AGREEMENT AND PLAN OF MERGER

 

 

dated as of

 

November 17, 2005

 

among

 

Roadhouse Grill, Inc.

(“Company"),

 

Steakhouse Partners, Inc.

(“Acquiror”)

 

and Acquiror’s wholly-owned subsidiary,

 

RGI Acquisition Corp.

(“Merger Sub”)

 

 

--------------------------------------------------------------------------------

 

 

TABLE OF CONTENTS

 

 

 

Page

ARTICLE 1

DEFINITIONS

1

 

Section 1.01.

Definitions

1

ARTICLE 3

THE MERGER

7

 

Section 3.01.

The Merger

7

 

Section 3.02.

Conversion of Shares

7

 

Section 3.03.

Surrender and Payment

9

 

Section 3.04.

Dissenting Shares

11

 

Section 3.05.

Stock Options

11

 

Section 3.07.

Adjustments

11

 

Section 3.08.

Withholding Rights

11

 

Section 3.09.

Lost Certificates

12

ARTICLE 4

THE SURVIVING CORPORATION

12

 

Section 4.01.

Certificate of Incorporation

12

 

Section 4.02.

Bylaws

12

 

Section 4.03.

Directors and Officers

12

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

12

Section 5.01.

Corporate Existence and Power

12

Section 5.02.

Corporate Authorization

13

Section 5.03.

Governmental Authorization

13

Section 5.04.

Non-contravention

13

Section 5.05.

Capitalization

14

Section 5.07.

SEC Filings

15

Section 5.08.

Financial Statements

15

Section 5.09.

Disclosure Documents

17

Section 5.10.

Absence of Certain Changes

17

Section 5.11.

No Undisclosed Material Liabilities

19

Section 5.12.

Compliance with Laws and Court Orders

19

Section 5.13.

Litigation

20

Section 5.14.

Finders’ Fees

20

Section 5.15.

Tax Matters

20

Section 5.16.

Employee Benefit Plans

22

Section 5.17.

Environmental Matters

25

Section 5.19.

Intellectual Property

28

Section 5.20.

Material Contracts

28

Section 5.21.

Employees

29

Section 5.22.

Investment Company

31

Section 4.28.

Title to Property; Encumbrances

31

Section 4.28.

Trading with the Enemy Act; Patriot Act

31

 

 

i

 

--------------------------------------------------------------------------------

 

 

ARTICLE 6

REPRESENTATIONS AND WARRANTIES OF ACQUIROR

31

 

Section 6.01.

Corporate Existence and Power

31

 

Section 6.02.

Corporate Authorization

32

 

Section 6.03.

Governmental Authorization

32

 

Section 6.04.

Non-contravention

32

 

Section 6.05.

Disclosure Documents

33

 

Section 6.06.

Finders’ Fees

33

 

Section 6.07.

Interim Operations of Merger Sub

33

ARTICLE 7

COVENANTS OF THE COMPANY

34

Section 7.01.

Conduct of the Company

34

Section 7.01.

Shareholder Meeting; Consent; Proxy Material

36

Section 7.03.

Access to Information

36

Section 7.05.

Notices of Certain Events

39

Section 7.06.

FIRPTA Certificate

40

Section 7.07.

Voting Agreements

40

ARTICLE 8

COVENANTS OF ACQUIROR AND THE COMPANY

40

Section 8.01.

Best Efforts

40

Section 8.02.

Certain Filings

41

Section 8.03.

Public Announcements

41

Section 8.04.

Further Assurances

41

Section 8.06.

Employee Matters

42

Section 8.07.

Notices of Certain Events

42

Section 8.08.

Indemnification; Directors and Officers Insurance

42

ARTICLE 9

CONDITIONS TO THE MERGER

44

 

Section 9.01.

Conditions to Obligations of Each Party

44

ARTICLE 10

TERMINATION

46

 

Section 10.01.

Termination

46

 

Section 10.02.

Effect of Termination

48

ARTICLE 11

MISCELLANEOUS

48

 

Section 11.01.

Notices

48

 

Section 11.02.

Survival of Representations and Warranties

49

 

Section 11.03.

Amendments; No Waivers

49

 

Section 11.04.

Expenses

49

 

 

ii

 

--------------------------------------------------------------------------------

 

 

Section 11.05.

Binding Effect; Benefit; Assignment

50

Section 11.06.

Governing Law

50

Section 11.07.

Jurisdiction

50

Section 11.08.

WAIVER OF JURY TRIAL

51

Section 11.09.

Counterparts; Effectiveness

51

Section 11.10.

Entire Agreement

51

Section 11.11.

Captions

51

Section 11.12.

Severability

51

Section 11.13.

Specific Performance

52

Section 11.14.

Obligations of Subsidiaries

52

Section 11.15.

Company Letter

52

 

 

iii

 

--------------------------------------------------------------------------------

 

 

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER dated as of November 17, 2005, (the “Agreement”)
among Roadhouse Grill, Inc., a Florida corporation (“Company”), Steakhouse
Partners, Inc., a Delaware corporation (“Acquiror”), and RGI Acquisition Corp.,
a Florida corporation and a wholly-owned subsidiary of Acquiror (“Merger Sub”).

WHEREAS, the respective boards of directors of each of Acquiror, Merger Sub and
Company have determined that it is advisable and in the best interests of their
respective entities and stockholders to enter into this Agreement and have
approved and adopted this Agreement and the merger of Merger Sub with and into
the Company (the “Merger”) upon the terms and subject to the conditions set
forth in this Agreement; and

WHEREAS, the Company, Acquiror and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.

NOW THEREFORE, in consideration of the premises, and of the representations,
warranties, covenants and agreements contained herein, the parties hereto agree
as follows:

ARTICLE 1

DEFINITIONS

Section 1.01.

Definitions.

 

(a)

The following terms, as used herein, have the following meanings:

“Acquisition Proposal” means, other than the transactions contemplated by this
Agreement, any Third-Party offer, proposal or inquiry relating to, or any
Third-Party indication of interest in, (i) any acquisition or purchase, direct
or indirect, of 25% or more of the consolidated assets of the Company or 25% or
more of any class of equity or voting securities of the Company, (ii) any tender
offer (including a self-tender offer) or exchange offer that, if consummated,
would result in any Third Party’s beneficially owning 25% or more of any class
of equity or voting securities of the Company, (iii) a merger, consolidation,
share exchange, business combination, sale of substantially all the assets,
reorganization, recapitalization, liquidation, dissolution or other similar
transaction involving the Company, or (iv) any other transaction the
consummation of which could reasonably be expected to impede, interfere with,
prevent or materially delay the Offer or Merger.

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person.

 

1

 

--------------------------------------------------------------------------------

 

 

“Business Day” means a day other than a Saturday, Sunday or other day on which
commercial banks in New York City, NY are authorized or required by law to
close.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company Balance Sheet” means the consolidated balance sheet of the Company as
of the Company Balance Sheet Date, and the footnotes thereto set forth in the
Company 10-Q.

“Company Balance Sheet Date” means July 24, 2005.

“Company Letter” means the letter from the Company to the Acquiror dated the
date hereof, which letter relates to this Agreement and is designated therein as
the Company Letter.

“Company 10-K” means the Company’s Annual Report on Form 10-K for the fiscal
year ended April 24, 2005.

“Company 10-Q” means the Company’s Quarterly Report on Form 10-Q for the
thirteen weeks ended July 24, 2005.

"Debt" shall mean: (i) obligations with respect to borrowed money that
constitute debt of the Company on the Company's balance sheet calculated in
accordance with GAAP applied on a consistent basis and determined in the same
manner as the amounts listed as "Long-term debt" and "Current portion of
long-term debt" on the balance sheet contained in the Company 10-Q, (ii) term
debt that is due to related parties (if not otherwise included in subsection (i)
above), and (iii) to the extent that between the date of the Company 10-Q and
the Effective Time the Company sells additional amounts of credits for food,
beverage, goods and/or services to a loyalty and rewards company, or otherwise
during such period of time engages in a similar type of arrangement or
transaction having the effect of borrowed money, the amount of such additional
discounted credits or the balance of such other additional similar arrangements
or transactions, on the Company's balance sheet.

"Enumerated Transaction Expenses" means the transaction expenses designated as
Enumerated Transaction Expenses in Section 10.04 of the Company Letter.

“Environment” means air, surface water, ground water or land, including land
surface or subsurface, and any receptors such as persons, wildlife, fish or
other natural resources.

“Environmental Clean-Up Site” means any location which is listed or proposed for
listing on the National Priorities List, the Comprehensive Environmental
Response, Compensation and Liability Information System, or on

 

2

 

--------------------------------------------------------------------------------

 

any similar state list of sites relating to investigation or cleanup, or which
is the subject of any pending or threatened action, suit, proceeding or
investigation, formal or informal, related to or arising from any location at
which there has been a Release or threatened or suspected Release of a Hazardous
Material.

“Environmental Laws” means any federal, state, local or foreign law, regulation,
rule, judgment, order, decree or injunction, relating to occupational health and
safety, the environment or to pollutants, contaminants, wastes or chemicals or
any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous
substances, wastes or materials.

“Environmental Permits” means all permits, licenses, franchises, certificates,
approvals and other similar authorizations of governmental authorities required
by Environmental Laws in connection with the business of the Company or any of
its Subsidiaries as currently conducted.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” of any entity means any other entity that, together with such
entity, would be treated as a single employer under Section 414 of the Code.

“Florida Law” means the Florida Business Corporation Act, as currently in effect
as of the date of this Agreement.

"GAAP" means generally accepted accounting principles in the United States.

“Hazardous Materials” means (a) any chemicals, materials, substances or waste,
including, containing or constituting petroleum or petroleum products, solvents
(including chlorinated solvents), nuclear or radioactive materials, asbestos in
any form that is or could become friable, radon, lead-based paint, urea
formaldehyde foam insulation or polychelorinated biphenyls, or (b) any
chemicals, materials, substances or waste which are now defined as or included
in the definition of “hazardous substances,” “hazardous wastes,” “hazardous
materials,” extremely hazardous wastes,” “restricted hazardous wastes,” “toxic
substances,” “toxic pollutants” or words of similar import under any
Environmental Law.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

“Intellectual Property Rights” means (i) national and multinational statutory
invention registrations, patents and patent applications (including all
reissues, divisions, continuations, continuations-in-part, extensions and
reexaminations thereof) registered or applied for in the United States and all
other nations throughout the world, and all improvements to the inventions
disclosed in

 

3

 

--------------------------------------------------------------------------------

 

each such registration, patent or patent application, (ii) trademarks, service
marks, trade dress, logos, domain names, trade names and corporate names
(whether or not registered) in the United States, including all variations,
derivations, combinations, registrations and applications for registration of
the foregoing and all goodwill associated therewith, (iii) copyrights (whether
or not registered) and registrations and applications for registration thereof
in the United States and all other nations throughout the world, including all
derivative works, moral rights, renewals, extensions, reversions or restorations
associated with such copyrights, now or hereafter provided by law, regardless of
the medium of fixation or means of expression, (iv) computer software (including
source code, object code, firmware, operating systems and specifications), (v)
trade secrets and, whether or not confidential, business information (including
pricing and cost information, business and marketing plans and customer and
supplier lists) and know-how (including production processes and techniques and
research and development information), (vi) industrial designs (whether or not
registered), (vii) databases and data collections, (viii) copies and tangible
embodiments of any of the foregoing, in whatever form or medium, (ix) all rights
to obtain and rights to apply for patents, and to register trademarks and
copyrights, (x) all rights in all of the foregoing provided by treaties,
conventions and common law and (xi) all rights to sue or recover and retain
damages and costs and attorneys’ fees for past, present and future infringement
or misappropriation of any of the foregoing.

“Knowledge” of any Person that is not an individual means (i) in the case of the
Company the knowledge which any of the Company’s Officers actually, or would be
expected to, have and (ii) in all other cases, the knowledge which any of such
Person’s Officers actually, or would be expected to, have, in each case, after
due inquiry.

“Licensed Intellectual Property Rights” means all Intellectual Property Rights
owned by a Person other than the Company and licensed or sublicensed to the
Company, other than any such Intellectual Property Rights solely relating to
commercial “off-the-shelf” or “shrink wrap” software.

“Lien” means, with respect to any property or asset, any mortgage, lien, pledge,
charge, security interest, encumbrance or other adverse claim of any kind in
respect of such property or asset other than a statutory lien. For purposes of
this Agreement, a Person shall be deemed to own subject to a Lien, any property
or asset that it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such property or asset.

“Material Adverse Effect” means, with respect to any Person, a material adverse
effect on the financial condition, business, liabilities, assets or results of
operations of such Person and its Subsidiaries, taken as a whole, except any
such effect resulting from or arising in connection with the announcement of the

 

4

 

--------------------------------------------------------------------------------

 

Agreement, the Merger or the transactions contemplated hereby or thereby,
including resignations of employees.

“1933 Act” means the Securities Act of 1933, as amended.

“1934 Act” means the Securities Exchange Act of 1934, as amended.

"Net Debt" shall mean Debt as of the Effective Time, net of amounts set forth in
Schedule 2.02(a) of the Company Letter.

“Officer” of any Person means (i) in the case of the Company, the persons listed
in Item 1.01 of the Company Letter and (ii) in all other cases, any executive
officer of such Person within the meaning of Rule 3b-7 of the 1934 Act.

“Owned Intellectual Property Rights” means all Intellectual Property Rights
owned by either the Company or any Subsidiary of the Company.

“Person” means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.

“Real Property Lease” means any real property lease, sublease, license, or other
occupancy agreement, including, without limitation, any modification, amendment
or supplement thereto and any other related document or agreement executed or
entered into by the Company (including, without limitation, any of the foregoing
which the Company has subleased or assigned to another Person and as to which
the Company remains liable).

“Registered Intellectual Property Rights” means all Intellectual Property Rights
of which the Company or any Subsidiary is the registered owner or has applied to
become the registered owner.

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing of a Hazardous
Material into the Environment.

“SEC” means the Securities and Exchange Commission.

“Shares” means the shares of common stock, $0.03 par value, of the Company.

“Site” means any of the real property currently owned, leased, occupied, used or
operated by the Company, including all soil, subsoil, surface waters and
groundwater.

“Subsidiary” means, with respect to any Person, any entity of which securities
or other ownership interests having ordinary voting power to elect a

 

5

 

--------------------------------------------------------------------------------

 

majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person.

“Third Party” means any Person as defined in this Agreement or any partnership,
syndicate or other group deemed to be a “person” under Section 13(d) of the 1934
Act, other than Acquiror or any of its Affiliates.

Any reference in this Agreement to (i) a statute shall be to such statute, as
amended from time to time, and to the rules and regulations promulgated
thereunder and (ii) the word “including” shall mean “including, without
limitation”.

(b) Each of the following terms is defined in the Section set forth opposite
such term:

Term

Section

Aggregate Consideration Payable to Shareholders....

2.02

Articles

3.02

Agreement

Recitals

Bylaws

3.02

Certificates

2.03

Company

Recitals

Company Disclosure Documents

4.08

Company Option

2.05

Company Proxy Statement

4.08

Company SEC Documents

4.06

Company Securities

4.05

Company Shareholder Approval

6.02

Company Shareholder Meeting

6.02

Confidentiality Agreement

6.03

D&O Insurance

7.07

Effective Time

2.01

Employee Plans

4.15

Exchange Agent

2.03

Indemnified Person

7.07

Material Contract

4.23

Merger

Recitals

Merger Consideration

2.02

Merger Sub

Recitals

Option Plan

2.05

Acquiror

Recitals

Superior Proposal

6.04

Surviving Corporation

2.01

Tax

4.14

Tax Authority

4.14

Tax Return

4.14

 

 

6

 

--------------------------------------------------------------------------------

 

 

 

Term

Section

Termination Fee

10.04

Transfer Taxes

10.04

Uncertificated Shares

2.03

Voting Agreement

6.07

 

ARTICLE 2

THE MERGER

Section 2.01.

The Merger.

(a)        At the Effective Time, Merger Sub shall be merged with and into the
Company in accordance with Florida Law, whereupon the separate existence of
Merger Sub shall cease, and the Company shall be the surviving corporation (the
“Surviving Corporation”).

(b)        As soon as practicable, but no later than the third Business Day
after satisfaction or, to the extent permitted hereunder, waiver of all
conditions to the Merger, the Company and Merger Sub shall, and Acquiror shall
cause Merger Sub to, file a certificate of merger in a form specified by
Acquiror with the Florida Secretary of State and make all other filings or
recordings required by Florida Law in connection with the Merger. The Merger
shall become effective at such time (the “Effective Time”) as the certificate of
merger is duly filed with the Florida Secretary of State or at such later time
as is specified in the certificate of merger.

(c)        From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to all
of the obligations, liabilities, restrictions and disabilities of the Company
and Merger Sub, all as provided under Florida Law.

Section 2.02.

Conversion of Shares.

At the Effective Time, by virtue of the Merger and without any action on the
part of the Company, the Acquiror, or Merger Sub:

(a)        except as otherwise provided in Section 2.02(b), Section 2.02(c) or
Section 2.04, each Share outstanding immediately prior to the Effective Time
shall be converted into the right to receive, net, $0.7723 per share, or an
aggregate of $23,566,200 (the "Aggregate Consideration Payable to Shareholders")
based on the 30,515,663 Shares expected to be outstanding at the Effective Time,
in cash, without interest (the “Merger Consideration”). Notwithstanding the
foregoing, in the following circumstances, the Aggregate Consideration Payable
to Shareholders, and thereby the amount payable to shareholders on a per Share
basis as set forth above, shall be reduced, as follows:

 

7

 

--------------------------------------------------------------------------------

 

 

(i)         if the Net Debt at the Effective Time exceeds $6,798,000, then the
Aggregate Consideration Payable to Shareholders shall be reduced by the amount
by which the Net Debt due at the Effective Time exceeds $6,798,000; and

(ii)         if the Enumerated Transaction Expenses due at the Effective Time
exceed $2,350,000, then the Aggregate Consideration Payable to Shareholders
shall be reduced by the amount by which the Enumerated Transaction Expenses due
at the Effective Time exceed $2,350,000.

As soon as reasonably practicable, but not later than ten business days before
the anticipated Effective Time, the Company shall deliver to Acquiror (i)
schedules setting forth with specificity the anticipated Net Debt and the
anticipated Enumerated Transaction Expenses expected to be due as of the
Effective Time (“Anticipated Amounts”), (ii) supporting information with the
respect to the calculation of the Anticipated Amounts and (iii) a certificate of
the Chief Financial Officer of the Company attesting to the manner of the
calculation of the Anticipated Amounts.  Within five business days thereafter,
the Acquiror shall determine whether it agrees or disagrees with the Company’s
calculations of the Anticipated Amounts. If the Acquiror does not agree with
Company’s calculations, it shall, on or before the fifth business day before the
Effective Time, provide the Company with schedules setting forth with
specificity Acquiror’s calculations of the Anticipated Amounts. Thereafter,
between the date that Acquiror presents its schedules and the Effective Time,
the Company and the Acquiror shall negotiate in good faith to resolve any such
disagreements before the Effective Time.

If after such discussions the parties are unable to reach an agreement as to the
Anticipated Amounts to be outstanding as of the Effective Time, and as a result
of such disagreement a reduction in the Aggregate Consideration Payable to
Shareholders (or a larger reduction, as the case may be) would be required under
this Section 2.02(a), the parties shall calculate the reduction in the Aggregate
Consideration Payable to Shareholders based solely on Acquiror’s calculations
and such computation shall be used for purposes of determining the Merger
Consideration to be paid at the Effective Time. Notwithstanding the increased
Merger Consideration that would have been payable to the Company’s shareholders
hereunder if the Company’s determination of the Anticipated Amounts had been
used, such excess amount shall be placed in escrow at the Effective Time with an
escrow agent reasonably satisfactory to both Company and Acquiror (“Escrowed
Funds”).  At such time, the Acquiror and the Company shall also select an
arbitrator, which shall be a firm of independent certified public accountants
mutually agreed upon by the Acquiror and the Company (but not the Company’s or
the Acquiror’s independent certified public accounting firms), to review such
matters and request that such arbitrator determine the Net Debt and the
Enumerated Transaction Expenses as of the Effective Time. The arbitrator’s

 

8

 

--------------------------------------------------------------------------------

 

decision shall be made as soon as practicable, but no later than 60 days after
the Effective Time. The decision of the arbitrator shall be issued in writing to
those persons who are the Company’s shareholders immediately prior to the
Effective Time and to the Acquiror. The arbitrator's decision shall be final,
non-appealable and binding on all parties. Based on the arbitrator's decision,
the Escrowed Funds shall be paid to the holders of the Shares (as part of the
Merger Consideration) or to the Acquiror, as applicable. In any event, the
Company shall pay the fees of the arbitrator.

(b)        each Share held by the Company as treasury stock or owned by Acquiror
or any of its Subsidiaries immediately prior to the Effective Time shall be
canceled, and no payment shall be made with respect thereto; and

(c)        each share of common stock of Merger Sub outstanding immediately
prior to the Effective Time shall be converted into and become one share of
common stock of the Surviving Corporation with the same rights, powers and
privileges as the shares so converted and shall constitute the only outstanding
shares of capital stock of the Surviving Corporation.

Section 2.03.

Surrender and Payment.

(a)        Prior to the Effective Time, Acquiror shall appoint Corporate Stock
Transfer or another agent who shall be reasonably satisfactory to the Company
(the “Exchange Agent”) pursuant to an agreement that shall be reasonably
satisfactory to the Company, for the purpose of exchanging for the Merger
Consideration (i) certificates representing Shares (the “Certificates”) or (ii)
uncertificated Shares (the “Uncertificated Shares”). Acquiror shall make
available to the Exchange Agent, as needed, the Merger Consideration to be paid
in respect of the Certificates and the Uncertificated Shares. Such funds shall
be invested by the Exchange Agent as directed by Acquiror or the Surviving
Corporation pending payment thereof by the Exchange Agent to the holders of the
Shares; provided, however, that such investments shall be held by the Exchange
Agent and only be in obligations of or guaranteed by the United States of
America, in commercial paper obligations rated A-1 or P-1 or better by Moody’s
Investors Service, Inc. or Standard & Poor’s Corporation, respectively, or in
certificates of deposit, bank repurchase agreements or banker’s acceptances of
commercial banks with capital exceeding $10 billion. Earnings from such
investments shall be the sole and exclusive property of Acquiror and the
Surviving Corporation, and no part of such earnings shall accrue to the benefit
of holders of Shares. Promptly after the Effective Time, but no later than 5
Business Days following the Effective Time, Acquiror shall send, or shall cause
the Exchange Agent to send, to each holder of Shares at the Effective Time a
letter of transmittal and instructions in form and substance reasonably
acceptable to the Company (which shall specify that the delivery shall be
effected, and risk of loss and title shall pass, only upon proper delivery of
the Certificates or transfer of the Uncertificated Shares to the Exchange Agent)
for use in such exchange.

 

9

 

--------------------------------------------------------------------------------

 

 

(b)        Each holder of Shares that have been converted into the right to
receive the Merger Consideration shall be entitled to receive, upon (i)
surrender to the Exchange Agent of a Certificate, together with a properly
completed letter of transmittal, or (ii) receipt of an “agent’s message” by the
Exchange Agent (or such other evidence, if any, of transfer as the Exchange
Agent may reasonably request) in the case of a book-entry transfer of
Uncertificated Shares, the Merger Consideration payable for each Share
represented by a Certificate or for each Uncertificated Share. Until so
surrendered or transferred, as the case may be, each such Certificate or
Uncertificated Share shall represent after the Effective Time for all purposes
only the right to receive such Merger Consideration.

(c)        If any portion of the Merger Consideration is to be paid to a Person
other than the Person in whose name the surrendered Certificate or the
transferred Uncertificated Share is registered, it shall be a condition to such
payment that (i) either such Certificate shall be properly endorsed or shall
otherwise be in proper form for transfer or such Uncertificated Share shall be
properly transferred and (ii) the Person requesting such payment shall pay to
the Exchange Agent any transfer or other taxes required as a result of such
payment to a Person other than the registered holder of such Certificate or
Uncertificated Share or establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not payable.

(d)        After the Effective Time, there shall be no further registration of
transfers of Shares. If, after the Effective Time, Certificates or
Uncertificated Shares are presented to the Surviving Corporation, they shall be
canceled and exchanged for the Merger Consideration provided for, and in
accordance with the procedures set forth, in this Article 2.

(e)        Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.03(a) (and any interest or other income
earned thereon) that remains unclaimed by the holders of Shares one year after
the Effective Time shall be returned to Acquiror, upon demand, and any such
holder who has not exchanged such Shares for the Merger Consideration in
accordance with this Section 2.03 prior to that time shall thereafter look only
to Acquiror for payment of the Merger Consideration in respect of such Shares
without any interest thereon. Notwithstanding the foregoing, Acquiror shall not
be liable to any holder of Shares for any amount paid to a public official
pursuant to applicable abandoned property, escheat or similar laws. Any amounts
remaining unclaimed by holders of Shares two years after the Effective Time (or
such earlier date immediately prior to such time when the amounts would
otherwise escheat to or become property of any governmental authority) shall
become, to the extent permitted by applicable law, the property of Acquiror free
and clear of any claims or interest of any Person previously entitled thereto.

(f)         Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.03(a) to pay for Shares for which appraisal
rights have been perfected shall be returned to Acquiror, upon demand.

 

10

 

--------------------------------------------------------------------------------

 

 

Section 2.04.         Dissenting Shares. Notwithstanding Section 2.02, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal for such Shares in accordance with Florida Law shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect, withdraws or otherwise loses the right to appraisal. If, after
the Effective Time, such holder fails to perfect, withdraws or loses the right
to appraisal, such Shares shall be treated as if they had been converted as of
the Effective Time into a right to receive the Merger Consideration which, to
the extent permitted by law, will bear no interest. The Company shall give
Acquiror prompt notice of any demands received by the Company for appraisal of
Shares, and Acquiror shall have the right to participate in all negotiations and
proceedings with respect to such demands. Except with the prior written consent
of Acquiror, the Company shall not make any payment with respect to, or offer to
settle or settle, any such demands.

Section 2.05.         Stock Options. At the Effective Time, each option to
purchase Shares that is outstanding immediately prior to the Effective Date (a
“Company Option”) pursuant to the Company’s 2003 Stock Option Plan (the “Option
Plan”) shall be cancelled by the Company in consideration for which the holder
thereof shall thereupon be entitled to receive promptly (but in no event later
than five Business Days) after the Effective Time, a cash payment from Acquiror
in respect of such cancellation in an amount (if any) equal to:

(i)         the product of (x) the number of Shares subject to such Company
Option and (y) the price per Share represented by the per share consideration in
Section 2.02(a), minus

(ii)         the exercise price per Share of each such Company Option (in all
cases, $0.36 per share) and (ii) all applicable federal, state and local taxes
required by law to be withheld.

Section 2.06.         Adjustments. If, during the period between the date of
this Agreement and the Effective Time, any change in the outstanding Shares
shall occur, including by reason of any reclassification, recapitalization,
stock split or combination, exchange or readjustment of Shares, or stock
dividend thereon with a record date during such period, the Merger Consideration
and any other amounts payable pursuant to this Agreement shall be appropriately
adjusted.

Section 2.07.         Withholding Rights. Each of the Surviving Corporation and
Acquiror shall be entitled to deduct and withhold from the consideration
otherwise payable to any Person pursuant to this Article 2 such amounts as it is
required to deduct and withhold with respect to the making of such payment under
any provision of federal, state, local or foreign tax law. If the Surviving
Corporation or Acquiror, as the case may be, so withholds amounts, such amounts
shall be treated for all purposes of this Agreement as having been paid to the

 

11

 

--------------------------------------------------------------------------------

 

holder of the Shares in respect of which the Surviving Corporation or Acquiror,
as the case may be, made such deduction and withholding.

Section 2.08.         Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent shall pay, in exchange for such lost, stolen or destroyed
Certificate, the Merger Consideration to be paid in respect of the Shares
represented by such Certificate, as contemplated by this Article 2.

ARTICLE 3

THE SURVIVING CORPORATION

Section 3.01.         Certificate of Incorporation. The Articles of
Incorporation of the Company as in effect at the Effective Time shall be amended
in its entirety as set forth on Exhibit A hereto and, as so amended, shall be
the certificate of incorporation of the Surviving Corporation (the “Articles”)
until amended in accordance with applicable law.

Section 3.02.         Bylaws. The bylaws of Merger Sub as in effect immediately
prior to the Effective Time shall be the bylaws of the Surviving Corporation
(the “Bylaws”) until thereafter amended as provided therein or by applicable
law.

Section 3.03.         Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law the directors and Officers of Merger Sub at the Effective Time
shall be the directors and Officers of the Surviving Corporation.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Acquiror that:

Section 4.01.         Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Florida and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted, except for those licenses, authorizations,
permits, consents and approvals the absence of which would not have,
individually or in the aggregate, a Material Adverse Effect on the Company. The
Company is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where such qualification is necessary, except as
would not have, individually or in the aggregate, a Material Adverse Effect on
the Company. The

 

12

 

--------------------------------------------------------------------------------

 

Company has heretofore delivered to Acquiror true and complete copies of the
certificate of incorporation and bylaws of the Company as currently in effect.
The Company does not have any Subsidiaries.

Section 4.02.         Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby are within the Company’s corporate
powers and, except for the affirmative vote of the holders of a majority of the
outstanding Shares in connection with the consummation of the Merger, have been
duly authorized by all necessary corporate action on the part of the Company.
The affirmative vote of the holders of a majority of the outstanding Shares is
the only vote of the holders of any of the Company’s capital stock necessary in
connection with the consummation of the Merger. This Agreement constitutes a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws relating to or
affecting creditor’s rights and remedies generally, and subject as to
enforceability of general principles of equity (whether considered in a
proceeding in equity or at law).

Section 4.03.         Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no action by or in respect of,
or filing with, any governmental body, agency, official or authority, domestic,
foreign or supranational, other than (i) the filing of a certificate of merger
with respect to the Merger with the Florida Secretary of State and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, (ii) compliance with any applicable requirements of
the HSR Act and of laws, rules and regulations analogous to the HSR Act existing
in foreign jurisdictions, (iii) compliance with any applicable requirements of
the 1933 Act, the 1934 Act and any other applicable securities or takeover laws,
whether state or foreign, (iv) compliance with the rules and regulations of any
over the counter market or national securities exchange, and (v) any actions or
filings the absence of which could not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement.

Section 4.04.        Non-contravention. The execution, delivery and performance
by the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not (i) contravene, conflict
with, or result in any violation or breach of any provision of the certificate
of incorporation or bylaws of the Company, (ii) assuming compliance with the
matters referred to in Section 4.03, contravene, conflict with, or result in a
violation or breach of any provision of any applicable law, statute, ordinance,
rule, regulation, judgment, injunction, order or decree, (iii) require any

 

13

 

--------------------------------------------------------------------------------

 

consent or other action by any Person under, constitute a default or an event
that, with or without notice or lapse of time or both, could become a default
under, or cause or permit the termination, cancellation, acceleration or other
change of any right or obligation or the loss of any benefit to which the
Company is entitled under any provision of any agreement or other instrument
binding upon the Company or any license, franchise, permit, certificate,
approval or other similar authorization affecting the assets or business of the
Company, or (iv) result in the creation or imposition of any Lien on any asset
of the Company, except in the case of each of clauses (ii), (iii) and (iv) as
would not have, individually or in the aggregate, a Material Adverse Effect on
the Company.

Section 4.05.

Capitalization.

(a)        The authorized capital stock of the Company consists of 35,000,000
Shares. As of the date of this Agreement, there are outstanding:

(i)

29,220,663 Shares, and

(ii)         employee stock options to purchase an aggregate of 1,295,000
Shares.

(b)        All outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. Except as
disclosed above or in Item 4.05 of the Company Letter, there are outstanding (a)
no shares of capital stock or other voting securities of the Company, (b) no
securities or indebtedness of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company, and (c) no options,
warrants or other rights to acquire from the Company , and no preemptive or
similar rights, subscription or other rights, convertible securities,
agreements, arrangements or commitments of any character, relating to the
capital stock of the Company, obligating the Company to issue, transfer or sell,
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company or obligating
the Company to grant, extend or enter into any such option, warrant,
subscription or other right, convertible security, agreement, arrangement or
commitment (the items in clauses (a), (b) and (c) being referred to collectively
as the "Company Securities"). Except as set forth in the Company Letter, there
are no outstanding obligations of the Company to repurchase, redeem or otherwise
acquire any Company Securities. Further, except for the Voting Agreements and as
set forth in the Company Letter or as otherwise contemplated by this Agreement,
there are not as of the date hereof and there will not be at the Effective Time
any stockholder agreements, voting trusts or other agreements or understandings
to which the Company is a party or by which it is bound relating to the voting
of any shares of the capital stock of the Company or any arrangements,
agreements or other understandings to which the Company is a party or by which
it is bound that will limit in any way the solicitation of proxies

 

14

 

--------------------------------------------------------------------------------

 

by or on behalf of the Company from, or the casting of votes by, the
stockholders of the Company with respect to the Merger.

Section 4.06.

SEC Filings.

(a)        The Company has made available to Acquiror (i) the Company’s annual
reports on Form 10-K (as may have been amended prior to the date hereof) for its
fiscal years ended April 24, 2005, April 25, 2004, April 27, 2003, and April 28,
2002, (ii) its proxy or information statements relating to meetings of the
stockholders of the Company held (or actions taken without a meeting by such
stockholders) since October 1, 2002, and (iii) all of its other reports,
statements, schedules and registration statements filed with the SEC since
October 1, 2002 (the documents referred to in this Section 4.06(a),
collectively, the “Company SEC Documents”.) The Company has made available to
Acquiror all correspondence of the Company, including any comment letters and
the responses thereto, from or to the SEC or its staff since October 1, 2002.

(b)        As of its filing date, each Company SEC Document complied, and each
such Company SEC Document filed subsequent to the date hereof will comply as to
form in all material respects with the applicable requirements of the 1933 Act
and the 1934 Act, as the case may be.

(c)        As of its filing date (or, if amended or superceded by a filing prior
to the date hereof, on the date of such filing), each Company SEC Document filed
pursuant to the 1934 Act did not, and each such Company SEC Document filed
subsequent to the date hereof 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.

(d)        Each Company SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of
the date such statement or amendment became effective, did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading.

(e)        The Company has put in place disclosure controls and procedures, as
defined in Rule 13a-14(c) promulgated under the 1934 Act.

Section 4.07.        Sarbanes-Oxley Act; Financial Statements; Internal
Controls. The Company is in compliance in all material respects with all
applicable requirements of the Sarbanes-Oxley Act of 2002 (“SOX”) and all
applicable rules and regulations promulgated by the SEC thereunder that are
effective as to the Company of the date hereof, except as would not be
reasonably be expected to have a Material Adverse Effect. The audited
consolidated financial statements and unaudited consolidated interim financial
statements of the

 

15

 

--------------------------------------------------------------------------------

 

Company included in the Company SEC Documents fairly present, in all material
respects, in conformity with GAAP applied on a consistent basis (except as may
be indicated in the notes thereto), the consolidated financial position of the
Company and its consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods then ended
(subject to normal year-end adjustments in the case of any unaudited interim
financial statements). The books and records of the Company and its Subsidiaries
have been, and are being, maintained, in all material respects, in accordance
with GAAP and any other applicable legal and accounting requirements. The
Company’s system of internal controls over financial reporting are reasonably
sufficient in all material respects to provide reasonable assurance (i) that
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP, (ii) that receipts and expenditures are
executed in accordance with the authorization of management and (iii) regarding
prevention or timely detection of the unauthorized acquisition, use or
disposition of the Company’s assets that would have a Material Adverse Effect on
the Company’s financial statements. No significant deficiency or material
weakness was identified in management’s assessment of internal controls as of
July 24, 2005 (nor has any such deficiency or weakness been identified between
that date and the date of this Agreement). The Company’s “disclosure controls
and procedures”, as defined in Rules 13a-15(e) and 15d-15(e) of the 1934 Act,
are reasonably designed to ensure that (i) all material information, both
financial and non-financial that is required to be disclosed by the Company in
the reports that it files or submits under the 1934 Act, is recorded, processed,
summarized, and reported to the individuals responsible for preparing such
reports within the time periods specified in the rules and forms of the SEC, and
(ii) all such information is accumulated and communicated to the Company’s
management or to other individuals responsible for preparing such reports as
appropriate to allow timely decisions regarding required disclosure and to make
the certifications of the principal executive officer and principal financial
officer of the Company required under the 1934 Act with respect to such reports.
Since the date of their last certification filed with the SEC, neither the chief
executive officer of the Company nor the chief financial officer of the Company
has become aware of any fact, circumstance, or change that is reasonably likely
to result in a “significant deficiency” or a “material weakness” in the
Company’s internal controls over financial reporting. The audit committee of the
Board of Directors of the Company includes an Audit Committee Financial Expert,
as defined by Item 401(h)(2) of Regulation S-K. The Company has adopted a code
of ethics, as defined by Item 406(b) of Regulation S-K, for senior financial
officers, applicable to its principal financial officer, comptroller or
principal accounting officer, or persons performing similar functions. The
Company has promptly disclosed any change in or waiver of the Company’s code of
ethics with respect to any such persons, as required by Section 406(b) of SOX.
To the Company’s Knowledge, there have been no violations of provisions of the
Company’s code of ethics by any such persons.

 

16

 

--------------------------------------------------------------------------------

 

 

Section 4.08.

Disclosure Documents.

(a)        Each document required to be filed by the Company with the SEC or
required to be distributed or otherwise disseminated to the Company’s
stockholders in connection with the transactions contemplated by this Agreement
(the “Company Disclosure Documents”), including 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, when filed, distributed or disseminated, as applicable, will comply as
to form in all material respects with the applicable requirements of the 1934
Act.

(b)        (i) The Company Proxy Statement, as supplemented or amended, if
applicable, at the time such Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company and at the
time such stockholders vote on adoption of this Agreement and at the Effective
Time, and (ii) any Company Disclosure Document (other than the Company Proxy
Statement), at the time of the filing of such Company Disclosure Document or any
supplement or amendment thereto and at the time of any distribution or
dissemination thereof, 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. The representations and warranties contained in this Section 4.08(b)
will not apply to statements or omissions included in the Company Disclosure
Documents based upon information furnished to the Company in writing by or on
behalf of the Acquiror specifically for use therein.

(c)        The affirmative vote of the holders of a majority of the outstanding
Shares are the only votes of the holders of any class or series of the Company’s
capital stock necessary to adopt this Agreement.

Section 4.09.         Absence of Certain Changes. Since the date of the balance
sheet in the Company 10-Q, the business of the Company has been conducted in all
material respects in the ordinary course of business and, except as disclosed to
Acquiror in Item 4.09 of the Company Letter or in the Company SEC Documents
filed prior to the date hereof, there has not been:

(a)        any event, occurrence, development or state of circumstances or facts
that has had or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company;

(b)        any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company of any outstanding
shares of capital stock or other securities of, or other ownership interests in,
the Company;

 

17

 

--------------------------------------------------------------------------------

 

 

(c)        any amendment of any material term of any outstanding security of the
Company;

(d)        any incurrence, assumption or guarantee by the Company of any
indebtedness for borrowed money other than in the ordinary course of business
and in amounts and on terms consistent with past practices;

(e)        any creation or other incurrence by the Company of any Lien on any
material asset other than in the ordinary course of business consistent with
past practices and other than any such Lien which relates, individually or in
the aggregate, to an obligation or obligations of not more than $50,000;

(f)         any making of any loan, advance or capital contributions to or
investment in any Person;

(g)        any damage, destruction or other casualty loss not covered by
insurance affecting the business or assets of the Company that has had or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company;

(h)        any change in any method of accounting or accounting principles or
practice by the Company, except for any such change required by reason of a
concurrent change in GAAP or Regulation S-X under the 1934 Act;

(i)         any entering into of any material transaction or contract, or making
any material commitment to do the same, by the Company, except in the ordinary
course of business consistent with past practice;

(j)         any (i) entering into of an agreement providing for any severance or
termination pay to (or amendment to any existing arrangement with) any current
or former director, officer or employee of the Company, (ii) increase in
benefits payable under any existing severance or termination pay policies or
employment agreements covering any current or former director, officer or
employee of the Company, (iii) entering into any employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any current or former director, officer or employee of the
Company, (iv) establishment, adoption or amendment (except as required by
applicable law) of any labor, collective bargaining, bonus, profit-sharing,
thrift, pension, retirement, deferred compensation, compensation, stock option,
restricted stock or other benefit plan or arrangement covering any current or
former director, officer or employee of the Company, (v) increase in
compensation or bonus or increase in other benefits (including stock options or
other equity-based compensation) payable to any current or former director or
officer of the Company, or (vi) except in the ordinary course of business
constant with past practices, increase in compensation, bonus or other benefits
payable (including stock options or other equity-based compensation) or payment
of any

 

18

 

--------------------------------------------------------------------------------

 

bonus or similar remuneration to any current or former employee of the Company;

(k)        except as required by law, any material Tax election made or changed,
any annual income tax accounting period changed, any material change in a method
of income tax accounting, any amended Tax Return or claim for Tax refund filed,
any written closing agreement entered into under Section 7121 of the Code (or
similar agreement under state, local or foreign income tax law), or any material
Tax controversy settled;

(l)         any cancellation of any licenses, sublicenses, franchises, permits
or agreements to which the Company is a party, or any notification to the
Company that any party to any such arrangements intends to cancel or not renew
such arrangements beyond their expiration date as in effect on the date hereof,
which cancellation or notification has had or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect; or

(m)       any revaluation by the Company of any assets, including, without
limitation, writing down of the value of inventory or writing off notes or
accounts receivable, other than in the ordinary course of business consistent
with past practice.

Section 4.10.         No Undisclosed Material Liabilities. Except as disclosed
in Item 4.10 of the Company Letter or as set forth in the Company SEC Documents,
there are no material liabilities or obligations of the Company of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, other than:

(a)        liabilities or obligations disclosed and/or provided for in the
Company Balance Sheet or in the notes thereto or in the Company SEC Documents
filed prior to the date hereof; and

(b)        liabilities or obligations incurred in the ordinary course of
business consistent with past practices since the Company Balance Sheet Date
that would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on the Company.

Section 4.11.         Compliance with Laws and Court Orders. All licenses,
franchises, permits, clearances, consents, certificates and other evidences of
authority of the Company which are necessary to the conduct of the Company’s
business (“Company Permits”) are in full force and effect and the Company is not
in violation of any Company Permit in any respect, except for such exceptions or
violations that, individually or in the aggregate, would not have, or would not
be likely to have, a Material Adverse Effect. Except for exceptions which would
not have a Material Adverse Effect, the businesses of the Company has been
conducted in accordance with all applicable laws, regulations, orders, and other

 

19

 

--------------------------------------------------------------------------------

 

requirements of governmental authorities. The Company is, and since the Company
Balance Sheet Date has been in compliance with, and to the Knowledge of the
Company is not under investigation with respect to and has not been threatened
to be charged with or given notice of any violation of, any applicable law,
statute, ordinance, rule, regulation, judgment, injunction, order or decree, in
each case except for failures to comply or violations that have not had and
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.

Section 4.12.        Litigation. Other than for ordinary course matters, except
as disclosed in Item 4.12 of the Company Letter or as set forth in the Company
SEC Documents filed prior to the date hereof, there is no action, suit,
investigation, audit, arbitration or proceeding pending against, or, to the
Knowledge of the Company, threatened against or affecting, the Company, or, to
the Knowledge of the Company, pending against, threatened against or affecting,
any present or former officer, director or employee of the Company in his or her
capacity as such, or any of the properties or assets of the Company before any
court or arbitrator or before or by any governmental body, agency or official,
domestic, foreign or supranational.

Section 4.13.         Finders’ and Advisory Fees. Except as disclosed in Item
4.13 of the Company Letter, there is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of the Company or any of its Subsidiaries who might be entitled to any fee or
commission from the Company or any of its Affiliates in connection with the
transactions contemplated by this Agreement.

Section 4.14.

Tax Matters.

The representations set forth below are subject to the exceptions set forth in
the Item 4.14 of the Company Letter.

(a)        The Company has filed within the time and in the manner prescribed by
law, all Tax Returns required to be filed by or with respect to the Company and
such Tax Returns reflect accurately in all material respects the Tax Liabilities
of the Company.

(b)        The Company has within the time prescribed by law paid all Taxes that
are due and payable by the Company, except where the failure to so pay such
Taxes is being contested in good faith as identified in Item 4.14 of the Company
Letter and involve aggregate Taxes so being contested in excess of $25,000.

(c)        The Company has no liens with respect to Taxes upon any of its
properties or assets other than liens for Taxes not yet due and payable, except
where such Taxes are being contested in good faith as identified in Item 4.15 of

 

20

 

--------------------------------------------------------------------------------

 

the Company Letter and involve aggregate Taxes so being contested not in excess
of $25,000.

(d)        The Company has established an adequate accrual or reserve for unpaid
Taxes in the audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company included in the Company
SEC Documents.

(e)        The Company has not waived in writing any statute of limitations with
respect to Taxes of the Company or, to the extent related to such Taxes, agreed
to any extension of time with respect to a Tax assessment or deficiency, in each
case to the extent such waiver or agreement is currently in effect.

(f)         The Company does not have a federal, state, local or foreign audit
or other administrative proceeding or court proceeding presently pending or, to
the Knowledge of the Company, threatened relating to or involving any Tax
Returns for the Company.

(g)        The Company does not have any joint or several Tax liability under
Treas. Reg. §1.1502-6 (or similar provisions of any state, local or foreign
income Tax law), other than such liability arising solely by reason of
membership in the consolidated group of which the Company is the common parent.

(h)        Item 4.15 of the Company Letter sets forth all jurisdictions where
the Company files Tax Returns.

(i)         The Company has not been subject to a claim made by a Tax Authority
in a jurisdiction where the Company does not file Tax Returns that the Company
is or may be subject to Taxes assessed by such jurisdiction.

(j)         No deficiencies for any Taxes have been asserted, proposed or
assessed (in each case in writing) against the Company, except for any such
Taxes that have been fully paid on or before the Balance Sheet Date or which, if
fully paid, would involve aggregate Taxes of less than $25,000.

(k)        The Company has timely disclosed on Tax Returns all reportable
transactions required to be disclosed by Treasury Regulations under Section 6011
of the Code, and Item 4.15(k) contains a description of any such disclosures.

(l)         The Company will not be required (A) as a result of a change in
method of accounting prior to the date hereof, to include any adjustments under
Section 481(a) of the Code (or any corresponding provision of state, local or
foreign income Tax law) in taxable income for any period after the Effective
Time, or (B) as a result of a closing agreement under Section 7121 of the Code
(or similar agreement under state, local or foreign income Tax law) to include
any item of income or exclude any item of deduction for any period after the
Effective Time.

 

21

 

--------------------------------------------------------------------------------

 

 

(m)       The Company has not made any payments that are non-deductible under
Sections 162(m) or 280G of the Code (or any corresponding provisions of state,
local or foreign law).

(n)        The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code (or any
corresponding provisions of state, local or foreign law) during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code (or any corresponding
provision of state, local or foreign law).

(o)        The Company is not a party to a gain recognition agreement under
Section 367 of the Code and the regulations thereunder.

(p)        “Tax” means for purposes of this Agreement all taxes, charges, fees,
levies, penalties or other assessments imposed by any federal, state, local or
foreign governmental authority (“Tax Authority”), including but not limited to,
income, gross receipts, excise, property, sales, value-added, use, transfer, net
worth, franchise, environmental, payroll, withholding, social security or other
taxes, customs, duties, levies or fines, including any interest, penalties or
additions attributable thereto, and including liability for a Tax of another
Person as a transferee or by virtue of being an acquiring or survivor
corporation in a merger or similar transaction.

(q)        “Tax Return” means any return, report, form, information return or
other document, including any schedule or attachment thereto, and including any
amendment thereof, required by law to be filed with a Tax Authority relating to
Taxes.

Section 4.15.

Employee Benefit Plans.

(a)        Item 4.15 of the Company Letter contains a correct and complete list
identifying as of the date hereof each “employee benefit plan,” as defined in
Section 3(3) of ERISA, each material employment, severance or similar contract,
plan, arrangement or policy and each other plan or arrangement (written or oral)
providing for compensation, bonuses, profit- sharing, stock option or other
stock related rights or other forms of incentive, compensation or loans,
deferred compensation, vacation benefits, insurance (including any self-insured
arrangements), health or medical benefits, employee assistance program,
disability or sick leave benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post- employment or retirement
benefits (including compensation, pension, health, medical or life insurance
benefits) which is maintained, administered or contributed to by the Company or
any Affiliate and covers any current or former director, officer or employee of
the Company or any of its Subsidiaries, or with respect to which the Company or
any of its Subsidiaries has any liability. Such contracts, plans, arrangements
and policies are referred to collectively herein as the “Employee Plans.”

 

22

 

--------------------------------------------------------------------------------

 

 

(b)        True and accurate copies of each Employee Plan of the Company,
together, where applicable, with all current trust agreements, the most recent
annual reports on Form 5500 and any auditor’s reports, the most recent financial
statements, the most recent actuarial reports, all agreements or contracts with
any investment manager or investment advisor with respect to any Employee Plan
of the Company, the most recent IRS favorable determination letters, all current
summary plan descriptions and summaries of material modifications for such plans
have been made available to Acquiror. In the case of any unwritten Employee
Plan, a written description of such plan has been made available to Acquiror.
With respect to each “employee benefit plan”, as defined in Section 3(3) of
ERISA, maintained, administered or contributed to by the Company or any
Affiliate, the Company has provided Acquiror with a list of each actuary,
attorney, and accountant providing professional services with respect to each
Employee Plan of the Company or the fiduciaries of each Employee Plan of the
Company, as well as the location of all other records and the name of the
individual responsible for such records with respect to each Employee Plan of
the Company.

(c)        Neither the Company nor any ERISA Affiliate sponsors, maintains or
contributes to, or has in the past ten (10) years sponsored, maintained or
contributed to, any Employee Plan subject to Title IV of ERISA.

(d)        Neither the Company nor any ERISA Affiliate contributes to, or has in
the past ten (10) years contributed to, any multiemployer plan, as defined in
Section 3(37) of ERISA or any multiple employer plan within the meaning of
Section 210(a) of ERISA or Section 413(c) of the Code.

(e)        No Employee Plan is a multi-employer welfare arrangement as defined
in Section 3(40) of ERISA.

(f)         Each Employee Plan that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter, or has pending
or has time remaining in which to file, an application for such determination
from the Internal Revenue Service, and the Company has no Knowledge of any
reason why any such determination letter should be revoked or not be issued.
Except as would not have a Material Adverse Effect on the Company, each Employee
Plan that is intended to be qualified or registered under the laws of any
Non-U.S. jurisdiction is so qualified or registered. Except as would not have a
Material Adverse Effect on the Company, all amendments required to bring any
Employee Plan into conformity with any applicable provisions of ERISA and the
Code have been duly adopted. To the Knowledge of the Company, nothing has
occurred or will occur through the Closing which would cause the loss of such
qualification or exemption or the imposition of any penalty or tax liability

(g)        Except as would not have a Material Adverse Effect on the Company,
with respect to each Employee Plan of the Company: (i) each has been

 

23

 

--------------------------------------------------------------------------------

 

maintained, funded, operated and administered in compliance with its terms and
with all applicable laws including, without limitation, ERISA and the Code; (ii)
no actions, suits, claims or disputes are pending or threatened against any such
plan, the trustee or fiduciary of any such plan, the Company or any assets of
any such plan; (iii) no audits, proceedings, claims or demands are pending with
any Governmental Authority including, without limitation, the Internal Revenue
Service and the Department of Labor; (iv) all reports, returns and similar
documents required to be filed with any Governmental Authority or distributed to
any such plan participant have been duly or timely filed or distributed; (v) no
“prohibited transaction”, within the meaning of ERISA or the Code, or breach of
any duty imposed on “fiduciaries” pursuant to ERISA has occurred; (vi) all
required payments, premiums, contributions, reimbursements or accruals for all
periods ending prior to or as of the Closing shall have been made or properly
accrued on the Company Balance Sheet or will be properly accrued on the books
and records of the Company as of the Closing; and (vii) no such plan has any
unfunded liabilities which are not reflected on the Company Balance Sheet or the
books and records of the Company.

(h)        Except as required pursuant to the agreements listed in Item 4.16 of
the Company Letter or pursuant to the terms of this Agreement, neither the
execution or approval of this Agreement nor consummation by the Company of the
transactions contemplated by this Agreement will (either alone or together with
any other event) entitle any current or former director, officer, employee or
independent contractor of the Company or any of its Subsidiaries to severance
pay or accelerate the time of payment or vesting or trigger any payment or
funding (through a grantor trust or otherwise) of bonus or other compensation or
benefits of any kind under, increase the amount payable or trigger any other
material obligation pursuant to, any Employee Plan. Except as set forth in the
Company Letter, there is no contract, plan or arrangement (written or otherwise)
covering any employee or former employee of the Company or any of its
Subsidiaries that, individually or collectively, is reasonably expected by the
Company to give rise to the payment of any amount that would not be deductible
pursuant to the terms of Section 280G or 162(m) of the Code.

(i)         Neither the Company nor any of its Subsidiaries has any liability in
respect of post-retirement health, medical or life insurance benefits for
retired, former or current employees of the Company or its Subsidiaries except
as required to avoid excise tax under Section 4980B of the Code.

(j)         There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any of its Affiliates
relating to, or change in employee participation or coverage under, an Employee
Plan which would increase materially the expense of maintaining such Employee
Plan above the level of the expense incurred in respect thereof for the fiscal
year ended December 31, 2002.

 

24

 

--------------------------------------------------------------------------------

 

 

(k)        Neither the Company nor any of its Subsidiaries is a party to or
subject to, or is currently negotiating in connection with entering into, any
collective bargaining or labor agreement or other contract or understanding with
a labor union or organization.

(l)         Except as disclosed in Item 4.16 of the Company Letter, there exist
no loans or extensions of credit by the Company or any of its Subsidiaries to
any current and former director, officer, employee and independent contractor of
the Company or any of its Subsidiaries with a principal balance in excess of
$5,000 and which have not been repaid in full (for any reason) as of the date
hereof.

Section 4.16.         Labor Matters.     There are no labor disputes or union
organization activities pending, or, to the Knowledge of the Company, threatened
between the Company and any of its employees. None of the employees of the
Company belongs to any union or collective bargaining unit. The Company has
complied in all material respects with all applicable state and federal equal
employment opportunity laws and all other laws and regulations related to
employment or working conditions, including all civil rights and
anti-discrimination laws, rules, and regulations. The Company is not the subject
of material proceeding asserting that the Company has committed an unfair labor
practice or is seeking to compel it to bargain with any labor union or labor
organization, nor is there any pending, or, to the Knowledge of the Company,
threatened, any labor strike, dispute, walkout, work stoppage, slowdown, or
lockout involving the Company.

Section 4.17.

Environmental Matters.

(a)        Except as set forth in the Company SEC Documents filed prior to the
date hereof and except as would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company:

(i)         no notice, notification, demand, request for information, citation,
summons or order has been received, no complaint has been served, no penalty has
been assessed, and no investigation, action, claim, suit, proceeding or review
is pending or, to the Knowledge of the Company, is threatened by any
governmental entity or other Person relating to or arising out of any
Environmental Law or Release or threatened or suspected Release of any Hazardous
Materials;

(ii)         to the Knowledge of the Company, the Company is and has been in
compliance with all applicable Environmental Laws and all Environmental Permits;
and

(iii)        there are no material liabilities of or relating to the Company or
any of its Subsidiaries of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise

 

25

 

--------------------------------------------------------------------------------

 

arising under or relating to any Environmental Law, and there are no facts,
conditions, situations or set of circumstances that would reasonably be expected
to result in or be the basis for any such liability.

(b)        The Company possesses any and all Environmental Permits necessary or
required for the operation of its business as currently conducted, except to the
extent that the failure to have such Environmental Permits would not have a
Material Adverse Effect on the Company.

(c)        There has been no environmental investigation, study, audit, test,
review or other environmental analysis conducted prior to the date of this
Agreement of which the Company has Knowledge and/or possession as of the date
hereof in relation to the current or prior business of the Company or any of its
Subsidiaries or any property or facility now or previously owned or leased by
the Company or any of its Subsidiaries that has not been made available to
Acquiror at least five Business Days prior to the date hereof.

(d)        The Company does not have any obligation or liability with respect to
any Hazardous Materials, including any Release or threatened or suspected
Release of any Hazardous Material or any violation of Environmental Law, and
there have been no events, facts or circumstances which could form the basis of
any such obligation or liability.

(e)        To our Knowledge, no releases of Hazardous Materials have occurred
at, from, in, to, on, or under any Site and no Hazardous Materials are present
in, on, about, or migrating to or from any Site.

(f)         To our Knowledge, the Company has not transported or arranged for
the treatment, storage, handling, disposal or transportation of any Hazardous
Materials at, from or to any site or other location.

(g)        No Site is a current or, to our Knowledge, a proposed Environmental
Clean-Up Site.

(h)        There are no Liens under or pursuant to any Environmental Law on any
Site.

(i)         To our Knowledge, there is no (i) underground storage tank, active
or abandoned, (ii) polychlorinated biphenyl containing equipment, (iii)
asbestos-containing material, (iv) radon, (v) lead-based paint or (vi) urea
formaldehyde at any Site. Any underground storage tank meets all current
applicable requirements.

(j)         To our Knowledge, the Company has provided all notifications and
warnings, made all reports and kept and maintained all records required pursuant
to Environmental Laws.

 

26

 

--------------------------------------------------------------------------------

 

 

(k)        For purposes of this Section 4.17, the term “Company” includes any
entity that is, in whole or in part, a predecessor of the Company.

Section 4.18.

Real Property

(a)        Owned Real Property. Except as set forth in Item 4.18 of the Company
Letter, the Company does not own any real property, and the Company is not
obligated by contract or otherwise to purchase real property. The Company holds
options on certain leased real property as more particularly set forth in Item
4.18 of the Company Letter.

(b)        Item 4.18 of the Company Letter contains an accurate and complete
list of each Real Property Lease. With respect to each Real Property Lease set
forth on Item 4.18 of the Company Letter: (a) it is valid, binding and in full
force and effect; (b) all rents and additional rents and other sums, expenses
and charges due to date have been paid; (c) the lessee has been in peaceable
possession since October 2002, or, if shorter, the original term thereof; (d) no
waiver, indulgence or postponement of the lessee’s obligations thereunder has
been granted by the lessor; (e) there exists no default or event of default by
the Company or by any other party thereto; (f) to the Company’s Knowledge, there
exists no occurrence, condition or act which, with the giving of notice, the
lapse of time or the happening of any further event or condition, would become a
default or event of default by the Company thereunder; and (g) there are no
outstanding claims of breach or indemnification or notice of default or
termination thereunder. The Company holds the leasehold estate on each Real
Property Lease free and clear of all Liens, except for the liens of mortgagees
of the real property in which such leasehold estate is located. The Company is
in physical possession and actual and exclusive occupation of the whole of each
of its leased properties. The Company does not owe any brokerage commission with
respect to any Real Property Lease.

Section 4.19.         Banks; Powers of Attorney.          Item 4.19 of the
Company Letter contains an accurate and complete list showing: (i) the names of
each bank in which the Company has an account or safe deposit box and the names
of all persons authorized to draw thereon or have access thereto, and (ii) the
names of all persons, if any, holding powers of attorney from the Company.

Section 4.20.         Board Recommendation.   The Board of Directors of the
Company has (a) approved and adopted this Agreement; (b) determined that this
Agreement and the transactions contemplated herein are in the best interests of
the Company and its stockholders, and (c) resolved to recommend adoption of this
Agreement to the stockholders of the Company.

Section 4.21.         Anti-takeover Statutes.     The Company has taken all
action necessary to exempt the Merger, this Agreement, the Voting Agreements,
and the transactions contemplated hereby from the restrictions on “business

 

27

 

--------------------------------------------------------------------------------

 

combinations” contained in applicable Florida Law, and, accordingly, neither
such Section nor any other anti-takeover or similar statute or regulation
applies or purports to apply to any such transactions.

Section 4.22.

Intellectual Property.

(a)        Item 4.22 of the Company Letter contains a true and complete list of
each of the registrations, applications and other material Intellectual Property
Rights included in the Owned Intellectual Property Rights and the Licensed
Intellectual Property Rights, specifying as to each such Intellectual Property
Right, as applicable, (i) the owner of such Intellectual Property Right, (ii)
the jurisdictions by or in which such Intellectual Property Right has been
issued or registered or in which an application for such issuance or
registration has been filed, (iii) the registration or application numbers
thereof, (iv) the termination or expiration dates thereof, and (vi) all
agreements related to such intellectual Property Right which is a Licensed
Intellectual Property Right, setting forth the date of any license or agreement
and the identity of all parties thereto.

(b)        The Licensed Intellectual Property Rights and the Owned Intellectual
Property Rights together with Intellectual Property Rights solely relating to
commercial “off-the-shelf” or “shrink wrap” software constitute all the
Intellectual Property Rights that are material to the conduct of the business of
the Company and its Subsidiaries as currently conducted.

(c)        To the Knowledge of the Company, the Company’s use of the
Intellectual Property Rights does not infringe, misappropriate or otherwise
violate any Intellectual Property Right of any third person, in each case except
as would not have, individually or in the aggregate, a Material Adverse Effect
on the Company. As of the date hereof, there is no claim, action, suit,
investigation or proceeding pending against, or, to the Knowledge of the
Company, threatened in writing against the Company, any present or former
officer, director or employee of the Company in his or her capacity as such, (i)
challenging or seeking to deny or restrict, the rights of the Company in any of
the Owned Intellectual Property Rights and the Licensed Intellectual Property
Rights, (ii) alleging that the use of the Owned Intellectual Property Rights or
the Licensed Intellectual Property Rights or any services provided, processes
used or products manufactured, used, imported or sold by the Company do or may
conflict with, misappropriate, infringe or otherwise violate any Intellectual
Property Right of any third party or (iii) alleging that the Company has
infringed, misappropriated or otherwise violated any Intellectual Property Right
of any third party, except, in each case except as would not have, individually
or in the aggregate, a Material Adverse Effect on the Company.

Section 4.23.

Material Contracts.

 

 

28

 

--------------------------------------------------------------------------------

 

 

(a)        Except as disclosed in Item 4.23 of the Company Letter, as of the
date hereof, the Company is not a party to or bound by:

(i)         any agreement for the purchase by the Company of materials,
supplies, goods, services, equipment or other assets that has a term of at least
one year;

(ii)         any sales, distribution or other similar agreements not entered
into in the ordinary course of business providing for the sale by the Company of
materials, supplies, goods, services, equipment or other assets;

(iii)        any partnership, joint venture or other similar equity agreement or
arrangement under which the Company and any other Person both have an equity
interest in another Person; or

(iv)        any agreement that limits, in any material respect, the freedom of
the Company to compete in any line of business or with any Person or in any area
or to own, operate, sell, transfer, pledge or otherwise dispose of or encumber
any asset or which would so limit the freedom of Acquiror after the Effective
Time.

(b)        The agreements and contracts required to be disclosed in Item 4.22 of
the Company Letter, along with Real Estate Leases disclosed in Item 4.18 of the
Company Letter, are referred to herein as the “Material Contracts”.

(c)        Except as set forth in Item 4.23 of the Company Letter, as of the
date hereof, each Material Contract is a valid and binding agreement of the
Company, to the Knowledge of the Company, the other party thereto and is in full
force and effect; neither the Company nor, to the Knowledge of the Company, any
other party thereto, is in default or breach in any material respect under the
terms of any Material Contract and no event or circumstance has occurred that,
with notice or lapse of time or both, would constitute a default or breach
thereunder, which would have, individually or in the aggregate, a Material
Adverse Effect on the Company. Subject to applicable law (whether state, federal
or foreign) or confidentiality agreements, as of the date hereof, true and
complete copies of each Material Contract have been made available to the
Acquiror.

Section 4.24.

Employees.

(a)        The Company has previously made available to Acquiror a true and
complete list of the names, titles and compensation of all officers of the
Company and all other corporate and management employees of the Company.

(b)        To the Knowledge of the Company, no Officer or other vice-president
(or person senior to any vice-president) of the Company or its Subsidiaries has
indicated as of the date hereof that he or she intends to resign or

 

29

 

--------------------------------------------------------------------------------

 

retire as a result of the transactions contemplated by this Agreement, except
for the resignations disclosed to the Company in Item 4.24 of the Company
Letter.

(c)        Except as set forth in Item 4.24 of the Company Letter, the Company
has not entered into any employment contract or arrangement with any director,
officer, employee or any other consultant or Person (i) which is not terminable
by it at will without liability, except as the right of the Company to terminate
its employees at will may be limited by applicable federal, state or local law,
or (ii) under which the Company could have any material liability.

Section 4.25.         WARN Act. The Company is in compliance in all material
respects with the Worker Adjustment Retraining Notification Act of 1988, as
amended (“WARN Act”), or any similar state or local law. In the past two years,
(i) the Company has not effectuated a “plant closing” (as defined in the WARN
Act) affecting any site of employment or one or more facilities or operating
units within any site of employment or facility of its business; (ii) there has
not occurred a “mass layoff” (as defined in the WARN Act) affecting any site of
employment or facility of the Company, and (iii) the Company has not been
affected by any transaction or engaged in layoffs or employment terminations
sufficient in number to trigger application of any similar state, local, or
foreign law or regulation. The Company has not caused any of its employees to
suffer an “employment loss” (as defined in the WARN Act) during the 90 day
period prior to the effective date of this Agreement.

Section 4.26.         Insurance.   The Company has previously made available to
Acquiror copies of all insurance policies to which the Company is a party or is
a beneficiary or named insured. All of the insurable properties of the Company
are insured pursuant to insurance policies as the Company reasonably believes is
customary in the industry in which the Company is engaged. Such policies are in
full force and effect, all premiums due and payable with respect thereto have
been paid, and no notice of cancellation or termination has been received by the
Company. Except as set forth on Item 4.25 of the Company Letter, there have been
no claims in excess of $50,000 asserted under any of the insurance policies of
the Company in respect of all general liability, professional liability, errors
and omissions, property liability, worker’s compensation, and medical claims
since the Company Balance Sheet Date.

Section 4.27.         Interests in Other Entities. Other than as disclosed in
Item 4.26 of the Company Letter, the Company does not (i) own, directly or
indirectly, of record or beneficially, any shares of voting stock or other
equity securities of any other corporation, (ii) have any ownership interest,
direct or indirect, of record or beneficially, in any unincorporated entity, or
(iii) have any obligation, direct or indirect, present or contingent, (1) to
purchase or subscribe for any interest in, advance or loan monies to, or in any
way make investments in, any Person, or (2) to share any profits or capital
investments or both.

 

30

 

--------------------------------------------------------------------------------

 

 

Section 4.28.         Investment Company. The Company is not an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.

Section 4.29.         Opinion of Financial Advisor. The Company has received the
opinion of Capitalink, L.C. to the effect that, as of the date of such opinion,
the Merger Consideration was fair from a financial point of view to the Company
shareholders, and, as of the date hereof, such opinion has not been withdrawn
(such opinion, the “Company Fairness Opinion”).

Section 4.30.         Title to Property; Encumbrances. The Company has good and
valid title to, or enforceable leasehold interests in or valid rights under
contract to use, all the properties and assets owned or used by it (real,
personal, tangible and intangible), including, without limitation (a) all the
properties and assets reflected in the Company Balance Sheet, and (b) all the
properties and assets purchased or otherwise contracted for by the Company since
the Company Balance Sheet Date (except for properties and assets reflected in
the Company Balance Sheet or acquired or otherwise contracted for since the
Company Balance Sheet Date that have been sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of all Liens, except
for Liens set forth on the Company Letter. The property, plant and equipment of
the Company, whether owned or otherwise contracted for, is in a state of good
maintenance and repair (ordinary wear and tear excepted) and is adequate and
suitable for the purposes for which they are presently being used.

Section 4.31.         Trading with the Enemy Act; Patriot Act. No sale of the
Company’s securities nor the Company’s use of the proceeds from such sale has
violated the Trading with the Enemy Act, as amended, or any of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto. Without limiting the foregoing, the Company (a) is not a
person whose property or interests in property are blocked pursuant to Section 1
of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)) and (b) does not engage in any dealings or
transactions, and is not otherwise associated with any such person. The Company
is in material compliance with the USA Patriot Act of 2001 (signed into law
October 26, 2001).

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF ACQUIROR

Acquiror represents and warrants to the Company that:

Section 5.01.         Corporate Existence and Power. Each of Acquiror and Merger
Sub is a corporation duly incorporated, validly existing and in good

 

31

 

--------------------------------------------------------------------------------

 

standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted,
except for those licenses, authorizations, permits, consents and approvals the
absence of which would not have, individually or in the aggregate, a Material
Adverse Effect on Acquiror or Merger Sub.

Section 5.02.        Corporate Authorization. The execution, delivery and
performance by Acquiror and Merger Sub of this Agreement and the consummation by
Acquiror and Merger Sub of the transactions contemplated hereby are within the
corporate powers of Acquiror and Merger Sub and have been duly authorized by all
necessary corporate action. This Agreement constitutes a valid and binding
agreement of each of Acquiror and Merger Sub, enforceable against each of
Acquiror and Merger Sub in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws relating to or affecting creditor’s rights and remedies generally,
and subject as to enforceability of general principles of equity (whether
considered in a proceeding in equity or at law).

Section 5.03.        Governmental Authorization. The execution, delivery and
performance by Acquiror and Merger Sub of this Agreement and the consummation by
Acquiror and Merger Sub of the transactions contemplated hereby require no
action by or in respect of, or filing with, any governmental body, agency,
official or authority, domestic, foreign or supranational, other than (i) the
filing of a certificate of merger with respect to the Merger with the Florida
Secretary of State and appropriate documents with the relevant authorities of
other states in which Acquiror is qualified to do business, (ii) compliance with
any applicable requirement of the HSR Act and of laws, rules and regulations
analogous to the HSR Act existing in foreign jurisdictions, (iii) compliance
with any applicable requirements of the 1933 Act, the 1934 Act and any other
applicable securities or takeover laws, whether state or foreign, (iv)
compliance with the rules and regulations of any over the counter securities
market or any national securities exchange, and (v) any actions or filings the
absence of which could not be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect on Acquiror or Merger Sub.

Section 5.04.         Non-contravention. The execution, delivery and performance
by Acquiror and Merger Sub of this Agreement and the consummation by Acquiror
and Merger Sub of the transactions contemplated hereby do not and will not (i)
contravene, conflict with, or result in any violation or breach of any provision
of the certificate of incorporation or bylaws of Acquiror or Merger Sub, or (ii)
assuming compliance with the matters referred to in Section 5.03, contravene,
conflict with, or result in any violation or breach of any provision of any law,
rule, regulation, judgment, injunction, order or decree, except for such
contraventions, conflicts and violations referred to in clause (ii)

 

32

 

--------------------------------------------------------------------------------

 

that would not be reasonably expected to have, individually or in the aggregate,
a Material Adverse Effect on Acquiror or Merger Sub.

Section 5.05.         Disclosure Documents.      The information with respect to
Acquiror and any of its Subsidiaries that Acquiror 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
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, as supplemented or amended, if applicable, at the time
such Company Proxy Statement or any amendment or supplement thereto is first
mailed to stockholders of the Company and at the time such stockholders vote on
adoption of this Agreement, and (ii) in the case of any Company Disclosure
Document other than the Company Proxy Statement, at the time of the filing of
such Company Disclosure Document or any supplement or amendment thereto and at
the time of any distribution or dissemination thereof.

Section 5.06.        Finders’ or Advisory Fees. There is no investment banker,
broker, finder or other intermediary that has been retained by or is authorized
to act on behalf of Acquiror who might be entitled to any fee or commission from
the Company or any of its Affiliates upon consummation of the transactions
contemplated by this Agreement.

Section 5.07.        Interim Operations of Merger Sub. Merger Sub was formed
solely for the purpose of engaging in the transactions contemplated hereby, and
has engaged in no other business activities other than in connection with this
Agreement or as contemplated hereby.

 

33

 

--------------------------------------------------------------------------------

 

ARTICLE 6

 

COVENANTS OF THE COMPANY

The Company agrees that:

Section 6.01.         Conduct of the Company. Except as provided for in Item
6.01 of the Company Letter, from the date hereof until the Effective Time, the
Company shall conduct its business in all material respects in the ordinary
course of business consistent with past practices and shall use its best efforts
to preserve intact its business organization and relationships with customers
and other third parties and to keep available the services of their present
officers and employees. Without limiting the generality of the foregoing, from
the date hereof until the Effective Time, except as contemplated by this
Agreement, as provided for in Item 6.01 of the Company Letter, or as otherwise
approved by Acquiror (which approval shall not be unreasonably withheld or
delayed):

(a)        the Company shall not adopt or propose any change to its certificate
of incorporation or bylaws.

(b)        the Company shall not merge or consolidate with any other Person or
acquire the stock or assets of any other Person;

(c)        the Company shall not sell, lease, license or otherwise dispose of
any material amount of assets, securities or property or interest therein;

(d)        the Company shall not (i) declare, set aside or pay any dividends on
or make any other distributions (whether in cash, securities or property) in
respect of any capital stock or split, combine or reclassify any capital stock,
or issue or authorize the issuance of any other securities in respect of or in
substitution for any capital stock, (ii) purchase, redeem or otherwise acquire
any shares of its capital stock, (iii) issue, deliver, sell, authorize, pledge
or otherwise create a Lien on, any shares of capital stock or securities
convertible into capital stock, other than issuances of Shares upon the valid
exercise of any Options existing on the date hereof in accordance with their
present terms, (iv) make any loans, advances or capital contributions to or
investments in any other Person, (v) incur any indebtedness for borrowed money,
or guarantee any indebtedness for borrowed money of or on behalf of another
Person (except that Company may borrow additional available amounts under lines
of credit in place as of the date of this Agreement), (vi) make any material
change in its methods or principles of accounting or in its maintenance of its
books and records, except as required by GAAP or the SEC as concurred in by the
Company’s independent auditor, (vii) settle any material claim, action or
proceeding involving money damages, except to the extent subject to reserves
existing as of the date hereof in accordance with GAAP, (viii) enter into any
consent decree, injunction or similar restraint or form of equitable relief in
settlement of any suit, action, proceeding, or regulatory investigation pending,
except for such consent decrees, injunctions, or restraints

 

34

 

--------------------------------------------------------------------------------

 

which do not individually or in the aggregate have a Material Adverse Effect,
(ix) transfer or license to any Person or otherwise extend, amend or modify any
Intellectual Property Rights owned by the Company, other than in the ordinary
course of business or pursuant to any contracts, agreements, arrangements, or
understandings already in place, (x) modify, amend, or terminate in any manner
adverse to the Company any of the Material Contracts other than in the ordinary
course of business, or (xi) other than as expressly permitted in section 6.04
hereof, take any action to omit or take any action for the purpose of
preventing, delaying, or impeding the consummation of the Merger or the other
transactions contemplated by this Agreement.

(e)        except as required by contracts or compensation plans existing as of
the date hereof and binding on the Company, to comply with applicable law, or as
set forth below, the Company shall not (i) increase in any material respect the
amount of compensation or fringe benefits of, pay any bonus to, or grant
severance or termination pay to, any director, Officer or other management level
employee of the Company (except for the payment of compensation and benefits
(excluding severance pay) to new employees (other than officers) hired by the
Company in the ordinary course of business, or compensation increases to
non-corporate restaurant employees if such compensation increases are in the
ordinary course of business consistent with past practices), (ii) make any
increase in, or commitment to increase, or adopt, any Employee Plans, (iii)
amend or change the exercisability or vesting of any Options, or reprice any
Options or authorize cash payments in exchange for any Options, (iv) modify any
employment, severance or termination agreement with any director, Officer or
other employee of the Company existing as of the date hereof, or enter into any
employment, severance, termination or other agreement with any director, Officer
or other employee of the Company the benefits of which are in whole or in part
contingent upon, or the terms of which are materially altered upon, the
occurrence of a transaction involving the Company of the nature contemplated
hereby;

(f)         the Company shall not exempt any Third Party from, or to render
inapplicable to any Acquisition Proposal, the restrictions on “business
combinations” of applicable Florida Law;

(g)        the Company shall not (i) enter into any new material line of
business, or (ii) incur or commit to any capital expenditures other than normal
routine maintenance capital expenditures consistent with past practices and
other non-routine capital expenditures exceeding $25,000 in the aggregate;

(h)        the Company will not discharge or forgive any liabilities in excess
of $25,000, except in the ordinary course of business.

(i)

the Company shall not agree or commit to do any of the foregoing.

 

 

35

 

--------------------------------------------------------------------------------

 

 

Section 6.02.        Shareholder Meeting; Consent; Proxy Material. The Company
shall cause a meeting of its shareholders (the “Company Shareholder Meeting”) to
be duly called and held as soon as reasonably practicable for the purpose of
voting on the approval and adoption of this Agreement and the Merger (the
“Company Shareholder Approval”). Subject to Section 6.04(b), the Board of
Directors of the Company shall unanimously recommend approval and adoption of
this Agreement and the Merger by the Company’s Shareholders. In connection with
such meeting, the Company shall (i) promptly prepare and file with the SEC,
shall use commercially reasonable efforts to have cleared by the SEC and shall
thereafter mail to its stockholders as promptly as practicable the Company Proxy
Statement and all other materials for such meeting and (ii) otherwise comply
with all legal requirements applicable to such meeting. The Company shall
provide Acquiror and its counsel with a reasonable opportunity to review and
comment on the Company Proxy Statement before it is filed with the SEC and the
Company agrees to reflect in the Company Proxy Statement, when so filed with the
SEC, such comments as Acquiror and its counsel reasonably may propose. The
Company shall provide Acquiror and its counsel with (i) any comments or other
communications, whether written or oral, that the Company or its counsel may
receive from time to time from the SEC or its staff with respect to the Company
Proxy Statement promptly after receipt of such comments or other communications
and (ii) the opportunity to participate in the response of the Company to such
comments, including by participating with the Company or its counsel in any
discussions with the SEC. If, at any time prior to the Effective Time, any
information relating to the Company, or any of their respective affiliates,
officers or directors, is discovered by the Company or the Acquiror and such
information should have been set forth in an amendment or supplement to the
Company Proxy Statement so that the Company Proxy Statement would not include
any misstatement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, the party hereto discovering such information shall
promptly notify the other party to, and, to the extent required by law, rules or
regulations, an appropriate amendment or supplement describing such information
shall be promptly filed with the SEC and disseminated to the shareholders of the
Company. Acquiror shall cooperate with the Company in the preparation of the
Company Proxy Statement and accompanying proxy materials and any amendment or
supplement thereto. Acquiror agrees to cause all Shares purchased pursuant to
the Merger and all other Shares of the Company entitled to vote on the Merger
owned by Acquiror to be voted in favor of the Merger.

Section 6.03.        Access to Information. From the date hereof until the
Effective Time and subject to applicable law, any existing confidentiality
obligations which are listed in the Company Letter (the “Confidentiality
Agreement”), the Company shall (i) give Acquiror, its counsel, financial
advisors, auditors and other authorized representatives reasonable access,
during normal business hours, to the offices, properties, books and records of
the Company and the Subsidiaries, (ii) furnish to Acquiror, its employees,
counsel,

 

36

 

--------------------------------------------------------------------------------

 

financial advisors, auditors and other authorized representatives such financial
and operating data and other information as such Persons may reasonably request,
(iii) instruct the employees, counsel, financial advisors, auditors and other
authorized representatives of the Company and its Subsidiaries to cooperate with
Acquiror in its investigation of the Company and its Subsidiaries and (iv)
notify and consult with Acquiror prior to entering into any agreement to pay any
contested liabilities involving more than $25,000 in cash. Any investigation
pursuant to this Section shall be conducted in such manner as not to interfere
unreasonably with the conduct of the business of the Company and its
Subsidiaries. No information or knowledge obtained by Acquiror in any
investigation pursuant to this Section shall affect or be deemed to modify any
representation or warranty made by the Company hereunder.

Section 6.04.

No Solicitation

(a)        Subject to Sections 6.04(b), 6.04(c) and 6.04(d), neither the Company
nor any of its Subsidiaries shall, nor shall the Company or any of its
Subsidiaries authorize any of its or their officers, directors, employees,
investment bankers, attorneys, accountants, consultants or other agents or
advisors to, directly or indirectly, (i) solicit, initiate or knowingly
encourage the submission of any Acquisition Proposal, (ii) enter into or
participate in any discussions or negotiations with, furnish any information
relating to the Company or any of its Subsidiaries regarding any Acquisition
Proposal, (iii) grant any waiver or release under any standstill or similar
agreement with respect to any class of equity securities of the Company or any
of its Subsidiaries entered into after the date of this Agreement (it being
acknowledged hereby by the Company that it is not currently bound by any such
standstill or similar agreement with any Person except for Acquiror) or (iv)
enter into any agreement with respect to an Acquisition Proposal.

(b)        The Board of Directors, directly or indirectly through advisors,
agents or other intermediaries, may (i) engage in negotiations or discussions
with any Third Party that, subject to the Company’s compliance with Section
6.04(a), has made a bona fide Acquisition Proposal that the Board of Directors
reasonably believes will lead to a Superior Proposal, (ii) furnish to such Third
Party nonpublic information relating to the Company or any of its Subsidiaries
pursuant to a confidentiality agreement with terms no less favorable to the
Company than those contained in the Confidentiality Agreement, (iii) following
receipt of a bona fide Acquisition Proposal that the Board of Directors
reasonably believes will lead to a Superior Proposal, fail to make, withdraw, or
modify in a manner adverse to Acquiror its recommendation to its stockholders
referred to in Section 6.02 hereof, and/or (iv) take any non-appealable, final
action that any court of competent jurisdiction orders the Company to take in
contravention of Section 6.04(a), but in each case referred to in the foregoing
clauses (i) through (iii) only if the Board of Directors determines in good
faith by a majority vote, after receiving a written opinion from Akerman
Senterfitt (or other outside legal

 

37

 

--------------------------------------------------------------------------------

 

counsel of nationally recognized reputation) and Capitalink, L.C., financial
advisor to the Company (or another financial advisor of nationally recognized
reputation) that such action is consistent with its fiduciary duties under
applicable law. Nothing contained herein shall prevent the Board of Directors
from complying with Rules 14D-9 or 14e-2(a) under the 1934 Act with regard to an
Acquisition Proposal.

(c)        The Company shall advise Acquiror orally within twenty-four (24)
hours (without counting any hours falling on a Saturday or Sunday or nationally
or locally recognized holiday) and in writing within forty-eight (48) hours
(without counting any hours falling on a Saturday or Sunday or nationally or
locally recognized holiday) of (i) its receipt of an Acquisition Proposal, (ii)
the fact that in response thereto it plans to furnish confidential information
to the proponent thereof or has plans to commence negotiations with the
proponent thereof, and (iii) the terms and conditions of any such Acquisition
Proposal, indication or request. If any such Acquisition Proposal is in writing,
the Company shall within one (1) business day after it receives same deliver or
cause to be delivered to Acquiror a copy of such Acquisition Proposal and within
one (1) business day after it receives a written update of any Acquisition
Proposal, provide a copy of such update to Acquiror.

(d)        If the Company has received a bona fide Acquisition Proposal that the
Board of Directors reasonably believes will lead to a Superior Proposal, nothing
in this Agreement shall prevent the Board of Directors from (i) withdrawing or
modifying its approval or recommendation of the Merger and this Agreement and/or
(ii) approving or recommending any Superior Proposal received by the Company
and/or terminating this Agreement pursuant to Section 9.01(c) (and concurrently
with or immediately after such termination, if it so chooses, cause the Company
to enter into an Acquisition Agreement with respect to such Superior Proposal)
(any such action, a “Change in Recommendation”), but the Board of Directors may
only effect a Change in Recommendation if the following conditions are met: (x)
within forty-eight (48) hours (without counting any hours falling on a Saturday,
Sunday or nationally or locally recognized holiday) after receiving such notice,
the Company shall deliver to the Acquiror written notice (A) stating that the
Company has received a Superior Proposal and that the Board of Directors intends
to consider a Change of Recommendation, (B) include a copy of any proposed
transaction documents relating to such Superior Proposal (including documents as
to such party’s ability to finance such transaction, if such Superior Proposal
is to be paid for in cash, whether in whole or in part, and (C) disclose the
identity of the party making such Superior Proposal, and (y) if the Superior
Proposal has been received by the Company on or before December 15, 2005,
Acquiror shall have until the later of five (5) business days after it receives
such notice or December 15, 2005 to respond to such notice with an amended offer
which provides for economic terms not less favorable to the Company's
shareholders than the Superior Proposal that has been received, and (z) if the
Superior Proposal has been received by the Company after

 

38

 

--------------------------------------------------------------------------------

 

December 15, 2005, Acquiror shall have five (5) business days after it receives
such notice to respond to such notice with an amended offer which provides for
economic terms not less favorable to the Company's shareholders than the
Superior Proposal that has been received. If Acquiror chooses to submit an
amended offer, the parties making the Superior Proposal shall have, upon notice,
five (5) business days in which to respond to such notice with a further amended
offer. If the party making such Superior Proposal comes forth with a further
proposal, further notice shall be delivered to Acquiror as set forth in this
section. Notwithstanding the foregoing, if Acquiror submits an amended offer
which provides for economic terms not less favorable to the Company's
shareholders than the Superior Proposal that has been received, and thereafter
no further Superior Proposals are received, the Board shall agree to continue to
support the Merger and not to make a Change of Recommendation.

(e)        The Company shall, and shall cause its Subsidiaries and direct its
advisors, employees and other agents of the Company and any of its Subsidiaries
to, cease immediately and cause to be terminated any and all existing
activities, discussions and negotiations, if any, with any Third Party conducted
prior to the date hereof with respect to any Acquisition Proposal and shall
request any such Party (or its agents or advisors) in possession of confidential
information about the Company that was furnished by or on behalf of the Company
to return or destroy all such information.

“Superior Proposal” means any bona fide, unsolicited written Acquisition
Proposal to acquire, directly or indirectly, for consideration consisting of at
least $26,532,000 in cash and/or securities for all or substantially all of the
Shares of the Company or for substantially all of the assets of the Company, on
terms that the Board of Directors determines in good faith by a majority vote,
after considering the written opinion of Capitalink, L.C. or another financial
advisor of nationally recognized reputation and taking into account all the
terms and conditions of the Acquisition Proposal, including any break-up fees,
expense reimbursement provisions and conditions to consummation, are more
favorable from a financial point of view to the Company’s stockholders than as
provided hereunder and for which financing, to the extent required, is then
fully committed or reasonably determined to be available by the Board of
Directors, is from a Person that in the reasonable judgment of the Company’s
Board of Directors, after consultation with a recognized financial advisor, is
financially capable of consummating such a proposal, and that in the reasonable
judgment of the Company’s Board of Directors, after consultation with a
recognized financial advisor, if accepted, is reasonably likely to be
consummated and taking into account all legal, financial, and regulatory aspects
of the offer and the Person making the offer.

Section 6.05.         Notices of Certain Events. The Company shall promptly
notify Acquiror of:

 

39

 

--------------------------------------------------------------------------------

 

 

(a)        any written notice or other communication from any Person that, to
its Knowledge, alleges that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;

(b)        any written notice or other communication it receives from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement;

(c)        any actions, suits, claims, investigations or proceedings commenced
or, to its Knowledge, threatened against, relating to or involving or otherwise
affecting the Company or any of its Subsidiaries that, if pending on the date of
this Agreement, would have been required to have been disclosed pursuant to
Section 4.13 or that relate to the consummation of the transactions contemplated
by this Agreement of which the Company has Knowledge; and

(d)        any representation or warranty made by it contained in this Agreement
becoming untrue or inaccurate, or any failure of the Company to comply with or
satisfy in any respect any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement, in each case, such that any of the
conditions set forth in Article 8 could reasonably be expected to not be
satisfied; provided, however, that no such notification shall affect the
representations, warranties, covenants, remedies or agreements of the parties or
the conditions to the obligations of the parties under this Agreement.

Section 6.06.         FIRPTA Certificate. Prior to the Effective Time, the
Company shall deliver to Acquiror a certification pursuant to Treasury
Regulations Sections 1.897- 2(h) and 1.1445-2(c), signed by the Company and
dated not more than 15 days prior to the Closing Date, to the effect that the
Company is not, nor has it been at any time within five (5) years of the date of
the certification, a “United States real property holding corporation” as
defined in Section 897 of the Code.

Section 6.07.         Voting Agreements. Upon execution of this Agreement, the
Company will deliver to Acquiror copies of the agreements by and among Acquiror,
Merger Sub, the Company and (i) each director who is a stockholder of the
Company to vote its Shares in favor of the Merger and (ii) Berjaya Group
(Cayman) Limited and Tonto Capital Partners, GP, to vote their respective Shares
in favor of the Merger (the “Voting Agreements”).

ARTICLE 7

COVENANTS OF ACQUIROR AND THE COMPANY

The parties hereto agree that:

Section 7.01.         Best Efforts. Subject to the terms and conditions of this
Agreement, the Company and Acquiror shall use their best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary,

 

40

 

--------------------------------------------------------------------------------

 

proper or advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement, including (i) preparing and filing
as promptly as practicable with any governmental authority or other third party
all documentation to effect all necessary filings, notices, petitions,
statements, registrations, submissions of information, applications and other
documents and (ii) obtaining and maintaining all approvals, consents,
registrations, permits, authorizations and other confirmations required to be
obtained from any governmental authority or other third party that are
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement. Each of the Company and Acquiror shall not, and each shall not
permit any of its Subsidiaries to, take any action that would make any
representation and warranty of the Company or Acquiror respectively, hereunder
inaccurate or untrue in any material respect at, or as of, the Effective Time.

Section 7.02.         Certain Filings. The Company and Acquiror shall cooperate
with one another (i) in connection with the preparation of the Company
Disclosure Documents, (ii) in determining whether any action by or in respect
of, or filing with, any governmental body, agency, official, or authority is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement and (iii) in
taking such actions or making any such filings, furnishing information required
in connection therewith or with the Company Disclosure Documents and seeking
timely to obtain any such actions, consents, approvals or waivers. The Company
shall provide to Acquiror, and Acquiror shall provide to the Company, copies of
all filings made by the Company or Acquiror, as the case may be, with any
governmental entity in connection with this Agreement and the transactions
contemplated hereby. Non-public information contained in such filings shall be
considered confidential under the Confidentiality Agreement.

Section 7.03.         Public Announcements. Acquiror and the Company shall
consult with each other before issuing any press release or making any other
public statement with respect to this Agreement or the transactions contemplated
hereby, except as may be required by applicable law, order of a court of
competent jurisdiction or any listing agreement with or rule of any national
securities exchange.

Section 7.04.         Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets of the Company acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger.

 

41

 

--------------------------------------------------------------------------------

 

 

Section 7.05.

Employee Matters.

(a)        Acquiror shall cause its benefit plans to waive any preexisting
condition, exclusions or waiting period limitation that was likewise waived or
otherwise satisfied as to each Company Employee under the terms of any
corresponding Employee Plan immediately prior to the Effective Time. Acquiror
shall cause each benefit plan in which employees of the Company become eligible
to participate to provide that such employees be given credit for all service
with the Company (or all service credited by the Company) to the same extent as
if rendered to Acquiror or its Subsidiaries.

(b)        Acquiror will, or will cause the Surviving Corporation to, honor the
severance policies, agreements and plans set forth the Company Letter with
respect to employees and former employees of the Company and its Subsidiaries as
of the date hereof and the terms of such plans and agreements as in effect on
the date hereof, to the extent required by law or contract and subject to any
waivers granted or amendments entered into by any plan participants or employees
of the Company.

Section 7.06.         Notices of Certain Events. Acquiror shall promptly notify
the Company of:

(a)        any written notice or other communication from any Person that, to
its Knowledge, alleges that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;

(b)        any written notice or other communication it receives from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement; and

(c)        any actions, suits, claims, investigations or proceedings commenced
or threatened against, relating to or involving or otherwise affecting the
consummation of the transactions contemplated by this Agreement of which it has
Knowledge.

Section 7.07.

Indemnification; Directors and Officers Insurance.

(a)        Acquiror shall, or shall cause the Surviving Corporation to, honor
all rights to indemnification or exculpation, existing in favor of a director,
officer, employee or agent, when acting in such capacity (an “Indemnified
Person”) of the Company (including, without limitation, rights relating to
advancement of expenses and indemnification rights to which such persons are
entitled because they are serving as a director, officer, agent or employee of
another entity at the request of the Company), determined as of the Effective
Time, to the extent provided under Florida Law, in the Articles of Incorporation
of the Company, in the Bylaws of the Company or in any indemnification
agreement, in each case, as in effect on the date of this Agreement, and
relating to actions or events through

 

42

 

--------------------------------------------------------------------------------

 

the Effective Time; provided, however, that the Surviving Corporation shall not
be required to indemnify any Indemnified Person in connection with any
proceeding (or portion thereof) to the extent involving any claim initiated by
such Indemnified Person unless the initiation of such proceeding (or portion
thereof) was authorized by the Board of Directors of the Company or unless such
proceeding is brought by an Indemnified Person to enforce rights under this
Section 7.07; provided, further that any determination required to be made with
respect to whether an Indemnified Person’s conduct complies with the standards
set forth under Florida Law, the Restated Certificate of Incorporation of the
Company, the Bylaws of the Company or any such agreement, as the case may be,
shall be made by independent legal counsel selected by such Indemnified Person
and reasonably acceptable to Acquiror; and provided, further that nothing in
this Section 7.07 shall impair any rights of any Indemnified Person. Without
limiting the generality of the preceding sentence, in the event that any
Indemnified Person becomes involved in any actual or threatened action, suit,
claim, proceeding or investigation after the Effective Time, Acquiror shall, or
shall cause the Surviving Corporation to, promptly advance to such Indemnified
Person his or her legal and other expenses (including the cost of any
investigation and preparation incurred in connection therewith), subject to the
providing by such Indemnified Person of an undertaking to reimburse all amounts
so advanced in the event of a non-appealable determination of a court of
competent jurisdiction that such Indemnified Person is not entitled thereto.

(b)

D&O Insurance.

(i)         Prior to the Effective Time, the Company shall have the right to
obtain and pay for in full a “tail” coverage directors’ and officers’ liability
insurance policy (“D&O Insurance”) covering a period from the Effective Time
until 6 years after the Effective Time and providing coverage in amounts and on
terms consistent with the Company’s existing D&O Insurance.

(ii)         In the event the Company is unable or unwilling to obtain D&O
Insurance, Acquiror shall cause the Surviving Corporation to maintain the
Company’s D&O Insurance (the “Existing D&O Insurance”) for a period of not less
than 6 years after the Effective Time with coverage of no less than amounts
currently held by the Company, provided, however, that the Surviving Company
shall not be required to pay annual premiums for the Existing D&O Insurance (or
for any substitute policies) in excess of 180% of the annual premium paid by the
Company with respect to the Existing D&O Insurance (the “Maximum Premium”),
which amount the Company has disclosed to Acquiror prior to the date hereof. In
the event that any future annual premiums for the Existing D&O Insurance (or any
substitute policies) exceed the Maximum Premium, the Surviving Corporation shall
be entitled to reduce the amount of coverage of the Existing D&O Insurance (or
any substitute policies) to

 

43

 

--------------------------------------------------------------------------------

 

the greatest amount of coverage reasonably procurable for a premium equal to the
Maximum Premium.

(iii)        It is understood and agreed that if the Company procures any D&O
Insurance pursuant to Section 7.07(b)(i), Acquiror will have no further
obligations under Section 7.07(b)(ii).

(c)        The provisions of this Section 7.07 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Person, his or her
heirs and his or her personal representatives and shall be binding on all
successors and assigns of Acquiror, the Company and the Surviving Corporation.

ARTICLE 8

CONDITIONS TO THE MERGER

Section 8.01.         Conditions to Obligations of Each Party. The obligations
of the Company, Acquiror and Merger Sub to consummate the Merger are subject to
the satisfaction of the following conditions:

(a)        the Company shall have obtained Company Shareholder Approval in
accordance with Florida state corporate Law;

(b)        no laws shall have been adopted or promulgated, and no temporary
restraining order, preliminary or permanent injunction or other order issued by
a court or other governmental entity of competent jurisdiction shall be in
effect, that (i) has the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger or (ii) otherwise, individually or in the
aggregate, would have a Material Adverse Effect on Acquiror (including the
Surviving Corporation and its Subsidiaries), after giving effect to the Merger;
provided, however, that each of the parties shall have used their best efforts
to prevent the entry of any such temporary restraining order, injunction or
other order, including, without limitation, taking such action as is required to
comply with Section 8.01, and to appeal as promptly as possible any injunction
or other order that may be entered;

(c)        all required approvals, applications, or notices with governmental
entities and/or self-regulatory agencies shall have been obtained (the
“Approvals”), except those approvals, the failure of which to obtain would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company;

(d)        no order suspending the use of the Company Proxy Statement or any
part thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened in writing by the SEC; and

(e)        any waiting period (and any extension thereof) under the HSR Act
applicable to the Merger shall have expired or been terminated.

 

44

 

--------------------------------------------------------------------------------

 

 

Section 8.02.         Conditions to Obligations of the Company.   The
obligations of the Company to consummate the Merger are subject to the
satisfaction, or, to the extent legally permissible, waiver, of the following
conditions:

(a)        (i) Acquiror shall have performed in all material respects all of its
obligations and covenants hereunder required to be performed by it at or prior
to the Effective Time, (ii) the representations and warranties of Acquiror
contained in this Agreement shall be true and correct in all material respects
as of the Closing Date with the same force and effect as if made on the Closing
Date (provided that any such representation and warranty made as of a specific
date shall be true and correct as of such specific date), and (iii) the Company
shall have received a certificate signed by the chief executive officer of
Acquiror and Merger Sub to the foregoing effect; and

(b)        there shall not be pending any suit, proceeding, or investigation (i)
challenging or seeking to restrain or prohibit the consummation of the Merger or
any of the other transactions contemplated herein, or (ii) relating to the
Merger and seeking to obtain from the Company any damages that may be material
to the Company;

(c)        Company shall have received an opinion of Littman Krooks, LLP,
counsel for the Acquiror and Merger Sub, in form and substance reasonably
satisfactory to the Company.

Section 8.03.         Conditions to the Obligations of Acquiror.          The
obligation of Acquiror to consummate the Merger is subject to the satisfaction
(or, to the extent legally permissible, waiver) of the following conditions:

(a)        (i) the Company shall have performed in all material respects all of
its obligations and covenants hereunder required to be performed by it at or
prior to the Effective Time, (ii) the representations and warranties of the
Company contained in this Agreement shall be true and correct in all material
respects as of the Closing Date with the same force and effect as if made on the
Closing Date (provided that any such representation and warranty made as of a
specific date shall be true and correct as of such specific date), and (iii) the
Acquiror shall have received a certificate signed by the chief executive officer
of Company to the foregoing effect; and

(b)        there shall not be pending any suit, proceeding, or investigation (i)
challenging or seeking to restrain or prohibit the consummation of the Merger or
any of the other transactions contemplated herein, (ii) relating to the Merger
and seeking to obtain from the Acquiror or Merger Sub any damages that may be
material to Acquiror, or (iii) seeking to prohibit or limit in any material
respect Acquiror’s ability to vote, receive dividends with respect to or
otherwise exercise ownership rights with respect to the stock of the Surviving
Corporation;

 

45

 

--------------------------------------------------------------------------------

 

 

(c)        the Company shall have received all consents, waivers and approvals
required in connection with the consummation of the transactions contemplated
hereby in connection with the agreements, contracts, licenses and leases set
forth as requiring consent in the Company Letter, except those consents,
waivers, or approvals the failure to obtain of which would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company;

(d)        there shall not have occurred any event or change since the date of
the Agreement that has had or could reasonably be expected to have a Material
Adverse Effect on the Company;

(e)        Acquiror shall have successfully completed a financing (of equity,
debt or a combination thereof,) or series of related financings of not less than
gross proceeds of $35,000,000 (the "Required Financing");

(f)         the Company shall have received from Capitalink, L.C. an opinion as
to the fairness to the Company’s shareholders from a financial point of view of
the consideration to be offered to the Company in connection with the
transactions contemplated hereby; and

(g)        Acquiror shall have received an opinion of Akerman Senterfitt,
counsel for the Company, in form and substance reasonably satisfactory to the
Acquiror.

ARTICLE 9

TERMINATION

Section 9.01.        Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):

(a)

by mutual written agreement of the Company and Acquiror;

(b)

by either the Company or Acquiror, if:

 

(i)         the Merger has not been consummated on or before February 15, 2006;
or

(ii)         (A)      there shall be any law or regulation that makes acceptance
for payment of, and payment for consummation of the Merger illegal or otherwise
prohibited or (B) any judgment, injunction, order or decree of any court or
governmental body having competent jurisdiction enjoining the Company or
Acquiror from consummating the Merger is entered and such judgment, injunction,
order or decree shall have become final and non-appealable; provided, however,
that the right to terminate

 

46

 

--------------------------------------------------------------------------------

 

this Agreement pursuant to this Section 9.01(b)(ii) shall not be available to
any party who has not used its best efforts to cause such order to be lifted or
otherwise taken such action as is required to comply with Section 7.01.

(c)        by the Company in the event that the Company has entered into a
binding agreement with a third party in which it has accepted a Superior
Proposal, provided that the Company has complied in all respects with the
provisions contained in Section 6.04(d) herein.

(d)        by the Company, if Acquiror, after Company receives a Superior
Proposal and thereafter Acquiror presents an amended offer on or before the
dates set forth below, does not provide correspondence to Company from credible
financing sources indicating an interest in providing the financing to the
Acquiror that will satisfy the Required Financing, as follows:

(i)         if the Acquiror's amended offer has been provided to the Company on
or before January 11, 2006, then such correspondence must be provided to the
Company on or before January 16, 2006; or

(ii)         if the Acquiror's amended offer has been presented to the Company
after January 11, 2006, then such information and documentation must be provided
to the Company within three business days after Acquiror's amended offer has
been provided to the Company.

(e)        by the Company, if Acquiror or Merger Sub shall have breached in any
material respect any of their respective representations, warranties, covenants
or other agreements contained in this Agreement, which breach or failure to
perform cannot be or has not been cured within 10 days after the giving of
written notice to Acquiror or Merger Sub as applicable.

(f)         by Acquiror, if Company has breached in any material respect any of
their respective representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform cannot be or has
not been cured within 10 days after the giving of written notice to Company.

(g)

By Acquiror if:

(i)         Company Stockholder Approval in accordance with state Law has not
been obtained by reason of the failure to obtain the required vote at the
Company Stockholder Meeting or in an action by written consent of the holders of
a majority of the outstanding Shares;

(ii)         more than 5% of the Company's stockholders have properly demanded
appraisal rights;

(iii)

it is unable to obtain the Required Financing; or

 

 

47

 

--------------------------------------------------------------------------------

 

 

(iv)

the Company breaches any provision of Section 10.04(b).

The party desiring to terminate this Agreement pursuant to this Section 9.01
(other than pursuant to Section 9.01(a)) shall give notice of such termination
to the other party.

Section 9.02.         Effect of Termination. If this Agreement is terminated
pursuant to Section 9.01, this Agreement shall become void and of no effect with
no liability on the part of any party (or any stockholder, director, officer,
employee, agent, consultant or representative of such party) to the other party
hereto; provided that, if such termination shall result from the willful (i)
failure of either party to fulfill a condition to the performance of the
obligations of the other party or (ii) failure of either party to perform a
covenant hereof, such party shall be fully liable for any and all liabilities
and damages incurred or suffered by the other party as a result of such failure.
Notwithstanding the foregoing, the provisions of Section 4.14, Section 5.06,
Section 10.04, Section 10.06 and, Section 10.07 shall survive any termination
hereof pursuant to Section 9.01.

ARTICLE 10

MISCELLANEOUS

Section 10.01.       Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given,

if to Acquiror or Merger Sub, to:

Steakhouse Partners, Inc.

10200 Willow Creek Road

San Diego, CA 92131

Attn: Chief Executive Officer

Fax: (858) 635-3976

 

 

 

 

with a copy to:

Littman Krooks LLP

 

655 Third Avenue

 

20th Floor

 

New York, New York 10017

 

Attn: Mitchell C. Littman, Esq.

Fax: (212) 490-2990

 

 

if to the Company, to:

Roadhouse Grill, Inc.

 

2703-A Gateway Drive

Pompano Beach, Florida 33069

Attention: Chief Financial Officer

Fax: (954) 969-5422

 

 

 

 

48

 

--------------------------------------------------------------------------------

 

 

 

with a copy to:

Akerman Senterfitt

 

One Southeast Third Avenue

 

Miami, FL 33131

 

Attn: Philip B. Schwartz, Esq.

 

Fax: (305) 374-5095

 

 

or to such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by overnight courier (providing proof of
delivery).

Section 10.02.      Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time, and any other agreement that by their terms apply or are to be
performed in whole or in part after the Effective Time.

Section 10.03.

Amendments; No Waivers.

(a)        Any provision of this Agreement may be amended or waived prior to the
Effective Time if, but only if, such amendment or waiver is in writing and is
signed, in the case of an amendment, by each party to this Agreement or, in the
case of a waiver, by each party against whom the waiver is to be effective;
provided that, after the adoption of this Agreement by the stockholders of the
Company and without their further approval, no such amendment or waiver shall
reduce the amount or change the kind of consideration to be received in exchange
for the Shares.

(b)        No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

Section 10.04.

Expenses.

(a)        Except as otherwise provided in this Section, all costs and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such cost or expense. In that regard, Acquiror acknowledges the expenses set
forth in Item 10.04 of the Company Letter that at the closing of the Merger, the
Company shall be obligated to pay.

(b)        If Acquiror terminates this Agreement under Section 9.01(c), the
Company shall pay (by wire transfer of immediately available funds) a fee of
$1,282,000 (the “Termination Fee”), together with all of the reasonable expenses

 

49

 

--------------------------------------------------------------------------------

 

incurred by Acquiror in connection with the transactions contemplated by this
Agreement (but no more than $500,000 in the aggregate) no later than the date
which is the next Business Day after the Company makes public disclosure that it
has entered into a binding agreement with the third party providing such
Superior Proposal. Payment of the Termination Fee shall constitute liquidated
damages and be the sole and exclusive remedy of Acquiror and Merger Sub arising
in connection with this Agreement, including without limitation, with respect to
the matters giving rise to the termination of this Agreement.

(c)        The Company acknowledges that the agreements contained in this
Section 10.04 are an integral part of the transactions contemplated by this
Agreement and that, without these agreements, Acquiror and Merger Sub would not
enter into this Agreement. Accordingly, if the Company fails promptly to pay any
amount due to Acquiror pursuant to this Section 10.04, it shall also pay any
costs and expenses incurred by Acquiror or Merger Sub in connection with a legal
action to enforce this Agreement that results in a judgment against the Company
for such amount.

(d)        If any litigation arises between the parties hereto out of the
obligations of the parties under this Agreement or concerning the meaning or
interpretation of any provision contained herein, the losing party shall pay the
prevailing party’s costs and expenses of such litigation including, without
limitation, reasonable attorneys’ fees.

Section 10.05.

Binding Effect; Benefit; Assignment.

(a)        The provisions of this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns. Except for Section 7.07, no provision of this Agreement is intended to
confer any rights, benefits, remedies, obligations or liabilities hereunder upon
any Person other than the parties hereto and their respective successors and
assigns.

(b)        No party may assign, delegate or otherwise transfer any of its rights
or obligations under this Agreement without the consent of each other party
hereto except that Acquiror or Merger Sub may transfer or assign, in whole or
from time to time in part, to one or more of its affiliates, its rights under
this Agreement, but any such transfer or assignment will not relieve Acquiror or
Merger Sub of its obligations hereunder.

Section 10.06.       Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware, without regard to
the conflicts of law rules of such state.

Section 10.07.       Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought in

 

50

 

--------------------------------------------------------------------------------

 

the federal courts in the District of Delaware or in the Delaware state court,
and each of the parties hereby consents to the jurisdiction of such courts (and
of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
form. Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that service of process
on such party as provided in Section 11.01 shall be deemed effective service of
process on such party.

Section 10.08.       WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

Section 10.09.       Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.

Section 10.10.       Entire Agreement. This Agreement and the Confidentiality
Agreement constitutes the entire agreement between the parties with respect to
the subject matter of this Agreement and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this Agreement.

Section 10.11.       Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.

Section 10.12.       Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.

 

51

 

--------------------------------------------------------------------------------

 

 

Section 10.13.       Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of Florida or any Florida state court, in
addition to any other remedy to which they are entitled at law or in equity.

Section 10.14.       Obligations of Subsidiaries. Whenever this Agreement
requires any Subsidiary of Acquiror (including Merger Sub) or of the Company to
take any action, such requirement shall be deemed to include an undertaking on
the part of Acquiror or the Company, as the case may be, to cause such
Subsidiary to take such action.

Section 10.15.       Company Letter. References in the Company Letter to a
particular Section or Sections of this Agreement are not intended to limit, and
shall not be construed as limiting, the disclosures contained therein which are
reasonably applicable to another Section or Sections. The disclosures in the
Company Letter are made in response to the representations and warranties of the
Company and certain other covenants of the Company contained in this Agreement
without fully taking into consideration the standard of materiality set forth in
certain of such representations, warranties or covenants; and no disclosure made
therein shall (i) constitute an admission or determination that any fact or
matter so disclosed is material to the business, properties, prospects, assets,
financial condition or results of operations of the Company and its Subsidiaries
taken as a whole or (ii) be deemed to modify in any respect the standard of
materiality set forth in any representation, warranty, covenant or other
provision contained in this Agreement.

 

[Signatures on Next Page]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

Roadhouse Grill, Inc.

 

 

 

By: /s/ Ayman Sabi

 

Ayman Sabi

President and Chief Executive Officer

 

 

 

Steakhouse Partners, Inc.

 

 

 

By: /s/ A. Stone Douglass

 

A. Stone Douglass

Chairman and Chief Executive Officer

 

 

 

RGI Acquisition Corp.

 

 

 

By: /s/ Susan Schulze-Claasen

 

Name: Susan Schulze-Claasen

 

Title: President

 

 

 

52