, representatives of STES met with the management of
Logan's to discuss various strategic alternatives, including the potential
benefits to the Company of having a strategic partner. STES and Logan's reviewed
numerous publicly-owned restaurant companies to determine those companies that
might have an interest in a merger or strategic partnership with Logan's. STES
and Logan's contacted several of the most attractive candidates and meetings
were arranged with three companies, including Cracker Barrel, in early 1997. At
these meetings, the parties engaged in general discussions about the restaurant
industry and the strategic alternatives being considered by Logan's, but the
meetings did not result in continued discussions.
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In January 1998, STES and Logan's resumed their analysis of possible
strategic alternatives and contacted representatives of several of the most
attractive candidates. No companies expressed sufficient interest to arrange a
meeting to have additional discussions at that time.
In July 1998, counsel to Cracker Barrel contacted STES to express
Cracker Barrel's interest in a meeting with Logan's to discuss a possible
transaction. Representatives of STES, Logan's, Cracker Barrel and counsel to
Cracker Barrel met to discuss their interest in a transaction with Logan's. The
discussions were of a general nature and did not result in any continued
discussions. In addition, STES had discussions with other potential strategic
partners during the summer of 1998. None of these parties expressed an interest
in pursuing discussions with Logan's at such time.
In October 1998, counsel to Cracker Barrel contacted STES to express
Cracker Barrel's interest in a meeting to discuss a potential transaction with
Logan's. On October 30, 1998, representatives of STES and Logan's met with the
management, counsel and financial advisors of Cracker Barrel. Cracker Barrel
expressed its interest in a cash acquisition of Logan's and discussed, in
general terms, a price range for Logan's Common Stock between 125% ($21.88) and
130% ($22.75) of the current market prices.
On November 1 and 2, 1998, representatives of STES and Logan's met to
discuss a potential business combination with Cracker Barrel, including certain
information regarding comparable acquisitions and other financial information.
On November 3, 1998, representatives of STES met with J.C. Bradford &
Co., LLC ("Bradford"), financial advisors to Cracker Barrel, to discuss in
greater specificity a potential business combination, including the proposed
timing of the transaction and alternatives for forms of consideration. In
particular, STES expressed concern over the initially suggested price range and
conveyed Logan's possible interest in CBRL Common Stock being used for some or
all of the Merger consideration. Bradford informed STES that the initially
suggested price range still applied and that Cracker Barrel was not interested
in offering stock as consideration in the acquisition. Following discussions of
this meeting with Logan's, STES and Bradford had conversations again on November
5, 1998 to discuss the transaction. The discussions focused on Logan's desire
for a formal proposal and Logan's concern with the price range.
On November 10, 1998, Bradford contacted STES to request a meeting
among Logan's, Cracker Barrel and its advisors to discuss the potential business
combination. STES and Logan's met on November 11, 1998 to discuss the proposed
transaction and valuation issues. Following this meeting, STES contacted
Bradford and requested a formal offer from Cracker Barrel.
On November 13, 1998, Dan W. Evins, the Chief Executive Officer of
Cracker Barrel contacted Edwin W. Moats, Jr., the Chief Executive Officer of
Logan's, to make a formal proposal for an acquisition of Logan's at $24.00 per
share in cash. Mr. Moats indicated that he would discuss the proposal with the
Logan's Board. On November 16, 1998, STES contacted Bradford to discuss
specifics of the proposal and the proposed time schedule for a transaction.
On November 19, 1998, the Logan's Board met to discuss the proposed
transaction. The Logan's Board received an analysis of the transaction from STES
and a discussion of other factors regarding the transaction from counsel to
Logan's. The Logan's Board determined that it was interested in pursuing the
transaction and authorized Mr. Moats to sign a confidentiality agreement with
and provide certain financial and other information to Cracker Barrel.
On November 25, 1998, Logan's signed a confidentiality agreement with
Cracker Barrel. During the week beginning November 30, 1998, Logan's made
certain information available to
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Cracker Barrel. In addition, certain executive officers of Logan's had
discussions with representatives of Cracker Barrel concerning Logan's and its
prospects.
On December 9, 1998, the Logan's Board met to discuss the terms of the
transaction and receive a presentation from STES regarding the transaction. On
December 10, 1998, the Logan's Board met to further discuss the transaction and
to receive a fairness opinion from STES. After discussions regarding the final
terms of the transaction, the Logan's Board voted to approve the transaction.
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARD OF DIRECTORS
Logan's. In reaching its determination to adopt the Merger Agreement,
the Board of Directors of Logan's consulted with its management and its
financial and legal advisors, and considered a number of factors. The following
include all of the material factors considered thereby:
(i) the presentations of STES to the Logan's Board, the financial
information reviewed by STES at the meetings of the Logan's Board on November
19, 1998 and December 9, 1998, and the opinion of STES rendered on December 10,
1998, that, as of such date and based upon and subject to the procedures
followed, assumptions made, matters considered, and limitations on the analyses
undertaken, the purchase price was fair from a financial point of view to the
shareholders (See "--Opinion of SunTrust Equitable Securities Corporation");
(ii) the Logan's Board's review, based in part on presentations by
STES and Logan's management, of the recent stock performances of public
restaurant companies generally, and the stock performance of Logan's in
particular, including the fact that the stocks of restaurant companies with
growth rates of 25% or higher generally trade at price-to-earnings ratios which
are less than half the growth rates of such companies and the tendency of the
public markets to undervalue smaller companies, especially those with under $500
million market capitalization;
(iii) the current and prospective economic and competitive
environment facing the restaurant industry generally, and Logan's in particular,
including Logan's recent performance as characterized by downward trends in its
annual growth rates and the vulnerability of Logan's to many risks, including
the failure to meet quarterly earnings expectations and other risks outside
Logan's control, such as food poisoning and class action litigation, that are
potentially more damaging to smaller companies;
(iv) the terms of the Merger Agreement and the Merger, including
the purchase price, noting that it reflected a 33.3% and a 13.9% premium for
Logan's shareholders based on the closing price of Logan's Common Stock on
November 12, 1998, the trading day four weeks prior to the approval of the
Merger by the Logan's Board, and December 10, 1998, the last trading day prior
to the approval of the Merger by the Logan's Board, respectively;
(v) the terms of the Merger Agreement, including the provision of
the Merger Agreement allowing the Logan's Board, in the exercise of its
fiduciary duties, to consider an Alternative Transaction and pay a termination
fee in the event the Board, in the good faith exercise of its fiduciary duties,
terminates the Merger Agreement and enters into a definitive agreement with
respect to an Alternative Transaction;
(vi) the Logan's Board's review, based on the presentation of STES
to the Board and discussions with executive officers of Logan's, of alternative
business strategies and the belief of the Logan's Board, based upon such review,
that other potential financial and strategic partners were not currently
interested in combining with Logan's and that the Merger was preferable to any
such alternatives; and
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(vii) the expectation that the Merger would be a taxable
cash-for-stock transaction (see "--Certain Federal Income Tax Consequences").
The foregoing discussion of the information and factors considered by
Logan's Board is not intended to be exhaustive, but includes all of the material
factors considered by the Board of Directors. In the course of its deliberations
with respect to the Merger, the Board of Directors discussed the anticipated
effect of the Merger on Logan's and its shareholders. In reaching its
determination to approve and recommend the Merger, the Board of Directors
generally viewed each of the foregoing factors as supporting its approval and
recommendation of the Merger Agreement but did not assign any relative or
specific weight to the factors considered in reaching such determination, and
individual directors may have given differing weights to different factors.
THE COMPANY'S BOARD OF DIRECTORS BELIEVES THAT THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN THE BEST INTERESTS OF,
THE COMPANY AND THE COMPANY'S SHAREHOLDERS. THE COMPANY'S BOARD RECOMMENDS THAT
THE SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY. SHAREHOLDERS SHOULD BE AWARE THAT CERTAIN
MEMBERS OF THE LOGAN'S BOARD AND MANAGEMENT HAVE CERTAIN INTERESTS IN THE MERGER
THAT ARE IN ADDITION TO THOSE OF OTHER SHAREHOLDERS OF LOGAN'S. SEE "--INTERESTS
OF CERTAIN PERSONS IN THE MERGER."
CBRL. The CBRL Board of Directors, after consideration of various
relevant factors, approved the Merger Agreement and the transactions
contemplated in that document. No relative or specific weights were assigned to
the factors considered by the CBRL Board of Directors.
Generally, the acquisition of Logan's is consistent with CBRL's plans
to grow by expanding existing concepts as well as by acquisitions. CBRL believes
that Logan's has an excellent management team which has built an exceptional
restaurant concept that focuses on high quality food served in a casual and
entertaining environment, delivers excellent unit economics, and provides an
excellent price-to-value relationship for its guests. CBRL believes Logan's
presents significant growth opportunities. CBRL also believes that Logan's will
fit well with its existing concepts and does not directly compete with those
concepts.
OPINION OF SUNTRUST EQUITABLE SECURITIES CORPORATION
Pursuant to an engagement letter dated November 20, 1998 (the
"Engagement Letter"), Logan's engaged STES to act as its exclusive financial
advisor in connection with the possible sale of Logan's. STES is a nationally
recognized firm and, as part of its investment banking activities, is regularly
engaged in the valuation of businesses and their securities in connection with
merger transactions and other types of acquisitions, negotiated underwritings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. Logan's selected STES as its
financial advisor on the basis of its experience and expertise in transactions
similar to the Merger, its reputation and experience in the restaurant industry
and its historical investment banking relationship with Logan's.
In connection with the consideration by Logan's of the merits of the
Merger, STES was asked under the terms of the Engagement Letter to perform
various financial analyses and deliver to the Board of Directors its opinion
based on such analyses. At the December 10, 1998 meeting of the Board of
Directors, STES delivered its written opinion (the "STES Opinion") that, as of
such date, and based upon and subject to the limitations, assumptions and
qualifications set forth in such opinion, the consideration to be received by
the shareholders of Logan's in the Merger (the "Merger Consideration") was fair,
from a financial point of view, to such shareholders. No limitations were
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imposed by the Board of Directors upon STES with respect to the investigations
made or the procedures followed by it in rendering its opinion.
THE FULL TEXT OF THE STES OPINION, WHICH SETS FORTH THE ASSUMPTIONS
MADE, MATTERS CONSIDERED AND LIMITATIONS OF REVIEW BY STES, IS ATTACHED HERETO
AS ANNEX B AND IS INCORPORATED HEREIN BY REFERENCE AND SHOULD BE READ CAREFULLY
AND IN ITS ENTIRETY IN CONNECTION WITH THIS PROXY STATEMENT. THE FOLLOWING
SUMMARY OF THE STES OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
FULL TEXT OF THE STES OPINION. THE STES OPINION IS ADDRESSED TO LOGAN'S BOARD
ONLY AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER OF LOGAN'S AS
TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE SPECIAL MEETING.
In connection with its opinion, STES has, among other things: (i)
reviewed certain publicly available financial and certain other financial
information, reports, forecasts and other internal information that was provided
to STES by or on behalf of Logan's; (ii) reviewed the draft Merger Agreement;
(iii) compared Logan's from a financial and operational point of view with
certain other companies in the restaurant industry that STES deemed to be
relevant; (iv) considered the financial terms, to the extent publicly available,
of selected recent business combinations of companies in the restaurant industry
which STES believed to be comparable to the Merger; (v) reviewed and discussed
the historical and current operations of Logan's, its financial condition and
prospects with management and representatives of Logan's; and (vi) performed
such financial studies, other analyses and examinations and reviewed such other
information and factors as STES deemed appropriate.
In connection with its review, STES did not independently verify the
foregoing information and relied on such information being accurate and complete
in all material respects. With respect to the financial forecasts for Logan's,
STES assumed for purposes of its opinion that the forecasts were reasonably
prepared on bases reflecting the best available estimates at the time of
preparation as to the future financial performance of Logan's and that the
forecasts provided a reasonable basis upon which STES could form its opinion.
STES has expressed no opinion with respect to such forecasts or the assumptions
on which they were based. STES also assumed that there were no material changes
in Logan's assets, financial condition, results of operations, business or
prospects since the date of the last financial statements made available to
STES. STES relied on advice of counsel and the independent accountants to
Logan's as to all legal and financial reporting matters, respectively, with
respect to Logan's, the Merger and the draft Merger Agreement. STES has assumed
that the Merger will be consummated in a manner that complies in all respects
with the applicable provisions of the Exchange Act and all other applicable
federal and state statutes, rules and regulations. In addition, STES did not
assume responsibility for making an independent evaluation, appraisal or
physical inspection of the assets or liabilities (contingent or otherwise) of
Logan's and was not furnished with any such appraisals. Finally, the STES
Opinion was based on economic, monetary, market and other conditions existing on
the date of the STES Opinion and does not address the fairness of the Merger
Consideration to the shareholder as of any other date.
Set forth below is a brief summary of selected analyses performed by
STES in connection with the STES Opinion and included in its presentation to
Logan's Board of Directors.
Analysis of Premiums Paid
STES reviewed the acquisition premiums paid for two groups of selected
public companies for certain periods prior to announcing a transaction. For the
first group, consisting of 35 transactions in which cash was the acquisition
consideration and having a transaction value of between $125 million and $250
million, the median premium paid in the transaction as compared to the acquired
company's stock price one day, one week and four weeks prior to the announcement
of the
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transaction were 25.6%, 30.9% and 35.4%, respectively. For the second group,
consisting of 16 transactions involving restaurant companies, the median premium
paid in the transaction as compared to the acquired company's stock price one
day, one week and four weeks prior to the announcement of the transaction were
32.1%, 30.2% and 26.5%, respectively. STES noted that the $24.00 per share
transaction value of the Merger implied premiums of 13.9%, 11.6% and 33.3%,
respectively, to the stock price of Logan's one day, one week and four weeks
prior to the announcement. STES noted that it viewed the relative premiums four
weeks prior to announcement as most relevant in its analysis. STES also examined
the premium paid for Logan's relative to the average trading price for the one
week, four week and twelve week periods prior to the announcement. This analysis
indicated premiums of 10.8%, 17.6% and 33.1%, respectively. STES viewed this
analysis as supporting fairness since the implied premium four weeks prior to
announcement was comparable to premiums in similar transactions.
Comparable Company Analysis
STES analyzed a group of twelve publicly-traded restaurant companies.
As a multiple of the latest twelve months' ("LTM") revenue, earnings before
interest, taxes, depreciation and amortization ("EBITDA") and earnings before
interest and taxes ("EBIT"), the companies were valued at an average multiple,
excluding the high and low values from the range, of 0.9x, 6.9x and 11.6x,
respectively. STES determined that the transaction value of $24.00 per share,
based upon LTM financial data, implied a valuation for Logan's of 1.9x revenues,
10.5x EBITDA and 14.5x EBIT. STES determined that the transaction value of
$24.00 per share represented a multiple of LTM, estimated 1998 and 1999
price-to-earnings ratios ("P/E") of 21.1x, 19.0x and 15.1x, respectively. As a
multiple of LTM P/E, 1998 P/E and 1999 P/E, the comparable companies examined
were valued at an average multiple, excluding the high and low values from the
range, of 17.5x, 16.3x and 13.7x, respectively. STES judged this analysis as
supporting fairness since the valuation multiples implied by the transaction
value of $24.00 per share were generally in excess of the valuation multiples of
comparable companies. No company or transaction used in the above analysis is
identical to Logan's or the Merger. Accordingly, an analysis of the results of
the foregoing involves complex considerations and judgments concerning
differences in financial and operating characteristics of the companies and
other factors that could affect the public trading value of the companies to
which Logan's and the Merger are being compared.
Comparable Transaction Analysis
STES developed a list of twelve merger and acquisition transactions
involving selected restaurant companies to determine comparable transaction
multiples of revenue, EBITDA and EBIT. STES determined that the $24.00 per share
transaction value represents the following multiples based on estimated 1998
financial data: 1.9x, 10.2x and 14.2x, respectively. These multiples compare to
the average multiples, excluding the high and low value from the range, paid for
other comparable restaurant companies of 1.1x, 8.7x and 15.3x, respectively. No
company or transaction used in the above analysis is identical to Logan's or the
Merger. Accordingly, an analysis of the results of the foregoing involves
complex considerations and judgments concerning differences in financial and
operating characteristics of the companies and other factors that could affect
the public trading value of the companies to which Logan's and the Merger are
being compared. Mathematical analysis (such as determining the mean) is not, in
itself, a meaningful method of using comparable transaction data. STES judged
this analysis as supporting fairness since the valuation multiples implied by
the transaction value of $24.00 per share were generally in excess of the
valuation multiples of comparable transactions.
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Discounted Cash Flow Analysis
Using certain projected financial information, STES calculated the net
present value of free cash flows of Logan's through 2002 using discount rates
ranging from 11.7% to 13.7%. STES' estimate of the appropriate discount rate was
based on the estimated weighted average cost of capital for comparable
restaurant companies. STES also calculated the terminal value of Logan's in the
year 2002 based on multiples of 2002 free cash flow ranging from 8.0x to 12.0x
and discounted these terminal values using the assumed range of discount rates.
This analysis indicated a range of per share values for Logan's of $16.56 to
$29.68. Inherent in any discounted cash flow valuation are the use of a number
of assumptions, including the accuracy of projections, and the subjective
determination of an appropriate terminal value and discount rate to apply to the
projected cash flows of the entity under examination. Variations in any of these
assumptions or judgments could significantly alter the results of a discounted
cash flow analysis. STES judged this analysis as supporting fairness since the
transaction value of $24.00 per share was within the range of values generated
by this analysis.
Leveraged Buyout Analysis
STES calculated the price which could be paid for Logan's equity in a
leveraged transaction while achieving an adequate internal rate of return on
investment. STES applied a leveraged buyout analysis to the financial forecasts
for Logan's for calendar years 1999 to 2002, with the assumption of 2% revenue
growth rate and constant margins after 2000. STES calculated the value of the
equity acquired assuming a 30% and 40% internal rate of return to the equity
investors. The return is calculated over a five-year time period with an assumed
exit valuation of 8.0x EBITDA. The return levels were selected based upon STES'
judgment of the returns expected by equity investors in a leveraged transaction.
This analysis indicated values for Logan's equity ranging from $17.38 to $21.10
per share, based upon a 40% and 30% internal rate of return, respectively.
Inherent in any leveraged buyout analysis are the use of a number of
assumptions, including the accuracy of projections, the appropriate capital
structure and the exit multiple used in the analysis. Variations in any of these
assumptions or judgments could significantly alter the results of a leveraged
buyout analysis. STES judged this analysis as supporting fairness since the
transaction value of $24.00 per share was above the range of values indicated by
this analysis.
The summary set forth above does not purport to be a complete
description of the presentation by STES to the Board of Directors or the
analyses performed by STES. The preparation of a fairness opinion necessarily is
not susceptible to partial analysis or summary description. STES believes that
the analyses and the summary set forth above must be considered as a whole and
that selecting portions of its analyses and of the factors considered, without
considering all such analyses and factors, would create an incomplete or
misleading view of the evaluation process underlying its opinion. In addition,
STES may have given various analyses more or less emphasis than other analyses,
so that the ranges of valuations resulting from any particular analysis
described above should not be taken to be STES' view of the actual value of
Logan's.
In performing its analyses, STES made numerous assumptions with respect
to industry performance, general business and economic conditions and other
matters, many of which are beyond the control of Logan's. The analyses performed
by STES are not necessarily indicative of actual values or actual future
results, which may be significantly more or less favorable than suggested by
such analyses. Such analyses were prepared solely as part of STES' analysis of
the fairness of the Merger Consideration to Logan's shareholders and were
provided to the Board of Directors in connection with the delivery of the STES
Opinion. The analyses do not purport to be appraisals or to reflect the prices
at which a company might actually be sold or the prices at which any securities
may trade at the present time or at any time in the future. STES used in its
analyses various projections of future performance prepared by the management of
Logan's. The projections are based on numerous variables and assumptions, which
are inherently unpredictable and must be
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considered not certain of occurrence as projected. Accordingly, actual results
could vary significantly from those set forth in such projections.
As described above, the STES Opinion and presentation to Logan's Board
of Directors were among the many factors taken into consideration by Logan's
Board of Directors in making its determination to approve, and to recommend that
its shareholders approve, the Merger.
Pursuant to the Engagement Letter, Logan's paid STES (i) an advisory
fee of $75,000 and (ii) an additional fee of $175,000 following the delivery of
the STES Opinion, both of which will be credited against any fee payable to STES
upon consummation of the Merger. Upon consummation of the Merger, Logan's will
become obligated to pay STES a fee of approximately $1.7 million. Logan's has
also agreed to reimburse STES for its reasonable expenses. Pursuant to a
separate letter agreement, Logan's has agreed to indemnify STES, its affiliates,
and their respective partners, directors, officers, agents, consultants,
employees and controlling persons against certain liabilities, including
liabilities under the federal securities laws.
In the past, STES has provided financial advisory and investment
banking services to Logan's and has received customary fees for the rendering of
such services. In the ordinary course of its business, STES actively trades
securities of Logan's and CBRL for its own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain Logan's executive officers and members of its Board of
Directors have interests in the Merger that are in addition to their interests
as shareholders of Logan's generally. Certain of these persons participated in
the negotiation of the Merger Agreement. The Logan's Board was aware of these
interests and considered them, among other matters, in approving the Merger
Agreement and the transactions contemplated thereby. Jerry O. Bradley, a
director of Logan's, abstained from the vote by the Logan's Board with respect
to the Merger because of his ownership interest in CBRL. The executive officers
and directors of Logan's own options to purchase 475,500 shares of Logan's
Common Stock, including options to purchase 235,875 shares that will become
exercisable upon the affirmative vote of a majority of Logan's shareholders for
approval of the Merger Agreement. It is anticipated that each of Logan's
executive officers will continue his employment with Logan's following the
Merger.
Described below are the material provisions of the employment
agreements. Also described below are other payments to which Logan's executive
officers may be entitled and which certain other persons will be entitled as a
result of the Merger.
At the time of execution of the Merger Agreement, Edwin W. Moats, Jr.
entered into a Second Amended and Restated Employment Agreement ("the Second
Amended Agreement") as President and Chief Executive Officer of Logan's until
July 31, 2000, unless earlier terminated. In addition, Peter W. Kehayes, Ralph
W. McCracken and David J. McDaniel each entered into Amended Employment
Agreements with Logan's (collectively, the "Amended Employment Agreements"). The
initial term of the Amended Employment Agreements expires January 14, 2000,
unless earlier terminated. Pursuant to their respective Amended Employment
Agreements, Mr. Kehayes is employed as Executive Vice President and Chief
Operating Officer, Mr. McCracken is employed as Senior Vice President of
Development of the Company and Mr. McDaniel is employed as Senior Vice President
of Finance and Chief Financial Officer of the Company.
The Second Amended Agreement of Mr. Moats provides for an annual base
salary of $250,000, which is subject to annual review by the Compensation
Committee or Board of Directors, and bonuses, which amounts will be determined
in accordance with the Logan's Executive Bonus
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Plan administered by the Compensation Committee. The employment agreements of
Messrs. Kehayes, McCracken and McDaniel provide for annual base salaries of
$200,000, $115,000 and $125,000, respectively. The salaries of Messrs. Kehayes,
McCracken and McDaniel are subject to annual review by the Compensation
Committee or Board of Directors of Logan's. In addition, the Amended Employment
Agreements provide for bonuses, which amounts will be determined in accordance
with the Logan's Executive Bonus Plan administered by the Compensation
Committee.
The Second Amended Agreement and the Amended Employment Agreements
provide that each of the executive officers may terminate his employment
agreement without cause by giving Logan's 90 days prior written notice. Pursuant
to the terms of the Second Amended Employment Agreement and the Amended
Employment Agreements, each of the executive officers has agreed not to disclose
Logan's confidential information and, if terminated for cause or if voluntarily
terminated, not to compete against Logan's during the term of his employment
agreement and for a period of 12 months thereafter.
In the event of any termination of an executive officer's employment
agreement within six months of a "change-in-control" (as defined in each of the
Second Amended Agreement and the Amended Employment Agreements), including a
voluntary termination by the executive officer (except for a voluntary
termination by such executive officer in connection with the Merger), he will be
paid all accrued base salary, bonus compensation to the extent earned, vested
deferred compensation (other than plan benefits which will be paid in accordance
with the applicable plan) and other benefits under any plans of Logan's in which
employee is a participant, including accelerated vesting of any awards under
Logan's stock option plans, through the date of termination. In addition, each
executive officer will receive as severance pay his base salary in monthly
installments for 12 months upon any such termination within the initial term of
his employment agreement. Mr. Moats also will receive as severance pay pursuant
to the Second Amended Agreement his base salary in monthly installments for the
greater of 12 months or the remaining term of the Second Amended Agreement and
any extensions thereof. Alternatively, each executive officer may elect to
receive a lump sum severance payment equal to the present value of the cash flow
of severance payments that would otherwise be paid to him. Notwithstanding the
foregoing, the Company is not required to pay any amount which is not deductible
for federal income tax purposes.
Each executive officer is entitled to receive his accrued base salary,
earned bonus and other benefits through the date of termination in the event
that Logan's terminates his employment without cause. Mr. Moats also will
receive as severance compensation pursuant to the Second Amended Agreement his
base salary for the greater of 12 months or the remaining term of such
Agreement. Messrs. Kehayes, McCracken and McDaniel each will receive as
severance compensation his base salary for 12 months pursuant to his Amended
Employment Agreement. Each executive officer also will receive an amount equal
to his average monthly bonus for the two years preceding the date of termination
(as if such bonus were paid monthly), which shall be computed on a pro rata
basis if the executive officer has not been employed by Logan's for two years at
the time of termination. Additionally, any stock options granted to Messrs.
Moats, Kehayes, McCracken or McDaniel for shares of CBRL Common Stock will
become fully vested and immediately exercisable for a period of 90 days.
In the event any executive officer is terminated for cause (as defined
in each of the Second Amended Agreement and the Amended Employment Agreements),
he is entitled to receive all accrued base salary, earned bonus compensation and
unreimbursed expenses through the date of termination, but shall receive no
other severance benefits. Each of the Second Amended Employment Agreement and
the Amended Agreements also may be terminated if the executive officer dies, in
which event his estate will receive these same payments. In addition, pursuant
to the Second Amended Employment Agreement, Mr. Moats' estate will receive
severance payments equal to six months' salary.
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In the event any executive officer becomes disabled for a period of 60
consecutive days, he is entitled to receive his base salary, insurance, bonus
and other benefits for a period of six months from the date such disability
began or for such shorter period as he is unable to perform his duties
thereunder. In the event he is unable to perform his duties after the expiration
of the six-month period, his employment agreement will terminate.
CBRL has agreed in the Merger Agreement that for six years from and
after the Effective Time, it will not, and it will not permit Logan's to, alter
the provisions of Logan's Amended and Restated Charter and Bylaws relating to
indemnification of officers and directors of Logan's for acts or omissions
occurring at or prior to the Effective Time. For a period of six years from the
Effective Time, CBRL also will cause Logan's to provide Logan's current
directors and officers an insurance and indemnification policy that provides
coverage for events occurring prior to the Effective Time that is no less
favorable than Logan's existing policy or, if substantially equivalent insurance
is unavailable, the best available coverage; provided, however, that Logan's (as
the Surviving Corporation in the Merger) will not be required to pay an annual
premium for the insurance in excess of 300% of the last annual premiums paid
prior to the date of the Merger Agreement, but in such case shall purchase as
much coverage as possible for such amount.
ACCOUNTING TREATMENT
The Merger will be accounted for as a purchase under GAAP.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain federal income tax
consequences of the Merger to holders of shares of Logan's Common Stock. This
discussion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), existing and proposed regulations thereunder, Internal Revenue Service
(the "IRS") rulings and pronouncements, reports of congressional committees,
judicial decisions and current administrative rulings and practice, all as in
effect on the date hereof. Any change to the foregoing sources could be
retroactive and, accordingly, could modify the tax consequences discussed
herein. No ruling from the IRS with respect to the matters discussed herein has
been requested and there is no assurance that the IRS will agree with the
conclusions set forth in this discussion. In addition, no tax opinion has been
requested or received by the Company with respect to the federal income tax
consequences of the Merger.
The discussion below does not address all of the federal income tax
consequences that may be relevant to particular shareholders in light of their
personal circumstances or to certain types of shareholders (such as dealers in
securities, corporations, insurance companies, foreign individuals and entities,
financial institutions and tax-exempt entities) who may be subject to special
treatment under the federal income tax laws. This discussion also does not
address the federal income tax consequences to shareholders who acquired their
shares of Logan's Common Stock through the exercise of employee stock options or
otherwise as compensation.
For federal income tax purposes, an individual holder of shares of
Logan's Common Stock who exchanges such shares for cash pursuant to the Merger
will be treated as having sold his or her shares of Logan's Common Stock for
cash in a taxable transaction. Gain or loss will be recognized on the exchange
in an amount equal to the difference between the cash received and the holder's
adjusted tax basis in the shares of Logan's Common Stock exchanged therefor.
Such gain or loss will be a capital gain or loss if the holder of the shares of
Logan's Common Stock held such shares as a capital asset at the Effective Time,
and may qualify as long-term capital gain or loss if such holder held the shares
of Logan's Common Stock for a period greater than 12 months at the Effective
Time.
Holders of Logan's Common Stock or other payees generally will be
required to provide the Paying Agent with their correct taxpayer identification
numbers (certified under penalties or
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perjury) on the Substitute Forms W-9 included as part of the transmittal forms
sent to such shareholders pursuant to the Merger. The taxpayer identification
number of an individual is his or her social security number. A holder of
Logan's Common Stock or other payee who does not provide the Paying Agent with a
correct taxpayer identification number may be subject to a penalty imposed by
the IRS. Furthermore, payments made to a holder of Logan's Common Stock or other
payee may be subject to backup withholding if: (i) the Logan's shareholder or
other payee fails to furnish a correct taxpayer identification number, (ii) the
Logan's shareholder or other payee furnishes an incorrect taxpayer
identification number, (iii) Logan's, CBRL, or the Paying Agent is notified by
the IRS that such Logan's shareholder or other payee failed to report dividends
or (iv) under certain circumstances, the Logan's shareholder fails to provide a
certified statement, signed under penalty or perjury, that the taxpayer
identification number provided is the correct number and that the Logan's
shareholder is not subject to backup withholding.
If backup withholding applies, the Paying Agent is required to and will
withhold 31 percent of any payment made to a holder of Logan's Common Stock or
other payee. Backup withholding is not an additional tax but is credited against
the federal income tax liability of the taxpayer subject to the withholding. If
backup withholding results in an overpayment of a taxpayer's federal income
taxes, that taxpayer may obtain a refund from the IRS.
Generally, a holder of Company Common Stock or other payee may avoid
backup withholding by completing the Substitute Form W-9 included as part of the
transmittal forms and certifying that the taxpayer identification number
included therein is correct and that the holder of Logan's Common Stock or other
payee is not subject to backup withholding. Certain types of taxpayers
(including corporations and certain foreign individuals) are not subject to
these reporting or withholding requirements.
SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF PARTICIPATING IN THE MERGER, INCLUDING
THE APPLICABILITY OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, CHANGES IN APPLICABLE
TAX LAWS AND ANY PENDING OR PROPOSED LEGISLATION.
THE FOREGOING SUMMARY OF CERTAIN MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER WITH RESPECT TO HOLDERS OF LOGAN'S COMMON STOCK IS
WITHOUT REFERENCE TO THE PARTICULAR FACTS AND CIRCUMSTANCES OF ANY PARTICULAR
HOLDER. IN ADDITION, THE FOREGOING SUMMARY DOES NOT ADDRESS ANY NON-INCOME TAX
OR ANY FOREIGN, STATE OR LOCAL TAX CONSEQUENCES OF THE MERGER NOR DOES IT
ADDRESS THE TAX CONSEQUENCES OF ANY TRANSACTION OTHER THAN THE MERGER OR ANY
ASPECT OF THE MERGER NOT INVOLVING THE EXCHANGE OF LOGAN'S COMMON STOCK.
ACCORDINGLY, EACH HOLDER OF LOGAN'S COMMON STOCK IS STRONGLY URGED TO CONSULT
WITH SUCH HOLDER'S TAX ADVISOR TO DETERMINE THE PARTICULAR UNITED STATES
FEDERAL, STATE, LOCAL OR FOREIGN INCOME OR OTHER TAX CONSEQUENCES OF THE MERGER
TO SUCH HOLDER.
REGULATORY APPROVALS
The HSR Act prohibits consummation of the Merger until certain
information has been furnished to the Antitrust Division of the DOJ and the FTC
and certain waiting period requirements have been satisfied. On January 5, 1999,
CBRL and Logan's made their respective filings with the DOJ and the FTC with
respect to the Merger Agreement. Under the HSR Act, the filings commenced a
30-day waiting period during which the Merger cannot be consummated, which
waiting period will expire on February 4, 1999. Notwithstanding the expiration
of the HSR Act waiting period, at any time before or after the Effective Time,
the FTC, the DOJ or others could take action under the antitrust laws, including
requesting additional information, seeking to enjoin the
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consummation of the Merger or seeking the divestiture by CBRL of all or any part
of the stock or assets of Logan's. There can be no assurance that a challenge to
the Merger on antitrust grounds will not be made or, if such a challenge were
made, that it would not be successful.
Prior to the Merger, the FTC or the DOJ could seek to enjoin the
consummation of the Merger under the federal antitrust laws or require that CBRL
or Logan's divest certain assets to avoid such a proceeding. The FTC or DOJ
could also, following the Merger, take action under the federal antitrust laws
to rescind the Merger, to require divestiture of assets of either CBRL or
Logan's, or to obtain other relief.
Certain other persons, such as states' attorneys general and private
parties, could challenge the Merger as violative of the antitrust laws and seek
to enjoin the consummation of the Merger and, in the case of private persons, to
obtain treble damages. There can be no assurance that a challenge to the Merger
on antitrust grounds will not be made or, if such a challenge is made, that it
would not be successful. Logan's does not intend to seek any further shareholder
approval or authorization of the Merger Agreement as a result of any action that
it may take to resist or resolve any FTC, DOJ or other objections, unless
required to do so by applicable law.
FINANCING THE MERGER
The total amount of funds required by CBRL and LRI to consummate the
Merger will be approximately $179 million, excluding fees and expenses. CBRL
intends to utilize cash from operations and its existing credit facility with a
commercial bank to fund the Merger consideration. For the year ended July 31,
1998, Cracker Barrel had total assets of $992,108,000, net income of
$104,136,000, and net sales of $1,317,104,000.
THE MERGER AGREEMENT
The following is a summary of certain provisions of the Merger
Agreement and is qualified in its entirety by and subject to reference to the
Merger Agreement, a copy of which is attached hereto as Annex A.
GENERAL
The Merger will become effective when CBRL and Logan's cause the
Articles of Merger, which were prepared in accordance with the TBCA, to be
executed and filed for record with the Secretary of State of Tennessee and upon
the acceptance for record of the Articles of Merger by the Secretary of State.
It is anticipated that the Merger will be effective on or about February 5,
1999.
THE MERGER
The Merger Agreement provides that, at the Effective Time, LRI will be
merged with and into Logan's on the terms and conditions set forth in the Merger
Agreement. Following the Merger, the separate existence of LRI will cease, and
Logan's, as the Surviving Corporation, will continue to exist under and be
governed by the TBCA as a wholly owned subsidiary of CBRL. At the Effective
Time, the Amended and Restated Charter and Bylaws of Logan's, as in effect
immediately prior to the Effective Time, will be the Charter and Bylaws of the
Surviving Corporation. The directors of the Surviving Corporation will consist
of the members of the Board of Directors of LRI, who will serve until successors
shall be elected and qualified or until his earlier death, resignation or
removal. Each officer of Logan's immediately prior to the Effective Time will be
an officer of the Surviving Corporation and will serve in the same capacity as
he did at Logan's, except that Mr. Moats will
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serve as President and Chief Operating Officer and Mr. Kehayes will serve as
Executive Vice President of Operations of the Surviving Corporation.
CONVERSION OF SHARES
At the Effective Time, (i) each share of Logan's Common Stock issued
and outstanding immediately prior to the Effective Time will, by virtue of the
Merger, automatically and without any action on the part of Logan's or the
holder thereof be converted into the right to receive $24.00 in cash, without
interest, (ii) each share of Logan's Common Stock, if any, held in the treasury
of Logan's will be canceled and (iii) each issued and outstanding share of
Common Stock of LRI will be converted into one share of Common Stock of the
Surviving Corporation. The Merger consideration is subject to equitable
adjustment in the event of any stock split, stock dividend, reverse stock split,
or other change in the number of shares of Logan's Common Stock outstanding that
occurs after December 10, 1998 (the date of the Merger Agreement). No shares of
Logan's Common Stock will be deemed to be outstanding or have any right other
than payment for such shares after the Effective Time.
If the shareholders of Logan's approve the Merger Agreement, on such
date all employee stock options then outstanding under Logan's 1995 Incentive
Stock Plan, as amended, and 1995 Non-Employee Director Stock Option Plan, as
amended (collectively, the "Stock Option Plans"), to the extent not otherwise
exercisable by their terms, will become immediately exercisable at the exercise
price set forth in such options. The holder of an option may elect to exercise
such option pursuant to the terms of the Stock Option Plans and receive shares
of Logan's Common Stock, which shares would then be converted into the right to
receive $24.00 in cash, without interest. Any options not so exercised will
terminate, and each such option holder will be entitled to receive $24.00 in
cash, without interest, less the exercise price and applicable taxes, for each
share of Logan's Common Stock that the holder would have been entitled to
receive upon exercise of the option if the Merger had not been consummated.
Immediately after the Effective Time, CBRL will furnish to SunTrust
Bank, N.A. (the "Paying Agent") a corpus (the "Payment Fund") consisting of cash
sufficient in the aggregate for the Paying Agent to make full payment of the
Merger consideration to the holders of the outstanding shares of Logan's Common
Stock immediately prior to the Effective Time. CBRL will also cause the Paying
Agent to mail a letter of transmittal (with instructions for its use) to former
holders of outstanding shares of Logan's Common Stock for use in surrendering
the certificates which represented his or its shares of Logan's Common Stock
against payment of the Merger consideration. CBRL may cause the Paying Agent to
invest the cash included in the Payment Fund in securities issued or guaranteed
by the United States of America, investment grade commercial paper or securities
of comparable credit and quality; provided, however, that the terms and
conditions of the investment must be such as to permit the Paying Agent to make
prompt payment of the Merger consideration as necessary. The Paying Agent must
pay over to the Surviving Corporation any net earnings with respect to such
investment. CBRL may cause the Paying Agent to pay over to the Surviving
Corporation any portion of the Payment Fund (including earnings thereon)
remaining 180 days after the Effective Time, and thereafter all former
shareholders will be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat, and other similar laws) as general creditors with
respect to the cash payable upon surrender of their certificates. If any old
certificate representing shares of Logan's Common Stock has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such old certificate to be lost, stolen or destroyed, and, if required by the
Surviving Corporation, the posting by such person of the bond in such reasonable
amounts as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such old certificate, the Paying
Agent will include in the Payment Fund cash sufficient to make full payment of
the Merger consideration with respect to such lost, stolen or destroyed old
certificate.
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Each of Logan's, LRI, Cracker Barrel and CBRL is entitled to deduct and
withhold from the Merger consideration otherwise payable to any holder of shares
of Logan's Common Stock or any holder of stock options, such taxes as may be
required to be deducted and withheld with respect to the making of such payment
under the Internal Revenue Code, or any provision of state, local or foreign tax
law. To the extent that amounts are required to be so withheld, such amounts
will be treated for the purposes of the Merger Agreement as having been paid to
the holder of the shares of Logan's Common Stock and holders of stock options in
respect of which such deductions and withholding was made by Logan's, LRI,
Cracker Barrel or CBRL, as the case may be.
REPRESENTATIONS AND WARRANTIES
In the Merger Agreement, Logan's has made customary representations and
warranties to CBRL, Cracker Barrel and LRI, including without limitation,
representations and warranties as to organization and qualification, capital
structure, authority relative to the Merger Agreement, required consents and
approvals, filings made by Logan's with the Commission (including financial
statements included in the documents filed by Logan's under the Exchange Act),
subsidiaries, absence of material adverse change, governmental authorizations
and compliance with laws, absence of undisclosed liabilities and agreements, tax
matters, title to properties and absence of liens and encumbrances, material
contracts, litigation, labor matters, insider interests, trade names and
trademarks, insurance, employment benefit plans and agreements, and
environmental matters. CBRL, Cracker Barrel and LRI have also made customary
representations and warranties to Logan's, including without limitation,
representation and warranties as to organization and qualification, authority
relative to the Merger Agreement, and required consents and approvals.
COVENANTS
The Merger Agreement contains various covenants of Logan's and CBRL,
Cracker Barrel and LRI that are applicable during the period from December 10,
1998 (the date of the Merger Agreement) until the Effective Time. The covenants
made by Logan's include, without limitation, business covenants relating to its
operations, refraining from certain activities without prior written consent of
CBRL, that Logan's Board will, as soon as reasonably practical, call a meeting
of its shareholders to consider and vote upon the Merger Agreement and, unless
inconsistent with the exercise by the Logan's Board of its fiduciary duties,
that Logan's Board recommend to Logan's shareholders that the Merger and the
transactions contemplated thereby be approved, that CBRL may, prior to the
Effective Time, make or cause to be made such investigation of the business and
properties of Logan's and its subsidiaries and their financial and legal
condition as CBRL deems necessary or advisable.
If the Merger is consummated, all costs and expenses incurred in
connection with the Merger Agreement and the transactions contemplated thereby
will be paid by the party incurring such expenses; provided, however, that if,
either Logan's, on one hand, or CBRL, Cracker Barrel or LRI, on the other hand,
materially breaches the Merger Agreement and the Merger is not consummated
because of such breach, the breaching party is required to pay reasonable costs
and expenses incurred by counsel and accountants of the non-breaching party;
further provided, that no party is required to pay the other party's costs and
expenses in excess of $500,000. The parties further covenant that in the event
of a breach, the non-breaching party is entitled, in addition to the recovery of
costs and expenses discussed above, to any other remedies or damages, at law or
in equity, that a court of competent jurisdiction may find appropriate.
Logan's and its subsidiaries, officers, directors, financial advisors
and counsel have covenanted not to solicit, initiate or deliberately encourage
submission of proposals or offers from any person relating to the acquisition or
purchase of a material amount of the assets of, or any equity interest in,
Logan's or any merger, consolidation, or business combination with Logan's;
provided, however, that, consistent with the fiduciary obligations of Logan's
directors and officers under
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applicable law, Logan's may participate in any unsolicited discussions or
negotiations regarding, and may furnish to any person information or take such
other action as it may deem appropriate with respect to, any of the foregoing;
provided further, that none of the foregoing can prevent Logan's from taking any
position necessary in order to comply with applicable filing and disclosure
requirements of federal securities laws, if applicable.
CBRL has agreed that it will retain all employees of Logan's who are
employed at the Effective Time as employees-at-will (except to the extent that
such employees are parties to contracts providing for other employment terms, in
which case such employees will be retained in accordance with the terms in such
contract). CBRL also coveted that it will provide such employees with the same
employee benefits as Logan's currently provides to its existing employees.
For six years from the Effective Time, CBRL has agreed not to, and
agreed to cause the Surviving Corporation not to, alter the provisions of
Logan's Charter and Bylaws relating to indemnification of officers and directors
of Logan's and its subsidiaries for acts or omissions occurring at or prior to
the Effective Time. CBRL will cause the Surviving Corporation to provide, for a
period of six years from the Effective Time, Logan's current directors and
officers an insurance and indemnification policy that provides coverage for
events occurring prior to the Effective Time that is not less favorable than
Logan's existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; provided, however, that the Surviving
Corporation should not be required to pay any annual premium for such director
or officer that is in excess of 300% of the last annual premiums paid prior to
December 10, 1998 (the date of the Merger Agreement) but in such case must
purchase as much coverage as possible for such amount.
CONDITIONS PRECEDENT
The respective obligations of the parties to consummate the Merger are
subject to the fulfillment prior to or on the Effective Time of the following
conditions: (a) the shareholders of Logan's will have approved the Merger
Agreement; (b) except for the filing of the Articles of Merger for record with
the Secretary of State of Tennessee, all consents, authorizations, orders and
approvals of, and filing and registrations with, any governmental commission,
board or other regulatory body or any nongovernmental third party which are
required for or in connection with the execution and delivery of the Merger
Agreement, and the consummation by each party to the Merger Agreement as the
transactions contemplated thereby, have been obtained or made; (c) at the
Effective Time there must not be any judgment, decree, injunction, ruling or
order of any court, governmental department, commission, agency or
instrumentality outstanding against any of the parties, which prohibits,
restricts or delays consummation of the Merger or any of the conditions to the
consummation of the Merger or limits in any material aspects the right of CBRL
to control Logan's or any material aspect of the business of Logan's and its
subsidiaries after the Effective Time; (d) the representations and warranties of
each of the parties contained in the Merger Agreement must be true and correct
in all material aspects at the date of the Merger Agreement and must also be
true and correct in all material aspects at and as of the Effective Time; (e)
any waiting period, and any extension thereof, under the HSR Act, applicable to
the Merger must have expired or have been terminated; (f) the receipt by each
party of a satisfactory legal opinion of counsel to the other party; (g) the
receipt by CBRL of a "comfort letter" from Logan's independent auditors; (h) the
receipt by Logan's of the STES Opinion, updated to the date of this Proxy
Statement and to the Effective Time of the Merger; and (i) CBRL must have
granted options to certain employees of Logan's to purchase up to an aggregate
of 250,000 shares of Common Stock of CBRL.
Except for conditions relating to the approval of the Merger Agreement
by Logan's shareholders, obtaining all necessary consents and approvals in
connection with the Merger and the Merger Agreement (except the filing of the
Articles of Merger), and the expiration of the applicable waiting period under
the HSR Act, each party, at its option, may waive in writing any condition to
its obligations to consummate the Merger. In the event that the waiver of a
condition by Logan's
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materially and adversely affects the Merger consideration, or any other terms of
the transaction, Logan's would provide supplemental proxy information to its
shareholders and, if the Special Meeting has not been held, the opportunity to
revoke previously delivered proxies or, if the Special Meeting has been held,
notice of another Special Meeting to consider the Merger.
TERMINATION FEE
Logan's may exercise its right to terminate the Merger Agreement in the
event that Logan's receives a bona fide offer for a merger, consolidation, or
other business combination involving Logan's or substantially all of its assets
from any third party (an "Alternative Transaction"), and the Logan's Board
determines, in the good faith exercise of its fiduciary duties, that the
Alternative Transaction is more advantageous in the opinion of the Logan's Board
to the shareholders of Logan's than the consummation of the transactions
contemplated under the Merger Agreement, and within one year after the date of
such termination Logan's executes a definitive agreement with respect to the
Alternative Transaction. Logan's covenants that upon execution of such agreement
it must pay to CBRL a fee in the amount of $5,500,000 in immediately available
funds.
TERMINATION
The Merger Agreement and the Merger may be terminated and abandoned at
any time prior to the Effective Time: (a) by mutual action of the Board of
Directors of CBRL and Logan's; (b) by any party if the conditions of the other
party are not complied with or performed in any material respect and such
noncompliance and nonperformance has not been cured or eliminated on or before
March 25, 1999, (c) by either CBRL or Logan's, if any court of competent
jurisdiction or other governmental entity has issued an order, decree or ruling
or taken any other action permanently enjoining, restraining, or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall
become final and nonappealable, and (d) by the Logan's Board if Logan's has
received an offer for an Alternative Transaction, and the Logan's Board has
determined, in its exercise of its fiduciary duties, that the Alternative
Transaction is more advantageous in the opinion of the Logan's Board to the
shareholders of Logan's than the consummation of the transactions contemplated
in the Merger Agreement, subject to certain conditions discussed above. In the
event of termination and abandonment of the Merger Agreement and the Merger, the
Merger Agreement will thereafter become void and have no effect, and no party to
the Merger Agreement will have any liability to any other party to the Merger
Agreement or its shareholders or directors or officers in respect thereof,
except for certain obligations enumerated in the Merger Agreement.
EFFECTIVE TIME OF THE MERGER
The Merger will become effective upon the filing of the Articles of
Merger by CBRL, LRI and Logan's under the TBCA, or at such later time as may be
specified in the Articles of Merger. The Merger Agreement requires that this
filing be made as soon as practicable following satisfaction or waiver of the
various conditions to the Merger set forth in the Merger Agreement, or, under
the TBCA at such other time as may be agreed by CBRL, LRI and Logan's. It is
currently anticipated that such filing will be made as soon as reasonably
practicable after the Special Meeting and after all regulatory approvals have
been obtained, and that the Effective Time will occur upon such filing and
acceptance for record with the Secretary of State of Tennessee. There can be no
assurance, however, as to whether or when the Merger will occur. See "THE
MERGER--Regulatory Approvals" and "THE MERGER AGREEMENT--Conditions Precedent."
AMENDMENT
The Merger Agreement may be amended at any time before or after the
approval of the Merger Agreement by action of the respective Boards of Directors
of CBRL, Cracker Barrel, LRI and Logan's, as the case may be, without the
approval of the shareholders of either party, except that
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after the Special Meeting, no amendment may be made which by law requires a
further approval by the shareholders of Logan's without such further approval
being obtained.
MARKET PRICE DATA
Logan's Common Stock is quoted on the Nasdaq National Market under the
symbol "RDHS." The following table sets forth, for the periods indicated, the
range of high and low sales prices per share as reported by Nasdaq:
Logan's
Common Stock
-------------------------
High Low
------ ------
1997
First Quarter................................... $28.00 $18.00
Second Quarter.................................. 25.75 14.25
Third Quarter................................... 28.13 23.63
Fourth Quarter.................................. 25.00 13.75
1998
First Quarter................................... $25.25 $14.00
Second Quarter ................................. 27.63 19.00
Third Quarter .................................. 25.00 15.50
Fourth Quarter.................................. 23.50 12.63
1999
First Quarter (thru January 5, 1999)............ $23.50 $23.25
The closing sale price for Logan's Common Stock as reported by the
Nasdaq National Market was $21.06 on December 10, 1998, the last trading day
immediately prior to the public announcement of the proposed Merger. As of
January 5, 1999, there were approximately 135 holders of record of Logan's
Common Stock.
The Logan's Board believes that consideration to be paid by CBRL in
connection with the Merger Agreement is fair, based upon, among other factors,
the STES Opinion. See "THE MERGER--Reasons for the Merger; Recommendations of
the Board of Directors" and "-- Opinion of SunTrust Equitable Securities
Corporation."
DIVIDENDS
Logan's has never declared or paid a dividend on its Common Stock.
Before execution of the Merger Agreement, Logan's intended to retain its
earnings to finance the growth and development of its business.
BUSINESS OF LOGAN'S
Logan's operates 41 Company-owned Logan's Roadhouse restaurants and
four franchised restaurants, all of which feature steaks, ribs, chicken and
seafood dishes in a distinctive atmosphere reminiscent of an American roadhouse.
The Logan's Roadhouse concept is designed to appeal to a broad range of
customers by offering generous portions of moderately-priced, high quality food
in a very casual, relaxed dining environment that is lively and entertaining.
The restaurants are open seven days a week for lunch and dinner and offer full
bar service. The Logan's Roadhouse menu is designed to appeal to a wide variety
of tastes, emphasizing extra-aged, hand-cut USDA choice steaks and signature
dishes such as fried green tomatoes, baked sweet potatoes and made-from-scratch
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yeast rolls. Since the first Logan's Roadhouse restaurant opened in 1991 in
Lexington, Kentucky (which was acquired by the Company in 1992), the Company has
opened 40 additional Logan's Roadhouse restaurants in Alabama, Florida, Georgia,
Indiana, Kentucky, Louisiana, Tennessee, Virginia and West Virginia and has
franchised two Logan's Roadhouse restaurants in Oklahoma, one in North Carolina
and one in South Carolina.
The Logan's Roadhouse concept is designed to appeal to a broad range of
customers by offering a wide variety of items in a very casual, relaxed dining
atmosphere that is lively and entertaining. The lively, country "honky-tonk"
atmosphere of Logan's Roadhouse restaurants seeks to appeal to families,
couples, single adults and business persons. The Company's spacious restaurants
are constructed of rough-hewn cedar siding in combination with bands of
corrugated metal outlined in double-striped, red neon. The interiors are
decorated with hand-painted murals depicting typical scenes from American
roadhouses of the 1940s and 1950s, concrete and wooden planked floors and neon
signs and feature Wurlitzer (TM) jukeboxes playing contemporary country hits.
The restaurants also feature a display cooking grill and an old-fashioned meat
counter displaying steaks, ribs, seafood and salads, and include a spacious,
comfortable bar area with a large-screen television. While dining or waiting for
a table, guests may eat roasted in-shell peanuts and toss the shells on the
floor, and watch as cooks prepare steaks and other entrees on gas-fired mesquite
grills.
The Company's operating strategy is to differentiate its restaurants by
providing a unique, lively dining atmosphere, maintaining a high price-to-value
relationship, offering a diverse menu, and hiring and retaining quality
employees. Management believes that the Company's restaurants are unique and
provide a relaxed, enjoyable, lively atmosphere for customers. All employees are
encouraged to interact with customers in a respectful, friendly manner which
encourages customers to relax and enjoy their experience. Also, management
believes that the Logan's Roadhouse menu offers more dishes at lower price
points than many of its competitors which broadens the Company's target market
to include value-driven customers as well as traditional casual dining
customers. Moreover, management believes that offering a diverse menu appeals to
a broader segment of the population and encourages customers to visit the
Company's restaurants more often. Finally, by providing extensive training,
employee development and attractive compensation, the Company encourages a sense
of personal commitment from its employees. Management believes that the Company
attracts qualified managers by providing a better overall quality of life
characterized by a five-day work schedule involving fewer hours than are
typically required in the restaurant industry. Management believes its
restaurant policies have resulted in a low rate of management-level employee
turnover.
The key elements of the Company's growth strategy include opening
restaurants in target markets, selecting and developing high quality restaurant
sites, utilizing the Company's prototype restaurant and seeking remodeling
opportunities. The Company targets metropolitan markets of approximately 500,000
or more in population primarily in the Southeast, Midwest and Mid-Atlantic that
management believes include significant opportunities for potential customers
because of the population, income levels, presence of shopping and entertainment
centers, offices and colleges and universities. The Company also targets smaller
markets of approximately 175,000 or more in population where the appeal of the
Company's concept provides an attractive opportunity for the Company. Management
devotes significant time and resources to analyzing each prospective site,
considering local market demographics, population density, average household
income levels and site specific characteristics such as visibility,
accessibility, traffic counts and parking. The Company also considers existing
local competition and, to the extent such information is available, the revenues
of other comparably priced restaurants operating in the market. Management has
designed the prototype Logan's Roadhouse restaurant to be larger than many
casual dining restaurants as part of its strategy to provide a relaxed
atmosphere and maximize sales volumes. The prototype Logan's Roadhouse
restaurants operate in new, freestanding buildings, with approximately 7,800
square feet of space situated on a 1.7 acre site, with seating for approximately
290 guests, including 45 bar seats,
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and parking for 150 automobiles. In addition to developing prototype
restaurants, the Company plans to consider developing additional Logan's
Roadhouse restaurants in existing buildings. Management believes that its
ability to remodel an existing facility into a Logan's Roadhouse permits greater
accessibility to quality sites in more developed markets.
The Company is committed to providing its customers prompt, friendly,
efficient service, keeping table-to-server ratios low and staffing each
restaurant with an experienced management team to ensure attentive customer
service and consistent food quality. Through the regular use of customer surveys
and an independently run "mystery shoppers" program, management receives
valuable feedback which it uses to improve restaurants and demonstrate a
continuing interest in customer satisfaction.
The Company employs an advertising and marketing strategy designed to
establish and maintain a high level of name recognition and to attract new
customers. The Company primarily uses radio and outdoor advertising in selected
markets. The Company's goal is to develop a sufficient number of restaurants in
certain markets to permit the cost-efficient use of television, radio and
outdoor advertising. The Company currently spends approximately 2.0% of its
annual sales on advertising and public relations. The Company also engages in a
variety of promotional activities, such as contributing time, money and
complementary meals to charitable, civic and cultural programs, in order to
increase public awareness of the Company's restaurants.
The Company closely monitors sales, product costs and labor at each of
its restaurants. Weekly restaurant operating results are used by management to
detect trends at each location, and negative trends are promptly remedied where
possible. Financial controls are maintained through management of an accounting
and management information system that is implemented at the restaurant level.
Administrative and management staff prepare daily reports of sales, labor and
customer counts. On a weekly basis, condensed operating statements are compiled
by the Company's accounting department and provide management a detailed
analysis of sales, product and labor costs, with a comparison to budgets and
prior period performance.
The Company strives to obtain consistent quality items at competitive
prices from reliable sources. The Company tests various new products in an
effort to obtain the highest quality products possible and to be responsive to
changing customer tastes. In order to maximize operating efficiencies and to
provide the freshest ingredients for its food products, purchasing decisions are
made by corporate management.
The Company has entered into agreements with each of L.W. Group, Inc.
("L.W. Group"), a corporation controlled by David K. Wachtel, Jr., a principal
shareholder of the Company, CMAC Incorporated ("CMAC") and L.G. Enterprises,
Inc. ("LGE") (collectively, the "Franchisees") in connection with the
franchising of Logan's Roadhouse restaurants in select market areas not in the
Company's immediate expansion plans. Pursuant to the agreements, each of L.W.
Group and CMAC operates two franchised restaurants in Oklahoma, and one each in
North Carolina and South Carolina, respectively. LGE currently has one
franchised restaurant in California under construction. Management is
considering other future franchising opportunities in areas which are not in the
Company's immediate expansion plans for owned restaurants, and has had
discussions with third parties that could result in the franchising of
additional Logan's Roadhouse restaurants on similar terms as the Company's
agreements with its Franchisees.
Additional information concerning the Company is included in reports,
proxy statements and other information of the Company filed with the Commission
which are incorporated by reference in this Proxy Statement. See "INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE."
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of the Record Date (unless otherwise noted) by
(i) each director and nominee for director who beneficially owns Common Stock,
(ii) each executive officer named in the Summary Compensation Table, (iii) each
person known by the Company to be the beneficial owner of more than 5% of the
Common Stock of the Company, and (iv) all directors and executive officers as a
group. Except as otherwise indicated, the beneficial owners listed below have
sole voting and investment power with respect to all shares owned by them,
except to the extent such power is shared by a spouse under applicable law.
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
NAME OF BENEFICIAL OWNER OWNED(1) SHARES
- ------------------------ ------------ -------------
Edwin W. Moats, Jr.(2).......................................... 470,762 6.4%
Peter W. Kehayes (3)............................................ 30,000 *
Ralph W. McCracken(4)........................................... 68,115 *
David J. McDaniel(5)............................................ 90,500 1.2
Gary T. Baker(6)................................................ 24,500 *
Jerry O. Bradley(6)............................................. 24,500 *
B. Tom Collins(6)............................................... 24,400 *
Thomas E. Ervin(6).............................................. 23,500 *
Ted H. Welch(6)................................................. 23,500 *
Maynard Capital Partners, L.L.C.(7)............................. 806,225 11.2
Pilgrim Baxter & Associates(8).................................. 570,650 7.9
David K. Wachtel, Jr.(9)........................................ 469,701 6.5
Dimensional Fund Advisors, Inc. (10)............................ 430,000 6.0
Fidelity Management and Research Company(11).................... 428,225 5.9
Oberweis Asset Management, Inc.(12)............................. 404,820 5.6
Kalmar Investments(13).......................................... 375,700 5.2
All directors and executive officers as a group (nine
persons)(14)............................................... 779,777 10.2%
- ---------------
* Less than 1%.
(1) Includes shares of Common Stock subject to options which will vest
prior to the Effective Time of the Merger or become exercisable upon
the affirmative vote of a majority of Logan's shareholders for approval
of the Merger Agreement. Such shares are deemed to be outstanding for
the purposes of computing the percentage ownership of the individual
holding such shares, but are not deemed outstanding for purposes of
computing the percentage of any other person shown in the table.
(2) Includes 1,500 shares beneficially owned by Edwin A. Moats and 1,500
shares beneficially owned by Jeffrey S. Moats, Mr. Moats's sons. Mr.
Moats disclaims beneficial ownership of such shares. Also includes
vested options to purchase 88,750 shares of Common Stock and options to
purchase 101,250 shares of Common Stock which will become exercisable
upon the affirmative vote of a majority of Logan's shareholders for
approval of the Merger Agreement.
(3) Includes vested options to purchase 7,500 shares of Common Stock and
options to purchase 22,500 shares of Common Stock which will become
exercisable upon the affirmative vote of a majority of Logan's
shareholders for approval of the Merger Agreement. Excludes options to
purchase 45,000 shares at an exercise price of $24.50 which will not be
exercised because such exercise price exceeds $24.00.
(4) Includes vested options to purchase 23,750 shares of Common Stock and
options to purchase 43,750 shares of Common Stock which will become
exercisable upon the affirmative vote of a majority of Logan's
shareholders for approval of the Merger Agreement.
(5) Includes vested options to purchase 42,125 shares of Common Stock and
options to purchase 43,375 shares of Common Stock which will become
exercisable upon the affirmative vote of a majority of Logan's
shareholders for approval of the Merger Agreement.
(6) Includes vested options to purchase 15,500 shares of Common Stock and
options to purchase 5,000 shares of Common Stock which will become
exercisable upon the affirmative vote of a majority of Logan's
shareholders for approval of the Merger Agreement.
(7) Maynard Capital Partners, L.L.C. ("Maynard") filed a Schedule 13D/A
with the Commission on October 30, 1998 on behalf of a group of ten
related parties which have sole and shared voting and dispositive power
as to certain percentages of 806,225 shares of Common Stock. For more
information regarding the beneficial ownership of such shares, please
refer to the Schedule 13D/A filed by Maynard with the Commission on
October 30, 1998. Maynard's address is 5151 Glenwood Avenue, Raleigh,
North Carolina 27612.
(8) Pilgrim Baxter & Associates, a registered investment advisor
("Pilgrim"), has sole voting and dispositive power as to 570,650
shares. Pilgrim's address is 1255 Drummers Lane, Suite 300, Wayne,
Pennsylvania 19087. Information is as of September 30, 1998 and is
derived from Commission filings.
(9) Mr. Wachtel's address is 640 Spence Lane, Suite 123, Nashville,
Tennessee 37217.
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(10) Dimensional Fund Advisors, Inc., a registered investment advisor
("Dimensional"), has sole voting power as to 275,900 shares and sole
dispositive power as to 430,000 shares. All of such are held in
portfolios of DFA Investment Dimensions Group, Inc., a registered
open-end investment company, or in series of The DFA Investment Trust
Company, a Delaware business trust, or the DFA Group Trust and DFA
Participating Group Trust, investment vehicles for qualified employee
benefit plans. Dimensional's address is 1299 Ocean Avenue, 11th Floor,
Santa Monica, CA 90401. Information is as of September 30, 1998 and is
derived from Commission filings. Dimensional disclaims beneficial
ownership of such shares.
(11) Fidelity Management and Research Company, a registered investment
advisor ("Fidelity"), beneficially owns 428,225 shares. Fidelity's
address is 82 Devonshire Street, Boston, MA 02109. Information is as of
September 30, 1998 and is derived from Commission filings.
(12) Oberweis Asset Management, Inc., a registered investment advisor
("Oberweis"), has shared voting power as to 404,820 shares. Oberweis'
address is 951 Ice Cream Drive, Suite 200, North Aurora, Illinois
60542. Information is as of September 30, 1998 and is derived from
Commission filings.
(13) Kalmar Investments, a registered investment advisor ("Kalmar"),
beneficially owns 375,700 shares. Kalmar's address is 3701 Kennett
Pike, The Barley Mill House, Greeneville, DE 19807. Information is as
of September 30, 1998 and is derived from Commission filings.
(14) Includes vested options to purchase 239,625 shares of Common Stock and
options to purchase 235,875 shares of Common Stock which will become
exercisable upon the affirmative vote of a majority of Logan's
shareholders for approval of the Merger Agreement. Also includes 3,000
shares beneficially owned by Mr. Moats' sons. Mr. Moats disclaims
beneficial ownership of such shares.
INDEPENDENT AUDITORS
KPMG LLP serves as Logan's independent auditors. It is anticipated that
representatives of KPMG LLP will attend the Special Meeting and will have an
opportunity to make a statement, if they determine to do so, and will be
available to respond to questions at that time.
OTHER MATTERS
The Board of Directors is not aware of any other matters to be brought
before the Annual Meeting. If any other mattes, however, are properly brought
before the Annual Meeting, the persons named in the enclosed form of proxy will
have discretionary authority to vote all proxies with respect to such matters in
accordance with their best judgment.
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LOGAN'S ROADHOUSE, INC.
SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 5, 1999
The undersigned hereby appoints Edwin W. Moats, Jr. and David J.
McDaniel, or either of them, with power of substitution, as proxies to vote all
stock of Logan's Roadhouse, Inc. ("Logan's") owned by the undersigned at a
Special Meeting of Shareholders to be held at the Marriott Hotel, Memphis Room,
600 Marriott Drive, Nashville, Tennessee 37214, at 8:30 a.m. on February 5,
1999, and any adjournment thereof, on the following matter as indicated below
and such other business as may properly come before the meeting.
1. To approve the Agreement and Plan of Merger, dated as of December
10, 1998, attached as Annex A to the Proxy Statement that has been transmitted
in connection with the Special Meeting, pursuant to which Logan's will merge
with LRI Merger Corporation, a Tennessee corporation and wholly-owned subsidiary
of CBRL Group, Inc. ("CBRL"), with Logan's being the surviving corporation, and
shareholders of Logan's will receive $24.00 in cash for each share of Common
Stock of Logan's owned by them.
FOR AGAINST ABSTAIN
2. In their discretion, to act upon any matters incidental to the
foregoing and such other business as may properly come before the Special
Meeting.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is made, this
Proxy will be voted FOR Item 1 above. Any holder who wishes to withhold the
discretionary authority referred to in Item 2 above should mark a line through
the entire Item. Discretionary authority and votes against approval of the
Merger Agreement will not be used to vote in favor of adjournment.
Receipt of the Proxy Statement dated January 7, 1999, is hereby
acknowledged.
Dated: __________, 1999
--------------------------------
Signature(s)
(Please sign exactly and as fully
as your name appears on your
stock certificate. If shares are
held jointly, each shareholder
should sign.) PLEASE MARK, SIGN,
DATE AND RETURN PROMPTLY, USING
THE ENCLOSED ENVELOPE. NO POSTAGE
IS REQUIRED.
36
ANNEX A
================================================================================
AGREEMENT AND PLAN OF MERGER
AMONG
LOGAN'S ROADHOUSE, INC.
CBRL GROUP, INC.
CRACKER BARREL OLD COUNTRY STORE, INC.
AND
LRI MERGER CORPORATION
DATED AS OF DECEMBER 10, 1998
37
TABLE OF CONTENTS
ARTICLE I MERGER..................................................................................................A-1
SECTION 1.1 The Merger.............................................................................A-1
SECTION 1.2 Filing.................................................................................A-2
SECTION 1.3 Effective Date of the Merger...........................................................A-2
ARTICLE II BOARD OF DIRECTORS AND OFFICERS........................................................................A-2
SECTION 2.1 Directors..............................................................................A-2
SECTION 2.2 Officers...............................................................................A-2
SECTION 2.3 Charter and Bylaws.....................................................................A-2
ARTICLE III CONVERSION OF SHARES..................................................................................A-2
SECTION 3.1 Conversion.............................................................................A-2
ARTICLE IV CERTAIN EFFECTS OF MERGER..............................................................................A-4
SECTION 4.1 Effect of Merger.......................................................................A-4
ARTICLE V COMPANY STOCK PLANS.....................................................................................A-4
SECTION 5.1 Outstanding Stock Options..............................................................A-4
SECTION 5.2 Withholding Rights.....................................................................A-4
ARTICLE VI REPRESENTATIONS AND WARRANTIES.........................................................................A-5
SECTION 6.1 Representations and Warranties by the Company..........................................A-5
(a) Organization and Qualification, etc....................................................A-5
(b) Capital Stock..........................................................................A-5
(c) Authority Relative to Agreement........................................................A-5
(d) Non-Contravention......................................................................A-6
(e) Consents, etc..........................................................................A-6
(f) SEC Documents..........................................................................A-6
(g) Subsidiaries...........................................................................A-6
(h) Financial Statements...................................................................A-7
(i) Absence of Certain Changes or Events...................................................A-7
(j) Governmental Authorization and Compliance with Laws....................................A-8
(k) Absence of Undisclosed Liabilities and Agreements......................................A-8
(l) Tax Matters............................................................................A-9
(m) Title to Properties; Absence of Liens and Encumbrances, etc............................A-9
(n) Material Contracts.....................................................................A-9
(o) Litigation............................................................................A-10
(p) Labor Matters and Controversies.......................................................A-10
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38
(q) Insider Interests.....................................................................A-11
(r) Trade Names, Trademarks, etc..........................................................A-11
(s) Insurance.............................................................................A-11
(t) Employee Benefit Plans and Employment Agreements......................................A-11
(u) Environmental Matters.................................................................A-14
SECTION 6.2 Representations and Warranties by CBRL and Cracker Barrel.............................A-15
(a) Organization and Qualification, etc...................................................A-15
(b) Authority Relative to Agreement.......................................................A-15
(c) Non-Contravention.....................................................................A-15
(d) Consents, etc.........................................................................A-16
SECTION 6.3 Representations and Warranties by LRI.................................................A-16
(a) Organization and Qualification, etc...................................................A-16
(b) Capital Stock.........................................................................A-16
(c) Authority Relative to Agreement.......................................................A-16
(d) Non-Contravention.....................................................................A-16
(e) Consents, etc.........................................................................A-16
(f) Other Matters.........................................................................A-16
ARTICLE VII ADDITIONAL COVENANTS AND AGREEMENTS..................................................................A-17
SECTION 7.1 Conduct of Business...................................................................A-17
(a) Operations in the Ordinary Course of Business.........................................A-17
(b) Forbearances..........................................................................A-17
SECTION 7.2 Stockholders' Meeting.................................................................A-18
SECTION 7.3 Proxy Statement.......................................................................A-18
SECTION 7.4 Regulatory Consents, Authorizations, etc..............................................A-19
SECTION 7.5 Investigation.........................................................................A-19
SECTION 7.6 Public Announcements..................................................................A-19
SECTION 7.7 Expenses; Certain Payments............................................................A-20
SECTION 7.8 No Solicitation of Transactions.......................................................A-20
SECTION 7.9 Additional Agreements.................................................................A-20
SECTION 7.10 Proxy Statement.......................................................................A-20
SECTION 7.11 Employees of the Company..............................................................A-21
SECTION 7.12 Indemnification; Directors and Officers Insurance.....................................A-21
ARTICLE VIII CONDITIONS TO THE MERGER............................................................................A-21
SECTION 8.1 Conditions to Merger Relating to CBRL, Cracker Barrel and LRI.........................A-21
(a) Stockholder Approval..................................................................A-21
(b) Regulatory Consents, Authorizations, etc..............................................A-21
(c) Injunction, etc.......................................................................A-22
(d) Representations and Warranties........................................................A-22
(e) Certificate...........................................................................A-22
(f) Opinion of Company's Counsel..........................................................A-22
(g) Letters from Accountants..............................................................A-24
ii
39
(h) Additional Certificates, etc..........................................................A-24
(i) Antitrust Improvements Act............................................................A-25
SECTION 8.2 Conditions to the Merger Relating to the Company......................................A-25
(a) Stockholder Approval..................................................................A-25
(b) Regulatory Consents, Authorizations, etc..............................................A-25
(c) Injunction, etc.......................................................................A-25
(d) Representations and Warranties........................................................A-25
(e) Certificate...........................................................................A-25
(f) Opinion of Counsel to CBRL, Cracker Barrel and LRI....................................A-25
(g) Additional Certificates, etc..........................................................A-27
(h) Antitrust Improvements Act............................................................A-27
(i) Investment Bankers' Opinion...........................................................A-27
(j) Grant of CBRL Options.................................................................A-27
ARTICLE IX TERMINATION AND ABANDONMENT...........................................................................A-28
SECTION 9.1 Termination and Abandonment...........................................................A-28
SECTION 9.2 Expiration............................................................................A-28
SECTION 9.3 Effect of Termination.................................................................A-28
ARTICLE X MISCELLANEOUS..........................................................................................A-29
SECTION 10.1 Waiver of Conditions..................................................................A-29
SECTION 10.2 Closing ..............................................................................A-29
SECTION 10.3 Notices .............................................................................A-29
SECTION 10.4 Financial Advisors....................................................................A-30
SECTION 10.5 Counterparts..........................................................................A-30
SECTION 10.6 Headings .............................................................................A-30
SECTION 10.7 Variation and Amendment...............................................................A-30
SECTION 10.8 No Survival of Representations or Warranties..........................................A-30
SECTION 10.9 Schedules.............................................................................A-30
SECTION 10.10 Miscellaneous.........................................................................A-30
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of December 10, 1998
("Agreement"), among Logan's Roadhouse, Inc., a Tennessee corporation (the
"Company" or "Surviving Corporation"), CBRL Group, Inc., a Tennessee corporation
("CBRL"), Cracker Barrel Old Country Store, Inc., a Tennessee corporation
("Cracker Barrel"), and LRI Merger Corporation, a Tennessee corporation ("LRI").
W I T N E S S E T H :
WHEREAS, CBRL and LRI desire that LRI merge with and into the Company
(the "Merger"), and the Company also desires that LRI merge with and into the
Company, upon the terms and conditions set forth in this Agreement and in
accordance with the Tennessee Business Corporation Act ("TBCA"), and that the
outstanding shares of Common Stock, $.01 par value per share ("Common Stock"),
of the Company, excluding any such shares of Common Stock held in the treasury
of the Company, be converted upon the consummation of the Merger into the right
to receive $24 per share (the "Merger Consideration"), in cash, without
interest;
WHEREAS, CBRL and Cracker Barrel are affiliated companies in the midst
of a corporate restructuring, as a result of which by or on December 31, 1998
CBRL will own 100% of Cracker Barrel (the "Reorganization"), and CBRL intends to
operate as a holding company, and from time to time to develop or acquire other
businesses which will be held as wholly-owned operating subsidiaries;
WHEREAS, Cracker Barrel and CBRL are cooperating in all respects
throughout the course of the foregoing transactions to consummate the Merger as
stated in this Agreement, and it is contemplated that the Reorganization will be
completed following the formal creation of the holding company structure, and
that CBRL will be the sole owner and parent of the Surviving Corporation upon
implementation of this Agreement;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, and in order
to set forth the terms and conditions of the Merger and the mode of carrying the
same into effect, the parties hereto agree as follows:
ARTICLE I
MERGER
SECTION 1.1 The Merger. At the Effective Time (as hereinafter defined),
LRI shall be merged with and into the Company on the terms and conditions
hereinafter set forth as permitted by and in accordance with the TBCA. Thereupon
the separate existence of LRI shall cease, and the Company, as the Surviving
Corporation, shall continue to exist under and be governed by the TBCA.
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SECTION 1.2 Filing. As soon as practicable following fulfillment of the
conditions specified in Sections 8.1(a), (b) and (i) and 8.2(a), (b) and (h),
and upon fulfillment or waiver of the remaining conditions specified in Article
VIII, and provided that this Agreement has not been terminated and abandoned
pursuant to Article IX, CBRL and the Company will cause Articles of Merger
prepared in accordance with the TBCA (the "Articles of Merger") to be executed
and filed for record with the Secretary of State of the State of Tennessee.
SECTION 1.3 Effective Date of the Merger. The Merger shall become
effective at the time that the Articles of Merger have been accepted for record
as referred to in Section 1.2. The date and time of such filing is the
"Effective Time".
ARTICLE II
BOARD OF DIRECTORS AND OFFICERS
SECTION 2.1 Directors. From and after the Effective Time, the members
of the Board of Directors of the Surviving Corporation shall consist of the
members of the Board of Directors of LRI, whose members are set forth in
Schedule 2.1, with each of the members of the Board of Directors of the
Surviving Corporation to serve until his successor is elected and is qualified
or until his earlier death, resignation or removal.
SECTION 2.2 Officers. From and after the Effective Time, each officer
of the Company immediately prior to the Effective Time shall be an officer of
the Surviving Corporation in the same capacity or capacities, until his
successor is elected and qualified or until his earlier death, resignation or
removal.
SECTION 2.3 Charter and Bylaws. At the Effective Time, the Amended and
Restated Charter of the Company (the "Company Charter"), as in effect
immediately prior to the Effective Time, shall be the Charter of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law. At the Effective Time, the Bylaws of the Company (the "Company
Bylaws"), as in effect immediately prior to the Effective Time, shall be the
Bylaws of the Surviving Corporation until thereafter changed or amended as
provided therein or by the Charter of the Surviving Corporation or by applicable
law.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 Conversion.
(a) Subject to the other subsections of this Section 3.1, on the
Effective Time each share of Common Stock issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger, automatically and
without any action on the part of the Company or the holder thereof,
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become and be converted into the right to receive $24.00 in cash, without
interest. The Merger Consideration shall be subject to equitable adjustment in
the event of any stock split, stock dividend, reverse stock split, or other
change in the number of shares of Common Stock outstanding that occurs after the
date of this Agreement. No share of the Common Stock shall be deemed to be
outstanding or to have any rights other than payment therefor after the
Effective Time.
(b) On the Effective Time, holders of certificates which represent
shares of Common Stock outstanding immediately prior to the Effective Time ("Old
Certificates") shall cease to be, and shall have no rights as, stockholders of
the Company.
(c) On the Effective Time, each share of Common Stock, if any, held in
the treasury of the Company shall be canceled.
(d) On the Effective Time, each issued and outstanding share of Common
Stock, $.01 par value per share, of LRI shall be converted into one share of
Common Stock of the Surviving Corporation.
(e) Immediately after the Effective Time, CBRL will furnish to SunTrust
Bank, N.A. (the "Paying Agent") a corpus (the "Payment Fund") consisting of cash
sufficient in the aggregate for the Paying Agent to make full payment of the
Merger Consideration to those who were holders of the outstanding shares of the
Common Stock immediately prior to the Effective Time, and CBRL will cause the
Paying Agent to mail a letter of transmittal (with instructions for its use) in
the form attached hereto as Exhibit A to such former record holders of
outstanding shares of the Common Stock for use in surrendering the certificates
which represented his or its shares of the Common Stock against payment of the
Merger Consideration.
(f) CBRL may cause the Paying Agent to invest the cash included in the
Payment Fund in securities issued or guaranteed by the United States of America,
investment grade commercial paper or securities of comparable credit and
quality; provided, however, that the terms and conditions of the investments
shall be such as to permit the Paying Agent to make prompt payment of the Merger
Consideration as necessary. The Paying Agent shall pay over to the Surviving
Corporation any net earnings with respect to the investments.
(g) CBRL may cause the Paying Agent to pay over to the Surviving
Corporation any portion of the Payment Fund (including any earnings thereon)
remaining 180 days after the Effective Time, and thereafter all former
stockholders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat, and other similar laws) as general creditors
thereof with respect to the cash payable upon surrender of their certificates.
(h) CBRL shall cause the Surviving Corporation to pay all charges and
expenses of the Paying Agent.
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(i) If any Old Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such Old
Certificate to be lost, stolen or destroyed and, if required by the Surviving
Corporation, the posting by such person of a bond, in such reasonable amount as
the Surviving Corporation may direct, as indemnity against any claim that may be
made against it with respect to such Old Certificate, the Paying Agent will
include in the Payment Fund cash sufficient to make full payment of the Merger
Consideration with respect to such lost, stolen or destroyed Old Certificate.
ARTICLE IV
CERTAIN EFFECTS OF MERGER
SECTION 4.1 Effect of Merger. Upon and after the Effective Time, the
separate existence of each constituent corporation party to the Articles of
Merger, except the Surviving Corporation, ceases; the assets and liabilities of
each constituent corporation party to the Articles of Merger vest in the
Surviving Corporation without reversion or impairment; and the Charter of the
Surviving Corporation shall be amended if and to the extent provided in this
Agreement.
ARTICLE V
COMPANY STOCK PLANS
SECTION 5.1 Outstanding Stock Options. On the date on which the
stockholders of the Company approve the adoption of this Agreement, all employee
stock options then outstanding under the Company's 1995 Incentive Stock Plan, as
amended, and 1995 Non-Employee Director Stock Option Plan, as amended
(collectively, the "Stock Option Plans"), to the extent not otherwise
exercisable by their terms, shall become immediately exercisable at the exercise
price set forth in such options. The holder of an option may elect to exercise
such option pursuant to the terms of the Stock Option Plans and receive shares
of Common Stock, which shares would then be converted into the right to receive
$24.00 in cash in accordance with Section 3.1(a) hereof. Any options not so
exercised shall thereupon terminate and each such option holder shall be
entitled to receive $24.00 in cash, less the exercise price and applicable
taxes, for each share of Common Stock that the holder would have been entitled
to receive upon exercise of the option if the Merger had not been consummated.
SECTION 5.2 Withholding Rights. Each of the Company, LRI, Cracker
Barrel and CBRL shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable to any holder of shares of Common Stock or any
holder of stock options such taxes as may be required to be deducted and
withheld with respect to the making of such payment under the Internal Revenue
Code, or any provision of state, local or foreign tax law. To the extent that
amounts are required to be so withheld, such amounts shall be treated for all
purposes of this Agreement as having been paid to the holders of shares of
Common Stock and holders of stock options in respect of which such deductions
and withholding was made by the Company, LRI, Cracker Barrel or CBRL, as the
case may be.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1 Representations and Warranties by the Company. The Company
represents and warrants to CBRL, Cracker Barrel and LRI as follows:
(a) Organization and Qualification, etc.. The Company is a corporation
duly organized and validly existing under the laws of the State of Tennessee,
has corporate power and authority to own all of its properties and assets and to
carry on its business as it is now being conducted, and is duly qualified to do
business and is in good standing (if applicable) in each jurisdiction where such
qualification is required. The copies of the Company Charter and the Company
Bylaws, as amended to date, which have been delivered to CBRL, are complete and
correct, and such instruments, as so amended, are in full force and effect at
the date of this Agreement and at the Effective Time.
(b) Capital Stock. The authorized capital stock of the Company consists
of (i) 15,000,000 shares of Common Stock, of which as of December 9, 1998,
7,198,550 shares of Common Stock were validly issued and outstanding, fully paid
and nonassessable, and no shares of Common Stock were held in the treasury of
the Company, and (ii) 5,000,000 shares of Preferred Stock, $.01 par value per
share, of the Company, none of which are outstanding. As of the date hereof, the
Company had 221,569 authorized but unissued shares of Common Stock reserved for
issuance pursuant to options to be granted under the Stock Option Plans. Since
the date hereof, no shares of Common Stock have been issued except pursuant to
options granted prior to that date under the Stock Option Plans. As of the date
hereof, except for outstanding options under its Stock Option Plans to purchase
700,931 shares, the Company has no commitments to issue or sell any shares of
its capital stock or any securities or obligations convertible into or
exchangeable for, or giving any person any right to subscribe for or acquire
from the Company, any shares of its capital stock and no securities or
obligations evidencing any such rights are outstanding. None of the shares of
the capital stock of the Company was issued in violation of the Securities Act
of 1933, as amended, or any regulation or rule issued thereunder, or any other
federal or state law relating to the sale and issuance of securities.
(c) Authority Relative to Agreement. The Company has the corporate
power and authority to execute and deliver this Agreement and, subject to the
receipt of the approval of this Agreement by the affirmative vote of the holders
of the requisite number of the outstanding shares of Common Stock, to consummate
the transactions contemplated hereby. The execution and delivery by the Company
of this Agreement and the consummation by it of the transactions contemplated on
its part hereby have been duly authorized by its Board of Directors. Except for
the approval of this Agreement by the stockholders of the Company, no other
corporate action on the part of the Company is necessary to authorize the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Company and is a valid and binding agreement
of the Company.
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(d) Non-Contravention. Except as set forth in Schedule 6.1(d), the
execution and delivery of this Agreement by the Company do not and, subject to
the approval of the adoption of this Agreement by the stockholders of the
Company, the consummation by the Company of the transactions contemplated hereby
will not violate any provision of the Company Charter or the Company Bylaws, or
violate, or result, with the giving of notice or the lapse of time or both, in a
violation of, any provision of, or result in the acceleration of or entitle any
party to accelerate (whether after the giving of notice or lapse of time or
both) any obligation under, or result in the creation or imposition of any lien,
charge, pledge, security interest or other encumbrance upon any of the property
of the Company or any of its Subsidiaries (as defined herein) pursuant to any
provision of, any mortgage, lien, lease, agreement, license, instrument, law,
ordinance, regulation, order, arbitration award, judgment or decree to which the
Company or any of its Subsidiaries is a party or by which any of them is bound,
and do not and will not violate or conflict with any other restriction of any
kind or character to which the Company or any of its Subsidiaries is subject or
by which any of their assets may be bound, and the same does not and will not
constitute an event permitting termination of any mortgage, lien, lease,
agreement, license or instrument to which the Company or any of its Subsidiaries
is a party, except for any such violations, defaults, rights, liens, security
interests, charges or encumbrances that, individually or in the aggregate, would
not have a material adverse effect on the financial condition of the Company.
(e) Consents, etc. Except as set forth in Schedule 6.1(e) and except
for the filing of the Proxy Statement (as hereinafter defined) with the
Securities and Exchange Commission (the "SEC"), filings with the Federal Trade
Commission (the "FTC") and the Department of Justice ("Justice") under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "Antitrust
Improvements Act") and the filing of the Articles of Merger with the Secretary
of State of Tennessee, no consent, authorization, order or approval of, or
filing or registration with, any governmental commission, board or other
regulatory body is required for or in connection with the execution and delivery
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby.
(f) SEC Documents. The Company has filed with the SEC all reports,
schedules, forms, statements and other documents required to be filed with the
SEC by the Securities Exchange Act of 1934, as amended (the "1934 Act"), since
January 1, 1998 through the date hereof (the "Company SEC Documents"). All of
the Company SEC Documents, as of their respective filing dates, complied as to
form in all material respects with all applicable requirements of the 1934 Act
and the rules and regulations promulgated thereunder. To the knowledge of the
executive officers of the Company, no facts or circumstances exist that would
require the Company to file a Current Report on Form 8-K to amend any previously
filed Quarterly Report on Form 10-Q or Annual Report on Form 10-K.
(g) Subsidiaries. Schedule 6.1(g) hereto sets forth each Subsidiary of
the Company ("Subsidiary" or "Subsidiaries," as the case may be). The Company
owns, directly or indirectly, all of the outstanding capital stock of each of
its Subsidiaries, free and clear of all liens, charges, pledges, security
interests or other encumbrances, and all such capital stock is duly authorized,
validly issued and outstanding, fully paid and nonassessable, and neither the
Company nor any Subsidiary has, other
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than in the ordinary and usual course of business or as shown on Schedule
6.1(g), made any material investment in, or material advances of cash or other
extension of credit to, any company other than its Subsidiaries. None of the
Subsidiaries has any commitment to issue or sell any shares of its capital stock
or any securities or obligations convertible into or exchangeable for, or giving
any person (other than the Company) any right to acquire from such Subsidiary,
any shares of its capital stock, and no such securities or obligations are
outstanding. Each Subsidiary is an entity duly organized, validly existing and
in good standing (if applicable) under the laws of its jurisdiction of
formation, has the corporation or partnership power and authority, as the case
may be, to own all of its properties and assets and to carry on its business as
it is now being conducted, and is duly qualified to do business and is in good
standing (if applicable) in each jurisdiction where such qualification is
required, except where the failure to be so organized, existing, in good
standing, qualified to do business or to have such power and authority would
not, individually or in the aggregate, have a material adverse effect on the
financial condition of the Company.
(h) Financial Statements. The Company has previously furnished CBRL
with a true and complete copy of the consolidated balance sheets of the Company
and its Subsidiaries as of December 28, 1997, December 29, 1996 and December 31,
1995 and the related consolidated statements of income, stockholders' equity and
changes in financial position for the fiscal years then ended, including the
notes thereto, certified by independent certified public accountants (the
"Audited Financial Statements"). The Audited Financial Statements have been
prepared in conformity with generally accepted accounting principles
consistently applied and present fairly the consolidated financial position of
the Company and its Subsidiaries as of such respective dates and their
consolidated results of operations for the periods then ended.
(i) Absence of Certain Changes or Events. Except as set forth in
Schedule 6.1(i), since October 4, 1998 there has not been (i) any damage,
destruction or other casualty loss with respect to property owned by the Company
or any of its Subsidiaries not covered by insurance, or any strike, work
stoppage or slowdown or other labor trouble involving the Company or any of its
Subsidiaries which, in any of such cases, materially and adversely affected, or
could affect in the future, the financial condition of the Company and its
Subsidiaries considered as a whole; (ii) any material adverse change in the
financial condition of the Company and its Subsidiaries, considered as a whole,
excluding any changes and effects resulting from changes in economic, regulatory
or political conditions or changes in conditions generally applicable to the
industries in which the Company and its Subsidiaries are involved and which do
not affect the Company in a manner materially disproportionate to the effect on
CBRL and except for any such changes or effects resulting from this Agreement,
the transactions contemplated hereby or the announcement thereof, or changes or
effects previously disclosed in writing (including all Schedules attached
hereto) by the Company to CBRL and its representatives; (iii) any issuance by
the Company or any of its Subsidiaries of any shares, options, calls or
commitments relating to shares of the Company's or its Subsidiaries' capital
stock, or any securities or obligations convertible into or exchangeable for, or
giving any person any right to acquire from the Company or any of its
Subsidiaries, any shares of the Company's or its Subsidiaries' capital stock,
other than the issuance by the company pursuant to the Stock Option Plans of
shares of Common Stock upon the exercise of options granted under such Stock
Option
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Plans, or any redemption, purchase or other acquisition by the Company or any of
its Subsidiaries of any such shares; (iv) any split, combination or other
similar change in the outstanding shares of the Company; or (v) any declaration,
setting aside or payment of any dividend (whether in cash, capital stock or
property) with respect to the capital stock of the Company.
(j) Governmental Authorization and Compliance with Laws. Except as set
forth in Schedule 6.1(j), to the knowledge of the executive officers of the
Company, the business of the Company and its Subsidiaries has been operated in
compliance with the laws, orders, regulations, policies and guidelines of all
governmental entities, including without limitation all applicable immigration
laws (including Form I-9 completion and record-keeping), except for violations
of such laws, orders, regulations, policies and guidelines which, when
considered together, do not constitute criminal acts and do not affect
materially and adversely the financial position of the Company and its
Subsidiaries considered as a whole. Except as set forth on Schedule 6.1(j), to
the knowledge of the Company's executive officers, the Company and its
Subsidiaries have all permits, certificates, licenses, approvals and other
authorizations required in connection with the operation of their business,
except where the failure to obtain any such authorization would not constitute
criminal acts and, when taken together with all other such failures, do not
affect materially and adversely the financial condition of the Company and its
Subsidiaries considered as a whole. Except as set forth in Schedule 6.1(j), no
notice has been issued and, to the knowledge of the executive officers of the
Company, no investigation or review is pending or is contemplated or threatened
by any governmental entity (i) with respect to any alleged violation by the
Company or any of its Subsidiaries of any law, order, regulation, policy or
guideline of any governmental entity, or (ii) with respect to any alleged
failure to have all permits, certificates, licenses, approvals and other
authorizations required in connection with the operation of the business of the
Company and its Subsidiaries, which in either case will affect materially and
adversely the financial condition of the Company and its Subsidiaries considered
as a whole.
(k) Absence of Undisclosed Liabilities and Agreements. Except as set
forth in Schedule 6.1(k), the balance sheet as of December 28, 1997, included in
the Audited Financial Statements, the Annual Report on Form 10-K for the year
ended December 28, 1997 (the "Annual Report"), or any Quarterly Report on Form
10-Q for the fiscal quarters ended April, July and October 1998 (the "Quarterly
Reports"), neither the Company nor any of its Subsidiaries (i) had, as of
December 28, 1997, debts, liabilities or obligations, whether accrued, absolute,
contingent or otherwise and whether due or to become due (including without
limitation any uninsured liabilities resulting from failure to comply with any
law applicable to the conduct of its business) which are material to the
financial condition of the Company and its Subsidiaries as a whole, (ii) has
incurred since December 28, 1997 any such debts, liabilities or obligations
(other than debts, liabilities or obligations incurred in the ordinary and usual
course of business after December 28, 1997) which materially and adversely
affect the financial condition of the Company and its Subsidiaries considered as
a whole, or (iii) has, since December 28, 1997, conducted its business otherwise
than in the ordinary and usual course. To the knowledge of the executive
officers of the Company, neither the Company nor any of its Subsidiaries is in
violation of any instrument, arbitration award, judgment or decree applicable to
the Company
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or any of its Subsidiaries or any of their property, the effect of which would
be to materially and adversely affect the financial condition of the Company and
its Subsidiaries considered as a whole.
(l) Tax Matters. To the knowledge of the executive officers of the
Company, the provisions made for taxes on the consolidated balance sheet of the
Company as of December 28, 1997 included in the Audited Financial Statements
were properly accrued for the payment of all federal, state, county and local
taxes of the Company and its Subsidiaries, whether or not disputed. There are no
agreements by the Company or any of its Subsidiaries for the extension of the
time for the assessment of any taxes, and all federal, state, county and local
taxes due and payable by the Company or any of its Subsidiaries on or before the
date of this Agreement have been paid or provided for or are not delinquent,
subject, however, to the ongoing possibility of contested assessments of
additional taxes upon audit of returns filed prior to the date hereof.
(m) Title to Properties; Absence of Liens and Encumbrances, etc. The
Company and its Subsidiaries have good title to all properties and assets owned
by them, real, personal and mixed, used in their business, free and clear of any
liens, charges, pledges, security interests or other encumbrances, except as
reflected in the Audited Financial Statements and except for such imperfections
of title and encumbrances, if any, as are not substantial in character, amount
or extent, and do not materially detract from the value, or interfere with the
present use, of the property subject thereto or affected thereby, or otherwise
materially impair the business operations of the Company and its Subsidiaries
considered as a whole. Except as set forth in Schedule 6.1(m), no lease under
which the Company or any of its Subsidiaries is the lessee will terminate as a
result of the consummation of the Merger. All leases under which the Company or
any of its Subsidiaries is the lessee of real or personal property that are
material to the conduct of the business of the Company and its Subsidiaries
considered as a whole are, to the knowledge of the Company's executive officers,
valid and binding on the lessors specified thereunder in accordance with their
respective terms and there is not under any of such leases any existing default,
or any condition, event or act which with notice of lapse of time or both would
constitute such a default, which in either case would affect materially and
adversely the financial condition of the Company and its Subsidiaries considered
as a whole.
(n) Material Contracts. Except as disclosed in the Company SEC
Documents or on Schedule 6.1(n), neither the Company nor any of its Subsidiaries
has outstanding any employment agreements or any incentive compensation,
deferred compensation, profit sharing, stock option, stock purchase, savings,
consultant, retirement, pension or other "fringe benefit" plans or arrangements
with or for the benefit of any officer, employee or other person which are not
subject to cancellation by the Company or any of its Subsidiaries, as the case
may be, without material penalty or increased cost on not more than 30 days
notice. Except as set forth on Schedule 6.1(n), in the Company SEC Documents or
for arrangements made in the ordinary course of business, neither the Company
nor any of its Subsidiaries is as of the date hereof a party to, or bound by,
any material contract of any kind to be performed after the Effective Time.
Solely for the purpose of this Section 6.1(n), the term "material contract"
shall mean any single contract pursuant to which any party thereto is obligated
to make payments aggregating more than $25,000. The Company's executive officers
have no knowledge of any defaults in any obligation to be performed by any party
to a contract or other agreement to which the Company or any of its Subsidiaries
is a party, which defaults may reasonably
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be expected to affect materially and adversely the financial condition of the
Company and its Subsidiaries considered as a whole. Moreover, to the knowledge
of the executive officers of the Company, there is no material default by the
Company under the Area Development Agreement, dated March 17, 1997, by and among
the Company, CMAC Incorporated, a Tennessee corporation, and Charles F.
McWhorter, Jr., and the Area Development Agreement, dated January 12, 1996 by
and among the Company, L. W. Group, Inc., a Tennessee corporation, and David K.
Wachtel, Jr. Except as disclosed on Schedule 6.1(n), there are no contracts or
options to sell or lease any material property or assets, real, personal or
mixed, of the Company or any of its Subsidiaries. To the knowledge of the
executive officers of the Company, the Company has all license or other rights
to use the software necessary for its business, free and clear of material
claims of others, and all Company computer systems and software material to its
business operations are believed by the executive officers of the Company to be
Year 2000 compliant to the extent disclosed in the Company's most recent
Quarterly Report on Form 10-Q.
(o) Litigation. Except as disclosed in the Annual Report, any of the
Quarterly Reports or on Schedule 6.1(o), (i) there is no claim, action, suit or
proceeding pending or, to the knowledge of the executive officers of the
Company, contemplated or threatened against the Company or any of its
Subsidiaries or any of their properties which, in the event of a final adverse
determination, is reasonably likely to affect materially and adversely the
financial condition of the Company and its Subsidiaries considered as a whole,
or which seeks damages in connection with any of the transactions contemplated
by this Agreement or to prohibit, restrict or delay consummation of the Merger
or any of the conditions to consummation of the Merger or to limit in any manner
the right of CBRL to control the Company or any material aspect of the business
of the Company and its Subsidiaries after the Effective Time, nor is there, to
the knowledge of the executive officers of the Company, any judgment, decree,
injunction, ruling or order of any court, governmental department, commission,
agency or instrumentality, arbitrator or any other person outstanding against
the Company or any of its Subsidiaries having any such effect; and (ii) neither
the Company nor any of its Subsidiaries is a party to or is bound by any
judgment, decree, injunction, ruling or order of any court, governmental
department, commission, agency or instrumentality, arbitrator or any other
person against the Company or any of its Subsidiaries affecting materially and
adversely the financial condition of the Company and its Subsidiaries considered
as a whole.
(p) Labor Matters and Controversies. Except as set forth on Schedule
6.1(p), the Company is not a party to any collective bargaining agreement with
respect to its employees, and, to the knowledge of the executive officers of the
Company, there are no efforts by any labor organization to gain representation
of any of the Company's employees. There are no controversies pending between
the Company or any of its Subsidiaries and any of their respective employees,
which controversies may reasonably be expected to affect materially and
adversely the financial condition of the Company and its Subsidiaries considered
as a whole.
(q) Insider Interests. Except as disclosed in the Annual Report, any of
the Quarterly Reports or on Schedule 6.1(q), no officer or director of the
Company or any of its Subsidiaries has any agreement with the Company or any of
its Subsidiaries or any interest in any property, real or personal, tangible or
intangible, including without limitation trade names or trademarks used in or
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pertaining to the business of the Company or any of its Subsidiaries, except for
the normal rights as a stockholder or employee.
(r) Trade Names, Trademarks, etc. Schedule 6.1(r) sets forth a list of
all United States and foreign patents, trademarks, trade names, service marks,
copyrights and applications therefor owned by the Company and its Subsidiaries
(the "Patent and Trademark Rights"). Except as set forth in Schedule 6.1(r), the
Patent and Trademark Rights are all the intellectual property rights that are
material to the operation of the business of the Company and its Subsidiaries as
currently being conducted. The Company is the owner of all title and interest in
and to each of the Patent and Trademark Rights, free and clear of all liens,
security interests, charges, encumbrances, equities and other adverse claims
known to the executive officers of the Company. There are no claims or
proceedings pending or, to the knowledge of the Company's executive officers,
threatened against the Company or any of its Subsidiaries asserting that its use
of any of the Patent and Trademark Rights infringes the rights of any other
person.
(s) Insurance. The Company and its Subsidiaries have insurance
contracts or self-insurance in full force and effect which, to the knowledge and
belief of the Company's executive officers, provide for coverages which are
usual and customary in the business of the Company and its Subsidiaries as to
amount and scope.
(t) Employee Benefit Plans and Employment Agreements.
(1) General. Except as set forth on Schedule 6.1(t), neither
the Company nor any of its Subsidiaries is a party to nor participates in or has
any liability or contingent liability with respect to:
(i) any "employee welfare benefit plan" or "employee pension
benefit plan" as those terms are respectively defined in
sections 3(1) and 3(2) of ERISA, other than a "multiemployer
plan" (as defined in section 3(37) of ERISA),
(ii) any retirement or deferred compensation plan, incentive
compensation plan, stock plan, unemployment compensation plan,
vacation pay, severance pay, bonus or benefit arrangement,
insurance or hospitalization program or any other fringe
benefit arrangements for any current or former employee,
director, consultant or agent, whether pursuant to contract,
arrangement, custom or informal understanding, which does not
constitute an "employee benefit plan" (as defined in section
3(3) of ERISA), or
(iii) any employment agreement.
(collectively, the "Benefit Plans").
(2) Plan Documents and Reports. A true, accurate and complete
copy of each of the Benefit Plans is set forth on Schedule 6.1(t), and all
contracts relating thereto, or to the funding thereof, including all trust
agreements, insurance contracts, administration contracts, investment
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management agreements, subscription and participation agreements, and
record-keeping agreements, each as in effect on the date hereof, has been
supplied to CBRL. In the case of any Benefit Plan which is not in written form,
CBRL has been supplied with a true, accurate and complete description thereof as
in effect on the date hereof. The Company will timely file with the Internal
Revenue Service all annual reports for the Benefit Plans that are required with
respect thereto, and all such reports will be made available to CBRL. None of
the Benefit Plans are "pension plans" as defined in Section 3(2) of ERISA.
(3) Compliance with Laws; Liabilities. As to all Benefit
Plans:
(i) All Benefit Plans substantially comply and have been
administered in form and in operation in all material respects
with all requirements of law applicable thereto, and the
Company has received no notice issued by any governmental
authority questioning or challenging such compliance.
(ii) All Benefit Plans that are employee pension benefit plans
(as defined in section 3(2) of ERISA) comply in form and in
operation with all applicable requirements of sections 401(a)
and 501(a) of the Internal Revenue Code (the "Code"); there
have been no amendments to such plans which are not the
subject of a determination letter issued with respect thereto
by the Internal Revenue Service; and no event has occurred
which will or could give rise to disqualification of any such
plan under such sections or to a tax under section 511 of the
Code, which event has not been timely and completely
corrected, without further liability or potential liability of
any type to the Company or the Benefit Plans under either the
Administrative Procedure Regarding Self-Correction or the
Employee Plans Compliance Resolution System, each as
established by the Internal Revenue Service.
(iii) None of the assets of any Benefit Plan is invested in
employer securities or employer real property.
(iv) There have been no "prohibited transactions" (as
described in section 406 of ERISA or section 4975 of the Code)
with respect to any Benefit Plan and neither the Company nor
any of its Subsidiaries has otherwise engaged in any
prohibited transaction.
(v) There has been no act or omission which has given rise to
or may give rise to fines, penalties, taxes, or related
charges under sections 502(c), 502(i), 502(l) or 4071 of ERISA
or Chapters 43, 47, or 68 of the Code for which the Company or
any of its Subsidiaries may be liable.
(vi) None of the payments contemplated by the Benefit Plans
would, in the aggregate, constitute excess parachute payments
as defined in section 280G of the Code (without regard to
subsection (b)(4) thereof).
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(vii) There are no actions, suits, or claims (other than
routine claims for benefits) pending or threatened involving
such Benefit Plans or the assets thereof, and no facts exist
which could give rise to any such actions, suits, or claims
(other than routine claims for benefits).
(viii) No Benefit Plan or prior Benefit Plan of the Company,
any Subsidiary or other affiliate is or ever was subject to
Title IV of ERISA.
(ix) Each Benefit Plan which constitutes a "group health plan"
(as defined in section 607(1) of ERISA or section 4980B(g)(2)
of the Code), including any Benefit Plans of current and
former affiliates which must be taken into account under
section 4980B and 414(t) of the Code or section 601 of ERISA,
have been operated in substantial compliance with applicable
law, including the group health plan continuation coverage
requirements of section 4980B of the Code and section 601 of
ERISA and the portability, certification and nondiscrimination
requirements of sections 9801 and 9802 of the Code to the
extent such requirements are applicable.
(x) Adequate accruals for all obligations under the Benefit
Plans are reflected in the Audited Financial Statements and
such obligations include a pro rated amount of the
contributions and PBGC premiums which would otherwise have
been made in accordance with past practices and applicable law
for the plan years which include the Effective Time.
(xi) Neither the Company nor any of its Subsidiaries has
liability or contingent liability under any Benefit Plan or
otherwise for providing post-retirement medical or life
insurance benefits, other than statutory liability for
providing group health plan continuation coverage under Part 6
of Title I of ERISA and section 4980B (or any predecessor
section thereto) of the Code.
(xii) There has been no act or omission that would impair the
right or ability of the Company or any of its Subsidiaries
unilaterally to amend or terminate any Benefit Plan.
(4) Multiemployer Plans. Neither the Company nor any of its
Subsidiaries contributes to, has contributed to, or has any liability or
contingent liability with respect to a multiemployer plan (as defined in section
3(37) of ERISA).
(u) Environmental Matters. Except as set forth on Schedule 6.1(u)
hereto, and to the knowledge of the executive officers of the Company:
(i) The Company has not deposited, incorporated or disposed,
or arranged for the disposal of, any Hazardous Substance (as
defined hereafter) at a location owned or operated by any
other person which could result in any liabilities, costs,
claims or damages for which the Company might be liable,
except as would not have a material adverse effect on the
financial condition of the Company; "Hazardous Substance"
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means any material or substance which is defined and/or
regulated as a hazardous substance, hazardous waste, hazardous
material, toxic substance or pollutant or contaminant by or
pursuant to any Environmental Law; the term "Environmental
Law" means all federal, state or local environmental laws,
regulations and rules relating to the generation, treatment,
storage, transportation, disposal, emission, discharge or
release of Hazardous Substances, or otherwise relating in any
way to the protection of the environment, as the same may be
amended or modified until the Effective Time;
(ii) The Company is in material compliance with all
Environmental Laws in effect as of the date hereof, and no
condition exists or event has occurred which would constitute
a material violation of any Environmental Law;
(iii) The Company is in possession of those permits required
by any applicable Environmental Law for the conduct or
operation of its business (or any part thereof), except where
the failure to be in possession of such permits would not have
a material adverse effect on the financial condition of the
Company, and is in material compliance with all of the
requirements and limitations included in such permits;
(iv) The Company has not released or discharged any Hazardous
Substances in amounts or types requiring cleanup or remedial
action, in, on, or at any property it owns or on which it
conducts business, and the executive officers of the Company
have no knowledge of any such discharges or releases by others
in, on, or at such properties;
(v) The executive officers of the Company have not received
any written or verbal notice from any governmental authority
or any other person that any aspect of its business or the
operation thereof is in violation of any Environmental Law or
environmental permit, or that the Company is responsible (or
potentially responsible) for the cleanup or remediation of any
substances at any location;
(vi) The Company has not deposited or placed or permitted to
be deposited or placed any Hazardous Substances in amounts or
types requiring cleanup or remedial action into, on, beneath,
or adjacent to any property it owns or on which it conducts
business, except as would not have a material adverse effect
on the financial condition of the Company;
(vii) The Company is not subject to any pending or threatened
litigation or proceedings in any forum, judicial or
administrative, involving a demand for damages, an order of
compliance, injunctive relief, penalties, or other potential
liability of a material nature with respect to any
Environmental Law; and
(viii) The Company has timely filed all material reports and
notifications required to be filed with respect to properties
owned by the Company or with respect to the
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operation of its business, and has generated and maintained
all required records and data of a material nature under
applicable Environmental Laws.
SECTION 6.2 Representations and Warranties by CBRL and Cracker Barrel.
CBRL and Cracker Barrel, jointly and severally, represent and warrant to the
Company as follows:
(a) Organization and Qualification, etc. CBRL and Cracker Barrel each
is a corporation duly organized and validly existing under the laws of the State
of Tennessee, each has corporate power and authority to own all of its
properties and assets and to carry on its business as it is now being conducted.
(b) Authority Relative to Agreement. CBRL and Cracker Barrel each has
the corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby on the part of CBRL and Cracker
Barrel respectively. The execution and delivery by CBRL and Cracker Barrel of
this Agreement and the consummation by CBRL and Cracker Barrel of the
transactions contemplated on their part hereby have been duly authorized by
their respective Board of Directors. No other corporate proceedings on the part
of CBRL or Cracker Barrel are necessary to authorize the execution and delivery
of this Agreement by CBRL or Cracker Barrel or the consummation by CBRL or
Cracker Barrel of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by each of CBRL and Cracker Barrel and is a valid
and binding agreement of CBRL and Cracker Barrel.
(c) Non-Contravention. The execution and delivery of this Agreement by
each of CBRL and Cracker Barrel do not, and the consummation by each of CBRL and
Cracker Barrel of the transactions contemplated hereby will not, violate any
provision of their respective Charters or Bylaws, or violate, or result, with
the giving of notice or the lapse of time or both, in a violation of, any
provision of, or result in the acceleration of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both) any
obligation under, or result in the creation or imposition of any lien, charge,
pledge, security interest or other encumbrance upon any of the property of CBRL
or Cracker Barrel pursuant to any provision of any mortgage, lien, lease, or
agreement to which CBRL or Cracker Barrel is a party or by which it is bound and
do not and will not violate or conflict with any other restriction of any kind
or character to which CBRL or Cracker Barrel is subject or by which its assets
may be bound, and the same does not and will not constitute an event permitting
termination of any mortgage, lien, lease, agreement, license or instrument to
which CBRL or Cracker Barrel is a party.
(d) Consents, etc. Except for filings with the FTC and Justice pursuant
to the Antitrust Improvements Act, and the filing of the Articles of Merger for
record with the Secretary of State of the State of Tennessee, no consent,
authorization, order or approval of, or filing or registration with, any
governmental commission, board or other regulatory body is required for or in
connection with the execution and delivery of this Agreement by each of CBRL and
Cracker Barrel and the consummation by CBRL or Cracker Barrel contemplated
hereby or thereby.
SECTION 6.3 Representations and Warranties by LRI. LRI represents and
warrants to the Company as follows:
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(a) Organization and Qualification, etc. LRI is a corporation duly
organized and validly existing under the laws of the State of Tennessee, has
corporate power and authority to own all of its properties and assets and to
carry on its business as it is now being conducted.
(b) Capital Stock. The authorized capitalization of LRI consists of
1,000 shares of Common Stock, $.01 par value per share (the "LRI Common Stock"),
of which, as of the date of this Agreement and as of the Effective Time, 1,000
shares are validly issued and outstanding, fully paid and nonassessable. CBRL
owns beneficially and of record all the issued and outstanding shares of capital
stock of LRI.
(c) Authority Relative to Agreement. LRI has the corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated on the part of LRI hereby. The execution and delivery
by LRI of this Agreement and the consummation by LRI of the transactions
contemplated on its part hereby have been duly authorized by its Board of
Directors and by CBRL as its sole stockholder. No other corporate proceedings on
the part of LRI are necessary to authorize the execution and delivery of this
Agreement by LRI or the consummation by LRI of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by LRI and is a
valid and binding agreement of LRI.
(d) Non-Contravention. The execution and delivery of this Agreement by
LRI do not, and the consummation by LRI of the transactions contemplated hereby
will not, violate any provision of the Charter or Bylaws of LRI.
(e) Consents, etc. Except for the filing of the Articles of Merger for
record with the Secretary of State of Tennessee, no consent, authorization,
order or approval of, or filing or registration with, any governmental
commission, board or other regulatory body is required for or in connection with
the execution and delivery of this Agreement and the consummation by LRI of the
transactions contemplated hereby.
(f) Other Matters. Except for this Agreement, LRI has no other material
liabilities or obligations.
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS
SECTION 7.1 Conduct of Business. During the period from the date
hereof to the Effective Time:
(a) Operations in the Ordinary Course of Business. The Company shall,
and shall cause each of its Subsidiaries to, conduct its operations according to
its ordinary and usual course of business and use its best efforts to preserve
intact its business organization; keep available the services of its officers
and employees; and maintain satisfactory relationships with licensors,
suppliers, distributors, customers and others having business relationships with
it. The Company shall confer with representatives of CBRL to keep it informed
with respect to operational matters of a material nature and to report the
general status of the on-going operations of its business.
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(b) Forbearances. The Company and its Subsidiaries shall not, without
the prior written consent of CBRL, which written consent shall not be
unreasonably withheld:
(i) incur any debt, liability or obligation, direct or
indirect, whether accrued, absolute, contingent or otherwise, other than current
liabilities incurred in the ordinary and usual course of business, or pay any
debt, liability or obligation of any kind other than such current liabilities
and current maturities of existing long-term debt;
(ii) assume, guarantee, endorse or otherwise become
responsible for the obligations of any other individual, firm or corporation, or
make any loans or advances to any individual, firm or corporation, except in the
ordinary and usual course of business;
(iii) declare, set aside or pay any dividend (whether in cash,
capital stock or property) with respect to its capital stock, or declare or make
any distribution on, or redeem, purchase or otherwise acquire, any shares of
Common Stock, or split, combine or otherwise similarly change the outstanding
shares of Common Stock, or authorize the creation or issuance of or issue or
sell any shares of its capital stock or any securities or obligations
convertible into or exchangeable for, or giving any person any right to acquire
from it, any shares of its capital stock, or agree to take any such action,
except that the Company may issue shares of Common Stock upon the exercise of
options granted pursuant to its Stock Option Plans prior to the date hereof;
(iv) mortgage, pledge or otherwise encumber any material
property or asset;
(v) except as set forth on Schedule 7.1(b)(v), sell, lease,
transfer or dispose of any of its properties or assets, waive or release any
rights of material value, or cancel, compromise, release or assign any
indebtedness owed to it or any claims held by it, except in the ordinary and
usual course of business;
(vi) make any investment of a capital nature either by
purchase of stock or securities, contributions to capital, property transfers or
otherwise, or by the purchase of any property or assets of any other individual,
firm or corporation, except in the ordinary and usual course of business;
(vii) enter into or terminate any contract, agreement, plan or
lease, or make any change in any of its contracts, agreements, plans or leases
other than in the ordinary and usual course of business;
(viii) except for in the ordinary and usual course of business
or in accordance with the Company's 1998 Executive Bonus Plan, increase in any
manner the compensation or fringe benefits of any of its officers or employees
or pay or agree to pay any pension or retirement allowance not required by any
existing plan or agreement to any officer or employee other than consistent with
past practice, or commit itself to or enter into any employment agreement or any
incentive compensation, deferred compensation, profit sharing, stock option,
stock purchase, savings, consultant, retirement, pension or other "fringe
benefit" plan or arrangement with or for the benefit of any officer, employee or
other person;
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(ix) permit any material insurance policy naming it as a
beneficiary or a loss payable payee to be canceled or terminated or any of the
coverage thereunder to lapse, unless simultaneously with such termination or
cancellation replacement policies providing substantially the same coverage
(without any gap in coverage) are in full force and effect;
(x) amend the Company Charter or the Company Bylaws or the
organizational documents of any of its Subsidiaries;
(xi) enter into any collective bargaining agreement with a
labor organization; or
(xii) enter into an agreement to do any of the things
described in clauses (i) through (xi).
Notwithstanding the foregoing, for purposes of subsections (b)
(i),(v),(vi) and (vii), prior written consent of CBRL is not required for
material contracts of less that $25,000.
SECTION 7.2 Stockholders' Meeting. The Company covenants and agrees
that (i) its Board of Directors will, as soon as reasonably practicable, call a
meeting of its stockholders to consider and vote upon this Agreement and (ii)
unless inconsistent with the exercise by the Board of Directors of its fiduciary
duties, its Board of Directors will duly recommend to the Company's stockholders
that the Merger and the transactions contemplated thereby be approved.
SECTION 7.3 Proxy Statement. The Company covenants that the
information with respect to the Company, its officers and directors and its
Subsidiaries contained in the definitive proxy material that will be distributed
to the Company's stockholders in connection with the meeting of such
stockholders to approve this Agreement (the "Proxy Statement") will not, and
CBRL and Cracker Barrel covenant that the information supplied by CBRL, Cracker
Barrel and their representatives for inclusion in the Proxy Statement will not,
on the date the Proxy Statement is first mailed to stockholders, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they are made, not misleading.
SECTION 7.4 Regulatory Consents, Authorizations, etc. Each party
hereto will use its best efforts to obtain all consents, authorizations, orders
and approvals of and make all filings and registrations with, any governmental
commission, board or other regulatory body required for, or in connection with,
the performance by it of this Agreement and the consummation by it of the
transactions contemplated hereby and will cooperate fully with the other in
assisting it to obtain such consents, authorizations, orders and approvals. No
party hereto will take any action which could reasonably be anticipated to have
the effect of delaying, impairing or impeding the receipt of any required
regulatory approvals.
SECTION 7.5 Investigation. CBRL may prior to the Effective Time make
or cause to be made such investigation of the business and properties of the
Company and its Subsidiaries and their financial and legal condition as CBRL
deems necessary or advisable to familiarize itself therewith, provided that such
investigation shall not interfere with normal operations of the Company
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or any of its Subsidiaries. The Company agrees to permit CBRL and its authorized
representatives to have or cause them to be permitted to have, after the date
hereof and until the Effective Time, full access to the premises, books and
records of the Company and its Subsidiaries at reasonable hours, and the
officers of the Company and its Subsidiaries will furnish CBRL with such
financial and operating data and other information with respect to the business
and properties of the Company and its Subsidiaries as the other shall from time
to time reasonably request. The Company will permit CBRL and its
representatives, including its auditing firm, to review the work papers of the
auditing firm of the Company relating to their examination of the financial
statements as of and for the three most recent years. No investigation by CBRL
before and after the date hereof shall affect any of the representations and
warranties made by the Company, and each such representation and warranty shall
survive any such investigation, subject to Section 10.8. CBRL covenants to
inform the Company during the course of its investigation of any apparent
breaches of representations or warranties. CBRL, Cracker Barrel and LRI covenant
and agree to hold all information received by them in connection herewith on a
confidential basis, and, should this Agreement be terminated or abandoned for
any reason, not to use or voluntarily disclose to others any such information,
to promptly return every document furnished by the Company in connection
herewith and any copies thereof they may have made and to destroy any summaries,
compilations or similar documents they may have made or derived from such
material, and to use their best efforts to have their agents promptly return
such documents and copies and to destroy such summaries, compilations or similar
documents.
SECTION 7.6 Public Announcements. CBRL, Cracker Barrel and the
Company will not issue any press release with respect to the transactions
contemplated by this Agreement or otherwise issue any written public statements
with respect to such transactions other than upon mutual agreement and
cooperation with the other party, except as may be required by applicable law or
by obligation pursuant to any listing agreement with any national securities
exchange or the Nasdaq Stock Market. The parties shall issue a joint press
release, mutually acceptable to the Company and CBRL, promptly upon execution of
this Agreement. CBRL and the Company also agree to reasonably cooperate
regarding any written communications which relate to the transactions
contemplated by this Agreement made to their employees during the period from
the date hereof until the Effective Time.
SECTION 7.7 Expenses; Certain Payments. If the Merger is consummated,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses. Notwithstanding the foregoing, (a) in the event that the Company
materially breaches this Agreement and the Merger is not consummated because of
such breach, the Company shall pay the reasonable costs and expenses incurred by
the counsel and accountants of CBRL, Cracker Barrel and LRI, and (b) in the
event that CBRL, Cracker Barrel or LRI, as the case may be, materially breaches
this Agreement and the Merger is not consummated because of such breach, CBRL,
Cracker Barrel and LRI shall pay the reasonable costs and expenses incurred by
the counsel and accountants of the Company; provided however, that no party
shall be required to pay the other party's costs and expenses in excess of
$500,000. The parties agree that in the event of a breach, the non-breaching
party shall also be entitled, in addition to the recovery of costs and expenses
discussed above, to any other remedies or damages, at law or in equity, that a
court of competent jurisdiction may find appropriate. If the Company shall
exercise its right to
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terminate this Agreement pursuant to Section 9.1(e) and within one year after
the date of such termination the Company executes a definitive agreement with
respect to an Alternative Transaction (as hereinafter defined), then, upon such
execution, the Company shall pay CBRL a fee in the amount of $5,500,000 in
immediately available funds.
SECTION 7.8 No Solicitation of Transactions. The Company and its
Subsidiaries, officers, directors, financial advisors and counsel will not
solicit, initiate or deliberately encourage submission of proposals or offers
from any person relating to the acquisition or purchase of a material amount of
the assets of, or any equity interest in, the Company or any merger,
consolidation, or business combination with the Company; provided, however,
that, consistent with the fiduciary obligations of the Company's directors and
officers under applicable law, the Company may participate in any unsolicited
discussions or negotiations regarding, and may furnish to any person information
or take such other action as it may deem appropriate with respect to, any of the
foregoing; and provided, further, that nothing in this Section 7.8 shall prevent
the Company from taking any position necessary in order to comply with the
filing and disclosure requirements of Schedule 14D-9, if applicable.
SECTION 7.9 Additional Agreements. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective, as soon as reasonably practicable,
the transactions contemplated by this Agreement, subject, however, to the
receipt of the approval of stockholders of the Company.
SECTION 7.10 Proxy Statement. Subject to the terms and conditions
herein provided, the Company will file with the SEC as soon as practicable its
proxy material with respect to its stockholders meeting to consider approval of
the Merger, use its best efforts to resolve as promptly as practicable any
comments of the staff of the SEC to such proxy material and promptly thereafter
mail the Proxy Statement and other proxy material to its stockholders. The Proxy
Statement shall conform, at the date of mailing, as to form in all material
respects with all applicable requirements of the 1934 Act, or any regulation or
rule issued thereunder.
SECTION 7.11 Employees of the Company. CBRL shall retain all
employees of the Company who are employed at the Effective Time as
employees-at-will (except to the extent that such employees are parties to
contracts providing for other employment terms, which employees are named on
Schedule 7.11, in which case such employees shall be retained in accordance with
the terms of such contracts) and shall provide such employees with the same
customary employee benefits as the Company currently provides its existing
employees.
SECTION 7.12 Indemnification; Directors and Officers Insurance. For
six years from and after the Effective Time, CBRL agrees not to, and agrees to
cause the Surviving Corporation not to, alter the provisions of the Company
Charter and Company Bylaws relating to indemnification of officers and directors
of the Company and its Subsidiaries for acts or omissions occurring at or prior
to the Effective Time. CBRL shall cause the Surviving Corporation to provide,
for a period of six years from the Effective Time, the Company's current
directors and officers an insurance and
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indemnification policy that provides coverage for events occurring prior to the
Effective Time (the "D&O Insurance") that is not less favorable than the
Company's existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; provided, however, that the Surviving
Corporation shall not be required to pay an annual premium for the D&O Insurance
in excess of 300 percent of the last annual premiums paid prior to the date
hereof, but in such case shall purchase as much coverage as possible for such
amount.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1 Conditions to Merger Relating to CBRL, Cracker Barrel and
LRI. Consummation of the Merger is subject to the fulfillment to the reasonable
satisfaction of CBRL, prior to or on the Effective Time, of each of the
following conditions:
(a) Stockholder Approval. The adoption of this Agreement shall have
been approved by the affirmative vote, in person or by proxy, of the holders of
at least a majority of the outstanding shares of Common Stock entitled to vote
thereon, and on the Effective Time CBRL shall have been furnished with certified
copies of the resolutions adopted by the holders of shares of Common Stock.
(b) Regulatory Consents, Authorizations, etc. Except for the filing of
the Articles of Merger for record with the Secretary of State of Tennessee, all
consents, authorizations, orders and approvals of, and filings and registrations
with, any governmental commission, board or other regulatory body or any
nongovernmental third party which are required for or in connection with the
execution and delivery of this Agreement, and the consummation by each party
hereto of the transactions contemplated hereby, shall have been obtained or
made, if the failure to make such filing or registration or to obtain such
consent, authorization, order or approval would have a material and adverse
effect on the power of CBRL to conduct after the Effective Time the business
theretofore conducted by the Company and its Subsidiaries.
(c) Injunction, etc. At the Effective Time there shall be no judgment,
decree, injunction, ruling or order of any court, governmental department,
commission, agency or instrumentality outstanding against CBRL, Cracker Barrel,
LRI or the Company which prohibits, restricts or delays consummation of the
Merger or any of the conditions to the consummation of the Merger or limits in
any material respect the right of CBRL to control the Company or any material
aspect of the business of the Company and its Subsidiaries after the Effective
Time.
(d) Representations and Warranties. The representations and warranties
of the Company contained in this Agreement were true and correct in all material
respects at the date thereof and shall also be true and correct in all material
respects at and as of the Effective Time, except for changes contemplated in
this Agreement and except for the updating of the Company's disclosures made
herein that do not reflect any material adverse change to the financial
condition of the Company and its Subsidiaries considered as a whole, with the
same force and effect as if made at and as of the Effective Time, except as such
representations and warranties by their terms relate only to periods of time
prior to the Effective Time (it being understood that the determination of
whether or not representations and warranties are true in all material respects
shall be determined in light of whether
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any misrepresentations or breaches would have, or would be reasonably expected
to have, a material adverse effect on the financial condition of the Company and
its Subsidiaries considered as a whole), and the Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the
Effective Time.
(e) Certificate. The Company shall have delivered to CBRL, Cracker
Barrel and LRI a certificate, dated the Effective Time, of the President of the
Company to the effect that (i) he is familiar with the provisions of this
Agreement and (ii) the conditions specified in paragraph (d) of this Section 8.1
have been, to the best of his knowledge, satisfied.
(f) Opinion of Company's Counsel. CBRL, Cracker Barrel and LRI shall
have received an opinion or opinions, dated the Effective Time, of Waller
Lansden Dortch & Davis, A Professional Limited Liability Company, counsel to the
Company, in form and substance and with such exceptions and limitations as shall
be reasonably satisfactory to CBRL, substantially to the effect that:
(i) The Company is a corporation duly incorporated and validly
existing under the laws of the State of Tennessee, has corporate power and
authority to own its properties and assets and to carry on its business;
(ii) The authorized capital stock of the Company consists of
15,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock and,
based solely upon a review of the minute books and stock books of the Company,
the number of shares of Common Stock which are duly authorized, validly issued
and fully paid and nonassessable and the number of shares of Common Stock held
in the treasury of the Company are as stated in such opinion as of the date
thereof;
(iii) The Company has the corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated on the part of the Company hereby; the Company has taken all
necessary corporate action to authorize the execution and delivery of this
Agreement and the consummation by the Company of the transactions contemplated
hereby; and this Agreement has been duly executed and delivered by the Company
and is a valid binding agreement of the Company, subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency and similar laws,
to moratorium laws from time to time in effect and to general principles of
equity;
(iv) The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby do not violate any provision of the Company Charter or the Company
Bylaws;
(v) Except for the filing of the Articles of Merger, each
consent, authorization, order and approval of, and filing and registration with,
any governmental commission, board or other regulatory body required to be made
or obtained by the Company for the execution and delivery of this Agreement and
the consummation by the Company of the transactions contemplated hereby has been
made or obtained;
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(vi) Each of the Subsidiaries that is formed under the laws of
Tennessee, as such Subsidiaries are set forth in Schedule 6.1(g), is an entity
duly incorporated and validly existing under the laws of Tennessee, has the
corporate power and authority to own all of its properties and assets and to
carry on its business; the Company owns directly or indirectly all of the
outstanding capital stock of each of its Subsidiaries, to the best knowledge of
such counsel, free and clear of all liens, charges, pledges, security interests
or other encumbrances, and all such capital stock is duly authorized, validly
issued and outstanding, fully paid and nonassessable;
(vii) Except as may be specified by such counsel, insofar as
such counsel knows, there is no claim, action, suit or proceeding pending or
contemplated or threatened against the Company or any of its Subsidiaries or any
of their properties, which, in the event of a final adverse determination, such
counsel believes will affect materially and adversely the financial condition of
the Company and its Subsidiaries considered as a whole, or which seeks to
prohibit, restrict or delay consummation of the Merger or any of the conditions
to the consummation of the Merger, nor, insofar as such counsel knows, is there
any judgment, decree, injunction, ruling or order of any court, governmental
department, commission, agency or instrumentality, arbitrator or any other
person outstanding against the Company or any of its Subsidiaries that such
counsel believes will in the future have any such effect; and, insofar as such
counsel knows, neither the Company nor any of its Subsidiaries is a party to or
is bound by any judgment, decree, injunction, ruling or order of any court,
governmental department, commission, agency or instrumentality, arbitrator or
any other person that such counsel believes will affect, materially and
adversely, the financial condition of the Company and its Subsidiaries
considered as a whole;
(viii) The Company has filed with the SEC all of the Company
SEC Documents required to be filed since January 1, 1998 through the date
hereof. All of the Company SEC Documents, as of their respective filing dates,
complied as to form in all material respects with all applicable requirements of
the 1934 Act and the rules and regulations promulgated thereunder.
(ix) Upon the acceptance for record of Articles of Merger with
the Secretary of State of Tennessee in accordance with Section 1.2 of this
Agreement, the Merger shall become effective.
In rendering such opinions such counsel may rely upon opinions of other
counsel and may rely upon certificates of public officials and officers of the
Company or any of its Subsidiaries as to factual matters and shall be under no
obligation to make any independent investigation as to factual matters.
(g) Letters from Accountants. CBRL, Cracker Barrel and LRI shall have
received two letters, one dated the date the Proxy Statement is mailed to the
stockholders of the Company and the other dated the Effective Time, from KPMG
Peat Marwick LLP confirming that they are independent accountants with respect
to the Company and its Subsidiaries, and stating in effect that on the basis of
a reading of the latest available interim financial statements of the Company
and its Subsidiaries, inquiries of officials of the Company and its Subsidiaries
responsible for financial and accounting matters, and a reading of the minutes
of the Company and its Subsidiaries as set forth in the minute books to a
specified day not more than five days prior to the date of delivery of such
letter, nothing came to their attention that caused them to believe that:
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(i) any unaudited financial statements of the Company and its
Subsidiaries provided to CBRL are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that of
the Audited Financial Statements;
(ii) for the period from December 28, 1997 to the date of the
latest available interim financial statements of the Company and its
Subsidiaries, there were any decreases, as compared to the corresponding
preceding period in the prior fiscal year and the most recent preceding fiscal
quarter, in operating revenues or net earnings; or
(iii) as of a specified date not more than five days prior to
the date of delivery of such letter, there was any change in capital stock, any
increase in consolidated long-term debt, or any decrease in consolidated net
assets, or the Company and its Subsidiaries, as compared with amounts shown on
the balance sheet as of December 28, 1997.
(h) Additional Certificates, etc. The Company shall have furnished to
CBRL such additional certificates, opinions and other documents as CBRL may have
reasonably requested as to any of the conditions set forth in this Section 8.1.
(i) Antitrust Improvements Act. The applicable waiting period under the
Antitrust Improvements Act shall have expired.
SECTION 8.2 Conditions to the Merger Relating to the Company.
Consummation of the Merger is subject to the fulfillment to the reasonable
satisfaction of the Company, prior to or on the Effective Time, of each of the
following conditions:
(a) Stockholder Approval. The adoption of this Agreement shall have
been approved by the affirmative vote, in person or by proxy, of the holders of
a majority of the outstanding shares of Common Stock entitled to vote thereon.
(b) Regulatory Consents, Authorizations, etc. Except for the filing of
the Articles of Merger with the Secretary of State of Tennessee, all consents,
authorizations, orders and approvals of, and filings and registrations with, any
governmental commission, board or other regulatory body or any nongovernmental
third party which are required for or in connection with the execution and
delivery of this Agreement and the consummation by each party thereto of the
transactions contemplated hereby shall have been obtained or made.
(c) Injunction, etc. At the Effective Time there shall be no judgment,
decree, injunction, ruling or order of any court, governmental department,
commission, agency or instrumentality outstanding against CBRL, Cracker Barrel,
LRI or the Company which prohibits, restricts or delays consummation of the
Merger or any of the conditions to the consummation of the Merger or limits in
any manner the right of CBRL to control the Company or any material aspect of
the business of the Company and its Subsidiaries after the Effective Time.
(d) Representations and Warranties. The representations and warranties
of each of CBRL, Cracker Barrel and LRI contained in this Agreement were true
and correct in all material
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respects at the date hereof and shall also be true and correct in all material
respects at and as of the Effective Time, except for changes contemplated in
this Agreement, with the same force and effect as if made at and as of the
Effective Time, except as such representations and warranties by their terms
relate only to periods of time prior to the Effective Time; and each of CBRL,
Cracker Barrel and LRI shall have performed or complied in all material respects
with all agreements and covenants required by this Agreement to be performed or
complied with by it at or prior to the Effective Time.
(e) Certificate. Each of CBRL, Cracker Barrel and LRI shall have
delivered to the Company a certificate, dated the Effective Time, of the
respective Presidents of CBRL, Cracker Barrel and LRI to the effect that (i)
they are familiar with the provisions of this Agreement and (ii) the conditions
specified in paragraph (d) of this Section 8.2 have been, to the best of their
knowledge, satisfied.
(f) Opinion of Counsel to CBRL, Cracker Barrel and LRI. The Company
shall have received an opinion, dated the Effective Time, of Baker, Donelson,
Bearman & Caldwell, counsel to CBRL, Cracker Barrel and LRI, in form and
substance and with such exceptions and limitations as shall be reasonably
satisfactory to the Company, substantially to the effect that:
(i) CBRL is a corporation duly incorporated and validly
existing under the laws of the State of Tennessee, has corporate power and
authority to own its properties and assets and to carry on its business;
(ii) CBRL has the corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated on the
part of CBRL hereby; CBRL has taken all necessary corporate proceedings to
authorize the execution and delivery of this Agreement and the consummation by
it of the transactions contemplated hereby; and this Agreement has been duly
executed and delivered by CBRL and is a valid and binding agreement of CBRL,
subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency and similar laws, to moratorium laws from time to
time in effect and to general principles of equity;
(iii) The execution and delivery of this Agreement by CBRL and
the consummation by CBRL of the transactions contemplated hereby do not and will
not violate any provision of its Charter or Bylaws;
(iv) Except for the filing of the Articles of Merger with the
Secretary of State of Tennessee, each consent, authorization, order and approval
of, and filing and registration with, any governmental commission, board or
other regulatory body required to be made or obtained by CBRL for the execution
and delivery of this Agreement and the consummation by CBRL of the transactions
contemplated hereby has been made or obtained;
(v) Except as may be specified by such counsel, insofar as
such counsel knows, there is no claim, action, suit or proceeding pending or
contemplated or threatened against CBRL or any of its properties, which, in the
event of a final adverse determination, such counsel believes will affect
materially and adversely the financial condition of CBRL considered as a whole,
or which seeks to prohibit, restrict or delay consummation of the Merger or any
of the conditions to the
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consummation of the Merger, nor, insofar as such counsel knows, is there any
judgment, decree, injunction, ruling or order of any court, governmental
department, commission, agency or instrumentality, arbitrator or any other
person outstanding against CBRL that such counsel believes will in the future
have any such effect; and, insofar as such counsel knows, CBRL is not a party to
nor is bound by any judgment, decree, injunction, ruling or order of any court,
governmental department, commission, agency or instrumentality, arbitrator or
any other person that such counsel believes will affect, materially and
adversely, the financial condition of CBRL considered as a whole;
(vi) LRI is a corporation duly incorporated and validly
existing under the laws of the State of Tennessee, has corporate power and
authority to own its properties and assets and to carry on its business; the
authorized capital stock of LRI consists of 1,000 shares of LRI Common Stock,
all of which are duly authorized, validly issued, fully paid and nonassessable
and owned beneficially and of record by CBRL; LRI has the corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated on the part of LRI hereby; LRI has taken all necessary
corporate proceedings to authorize the execution and delivery of this Agreement
and the consummation by LRI of the transactions contemplated hereby; this
Agreement has been duly executed and delivered by LRI and is a valid and binding
agreement of LRI, subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency and similar laws, to moratorium laws from
time to time in effect and to general principles of equity; and the execution
and delivery of this Agreement by LRI and the consummation by LRI of the
transactions contemplated hereby do not violate its Charter or Bylaws;
(vii) Cracker Barrel is a corporation duly incorporated and
validly existing under the laws of the State of Tennessee, has corporate power
and authority to own its properties and assets and to carry on its business;
Cracker Barrel has the corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated on the part of Cracker
Barrel hereby; Cracker Barrel has taken all necessary corporate proceedings to
authorize the execution and delivery of this Agreement and the consummation by
Cracker Barrel of the transactions contemplated hereby; this Agreement has been
duly executed and delivered by Cracker Barrel and is a valid and binding
Agreement of Cracker Barrel, subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency and similar laws, to
moratorium laws from time to time in effect and to general principles of equity;
and the execution and delivery of this Agreement by Cracker Barrel and the
consummation by Cracker Barrel of the transactions contemplated hereby do not
violate its Charter or Bylaws;
(viii) Upon the acceptance for record of the Articles of
Merger with the Secretary of State of Tennessee in accordance with Section 1.2
of this Agreement, the Merger shall become effective.
In rendering such opinions such counsel may rely upon opinions of other
counsel and may rely upon certificates of public officials and officers of CBRL,
Cracker Barrel and LRI as to factual matters and shall be under no obligation to
make any independent investigation as to factual matters.
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(g) Additional Certificates, etc. CBRL and LRI shall have furnished to
the Company such additional certificates, opinions and other documents as the
Company may have reasonably requested as to any of the conditions set forth in
this Section 8.2.
(h) Antitrust Improvements Act. The applicable waiting period under the
Antitrust Improvements Act shall have expired.
(i) Investment Bankers' Opinion. On the date on which the Proxy
Statement is first mailed to stockholders of the Company and on the Effective
Time, the Company shall have received from its investment bankers a written
opinion confirming the opinion of such bankers' delivered to the Company on or
prior to the date hereof with respect to the transactions contemplated hereby (a
copy of which or a summary thereof has been delivered to CBRL).
(j) Grant of CBRL Options. CBRL shall have granted options to employees
of the Company set forth on Schedule 7.11 to purchase up to an aggregate of
250,000 shares of the Common Stock of CBRL.
ARTICLE IX
TERMINATION AND ABANDONMENT
SECTION 9.1 Termination and Abandonment. This Agreement and the Merger
may be terminated and abandoned at any time prior to the Effective Time:
(a) By mutual action of the Boards of Directors of CBRL and the
Company.
(b) By CBRL, Cracker Barrel and LRI, if the conditions set forth in
Section 8.1 shall not have been complied with or performed in any material
respect and such noncompliance or nonperformance shall not have been cured or
eliminated (or by its nature cannot be cured or eliminated) by the Company on or
before March 25, 1999.
(c) By the Company, if the conditions set forth in Section 8.2 shall
not have been complied with or performed in any material respect and such
noncompliance or nonperformance shall not have been cured or eliminated (or by
its nature cannot be cured or eliminated) by CBRL, Cracker Barrel or LRI on or
before March 25, 1999.
(d) By CBRL or the Company, if any court of competent jurisdiction or
other governmental entity shall have issued an order, decree or ruling or taken
any other action permanently enjoining, restraining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become final
and nonappealable.
(e) By the Board of Directors of the Company if the Company shall
receive a bona fide offer for a merger, consolidation or other business
combination involving the Company or substantially all its assets from any third
party (an "Alternative Transaction"), and the Board of Directors of the Company
shall determine, in the good faith exercise of its fiduciary duties, that the
Alternative Transaction is more advantageous in the opinion of the Board of
Directors to the
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stockholders of the Company than the consummation of the transactions
contemplated hereby; provided, however, that the Board of Directors shall not
have any such right to terminate this Agreement if the Company shall have
violated its agreements contained in Section 7.8.
SECTION 9.2 Expiration. In the event that the Merger is not
consummated pursuant to this Agreement on or before March 25, 1999, this
Agreement may be terminated and abandoned by the Company or CBRL unless the
Boards of Directors of CBRL and the Company shall have agreed in writing upon an
extension of time in which to consummate the Merger.
SECTION 9.3 Effect of Termination. In the event of the termination and
abandonment of this Agreement and the Merger, this Agreement shall thereafter
become void and have no effect, and no party hereto shall have any liability to
any other party hereto or its stockholders or directors or officers in respect
thereof, except for the obligations of CBRL in Section 7.6 hereof and the
obligations of the parties hereto in Section 7.7 hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Waiver of Conditions. Any party may, at its option, waive
in writing any or all of the conditions contained herein to which its
obligations hereunder are subject, except that the conditions contained in
Sections 8.1(a), (b) and (i) and 8.2(a), (b) and (h) may not be so waived.
SECTION 10.2 Closing. The closing of this transaction shall be held at
the offices of Baker, Donelson, Bearman & Caldwell, Nashville City Center, 511
Union Street, Suite 1700, Nashville, Tennessee 37219 on the second business day
after the last of the conditions set forth in Article VIII is fulfilled or
waived or at such other time and place as the parties hereto may agree.
SECTION 10.3 Notices. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if it is sent by
registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
If to the Company: Logan's Roadhouse, Inc.
565 Mariott Drive, Suite 490
Nashville, Tennessee 37214
Attention: President
Copy to: J. Chase Cole, Esquire
Waller Lansden Dortch & Davis,
A Professional Limited Liability Company
2100 Nashville City Center
Nashville, Tennessee 37219
If to CBRL or LRI: 106 Castle Heights Avenue North
Lebanon, Tennessee 37087
Attention: General Counsel
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Copy to: Robert G. McCullough, Esquire
Baker, Donelson, Bearman & Caldwell
1700 Nashville City Center
511 Union Street
Nashville, Tennessee 37219
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
SECTION 10.4 Financial Advisors. The Company represents and warrants
that no advisor, broker or finder is entitled to any brokerage or finder's fee
or other commission from it based on agreements, arrangements or undertakings
made by it in connection with the transactions contemplated hereby except that
upon consummation of the transactions contemplated hereby a fee shall be payable
by the Company to its investment banker, SunTrust Equitable Securities
Corporation. CBRL represents and warrants that no broker or finder is entitled
to any brokerage or finder's fee or other commission from CBRL based on
agreements, arrangements or undertakings made by CBRL in connection with the
transactions contemplated hereby, except that upon consummation of the
transactions contemplated hereby a fee shall be payable by CBRL to its
investment banker, J.C. Bradford & Co.
SECTION 10.5 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 10.6 Headings. The headings herein are for convenience of
reference only, do not constitute a part of this Agreement, and shall not be
deemed to limit or affect any of the provisions hereof.
SECTION 10.7 Variation and Amendment. This Agreement may be varied or
amended at any time before or after the approval of the adoption of this
Agreement by the stockholders of the Company by action of the respective Boards
of Directors of the Company, CBRL, Cracker Barrel and LRI, as the case may be,
without action by their respective stockholders.
SECTION 10.8 No Survival of Representations or Warranties. Except to
the extent expressly provided herein, none of the representations or warranties
included or provided for herein or in any schedule or certificate or other
document delivered pursuant to this Agreement shall survive the Effective Time.
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SECTION 10.9 Schedules. Any matter described or included in any
Schedule delivered herewith in response to any disclosure obligation hereunder
shall be deemed disclosed for all other purposes of this Agreement. In the
Schedules delivered herewith, the cross-references to particular provisions of
this Agreement are included therein for convenience only and shall not be deemed
a part of the Schedules delivered herewith or to affect the construction
thereof.
SECTION 10.10 Miscellaneous. This Agreement (a) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties, with respect to the subject matter hereof; (b) is
not intended to confer upon any other person any rights or remedies hereunder;
(c) shall not be assigned, by operation of law or otherwise; and (d) shall be
governed in all respects, including validity, interpretation and effect, by the
laws of the State of Tennessee.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
LOGAN'S ROADHOUSE, INC.
By: /s/ Edwin W. Moats, Jr.
---------------------------------
Attest:
/s/ David J. McDaniel
- -----------------------------------
Secretary
CBRL GROUP, INC.
By: /s/ Dan W. Evins
---------------------------------
Attest:
/s/ James F. Blackstock
- -----------------------------------
Secretary
CRACKER BARREL OLD COUNTRY
STORE, INC.
By: /s/ Dan W. Evins
---------------------------------
Attest:
/s/ James F. Blackstock
- -----------------------------------
Secretary
LRI MERGER CORPORATION
By: /s/ Ronald N. Magruder
---------------------------------
Attest:
/s/ James F. Blackstock
- -----------------------------------
Secretary
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ANNEX B
December 10, 1998
Board of Directors
Logan's Roadhouse, Inc.
565 Marriott Drive, Suite 490
Nashville, TN 37229
Members of the Board:
We understand that Logan's Roadhouse, Inc. ("Logan's" or the
"Company") proposes to enter into an Agreement and Plan of Merger, dated
December 10, 1998 (the "Agreement"), with CBRL Group, Inc. ("CBRL"), Cracker
Barrel Old Country Store, Inc. ("Cracker Barrel") and LRI Merger Corporation
("LRI"). The Agreement provides that, at the effective time of the merger (the
"Merger") of LRI with and into Logan's (the "Effective Time"), Logan's will
become a wholly-owned subsidiary of CBRL and each outstanding share of Logan's
common stock (other than shares held in the treasury) will be converted into
the right to receive $24.00 per share in cash (the "Merger Consideration"). The
terms and conditions of the Merger are more fully set forth in the Agreement
and related documents.
You have requested our opinion as investment bankers as to the
fairness, from a financial point of view, to the shareholders of the Company
(the "Shareholders") of the Merger Consideration.
SunTrust Equitable Securities Corporation ("SunTrust Equitable"), as
part of its investment banking business, is regularly engaged in the valuation
of businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, secondary distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes. SunTrust Equitable has been engaged to render financial advisory
services to the Company in connection with the Merger and will receive a fee
for rendering this opinion and reimbursement of its expenses. SunTrust
Equitable Securities will also receive a fee if a transaction is completed. In
addition, the Company has agreed to indemnify SunTrust Equitable for certain
liabilities arising out of its engagement, including the rendering of this
opinion. In the past, SunTrust Equitable has performed investment banking and
financial advisory services for the Company from time to time for which we have
received compensation, including serving as a managing underwriter in
connection with the Company's initial public offering and two subsequent public
equity offerings in 1995, 1996 and 1997, respectively. In the ordinary course
of business, we trade the equity securities of the Company for our own account
and for the accounts of customers and, accordingly, may at any time hold a long
or short position in these securities.
In connection with our opinion, we have reviewed, among other things,
the Agreement, certain publicly-available information and certain other
financial information, reports, forecasts
71
Board of Directors
December 10, 1998
Page 2
and other internal information that was provided to us by or on behalf of the
Company for purposes of our analysis. We held discussions with the management
and representatives of the Company concerning the historical and current
operations of the Company, its financial condition and prospects. In addition,
we (i) considered, to the extent available, the financial terms of certain
other similar transactions recently effected which we believed to be comparable
to the Merger, (ii) compared certain financial positions and operating results
of the Company to other companies in the restaurant industry and (iii)
conducted such other financial studies, analyses and investigations and
reviewed such other information and factors as we deemed appropriate for
purposes of this opinion.
In rendering this opinion, we have relied, without assuming any
responsibility for independent verification, on the accuracy and completeness
of all financial and other information reviewed by us that was publicly
available or furnished to us by or on behalf of the Company. We have assumed
that the financial forecasts that we examined were reasonably prepared on bases
reflecting the best currently available estimates and good faith judgments of
the management of the Company. We express no opinion with respect to such
forecasts or the assumptions on which they were based. We have not made an
independent evaluation or appraisal of the assets or liabilities (contingent or
otherwise) of the Company, nor were we furnished with any such evaluations or
appraisals. Our opinion is based upon economic, market and other conditions
existing on the date hereof and does not address the fairness of the Merger
Consideration to the Shareholders as of any other date. Our opinion does not
address the merits of the underlying decision by the Company to engage in the
Merger and does not constitute a recommendation to any Shareholder of the
Company as to whether or not that Shareholder should vote to approve the
Merger. The financial markets in general, and the markets for the securities of
the Company, in particular, are subject to volatility, and this opinion does
not purport to address potential developments in the financial markets or the
markets for the securities of the Company after the date hereof.
This letter may not be reproduced, disseminated, quoted or referred to
at any time without our prior written consent; however, the opinion rendered
hereby may be disclosed in the Proxy Statement relating to the Merger to be
distributed by the Company to its Shareholders.
Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the Merger Consideration is fair, from a financial point of
view, to the Shareholders of the Company.
Very truly yours,
SunTrust Equitable Securities Corporation
72
LOGAN'S ROADHOUSE, INC.
SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 5, 1999
The undersigned hereby appoints Edwin W. Moats, Jr. and David J. McDaniel,
or either of them, with power of substitution, as proxies to vote all stock of
Logan's Roadhouse, Inc. ("Logan's") owned by the undersigned at a Special
Meeting of Shareholders to be held at the Marriott Hotel, Memphis Room, 600
Marriott Drive, Nashville, Tennessee 37214, at 8:30 a.m. on February 5, 1999,
and any adjournment thereof, on the following matter as indicated below and such
other business as may properly come before the meeting.
1. To approve the Agreement and Plan of Merger, dated as of December 10, 1998,
attached as Annex A to the Proxy Statement that has been transmitted in
connection with the Special Meeting, pursuant to which Logan's will merge
with LRI Merger Corporation, a Tennessee corporation and wholly-owned
subsidiary of CBRL Group, Inc. ("CBRL"), with Logan's being the surviving
corporation, and shareholders of Logan's will receive $24.00 in cash for each
share of Common Stock of Logan's owned by them.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, to act upon any matters incidental to the foregoing and
such other business as may properly come before the Special Meeting.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted FOR Item 1 above. Any holder who wishes to withhold the discretionary
authority referred to in Item 2 above should mark a line through the entire
Item. Discretionary authority and votes against approval of the Merger Agreement
will not be used to vote in favor of adjournment.
Receipt of the Proxy Statement dated January 7, 1999, is hereby
acknowledged.
Dated: , 1999
--------------------------
----------------------------------
Signature(s)
(Please sign exactly and as fully
as your name appears on your stock
certificate. If shares are held
jointly, each shareholder should
sign.)
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED.
73
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Logan's Roadhouse, Inc.:
We have audited the accompanying balance sheets of Logan's Roadhouse, Inc. and
its predecessor company, Logan's Partnership, as of December 28, 1997 and
December 29, 1996, and the related statements of earnings, partners' and
shareholders' equity, and cash flows for each of the years in the three-year
period ended December 28, 1997. Theses financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Logan's Roadhouse, Inc. and its
predecessor company, Logan's Partnership, as of December 28, 1997 and December
29, 1996, and the results of its operations and its cash flows for each of the
years in the three-year period ended December 28, 1997, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
January 30, 1998