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Exhibit 11(c)(3)
May 18, 1998
Xxxxxxxx Restaurants Inc.
0000 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chairman
Gentlemen:
Reference is made to the Plan and Agreement of Merger dated the 22nd of
April 1998, (the "Agreement") by and between Piccadilly Cafeterias, Inc.
("Piccadilly") and Xxxxxxxx Restaurants Inc. ("Xxxxxxxx"). Section 2.1(d) of the
Agreement provides that a holder of an option to acquire shares of Xxxxxxxx
Common Stock that was outstanding as of the date of the Agreement (to the extent
such option had been granted under plans or agreements set forth in Exhibit
2.7(d) of the Disclosure Schedule) is entitled to receive, in cancellation and
settlement thereof, an amount equal to the product of (i) the number of shares
covered by such option, and (ii) the excess of $5.00 (the "Tender Price") over
the exercise price of the option. Section 2.1(d) further provides that the
foregoing payment is to be made no later than the date payment is made for
shares tendered by Xxxxxxxx shareholders pursuant to the tender offer
contemplated by the Agreement (the "Acceptance Date").
Subsequent to the execution of the Agreement, Piccadilly was advised by
Xxxxxxxx that the Agreement and the accompanying Disclosure Schedule prepared by
Xxxxxxxx did not quantify the potential issuance, following the date of the
Agreement, of shares of Xxxxxxxx Common Stock, as well as options to acquire
additional shares of Xxxxxxxx Common Stock, under Morrison's Management Stock
Option Program (the "Program"). Under the terms of the Program, certain eligible
employees were afforded the opportunity to accumulate an equity position in
Xxxxxxxx on a fiscal quarterly basis.
By letter dated March 23, 1998, Xxxxxxxx notified 61 employees (the
"Notified Employees") that they had the right, based on the achievement of
specified performance goals for the fiscal quarter ended February 28, 1998, to
purchase (the "Purchase Right") either $3,000 or $8,000 in value of newly issued
shares of Morrison's common stock (the "Base Shares") at the price of $2.8125
per share, which was the per share closing sales price of Xxxxxxxx Common Stock
on the last day of such fiscal quarter (such price being referred to herein as
the "Purchase Price"). The Purchase Right was exercisable by each of the
Notified Eligible Employees until April 30, 1998, and, if exercised, a Notified
Employee would receive, in addition to the Base Shares, (i) additional shares of
Xxxxxxxx Common Stock equal to 15% of the number of shares purchased upon
exercise of the Purchase Right
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Xxxxxxxx Restaurants Inc.
May 18, 1998
Page 2
(the "Bonus Shares"), and (ii) options to acquire a number of shares of Xxxxxxxx
Common Stock (the "Option Shares") equal to the product of (A) 3 and (B) the sum
of the Base Shares and Bonus Shares, such options being exercisable for the
Purchase Price.
Xxxxxxxx has represented to Piccadilly that 18 of the Notified
Employees (the "Electing Employees") have taken the necessary actions to
exercise the Purchase Right and that such Electing Employees have the right to
receive 21,791 Base Shares, 3,269 Bonus Shares, and options to acquire 75,180
shares of Xxxxxxxx Common Stock. Xxxxxxxx has further represented to Piccadilly
that no other employee participant in the Program has taken the actions
necessary to exercise the Purchase Right.
Xxxxxxxx and Piccadilly agree that in lieu of the issuance of the Base
Shares, Bonus Shares and options for the Option Shares, it is more expeditious,
and consistent with the treatment of other outstanding options to acquire shares
of Xxxxxxxx Common Stock, to arrange for a cash payment in satisfaction and
cancellation thereof to be made by Piccadilly to each of the Electing Employees.
Accordingly, Piccadilly agrees that no later than the Acceptance Date, it shall
pay, or arrange to be paid, to each of the Electing Employees who has
countersigned the letter attached hereto as Appendix A, the following:
(i) with respect to each Base Share that an Electing Employee would
otherwise have been entitled to receive, an amount equal to the difference
between the Tender Price and the Purchase Price;
(ii) with respect to each Bonus Share that an Electing Employee would
otherwise have been entitled to receive, an amount equal to the Tender Price;
and
(iii) with respect to each Option Share, the difference between the
Tender Price and the Purchase Price.
Xxxxxxxx also agrees to use commercially reasonable efforts to obtain
from the following persons the written consent to the cancellation, on the terms
provided in Section 2.1(d) of the Agreement, of all options to purchase Xxxxxxxx
Common Stock held by them: Xxxxxx Xxxxx, X. X. Xxxxxx, Xxxxxx X. Xxxxx, all
persons holding options granted under the 1987 Xxxxxxxx Restaurants Inc. Stock
Bonus Plan and all persons holding options granted under the Xxxxxxxx Inc. Stock
Incentive and Deferred Compensation Plan for Directors.
Xxxxxxxx agrees to deliver the letter attached as Appendix A to each
Electing Employee promptly and to use commercially reasonable efforts to secure
the consent of the Electing Employee provided therein.
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Xxxxxxxx Restaurants Inc.
May 18, 1998
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If the foregoing letter is acceptable to you, please so indicate by
countersigning in the space provided below.
PICCADILLY CAFETERIAS, INC.
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. XxXxxxx
President and Chief
Executive Officer
Agreed to and accepted this 19th
day of May, 1998.
XXXXXXXX RESTAURANTS INC.
By: /s/ XXXXXX X. XXXXX
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