TRINITY MANAGEMENT COMPANY, INC.
000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
February 23, 1999
Wall Street Deli, Inc.
Xxx Xxxxxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Gentlemen:
This letter will confirm our agreement in principle with respect to
the acquisition (the "Acquisition") by Trinity Management Company, Inc.
("Trinity") or one of its affiliates (collectively, the "Purchaser"), of all
of the issued and outstanding common stock, $.05 par value per share (the
"Deli Shares"), of Wall Street Deli, Inc. ("WSDI"), for cash consideration of
$5.50 per Deli Share. Xxxxxxx understands that, as of February 19, 1999,
there were 2,896,077 Xxxx Xxxxxx issued and outstanding.
1. Acquisition Agreement. Trinity and WSDI will use their good
faith efforts to prepare and execute, as promptly as possible on or before
the Acquisition Agreement Date (as hereinafter defined), a definitive
acquisition agreement among WSDI (and its subsidiaries) and Purchaser (the
"Acquisition Agreement") that embodies the terms of this agreement and
contains representations, warranties, covenants and other terms and
conditions customarily contained in such agreements as the parties and their
respective counsel may deem appropriate, including, but not limited to,
fulfillment of covenants and agreements of each of the parties, receipt of
required regulatory approvals and legal opinions. In addition, the
Acquisition Agreement will provide for the disposition of outstanding options
for Deli Shares in a manner mutually acceptable to Trinity and WSDI. Xxxxxxx
and WSDI agree to work in good faith to execute an Acquisition Agreement on
or before April 15, 1999, or such other date upon which Trinity and WSDI
shall agree in writing (the "Acquisition Agreement Date"). This agreement
shall terminate, except as set forth in numbered Section 11 hereof, on the
date (the "Termination Date") that is the earlier of (i) the date on which
the Acquisition Agreement is fully executed and delivered or (ii)
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February 23, 1999
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5:00 Central Time on the Acquisition Agreement Date. Xxxxxxx agrees to work
in good faith and to use reasonable efforts to complete its due diligence
review of WSDI and its subsidiaries on or before the Acquisition Agreement
Date.
2. Closing. The closing of the Acquisition shall take place on
or before June 1, 1999 (the "Closing Date").
3. Conditions to Closing. In addition to the execution and
delivery of the Acquisition Agreement, the closing of the Acquisition will be
subject to customary terms and conditions and such other terms and conditions
upon which the Trinity and WSDI may agree, including:
(a) Due Diligence - Trinity shall have completed to its
satisfaction its due diligence review of the assets of WSDI and each
of WSDI's subsidiaries, and their respective businesses, assets and
liabilities. WSDI shall have provided Trinity and its
representatives such information as may reasonably be required for
such purposes, including, but not limited to, financial statements,
accounting books and records, information with respect to litigation
and loss contingencies, employee matters, environmental matters, tax
and ERISA matters, vendor and customer information, legal and
regulatory compliance, licenses, insurance, contracts and other
matters. Information obtained by Trinity in its due diligence review
shall be subject to the terms and conditions of the Confidentiality
Agreement dated February 9, 1999 (the "Confidentiality Agreement")
between Trinity and WSDI.
(b) Documentation - Each of Xxxx X. Xxxxxxx and Xxxxxx
X. Xxxxxx shall have entered into and delivered a non-compete and
consulting agreement with WSDI, in a form acceptable to Trinity.
(c) Approvals - The Acquisition shall have been approved
by (i) the WSDI Board of Directors, (ii) a special committee of
independent directors of WSDI, and (iii) all other necessary
corporate action of WSDI, including the approval of its shareholders
(with shareholders holding not more than five percent (5%) of the
Deli Shares asserting dissenters' appraisal rights under applicable
law). The Acquisition Agreement also shall have been approved by the
equity investors and lenders of Trinity.
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(d) Fairness - WSDI shall have received an opinion from
its financial advisor satisfactory to its board of directors that the
consideration to be paid for Deli Shares pursuant to the Acquisition
Agreement is fair to the shareholders of WSDI from a financial point
of view.
(e) Regulatory Approvals - Trinity and WSDI shall have
complied with all applicable legal and regulatory requirements and
received all regulatory approvals, including, but not limited to,
satisfaction or early termination of the waiting period under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, if applicable.
4. Maintenance of Business. From the date hereof and until the
Termination Date, WSDI and each of its subsidiaries shall:
(a) continue to operate its business in the customary
and ordinary manner;
(b) use its reasonable efforts to preserve its business
operations intact, to keep available the services of its present
personnel, and to preserve the goodwill and relationships of its
suppliers, customers and others having business relations with WSDI
or such subsidiary;
(c) notify Trinity in writing of any event involving
WSDI or such subsidiary that has had, or may be reasonably expected
to have, a material adverse effect on the business or financial
condition of WSDI or such subsidiary;
(d) not sell, encumber or otherwise dispose of any
assets except in the ordinary course of its business;
(e) not enter into any employment agreements with any
person or amend the terms of any existing employment agreement;
(f) not merge, restructure or reorganize WSDI or such
subsidiary in any manner that shall have the effect of changing any
aspect of, or ownership rights in, the Deli Shares, including, but
not limited to, creating appraisal rights or diluting WSDI
shareholders' interest;
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(g) not issue any additional shares of capital stock of
any designation or class (except pursuant to the exercise of options
existing on the date hereof or pursuant to the terms of 401(k) or
Section 423 stock purchase plans existing on the date hereof); and
(h) not issue or declare dividends or distributions of
any kind on the Deli Shares.
5. Exclusivity. WSDI may furnish information and access, in
each case in response to unsolicited requests therefor, to any corporation,
partnership, person or other entity or group, pursuant to appropriate
confidentiality agreements, and may participate in discussions and negotiate
with such corporation, partnership, person or other entity or group
concerning any proposal to acquire WSDI or any subsidiary of WSDI, purchase
of assets, purchase of or tender offer for shares of capital stock of WSDI or
any subsidiary of WSDI or similar transaction (an "Acquisition Transaction"),
if the Board of Directors of WSDI determines in its good faith judgment in
the exercise of its fiduciary duties, after consultation with legal counsel
and its financial advisors, that such action is appropriate in furtherance of
the best interests of the shareholders of WSDI. Except as set forth in the
preceding sentence, WSDI shall not, and will direct each officer, director,
employee, representative and agent of WSDI and of each subsidiary thereof not
to, directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with or provide any information to any
corporation, partnership, person or other entity or group (other than the
other parties hereto or an affiliate or an associate or agent of the other
parties hereto) concerning any merger, sale of assets, sale of or tender
offer for shares of capital stock of or similar transactions involving WSDI
or a subsidiary thereof. WSDI shall promptly notify Trinity if WSDI shall,
on or after the date hereof, receive any unsolicited request for information
or access in connection with a possible Acquisition Transaction involving
WSDI, such notification to include the identity of such third party and the
proposed terms of such possible Acquisition Transaction.
6. Confidentiality. Each of WSDI and Xxxxxxx hereby agree to
keep all discussions and all non-public information (written or oral) which
is shared pursuant to the proposed Acquisition confidential, except for
disclosure to advisors, investors or lenders who need to know such
information for their evaluation of the proposed Acquisition and who agree
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to be bound by the confidentiality terms of this agreement as if they were
parties thereto.
7. Cooperation of Parties. It is the intent of the parties
that, following execution and delivery of this agreement, the parties will
use all reasonable efforts to satisfy the conditions set forth in numbered
Section 3 hereof which are within their respective control and cooperate in
the negotiation and preparation of the Acquisition Agreement and other
necessary documentation. Each party shall bear its own expenses with no
liability for such expenses to the other party, whether or not the
Acquisition Agreement is executed, except as set forth in numbered Section 11
hereof.
8. Public Announcements. It is the intention of the parties to
use reasonable efforts to reach agreement on the wording of any news releases
or other public announcements pertaining to this agreement, the proposed
Acquisition or the negotiations concerning the proposed Acquisition. In the
absence of circumstances requiring otherwise, any such release or public
announcements shall be submitted to the other party for its comment prior to
issuance.
9. Termination Fee. It is understood that this agreement
constitutes a statement of the mutual intentions of the parties with respect
to the proposed Acquisition and contains sufficient detail for the proposed
Acquisition to be consummated upon satisfaction of the conditions to closing
set forth in numbered Section 3 hereof. For purposes of this Agreement, a
"Third Party Acquisition Event" shall mean one of the following:
(a) any person (other than Trinity or its affiliates) shall
have commenced (or publicly announced a proposal to commence) a
tender offer or exchange offer to purchase Deli Shares such that,
upon consummation of such offer, such person could own or control
fifty percent (50%) or more of the Deli Shares; or
(b) any person (other than Trinity or its affiliates) shall
have publicly announced a proposal to consummate an acquisition of
WSDI or a subsidiary thereof or an acquisition of another party by
WSDI or a subsidiary thereof by merger, purchase of assets, purchase
of shares
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of capital stock or similar transaction (an "Alternate Acquisition
Transaction").
If a Third Party Acquisition Event occurs and, thereafter, (i) the
Acquisition does not occur on or before the Closing Date and (ii) the
transaction contemplated by such Third Party Acquisition Event is completed
or consummated within six (6) months after the Closing Date, WSDI shall
forthwith pay to Trinity (within five (5) days after the completion or
consummation of such Third Party Acquisition Event) a termination fee in the
amount of $550,000 in immediately available funds.
10. Choice of Law. This agreement and the Acquisition Agreement
shall be governed by and construed and enforced in accordance with the
internal law (excluding conflict of laws principles) of the State of
Delaware.
11. Binding and Non-Binding Effect. This agreement is a
statement of present intent only and, except as set forth below, is not
binding upon the parties. The rights and obligations of the parties with
respect to the Acquisition shall only be as set forth in the Acquisition
Agreement, if and when it is executed by the parties thereto, and subject to
the conditions set forth therein. Neither party shall have any liability for
failure to execute the Acquisition Agreement, except as otherwise described
herein. Notwithstanding the foregoing, the Confidentiality Agreement and the
provisions of numbered Sections 6, 7, 8 and 9 hereof shall be binding and
enforceable obligations of the parties, and the Confidentiality Agreement and
the provisions of numbered Sections 6, 7, 8 and 9 hereof shall continue in
full force and effect following the termination or expiration of this
agreement. This agreement may be amended, modified or supplemented in
writing by the parties.
If the foregoing terms are acceptable to you, please so indicate by
signing a copy of this agreement and returning it to the undersigned. This
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February 23, 1999
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agreement will be void unless it is fully executed and returned to the
undersigned by 5:00 p.m. Central Time on February 26, 1999.
Very truly yours,
TRINITY MANAGEMENT COMPANY, INC.
By: /s/ X. Xxxxx Xxxxxx
-----------------------------
X. Xxxxx Xxxxxx, President
ACCEPTED AND AGREED TO:
WALL STREET DELI, INC.
By: Xxxxxxx X. Xxxxxxx
--------------------------------
Title: President & CEO
-----------------------------
Date: 2/23/99
-----------------------------
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