Agreement and Plan of Merger - Bertucci's Inc., NE Restaurant Co. Inc. and NERC Acquisition Corp.
[Execution Copy]
AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 13, 1998
AMONG
BERTUCCI'S, INC.,
NE RESTAURANT COMPANY, INC.,
AND
NERC ACQUISITION CORP.
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
THE OFFER 1
SECTION 1.1. THE OFFER 1
SECTION 1.2. COMPANY ACTION. 3
SECTION 1.3. DIRECTORS. 5
ARTICLE II
THE MERGER 6
SECTION 2.1. THE MERGER 6
SECTION 2.2. CLOSING 7
SECTION 2.3. EFFECTIVE TIME 7
SECTION 2.4. EFFECTS OF THE MERGER 7
SECTION 2.5. ARTICLES OF ORGANIZATION; BY-LAWS 7
SECTION 2.6. DIRECTORS 7
SECTION 2.7. OFFICERS 8
ARTICLE III
EFFECT OF THE MERGER ON THE SECURITIES OF THE CONSTITUENT CORPORATIONS 8
SECTION 3.1. EFFECT ON CAPITAL STOCK 8
SECTION 3.2. STOCK OPTIONS 9
SECTION 3.3. EXCHANGE OF CERTIFICATES 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES 12
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 12
SECTION 4.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB 20
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER 23
SECTION 5.1. CONDUCT OF BUSINESS OF THE COMPANY 23
SECTION 5.2. OTHER ACTIONS 25
ARTICLE VI
ADDITIONAL AGREEMENTS 26
SECTION 6.1. MEETING OF STOCKHOLDERS 26
SECTION 6.2. PROXY STATEMENT 26
SECTION 6.3. ACCESS TO INFORMATION; CONFIDENTIALITY 27
SECTION 6.4. COMMERCIALLY REASONABLE EFFORTS 27
SECTION 6.5. FINANCING 28
SECTION 6.6. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE 28
SECTION 6.7. PUBLIC ANNOUNCEMENTS 29
SECTION 6.9. ACQUISITION PROPOSALS 30
<PAGE>
SECTION 6.9. STOCKHOLDER LITIGATION 31
SECTION 6.10. BOARD ACTION RELATING TO STOCK OPTION PLANS 31
SECTION 6.11. CONSENTS AND APPROVALS 31
SECTION 6.12. REPAYMENT OF INDEBTEDNESS 32
SECTION 6.13. PAYMENT OF FEE AND EXPENSES 32
ARTICLE VII
CONDITIONS PRECEDENT 32
SECTION 7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER 32
SECTION 7.2. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB 33
SECTION 7.3. CONDITIONS TO OBLIGATIONS OF THE COMPANY 33
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER 34
SECTION 8.1. TERMINATION 34
SECTION 8.2. EFFECT OF TERMINATION 35
SECTION 8.3. AMENDMENT 37
SECTION 8.4. EXTENSION; WAIVER 37
SECTION 8.5. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER 38
ARTICLE IX
GENERAL PROVISIONS 38
SECTION 9.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES 38
SECTION 9.2. FEES AND EXPENSES 38
SECTION 9.3. DEFINITIONS 38
SECTION 9.4. NOTICES 38
SECTION 9.5. INTERPRETATION 39
SECTION 9.6. COUNTERPARTS 40
SECTION 9.7. ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES 40
SECTION 9.8. GOVERNING LAW 40
SECTION 9.9. ASSIGNMENT 40
SECTION 9.10. ENFORCEMENT 41
SECTION 9.11. SEVERABILITY 41
<PAGE>
AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 13, 1998
AMONG
BERTUCCI'S, INC.,
A MASSACHUSETTS CORPORATION (THE "COMPANY"),
NE RESTAURANT COMPANY, INC.,
A DELAWARE CORPORATION ("PARENT"),
AND
NERC ACQUISITION CORP.,
A MASSACHUSETTS CORPORATION AND A WHOLLY OWNED SUBSIDIARY OF
PARENT ("SUB")
WITNESSETH:
WHEREAS, the Board of Directors of the Company has determined that this
Agreement and the transactions contemplated hereby including the Offer and the
Merger (each, as defined herein) are fair to and in the best interest of the
Company and its stockholders;
WHEREAS, the Board of Directors of each of Parent and Sub has determined that
the transactions contemplated by this Agreement (including the Offer and the
Merger) are in the best interests of Parent and Sub and their respective
stockholders; and
WHEREAS, the Boards of Directors of the Company, Parent and Sub, have each
approved and adopted this Agreement and approved the Offer and the Merger and
the other transactions contemplated hereby and recommended, in the case of the
Company, acceptance of the Offer by its stockholders.
NOW, THEREFORE, in consideration of the representations, warranties, covenants
and agreements contained in this Agreement, the parties agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1. THE OFFER.
(a) Provided that nothing shall have occurred that would result in a
failure to satisfy any of the conditions set forth in paragraphs (a) through (i)
of Annex I hereto, Parent shall or shall cause Sub to, as promptly as
practicable following the date hereof, but in no event later than
five business days after the initial public announcement of the Offer, commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) a tender offer (as amended from time to time in
accordance with this Agreement, the "Offer") to purchase all of the issued and
outstanding shares of common stock, par value $0.005 per share, of the Company
(the "Shares" or "Common Stock"), at a price of not less than $10.50
<PAGE>
per Share, net to the seller in cash. For purposes of this Article I, the party
which makes the Offer, whether Parent or Sub, shall be referred to as the
"Offeror." The obligation of Offeror to accept for payment and to pay for any
Shares tendered in the Offer shall be subject only to (i) the condition that
there shall be validly tendered in accordance with the terms of the Offer prior
to the expiration date of the Offer and not withdrawn a number of Shares which,
together with any Shares then owned by Parent or Sub, represents at least ninety
(90%) percent of the Shares outstanding on a fully-diluted basis (the "Minimum
Condition"), (ii) the receipt of cash proceeds of the Financing (as defined in
Section 4.2(d) of this Agreement) in an amount sufficient to consummate the
transactions contemplated hereby pursuant to the terms of the Commitments (as
defined in said Section 4.2(d)) or such other terms as Parent and the Company
shall agree or as are not materially more onerous than as set forth in the
Commitments (the "Financing Condition") and (iii) the other conditions set forth
in Annex I hereto. Offeror expressly reserves the right in its sole discretion
to waive any such condition (including the Minimum Condition, provided that no
such waiver of the Minimum Condition shall decrease the Minimum Condition to
less than sixty-six and two-thirds (66 2/3%) percent), to increase the price per
Share payable in the Offer, to extend the Offer and to make any other changes in
the terms and conditions of the Offer; provided, however, that unless
-------- -------
previously approved by the Company in writing, Offeror will not (i) decrease the
price per Share payable in the Offer, (ii) decrease the maximum number of Shares
to be purchased in the Offer, (iii) impose conditions to the Offer in addition
to those set forth in Annex I hereto, (iv) change the conditions to the Offer in
any material respect adverse to the Company, (v) except as provided in the next
sentence, extend the Offer, (vi) change the form of consideration payable in the
Offer or (vii) amend any other term of the Offer in a manner adverse to the
holders of the Shares. Notwithstanding the foregoing, Offeror may, without the
consent of the Company, (i) extend the Offer beyond any scheduled expiration
date (the initial scheduled expiration date being 20 business days following
commencement of the Offer) for a period not to extend beyond July 31, 1998, if
at any scheduled expiration date of the Offer, any of the conditions to
Offeror's obligation to accept for payment, and pay for, Shares (including, with
respect to the Financing Condition, the consummation of the sale of the Senior
Notes (as defined in Section 4.2(d)) shall not be satisfied or waived, until
such time as such conditions are satisfied or waived and (ii) extend the Offer
for any period required by any rule, regulation, interpretation or position of
the Securities and Exchange Commission (the "SEC") or the staff thereof
applicable to the Offer. The limitations regarding the terms and conditions of
the Offer, as set forth in the second preceding and the immediately preceding
sentences, shall not be applicable in the event this Agreement is terminated
pursuant to Section 8.1(d) of this Agreement. Subject to the terms and
conditions of the Offer and this Agreement, Offeror shall accept for payment ,
and pay for, all Shares validly tendered and not withdrawn pursuant to the Offer
that Offeror becomes obligated to accept for payment, and pay for, pursuant to
the Offer as soon as practicable after expiration of the Offer, subject to
compliance with Rule 14e-1(c) under the Exchange Act. Subject to the terms and
conditions of the Offer, Parent and Sub will each use
2
<PAGE>
its reasonable 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 the Offer.
(b) As soon as practicable on the date of the commencement of the Offer,
Offeror shall file with the SEC a Tender Offer Statement on Schedule 14D-1 with
respect to the Offer which will contain the offer to purchase and form of the
related letter of transmittal and summary advertisement (together with any
supplements or amendments thereto and including exhibits thereto, the "Offer
Documents"). The Offer Documents will comply in all material respects with
applicable federal securities laws and any other applicable laws. Parent,
Offeror and the Company each agree to promptly correct any information provided
by it for use in the Offer Documents if and to the extent that it shall have
become false or misleading in any material respect. Offeror will take all steps
necessary to cause the Offer Documents as so corrected to be filed with the SEC
and to be disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws and any other applicable laws.
The Company and its counsel shall be given an opportunity to review and comment
on the Offer Documents and any amendments thereto prior to the filing thereof
with the SEC; provided that Offeror will attempt to give the Company and its
counsel as much time prior to filing to so review and comment as Offeror
believes is reasonably practicable under the circumstances. Offeror will
provide the Company and its counsel with any comments Offeror and its counsel
may receive from the SEC or its staff with respect to the Offer Documents
promptly after the receipt thereof. In the event that the Offer is terminated
or withdrawn by Offeror, Parent and Sub shall cause all tendered Shares to be
returned to the registered holders of the Shares represented by the certificate
or certificates surrendered to the Exchange Agent (as defined in Section 3.3 of
this Agreement).
SECTION 1.2. COMPANY ACTION.
(a) The Company hereby consents to the Offer and represents that its Board
of Directors (the "Board of Directors"), at a meeting duly called and held, has
(i) unanimously determined that this Agreement and the transactions contemplated
hereby, including the Offer and the Merger (as defined in Section 2.1), are fair
to and in the best interest of the Company and its stockholders, (ii)
unanimously approved this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, which approvals are sufficient to render
entirely inapplicable to the Offer and the Merger or Parent or Sub the
provisions of Chapters 110C, 110D, 110E and 110F of the Massachusetts General
Laws, (iii) taken such action as is necessary to exempt this Agreement, the
purchase of Shares pursuant to the Offer, the Merger and the other
transactions contemplated hereby from the provisions set forth in (x) Article 6
of the Company's Restated Articles of Organization under the captions "Vote
Required for Certain Business
3
<PAGE>
Combinations" and "Redemption of Shares" and (y) Article 11 of the Company's
Restated By-Laws and (iv) resolved to recommend acceptance of the Offer and
approval and adoption of this Agreement and the Merger by its stockholders.
NationsBanc Montgomery Securities LLC (the "Financial Advisor") has delivered to
the Board of Directors its written opinion, subject to the qualifications and
limitations stated therein, to the effect that the consideration to be received
by the holders of the Shares pursuant to each of the Offer and the Merger, taken
together, is fair to the holders of Shares from a financial point of view. The
Company has been authorized by the Financial Advisor to permit, subject to prior
review and consent by the Financial Advisor (such consent not to be unreasonably
withheld), the inclusion of the fairness opinion (or a reference thereto) in the
Offer Documents and the Schedule 14D-9 (as defined in paragraph (b) of this
Section 1.2). The Company has been advised that Joseph Crugnale, President and
Chief Executive Officer and a Director of the Company, has agreed, pursuant to
the Tender and Voting Agreement, dated the date of this Agreement, among Parent,
Offeror and Joseph Crugnale (the "Tender and Voting Agreement"), to tender all
of the Shares beneficially owned by him pursuant to the Offer and, to the
Company's knowledge, all of its other directors and executive officers intend as
of the date hereof to the extent of their beneficial ownership of Shares, to
tender their Shares pursuant to the Offer. The Company will promptly furnish
Parent with a list of its stockholders, mailing labels containing the names and
addresses of all record holders of Shares and lists of securities positions of
Shares held in stock depositories, in each case as of the most recent
practicable date, and will provide to Parent such additional information
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Parent may
reasonably request from time to time in connection with the Offer and the Merger
(including but not limited to communicating the Offer and the Merger to the
record and beneficial holders of Shares). Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer or the
Merger, Parent, Offeror and their agents and advisors shall use the information
contained in any such labels and listings only in connection with the Offer and
the Merger and, if this Agreement shall be terminated pursuant to Article VIII
hereof, shall deliver to the Company all copies and extracts of such information
then in their possession or under their control.
(b) On or prior to the date that the Offer is commenced, the Company will
file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9,
(together with any supplements or amendments thereto and including exhibits
thereto, the "Schedule 14D-9") which shall contain the recommendations of the
Board of Directors referred to in Section 1.2(a) of this Agreement. The
Schedule 14D-9 will comply in all material respects with all applicable federal
securities laws and any other applicable laws. The Company, Parent and Sub each
agree to promptly correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it shall have become false or misleading in any
material respect. The Company will
4
<PAGE>
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and to be disseminated to holders of Shares, in each case as and to
the extent required by applicable federal securities laws and any other
applicable laws. Parent, Sub and their counsel shall be given an opportunity to
review and comment on the Schedule 14D-9 and any amendments thereto prior to the
filing thereof with the SEC; provided that the Company will attempt to give
--------
Parent, Sub and their counsel as much time prior to filing to so review and
comment as the Company believes is reasonably practicable under the
circumstances. The Company will provide Parent and Sub and their counsel with
any comments the Company or its counsel may receive from the SEC or its staff
with respect to the Schedule 14D-9 promptly after the receipt of such comments.
SECTION 1.3. DIRECTORS.
(a) Effective upon the purchase of and payment for Shares by Offeror
pursuant to the Offer such that Offeror shall own at least a majority of the
Shares and from time to time thereafter, Parent shall be entitled to designate
up to such number of directors, rounded up to the next whole number, on the
Board of Directors that equals the product of (i) the total number of directors
on the Board of Directors (giving effect to any increase in the number of
directors pursuant to this Section 1.3) multiplied by (ii) the percentage that
the number of Shares owned by Parent and Sub bears to the total number of Shares
outstanding on a primary basis, and the Company shall take all action necessary
to cause Parent's designees to be elected or appointed to the Board of
Directors, including, without limitation, increasing the number of directors
and/or securing the resignations of such number of incumbent directors as is
necessary to enable Parent's designees to be elected to the Board of Directors
and to cause Parent's designees to be so elected. At such times, the Company
will use its best efforts to cause individuals designated by Parent to
constitute the same percentage as such individuals represent on the Board of
Directors of (x) each committee of the Board of Directors, (y) each board of
directors of each Subsidiary (as defined below) of the Company and (z) each
committee of each such board. Notwithstanding the foregoing, until the
Effective Time (as defined in Section 2.3 of this Agreement), the Company shall
use its best efforts to ensure that not less than two persons who are directors
on the date hereof shall remain as members of the Board of Directors (the
"Continuing Directors") until the Effective Time. In the event there is only
one Continuing Director, such Continuing Director shall have the right to
designate a person, who is reasonably acceptable to Offeror, to become a
Continuing Director. For purposes of this Agreement, "Subsidiary" means any
corporation or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are directly or indirectly owned by
the Company or Parent, as applicable.
5
<PAGE>
(b) The Company's obligations to appoint designees to the Board of
Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions required
pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 1.3, including mailing to the stockholders as part of the
Schedule 14D-9 the information required by such Section 14f-1, as is necessary
to enable Parent's designees to be elected to the Board of Directors. Parent
will supply to the Company in writing and be solely responsible for any
information with respect to itself and its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1. For purposes of this
Agreement, "affiliate" shall mean, as to any person, any other person that would
be deemed to be an "affiliate" of such person as that term is defined in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
(c) Following the election or appointment of Parent's designees pursuant to
this Section 1.3 and prior to the Effective Time, any amendment of this
Agreement, any termination of this Agreement by the Company, any extension by
the Company of the time for the performance of any of the obligations or other
acts of Parent or Sub, any consent of the Company contemplated hereby, any
waiver of any of the Company's rights hereunder, any amendment to the Company's
Restated Articles of Organization or any action taken by the Company that
materially adversely affects the interests of the stockholders of the Company
with respect to the transactions contemplated hereby, will require the
concurrence of a majority of the Continuing Directors.
ARTICLE II
THE MERGER
SECTION 2.1. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Section 78 of the
Massachusetts Business Corporation Law (the "MBCL"), at the Effective Time (as
hereinafter defined), Sub shall be merged with and into the Company (the
"Merger"). Upon the Effective Time, the separate existence of Sub shall cease,
and the Company shall continue as the surviving corporation (the "Surviving
Corporation"). Notwithstanding the foregoing, in the event that Parent and Sub
shall acquire in the aggregate at least ninety (90%) percent of the outstanding
Shares, pursuant to the Offer or otherwise, the parties hereto shall, at the
request of Parent and subject to Article VII hereof, take all necessary and
appropriate action to cause the merger of the Company with and into Sub to
become effective, without a meeting of stockholders of the Company, on the same
day as the purchase of and payment for Shares is made by Offeror pursuant to the
Offer in accordance with Section 82 of the MBCL, in which case the separate
existence of the Company shall cease and Sub shall continue as the Surviving
Corporation and its corporate name shall be changed to
6
<PAGE>
"Bertucci's, Inc." and the term "Merger" as used in this Agreement shall be
deemed to refer to such merger.
SECTION 2.2. CLOSING. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 8.1, and subject to the satisfaction or waiver of the
conditions set forth in Article VII, the closing of the Merger (the "Closing")
will take place at 10:00 a.m., Boston time, not later than the second business
day following the date on which the last to be fulfilled or waived of the
conditions set forth in Article VII shall be fulfilled or waived in accordance
with this Agreement (the "Closing Date"), at the offices of Stroock & Stroock &
Lavan LLP, 100 Federal Street, Boston, Massachusetts, unless another date, time
or place is agreed to in writing by the parties hereto.
SECTION 2.3. EFFECTIVE TIME. The parties hereto will file with the
Secretary of State of the Commonwealth of Massachusetts (the "Massachusetts
Secretary of State") on the Closing Date (or on such other date as Parent and
the Company may agree) articles of merger or other appropriate documents,
executed in accordance with the relevant provisions of the MBCL, and make all
other filings or recordings required under the MBCL in connection with the
Merger. The Merger shall become effective upon the filing of the articles of
merger with the Massachusetts Secretary of State, or at such later time as is
specified in the articles of merger (the "Effective Time").
SECTION 2.4. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 80 of the MBCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 2.5. ARTICLE OF ORGANIZATION; BY-LAWS.
(a) The Company's Restated Articles of Organization, as in effect at
the Effective Time, shall be, from and after the Effective Time, the Articles of
Organization of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
(b) The Company's Restated By-laws, as in effect at the Effective
Time, shall be, from and after the Effective Time, the By-laws of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
SECTION 2.6. DIRECTORS. The directors of Sub at the Effective Time
shall become, from and after the Effective Time, the directors of the Surviving
Corporation, until the earlier of
7
<PAGE>
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
SECTION 2.7. OFFICERS. The officers of Sub at the Effective Time
shall become, from and after the Effective Time, the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
ARTICLE III
EFFECT OF THE MERGER ON THE SECURITIES OF THE
CONSTITUENT CORPORATIONS
SECTION 3.1. EFFECT ON CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of any holder:
(a) COMMON STOCK OF SUB. Each share of the capital stock of Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable share
of common stock, par value $0.005 per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each Share
issued or outstanding immediately prior to the Effective Time that is owned by
the Company or by Parent or Sub shall be canceled automatically and shall cease
to exist, and no cash or other consideration shall be delivered or deliverable
in exchange therefor.
(c) CONVERSION OF COMPANY SHARES. At the Effective Time, each Share
other than (i) Shares to be canceled pursuant to Section 3.1(b) and (ii)
Dissenting Shares (as hereinafter defined) shall be converted into and become
the right to receive, upon surrender of the certificate representing such Shares
in accordance with Section 3.3, the cash price per Share paid by Sub pursuant to
the Offer (the "Merger Consideration").
(d) DISSENTING SHARES. Notwithstanding anything in this Agreement to
the contrary, Shares issued and outstanding immediately prior to the Effective
Time and held by a holder (a "Dissenting Stockholder"), if any, who has the
right to demand, and who properly demands, an appraisal of such shares in
accordance with Section 85 of the MBCL or any successor provision ("Dissenting
Shares") shall not be converted into a right to receive the Merger Consideration
unless such Dissenting Stockholder fails to perfect or otherwise loses or
8
<PAGE>
withdraws such Dissenting Stockholder's right to such appraisal, if any.
Provided the holder of any Dissenting Shares complies with the provisions of the
MBCL, such holder shall have with respect thereto solely the rights provided
under Sections 86 through 98, inclusive, of the MBCL. If, after the Effective
Time, such Dissenting Stockholder fails to perfect or otherwise loses or
withdraws any such right to appraisal, each such share of such Dissenting
Stockholder shall be treated as a share that had been converted as of the
Effective Time into the right to receive the Merger Consideration in accordance
with this Section 3.1. The Company shall give prompt notice to Parent of any
demands received by the Company for appraisal of any Dissenting Shares, and
Parent shall have the right to participate in and direct all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Parent, which consent shall not be unreasonably
withheld, make any payment with respect to, or settle or offer to settle, any
such demands.
(e) CANCELLATION AND RETIREMENT OF COMMON STOCK. As of the Effective
Time all certificates representing Shares, other than certificates representing
Shares to be canceled in accordance with Section 3.1(b) or Dissenting Shares,
issued and outstanding immediately prior to the Effective Time, shall no longer
be outstanding and shall automatically be canceled and shall cease to exist, and
each holder of a certificate representing any such Shares shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration upon surrender of such certificate in accordance with Section 3.3.
SECTION 3.2. STOCK OPTIONS. As of the Effective Time, each
outstanding, unexercised stock option to purchase Shares (a "Company Stock
Option") issued under the Company's Amended and Restated 1987 Stock Option Plan
(the "1987 Plan"), the 1989 Time Accelerated Restricted Stock Option Plan (the
"TARSOP"), the 1993 Stock Option Plan for Non-Employee Directors (the "Director
Plan") and the 1997 Stock Option Plan (the "1997 Plan") (collectively, the
"Company Stock Option Plans") shall terminate and be canceled and each holder of
a Company Stock Option shall be entitled to receive, in consideration therefor,
a cash payment from the Company (which payment shall be made as soon as
practicable after the Effective Time) equal to the product of (a) the excess, if
any, of (x) the Merger Consideration over (y) the per Share exercise price of
such Company Stock Option, times (b) the number of Eligible Shares (as defined
below) subject to such Company Stock Option. Such cash payment shall be net of
any required withholding taxes. Notwithstanding the foregoing, any Director of
the Company who is not also an employee of the Company may make any payment of
any taxes incurred as a result of receipt of such cash payment and direct the
Company not to withhold any portion thereof, provided that any such Director
agrees in writing to indemnify the Company against any claim made against the
Company for the failure by such Director to make such tax payment. The term
"Eligible Shares" shall mean, (i) with respect to any Company Stock Option
granted under the 1987 Plan, the number of Shares subject to such option as to
which such option
9
<PAGE>
shall then be vested and exercisable as of the Effective Date, and (ii) with
respect to any Company Stock Option granted under the TARSOP, the Director Plan
or the 1997 Plan, the aggregate number of Shares that shall then be subject to
such option. The Company's obligation to make any such cash payment (1) shall be
subject to the obtaining of any necessary consents of optionees to the
cancellation of such Company Stock Options, in form and substance satisfactory
to Parent, and (2) shall not require any action which violates any of the
Company Stock Option Plans. As of the Effective Time, each of the Company Stock
Option Plans and the Company's 1992 Employee Stock Purchase Plan (the "ESPP")
shall terminate and be of no further force or effect, and the Company shall take
such action as shall be necessary to ensure, to Parent's reasonable
satisfaction, that no holder of a Company Stock Option or participant in the
ESPP will have any right to acquire any interest in the Surviving Corporation
under the Company Stock Option Plans or the ESPP.
SECTION 3.3. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time, Sub (or the Company, as
the Surviving Corporation) shall deposit, or shall cause to be deposited, with
or for the account of a bank, trust company or other agent designated by Sub,
which shall be reasonably satisfactory to the Company (the "Exchange Agent"),
for the benefit of the holders of Shares, cash in an aggregate amount equal to
the product of (x) the number of Shares outstanding immediately prior to the
Effective Time (other than Shares to be canceled pursuant to Section 3.1(b) and
Dissenting Shares), times (y) the Merger Consideration (such amount being
hereinafter referred to as the "Payment Fund"). The Exchange Agent shall invest
the Payment Fund as directed by the Surviving Corporation.
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective
Time, each holder of an outstanding certificate or certificates which prior
thereto represented outstanding Shares shall, upon surrender to the Exchange
Agent of such certificate or certificates and acceptance thereof by the Exchange
Agent, be entitled to the amount of cash which the aggregate number of Shares
previously represented by such certificate or certificates surrendered shall
have been converted into the right to receive pursuant to Section 3.1(c). The
Exchange Agent shall accept such certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose to effect an
orderly exchange thereof in accordance with normal exchange practices. If the
consideration to be paid in the Merger (or any portion thereof) is to be
delivered to any person other than the person in whose name the certificate
representing Shares surrendered in exchange therefor is registered, it shall be
a condition to such exchange that the certificate so surrendered shall be
properly endorsed with the signature guaranteed or otherwise be in proper form
for transfer and that the person requesting such exchange shall pay to the
Exchange Agent any transfer or other tax required by reason of the payment of
such
10
<PAGE>
consideration to a person other than the registered holder of the certificate
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable. After the Effective Time, there
shall be no further transfer on the records of the Company or its transfer agent
of certificates representing Shares, and if such certificates are presented to
the Company for transfer, they shall be canceled against delivery of the Merger
Consideration as hereinabove provided. Until surrendered as contemplated by this
Section 3.3(b), each certificate representing Shares shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration, without any interest thereon, as
contemplated by Section 3.l. No interest will be paid or will accrue on any
cash payable as Merger Consideration to any holder of Shares.
(c) LETTER OF TRANSMITTAL. Promptly after the Effective Time (but in
no event more than five business days thereafter), the Surviving Corporation
shall require the Exchange Agent to mail to each record holder of certificates
that immediately prior to the Effective Time represented Shares which have been
converted pursuant to Section 3.1, a form of letter of transmittal and
instructions for use in surrendering such certificates and receiving the
consideration to which such holder shall be entitled therefor pursuant to
Section 3.1.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMMON STOCK. The Merger
Consideration paid upon the surrender for exchange of certificates representing
Shares in accordance with the terms of this Article III shall be deemed to have
been issued and paid in full satisfaction of all rights pertaining to the Shares
theretofore represented by such certificates, and no holder of Shares shall
thereby have any equity interest in the Surviving Corporation.
(e) TERMINATION OF PAYMENT FUND. Any portion of the Payment Fund which
remains undistributed to the holders of the certificates representing Shares for
one year after the Effective Time (including, without limitation, all interest
and other income received by the Exchange Agent in respect to all funds made
available to it) shall be delivered to the Surviving Corporation, upon demand,
and any such holders of Shares who have not theretofore complied with this
Article III shall thereafter look only to the Surviving Corporation (subject to
abandoned property, escheat and other similar laws) and only as general
creditors thereof for payment of their claim for the Merger Consideration.
(f) NO LIABILITY. None of Parent, Sub, the Surviving Corporation or
the Exchange Agent shall be liable to any person in respect of any cash, shares,
dividends or distributions payable from the Payment Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any certificates representing Company Shares shall not have been surrendered
prior to five years after the Effective Time (or immediately prior to such
earlier date on which the Merger Consideration in respect of such certificate
would
11
<PAGE>
otherwise escheat to or become the property of any Governmental Entity (as
defined in Section 4.1(d)), any such cash, shares, dividends or distributions
payable in respect of such certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
(g) WITHHOLDING RIGHTS. The Surviving Corporation, Parent or Sub
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares such amounts as the
Surviving Corporation, Parent or Sub is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or foreign tax law, including, without limitation, withholdings required
in connection with payments with respect to Company Stock Options. To the
extent that amounts are so withheld by the Surviving Corporation, Parent or Sub,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder in respect of which such deduction and
withholding was made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to Parent and Sub as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing and in corporate good standing
under the laws of The Commonwealth of Massachusetts and has the requisite
corporate power and authority and any necessary governmental authority to carry
on its business as now being conducted and to own, operate and lease its
properties. The Company is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not have a material adverse
effect upon (i) the business, assets, properties, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries taken as
a whole, or (ii) the transactions contemplated hereby or the legality or
validity of this Agreement (a "Material Adverse Effect"). The Company has
delivered to Parent complete and correct copies of its Restated Articles of
Organization and Restated By-laws, as amended to the date of this Agreement.
12
<PAGE>
(b) SUBSIDIARIES. Section 4.l(b) of the disclosure schedule attached
hereto (the "Disclosure Schedule") sets forth the name, jurisdiction of
incorporation, capitalization and number of shares of outstanding capital stock
of each of the Company's Subsidiaries. All the issued and outstanding shares of
capital stock of each Subsidiary are validly issued, fully paid and
nonassessable and are owned, directly or indirectly, by the Company,
beneficially and of record, free and clear of all liens, pledges, encumbrances
or restrictions of any kind. No Subsidiary has outstanding any securities
convertible into or exchangeable or exercisable for any shares of its capital
stock, there are no outstanding options, warrants or other rights to purchase or
acquire any capital stock of any Subsidiary, there are no irrevocable proxies
with respect to such shares, and there are no contracts, commitments,
understandings, arrangements or restrictions by which any Subsidiary or the
Company is bound to issue additional shares of the capital stock of a
Subsidiary. Except for the Company's Subsidiaries, and as otherwise disclosed in
Section 4.1(b) of the Disclosure Schedule, the Company does not own, directly or
indirectly, any capital stock or other equity securities of any corporation or
have any direct or indirect equity interest in any business. Each of the
Company's Subsidiaries (a) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation; (b) has
all requisite corporate power and authority and any necessary governmental
authority to carry on its business as it is now being conducted and to own,
operate and lease its properties, except where the failure to have such
governmental authority would not have a Material Adverse Effect; and (c) is
qualified or licensed to do business as a foreign corporation and is in good
standing in each of the jurisdictions in which (i) the ownership or leasing of
real property or the conduct of its business requires such qualification or
licensing and (ii) the failure to be so qualified or licensed, either singly or
in the aggregate, would have a Material Adverse Effect. The Company has
delivered to Parent complete and correct copies of the Articles of Organization
or other charter documents and By-laws of each of its Subsidiaries, each as
amended to date.
(c) CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consists of 200,000 shares of Preferred Stock, $0.01 par
value per share ("Preferred Stock"), and 15,000,000 shares of Common Stock. As
of the date hereof, there are no shares of Preferred Stock issued or
outstanding. As of the date hereof, 8,908,621 Shares are issued and
outstanding, 521,050 shares of Common Stock are reserved for issuance pursuant
to outstanding Company Stock Options, and no shares of Common Stock are held by
the Company in its treasury. Except as set forth above, no shares of capital
stock or other equity securities of the Company are issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of the Company
are, and all shares which may be issued pursuant to the Company Stock Option
Plans will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. Section 4.1(c) of the
Disclosure Schedule accurately sets forth the number of Shares issuable upon
exercise of each outstanding Company Stock Option,
13
<PAGE>
the vesting schedule thereof, and the applicable exercise price with respect to
each such Company Stock Option. Except as set forth in Section 4.1(c) of the
Disclosure Schedule, the Company has no outstanding option, warrant,
subscription or other right, agreement or commitment which either (i) obligates
the Company to issue, sell or transfer, repurchase, redeem or otherwise acquire
or vote any shares of the capital stock of the Company or (ii) restricts the
transfer of Common Stock. Except as set forth in Section 4.l(c) of the
Disclosure Schedule, the Company has no outstanding stock appreciation rights,
phantom stock or stock equivalents.
(d) AUTHORITY; ENFORCEABILITY; NONCONTRAVENTION. The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject to the approval of its stockholders as set forth in Section 7.1(a) with
respect to the consummation of the Merger, to consummate the Merger and the
other transactions contemplated by this Agreement. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, subject to the approval of its
stockholders as set forth in Section 7.1(a). This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that the enforceability hereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions hereof will not, (i) violate any of
the provisions of the Restated Articles of Organization or Restated By-laws of
the Company, (ii) except as otherwise set forth in Section 4.1(d) of the
Disclosure Schedule and subject to the governmental filings and other matters
referred to in the following sentence, contravene any law, rule or regulation of
any state or of the United States or any political subdivision thereof or
therein, including any licensing board or agency, or any order, writ, judgment,
injunction, decree, determination or award currently in effect, or (iii) except
for leases requiring Landlord Consents as defined below in Section 6.11 and the
existing Revolving Credit and Term Loan Agreement among the Company, certain of
its Subsidiaries and The First National Bank of Boston (the "Company Credit
Agreement"), violate, conflict with or constitute a breach under any contract,
agreement, indenture, mortgage, deed of trust, lease or other instrument to
which the Company or any of its Subsidiaries is a party or by which any of its
assets is bound or subject, which, in the case of clauses (ii) and (iii) above,
singly or in the aggregate, would have a Material Adverse Effect or prevent
consummation of the transactions contemplated hereby. No consent, approval or
authorization of, or declaration or filing with, or notice to, any governmental
agency, board or regulatory authority, domestic or foreign (a "Governmental
Entity"), which has not been received
14
<PAGE>
or made, is required by or with respect to the Company or any Subsidiary in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions contemplated hereby, except
for (i) compliance with any applicable requirements of the Exchange Act and the
rules and regulations promulgated thereunder, (ii) state securities or blue sky
laws and state takeover, antitrust and compensation law filings and approvals,
(iii) compliance with any applicable requirements of The Hart-Scott-Rodino
Antitrust Improvement Act of 1976, as amended (the "HSR Act"), (iv) the filing
of articles of merger with the Massachusetts Secretary of State and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, and (v) such other consents, approvals,
authorizations, filings or notices as are set forth in Section 4.1(d) of the
Disclosure Schedule. Neither the Company nor any of its Subsidiaries is a party
or subject to, or bound by, any contract, agreement, indenture, mortgage, deed
of trust, lease or other instrument which prevents or restricts its power and
authority or its ability to guarantee obligations of third parties or pay
dividends on its capital stock, except for the Company Credit Agreement.
(e) FINANCIAL STATEMENTS; SEC REPORTS. The Company has previously
furnished Parent and Sub with true and complete copies of (i) its Annual Reports
on Form 10-K for the fiscal years ended December 28, 1996 (the "1996 Annual
Report") and December 27, 1997 (the "1997 Annual Report and, together with the
1996 Annual Report, the "Annual Reports") filed by the Company with the SEC,
(ii) its Quarterly Reports on Form 10-Q for the quarters ended April 19, July 12
and October 4, 1997 (collectively, the "Quarterly Reports" and, together with
the Annual Reports, the "Reports") filed by the Company with the SEC, (iii) the
unaudited consolidated balance sheet and the unaudited consolidated statement of
operations of the Company and its Subsidiaries as at April 18, 1998 and for the
16 weeks ended April 18, 1998, respectively (the "April 1998 Financial
Statements"), (iv) proxy statements relating to all of the Company's meetings of
stockholders (whether annual or special) held or scheduled to be held since
December 28, 1996 and (v) each other registration statement, proxy or
information statement or current report on Form 8-K filed since December 28,
1996 by the Company with the SEC. Since December 24, 1992, the Company has
complied in all material respects with its SEC filing obligations under the
Exchange Act and the Securities Act of 1933, as amended (the "Securities Act").
The financial statements and related schedules and notes thereto of the Company
contained in the Reports (or incorporated therein by reference) and the April
1998 Financial Statements were prepared in accordance with generally accepted
accounting principles (except, in the case of interim unaudited financial
statements, as permitted by Form 10-Q) applied on a consistent basis except as
noted therein, and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended, subject (in the case of interim unaudited financial
statements) to normal year-end audit adjustments, and such financial statements
complied as to form as of their respective dates in all
15
<PAGE>
material respects with applicable rules and regulations of the SEC. Each such
registration statement, proxy statement and Report was prepared in accordance
with the requirements of the Securities Act or the Exchange Act and did not, on
the date of effectiveness in the case of such registration statements, on the
date of mailing in the case of such proxy statements and on the date of filing
in the case of such Reports, 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 light of the circumstances under which they were
made, not misleading.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as may be disclosed
in the Reports or as otherwise disclosed in Section 4.1(f) of the Disclosure
Schedule, since December 27, 1997 there has not been (i) any declaration,
setting aside or payment of any dividend or other distribution in respect of the
capital stock of the Company or any redemption or other acquisition by the
Company of any of its capital stock; (ii) any issuance by the Company, or
agreement or commitment of the Company to issue, any shares of its Common Stock
or securities convertible into or exchangeable for shares of its Common Stock,
except for stock options and stock purchase rights set forth in Section 4.1(c)
of the Disclosure Schedule; (iii) any change by the Company in accounting
methods, principles or practices except as required by generally accepted
accounting principles; (iv) any increase in wage or bonus, severance, profit
sharing, retirement, deferred compensation, insurance or other compensation or
benefits or any new compensation or benefit plans or arrangements or any
amendments to any Company Benefit Plans (as hereinafter defined) existing on
December 27, 1997, other than bonus payments made in the ordinary course of
business consistent with past practice; or (v) any agreement or commitment,
whether in writing or otherwise, to take any action described in this subsection
4.1(f). Since December 27, 1997, the Company and its Subsidiaries have conducted
their respective businesses in all material respects only in the ordinary
course, consistent with past custom and practice, except as contemplated by this
Agreement. Since February 13, 1998, the Company and its Subsidiaries have
complied with all of the covenants and agreements applicable to the Company and
its Subsidiaries under the Agreement and Plan of Merger dated as of February 13,
1998 among the Company, Ten Ideas, Inc. and Ten Ideas Acquisition, Corp. (the
"Ten Ideas Merger Agreement"), including the provisions of Article IV thereof,
without the necessity of obtaining any consent or waivers from Ten Ideas, Inc.
or Ten Ideas Acquisition Corp.
(g) NO UNDISCLOSED LIABILITIES. Except as set forth in the Reports,
neither the Company nor any of its Subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise), except liabilities (i) in the aggregate
adequately provided for in the Company's audited balance sheet (including any
related notes thereto) for the fiscal year ended December 27, 1997 included in
the 1997 Annual Report (the "1997 Balance Sheet"), (ii) incurred in the ordinary
course of business and not required under generally accepted accounting
principles to be
16
<PAGE>
reflected on the 1997 Balance Sheet, (iii) incurred since December 27, 1997 in
the ordinary course of business consistent with past practice, (iv) incurred in
connection with this Agreement or (v) which could not reasonably be expected to
have a Material Adverse Effect.
(h) COMPLIANCE WITH LAWS. The business of the Company and each of the
Subsidiaries has been operated at all times in material compliance with all
applicable statutes, laws, rules, regulations, permits, licenses, orders,
injunctions and judgments (collectively, "Laws"), including, without limitation,
any applicable Laws regulating environmental matters, immigration, wages and
hours, working conditions or health and safety, except for such violations or
failures to comply that, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect nor have a material adverse effect
on the Financing.
(i) LITIGATION. Except as set forth in Section 4.1(i) of the
Disclosure Schedule or otherwise disclosed in the Reports, there is no suit,
action or proceeding pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, nor
is there any judgment, decree, injunction, rule or order of any Governmental
Entity outstanding against the Company or any of its Subsidiaries which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(j) DISCLOSURE DOCUMENTS.
(i) Each document required to be filed by the Company with the SEC in
connection with the transactions contemplated by this Agreement (the "Company
Disclosure Documents"), including, without limitation, the Schedule 14D-9, the
proxy or information statement of the Company (the "Company Proxy Statement"),
if any, to be filed with the SEC in connection with the Merger, and any
amendments or supplements thereto, will, when filed, comply as to form in all
material respects with the applicable requirements of the Exchange Act and the
rules and regulations thereunder.
(ii) At the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company, at the time
such stockholders vote on adoption of this Agreement and approval of the Merger
and at the Effective Time, the Company Proxy Statement, as supplemented or
amended, if applicable, will not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. At the time of the filing of any Company Disclosure Document other
than the Company Proxy Statement, at the time of any distribution thereof and
throughout the remaining pendency of the Offer, each such Company Disclosure
Document will not contain any untrue
17
<PAGE>
statement of a material fact or omit to state a material fact necessary in order
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading. The representations and warranties
contained in paragraphs (i) and (ii) of this Section 4.1(j) will not apply to
statements or omissions included in the Company Disclosure Documents or the
Company Proxy Statement, if any, based upon information furnished to the Company
in writing by Parent or Sub specifically for use therein.
(iii) The information with respect to the Company or any Company
Subsidiary that the Company furnishes to Parent or Sub in writing specifically
for use in the Offer Documents will not, at the time of the filing thereof, at
the time of any distribution thereof and throughout the remaining pendency of
the Offer, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(k) TERMINATION OF PRIOR MERGER AGREEMENT; BOARD RECOMMENDATION. The
Company's Board of Directors has (i) terminated the Ten Ideas Merger Agreement
pursuant to Section 7.1(c) thereof and (ii) taken the actions specified in the
first sentence of Section 1.2(a).
(l) FAIRNESS OPINION. The Board of Directors has received from the
Financial Advisor an oral opinion as of the date hereof, to be followed with a
written opinion to be dated the date hereof, in connection with this Agreement
to the effect that the consideration to be received by the stockholders of the
Company pursuant to the Offer and the Merger is fair to such stockholders from a
financial point of view and such written opinion has not been withdrawn or
modified.
(m) BROKERS. No broker, investment banker, financial advisor or other
person, the fees and expenses of which will be paid by the Company, is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement,
other than pursuant to an engagement letter with the Financial Advisor, a copy
of which has been furnished to Parent.
(n) EMPLOYEE BENEFIT MATTERS. All employee benefit plans and other
benefit arrangements covering employees of the Company and/or of the
Subsidiaries (collectively, the "Benefit Plans") are listed in Section 4.1(n) of
the Disclosure Schedule. True and complete copies of the Benefit Plans have
been made available to Parent and Sub. To the extent applicable, to the
Company's knowledge, the Benefit Plans comply in all material respects with the
requirements of the Employee Retirement Income Security Act of 1974, as amended
and
18
<PAGE>
the rules and regulations promulgated thereunder ("ERISA"), the Internal
Revenue Code of 1986, as amended (the "Code"), and any Benefit Plan intended to
be qualified under Section 401(a) of the Code has been determined by the United
States Internal Revenue Service to be so qualified. To the Company's knowledge,
no Benefit Plan is covered by Title IV of ERISA or Section 412 of the Code.
Neither the Company nor any Subsidiary, respectively, has incurred any liability
or penalty under Section 4975 of the Code or Section 502(i) of ERISA with
respect to any Benefit Plan, except as would not have a Material Adverse Effect.
Each Benefit Plan has been maintained and administered in all material respects
in compliance with its terms and with ERISA and the Code to the extent
applicable thereto and each Benefit Plan that is a "group health plan" as
defined in Section 607(1) of ERISA, has been operated in compliance with the
provisions of Part 6 of Title I of ERISA and Sections 162(k) and 4980B of the
Code. To the knowledge of the Company, there are no pending, nor has the
Company or any Subsidiary received written notice of any threatened, claims
against or otherwise involving any of the Benefit Plans, except as would not
have a Material Adverse Effect. To the Company's knowledge, all material
contributions required to be made as of the date this Agreement to the Benefit
Plans have been made or provided for. Neither the Company nor any Subsidiary,
respectively, nor any entity under "common control" with the Company and/or of
the Subsidiaries within the meaning of Section 4001 of ERISA has contributed to,
or been, to the Company's knowledge, required to contribute to, any
"multiemployer plan" (as defined in Sections 3 (37) and 4001(a)(3) of ERISA).
Neither the Company nor any Subsidiary has any present or future obligation to
make any payment to or under any "employee welfare plan" (as defined in Section
3(1) of ERISA, "ERISA Welfare Plan") which provides benefits to retirees. No
condition exists, to the Company's knowledge, which would prevent the Company or
any Subsidiary from amending or terminating any ERISA Welfare Plan.
(o) TAXES. Except as disclosed in the Reports or in Section 4.1(o) of
the Disclosure Schedule, each of the Company and the Subsidiaries (i) has timely
filed all federal, state and foreign Tax Returns required to be filed by the
Company and each Subsidiary, respectively, for Tax years ended prior to the date
of this Agreement and all such Tax Returns are correct and complete in all
material respects, (ii) has timely paid, withheld or accrued all Taxes shown to
be due and payable on such Tax Returns, (iii) has accrued all Taxes for such
periods subsequent to the periods covered by such Tax Returns ending on or prior
to the date hereof and (iv) has "open" years for federal, state, local and
foreign income Tax Returns only as set forth in the Reports or in Section 4.1(o)
of the Disclosure Schedule. There are no liens for Taxes on the assets of the
Company or the Subsidiaries except for liens for current Taxes not yet due, and,
except as set forth in the Reports or in Section 4.1(o) of the Disclosure
Schedule, there is no pending, nor has the Company or any Subsidiary received
written notice of any threatened, Tax audit, examination, refund litigation or
adjustment in controversy. Neither the Company nor any Subsidiary is a party to
any agreement providing for the allocation or sharing of Taxes. All
19
<PAGE>
Taxes which each of the Company and the Subsidiaries has been required to
collect or withhold have been duly collected or withheld and to the extent
required when due, have been or will be duly and timely paid to the proper
taxing authority.
As used in the foregoing paragraph, (a) "Taxes" shall mean (i) all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, excise, real and personal property, sales, transfer,
license, payroll and franchise taxes, imposed by the United States, or any
state, county, local or foreign government or subdivision or agency thereof; and
such term shall include any interest, penalties or additions to tax attributable
to such taxes, charges, fees, levies or other assessments and any obligations
under any agreement or arrangements with any other person with respect to such
amounts and including any liability for taxes of a predecessor entity and (ii)
all obligations, including joint and several liability pursuant to the law of
any jurisdiction or otherwise, for the payment of any of the types of taxes
referred to in clause (i) of this definition as a result of being a member of an
affiliated, consolidated, combined or unitary group for any taxable period and
(b) "Tax Returns" shall mean any report, return or other information required to
be supplied to any taxing authority in connection with Taxes.
SECTION 4.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.
Parent and Sub represent and warrant to the Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Parent is a
corporation duly organized, validly existing and in corporate good standing
under the laws of the State of Delaware. Sub is a corporation duly organized,
validly existing and in corporate good standing under the laws of The
Commonwealth of Massachusetts. Each of Parent and Sub has the requisite
corporate power and authority to carry on its business as now being conducted.
Each of Parent and Sub is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not have a Material Adverse
Effect.
(b) CAPITALIZATION. As of the date of this Agreement, the authorized
capital stock of Parent consists of 6,000,000 shares of common stock, par value
$0.01 per share, 1,316,656 shares of which are presently issued and outstanding.
As of the date of this Agreement, the authorized capital stock of Sub consists
of 1,000 shares of common stock, par value $0.01 per share, 1,000 shares of
which are presently issued and outstanding, which constitutes all of the issued
and outstanding capital stock of Sub. All of the issued and
20
<PAGE>
outstanding shares of capital stock of Parent and Sub are validly issued, fully
paid and nonassessable.
(c) AUTHORITY; ENFORCEABILITY; NONCONTRAVENTION. Parent and Sub have
all requisite corporate power and authority to enter into this Agreement and to
consummate the Merger and the other transactions contemplated by this Agreement.
The execution and delivery of this Agreement by Parent and Sub and the
consummation by Parent and Sub of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of Parent and Sub. This Agreement has been duly executed and delivered by
and constitutes a valid and binding obligation of each of Parent and Sub,
enforceable against such party in accordance with its terms, except that the
enforceability hereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not (i) violate any of the provisions
of the charter documents or By-laws of Parent or Sub, (ii) subject to the
governmental filings and other matters referred to in the following sentence,
contravene any law, rule or regulation of any state or of the United States or
any political subdivision thereof or therein, or any order, writ, judgment,
injunction, decree, determination or award currently in effect, or (iii) except
for the Parent's existing credit agreement with BankBoston, N.A. (the "Parent
Credit Agreement") which, together with the Company Credit Agreement, is to be
refinanced with a portion of the proceeds of the Financing as defined below in
Section 4.2(d), violate, conflict with or constitute a breach under any
contract, agreement, indenture, mortgage, deed of trust, lease or other
instrument to which Parent or any of its Subsidiaries is a party or by which any
of their assets is bound or subject, which, in the case of clauses (ii) and
(iii) above, singly or in the aggregate, would have a material adverse effect on
the business, financial condition or results of operations of Parent and Sub
taken as a whole or prevent consummation of the transactions contemplated
hereby. No consent, approval or authorization of, or declaration or filing with,
or notice to, any Governmental Entity which has not been received or made is
required by or with respect to Parent or Sub in connection with the execution
and delivery of this Agreement by Parent or Sub or the consummation by Parent or
Sub, as the case may be, of any of the transactions contemplated by this
Agreement, except for (i) compliance with any applicable requirements of the
Exchange Act and the rules and regulations promulgated thereunder, (ii) state
securities or blue sky laws and state takeover, antitrust and competition law
filings and approvals, (iii) compliance with any applicable requirements of the
HSR Act, (iv) the filing of the articles of merger with the Massachusetts
Secretary of State and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do
21
<PAGE>
business, and (iii) such other consents, approvals, authorizations, filings or
notices as are set forth in Section 4.1(d) of the Disclosure Schedule. Neither
Parent nor any of its Subsidiaries is a party or subject to, or bound by, any
contract, agreement, indenture, mortgage, deed of trust, lease or other
instrument which would prevent or restrict its power and authority or ability to
borrow under the "Interim Facility" (as defined below in Section 4.2(d),
guarantee obligations of third parties or pay dividends on its capital stock,
except for the Parent Credit Agreement and except that pursuant to the Loan
Agreement made as of August 6, 1997, as amended, between FFCA Acquisition
Corporation and NERC Limited Partnership, a Delaware limited partnership which
is a Subsidiary of Parent ("NERC LP"), NERC LP is prohibited from guaranteeing
obligations of third parties.
(d) FINANCING. Parent and Sub have received (i) a written commitment
from The Chase Manhattan Bank and BankBoston, N.A. (collectively, the "Banks")
for the provision of a senior credit facility (the "Interim Facility") for the
transactions contemplated hereby, on or prior to the Closing Date, in an amount
of at least $90 million as interim financing if Parent is unable to issue prior
to July 31, 1998 at least $90 million principal amount of senior unsecured notes
(the "Senior Notes") in a public offering or a Rule 144A private placement as
contemplated by such commitment , (ii) written commitments from stockholders of
Parent to subscribe for an aggregate of at least $21.5 million of equity
securities of Parent in connection with a rights offering made to stockholders
of Parent totaling $40 million of such equity securities to finance the
transactions contemplated hereby and (iii) a written commitment from JP
Acquisition Fund II, L.P. ("JPAF"), to subscribe for up to $18.5 million of such
equity securities of Parent. The aggregate of $130 million of financing (the
"Financing") contemplated by the commitments from the Banks and from
stockholders of Parent and from JPAF (collectively, the "Commitments"), will be
sufficient to consummate the Offer and the Merger. True and correct copies of
the Commitments have been provided to the Company prior to the date hereof.
(e) DISCLOSURE DOCUMENTS.
(i) The information with respect to Parent and its Subsidiaries that
Parent furnishes to the Company in writing specifically for use in any Company
Disclosure Document will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (i) in the case of the Company Proxy
Statement, if any, at the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company, at the time
the stockholders vote on adoption of this Agreement and at the Effective Time,
and (ii) in the case of any Company Disclosure Document other than the Company
Proxy Statement, at the time of the filing thereof, at the time of any
distribution thereof and throughout the remaining pendency of the Offer.
22
<PAGE>
(ii) The Offer Documents will comply in all material respects with the
applicable requirements of the Exchange Act and will not, at the time of the
filing thereof, at the time of any distribution thereof and throughout the
remaining pendency of the Offer contain any untrue statement of material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading; provided, that no representation is made by
Parent or Sub with respect to statements or omissions in the Offer Documents
based upon information furnished to Parent or Sub in writing by the Company
specifically for use therein.
(f) BROKERS. No broker, investment banker, financial advisor or other
person, the fees and expenses of which will be paid by Parent or Sub, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement,
except for fees payable to Jacobson Partners and fees and expenses payable to
the Banks, Chase Securities Inc., BancBoston Securities Inc., Donaldson, Lufkin
& Jenrette Securities Corporation and Jacobson Partners, which fees and expenses
shall remain the sole responsibility of Parent and Sub.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
PRIOR TO MERGER
SECTION 5.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement, during the period from the date of this
Agreement to the Effective Time, the Company shall operate, and shall cause each
Subsidiary to operate, its business in the ordinary course of business. Without
limiting the generality of the foregoing, during the period from the date of
this Agreement to the Effective Time, except as expressly contemplated by this
Agreement, the Company and the Subsidiaries shall not, without the prior written
consent of Parent:
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of the
Company's outstanding capital stock, (y) split, combine or reclassify any of its
outstanding capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
outstanding capital stock, or (z) purchase, redeem or otherwise acquire any
shares of outstanding capital stock or any rights, warrants or options to
acquire any such shares;
23
<PAGE>
(ii) issue, sell, grant, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities, including under the ESPP, except for the
issuance of Shares upon exercise of Company Stock Options outstanding prior to
the date of this Agreement and disclosed in Section 4.1(c), or take any action
that would make the Company's representations and warranties set forth in
Section 4.l(c) not true and correct in all material respects;
(iii) amend its Restated Articles of Organization or Restated By-laws
or the comparable charter or organizational documents of any of its
Subsidiaries;
(iv) acquire any business or any corporation, partnership, joint
venture, association or other business organization or division thereof (or any
interest therein), or form any subsidiaries;
(v) sell or otherwise dispose of any of its substantial assets,
except in the ordinary course of business;
(vi) make any capital expenditures, enter into leases or agreements
for new locations, or make other commitments with respect thereto, except
capital expenditures, leases, agreements or commitments (i) set forth on Section
5.1(vi) of the Disclosure Schedule, or (ii) not exceeding $100,000 in the
aggregate as the Company may, in its discretion, deem appropriate;
(vii) (x) incur any indebtedness for borrowed money or guaranty any
such indebtedness of another person, other than (A) borrowings in the ordinary
course under existing lines of credit (or under any refinancing of such existing
lines), (B) indebtedness owing to, or guaranties of indebtedness owing to, the
Company or (C) in connection with the Financing, or (y) make any loans or
advances to any other person, other than routine advances to employees;
(viii) except as disclosed in Section 4.1(f) of the Disclosure
Schedule, grant or agree to grant to any employee any increase in wages or
bonus, severance, profit sharing, retirement, deferred compensation, insurance
or other compensation or benefits, or establish any new compensation or benefit
plans or arrangements, or amend or agree to amend any existing Company Plans,
except as may be required under existing agreements or in the ordinary course of
business consistent with past practices;
(ix) merge, amalgamate or consolidate with any other person or entity
in any transaction, sell all or substantially all of its business or assets, or
acquire all or substantially all of the business or assets of any other person
or entity;
24
<PAGE>
(x) except as disclosed in Section 4.1(f) of the Disclosure Schedule,
enter into or amend any employment, consulting, severance or similar agreement
with any person or amend the engagement letter with the Financial Advisor
referred to in Section 4.1(l) hereof;
(xi) change its accounting policies in any material respect, except as
required by generally accepted accounting principles;
(xii) except as set forth in Section 4.1(f) of the Disclosure
Schedule, enter into any material contract, agreement or commitment (other than
purchase agreements for food and beverages and restaurant supplies entered into
in the ordinary course of business) not otherwise permitted under this Section
5.1, including, without limitation, any contract, agreement or commitment
involving expenditures by the Company or any of its Subsidiaries in excess of
$50,000 or which is not terminable by the Company upon giving 30 days of less
prior written notice; or
(xiii) commit or agree to take any of the foregoing actions.
SECTION 5.2. OTHER ACTIONS. The Company, Parent and Sub shall not
take any action that would, or that could reasonably be expected to, result in
(i) any of the representations and warranties of such party set forth in this
Agreement that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) any of the conditions of the Offer set forth in Annex
I or of the Merger set forth in Article VII not being satisfied.
25
<PAGE>
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1. MEETING OF STOCKHOLDERS. Following the expiration of
the Offer, the Company will promptly take all action necessary in accordance
with applicable law and its Restated Articles of Organization and Restated By-
laws to duly call, give notice of, and convene a meeting of its stockholders
(the "Stockholders' Meeting") to consider and vote upon the adoption and
approval of this Agreement and the Merger and all actions contemplated hereby
which require approval and adoption by the Company's stockholders unless the
Merger may be effected pursuant to Section 82 of the MBCL; provided, however,
that the obligations contained herein shall be subject to the provisions of
Section 6.8. Parent shall agree to cause all of the shares of capital stock of
the Company held by Parent and/or Sub to be voted, either in person or by proxy,
in favor of the adoption and approval of this Agreement and the Merger at the
Stockholders' Meeting.
SECTION 6.2. PROXY STATEMENT.
(a) In connection with the Stockholders' Meeting contemplated hereby,
as promptly as practicable after Offeror first purchased Shares pursuant to the
Offer and if required by applicable law, the Company will promptly prepare and
file, and Parent will cooperate with the Company in the preparation and filing
of, a preliminary Company Proxy Statement (the "Preliminary Proxy Statement")
with the SEC and will use its commercially reasonable best efforts to respond to
the comments of the SEC concerning the Preliminary Proxy Statement and to cause
the Company Proxy Statement to be mailed to the Company's stockholders, in each
case as soon as reasonably practicable. The Company shall pay the filing fees
for the Preliminary Proxy Statement. Each party to this Agreement will notify
the other parties promptly of the receipt of the comments of the SEC, if any,
and of any request by the SEC for amendments or supplements to the Preliminary
Proxy Statement or the Company Proxy Statement or for additional information,
and will supply the other parties with copies of all correspondence between such
party or its representatives, on the one hand, and the SEC or members of its
staff, on the other hand, with respect to the Preliminary Proxy Statement, the
Company Proxy Statement or the Merger.
(b) If at any time prior to the Stockholders' Meeting, any event
should occur relating to the Company or any of the Subsidiaries which should be
set forth in an amendment of, or a supplement to, the Company Proxy Statement,
the Company will promptly inform Parent. If at any time prior to the
Stockholders' Meeting, any event should occur relating to Parent or Sub or any
of their respective Associates or Affiliates, or relating to the plans of any
such persons for
26
<PAGE>
the Surviving Corporation after the Effective Time of the Merger, or relating to
the Financing, that should be set forth in an amendment of, or a supplement to,
the Company Proxy Statement, the Company, with the cooperation of Parent, will,
upon learning of such event, promptly prepare, file and, if required, mail such
amendment or supplement to the Company's stockholders; provided that, prior to
such filing or mailing, the Company shall consult with Parent with respect to
such amendment or supplement and shall afford Parent reasonable opportunity to
comment thereon.
(c) Parent will furnish to the Company the information relating to
Parent and Sub, their respective Associates and Affiliates and the plans of such
persons for the Surviving Corporation after the Effective Time of the Merger,
and relating to the Financing, which is required to be set forth in the
Preliminary Proxy Statement or the Company Proxy Statement under the Exchange
Act and the rules and regulations of the SEC thereunder. The Company shall cause
to be included as an exhibit to the Preliminary Proxy Statement and the Company
Proxy Statement, the fairness opinion of the Financial Advisor referred to in
Section 4.1(l).
SECTION 6.3. ACCESS TO INFORMATION; CONFIDENTIALITY. From and after
the date hereof, the Company will provide to Parent reasonable access, upon
notice and during normal business hours, to the Company's facilities, books and
records and shall cause the directors, employees, accountants, attorneys,
financial advisors, lenders and other agents and representatives (collectively,
"Representatives") of the Company to continue to cooperate fully with Parent and
Parent's Representatives in order to enhance such persons' knowledge of the
Company's assets, contracts, liabilities, operations, records and other aspects
of its business (including any environmental investigation of the Company's
facilities) and the efforts of Parent and Sub to secure the Financing as
described in Section 4.2(d). Parent shall, and shall cause Parent's
Representatives to, keep all information supplied or made available to Parent
hereunder in confidence and shall not disclose the same to any party other than
its Representatives on a "need to know" basis and only for purposes of
evaluating the Merger and the Financing. Parent will not use such information
except for evaluating the Merger and in connection with procurement of the
Financing. If the Merger is not consummated and this Agreement is terminated in
accordance with its terms, Parent shall return any information provided
hereunder.
SECTION 6.4. COMMERCIALLY REASONABLE EFFORTS. Upon the terms and
subject to the conditions and other agreements set forth in this Agreement, each
of the parties agrees to use commercially reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer, the Merger and the other transactions contemplated by
this Agreement, including the satisfaction of the respective conditions set
forth in Annex I and
27
<PAGE>
Article VII; provided that nothing herein shall be deemed to require the Company
or any of its Subsidiaries to participate in any meetings with prospective
investors in connection with the sale of any securities constituting a part of
the Financing described in Section 4.2(d).
SECTION 6.5. FINANCING. Each of Parent and Sub shall use
commercially reasonable best efforts to close the Financing on terms consistent
with the Commitments or such other terms as shall be satisfactory to them and to
execute and deliver definitive agreements with respect to the Financing (the
"Definitive Financing Agreements") on or before the Closing Date. Parent and
Sub shall use commercially reasonable best efforts to satisfy on or before the
Closing Date all requirements of the Definitive Financing Agreements which are
conditions to closing the transactions constituting the Financing and to drawing
the cash proceeds thereunder. The obligations contained herein are not
intended, nor shall they be construed, to benefit or confer any rights upon any
person, firm or entity other than the Company.
SECTION 6.6. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) From and after the Effective Time, Parent shall cause the
Surviving Corporation to indemnify and hold harmless each person who is now, at
any time has been or who becomes prior to the Effective Time a
"Director/officer" of the Company (as defined in Article 7 of the Company's
Restated By-laws ("Article 7")), and their heirs and personal representatives
(the "Indemnified Parties"), against any and all "Expenses" (as defined in
Article 7) incurred in connection with any "Proceeding" (as defined in Article
7) arising out of or pertaining to any action or omission occurring prior to the
Effective Time (including, without limitation, any Proceeding which arises out
of or relates to the transactions contemplated by this Agreement), to the full
extent permitted under Massachusetts law and the Surviving Corporation's
Restated By-laws in effect as of the Effective Date or under any indemnification
agreement in effect as of the date of this Agreement.
(b) The Surviving Corporation shall control the defense of any such
Proceeding with counsel selected by the Surviving Corporation, which counsel
shall be reasonably acceptable to the Indemnified Party, provided that the
Indemnified Party shall be permitted to participate in the defense of such
Proceeding at its own expense; except that the Surviving Corporation shall pay
as incurred the reasonable fees and expenses of counsel retained by an
Indemnified Party in the event that (i) the Surviving Corporation and the
Indemnified Party shall have mutually agreed on the retention of such counsel or
(ii) the named parties to any Proceeding include both the Surviving Corporation
and the Indemnified Party and representation of both parties by the same
counsel would be inappropriate, in the reasonable opinion of counsel to the
Indemnified Party, due to actual or potential differing interests between them;
and provided, further, that if any D&O Insurance (as defined in paragraph (c) of
this Section 6.6) in effect at the time shall require
28
<PAGE>
the insurance company to control such defense in order to obtain the full
benefits of such insurance and such provision is consistent with the provisions
of the Company's D&O Insurance existing as of the date of this Agreement, then
the provisions of such policy shall govern. Neither Parent nor the Surviving
Corporation shall in any event be liable for any settlement effected without its
written consent, which consent shall not be withheld unreasonably.
(c) For a period of not less than six years after the Effective Time,
Parent or the Surviving Corporation shall maintain officers' and directors'
liability insurance ("D&O Insurance") covering each Indemnified Party who is
presently covered by the Company's officers' and directors' liability insurance
or will be so covered at the Effective Time with respect to actions or omissions
occurring prior to the Effective Time, on terms no less favorable than such
insurance maintained in effect by the Company as of the date hereof in terms of
coverage and amounts, provided that Parent and the Surviving Corporation shall
not be required to pay in the aggregate an annual premium for D&O Insurance in
excess of 125% of the last annual premium paid prior to the date hereof, but in
such case shall purchase as much coverage as may be obtained for such amount.
(d) The Restated Articles of Organization and Restated By-laws of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Restated Articles of Organization and Restated
By-laws of the Surviving Corporation as of the Effective Date, which provisions
shall not be amended, repealed or otherwise modified after the Effective Time in
any manner that would adversely affect the rights thereunder of the Indemnified
Parties in respect of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement), unless such modification is required by law. Parent, Sub and
the Company agree that all rights existing in favor of any Indemnified Party
under any indemnification agreement in effect as of the date hereof shall
survive the Merger and shall continue in full force and effect, without any
amendment thereto.
(e) The provisions of this Section 6.6 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, his or
her heir and his or her personal representatives and shall be binding on all
successors and assigns of Parent, Sub, the Company and the Surviving
Corporation.
SECTION 6.7. PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one hand,
and the Company, on the other hand, will consult with each other before issuing,
and provide each other the opportunity to review and comment upon, any press
release or other public statements with respect to the existence of and
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement without the consent of the other
29
<PAGE>
party following such consultation, except as may be required by applicable law,
regulation or judicial process, and in such case only after reasonable notice to
the other party.
SECTION 6.8. ACQUISITION PROPOSALS. The Company shall not, nor shall
it authorize or permit any of its Representatives to, directly or indirectly,
(i) solicit, initiate or knowingly encourage any Third Party (as defined in this
Section 6.8) with respect to the submission of any Acquisition Proposal (as
hereinafter defined) or (ii) participate in any discussions or negotiations
regarding, or furnish to any Third Party any non-public information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal; provided, however, that the foregoing shall not prohibit
the Board of Directors of the Company (or, if applicable, the duly appointed
Special Committee thereof) from: (i) furnishing information to, or entering into
discussions or negotiations with, any Third Party in connection with an
unsolicited bona fide Acquisition Proposal by such Third Party if, and to the
extent that, the Board of Directors of the Company (or the Special Committee),
after consultation with independent legal counsel (who may be the Company's
regularly engaged independent counsel), determines in good faith that such
action is required for the Board of Directors of the Company to comply with its
fiduciary obligations to stockholders under applicable law; (ii) withdrawing or
modifying its recommendation referred to in Section 4.1(k) following receipt of
a bona fide unsolicited Acquisition Proposal if the Board of Directors of the
Company (or the Special Committee), after consultation with independent legal
counsel (who may be the Company's regularly engaged independent counsel),
determines in good faith that such action is necessary for the Board of
Directors of the Company to comply with its fiduciary duties to stockholders
under applicable law; or (iii) making to the Company's stockholders any
recommendation and related filing with the SEC as required by Rule 14e-2 and
14d-9 under the Exchange Act, with respect to any tender offer, or taking any
other legally required action (including, without limitation, the making of
public disclosures as may be necessary or advisable under applicable securities
laws); and provided further, however, that, in the event of an exercise of the
Company's or its Board of Director's (or the Special Committee's) rights under
clause (i), (ii) or (iii) above, notwithstanding anything contained in this
Agreement to the contrary, such failure shall not constitute a breach of this
Agreement by the Company. The Company shall provide immediate written notice to
Parent of the receipt of any such Acquisition Proposal and of the Company's
intention to furnish information to, or enter into discussions or negotiations
with, such person or entity. For purposes of this Agreement, (i) "Acquisition
Proposal" means any proposal with respect to a merger, consolidation, share
exchange, tender offer or similar transaction involving the Company, or any
purchase or other acquisition of all or any significant portion of the assets of
the Company, or any equity interest in the Company, other than the transactions
contemplated hereby and (ii) "Third Party" means any corporation, partnership,
person or other entity or "group" (as defined in
30
<PAGE>
Section 13(d)(3) of the Exchange Act) other than Parent, Sub or any Affiliates
of Parent or Sub and their respective directors, officers, employees,
representatives and agents.
SECTION 6.9. STOCKHOLDER LITIGATION. The Company shall give Parent
the opportunity to participate, at the expense of Parent, in the defense or
settlement of any stockholder litigation against the Company and its
Representatives relating to the transactions contemplated by this Agreement
and/or the Ten Ideas Merger Agreement; provided, however, that no such
settlement shall be agreed to without Parent's consent, which consent shall not
be unreasonably withheld.
SECTION 6.10. BOARD ACTION RELATING TO STOCK OPTION PLANS. As soon
as practicable following the date of this Agreement, the Board of Directors of
the Company (or, if appropriate, any committee administering a Company Stock
Option Plan) shall adopt such resolutions or take such actions as may be
required to adjust the terms of all outstanding Company Stock Options or
accelerate vesting of options granted under the TARSOP, the Director Plan or the
1997 Plan in accordance with Section 3.2 and shall make such other changes to
the Company Stock Option Plans and the ESPP as Parent deems appropriate to give
effect to the Merger, and to terminate such plans as of the Effective Time.
Promptly following the termination of the ESPP, the Company or the Surviving
Corporation, as the case may be, shall refund to each participant in the ESPP in
cash the amount of payroll deductions, if any, then credited to such
participant's account under the ESPP in accordance with the provisions of
Section 19 of the ESPP.
SECTION 6.11. CONSENTS AND APPROVALS. As soon as practicable
following the date of this Agreement, the Company and Parent shall make all
filings required to be made with and seek all consents, approvals, permits and
authorizations required to be obtained from, any third parties or Governmental
Entities in connection with this Agreement and the transactions contemplated
hereby, including, without limitation, the filing of any required notification
under the HSR Act, the consent of any licensing board or agency governing the
sale of alcoholic beverages ("Liquor License Consents"), the consent of any
landlord (or of any other person) at any location leased by the Company or any
of its Subsidiaries ("Landlord Consents") and any other filing, consent or
approval listed on Section 4.1(d) of the Disclosure Schedule, it being
understood, however, that the consummation of the Offer and the Merger are not
conditioned on the Company, Parent or Sub obtaining any such Liquor License
Consents or Landlord Consents. The Company shall pay any required filing fees
or other expense in connection therewith; provided that the Company and Parent
shall each pay one-half of any filing fees under the HSR Act; provided, further,
that Parent shall reimburse the Company for such payment in the event that this
Agreement is terminated pursuant to Section 8.1 hereof in any manner which does
not entitle Parent to reimbursement from the Company for Expenses (as defined in
Section 8.2(b)(i)).
31
<PAGE>
SECTION 6.12. REPAYMENT OF INDEBTEDNESS. Parent shall utilize a
portion of the net proceeds of the Financing, together with available cash of
the Company, to repay, satisfy or otherwise discharge, in full, all of the
Company's indebtedness to BankBoston, N.A. existing on the Closing Date.
SECTION 6.13. PAYMENT OF FEES AND EXPENSES. Parent and Sub
acknowledge that concurrently with the execution of this Agreement, the Company
is obligated to pay Ten Ideas a fee of $1,500,000 and an amount not to exceed
$750,000, as reimbursement of expenses, all in accordance with the terms of the
Ten Ideas Merger Agreement, and agree that they shall in no event contest the
propriety of or the obligation to make such payments or to seek to recover all
or any portion of such payments.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVAL. The Merger shall have been adopted and
approved by the affirmative vote of the holders of two-thirds of the outstanding
Shares as required under the laws of The Commonwealth of Massachusetts.
(b) THIRD-PARTY AND GOVERNMENTAL CONSENTS. All filings required to be
made prior to the Effective Time with, and all consents (other than Liquor
License Consents and Landlord Consents) and, approvals, permits and
authorizations required to be obtained prior to the Effective Time from, any
third party or any Governmental Entities, including, without limitation, those
set forth in Section 4.1(d) of the Disclosure Schedule, in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by the Company, Parent and Sub, and which,
either individually or in the aggregate, if not obtained would have a Material
Adverse Effect or would prevent consummation of the Merger, shall have been made
or obtained (as the case may be).
(c) NO INJUNCTIONS, RESTRAINTS OR LITIGATION. No temporary
restraining order, judgment, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the
32
<PAGE>
consummation of the Merger shall be in effect; provided, however, that the
parties invoking this condition shall use their best efforts to have any such
order or injunction vacated.
(d) SHARES PURCHASED. Sub shall have purchased Shares pursuant to the
Offer, provided this condition shall be deemed to be satisfied if Sub fails to
accept for payment and pay for Shares in violation of the Offer.
SECTION 7.2. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction, or waiver by Parent, on or prior to the Closing Date, of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in Section 4.1 that are qualified by
materiality shall be true and correct and such representations and warranties of
the Company set forth in Section 4.1 that are not so qualified shall be true and
correct in all material respects, in each case as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date, except
to the extent such representations and warranties speak as of an earlier date,
except for changes permitted or contemplated by this Agreement, and except, in
the case of any such breach, where such breach would not have, individually or
in the aggregate, a Material Adverse Effect or materially and adversely affect
the Financing described in Section 4.2(d) or the ability of Parent and Sub to
consummate the Offer and the Merger. Parent shall have received an officers'
certificate signed on behalf of the Company to the effect set forth in this
paragraph.
(b) CONSENTS AND APPROVALS. On or prior to the Effective Date, Parent
and/or Sub shall have received all of the necessary consents (other than Liquor
License Consents and Landlord Consents) or approvals of Governmental Entities
and all third parties in connection with the execution and delivery of this
Agreement and the consummation of the Merger and the other transactions
contemplated hereby, unless the failure to obtain such consent or approval would
not have a Material Adverse Effect nor have a material adverse effect on the
Financing.
SECTION 7.3. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to effect the Merger are further subject to the
satisfaction, or waiver by the Company, on or prior to the Closing Date, of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Parent and Sub set forth in Section 4.2 that are qualified by materiality
shall be true and correct and such representations and warranties of Parent and
Sub set forth in Section 4.2 that are not so qualified shall be true and correct
in all material respects, in each case as of the date of this Agreement and as
of the Closing Date as though made on and as of the Closing Date, except to
33
<PAGE>
the extent such representations and warranties speak as of an earlier date and
except for changes permitted or contemplated by this Agreement, and except, in
the case of any such breach, where such breach would not, individually or in the
aggregate, materially and adversely affect the Financing described in Section
4.2(d) or the ability of Parent and Sub to consummate the Offer and the Merger.
The Company shall have received an officers' certificate signed on behalf of
Parent to the effect set forth in this paragraph.
(b) FAIRNESS OPINION. At or prior to the Effective Time, the
Financial Advisor shall not have withdrawn its fairness opinion referred to in
Section 4.1(l).
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. TERMINATION. This Agreement may be terminated and
abandoned at any time prior to the Effective Time, whether before or after
approval of the Merger by the stockholders of the Company: (a) by mutual written
consent of Parent and the Company; or (b) by either Parent or the Company if (i)
Parent or Sub shall have failed to commence the Offer within five business days
following the date hereof or the Offer shall have terminated or expired in
accordance with its terms without Parent or Sub having purchased any Shares
pursuant to the Offer, or (ii) the Offer has not been consummated by July 31,
1998, or (iii) any change to the Offer is made in contravention of the
provisions of Section 1.1; or (c) by either Parent or the Company: (i) if, upon
a vote at the Stockholders Meeting, or any adjournment thereof, the adoption and
approval of this Agreement and the Merger by the stockholders of the Company
required by Massachusetts law, the Company's Restated Articles of Organization
or the terms of this Agreement shall not have been obtained; or (ii) if the
Merger shall not have been consummated on or before October 31, 1998, provided
that the failure to consummate the Merger is not attributable to the failure of
the terminating party to fulfill its obligations pursuant to this Agreement; or
(iii) if there shall be any law or regulation (other than a law or regulation
relating to the issuance or transfer of any licenses or permits of any licensing
board or agency governing the sale of alcoholic beverages) that makes
consummation of the Offer or the Merger illegal or otherwise prohibited, or if
any judgment, injunction, order or decree enjoining or otherwise restraining Sub
from purchasing Shares pursuant to the Offer or Sub or the Company from
consummating the Merger is entered and such judgment, injunction, order or
decree shall become final and nonappealable; or (d) by the Company, immediately
after payment to Sub of the fee and expense reimbursement described in Section
8.2(b), if prior to the purchase of Shares pursuant to the Offer, (i) the Board
of Directors shall have withdrawn or modified in a manner adverse to Parent or
Sub its approval or recommendation of the Offer, this Agreement or the Merger in
order to permit the Company to execute an Acquisition Proposal providing for the
34
<PAGE>
acquisition of the Company by a Third Party as determined by the Board of
Directors in good faith after consultation with independent legal counsel (who
may be the Company's regularly engaged independent counsel) that such action is
required for the Board of Directors of the Company to comply with its fiduciary
obligations to stockholders under applicable law, or (ii) the fairness
opinion referred to in Section 4.1(l) shall have been withdrawn; or (e) by
Parent, if the Board of Directors of the Company shall have approved an
Acquisition Proposal or withdrawn or modified (including by amendment of the
Schedule 14D-9), in a manner adverse to Parent or Sub, the Board of Director's
recommendation pursuant to Section 4.1(k); or (f) by Parent, if any of the
conditions set forth in Section 7.2 shall have become incapable of fulfillment,
and shall not have been waived by Parent, or if the Company shall breach in any
material respect any of its representations, warranties or obligations hereunder
and such breach shall not have been cured in all material respects or waived and
the Company shall not have provided reasonable assurance that such breach will
be cured in all material respects on or before the Closing Date, but only if
such breach, singly or together with all other such breaches, constitutes a
failure of the conditions contained in Section 7.2 as of the date of such
termination; or (g) by the Company, if any of the conditions set forth in
Section 7.3 shall have become incapable of fulfillment, and shall not have been
waived by the Company, or if Parent or Sub shall breach in any material respect
any of their respective representations, warranties or obligations hereunder and
such breach shall not have been cured in all material respects or waived and
Parent or Sub, as the case may be, shall not have provided reasonable assurance
that such breach will be cured in all material respects on or before the Closing
Date, but only if such breach, singly or together with all other such breaches,
constitutes a failure of the conditions contained in Section 7.3 as of the date
of such termination; provided, however, that the party seeking termination
pursuant to clause (f) or (g) hereof is not in breach of any of its material
representations, warranties, covenants or agreements contained in this
Agreement.
SECTION 8.2. EFFECT OF TERMINATION.
(a) AGREEMENT VOID. In the event of the termination and abandonment
of this Agreement pursuant to Section 8.1 hereof, this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
hereto or its affiliates, directors, officers or stockholders and all rights and
obligations of any party hereto shall cease except for agreements contained in
Sections 6.4, 8.2 and 9.2; provided, however, that nothing contained in this
Section 8.2 shall relieve any party from liability for any breach of this
Agreement or shall relieve the Company from any liability under this Article
VIII.
(b) TERMINATION FEE.
35
<PAGE>
(i) If this Agreement is terminated pursuant to Section 8.1(d)
or 8.1(e), pursuant to Section 8.1(f) as a result of a willful breach by the
Company, or pursuant to Section 8.1(g) as a result of the withdrawal or
modification of the Financial Advisor's fairness opinion referred to in Section
4.1(l), then the Company shall (provided that neither Parent nor Sub is then in
material breach of its obligations under this Agreement) promptly pay to Parent
in cash an amount equal to the aggregate out-of-pocket costs and reasonable
expenses of Parent and Sub in connection with this Agreement and the
transactions contemplated hereby, up to an aggregate amount not to exceed
$750,000, including, without limitation, commitment, appraisal and other fees
relating to the Financing and the reasonable fees and disbursements of
accountants, attorneys and investment bankers, whether retained by Parent or by
any other person (collectively, "Expenses").
(ii) In addition to any required payment of Expenses, if this
Agreement is terminated pursuant to Section 8.1(d) or 8.1(e), or pursuant to
Section 8.1(f) as a result of a willful breach by the Company, then the Company
shall (provided that neither Parent nor Sub is then in material breach of its
obligations under this Agreement) promptly pay to Parent the sum of $1,500,000
in cash (the "Termination Fee").
(iii) The sum of the Expenses and the Termination Fee, if any,
shall be referred to herein as the "Termination Amount." The rights of Parent to
receive the Termination Amount shall be in lieu of any damages remedy or claim
by Parent or Sub against the Company for termination of this Agreement pursuant
to Section 8.1(d) or 8.1(e), Section 8.1(f) in the event of a willful breach by
the Company or pursuant to Section 8.1(g) as a result of the Company's reliance
on the condition set forth in Section 7.3(b).
(iv) Notwithstanding the provisions of Section 8.2(b)(ii) above,
if this Agreement is terminated pursuant to Section 8.1(g) as a result of the
Company's reliance on the condition set forth in Section 7.3(b) at a time when
Parent is ready, willing and able (other than as a result of an inability to
consummate the Financing solely because of the withdrawal of the Financial
Advisor's fairness opinion referred to in Section 4.1(l)) to proceed with the
transactions contemplated hereby but for the withdrawal of such fairness
opinion, and within one year after such termination, the Company enters into an
agreement relating to an Acquisition Proposal with a person other than Parent or
Sub or their Affiliates and Associates, or the Company's Board of Directors
recommends or resolves to recommend to the Company's stockholders approval and
acceptance of such an Acquisition Proposal, then, upon the entry into such
agreement or the making of such recommendation or resolution, the Company shall
pay to Parent the Termination Fee.
36
<PAGE>
(c) ACQUISITION PROPOSAL FOLLOWING TERMINATION. At no time prior to
or within one year after termination of this Agreement shall the Company enter
into any agreement relating to an Acquisition Proposal with a person other than
Parent or Sub or their Affiliates and Associates unless such agreement provides
that such person shall, upon the execution of such agreement, pay any
Termination Amount due Parent under this Section 8.2 which at that time remains
unpaid.
(d) REASONABLE INDUCEMENT. The parties acknowledge and agree that the
provisions for payment of the Termination Amount are included herein in order to
reasonably induce Parent to enter into this Agreement and to reimburse Parent
for incurring the costs and expenses related to entering into this Agreement,
obtaining the Commitments and the Financing, and consummating the transactions
contemplated by this Agreement.
(e) COSTS OF ENFORCEMENT. Notwithstanding anything to the contrary
set forth in this Agreement, in the event Parent and/or Sub is required to file
suit to seek all or a portion of the Termination Amount, it shall be entitled,
in addition to payment of the Expenses, to payment by the Company of all
additional expenses, including reasonable attorneys' fees and expenses, which it
incurs in enforcing its rights hereunder.
SECTION 8.3. AMENDMENT. Subject to the applicable provisions of the
MBCL, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties; provided, however, that after
approval of the Merger by the stockholders of the Company, no amendment shall be
made which reduces the consideration payable in the Merger or adversely affects
the rights of the Company's stockholders hereunder without the approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
SECTION 8.4. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to Section 8.2, waive compliance with any of the agreements or conditions of the
other parties contained in this Agreement. Any agreement on the part of a party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
37
<PAGE>
SECTION 8.5. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER. A termination of this Agreement pursuant to Section 8.1, an amendment
of this Agreement pursuant to Section 8.3, an extension or waiver pursuant to
Section 8.4, or any other approval or consent required or permitted to be given
pursuant to this Agreement shall, in order to be effective and in addition to
requirements of applicable law, require, in the case of Parent, Sub or the
Company, action by its Board of Directors, a duly authorized committee thereof
(including, in the case of the Company, the Special Committee), or the duly
authorized designee of such Board of Directors or such committee thereof.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties set forth in of this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 9.1 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time, including,
without limitation, Section 6.7.
SECTION 9.2. FEES AND EXPENSES. Except as provided otherwise in this
Agreement, including, without limitation, in Sections 6.2, 6.11 and 8.2, whether
or not the Merger shall be consummated, each party hereto shall pay its own
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby.
SECTION 9.3. DEFINITIONS. For purposes of this Agreement:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act; and
(b) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
SECTION 9.4. NOTICES. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given when delivered personally or sent by overnight courier (providing
proof of delivery) or telecopy to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
38
<PAGE>
(a) if to Parent or Sub, to: NE Restaurant Company, Inc.
80A Turnpike Road
Westborough, Massachusetts 01581
Attn: President
Telecopy No.: (508) 870-9201
with copies to: Jacobson Partners
595 Madison Avenue
New York, New York 10022
Attn: Benjamin Jacobson
Telecopy No.: (212) 758-4567
- and -
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attn: David L. Finkelman, Esq.
Telecopy No.: (212) 806-6006
(b) if to the Company, to: Bertucci's, Inc.
14 Audubon Road
Wakefield, Massachusetts 01880
Attn: Board of Directors
Telecopy No.: (781) 246-2224
with a copy to: Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
Attn: James Westra, Esq.
Telecopy No.: (617) 951-1295
SECTION 9.5. INTERPRETATION. When a reference is made in this Agreement to
a Section or Schedule, such reference shall be to a Section of, or a Schedule
to, this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
39
<PAGE>
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
SECTION 9.6. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.7. ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This Agreement
and the other agreements referred to herein constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement. This
Agreement is not intended to confer upon any person, other than the parties
hereto and the third party beneficiaries referred to in the following sentence,
any rights or remedies. The parties hereto expressly intend the provisions of
Section 6.6 to confer a benefit upon and be enforceable by, as third party
beneficiaries of this Agreement, the third persons referred to in, or intended
to be benefited by, such provisions.
SECTION 9.8. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Massachusetts,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 9.9. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, and any such assignment that is not
consented to shall be null and void, except that Parent may assign this
Agreement (i) to any wholly owned subsidiary of Parent or (ii) together with all
of the outstanding capital stock of Sub, to an entity organized under the
corporate or limited liability laws of a jurisdiction of one of the United
States of America, the ownership interests of which entity are substantially
identical to the ownership interests of Parent immediately prior to such
assignment and which entity specifically and expressly assumes by written
agreement the obligations of Parent under this Agreement; in either case so long
as such assignment shall not adversely affect the ability of Parent and Sub to
secure the Financing described in Section 4.2(d) and without Parent being
released from liability hereunder and such transfer or assignment will not
relieve Parent or Sub of their obligations under the Offer or prejudice the
rights of tendering stockholders to receive payment for Shares validly tendered
and accepted for payment pursuant to the Offer. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
40
<PAGE>
SECTION 9.10. ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
(without requirement to post a bond) the terms and provisions of this Agreement,
this being in addition to any other remedy to which they are entitled at law or
in equity.
SECTION 9.11. SEVERABILITY. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
[Remainder of Page Intentionally Left Blank.]
41
<PAGE>
IN WITNESS WHEREOF, the Company, Parent and Sub have caused this Agreement to
be executed as an agreement under seal by their respective officers thereunto
duly authorized, all as of the date first written above.
BERTUCCI'S, INC.
By: /s/ Norman S. Mallett
-----------------------
Norman S. Mallett,
Vice President-Finance, Treasurer and
Chief Financial Officer
NE RESTAURANT COMPANY, INC.
By: /s/ Dennis Pedra
------------------
Dennis Pedra,
President
By: /s/ Paul Hoagland
--------------------
Paul Hoagland,
Assistant Treasurer and Chief Financial Officer
NERC ACQUISITION CORP.
By: /s/ Dennis Pedra
------------------------------------------------
Dennis Pedra,
President
By: /s/ Paul Hoagland
--------------------------------------------------
Paul Hoagland,
Assistant Treasurer and Chief Financial Officer
42
<PAGE>
ANNEX I
The capitalized terms used in this Annex have the meanings set forth
in the attached Agreement, except that the term "Merger Agreement" shall be
deemed to refer to the attached Agreement.
Notwithstanding any other provision of the Offer or the Merger
Agreement, Sub shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Sub's obligation to pay for or return tendered Shares
after the termination or withdrawal of the Offer), to pay for any Shares, and
may terminate the Offer, if (i) the Minimum Condition has not been satisfied,
(ii) the applicable waiting period under the HSR Act shall not have expired or
been terminated, (iii) the Financing Condition has not been satisfied or (iv) at
any time on or after May 13, 1998 and prior to the acceptance for payment of or
payment for Shares, any of the following conditions shall occur and be
continuing:
(a) there shall be instituted or pending any action or proceeding
before any domestic court, government or Governmental Entity, other than by
Parent or Sub, a stockholder of Parent or Sub or any person affiliated with
Parent or Sub, (i) challenging or seeking to make illegal, to delay materially
or otherwise to restrain or prohibit the making of the Offer, the acceptance for
payment of or payment for some of or all the Shares by Sub or the consummation
by Sub of the Merger, (ii) seeking to restrain or prohibit Parent's or the
Company's ownership or operation (or that of its respective Subsidiaries or
Affiliates) of all or any material portion of the business or assets of the
Company and its Subsidiaries, taken as a whole, or of Parent and its
Subsidiaries, taken as a whole, (iii) seeking to compel Parent or the Company to
sell or otherwise dispose of, or hold separate (through the establishment of a
trust or otherwise) any material assets or categories of assets or businesses of
any of the Company and its Subsidiaries, taken as a whole, or Parent or any of
Parent's Affiliates, taken as a whole, (iv) seeking to prohibit or impose
material limitations on the ability of Parent or any of its Subsidiaries or
affiliates effectively to exercise full rights of ownership of the Shares
(including, without limitation, the right to vote any Shares acquired or owned
by Parent or any of its Subsidiaries or affiliates on all matters properly
presented to the Company's stockholders), or seeking to prohibit Parent or any
of its Subsidiaries from effectively controlling in any material respect the
business and operations of the Company and its Subsidiaries, taken as a whole,
(v) seeking to require divestiture by Parent or any of its Subsidiaries or
affiliates of any Shares or seeking to obtain from the Company, Parent or Sub by
reason of any of the transactions contemplated by the Offer or the Merger
Agreement any
A-1
<PAGE>
damages that are material to the Company and its Subsidiaries, taken as a whole,
or Parent and its subsidiaries, taken as a whole, or (vi) that otherwise, in the
reasonable judgment of Parent, is likely to materially adversely affect the
Company and its Subsidiaries, taken as a whole, or Parent and its subsidiaries,
taken as a whole, provided that, in any such case, Parent shall have used its
best efforts to defeat or have vacated such action or proceeding and shall have
failed to do so; or
(b) there shall be any action taken, or any statute, rule, regulation,
injunction, interpretation, judgment, order or decree enacted, enforced,
promulgated, issued or deemed applicable to Parent or any of its Subsidiaries or
to the Company or any of its Subsidiaries or the Offer or the Merger, by any
court, government or Governmental Entity, other than the application of the
waiting period provision of the HSR Act to the Offer or the Merger, and other
than a law or regulation relating to the issuance or transfer of any licenses or
permits of any licensing board or agency governing the sale of alcoholic
beverages, that, in the reasonable judgment of Parent, is likely, directly or
indirectly, to result in any of the consequences referred to in clauses (i)
through (vi) of paragraph (a) above; or
(c) any change, event, occurrence or circumstance shall have occurred
in the business, operations, assets or condition (financial or otherwise) of the
Company or any of its Subsidiaries, relating to a period commencing after April
18, 1998, that in the reasonable judgment of Parent, is likely to have a
Material Adverse Effect on the Company and its Subsidiaries, taken as a whole;
or
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange,
which suspension or limitation shall continue for at least three consecutive
trading days, (ii) any decline in either the Dow Jones Industrial Average or the
Standard and Poor's 500 Index by an amount in excess of 25%, measured from May
13, 1998 (iii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (iv) a commencement of a war
or armed hostilities or other national or international calamity directly or
indirectly involving the United States which would reasonably be expected to
have a material adverse impact on the capital markets of the United States, or
(v) in the case of any of the foregoing existing on the date of this Agreement,
a material acceleration, escalation or worsening thereof; or
(e) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Merger Agreement,
or any of the representations and warranties of the Company set forth in the
Merger Agreement that are qualified as to materiality shall not be true and
correct and any of the representations and warranties without such
A-2
<PAGE>
qualification shall not be true and correct in any material respect, in each
case when made, except, in the case of any such breach, where such breach would
not have, individually or in the aggregate, a Material Adverse Effect or
materially and adversely affect the Financing described in Section 4.2(d) or the
ability of Parent and Sub to consummate the Offer and the Merger,; or
(f) the Merger Agreement shall have been terminated in accordance
with its terms; or
(g) any Third Party (other than Joseph Crugnale or "Permitted
Transferees" under the Tender and Voting Agreement) acquires beneficial
ownership of 15% or more of the outstanding Shares; or
(h) a tender offer or exchange offer for more than 33 1/3% of the
Shares shall have been made or publicly proposed by a Third Party for a price in
excess of the Merger Consideration; or
(i) the Board of Directors of the Company withdraws or modifies in a
manner adverse to Sub or Parent its approval or recommendation of the Offer,
this Agreement or the Merger or recommends or approves an Acquisition Proposal
by a Third Party;
which, in the reasonable judgment of Parent, in any such case, and regardless of
the circumstances giving rise to any such condition, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Parent and Sub
and may be asserted by Sub regardless of the circumstances giving rise to such
condition or may be waived by Sub in whole or in part at any time and from time
to time in its sole discretion. The failure by Sub or any Affiliate of Sub at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right, the waiver of any such right with respect to particular facts
and circumstances shall not be deemed a waiver with respect to any other facts
and circumstances and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
A-3