Document:

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

WORLDWIDE RESTAURANT CONCEPTS, INC.

AUS BIDCO PTY LIMITED

AND

US MERGECO, INC.

 

 

 

DATED
AS OF APRIL 28, 2005

 

TABLE OF CONTENTS

 

	
  ARTICLE I DEFINITIONS

  	
   

  
	
   

  	
  Section 1.1.

  	
  Certain Definitions

  	
   

  
	
   

  	
  Section
  1.2.

  	
  Terms
  Defined Elsewhere

  	
   

  
	
   

  	
   

  
	
  ARTICLE II THE MERGER

  	
   

  
	
   

  	
  Section
  2.1.

  	
  The
  Merger

  	
   

  
	
   

  	
  Section 2.2.

  	
  Effective Time

  	
   

  
	
   

  	
  Section
  2.3.

  	
  Closing

  	
   

  
	
   

  	
  Section 2.4.

  	
  Effects of the
  Merger

  	
   

  
	
   

  	
  Section 2.5.

  	
  Certificate of
  Incorporation and Bylaws

  	
   

  
	
   

  	
  Section
  2.6.

  	
  Board
  of Directors

  	
   

  
	
   

  	
  Section
  2.7.

  	
  Officers

  	
   

  
	
   

  	
  Section 2.8.

  	
  Subsequent
  Actions

  	
   

  
	
   

  	
   

  
	
  ARTICLE III
  EFFECT ON CAPITAL STOCK

  	
   

  
	
   

  	
  Section
  3.1.

  	
  Effect
  on Capital Stock

  	
   

  
	
   

  	
  Section 3.2.

  	
  Stock Options

  	
   

  
	
   

  	
  Section 3.3.

  	
  Appraisal
  Rights

  	
   

  
	
   

  	
  Section
  3.4.

  	
  Payment
  of Merger Consideration

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
  THE COMPANY

  	
   

  
	
   

  	
  Section
  4.1.

  	
  Organization

  	
   

  
	
   

  	
  Section 4.2.

  	
  Subsidiaries

  	
   

  
	
   

  	
  Section 4.3.

  	
  Capitalization

  	
   

  
	
   

  	
  Section 4.4.

  	
  Authorization

  	
   

  
	
   

  	
  Section 4.5.

  	
  No Conflict or
  Violation

  	
   

  
	
   

  	
  Section 4.6.

  	
  Consents and
  Approvals

  	
   

  
	
   

  	
  Section
  4.7.

  	
  SEC
  Documents; Undisclosed Liabilities

  	
   

  
	
   

  	
  Section 4.8.

  	
  Information
  Supplied

  	
   

  
	
   

  	
  Section
  4.9.

  	
  Absence
  of Changes

  	
   

  
	
   

  	
  Section 4.10.

  	
  Material Contracts

  	
   

  
	
   

  	
  Section 4.11.

  	
  Assets;
  Personal Property

  	
   

  
	
   

  	
  Section 4.12.

  	
  Real Property

  	
   

  
	
   

  	
  Section 4.13.

  	
  Intellectual
  Property

  	
   

  
	
   

  	
  Section 4.14.

  	
  Taxes

  	
   

  
	
   

  	
  Section
  4.15.

  	
  Compliance
  With Environmental Laws

  	
   

  
	
   

  	
  Section 4.16.

  	
  Employee Benefit
  Plans

  	
   

  
	
   

  	
  Section 4.17.

  	
  Labor Matters

  	
   

  
	
   

  	
  Section 4.18.

  	
  Litigation;
  Investigations

  	
   

  
	
   

  	
  Section 4.19.

  	
  Compliance with
  Law

  	
   

  
	
   

  	
  Section 4.20.

  	
  Permits

  	
   

  
	
   

  	
  Section
  4.21.

  	
  No
  Brokers

  	
   

  

 

i

 

	
   

  	
  Section 4.22.

  	
  Liquidation

  	
   

  
	
   

  	
  Section
  4.23.

  	
  Books
  and Records

  	
   

  
	
   

  	
  Section 4.24.

  	
  Insurance

  	
   

  
	
   

  	
  Section 4.25.

  	
  Transactions
  with Affiliates

  	
   

  
	
   

  	
  Section 4.26.

  	
  Suppliers

  	
   

  
	
   

  	
  Section
  4.27.

  	
  Opinion
  of Financial Advisor

  	
   

  
	
   

  	
  Section
  4.28.

  	
  Disclosure

  	
   

  
	
   

  	
   

  
	
  ARTICLE V REPRESENTATIONS AND WARRANTIES OF
  PARENT AND ACQUISITION SUB 

  	
   

  
	
   

  	
  Section 5.1.

  	
  Organization

  	
   

  
	
   

  	
  Section 5.2.

  	
  Authorization

  	
   

  
	
   

  	
  Section
  5.3.

  	
  Consents
  and Approvals; No Conflict or Violation

  	
   

  
	
   

  	
  Section
  5.4.

  	
  No
  Prior Activities

  	
   

  
	
   

  	
  Section 5.5.

  	
  Financing Ability

  	
   

  
	
   

  	
  Section
  5.6.

  	
  Compliance
  with Law; Litigation

  	
   

  
	
   

  	
  Section
  5.7.

  	
  Brokers

  	
   

  
	
   

  	
  Section 5.8.

  	
  Information
  Supplied

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI COVENANTS

  	
   

  
	
   

  	
  Section 6.1.

  	
  Conduct of
  Business of the Company

  	
   

  
	
   

  	
  Section
  6.2.

  	
  Preparation
  of the Proxy Statement; Stockholder Approval

  	
   

  
	
   

  	
  Section 6.3.

  	
  Access to
  Information

  	
   

  
	
   

  	
  Section 6.4.

  	
  No Solicitation

  	
   

  
	
   

  	
  Section
  6.5.

  	
  Reasonable
  Efforts; Notification

  	
   

  
	
   

  	
  Section 6.6.

  	
  Employee Benefits

  	
   

  
	
   

  	
  Section
  6.7.

  	
  Public
  Announcements

  	
   

  
	
   

  	
  Section 6.8.

  	
  Indemnification;
  Insurance

  	
   

  
	
   

  	
  Section
  6.9.

  	
  Transfer
  Taxes

  	
   

  
	
   

  	
  Section 6.10.

  	
  Shareholder
  Rights Plan

  	
   

  
	
   

  	
  Section 6.11.

  	
  Takeover
  Statutes

  	
   

  
	
   

  	
  Section
  6.12.

  	
  Consents

  	
   

  
	
   

  	
  Section 6.13.

  	
  Antitrust
  Authorities

  	
   

  
	
   

  	
  Section 6.14.

  	
  Financing

  	
   

  
	
   

  	
  Section
  6.15.

  	
  Opinion
  of Financial Advisor

  	
   

  
	
   

  	
  Section
  6.16.

  	
  No
  Affiliate Agreements

  	
   

  
	
   

  	
  Section
  6.17.

  	
  FFPE,
  LLC

  	
   

  
	
   

  	
  Section
  6.18.

  	
  Company
  SEC Documents

  	
   

  
	
   

  	
  Section 6.19.

  	
  Good Standing

  	
   

  
	
   

  	
  Section 6.20.

  	
  Employee
  Acknowledgments

  	
   

  
	
   

  	
   

  
	
  ARTICLE VII
  CONDITIONS TO CONSUMMATION OF THE MERGER

  	
   

  
	
   

  	
  Section
  7.1.

  	
  Conditions
  to Each Party’s Obligation to Effect the Merger

  	
   

  
	
   

  	
  Section
  7.2.

  	
  Conditions
  to the Obligation of the Company

  	
   

  
	
   

  	
  Section
  7.3.

  	
  Conditions
  to the Obligations of Parent and Acquisition Sub

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII
  TERMINATION; AMENDMENT; WAIVER

  	
   

  

 

ii

 

	
   

  	
  Section
  8.1.

  	
  Termination

  	
   

  
	
   

  	
  Section 8.2.

  	
  Effect of
  Termination

  	
   

  
	
   

  	
  Section 8.3.

  	
  Amendment

  	
   

  
	
   

  	
  Section 8.4.

  	
  Extension; Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX GENERAL PROVISIONS

  	
   

  
	
   

  	
  Section
  9.1.

  	
  Nonsurvival
  of Representations and Warranties

  	
   

  
	
   

  	
  Section
  9.2.

  	
  Notices

  	
   

  
	
   

  	
  Section
  9.3.

  	
  Entire
  Agreement

  	
   

  
	
   

  	
  Section 9.4.

  	
  Assignment

  	
   

  
	
   

  	
  Section
  9.5.

  	
  Severability

  	
   

  
	
   

  	
  Section
  9.6.

  	
  Governing
  Law

  	
   

  
	
   

  	
  Section 9.7.

  	
  Interpretation

  	
   

  
	
   

  	
  Section
  9.8.

  	
  Parties
  in Interest

  	
   

  
	
   

  	
  Section
  9.9.

  	
  Personal
  Liability

  	
   

  
	
   

  	
  Section 9.10.

  	
  Fees and
  Expenses

  	
   

  
	
   

  	
  Section 9.11.

  	
  Specific
  Performance

  	
   

  
	
   

  	
  Section
  9.12.

  	
  Venue

  	
   

  
	
   

  	
  Section
  9.13.

  	
  WAIVER
  OF JURY TRIAL

  	
   

  
	
   

  	
  Section
  9.14.

  	
  Counterparts

  	
   

  
	
   

  	
  Section 9.15.

  	
  Disclosure
  Generally

  	
   

  

 

iii

SCHEDULES

Schedule 4.1                                             Organization

Schedule 4.2                                             Subsidiaries

Schedule 4.3                                             Capitalization

Schedule 4.5                                             No
Conflict or Violation

Schedule 4.7                                             SEC
Documents

Schedule 4.9                                             Absence
of Certain Changes

Schedule 4.10                                       Material
Contracts

Schedule 4.12                                       Real
Property

Schedule 4.13                                       Intellectual
Property

Schedule 4.16                                       Employee
Benefit Plans

Schedule 4.17                                       Labor
Matters

Schedule 4.18                                       Litigation

Schedule 4.20                                       Permits

Schedule 4.22                                       Liquidation

Schedule 4.24                                       Insurance

Schedule 4.25                                       Transactions
with Affiliates

Schedule 4.26                                       Suppliers

Schedule 6.1                                             Exceptions
to Ordinary Course

Schedule 7.3(c)                               Consents

 

i

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN
OF MERGER (this “Agreement”), dated as of
April 28, 2005, is by and among Worldwide Restaurant Concepts, Inc., a
Delaware corporation (the “Company”), Aus
Bidco Pty Limited, a New South Wales, Australia, limited company (“Parent”), US Mergeco, Inc., a Delaware corporation and
wholly-owned subsidiary of Parent (“Acquisition Sub”).

RECITALS

WHEREAS, Parent has
formed Acquisition Sub for the purpose of merging it with and into the Company
and acquiring the Company as a wholly-owned subsidiary of Parent; and

WHEREAS, the boards of
directors of the Company, Parent and Acquisition Sub have each adopted this
Agreement and approved the Merger (as defined below), upon the terms and
subject to the conditions set forth in this Agreement.

AGREEMENT

NOW THEREFORE, in
consideration of the respective covenants and promises contained herein and for
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1.            Certain Definitions.

(a)           As used herein, the terms below shall
have the following meanings.  Any such
terms, unless the context otherwise requires, may be used in the singular or
plural, depending upon the reference.

“Affected
Employees” means the employees of the Company and the Company
Subsidiaries as of the Effective Time that continue to be employed by the
Surviving Corporation after the Effective Time.

“Affiliate”
means, with respect to any person (as defined below), (a) any other person
which directly or indirectly Controls, is Controlled by or is under common
Control with such specified person, (b) each person who at such time is an
executive officer, director, or direct or indirect holder of at least 10% of
any class of the capital stock of such specified person, (c) the Members of the
Immediate Family of any natural persons described in clause (b), and (d) if
such specified person is an individual, the Members of the Immediate Family of
such specified person.

 

 

“business day” means a day which is not a Saturday,
Sunday or public holiday in the State of New South Wales, Australia or the
State of California, USA.

“Closing
Exchange Rate” means the average of the US$/A$
bid and offer rates as displayed on the Reuters Monitor System at or about 11.00 am (Los Angeles time) on the date which
is the Business Day (in Los Angeles) immediately preceding the Closing Date in response to the query “AUD=” (or any replacement or
substitution for that display) (expressed to the same number of decimal places
as the Reference Exchange Rate).

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

“Collins”
means Collins Foods Group Pty Limited ACN 009 937 900, a company registered in
Australia, a Company Subsidiary.

“Collins Employee
Plans” means, collectively, the Collins Food Share Option Plan and
the Productivity Bonus Option Plan.

“Collins Food
Share Option Plan” means the option plan pursuant to which certain
members of the Australian management team of Collins have the opportunity to
exercise options for the purchase of shares in Collins, as referred to in the
Collins Shareholders Agreement.

“Collins
Shareholders Agreement” means the shareholders agreement between (a)
Collins, (b) the Company and (c) certain members of the Australian management
team of Collins, dated 22 March 2004.

“Common Stock” means the common stock, par
value $.01 per share, of the Company.

“Company Board” means the board of directors
of the Company.

“Company Bylaws” means the Bylaws of the
Company, as amended to the date of this Agreement.

“Company Certificate” means the Certificate
of Incorporation of the Company, as amended to the date of this Agreement.

“Company Option Plans” means the Company’s
1997 Employee Stock Incentive Plan and 1997 Non-Employee Director Stock
Incentive Plan.

“Company Property” means an Owned Property
or a Leased Property (each as defined below).

“Company Stockholder Approval” means the
approval of this Agreement by the holders of a majority of the outstanding
shares of Common Stock.

“Company Subsidiary” means a Subsidiary (as
defined below) of the Company.

 

2

 

“Company Takeover Proposal” means any
inquiry, proposal or offer from any person (a) relating to any merger,
acquisition, consolidation, liquidation, dissolution, recapitalization or other
business combination involving the Company or any Company Subsidiary (other
than FFPE, LLC and its Subsidiaries), (b) for the issuance by the Company or
any Company Subsidiary (other than FFPE LLC and its Subsidiaries) of over 20%
of any class of its equity securities as consideration for the assets or
securities of another person or (c) to acquire in any manner, directly or
indirectly, (i) over 20% of any class of the equity securities of the Company
or any Company Subsidiary (other than FFPE, LLC and its Subsidiaries) or (ii) a
business that constitutes 20% or more of the consolidated net revenues or
assets of the Company or 20% or more of the consolidated net revenues or assets
of Collins or any of the Subsidiaries of Collins, in each case other than the
Merger.

“Confidentiality Agreement” means that
certain Confidentiality Agreement by and between HLHZ (as defined below), on
behalf of the Company, and Pacific Equity Partners, dated December 17, 2004.

“Control” means, as to any person, the power
to direct or cause the direction of the management and policies of such person,
whether through the ownership of voting securities, by contract or otherwise
(the terms “Controlled by” and “under common Control with” shall have
correlative meanings).

“DGCL” means the General Corporation Law of
the State of Delaware.

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

“Environmental Claim” means any and all
administrative, regulatory or judicial actions, suits, orders, demands,
directives, claims, liens, judgments, investigations, proceedings or written or
oral notices of noncompliance or violation by or from any person alleging
liability of whatever kind or nature (including liability or responsibility for
the costs of enforcement proceedings, investigations, cleanup, governmental
response, removal or remediation, natural resources damages, property damages,
personal injuries, medical monitoring, penalties, contribution, indemnification
and injunctive relief) arising out of, based on or resulting from (a) the
presence or Release (as defined below) of, or exposure to, any Hazardous
Materials (as defined below) at any location; or (b) the failure to comply
with any Environmental Law (as defined below).

“Environmental Laws” means all applicable
federal, state, local and foreign Laws (as defined below), rules, regulations,
orders, decrees, judgments, legally binding agreements or Environmental Permits
(as defined below) issued, promulgated or entered into by or with any
Governmental Entity, relating to pollution, natural resources or protection of
endangered or threatened species, human health or the environment (including
ambient air, surface water, groundwater, land surface or subsurface strata).

“Environmental Permits” means all permits,
licenses and governmental authorizations pursuant to Environmental Laws.

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

 

3

 

“GAAP” means accounting principles generally accepted in the
United States.

“Governmental Entity” means any government
or any court of competent jurisdiction, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign.

“HSR Act”
means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder.

“Hazardous Materials” means (a) any
petroleum or petroleum products, radioactive materials or wastes, asbestos in
any form, urea formaldehyde foam insulation and polychlorinated biphenyls; and
(b) any other chemical, material, substance or waste that in relevant form
or concentration is prohibited, limited or regulated under any Environmental
Law.

“Intellectual Property” means the entire right, title and
interest in and to all proprietary rights of every kind and nature, including
all rights and interests pertaining to or deriving from (a) patents,
copyrights, mask work rights, technology, know-how, processes, trade secrets,
algorithms, inventions, works, proprietary data, databases, formulae, research
and development data and computer software or firmware; (b) trademarks, trade
names, service marks, service names, brands, trade dress and logos, and the
goodwill and activities associated therewith; (c) domain names, rights of
privacy and publicity, moral rights, and proprietary rights of any kind or
nature, however denominated, throughout the world in all media now known or
hereafter created; (d) any and all registrations, applications, recordings,
licenses, common-law rights and contracts or agreements relating to any of the
foregoing; (e) all claims, actions, suits, proceedings and rights to sue at law
or in equity for any past or future infringement or other impairment of any of
the foregoing, including the right to receive all proceeds and damages
therefrom, and all rights to obtain renewals, continuations, divisions or other
extensions of legal protections pertaining thereto; and (f) all works, ideas,
inventions, discoveries, innovations, know-how, information, data and databases
(including ideas, research and development, formulas, compositions, processes
and techniques, data, databases, designs, drawings, specifications, customer
and supplier lists, pricing and cost information, business and marketing plans
and proposals, documentation and manuals), computer software, firmware,
computer hardware and all other forms of works or technology, regardless of
medium, and including improvements,
modifications, works in process, derivatives or changes, whether tangible or
intangible, embodied or fixed in any form, whether or not protectible or
protected by patent, copyright, mask work right, trade secret law or otherwise,
and all documents and other materials recording any of the foregoing.

“Judgment” means any judgment, decision,
consent decree, injunction, ruling or order of any federal, state or local
court or Governmental Entity, department or authority that is binding on any
person or its property under applicable Law.

“knowledge” of any person that is not an
individual means, with respect to any matter in question, the actual knowledge
of such person’s executive officers and other officers having primary
responsibility for such matter.

 

4

 

“Laws” means any laws, statutes, ordinances,
regulations, rules, notice requirements, court decisions, agency guidelines,
principles of law and orders of any foreign (whether federal, state, municipal
or local), federal, state or local government and any other Governmental
Entity, agency, commission, board or
bureau.

“Leased Property” means all real property
and interests in real property leased by the Company or any Company Subsidiary.

“Liens” means any claim, lien, pledge,
option, charge, easement, security interest, deed of trust, mortgage,
conditional sales agreement, encumbrance or other right of third parties,
whether voluntarily incurred or arising by operation of law, and includes,
without limitation, any agreement to give any of the foregoing in the future,
and any contingent sale or other title retention agreement or lease in the
nature thereof.

“Material Adverse Effect” on a party means
any change, effect, event, situation or condition that, when considered either
individually or in the aggregate together with all other adverse changes or
effects with respect to which such phrase is used in this Agreement, is, or is
reasonably likely to be, materially adverse to the business, assets, financial
condition, reputation or results of operations of such party and its
Subsidiaries, taken as a whole; provided,
however, that a “Material Adverse
Effect” shall not be deemed to include the impact of any change or effect
relating to or arising from (a) the execution, announcement, or consummation of
this Agreement and the transactions contemplated hereby, including any impact
thereof on relationships, contractual or otherwise, with partners, customers,
suppliers or employees, (b) general changes in economic or regulatory
conditions in the industries in which the Company or Parent, as the case may
be, carries on business as of the date hereof, and changes in general economic,
regulatory or political conditions, but excluding changes or effects resulting
from, relating to or arising from acts of war or terrorism or (c) any changes
or effects resulting from any matter, which matter was expressly contemplated
or permitted by the terms of this Agreement (other than any matter set forth on
any section of the Company Disclosure Schedule other than Schedule 6.1),
including any matter which was approved by Parent following the date hereof
pursuant to Section 6.1, to the extent, with respect to any such matter
other than any sale or disposition of FFPE, LLC and its Subsidiaries or the
assets thereof, that Parent had actual knowledge of the material facts,
circumstances and events relating to such matter.

“Members of
the Immediate Family” means, with respect to any individual, (a)
such person’s spouse, (b) each parent, brother, sister or child of such person or
such person’s spouse, (c) the spouse of any person described in clause (b)
above, (d) each child of any person described in clauses (a), (b) or (c) above,
(e) each trust created solely for the benefit of one or more of the persons
described in clauses (a) through (d) above and (f) each custodian or guardian
of any property of one or more of the persons described in clauses (a) through
(e) above in his capacity as such custodian or guardian.

“Outside Date”
means August 28, 2005; provided
that, in the event that the SEC elects to review the Proxy Statement, such
Outside Date shall automatically be extended by an additional thirty days.

 

5

 

“Owned Property” means all real property and
interests in real property owned in fee by the Company or any Company
Subsidiary.

“Per Share Merger Consideration” means an
amount calculated in accordance with the following formula:

where:

(a)           X is the Per Share Merger
Consideration in US dollars;

(b)                                 CER is the Closing Exchange Rate; and

(c)           RER is the Reference Exchange Rate;

provided, however,
that, (i) if the Per Share Merger Consideration, as determined in accordance
with the above formula is less than US$6.65, then the Per Share Merger
Consideration shall be deemed to be US$6.65 and (ii) if the Per Share Merger
Consideration, as determined in accordance with the above formula is more than
US$7.25, then the Per Share Merger Consideration shall be deemed to be US$7.25.

“Permits” means all permits, licenses,
variances, exemptions, authorizations, operating certificates, franchises,
orders and approvals of all Governmental Entities.

“Permitted Liens” means (a) mechanics’,
carriers’, workmen’s, repairmen’s or other like Liens arising or incurred in
the ordinary course of business relating to obligations that are not delinquent
or that are being contested by the Company or a Company Subsidiary and for
which the Company or a Company Subsidiary has established adequate reserves,
(b) Liens for Taxes that are not due and payable or for Taxes that are being
contested in good faith, (c) Liens that secure debt obligations that are
reflected as liabilities on the most recent audited balance sheet of the
Company and its consolidated Subsidiaries contained in the Company SEC
Documents (as defined below) and the existence of which is referred to in the
notes to such balance sheet, (d) Liens arising under original purchase price
conditional sales contracts and equipment leases with third parties entered
into in the ordinary course of business, (e) terms and conditions of any
personal property lease, (f) easements, covenants, rights-of-way and other
similar restrictions of record (other than options or rights of first refusal
or offer to purchase), (g) any conditions that would be shown by a current,
accurate survey or physical inspection of any Company Property made on the date
of this Agreement and (h) other Liens, imperfections of title or encumbrances,
if any, that, individually or in the aggregate, do not have, and would not
reasonably be expected to have, a Material Adverse Effect on the Company.

“person” means any individual, firm,
corporation, partnership, company, limited liability company, trust, joint
venture, association, Governmental Entity or other entity.

“Productivity
Bonus Option Plan” means the option plan pursuant to which certain
members of the Australian management team of Collins have the opportunity to
exercise 

 

6

 

productivity
bonus options for the purchase of shares in Collins, as referred to in the
Collins Shareholder Agreement.

“Reference
Exchange Rate” means 0.7806.

“Release” means any actual or threatened
release, spill, emission, leaking, dumping, injection, pouring, deposit,
disposal, discharge, dispersal, leaching or migration into or through the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata) or within any building, structure, facility or fixture.

“SEC” means the United States Securities and
Exchange Commission.

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

“Shareholder Rights Plan” means the Rights
Agreement, dated January 22, 2001 between the Company and The Bank of New York,
as Rights Agent.

“Subsidiary” of any person means another
person of which 50% or more of the voting power or value of the equity
securities or equity interests is owned, directly or indirectly, by such first
person.

“Superior Takeover Proposal” means any bona
fide third party proposal on arm’s-length terms to acquire directly or indirectly
for consideration consisting of cash and/or securities all or substantially all
of the shares of Common Stock then outstanding or all or substantially all of
the assets of the Company and otherwise on terms which, when taken as a whole,
the Company Board determines in its good faith judgment (after consulting with
legal counsel and financial advisors) (i) is reasonably likely to be
consummated, taking into account the person making the proposal and all legal,
financial and regulatory aspects of the proposal and (ii) is reasonably likely,
if consummated, to provide greater value to the holders of shares of Common
Stock than the Merger, taking into account all the terms of such proposal and
of this Agreement (including any proposal by Parent to amend the terms of the
transactions contemplated hereby).

“Tax” means any and all U.S. and foreign
federal, state and local net income, gross income, gross receipts, sales, use,
ad valorem, transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, windfall profits, alternative, add-on minimum, estimated,
capital stock, customs, social security (or similar), unemployment,
environmental or other taxes, fees, assessments or charges in the nature of a
tax, together with any interest and any penalties, additions to tax or
additional amounts with respect thereto.

“Tax Return” means any return, declaration,
report, claim for refund, statement, information return or statement or other
document required to be filed with respect to Taxes, including any schedule or
attachment thereto and any amendment thereof.

“Transfer Taxes” means all stock transfer,
real estate transfer, documentary, stamp, recording and other similar Taxes (including
interest, penalties and additions to any such Taxes).

 

7

 

Section 1.2.            Terms
Defined Elsewhere.  The following is
a list of additional terms used in this Agreement and a reference to the
Section hereof in which such term is defined:

	
   Term

   	
   Section

   
	
  Acquisition Sub

  	
  Preamble

  
	
  Acquisition Sub Stockholder Approval

  	
  Section 6.2(e)

  
	
  Agreement

  	
  Preamble

  
	
  Certificates

  	
  Section 3.4(b)

  
	
  Closing

  	
  Section 2.3

  
	
  Closing Date

  	
  Section 2.3

  
	
  Commitment Letters

  	
  Section 5.5(a)

  
	
  Company

  	
  Preamble

  
	
  Company Disclosure Schedule

  	
  Article IV

  
	
  Company Group

  	
  Section 6.4(a)

  
	
  Company Intellectual Property

  	
  Section 4.13(a)

  
	
  Company Options

  	
  Section 3.2(a)

  
	
  Company SEC Documents

  	
  Section 4.7(a)

  
	
  Company Stockholders Meeting

  	
  Section 6.2(d)

  
	
  Consent

  	
  Section 4.6

  
	
  Dissenting Shares

  	
  Section 3.3

  
	
  ERISA Affiliate

  	
  Section 4.16(a)

  
	
  Effective Time

  	
  Section 2.2

  
	
  Employee Plans

  	
  Section 4.16(a)

  
	
  Equity Commitment Letters

  	
  Section 5.5(b)

  
	
  Exchange Agent

  	
  Section 3.4(a)

  
	
  Exchange Fund

  	
  Section 3.4(a)

  
	
  HLHZ

  	
  Section 4.21

  
	
  Indemnified Officers

  	
  Section 6.8(a)

  
	
  Lenders

  	
  Section 5.5(a)

  
	
  Licenses

  	
  Section 4.13(e)

  
	
  Material Contracts

  	
  Section 4.10(a)

  
	
  Maximum Premium

  	
  Section 6.8(b)

  
	
  Merger

  	
  Section 2.1

  
	
  Merger Certificate

  	
  Section 2.2

  
	
  Merger Consideration

  	
  Section 3.4(a)

  
	
  Non-qualified Employee Plan

  	
  Section 4.16(h)

  
	
  Parent

  	
  Preamble

  
	
  Pension Plan

  	
  Section 4.16(d)

  
	
  Per Share Merger Consideration

  	
  Section 3.1(a)

  
	
  Proxy Statement

  	
  Section 6.2(a)

  
	
  Required Cash Amount

  	
  Section 5.5

  
	
  Section 409A

  	
  Section 4.16(h)

  
	
  Shares

  	
  Section 3.1(a)

  
	
  Surviving Corporation

  	
  Section 2.1

  
	
  Transaction Financing

  	
  Section 5.5(a)

  
	
  Voting Company Debt

  	
  Section 4.3(a)

  

 

8

 

	
  Welfare Plan

  	
  Section 4.16(d)

  

ARTICLE II

 

THE MERGER

Section 2.1.            The
Merger.  At the Effective Time (as
defined below) and upon the terms and subject to the conditions of this
Agreement and in accordance with the DGCL, Acquisition Sub shall be merged with
and into the Company (the “Merger”).  Following the Merger, the Company shall
continue as the surviving corporation (the “Surviving
Corporation”) and the separate corporate existence of Acquisition
Sub shall cease.

Section 2.2.            Effective
Time.  Subject to the terms and
conditions set forth in this Agreement, a Certificate of Merger (the “Merger Certificate”) shall be duly executed and acknowledged
by the Company and thereafter delivered to the Secretary of State of the State
of Delaware for filing pursuant to the DGCL on the Closing Date (as defined
below).  The Merger shall become
effective at such time as a properly executed and certified copy of the Merger
Certificate is duly filed with the Secretary of State of the State of Delaware
in accordance with the DGCL or such later time as Parent and the Company may
agree upon and set forth in the Merger Certificate (such time as the Merger
becomes effective, the “Effective Time”).

Section 2.3.            Closing.  The closing of the Merger (the “Closing”) shall take place at a time and on a date (the “Closing Date”) to be specified by the parties, which shall
be no later than the second Business Day after satisfaction of the latest to
occur of the conditions set forth in Article VII, at the offices of
Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, Los Angeles,
California, or such other time, date or place as is agreed to in writing by the
parties hereto.

Section 2.4.            Effects
of the Merger.  The Merger shall have
the effects set forth in the DGCL. 
Without limiting the generality of the foregoing and subject thereto, at
the Effective Time, all the properties, rights, privileges, powers and
franchises of the Company and Acquisition Sub shall remain or become,
respectively, the properties, rights, privileges, powers and franchises of the
Company and all debts, liabilities and duties of the Company and Acquisition Sub
shall remain or become, respectively, the debts, liabilities and duties of the
Company.  The parties hereby acknowledge
that all the properties, rights, privileges, powers and franchises of the
Company prior to the Effective Time of the Merger, shall remain the properties,
rights, privileges, powers and franchises of the Company after the Effective
Time of the Merger.

Section 2.5.            Certificate
of Incorporation and Bylaws.  The
Certificate of Incorporation of Acquisition Sub in effect at the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation until
amended in accordance with applicable law, except that Article I thereof will
be amended and restated in its entirety to state:  “The name of the Corporation is Worldwide
Restaurant Concepts, Inc.”  The Bylaws of
Acquisition Sub in effect at the Effective Time shall be the Bylaws of the
Surviving Corporation until amended in accordance with applicable law.

 

9

 

Section 2.6.            Board of Directors.  The directors of Acquisition Sub at the
Effective Time shall be the initial directors of the Surviving Corporation,
each to hold office in accordance with the Certificate of Incorporation and
Bylaws of the Surviving Corporation until such director’s successor is duly
elected or appointed and qualified.

Section 2.7.            Officers.  The officers of the Company at the Effective
Time shall be the initial officers of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation until such officer’s successor is duly elected or
appointed and qualified.

Section 2.8.            Subsequent
Actions.  If, at any time after the Effective Time, the Surviving Corporation will
consider or be advised that any deeds, bills of sale, assignments, assurances
or any other actions or things are necessary or desirable to vest, perfect or
confirm of record or otherwise in the Surviving Corporation its right, title or
interest in, to or under any of the rights, properties or assets of the Company
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation are hereby authorized to execute and
deliver, in the name and on behalf of the Company or otherwise, all such deeds,
bills of sale, assignments and assurances and to take and do, in the name and
on behalf of the Company or otherwise, all such other actions and things as may
be necessary or desirable to vest, perfect or confirm any and all right, title
and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out this Agreement.

ARTICLE III

 

EFFECT ON CAPITAL
STOCK

Section 3.1.            Effect on Capital Stock.  At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of Common
Stock or any shares of capital stock of Acquisition Sub:

(a)           Conversion of Common Stock.  Each share of Common Stock issued and
outstanding immediately prior to the Effective Time (the “Shares”)
(other than (i) Shares held in the Company’s treasury, (ii) Shares held by
Parent, Acquisition Sub or any other Subsidiary of Parent and (iii) Dissenting
Shares (as defined below)) shall be converted into and shall become the right
to receive an amount in cash equal to the Per Share Merger Consideration. 
Notwithstanding the foregoing, if, between the date of this Agreement
and the Effective Time, the Shares shall have been changed into a different
number of shares or a different class by reason of any dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
then the Per Share Merger Consideration contemplated by the Merger shall be correspondingly
adjusted to reflect such dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of Shares.  As of the Effective Time, all such Shares
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing any
such Shares shall cease to have any rights with respect thereto, except the
right to receive the Per Share Merger Consideration upon surrender of such
certificate in accordance with this Article III, without interest.

 

10

 

(b)           Cancellation of Treasury Stock and
Parent-Owned Stock.  Each share of
Common Stock that is owned by the Company, Parent or Acquisition Sub shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and no cash or other consideration shall be delivered or
deliverable in exchange therefor.

(c)           Capital Stock of Acquisition Sub.  Each issued and outstanding share of capital
stock of Acquisition Sub shall be converted into and become one fully paid and
nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.

Section 3.2.            Stock
Options.

(a)           At the Effective Time, each
outstanding option to purchase Shares (the “Company
Options”), whether granted under the Company Option Plans or
otherwise, whether vested or unvested in accordance with its terms (including
by reason of the transactions contemplated by this Agreement), shall be canceled
without any action on the part of any holder of a Company Option, and each
holder of a Company Option shall be entitled to receive in exchange therefor
cash in an amount equal to the product of (i) the positive difference, if
any, between the Per Share Merger Consideration and the exercise price of such
Company Option multiplied by
(ii) the number of shares of Common Stock subject to such Company
Option.  As soon as reasonable
practicable following the Effective Time, the Exchange Agent (as defined below)
shall mail to each holder of a Company Option entitled to consideration
pursuant to this Section 3.2(a) a check in the amount of such
consideration.

(b)           As soon as reasonably practicable
following the date of this Agreement, the Company Board (or, if appropriate,
any committee administering the Company Option Plans) shall adopt such
resolutions or take such other actions as may be required in order that (i)
each outstanding Company Option shall automatically accelerate so that each
such Company Option shall, immediately prior to the Effective Time, become
fully exercisable for all of the shares of Common Stock at the time subject to
such Company Option and may be exercised by the holder thereof for any or all
of such shares as fully-vested shares of Common Stock and (ii) upon the
Effective Time, all outstanding Company Options, to the extent not exercised
prior to the Effective Time, shall be automatically cancelled without any
action on the part of any holder of Company Options in exchange for the consideration,
if any, set forth in Section 3.2(a). 
For avoidance of doubt, prior to the Closing, the Company shall take all
actions as may be required in order that each Company Option with an exercise
price equaling or exceeding the Per Share Merger Consideration to automatically
and duly terminate as of the Effective Time, and no Per Share Merger
Consideration, other cash amount or other property or obligation shall be owed,
due or payable by the Company, the Parent or Acquisition Sub in respect of such
Company Option.

Section 3.3.            Appraisal
Rights.  Notwithstanding anything in
this Agreement to the contrary, if appraisal rights are available under Section
262 of the DGCL in respect of the Merger, then Shares that are issued and
outstanding immediately prior to the Effective Time and which are held by
stockholders who have demanded and perfected their demands for appraisal of
such Shares in the time and manner provided in Section 262 of the DGCL and, as
of the Effective Time, have neither effectively withdrawn nor lost their rights
to such appraisal and payment under the DGCL (the “Dissenting Shares”), shall not be converted as
described in 

 

11

 

Section 3.1 hereof, but shall, by
virtue of the Merger, be entitled to only such rights as are granted by Section
262 of the DGCL; provided, that
if such holder shall have failed to perfect or shall have effectively withdrawn
or lost his, her or its right to appraisal and payment under the DGCL, such
holder’s Shares shall thereupon be deemed to have been converted, at the
Effective Time, as described in Section 3.1, into the right to receive
the Per Share Merger Consideration, without any interest thereon, and without
any action on the part of the holder. 
The Company shall give Parent (a) prompt notice of any written demands
for appraisal of any Shares, attempted withdrawals of such demands and any
other instruments served pursuant to the DGCL and received by the Company
relating to stockholders’ rights of appraisal and (b) the opportunity to
participate in and direct all negotiations and proceedings with respect to
demands for appraisal under the DGCL. 
The Company shall not, without the prior written consent of Parent, make
any payment with respect to any demand for payment with respect to any
Dissenting Shares or settle (or offer to settle) any such demand, or agree to
do any of the foregoing.

Section 3.4.            Payment of Merger Consideration.

(a)           Exchange Agent. 
Prior to the Effective Time, Parent shall select a bank or trust company
reasonably satisfactory to the Company to act as an agent (the “Exchange Agent”), for the benefit of the
holders of Shares and Company Options, in connection with the Merger.  Immediately prior to the Effective Time,
Parent shall deposit into a fund (the “Exchange
Fund”) with the Exchange Agent an amount of cash sufficient to pay
(i) the Per Share Merger Consideration with respect to each Share and (ii) the
consideration set forth in Section 3.2 with respect to each Company
Option (collectively, the “Merger
Consideration”).  Parent shall
take all steps necessary to enable and cause the Surviving Corporation to
provide to the Exchange Agent on a prompt and timely basis, as and when needed
after the Effective Time, any additional cash necessary to pay the Merger
Consideration pursuant to Section 3.1.

(b)           Exchange Procedures.  As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates (the “Certificates”)
that immediately prior to the Effective Time represented outstanding Shares,
(i) a letter of transmittal (which shall be in such form as Parent may
reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Per Share Merger
Consideration.  Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter
of transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor an amount in cash equal to the product
of (A) the number of Shares evidenced by such certificate and (B) the
Per Share Merger Consideration, and the Certificate so surrendered shall forthwith
be canceled.  In the event of a transfer
of ownership of shares of Common Stock that is not registered in the transfer
records of the Company, payment may be made to a person other than the person
in whose name the Certificate so surrendered is registered, if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer and the
person requesting such payment shall pay any transfer or other Taxes required
by reason of the payment to a person other than the registered holder of such
Certificate or establish to the satisfaction of Parent that such Tax has been
paid or is not applicable.  Until
surrendered as contemplated by this Section 3.4, each Certificate
shall be deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the applicable portion of the Merger
Consideration.  No interest shall be paid
or accrue 

 

12

 

on any
cash payable upon surrender of any Certificate. 
Company Options will be treated in the manner provided in Section 3.2.

(c)           No Further Ownership Rights in
Common Stock.  The Per Share Merger
Consideration paid in accordance with the terms of this Article III
upon conversion of any Shares shall be deemed to have been paid in full satisfaction
of all rights pertaining to such Shares, subject, however, to the
Surviving Corporation’s obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time that may have been
declared or made by the Company on such Shares in accordance with the terms of
this Agreement or prior to the date of this Agreement and which remain unpaid
at the Effective Time, and after the Effective Time there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of Shares that were outstanding immediately prior to the Effective
Time.  If, after the Effective Time, any
certificates formerly representing shares of Common Stock are presented to the
Surviving Corporation or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in this Article III.

(d)           Termination of Exchange Fund.  Any portion of the Exchange Fund that remains
undistributed to the holders of Shares or Company Options for twelve months after
the Effective Time shall be delivered to Parent, upon demand, and any holder of
Shares or Company Options who has not theretofore complied with this Article III
shall thereafter look only to Parent and the Surviving Corporation for payment
of its claim for the applicable portion of the Merger Consideration.

(e)           No Liability.  None of Parent, Acquisition Sub, the Company
or the Exchange Agent shall be liable to any person in respect of any cash
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar Law.  If any
Certificate has not been surrendered prior to five years after the Effective
Time (or immediately prior to such earlier date on which Merger Consideration
in respect of such Certificate would otherwise escheat to or become the
property of any Governmental Entity), any such cash, dividends or distributions
in respect of such Certificate shall, to the extent permitted by applicable
Law, become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.

ARTICLE IV

 

REPRESENTATIONS
AND WARRANTIES OF THE COMPANY

Except as set forth on
the disclosure schedule delivered by the Company to Parent in connection with
this Agreement (the “Company Disclosure
Schedule”) or in any Company SEC Document (as defined below) filed
by the Company with the SEC before the date of this Agreement, the Company
hereby represents and warrants to each of Parent and Acquisition Sub as
follows:

Section 4.1.            Organization.  The Company is duly incorporated, validly
existing and, except as set forth on Schedule 4.1, in good standing
under the laws of the State of Delaware with full corporate power and authority
to conduct its business as it is presently being conducted 

 

13

 

and to
own or lease, as applicable, its assets and properties.  The Company is duly qualified to do business
as a foreign entity and is in good standing in each jurisdiction where the
character of its properties owned or leased or the nature of its activities
make such qualification necessary, except where the failure to be so qualified
or in good standing would not have, and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.  The Company has delivered to
Parent true and complete copies of the Company Certificate and the Company
Bylaws.

Section 4.2.            Subsidiaries.

(a)           Schedule 4.2 is a true,
complete and correct list of each Company Subsidiary, its jurisdiction of
organization or formation and its shareholders and their percentage
ownership.  All the outstanding shares of
capital stock of each Company Subsidiary have been validly issued and are fully
paid and nonassessable and are owned by the Company, by another Company
Subsidiary or by the Company and another Company Subsidiary, free and clear of
all Liens.  Except for interests in
Company Subsidiaries, neither the Company nor any Company Subsidiary owns or has
agreed to acquire, directly or indirectly, any capital stock, membership
interest, partnership interest, joint venture interest or other equity interest
in any person.

(b)           Each Company Subsidiary is duly
organized or formed, validly existing and in good standing under the laws of
its jurisdiction of organization as reflected on Schedule 4.2, with full
corporate, partnership or limited liability company power and authority to
conduct its business as it is presently being conducted and to own or lease, as
applicable, its assets and properties.  Each Company Subsidiary is duly qualified to
do business and is in good standing in each jurisdiction where the character of
its properties owned or leased or the nature of its activities make such
qualification necessary, except where the failure to be so qualified or in good
standing would not have, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.

Section 4.3.            Capitalization.

(a)           The entire authorized capital stock
of the Company consists of 50,000,000 shares of Common Stock and 1,000,000
shares of preferred stock, par value $5.00 per share.  At the close of business on April 27, 2005,
(i) 27,865,264 shares of Common Stock were
issued and outstanding, (ii) 2,000,000  shares of Common Stock were held by the Company in its treasury, (iii) 3,248,981 shares of Common Stock were subject to
outstanding Company Options, (iv) 1,592,391 additional shares of
Common Stock were reserved for issuance pursuant to the Company Option Plans
and (v) no shares of preferred stock, par value $5.00 per share, were issued
and outstanding.  Except as set forth
above, at the close of business on April 27, 2005, no shares of capital stock
or other voting securities of the Company were issued, reserved for issuance or
outstanding, and, since April 27, 2005, no shares of capital stock or other
voting securities of the Company were issued by the Company, except for shares
of Common Stock issued upon the exercise of Company Options.  All outstanding shares of Common Stock are,
and all such shares that may be issued prior to the Effective Time will be when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to or issued in violation of any purchase option, call option, right of
first refusal, preemptive right, subscription right or any similar right under
any provision of the DGCL, the Company Certificate, the Company 

 

14

 

Bylaws
or any Material Contract (as defined below) to which the Company is a party or
otherwise bound.  There are no bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which holders of Common Stock may vote (“Voting Company Debt”).  Except as set forth above, as of the date of
this Agreement, there are no options, warrants, rights, convertible or
exchangeable securities, “phantom” stock rights, stock appreciation rights,
stock-based performance units, commitments, Material Contracts, arrangements or
undertakings of any kind to which the Company or any Company Subsidiary is a
party or by which any of them is bound (A) obligating the Company or any
Company Subsidiary to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock or other equity interests in, or
any security convertible or exercisable for or exchangeable into any capital
stock of or other equity interest in, the Company or any Company Subsidiary or
any Voting Company Debt, (B) obligating the Company or any Company
Subsidiary to issue, grant, extend or enter into any such option, warrant,
call, right, security, commitment, Material Contract, arrangement or
undertaking or (C) that give any person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights
occurring to holders of Common Stock.  As
of the date of this Agreement, there are no outstanding contractual obligations
of the Company or any Company Subsidiary to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any Company Subsidiary.

(b)           Schedule 4.3(b) sets forth a
true, complete and correct list of all outstanding Company Options, the number
of shares of Common Stock subject to each such Company Option, the grant date,
exercise price, expiration date and vesting schedule of each such Company
Option and the names of the holders of each Company Option.

(c)           The Company Board has, to the extent
such statutes are applicable, taken all action to render Section 203 of the
DGCL inapplicable to the Merger and the consummation of the transactions
contemplated by this Agreement.  As of
the date of this Agreement, no other “business combination,” “fair price,” “moratorium,”
“control share acquisition” or other similar anti-takeover statute or
regulation under any applicable Laws is applicable to the Company or any
Company Subsidiary or any of their capital stock, the Merger or any of the
other transactions contemplated by this Agreement.  Except as set forth on Schedule 4.3(c),
there are no issued and outstanding shares of Common Stock that constitute
restricted stock or that are otherwise subject to a repurchase or redemption
right in favor of the Company.  The Company
has made available to Parent a complete and correct copy of the Shareholder
Rights Plan, as amended and in effect as of the date hereof.  Other than the Shareholder Rights Plan, the
Company does not have and has not effected or voted to effect any shareholder
rights plan or agreement or so called “poison pill” that could adversely affect
on the consummation of the transactions contemplated hereby.  The Company Board has not taken any action to
render the provisions of the Shareholder Rights Plan or Section 203 of the DGCL
inapplicable to any transaction other than the transaction contemplated by this
Agreement.

Section 4.4.            Authorization.

(a)           The Company has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the Merger in accordance with the provisions of this Agreement.  The execution and delivery of this Agreement
by the Company and the 

 

15

 

consummation
by the Company of the Merger have been duly approved by all necessary corporate
action on the part of the Company, subject to receipt of Company Stockholder
Approval.  This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery hereof by Parent and Acquisition Sub, is the valid and
binding obligation of the Company, enforceable against it in accordance with
its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting creditors’
rights generally and except insofar as the availability of equitable remedies
may be limited by applicable law.

(b)           The Company Board, and a majority of
the independent members of the Company Board, at a meeting duly called and
held, duly adopted resolutions (i) adopting this Agreement and approving
the Merger, (ii) determining that the terms of the Merger are fair to and
in the best interests of the Company and its stockholders, (iii) directing that
this Agreement be submitted to a vote of the Company’s stockholders and
(iv) recommending that the Company’s stockholders approve this Agreement.

(c)           The only vote of holders of any class
or series of the capital stock of the Company necessary to approve this
Agreement and the Merger is the Company Stockholder Approval.

Section 4.5.            No
Conflict or Violation.  The execution, delivery and performance of
this Agreement by the Company do not, and the consummation of the Merger by the
Company and compliance by the Company with any of the provisions hereof will
not (a) violate or conflict with any provision of the Company Certificate
or Company Bylaws or the comparable charter or organizational documents of any
Company Subsidiary, (b) except as set forth on Schedule 4.5,
violate, conflict with, or result in or constitute a default under, or result
in the termination of, or accelerate the performance required by, or result in
a right of termination or acceleration under, any of the terms, conditions or
provisions of any Material Contract or (c) subject to the filings and
other matters referred to in Section 4.6, violate, conflict with,
contravene or give any person the right to exercise any remedy or obtain any
relief under, any Judgment or Law applicable to the Company, any Company
Subsidiary or their respective properties or assets, except in the case of each
of clauses (b) and (c) above, for such violations, defaults, terminations
or accelerations that, individually or in the aggregate, would not have, and
would not reasonably be expected to have, a Material Adverse Effect on the
Company.

Section 4.6.            Consents
and Approvals.  No consent, approval,
license, permit, order or authorization (“Consent”)
of, or registration, declaration or filing with, or permit from, any federal,
state, local or foreign Governmental Entity, is required to be obtained or made
by the Company or any Company Subsidiary in connection with the execution,
delivery and performance of this Agreement or the consummation of the Merger,
other than (i) compliance with and filings under the HSR Act,
(ii) the filing with the SEC of (A) the Proxy Statement (as defined
below) and (B) such reports under, or other applicable requirements of, the
Exchange Act, as may be required in connection with this Agreement and the
Merger, (iii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware and appropriate documents with the relevant
authorities of the other jurisdictions in which the Company is qualified to do
business and (iv) such other items that, individually or in the aggregate,
would not have, and would not reasonably be expected to have, a Material
Adverse Effect on the Company.

 

16

 

Section 4.7.            SEC Documents; Undisclosed
Liabilities.

(a)           Except as set forth on Schedule
4.7, the Company has filed all reports, schedules, forms, statements and
other documents (the “Company SEC Documents”)
required to be filed by the Company with the SEC since January 1, 2002 pursuant
to Sections 13(a) and 15(d) of the Exchange Act or pursuant to the
Securities Act.

(b)           As of its respective date, each
Company SEC Document complied in all material respects with the requirements of
the Exchange Act or the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Company SEC
Document, and did not, as of its filing date, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.  Except to the extent that information
contained in any Company SEC Document has been revised or superseded by a later
filed Company SEC Document, none of the Company SEC Documents contains any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.  The consolidated financial
statements of the Company included in the Company SEC Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods shown (subject, in the case
of unaudited statements, to normal year-end audit adjustments).

(c)           Neither the Company nor any Company
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be set forth on a
consolidated balance sheet of the Company and its consolidated Subsidiaries or
in the notes thereto, and that, individually or in the aggregate, would have,
or would reasonably be expected to have, a Material Adverse Effect on the
Company, except those reflected in the financial statements included in the
Company SEC Documents.

Section 4.8             Information
Supplied.  None of the information
relating to the Company supplied or to be supplied by the Company in writing
for inclusion or incorporation by reference in the Proxy Statement will, at the
date it is first mailed to the Company’s stockholders or at the time of the
Company Stockholders Meeting (as defined below), contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.  No representation, warranty or covenant is
made by the Company with respect to statements made or incorporated by
reference in the Proxy Statement based on information supplied by Parent or
Acquisition Sub in writing for inclusion or incorporation by reference in the
Proxy Statement.

 

17

 

Section 4.9.            Absence of Changes.  From the date of the most recent audited
financial statements included in the Company SEC Documents to the date of this
Agreement, the Company and each Company Subsidiary has conducted its respective
business only in the ordinary course, and, except as set forth on Schedule
4.9, during such period:

(a)           there has been no state of facts,
event, change, effect, development, transaction, condition or occurrence that,
individually or in the aggregate, has had, or would reasonably be expected to
have, a Material Adverse Effect on the Company;

(b)           (i) the Company Certificate, the
Company Bylaws and the charter and by-laws of each Company Subsidiary have not
been amended and (ii) neither the Company nor the Company Subsidiaries have
amended any term of their outstanding equity securities nor issued, sold,
granted or otherwise disposed of, their equity securities;

(c)           neither the Company nor any of its
Subsidiaries has (i) made any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with
respect to, or any repurchase, redemption or other acquisition of, any of their
capital stock or other equity securities or (ii) entered into, or performed,
any transaction with, or for the benefit of, any officer, director, employee or
Affiliate (other than payments made to officers, directors and employees in the
ordinary course of business);

(d)           there has been no split, combination
or reclassification of the capital stock or other equity securities or any
issuance or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of capital stock or other equity
securities, of the Company or any Company Subsidiary;

(e)           neither the Company nor any Company
Subsidiary has made any loan or increased any compensation, benefits, perquisites
or any bonus or award paid or payable, whether conditionally or otherwise, to
(i) any employee, consultant or agent,
except in the ordinary course of business consistent with past practice,
or (ii) any executive officer or director;

(f)            neither the Company nor any Company
Subsidiary has made any material change in its accounting methods (including
with respect to reserves), principles or practices, except insofar as may have
been required by a change in GAAP;

(g)           neither the Company nor any Company
Subsidiary has revalued any of its material assets;

(h)           neither the Company nor any Company
Subsidiary has become liable in respect of any guarantee of, or has incurred,
assumed or otherwise become liable in respect of, any indebtedness, except for
borrowings in the ordinary course of business under credit facilities in
existence on the date of the most recent audited financial statements included
in the Company SEC Documents filed up to the date of this Agreement;

(i)            there has been no material loss,
destruction, damage or eminent domain taking (in each case, whether or not
insured) affecting the operations of the Company or any Company Subsidiary or
any of their respective material assets;

 

18

 

(j)            neither the Company nor any Company
Subsidiary has entered into any agreement that is, will be or would be
(assuming the Company continued to be subject to SEC rules and regulations
requiring filing of current and periodic reports under the Exchange Act)
required to be filed as an exhibit to filings made or to be made by the Company
with the SEC;

(k)           neither the Company nor any Company
Subsidiary has made, changed or revoked any material Tax election, elected or
changed any method of accounting for Tax purposes, settled any material claim,
action, cause of action, suit or other proceeding in respect of Taxes or
entered into any contractual obligation in respect of any Taxes in an amount
greater than $25,000 with any Governmental Entity;

(l)            neither the Company nor any Company
Subsidiary has terminated or closed any material facility, business or
restaurant location;

(m)          neither the Company nor any Company
Subsidiary has adopted any Employee Plan or, except in accordance with terms
thereof as in effect on the on the date of the most recent audited financial
statements included in the Company SEC Documents to the date of this Agreement,
materially increased any benefits under any Employee Plan; and

(n)           neither the Company nor any Company
Subsidiary has entered into any agreement to do any of the things referred to
elsewhere in this Section 4.9.

Section 4.10.          Material
Contracts.

(a)           Schedule 4.10 discloses
all contracts, whether written or oral, described in
clauses (i) through (xviii) below to which the Company or a
Company Subsidiary is a party or bound (“Material Contracts”):

(i)            each employment agreement that has
an aggregate future liability in excess of $100,000 and is not terminable by
the Company or a Company Subsidiary by notice of not more than 60 days for a
cost of less than $100,000;

(ii)           each covenant not to compete or other
contract or agreement restricting the business or operations of the Company or
any Company Subsidiary or, to the knowledge of the Company, restricting any of
their respective executive officers or directors;

(iii)          each contract or agreement with any
officer in which the amount involved exceeds $60,000 (other than employment
agreements covered by clause (i) above);

(iv)          each contract or agreement under which
the Company or a Company Subsidiary has borrowed or agreed to borrow any money
from, or issued any note, bond, debenture or other evidence of indebtedness to,
any person or any other note, bond, debenture or other evidence of indebtedness
of the Company or a Company Subsidiary in any such case which, individually, is
in excess of $100,000;

 

19

 

(v)           each contract or agreement under
which (A) any person has directly or indirectly guaranteed indebtedness,
liabilities or obligations of the Company or a Company Subsidiary in excess of
$100,000 or (B) the Company or a Company Subsidiary has directly or indirectly
guaranteed indebtedness, liabilities or obligations of any other person (in
each case other than endorsements for the purpose of collection in the ordinary
course of business);

(vi)          each contract or agreement under which
the Company or a Company Subsidiary has, directly or indirectly, made any
advance, loan, extension of credit or capital contribution to any person in
excess of $100,000 (other than the Company or a Company Subsidiary and other
than extensions of trade credit in the ordinary course of business);

(vii)         each contract or agreement granting a
Lien securing indebtedness in excess of $100,000 upon any Company Property or
any other asset of the Company or any Company Subsidiary;

(viii)        each contract or agreement providing for
indemnification of any Person with respect to liabilities relating to any
current or former business of the Company, a Company Subsidiary or any
predecessor person, other than ordinary course indemnification provisions in
contracts not specifically entered into for the purpose of providing
indemnification;

(ix)           each contract or agreement with any
Governmental Entity in which the amount involved exceeds $100,000;

(x)            each franchise agreement;

(xi)           each supplier agreement requiring
payments in excess of $250,000 per year;

(xii)          each contract or agreement for any
joint venture, partnership or similar arrangement;

(xiii)         each power of attorney granted in favor
of any Person;

(xiv)        each contract, agreement or commitment
involving capital expenditure of more than $250,000, other than replacements
and normal purchases of machinery in the ordinary course of business;

(xv)         each foreign exchange contract;

(xvi)        each contract or agreement requiring any
payment upon a change of control of the Company or any Company Subsidiary;

(xvii)       each contract or agreement the terms of
which the Company or any Company Subsidiary is or will be bound to share its
profits or pay any royalties;

 

20

 

(xviii)      each contract or agreement under which the
Company or a Company Subsidiary has agreed to purchase or lease any real
property or any interest in real property for a purchase price in excess of
$500,000 or an annual base rental in excess of $100,000 or to construct any
improvements on real property or a leasehold interest in real property for a
contract sum in excess of $500,000; or

(xix)         any derivative contract (including
swaps, options and forwards) under which the Company or any Company Subsidiary
has an exposure of more than $25,000.

(b)           All Material Contracts are valid,
binding and enforceable by or against the Company or the applicable Company
Subsidiary in accordance with their respective terms, and, to the knowledge of
the Company, are in full force and effect in all material respects.  The Company or the applicable Company
Subsidiary has performed all material obligations required to be performed by
it to date under the Material Contracts, and, except as set forth on Schedule
4.10, it is not (with or without the lapse of time or the giving of notice,
or both) in breach or default in any material respect thereunder and, to the
knowledge of the Company, no other party to any Material Contract is (with or
without the lapse of time or the giving of notice, or both) in breach or
default in any material respect thereunder. 
Except as set forth on Schedule 4.10, none of the Company and the
Company Subsidiaries has received any written notice of the intention of any
party to terminate any Material Contract. 
Complete and correct copies of all Material Contracts, together with all
modifications and amendments thereto, have been made available to Parent.

(c)           Schedule 4.10(c) lists all
sub-franchise agreements that any franchisee of the Company or any Company
Subsidiary (other than any franchisee that is a Company Subsidiary) has entered
into of which the Company or any Company Subsidiary is aware.

Section 4.11.          Assets;
Personal Property.  The Company and
the Company Subsidiaries have good and marketable title to, or in the case of
leased or subleased assets, valid and subsisting leasehold interests in all of
their respective assets and properties, in each case free and clear of all
Liens, except for Permitted Liens.  This Section
4.11 does not relate to real property or interests in real property, such
items being the subject of Section 4.12, or to Intellectual Property,
such items being the subject of Section 4.13.

Section 4.12.          Real
Property.  Schedule 4.12 sets
forth a complete and accurate list of (a) all Owned Property and (b) all Leased
Property and any other premises occupied by the Company or any Company
Subsidiary and any prime or underlying leases relating thereto.  The Company or a Company Subsidiary has good
and marketable fee title to all Owned Property and a valid leasehold interest
in all Leased Property, in each case subject only to (i) Permitted Liens or
(ii) leases, subleases and similar agreements set forth in Schedule
4.12.  Except
as set forth in Schedule 4.12, no amount payable under any such lease,
sublease or similar agreement is past due. 
Except as set forth in Schedule 4.12, neither the Company nor any
Company Subsidiary has leased, subleased, licensed or otherwise granted to any
person the right to use or occupy any Company Property or any portion
thereof.  To the knowledge of the
Company, there is no condemnation, expiration or other proceeding in eminent
domain pending or threatened, affecting any Company Property or any portion
thereof or interest therein.

 

21

 

Section 4.13.          Intellectual Property.

(a)           All Intellectual Property that the
Company or any Company Subsidiary is using in the conduct of its respective
business as currently conducted (the“Company
Intellectual Property”) is owned by, or validly licensed to
the Company or such Company Subsidiary, free and clear of all Liens, except for Permitted Liens; provided that the Company makes no
representation and warranty with respect to non-infringement except as
expressly provided in Section 4.13(b) hereof.

(b)           Except as set forth on Schedule
4.13(b), to the knowledge of the Company, none of the Company or the
Company Subsidiaries (i) has, in any material respect, infringed upon,
misappropriated or violated any Intellectual Property rights of third parties
or (ii) has received during the past twenty-four months any written charge,
complaint, claim, demand or notice alleging any such infringement,
misappropriation or violation (including any claim that a person must license
or refrain from using any Intellectual Property rights of any third party in
connection with the conduct of the business of the Company or any Company
Subsidiary or the use of the Company Intellectual Property) and (iii) no third
party has, in any material respect, infringed upon, misappropriated or violated
any Company Intellectual Property.

(c)           Schedule 4.13 identifies (i)
all registered Intellectual Property that has been issued to the Company or any
Company Subsidiary, (ii) each pending application for registration that the
Company or a Company Subsidiary has made with respect to any Company
Intellectual Property, (iii) each contract or agreement that the Company or a
Company Subsidiary has granted to any third party with respect to any of (i) or
(ii) above and that authorizes such third party to use (A) any recipes and
related know-how that constitutes a trade secret of the Company or any Company
Subsidiary or (B) any trademarks of the Company or any Company Subsidiary other
than agreements entered into in the ordinary course of business relating to
advertising and promotional activities of the Company or any Company Subsidiary
and any franchise agreements listed in Schedule 4.10 and (iv) each
contract or agreement that the Company or a Company Subsidiary has granted to
any third party with respect to Company Intellectual Property that is not
included in (i) or (ii) above and that authorizes such third party to use (A)
any recipes and related know-how that constitutes a trade secret of the Company
or any Company Subsidiary or (B) any trademarks of the Company or any Company
Subsidiary other than agreements entered into in the ordinary course of
business relating to advertising and promotional activities of the Company or
any Company Subsidiary and any franchise agreements listed in Schedule 4.10.  True, accurate and complete copies of all
such registrations, applications and contracts or agreements, in each case, as
amended, or otherwise modified and in effect, have been made available to
Parent, as well as true, accurate and complete copies of all other written
documentation evidencing ownership and prosecution (if applicable) of each such
item.  To the knowledge of the Company,
each such registration is valid and subsisting. 
Schedule 4.13(c)(v) also identifies each material trade name,
trade dress and unregistered trademark or service mark used by the Company or a
Company Subsidiary or in connection with the business thereof or with the
Company Intellectual Property.

(d)           With respect to each item of Company
Intellectual Property owned or purported to be owned by the Company or a
Company Subsidiary, including, but not limited to, the Intellectual Property
identified on Schedule 4.13:

 

22

 

(i)            the Company or a Company Subsidiary
possesses all right, title, and interest in and to such item, free and clear of
any Lien other than a Permitted Lien;

(ii)           such item is not subject to any
outstanding Judgment, and no suit, claim, action or proceeding is pending or,
to the knowledge of the Company, threatened, that challenges the legality,
validity, enforceability, use or ownership of such item, except as disclosed on
Schedule 4.13(d)(ii); and

(iii)          except as disclosed on Schedule
4.13, neither the Company nor any Company Subsidiary has agreed nor is
obligated to indemnify any person for or against any interference,
infringement, misappropriation or other conflict with respect to such item
except for such matters that, individually or in the aggregate, do not have,
and would not reasonably be expected to have, a Material Adverse Effect on the
Company.

(e)           Schedule 4.13 identifies each
material item of Company Intellectual Property that any person besides the
Company or a Company Subsidiary owns and that is used by the Company or a
Company Subsidiary in connection with the business thereof pursuant to any
license, sublicense or other contract or agreement, other than any
non-exclusive end user license of commercially available desktop application software
used generally in support the Company’s operations (the “Licenses”).  Except as disclosed on Schedule 4.13,
there are no royalties for the use of any such Company Intellectual
Property.  The Company has made available
to Parent true, accurate and complete copies of all of the Licenses, in each
case, as amended or otherwise modified and in effect.  With respect to each such item identified on Schedule
4.13:  (i) to the knowledge of the
Company, such item is not subject to any outstanding Judgment, and no suit,
claim, action or proceeding is pending or threatened that challenges the
legality, validity or enforceability of such item and (ii) neither the Company
nor any Company Subsidiary has granted any material sublicense or similar right
with respect to any License covering such item.

(f)            All current and former employees and
contractors of the Company or a Company Subsidiary who contributed to the
Intellectual Property owned or purported to be owned by the Company or any
Company Subsidiary in any material respect have executed enforceable contracts
that assign to the Company or a Company Subsidiary all the respective rights,
including Intellectual Property, to any inventions, improvements, discoveries
or information relating to the business of the Company or such Company
Subsidiary made by such employees or contractors in the course of their
employment by the Company or such Company Subsidiary.

(g)           The Company and each Company
Subsidiary has used commercially reasonable efforts to prevent unauthorized access
to personal and individual data used in its respective business and, to the
knowledge of the Company, no such unauthorized access has occurred.  To the knowledge of the Company, the Company
and each Company Subsidiary is in material compliance with all applicable Laws
regarding the reception, use, importation or exportation of personal data and
the Company has not failed to comply with any such Laws in any respect that
would obligate the Company to notify any Governmental Entity or any other
person.  To the knowledge of the Company,
the transactions contemplated to be consummated hereunder as of the Closing
will not violate in any material respect any privacy policy, terms of 

 

23

 

use, or
Laws relating to the use, dissemination, or transfer of such data or
information and will not result in any violation of any such privacy policy,
terms of use, or Laws in any respect that would obligate the Company to notify
any Governmental Entity or any other person.

Section 4.14.          Taxes.  Each of the Company and the Company
Subsidiaries has filed all material Tax Returns that it was required to file on
or prior to the date hereof.  All such
Tax Returns were correct and complete in all material respects.  All Taxes of the Company and its Subsidiaries
that have become due and payable have been paid or have been adequately
reflected in the most recent audited financial statements included in the
Company SEC Documents.  There are no Liens
on any of the assets of the Company or any of Company Subsidiaries that arose
in connection with any failure (or alleged failure) to pay any Tax when due,
other than Permitted Liens.  No claim for
assessment or collection of Taxes is currently being asserted against the
Company or any of the Company Subsidiaries, and none of the Company or any of
the Company Subsidiaries is a party to any pending action, proceeding or
investigation by any governmental taxing authority and no requests for waivers
of the time to assess any Taxes are pending). 
Neither the Company nor any Company Subsidiary has been a party to any
distribution in which the parties to such distribution treated the distribution
as one to which Section 355 of the Code applied.

Section 4.15.          Compliance With Environmental Laws.  To the knowledge of the Company and except
for such matters that, individually or in the aggregate, do not have, and would
not reasonably be expected to have, a Material Adverse Effect on the Company:

(a)           the Company and each of the Company
Subsidiaries are in compliance with all Environmental Laws, and neither the
Company nor any of the Company Subsidiaries has received any (i) written
communication that alleges that the Company or any of the Company Subsidiaries
is in violation of, or has liability under, any Environmental Law or (ii)
written request for information pursuant to any Environmental Law;

(b)           (i) the Company and each of the
Company Subsidiaries have obtained and are in compliance with all Environmental
Permits necessary for their operations as currently conducted and
(ii) neither the Company nor any of the Company Subsidiaries has been
advised in writing by any Governmental Entity of any actual or potential change
in the status or terms and conditions of any Environmental Permit;

(c)           there are no Environmental Claims
pending or, to the knowledge of the Company, threatened, against the Company or
any of the Company Subsidiaries;

(d)           there have been no Releases of any
Hazardous Material that could reasonably be expected to form the basis of any
Environmental Claim against the Company or any of the Company Subsidiaries or
against any person whose liabilities for such Environmental Claims the Company
or any of the Company Subsidiaries has, or may have, retained or assumed,
either contractually or by operation of law;

(e)           there are no above-ground or
underground storage tanks or known or suspected asbestos-containing materials
on, under or about property owned, operated or leased by the Company or any
Company Subsidiary; and

 

24

 

(f)            (i) neither the Company nor any of
the Company Subsidiaries has retained or assumed, either contractually or by
operation of law, any liabilities or obligations that could reasonably be
expected to form the basis of any Environmental Claim against the Company or
any of the Company Subsidiaries, and (ii) to the knowledge of the Company,
no Environmental Claims are pending against any person whose liabilities for
such Environmental Claims the Company or any of the Company Subsidiaries has,
or may have, retained or assumed, either contractually or by operation of law.

Section 4.16           Employee Benefit Plans.

(a)           Schedule
4.16(a) contains a true and complete list of all “employee benefit plans”
(as defined in Section 3(3) of ERISA) and all other material bonus, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance, vacation, sick pay and paid -time-off and other similar
fringe or employee benefit plans, programs or arrangements (written or
oral) maintained or contributed to for the benefit of, or relating
to, any employee of the Company or any Company Subsidiary, any trade or
business (whether or not incorporated) (an “ERISA
Affiliate”) which is a member of a controlled group including the
Company or any Company Subsidiary or which is under common control with the
Company within the meaning of Section 414 of the Code or with respect to which
the Company or any Company Subsidiary has or is reasonably expected to have any
liability (contingent or otherwise) (collectively, the “Employee
Plans”), excluding any of the foregoing that are required to be
maintained by the Company or any Company Subsidiary under the Laws of any
foreign jurisdiction.  Each Employee Plan
has been administered in material compliance with its terms, applicable Law and
the terms of any applicable collective bargaining agreements.

(b)           The Company has made available to
Parent a copy of (i) the most recent two years’ annual reports on Form
5500 filed with the Internal Revenue Service for each disclosed Employee Plan
pursuant to which such report is required (including all schedules and the
accountant’s report and opinion) and (ii) the plan documents (and, with
respect to unwritten plans, a written description thereof), trust agreements and
summary plan descriptions, if any, and (iii) funding arrangements, insurance or
annuity contracts or policies, stop loss insurance policies, non-discrimination
tests for the preceding two years and employee handbooks and (iv) actuarial
valuations with respect to any defined benefit plan (whether or not funded), in
each case relating to each such Employee Plan (other than those referred to in
Section 4(b)(4) of ERISA).  To the
knowledge of the Company, no event has occurred and there currently exists no condition
or set of circumstances in connection with which the Company or any Company
Subsidiary could reasonably be expected to be subject to any material liability under the terms of any Employee Plan, ERISA, the Code or any other applicable Law, including,
without limitation, any liability under Title IV of ERISA.  In particular, but not in limitation of the
foregoing, the Company and any Company Subsidiary has complied in all material
respects with all reporting and disclosure obligations under Title I of ERISA,
including without limitation, the filing of complete information returns on a
timely basis, the requirement of financial audits for funded plans and the
timely distribution of summary plan descriptions and summary of material
modifications.

(c)           Each Employee Plan has been
maintained, operated and administered in compliance in all material respects
with its terms and with the applicable provisions of Law, 

 

25

 

including
ERISA and the Code.  Neither the Company
nor any Company Subsidiary has any material liability, directly or indirectly,
for (i) excise taxes (including interest and penalties) on account of any
non-exempt prohibited transaction (within the meaning of Section 4975 of the
Code or Section 406 of ERISA), or (ii) any breach of fiduciary duty under
ERISA.

(d)           No Employee Plan that is a welfare
benefit plan within the meaning of Section 3(1) of ERISA (a “Welfare Plan”) provides benefits to former
employees of the Company or its ERISA Affiliates, other than pursuant to
Section 4980B of the Code.  All
contributions and premium payments with respect to any Welfare Plan have been
made on a timely basis.

(e)           Each Employee Plan that is a “pension
benefit plan” within the meaning of Section 3(2) of ERISA and that is intended
to meet the qualification requirements of Section 401(a) of the Code (a “Pension Plan”) has received a favorable
determination or opinion letter from the United States Internal Revenue Service
as to its qualified status or the qualified
status of the standardized prototype plan on which such Pension Plan is
based, and there is no fact or
circumstance that could reasonably be expected to result in the revocation of
such letter or could reasonably be expected to result in material liability the
Company.  Each Pension Plan has
adopted all amendments necessary to comply with the Code on or before the
remedial amendment period deadline specified for each such amendment pursuant
to Section 401(b) of the Code or IRS promulgations.  No
Employee Plan that is a “pension benefit plan” is subject to Title IV of ERISA,
whether respect to a single employer plan (within the meaning of Section
4001(b)(15) of ERISA) or a multi-employer plan (within the meaning of Section
4001(b)(3) of ERISA).  All contributions
(employer and employee) have been made on a timely basis, within the time
periods required under ERISA and the Code. 
The Company and any Company Subsidiary have complied in all material
respects with all nondiscrimination requirements under Code §410(b), §401(a)(4)
and §401(k)(3).

(f)            Since January 1, 2004, and through
the date of this Agreement, neither the Company nor any Company Subsidiary has
received written notice of, and, to the knowledge of the Company, there are no
(i) pending termination proceedings or other suits, claims (except claims for
benefits payable in the normal operation of the Employee Plans), actions or
proceedings against or involving or asserting any rights or claims to benefits
under any Employee Plan, or (ii) pending investigations (other than routine
inquiries) by any Governmental Entity with respect to any Employee Plan, in
either case, that individually or in the aggregate, would result, or would
reasonably be expected to result, in material liability to the Company.  All contributions, premiums and benefit
payments under or in connection with the Employee Plan that are required to
have been made by the Company or any Company Subsidiary have been timely made,
accrued or reserved for in all material respects.

(g)           The Company maintains stop loss
insurance with respect to its self-funded health insurance plan that provides
for aggregate and specific limits on the Company’s liability with respect to
health benefits provided to employees and their dependents.  Sufficient reserves relating to incurred but
not reported claims have been accrued on the Company’s financial statements.

 

26

 

(h)           Any Employee Plan that is a plan or
arrangement to provide unfunded nonqualified deferred compensation plan (a “Non-qualified Employee Plan”) is specifically identified on Schedule
4.16(h).  The actuarial valuation
with respect to such Employee Plan, as of May 1, 2004, has been provided to
Parent and the Plan has not been amended to change the provisions on which the
valuation is based and, except as disclosed on Schedule 4.16(h), the
census of employees, former employees and retirees on which the valuation is
based has not changed.  No Non-qualified
Employee Plan subject to Section 409A of the Code (“Section 409A”)
has been materially modified (as defined under Section 409A) since October 3,
2004 and all such non-qualified deferred compensation plans have been operated
and administered in good faith compliance with Section 409A from the period
beginning January 1, 2005 through the date hereof.

(i)            Except as set forth on Schedule
4.16(i) (i) no payment made or contemplated under any Employee Plan
constitutes a “parachute payment” within the meaning of Section 280G of the
Code, and (ii) each Company Benefit Plan covering employees of the Company or
any Company Subsidiary organized in the United States may be terminated by the
Parent with no more than 60 day’s notice without material liability to the
Company.

(j)            Other than as listed in Schedule
4.16(j), neither Collins nor any Subsidiary of Collins has entered into any
retirement benefit scheme, pension schemes, superannuation plan, other pension
arrangements or other benefit payable on retirement, death or disability or on
the attainment of a specified or agreed number of years’ service, nor have they
undertaken to make any ex gratia payment of any such nature whether legally
enforceable or not, relating to the employees of Collins or any Subsidiary of
Collins.

(k)           Collins and each Subsidiary of
Collins have complied with any legal liability (whether arising under
industrial agreement, award or otherwise) or voluntary commitment to make
contributions to any superannuation fund, pension scheme or other arrangement
which may provide directors or employees of Collins or any Subsidiary of
Collins or their respective dependents with pensions, annuities, lump sums or
other payments upon retirement or earlier death or otherwise.

(l)            Neither Collins nor any Subsidiary
of Collins operates or is trustee for any form of superannuation fund.

(m)          Collins and each Subsidiary of Collins
have duly made all necessary payments on behalf of employees and other persons
in order to avoid incurring any liability to pay the superannuation guarantee
charge under the Superannuation Guarantee Charge Act 1992 (Australia).

(n)           Schedule 4.16(n) contains a
true and complete list of all share options which have been issued under the
Collins’ Employee Plans, which have either (a) been exercised in accordance
with the Collins Shareholder Agreement or (b) or which have not been exercised
and are not capable (in accordance with their terms) of being exercised by the
relevant employees.

 

27

 

(o)           Other than the Collins’ Employee
Plans or the other Employee Plans disclosed in Schedule 4.16(a), no
other employment agreements and bonus, share, option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance, vacation,
sick pay and paid time-off and similar fringe or employee benefit plans,
programs or arrangements (written or oral) are maintained or contributed to by
Subsidiary of Collins incorporated in any foreign jurisdiction.

(p)           Other than the Collins’ Employee
Plans, the other Employee Plans disclosed in Schedule 4.16(a) or the
Collins Shareholder Agreement, no Subsidiary of Collins is under any obligation
to allot any shares to any person or persons, or to otherwise alter the
structure of their respective unissued share capital, and no option exists (nor
is any Subsidiary of Collins under any obligation to give an option) over any
part of their respective unissued share capital, nor has any Subsidiary of
Collins offered to do any of the foregoing. 
Other than the Collins’ Employee Plans, the other Employee Plans disclosed
in Schedule 4.16(a) or the Collins Shareholder Agreement, no person
other than another Subsidiary of Collins has any interest in the issued or
unissued share capital of any Subsidiary of Collins.

(q)           The Collins’ Employee Plans have been
administered in material compliance with their respective terms, applicable Law
and the terms of any applicable collective bargaining agreements.

Section 4.17.          Labor
Matters.

(a)           Except as set forth on Schedule
4.17(a), none of the employees of the Company or any Company Subsidiary is
represented by any labor union with respect to such employee’s employment by
the Company or any Company Subsidiary. 
Since January 1, 2002, neither the Company nor any Company Subsidiary
has experienced any material labor strikes, union organization attempts,
requests for representation, material work slowdowns or stoppages or disputes
due to labor disagreements and, to the knowledge of the Company, there is
currently no such action threatened against or affecting the Company or any
Company Subsidiary, nor, to the knowledge of the Company, any facts, matters or
circumstances which may, with the passage of time, give rise to such an
action.  Each of the Company and the
Company Subsidiaries is and since January 1, 2002 has been in compliance in all
material respects with all applicable Laws and employment agreements with
respect to labor relations, employment and employment practices, occupational
safety and health standards, terms and conditions of employment and wages and
hours, human rights, pay equity and workers compensation, and is not and has
not been engaged in any unfair labor practice, other than any violation that,
individually or in the aggregate, does not have, and would not reasonably be
expected to have, a Material Adverse Effect on the Company.  There is and since January 1, 2002 has been
no unfair labor practice charge or complaint against the Company or any Company
Subsidiary pending or, to the knowledge of the Company, threatened before the
National Labor Relations Board or any comparable federal, state, provincial or
foreign agency or authority that, individually or in the aggregate, would have,
or would reasonably be expected to have, a Material Adverse Effect on the
Company.  No grievance or arbitration
proceeding arising out of a collective bargaining agreement has been filed or
instituted since January 1, 2002 or is now pending or, to the knowledge of the
Company, threatened against the Company or any Company Subsidiary.

 

28

 

(b)           Schedule 4.17(b) sets forth a
true, correct and complete description of (i) the extent, timing and nature of
reductions in force completed since July 1, 2004, (ii) any departure of an
employee of the Company or any Company Subsidiary (other than Collins or any of
its Subsidiaries) since July 1, 2004, (iii) any departure of an employee of
Collins or any of its Subsidiaries with an annual base salary in excess of
$AUD50,000 since July 1, 2004 and (iv) reductions in force currently planned by
the Company or any Company Subsidiary as of the date of this Agreement to be
effected on and after the date hereof, and of the types, timing and costs of
associated severance and other obligations resulting or to result
therefrom.  Except as specifically
identified in Schedule 4.17(b), since May 1, 2004 no officer of the
Company or any Company Subsidiary, for any reason, (A) has been terminated or
has resigned, retired or otherwise terminated his or her employment with the
Company or such Company Subsidiary or (B) has notified the Company or such
Company Subsidiary in writing, or to the knowledge of the Company otherwise
notified the Company or such Company Subsidiary or threatened of his or her
intention, to resign, retire or terminate his or her employment with the Company
or such Company Subsidiary.

(c)           Since January 1, 1998, neither the
Company nor any Company Subsidiary has effected a “plant closing” or “mass
layoff” as those terms are defined in the Worker Adjustment and Retaining
Notification Act of 1988, as amended.

Section 4.18.          Litigation;
Investigations.  Except as set forth on Schedule 4.18, there is
no suit, claim, action, inquiry, subpoena, investigation or proceeding pending
or, to the knowledge of the Company, threatened against the Company or any
Company Subsidiary or any of their respective properties or assets that (a) is
material or (b) seeks to restrain or prohibit or otherwise challenge the
consummation, legality or validity of the transactions contemplated hereby; nor
is there any material Judgment outstanding against the Company or any Company
Subsidiary; nor since January 1, 2002 has any such Judgment been settled or
compromised by the Company or any Company Subsidiary for in excess of
$500,000.  Since January 1, 2002 there has not been, nor is there now, any
internal investigations or inquiries
being conducted by the Company,
the Company Board (or any committee thereof) or any third party at the request
of any of the foregoing concerning any material financial, accounting, tax,
conflict of interest, self-dealing, fraudulent or deceptive conduct or other
misfeasance or malfeasance issues.

Section 4.19.          Compliance
with Law.  The Company, the Company Subsidiaries and the conduct of
their respective businesses are in compliance with all Laws relating to the businesses
or operations of the Company and the Company Subsidiaries, except where such
violation or noncompliance, individually or in the aggregate, would not have,
and would not reasonably be expected to have, a Material Adverse Effect on the
Company.  Neither the Company nor any
Company Subsidiary has received any written notice from a Governmental Entity
during the last six years to the effect that it is not in compliance in any
material respect with any such Laws.  In
the conduct of their business, neither Company nor any of the Company
Subsidiaries nor, to the knowledge of the Company, any of their respective
directors, officers, employees or agents, has (a) directly or indirectly,
given, or agreed to give, any illegal gift, contribution, payment or similar
benefit to any supplier, customer, governmental official or employee or other
person who was, is or may be in a position to help or hinder the Company or any
of the Company Subsidiaries (or assist in connection with any actual or
proposed transaction) or made, or agreed to make, any illegal contribution, or
reimbursed any illegal political gift or contribution made by 

 

29

 

any
other person, to any candidate for federal, state, local or foreign public office
or (b) established or maintained any unrecorded fund or asset or made any false
entries on any books or records for any purpose.  No representation or warranty is made in this
Section 4.19 with respect to (i) applicable Laws with respect to
Taxes, which are covered in Section 4.14, (ii) Environmental Laws,
which are covered in Section 4.15, or (iii) ERISA matters, which
are covered in Section 4.16.

Section 4.20.          Permits.  The Company and the Company Subsidiaries have
in effect all Permits necessary for them to own, lease or operate their
properties and assets and to carry on their businesses as now conducted, except
for such Permits, the lack of which, individually or in the aggregate, do not
have, and would not reasonably be expected to have, a Material Adverse Effect
on the Company.  There has occurred no
violation of, default (with or without notice or lapse of time or both) under,
or event giving to others any right of termination, amendment or cancellation
of, with or without notice or lapse of time or both, any such Permit, except
for any termination, amendment or cancellation of any Permit that, individually
or in the aggregate, does not have, and would not reasonably be expected to
have, a Material Adverse Effect on the Company. 
Except as set forth on Schedule 4.20, to the knowledge of the
Company, there is no fact, matter or circumstance that would affect the
continuance or renewals of any material Permits either before or after the
consummation of the transactions contemplated by this Agreement.

Section 4.21.          No Brokers.  No broker,
investment banker, financial advisor or other person, other than Houlihan Lokey
Howard & Zukin Capital (“HLHZ”),
the fees and expenses of which shall be paid by the Company, is entitled to any
broker’s, finder’s, financial advisor’s or other similar fee or commission in
connection with the Merger based upon arrangements made by or on behalf of the
Company.

Section 4.22.          Liquidation. 
Except as set forth on Schedule 4.22, since January 1, 1998, neither the
Company nor any Company Subsidiary has gone into liquidation or passed any
resolution for winding up, no petition for winding up has been presented
against the Company or any Company Subsidiary and no receiver, receiver and
manager or other controller or external administrator of the business or assets
of the Company or any Company Subsidiary has been appointed or is threatened or
expected to be appointed, nor are there any unsatisfied judgments or arbitral
awards outstanding against the Company or any Company Subsidiary.

Section 4.23.          Books and Records.  All
accounts, books, ledgers, financial and other records of the Company and the
Company Subsidiaries are in the possession or control of the Company, a Company
Subsidiary or a registered agent thereof.

Section 4.24.          Insurance.

(a)           Schedule 4.24(a) accurately
describes all contracts of insurance and indemnity in force in respect of the
business, property and assets of the Company and each Company Subsidiary.  Each such contract is in force and, to the
knowledge of the Company, there is no fact or circumstance which would lead to
the termination or non-renewal of any such contract.  None of the contracts of insurance and
indemnity will be terminated or cease to have effect as a result of the Merger.

 

30

 

(b)           The Company and each Company
Subsidiary is adequately insured in respect of the risks to which they are
subject (including loss or damage by fire, theft, storm and tempest) in such
amounts as accord with sound business principles and, except as set forth on Schedule
4.24(b), such insurances do not have an expiration date prior to the
Outside Date.

(c)           The Company and each
Company Subsidiary is insured against public liability, workers’ compensation
liability and loss of profits in such amounts as accord with sound business
principles and,
except as set forth on Schedule 4.24(b), such insurances do not have an
expiration date prior to the Outside Date.

(d)           All premiums in respect of the
insurances referred to on Schedule 4.24(a), other than financed
premiums, will have been paid in full prior to the Effective Time.

(e)           There are no material claims made but
unpaid under the insurances referred to on Schedule 4.24(a), and, to the
knowledge of the Company, no material threatened or pending claims or events or
circumstances which may give rise to any such claim.

(f)            Neither the Company nor any of its
Subsidiaries has received any written notice, or, to the knowledge of the
Company, threats of cancellation or non-renewal of, or, except as set forth on Schedule
4.24(f), since January 1, 2004, any material increase of premiums with
respect to, any insurance policies listed on Schedule 4.24(a).

Section 4.25.          Transactions
with Affiliates.  Except for the matters disclosed on Schedule 4.25,
no Affiliate of the Company or any Company Subsidiary (other than the Company
itself or another Company Subsidiary) is a consultant, competitor, creditor,
debtor, customer, distributor, supplier or vendor of, or is a party to any
contract or agreement with, the Company or any Company Subsidiary.  Except as disclosed on Schedule 4.25,
no Affiliate of the Company or any Company Subsidiary (other than the Company
itself or any such Company Subsidiary) owns any material asset used in, or
necessary to, the business of the Company or any Company Subsidiary.

Section 4.26.          Suppliers. 
Schedule 4.26 sets forth a complete and accurate list of the ten largest
suppliers of materials, products or services to each operational division of
the Company (measured by the aggregate amount purchased by such operational
division) during the Company’s most recently ended fiscal year, indicating any
agreements for continued supply from each such supplier.  Except as set forth on Schedule 4.26,
none of such suppliers listed on Schedule 4.26 has canceled, terminated
or otherwise materially altered (including any material reduction in the rate
or amount of sales or material increase in the prices charged) or notified the
Company or any Company Subsidiary of any intention to do any of the foregoing
or otherwise threatened in writing to cancel, terminate or materially alter
(including any material reduction in the rate or amount of sales) its
relationship with the Company or any Company Subsidiary.

Section 4.27.          Opinion of Financial Advisor. 
HLHZ has delivered to the Company an opinion dated on or about the date hereof
to the effect that as of such date, the Per Share Merger Consideration is fair,
from a financial point of view, to the stockholders of the Company.

Section 4.28           Disclosure.  To the knowledge of the Company, the
representations and warranties contained in this Article IV and in the
documents and certificates delivered pursuant to this Agreement, and the
diligence material and information furnished by the Company to 

 

31

 

Parent
and Acquisition Sub, their financiers and representatives in connection with
this Agreement and the transactions contemplated hereby, when taken in their
entirety, do not contain and will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements and information contained therein not misleading.

ARTICLE V

 

REPRESENTATIONS
AND WARRANTIES

OF PARENT AND ACQUISITION SUB

Parent and Acquisition
Sub hereby represent and warrant to the Company as follows:

Section 5.1.            Organization.  Each of Parent and Acquisition Sub is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full corporate power and authority to
conduct its business as it is presently being conducted and to own or lease, as
applicable, its assets and properties. 
Each of Parent and Acquisition Sub is duly qualified to do business as a
foreign entity and is in good standing in each jurisdiction where the character
of its properties owned or leased or the nature of its activities make such
qualification necessary, except where the failure to be so qualified or in good
standing would not have, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent or
Acquisition Sub.  Parent has delivered to
the Company true and complete copies of the charter documents and Bylaws of
each of Parent and Acquisition Sub, as amended to the date of this Agreement.

Section 5.2.            Authorization.   Each of Parent and Acquisition Sub has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the Merger in accordance with the provisions of this Agreement.  The execution and delivery of this Agreement
by each of Parent and Acquisition Sub and the consummation by each of Parent
and Acquisition Sub of the Merger have been duly approved by all necessary
corporate action on the part of each of Parent and Acquisition Sub, subject to
receipt of Acquisition Sub Stockholder Approval (as defined below).  This Agreement has been duly executed and
delivered by each of Parent and Acquisition Sub and, assuming the due
authorization, execution and delivery hereof by the Company, is the valid and
binding obligation of each of Parent and Acquisition Sub, enforceable against
it in accordance with its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting
creditors’ rights generally and except insofar as the availability of equitable
remedies may be limited by applicable law.

Section 5.3.            Consents and Approvals; No
Conflict or Violation.

(a)           No Consent of, or registration,
declaration or filing with, or permit from, any federal, state, local or
foreign Governmental Entity, is required to be obtained or made by Parent or
Acquisition Sub in connection with the execution, delivery and performance of
this Agreement or the consummation of the Merger, other than
(i) compliance with and filings under the HSR Act, (ii) the
filing of the Certificate of Merger with the Secretary of State of the 

 

32

 

State
of Delaware and (iii) such other items that, individually or in the
aggregate, do not have, and would not reasonably be expected to have, a
Material Adverse Effect on Parent.

(b)           The execution, delivery and
performance of this Agreement by each of Parent and Acquisition Sub do not, and
the consummation of the Merger by each of Parent and Acquisition Sub and
compliance by each of Parent and Acquisition Sub with any of the provisions
hereof will not (i) violate or conflict with any provision of the charter
document or Bylaws of each of Parent and Acquisition Sub, (ii) violate,
conflict with, or result in or constitute a default under, or result in the
termination of, or accelerate the performance required by, or result in a right
of termination or acceleration under, any of the terms, conditions or
provisions of any contract to which Parent or Acquisition is party or bound or
(iii) subject to the filings and other matters referred to in Section
5.3(a), violate, conflict with, contravene or give any person the right to
exercise any remedy or obtain any relief under, any Judgment or Law applicable
to Parent, Acquisition Sub or their respective properties or assets, except in
the case of each of clauses (ii) and (iii) above, for such violations,
defaults, terminations or accelerations that, individually or in the aggregate,
would not have, and would not reasonably be expected to have, a Material
Adverse Effect on Parent.

Section 5.4.            No Prior Activities.  Except for obligations incurred in connection
with its incorporation or organization or the negotiation and consummation of
this Agreement and the transactions contemplated hereby, Acquisition Sub has
neither incurred any obligation or liability nor engaged in any business or
activity of any type or kind whatsoever or entered into any agreement or
arrangement with any person.

Section 5.5.            Financing
Ability.

(a)           Parent has provided to the Company
accurate and complete copies of executed commitment letters from National
Australia Bank Limited, AMP Capital Investors Limited and UBS AG, Australia
Branch (the “Lenders”), dated April
18, 2005 and April 28, 2005, providing for the debt financing, which together
with the funds to be provided pursuant to the Equity Commitment Letters (as
defined below), is necessary for the payment of the aggregate Merger
Consideration and for Parent and Acquisition Sub to perform their respective
obligations with respect to the transactions contemplated by this Agreement
(collectively, the “Transaction Financing”)
and describing the terms and conditions upon which such Lenders will arrange
and provide such financing (the “Commitment
Letters”).  The Commitment
Letters are in full force and effect on the date hereof and have not been
amended or modified in any respect. 
There are no facts and circumstances known to Parent, Acquisition Sub or
any of their respective Affiliates that could reasonably be expected to (a)
prevent the conditions described in the Commitment Letters from being
satisfied, (b) prevent Parent from receiving financing pursuant to the terms of
the Commitment Letters or (c) make any of the assumptions set forth in the
Commitment Letters unreasonable.  The
Lenders have not advised Parent, Acquisition Sub or any of their respective
Affiliates of any facts which cause them to believe the financings contemplated
by the Commitment Letters will not be consummated substantially in accordance
with the terms thereof.  All commitment
fees and other fees required to be paid pursuant to the Commitment Letters on
or prior to the date hereof have been paid. 
The aggregate proceeds of the financings contemplated by the Commitment
Letters, when taken together with the funds provided by the Equity Commitment
Letters, are sufficient to pay the aggregate Merger Consideration, to pay the 

 

33

 

cash
amounts payable to the Company optionholders in connection with the Merger, to
effect any refinancings of existing indebtedness of the Company and the Company
Subsidiaries required as a result of the Merger and to pay the anticipated fees
and expenses related to the Merger and the other transactions contemplated by
this Agreement (the “Required Cash Amount”).

(b)           Parent has provided to the Company
accurate and complete copies of executed commitment letters from Pacific Equity Partners Fund II L.P., Pacific Equity Partners Supplementary
Fund II L.P., Pacific Equity Partners Fund II (NQP) L.P., Pacific Equity
Partners Fund II (Australasia) Pty Limited as trustee for the Pacific Equity
Partners Fund II (Australasia) Unit Trust, Pacific Equity Partners Fund II
(Australasia) Pty Limited as trustee for the Pacific Equity Partners
Supplementary Fund II (Australasia) Unit Trust, PEP Investment Pty Limited and
PEP Co-Investment Pty Limited dated on or about April 18, 2005 providing for equity financing and
describing the terms and conditions upon which financing will be provided (the “Equity Commitment Letters”).  The Equity Commitment Letters are in full
force and effect on the date hereof and have not been amended or modified in
any respect.  There are no facts and
circumstances known to Parent, Acquisition Sub or any of their respective
Affiliates that could reasonably be expected to (a) prevent the conditions
described in the Equity Commitment Letters from being satisfied, (b) prevent
Parent and Acquisition Sub from receiving financing pursuant to the terms of
the Equity Commitment Letters or (c) make any of the assumptions set forth in
the Equity Commitment Letters unreasonable. 
None of Parent, Acquisition Sub or any of their respective Affiliates
have been advised of any facts which cause them to believe the financings
contemplated by the Equity Commitment Letters will not be consummated
substantially in accordance with the terms thereof.  All commitment fees and other fees required
to be paid pursuant to the Equity Commitment Letters on or prior to the date
hereof have been paid.

Section 5.6.            Compliance with Law; Litigation. 
Each of Parent and Acquisition Sub is in material compliance with all Laws
which would affect its ability to perform its obligations hereunder.  There is no action pending or, to the
knowledge of Parent and Acquisition Sub, threatened against Parent or
Acquisition Sub that would affect their respective abilities to perform their
respective obligations hereunder.

Section 5.7.            Brokers.  No broker, investment banker, financial
advisor or other person, other than UBS AG and PEP Advisory Pty Limited, the
fees and expenses of which shall be paid by Parent, is entitled to any broker’s,
finder’s, financial advisor’s or other similar fee or commission in connection
with the Merger based upon arrangements made by or on behalf of Parent or
Acquisition Sub.

Section 5.8.            Information
Supplied.  None of the information
relating to Parent or Acquisition Sub supplied or to be supplied by Parent or
Acquisition Sub in writing for inclusion or incorporation by reference in the
Proxy Statement will, at the date it is first mailed to the Company’s
stockholders or at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.  No representation, warranty or covenant is made
by Parent or Acquisition Sub with respect to statements made or incorporated by
reference therein based on 

 

34

 

information
supplied by the Company in writing for inclusion or incorporation by reference
in the Proxy Statement.

ARTICLE VI

 

COVENANTS

Section 6.1.            Conduct of Business of the Company. 
Except as contemplated by this Agreement or as described on Schedule
6.1, during the period from the date hereof through the Effective Time, the
Company shall, and shall cause each of the Company Subsidiaries to, conduct its
business in the ordinary course consistent with past practice (including with
respect to cash management practices, maintenance of working capital levels and
estimation of reserves), and will seek to (i) preserve intact its current
business organizations and to maintain the value of the business as a going
concern, (ii) use commercially reasonable efforts to keep available the service
of its current officers and employees and to preserve its relationships with
customers, suppliers, lessors and others having business dealings with it and
(iii) use commercially reasonable efforts to preserve the goodwill of its
business.  Without limiting the
generality of the foregoing, except as otherwise expressly provided in this
Agreement or as described on Schedule 6.1, during the period from
the date hereof through the Effective Time, the Company shall not, and shall
not permit the Company Subsidiaries to, without the prior written consent of
Parent, which consent shall not be unreasonably delayed or withheld:

(a)           (i) enter into any agreement that
would be required (assuming the Company continued to be subject to SEC rules
and regulations requiring filing of current and periodic reports under the
Exchange Act) to be filed as an exhibit to, or described in, filings made or to
be made by the Company with the SEC or (ii) violate, extend, amend or otherwise
modify or waive any of the material terms of any Material Contract or any
agreement filed with the SEC as an exhibit to any of the Company SEC Documents,
or enter into or modify in any material respect any contract that is or would
be, if entered into or as so amended, required to be filed with the SEC or set
forth in Schedule 4.10;

(b)           cause, propose or permit any
amendment to the Company Certificate, Company Bylaws or other comparable
charter or organizational documents;

(c)           authorize for issuance, issue, sell,
deliver or agree or commit to issue, sell or deliver (whether through the
issuance or granting of options, warrants, commitments, subscriptions, rights
to purchase or otherwise) any shares of any class or any other securities or
equity equivalents (including, without limitation, any options or appreciation
rights), except for the issuance and sale of shares of Common Stock upon the
exercise of Company Options outstanding on the date of this Agreement and in
accordance with their present terms;

(d)           split, combine, reorganize,
recapitalize or reclassify any shares of capital stock or other voting
securities, declare, set aside or pay any dividend or other distribution
(whether in cash, shares or property or any combination thereof) or repurchase,
redeem or otherwise acquire shares of capital stock or other voting securities,
make any other actual, 

 

35

 

constructive
or deemed distribution in respect of shares of capital stock or other voting
securities or otherwise make any payments to the stockholders of the Company in
their capacity as such;

(e)           adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any Company
Subsidiary (other than the Merger);

(f)            (i) incur or assume any
long-term or short-term debt or issue any debt securities, except for borrowings
under existing lines of credit in the ordinary course of business; provided that such borrowing does not
exceed $100,000 whether in a single transaction or in any one or more
transactions in any 21 day period; (ii) assume, guarantee, endorse or
otherwise become liable or responsible, whether directly, contingently or
otherwise, for the obligations of any other person, except a Company Subsidiary
other than FFPE, LLC and its Subsidiaries, (iii) make any material loans,
advances or capital contributions to or investments in any other person or
(iv) sell, transfer, mortgage or pledge any of its or any Company
Subsidiaries’ material assets, tangible or intangible, or create or suffer to
exist any material Lien thereupon, except for Permitted Liens;

(g)           pay, discharge, compromise, satisfy,
cancel or forgive any debts or claims or rights (or series of rights, debts or
claims) involving, individually or in the aggregate, consideration in excess of
$100,000;

(h)           except as may be required by law,
enter into, adopt or amend or terminate any bonus, profit sharing,
compensation, severance, termination, option, appreciation right, performance
unit, stock equivalent, share purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement, trust,
plan, fund or other arrangement for the benefit or welfare of any director,
officer or employee of the Company or any Company Subsidiary in any manner or
increase in any manner the compensation or fringe benefits of any director,
officer or employee of the Company or any Company Subsidiary or pay any benefit
not required by any plan or arrangement as in effect as of the date hereof
(including, without limitation, the granting of appreciation rights or
performance units); provided, however, that this paragraph (h)
shall not prevent the Company or any Company Subsidiary from (A) entering
into employment agreements or severance agreements with employees in the
ordinary course of business; provided
any such agreement would not result in material liability to the Company or
(B) increasing annual compensation and/or providing for or amending bonus
arrangements for non-executive employees in the ordinary course of compensation
reviews to the extent that such compensation increases and new or amended bonus
arrangements do not result in a material increase in benefits or compensation
expense to the Company or any Company Subsidiary;

(i)            enter into any agreement providing
for the employment or consultancy of any person on a full-time, part-time,
consulting or other basis or otherwise providing compensation or other benefits
to any officer, director, employee or consultant; hire any person on a
full-time, part-time, consulting or other basis or otherwise providing
compensation or other benefits to any officer, director, employee or consultant
hired on or after the date hereof, if the compensation to be paid and payable
on an annualized basis to such person (i) will exceed 

 

36

 

$100,000,
or (ii) together with the compensation to be paid and payable on an annualized
basis to all other such persons hired on or after the date hereof, will exceed
$500,000;

(j)            effect any reduction in force;

(k)           acquire, sell, lease or dispose of
material property or assets in any single transaction or series of related
transactions;

(l)            maintain its books and records in a
manner other than in the ordinary course of business, consistent with past
practice;

(m)          except as may be required as a result
of a change in Law or in GAAP, change any of the accounting principles or
practices used by it;

(n)           in respect of any Taxes, make or change any material election, change
any accounting method, enter into any closing agreement or settle any material
claim or assessment or consent to any extension or waiver of the limitations
period applicable to any material claim or assessment except as required by
applicable law;

(o)           (i) acquire, by merger,
consolidation or acquisition of stock or assets, any corporation, partnership
or other business organization or division thereof or any equity interest
therein or (ii) make or authorize any new capital expenditure or expenditures
which in the aggregate are in excess of $500,000; provided, that none of the foregoing shall limit any capital
expenditure required pursuant to existing written contracts;

(p)           settle or compromise any pending or
threatened suit, action or claim (i) which relates to the transactions
contemplated hereby or (ii) the settlement or compromise of which would
involve a payment in excess of $50,000;

(q)           revalue in any material respect any
of the assets of the Company or any Company Subsidiary, including, without
limitation, writing down the value of inventory or writing-off notes or
accounts receivable, other than in the ordinary course of business consistent
with past practice;

(r)            enter into or perform any
transaction with, or for the benefit of, any officer, director, employee or
Affiliate of the Company or any Company Subsidiary (other than payments made to
officers, directors and employees in the ordinary course of business consistent
with past practice and with Section 6.1(h));

(s)           enter into any term sheet, memorandum of
understanding, or contract, whether binding or not, regarding a potential sale
or other disposition of part or all of the business conducted directly or
indirectly by FFPE, LLC;

(t)            incur out-of-pocket expenses in excess of the amounts
listed in Schedule 6.1(t) in connection with the transactions
contemplated hereby relating to financial advisory fees, fees payable to any
YUM Brands company, payments to employees triggered by the consummation of the
transactions contemplated by this Agreement, proxy solicitation expenses,
reimbursement of expenses of a bidder in the sale process and legal fees; and

 

37

 

(u)           take or agree in writing or otherwise
to take any of the actions described in Sections 6.1(a) through 6.1(t) or any
action which would make any of the representations or warranties of the Company
contained in this Agreement untrue or incorrect.

Section 6.2.            Preparation of the Proxy Statement; Stockholder
Approval.

(a)           As soon as practicable following the
date of this Agreement, the Company shall prepare and file with the SEC a proxy
statement (the “Proxy Statement”)
in preliminary form.  The Company shall
ensure that the Proxy Statement complies in all material respects with all
applicable requirements of the Securities Act and Exchange Act.  The Company shall provide Parent with a
reasonable opportunity to review and comment on the Proxy Statement and any
amendment or supplement to the Proxy Statement prior to filing the same with
the SEC, and the Company shall promptly provide Parent with a copy of all such
filings made with the SEC.  The Company
shall, as promptly as practicable after receipt thereof, provide Parent copies
of any written comments, and advise Parent of any oral comments or
communications regarding the Proxy Statement received from the SEC.

(b)           If, at any time prior to the receipt
of the Company Stockholder Approval, any event occurs with respect to the
Company or any Company Subsidiary, or any change occurs with respect to other
information supplied by the Company for inclusion in the Proxy Statement, which
is required to be described in an amendment of, or a supplement to, the Proxy
Statement, the Company shall promptly notify Parent of such event, and the
Company and Parent shall cooperate in the prompt filing with the SEC of any
necessary amendment or supplement to the Proxy Statement and, as required by Law,
in disseminating the information contained in such amendment or supplement to
the Company’s stockholders.

(c)           If, at any time prior to the receipt
of the Company Stockholder Approval, any event occurs with respect to Parent or
Acquisition Sub, or change occurs with respect to other information supplied by
Parent for inclusion in the Proxy Statement, which is required to be described
in an amendment of, or a supplement to, the Proxy Statement, Parent shall
promptly notify the Company of such event, and Parent and the Company shall
cooperate in the prompt filing with the SEC of any necessary amendment or
supplement to the Proxy Statement and, as required by Law, in disseminating the
information contained in such amendment or supplement to the Company’s
stockholders.

(d)           The Company shall, as soon as
practicable following the date of this Agreement, duly call, give notice of,
convene and hold a meeting of its stockholders (the “Company
Stockholders Meeting”) for the purpose of seeking the Company
Stockholder Approval.  The Company shall
(i) use its reasonable efforts to cause the Proxy Statement to be mailed to the
Company’s stockholders as promptly as practicable after the date of this
Agreement and to solicit from its stockholders proxies in favor of the approval
of the Merger and this Agreement and (ii) take all other action required by the
rules of the NYSE to obtain such approvals. 
The Company shall, through the Company Board, recommend to its stockholders
that they give the Company Stockholder Approval, except to the extent that the
Company Board shall have withdrawn or modified its approval or recommendation
of this Agreement or the Merger as permitted by Section 6.4(c).  Notwithstanding the foregoing, the Company,
after consultation with Parent, may adjourn or postpone the Company
Stockholders Meeting to the extent 

 

38

 

necessary
to ensure that any legally required supplement or amendment to the Proxy
Statement is provided to the Company’s stockholders or, if as of the time for
which the Company Stockholders Meeting is originally scheduled (as set forth in
the Proxy Statement) there are insufficient shares of Common Stock represented
(either in person or by proxy) to constitute a quorum necessary to conduct the
business of the Company Stockholders Meeting.

(e)           Parent shall, as soon as practicable
following the date of this Agreement, approve this Agreement by written consent
as the sole stockholder of Acquisition Sub (“Acquisition
Sub Stockholder Approval”).

Section 6.3.            Access to Information.

(a)           Between
the date hereof and the Effective Time, (i) the Company shall, and shall cause
the Company Subsidiaries to, provide Parent and its authorized representatives
with reasonable access during normal business hours to the facilities of the
Company and the Company Subsidiaries and their respective personnel,
representatives, books and records; provided, that
Parent and Acquisition Sub agree that such access will give due regard to
minimizing interference with the operations, activities and employees of the
Company and (ii) the Company shall furnish promptly to Parent (A) a copy of
each report, schedule, registration statement and other document filed by the
Company during such period pursuant to the requirements of federal or state
securities Laws and (B) such financial and operating data and other information
with respect to the Company and the Company Subsidiaries as Parent may from
time to time reasonably request. 
Notwithstanding any other provision of this Agreement, Parent shall have
the right to disclose any information it receives pursuant to this Section
6.3(a) to its advisors, its financiers and any advisors of its financiers,
subject to the terms of the Confidentiality Agreement.

(b)           Notwithstanding anything to the
contrary in this Agreement, nothing in this Section 6.3 shall require
the Company or its Affiliates to disclose any information to Parent if such
disclosure (i) would cause significant competitive harm to such disclosing
party or its Affiliates if the transactions contemplated by this Agreement were
not consummated or (ii) would be in violation of applicable Laws or
agreements.

(c)           Each of the parties hereto shall hold
and shall cause its representatives and Affiliates to hold in confidence all
documents and information furnished to it in connection with the transactions
contemplated by this Agreement pursuant to the terms of the Confidentiality
Agreement.

(d)           The Company shall keep Parent
apprised of all material developments in connection with (i) the potential sale
or other disposition of part or all of the business directly or indirectly
conducted by FFPE, LLC and (ii) the release of any guaranties given by the
Company or any Company Subsidiary (other than FFPE, LLC and its Subsidiaries)
in connection with the business conducted by FFPE, LLC and its Subsidiaries,
and in each case shall provide Parent and its officers and agents with all
information reasonably requested by them with respect to such potential sale or
other disposition or release.

 

39

 

Section 6.4.            No
Solicitation.

 

(a)           From the date hereof
through the earlier of (i) the Effective Time or (ii) the termination of this
Agreement in accordance with its terms, the Company and the Company
Subsidiaries shall not, and shall not knowingly authorize or knowingly permit
any of their respective officers, directors, representatives and agents
(including any financial advisors) (such persons collectively shall be referred
to as the “Company
Group”) to, directly or indirectly, (A) solicit, initiate, encourage or take any other
action to cooperate in any with respect to, or assist in or facilitate
(including by way of furnishing non-public information) any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Company Takeover Proposal,
or (B) participate in any discussions or negotiations with, or provide any
information to, any person or group of persons (other than Parent, Acquisition Sub
or any of their respective Affiliates) concerning any Company Takeover
Proposal, or (C) enter into any agreement, arrangement or understanding
(including any letter of intent or similar document) involving a Company
Takeover Proposal; provided, however, that if the Company receives an unsolicited
written proposal for a Company Takeover
Proposal from another person, without any member of the Company Group
acting or omitting to act in a manner that is inconsistent with this Section
6.4(a), that the Company Board determines in its good faith judgment is
reasonably likely to constitute a Superior Takeover Proposal, the Company and its representatives may conduct
such discussions or provide such information with respect to the Company and
the Company Subsidiaries as the Company shall determine, but only if, prior to
such provision of information or discussion (A) the person making the proposal
shall have entered into a non-disclosure agreement substantially in the form of
the Confidentiality Agreement (and containing additional provisions that
expressly permit the Company to comply with the provisions of this Section
6.4) and (B) the Company Board determines in its good faith judgment, after
consultation with legal counsel, that it is required to do so for the purpose
of exercising its fiduciary duties.  The Company shall promptly (and in any event
within one day) notify Parent in writing if any member of the Company Group
receives a Company Takeover Proposal or any inquiry regarding the making of, or
that could reasonably be expected to lead to, a Company Takeover Proposal,
including any material terms of any such inquiry or Company Takeover Proposal,
and shall keep Parent informed of the status of any such inquiry or Company
Takeover Proposal.  Nothing
contained in this Section 6.4 shall prohibit the Company from taking and
disclosing to its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any required disclosure to
the Company’s stockholders if, in the good faith judgment of the Company Board,
after consultation with legal counsel, failure so to disclose would be
inconsistent with the exercise of its fiduciary duties or any other obligations
under applicable Law.

(b)           Any violation of the restrictions set
forth in Section 6.4(a) by any member of the Company Group, whether or
not acting on behalf of the Company or any Company Subsidiary, shall be deemed
to be a breach of Section 6.4(a) by the Company.

(c)           Neither the Company Board nor any
committee thereof shall (i) withdraw or modify in a manner adverse to
Parent or Acquisition Sub, or propose to withdraw or modify in a manner adverse
to Parent or Acquisition Sub, the approval or recommendation by the Company
Board of this Agreement or the Merger, (ii) approve any letter of intent,
agreement in principle, acquisition agreement or similar agreement relating to
any Company Takeover Proposal or (iii) approve or recommend, or propose to
approve or recommend, any Company Takeover Proposal.  Notwithstanding the foregoing, but provided
always that the provisions of

 

40

 

Section
6.4(a) are
complied with in full by the Company Group, if, prior to receipt of the Company
Stockholder Approval, the Company Board receives a Superior Takeover Proposal
and as a result thereof the Company Board determines in good faith, after
consultation with legal counsel, that it is required for the purpose of
exercising its fiduciary duties, the Company Board may withdraw or modify its
approval or recommendation of the Merger and this Agreement; provided that the Company complies with Section
6.4(d) below.

(d)           The Company shall give Parent
forty-eight (48) hours notice that the Company Board is considering, or is
prepared to (i) withdraw or modify its approval or recommendation of the Merger
and this Agreement or (ii) accept a Superior Takeover Proposal in order to
allow Parent the opportunity to make an offer to the Company; provided that the Company may not
definitively accept a Superior Takeover Proposal unless the Company
concurrently therewith terminates this Agreement pursuant to Section 8.1(f)
and makes any payment required by Section 8.2(b).

(e)           The Company and the Board shall not
terminate, redeem any rights under, or waive or amend any provision of the
Shareholder Rights Plan to permit or facilitate the consummation of any Company
Takeover Proposal unless this Agreement shall have been terminated in
accordance with the terms and conditions set forth herein.

Section 6.5.            Reasonable Efforts; Notification.

(a)           Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties shall use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger and the other transactions
contemplated hereby, including, without limitation (i) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from, or
to avoid an action or proceeding by, any Governmental Entity, (ii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (iv) the execution and delivery of any additional
instruments necessary to consummate the Merger and the other transactions
contemplated hereby and to fully carry out the purposes of this Agreement.

(b)           The Company shall give prompt notice
to Parent, and Parent or Acquisition Sub shall give prompt notice to the
Company, of (i) any representation or warranty made by it contained in
this Agreement that is qualified as to materiality becoming untrue or
inaccurate in any respect or any such representation or warranty that is not so
qualified becoming untrue or inaccurate in any material respect, (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement or (iii) any Material Adverse Effect with respect to it; provided, however,

 

41

 

that no
such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.

Section 6.6.            Employee
Benefits.

(a)           Parent shall cause the Surviving
Corporation to provide the Affected Employees, for a period ending on the first anniversary of the Effective Time, with
compensation and employee benefits of the type described in Section 4.16
of this Agreement (other than any equity-based compensation or benefit plans)
which in the aggregate are at least as favorable to those currently provided by
the Company and the Company Subsidiaries to their employees, unless, with
respect to any individual Affected Employee, such Affected Employee agrees
otherwise.  Parent shall cause the
Surviving Corporation to assume all employment-related obligations and
agreements with respect to any Affected Employees (including, without
limitation, all obligations of the Company and the Company Subsidiaries under
any “change of control” or similar provisions relating to employees contained
in any existing contract and all termination or severance agreements with
executive officers identified on Schedule 4.16), which obligations and
agreements shall be performed in accordance with their terms as of the date
hereof.  Except as provided in the
preceding sentence, nothing contained herein shall be construed as requiring
Parent or the Surviving Corporation to continue any specific Employee Plan or
to continue the employment of any specific person.

(b)           Parent shall cause the Surviving
Corporation to honor long service leave entitlements, as well as all unused
vacation, holiday, sickness and personal days accrued by the employees of
Company and the Company Subsidiaries under the policies and practices of the
Company and the Company Subsidiaries. 
Parent shall cause the Surviving Company to (i) waive, or use
commercially reasonable efforts to cause its insurance carrier to waive, all
limitations as to preexisting and at-work conditions, exclusions and waiting
periods, if any, with respect to participation and coverage requirements
applicable to each Affected Employee under any benefit plan in which Affected
Employees participate after the Effective Time, except to the extent that such
conditions, exclusions or waiting periods would apply under the Company’s or a
Company Subsidiary’s then existing plans absent any change in such welfare plan
coverage and (ii) provide credit to each Affected Employee for any co-payments
and deductibles paid prior to any change in coverage in satisfying any
applicable deductible or out-of-pocket requirements under any new or changed
plan.  Parent shall cause the Surviving
Corporation to provide Affected Employees with service credit for purposes of
eligibility to participate and vesting under any employee benefit plan, program
or arrangement established or maintained by the Surviving Corporation or any of
its subsidiaries under which each Affected Employee may be eligible to
participate on or after the Effective Time to the same extent recognized by the
Company or any of the Company Subsidiaries under comparable Employee Plans
immediately prior to the Effective Time, provided, however, that such crediting
of service shall not operate to duplicate any benefit with respect to the same
period of service.  Nothing contained herein shall be construed as
requiring Parent or the Surviving Corporation to continue the employment of any
specific person.

Section 6.7.            Public Announcements.  On and after the date hereof and through the
Effective Time, the Company, Acquisition Sub and Parent shall consult with each
other before issuing any press releases or otherwise making any public
statements with respect to this 

 

42

 

Agreement
or the transactions contemplated hereby, and none of the parties shall issue
any press release or make any public statement prior to obtaining the other
parties’ written approval, which approval shall not be unreasonably withheld,
except that no such approval shall be necessary to the extent disclosure may be
required by applicable Law, court process or pursuant to any listing agreement
with a national securities exchange, in which case, to the extent reasonably
feasible, the relevant parties will be given a reasonable opportunity to
contest or comment on the proposed disclosure.

Section 6.8.            Indemnification; Insurance.

(a)           For a period of six years
following the Effective Time, Parent shall cause the Surviving Corporation to
comply with all obligations of the Company in existence or in effect as of the
date hereof, under applicable Laws, the Company Certificate, the Company Bylaws
or by contract, to indemnify, defend and hold harmless to the fullest extent
permitted under applicable Laws to, each person who is now or has been prior to
the date hereof or who becomes prior to the Effective Time an officer or director
of the Company or any Company Subsidiary (the “Indemnified
Officers “) against all losses, claims, damages, costs, expenses
(including, without limitation, reasonable counsel fees and expenses),
settlement payments or liabilities arising out of or in connection with any
claim, demand, action, suit, proceeding or investigation (whether or not
arising prior to the Effective Time) based
in whole or in part on or arising in whole or in part out of acts or
omissions of any Indemnified
Officer occurring prior to the
Effective Time or the fact that such person is or was an officer or
director of the Company or a Company Subsidiary at or prior to the Effective
Time.  The parties hereto intend, to the
extent not prohibited by applicable Law, that the indemnification provided for
in this Section 6.8 shall apply without limitation to acts or omissions,
other than illegal acts or acts of fraud, or alleged acts or omissions, other
than illegal acts or acts of fraud, by the Indemnified Officers in their
capacities as officers or directors, as the case may be, occurring prior to the Effective Time. 
In the event an Indemnified Officer is entitled to indemnification under
this Section 6.8, such Indemnified Officer shall be entitled to
reimbursement from the Surviving Corporation for reasonable attorney fees and
expenses incurred by such Indemnified Officer in pursuing such indemnification,
including payment of such fees and expenses by the Surviving Corporation in
advance of the final disposition of such action upon receipt of an undertaking
by such Indemnified Officer to repay such payment if it shall be adjudicated
that such Indemnified Officer was not entitled to such payment.  Parent
hereby guarantees the payment and performance of the Surviving Corporation’s
obligations in this Section 6.8. 
Each Indemnified Officer, and his or her heirs and legal
representatives, is intended to be a third party beneficiary of this Section
6.8 and may specifically enforce its terms. 
This Section 6.8 shall not limit or otherwise adversely affect
any rights any Indemnified Officer may have under any agreement with the
Company or any Company Subsidiary or under the Company’s or any such Company
Subsidiary’s organizational documents or under applicable Law.

(b)           For a period of six years following
the Effective Time, Parent shall cause the Surviving Corporation to maintain
policies of directors’ and officers’ liability insurance covering each
Indemnified Officer with respect to claims arising from facts or events that
occurred on or prior to the Effective Time and providing at least the same
coverage and amounts and containing terms that are not less advantageous to the
insured parties than those contained in the policies of directors’ and officers’
liability insurance in effect as of the date hereof for 

 

43

 

officers
and directors of Parent; provided,
however, that the Surviving
Corporation shall not be obligated to make annual premium payments for such
insurance to the extent such premiums exceed 200% of the annual premiums paid
as of the date hereof by the Company for such insurance (such amount, the “Maximum Premium”).  If such insurance coverage cannot be obtained
at all, or can only be obtained at an annual premium in excess of the Maximum
Premium, Parent shall cause the Surviving Corporation to maintain the most
advantageous policies of directors’ and officers’ insurance obtainable for an
annual premium equal to the Maximum Premium.

(c)           The provisions of this Section 6.8
are intended to be for the benefit of, and shall be enforceable by, each person
entitled to indemnification hereunder and the heirs and representatives of such
person.  Parent shall not permit the
Surviving Corporation to merge or consolidate with any other person unless the
Surviving Corporation ensures that the successor entity assumes the obligations
imposed by this Section 6.8 or agrees to provide the same
indemnification, protection and insurance to the directors and officers
referred to in this Section 6.8 as is provided by the Surviving
Corporation to any directors and officers appointed after the Effective Time or
any directors and officers of Acquisition Sub immediately before the Effective
Time.

Section 6.9.            Transfer Taxes.  All Transfer Taxes incurred in connection
with the Transactions shall be paid by either Acquisition Sub or the Surviving
Corporation, and the Company shall cooperate with Acquisition Sub and Parent in
preparing, executing and filing any Tax Returns with respect to such Transfer
Taxes.

Section 6.10           Shareholder
Rights Plan.  The Company Board shall
take all action reasonably necessary in order to render the Shareholder Rights
Plan inapplicable to the transactions contemplated hereby.  Except as approved in writing by Parent, the
Company Board shall not (i) amend the Shareholder Rights Plan, (ii) redeem any
rights under the Shareholder Rights Plan or (iii) take any action with respect
to, or make any determination under, the Shareholder Rights Plan, in each case
in a manner adverse to Parent or Acquisition Sub.

Section 6.11.          Takeover
Statutes.  Except as otherwise
specifically provided in Section 6.4, in no event shall the approval of
the Merger and this Agreement by the Company Board under Section 203 of the
DGCL be withdrawn, revoked or modified by the Company Board.  If Section 203 of the DGCL (or any comparable
Laws relating to takeovers) is or may become applicable to the Merger or any of
the transactions contemplated by this Agreement, the Company and the Company
Board shall promptly grant such approvals and take such lawful actions as are
necessary so that such transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement or the Merger, as the
case may be, and otherwise take such lawful actions to eliminate or minimize
the effects of such Laws on such transactions.

Section 6.12.          Consents.  The Company shall use its commercially
reasonable efforts to obtain (a) the consents listed on Schedule 7.3(c),
and (b) all necessary consents, waivers and approvals under any agreement to
which the Company or any of the Company Subsidiaries is a party or otherwise in
connection with the Merger or the transactions contemplated by this Agreement
required to prevent the occurrence of an event that has, or would reasonably be

 

44

 

expected
to have, a Material Adverse Effect on the Company.  Parent and Acquisition Sub will cooperate
with the Company to obtain such consents. 
Notwithstanding the foregoing, the Company shall use best
efforts to obtain all necessary consents or approvals with respect to the
leases set forth on Schedule 4.12(b)(i).

Section 6.13.          Antitrust
Authorities.  As soon as is
reasonably practicable, Parent and the Company shall file with the United
States Federal Trade Commission and the Antitrust Division of the United States
Department of Justice any Notification and Report Forms relating to the
transactions contemplated hereby required by the HSR Act, as well as comparable
pre-merger notification forms required by the merger notification and control
laws and regulations of any other applicable jurisdiction, as agreed to by the
parties.  The Company and Parent each
shall promptly (a) supply the other with any information which may be
reasonably required in order to make such filings, except to the extent that
such disclosure (i) would cause significant competitive harm to such disclosing
party or its Affiliates if the transactions contemplated by this Agreement were
not consummated or (ii) would be in violation of applicable Laws or
agreements, and (b) supply any additional information which may be requested by
the United States Federal Trade Commission or the Antitrust Division of the
United States Department of Justice or the competition or merger control
authorities of any other jurisdiction and which the parties reasonably deem
appropriate.

Section 6.14.          Financing.

(a)           Parent and Acquisition Sub agree to
use commercially reasonable efforts (i) to complete the transactions
contemplated by the Commitment Letters and (ii) to complete the transactions
contemplated by the Equity Commitment Letters, so as to obtain financing in an
amount sufficient to pay the Required Cash Amount.

(b)           Without limiting the generality of
the foregoing, in the event that at any time funds are not or have not been
made available pursuant to the Commitment Letters so as to enable Parent to
proceed with the Closing in a timely manner, Parent shall (i) use its
commercially reasonable efforts to obtain alternative funding in an amount at
least equal to the Required Cash Amount on terms and conditions substantially
comparable to those provided in the Commitment Letters and the Equity
Commitment Letters, or otherwise on terms reasonably acceptable to Parent and
(ii) shall continue to use its commercially reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable Laws to consummate the
transactions contemplated by this Agreement.

(c)           Following the date hereof, Parent
will promptly advise the Company of (i) any amendment, modification,
termination or cancellation of any of the Commitment Letters or Equity
Commitment Letters, and (ii) any change, effect, event, situation or condition
or any other information of which Parent is aware as a result of which it could
reasonably be expected that the Transaction Financing will not be obtained on
the terms set forth in the Commitment Letters or the Equity Commitment
Letters.  None of Parent, Acquisition Sub
or any of their respective Affiliates will (A) attempt, directly or indirectly,
to induce or encourage the Lenders or other entities not to fund any of the
financing provided for in the Commitment Letters or Equity Commitment Letters
or (B) amend, terminate or waive any provisions of the Commitment 

 

45

 

Letters
or Equity Commitment Letters without the prior written consent of the Company
(which shall not be unreasonably withheld or delayed), in any manner that could
reasonably be expected to adversely affect Parent’s ability to obtain the
Transaction Financing.  Notwithstanding
the foregoing, Parent, Acquisition Sub and their respective Affiliates and
agents are permitted to keep the Lenders and providers of equity financing
apprised of all developments related to the Company.

Section 6.15.          Opinion of Financial Advisor. 
No later than one business day following the date of this Agreement, the
Company will deliver to Parent a copy of the opinion of HLHZ delivered to the
Company Board to the effect that as of such date, the Per Share Merger
Consideration is fair, from a financial point of view, to the holders of Common
Stock of the Company.

Section 6.16.          No Affiliate Agreements.  Unless Parent otherwise consents, the Company
shall not, and shall cause the Company Subsidiaries not to, enter into any
contracts or other agreements of the Company or any Company Subsidiary with any
Affiliate of the Company or any Company Subsidiary (other than with the Company
itself or any of its Subsidiaries).

Section 6.17.          FFPE, LLC.  The Company shall use commercially reasonable
efforts to terminate any guaranties given by the Company or any Company
Subsidiary (other than FFPE, LLC and its Subsidiaries in the event of a sale of
the membership interests of FFPE, LLC) in connection with the business
conducted by FFPE, LLC and its Subsidiaries and shall use commercially
reasonable efforts to sell FFPE, LLC and its Subsidiaries or the assets thereof
prior to the Closing.

Section 6.18.          Company SEC Documents.  The Company shall, before the Closing Date,
file all reports, schedules, forms, statements and other documents required to
be filed by the Company with the SEC on or before the Closing Date pursuant to
Sections 13(a) and 15(d) of the Exchange Act or pursuant to the Securities
Act.

Section 6.19.          Good
Standing.  The Company shall cause
the Company and each Company Subsidiary to be in good standing in its
jurisdiction of incorporation and, except where the failure to be so qualified
or in good standing would not have, and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company, in each jurisdiction where the character of its properties owned or
leased or the nature of its activities make such qualification necessary.

Section 6.20.          Employee
Acknowledgements.  The Company shall
use its reasonable efforts to obtain, prior to the Closing, an acknowledgement,
which shall include a customary release, from each of the employees of the
Company party to a Special One Time Compensation Plan as set forth on Schedule
4.10(a)(iii), that, upon the payment of the amount due to such employee
upon the consummation of the Merger pursuant to his or her Special One Time
Compensation Plan, such employee shall not be entitled to any severance payment
in the event that such employee does not remain employed with the Company
following the Closing.

 

46

 

ARTICLE
VII

 

CONDITIONS TO
CONSUMMATION OF THE MERGER

Section 7.1.            Conditions to Each Party’s
Obligation to Effect the Merger.  The
respective obligations of each party hereto to effect the Merger are subject to
the satisfaction or waiver at or prior to the Closing of the following
conditions:

(a)           Company Stockholder Approval shall
have been obtained;

(b)           no statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits, restrains,
enjoins or restricts the consummation of the Merger; and

(c)           all approvals, waivers and consents
of any Governmental Entity necessary for the consummation of the Merger shall
have been obtained by Parent, Acquisition Sub and the Company, including,
without limitation, the expiration or termination of the waiting period (and
any extension thereof) applicable to the Merger under the HSR Act.

Section 7.2.            Conditions to the Obligation of
the Company.  The obligation of the
Company to effect the Merger is subject to the satisfaction or waiver (by the
Company only) at or prior to the Closing of the following conditions:

(a)           the representations and warranties of
Parent and Acquisition Sub in this Agreement or in any other document delivered
pursuant hereto that are qualified as to materiality shall be true and correct
and those not so qualified shall be true and correct in all material respects,
as of the date of this Agreement and as of the Closing Date as though made on
the Closing Date, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and
warranties qualified as to materiality shall be true and correct, and those not
so qualified shall be true and correct in all material respects, on and as of
such earlier date) and, at the Closing, each of Parent and Acquisition Sub
shall have delivered to the Company a certificate of an appropriate officer to
that effect; and

(b)           each of the covenants and obligations
of Parent and Acquisition Sub to be performed at or before the Closing Date
pursuant to the terms of this Agreement shall have been duly performed in all
material respects at or before the Closing and, at the Closing, each of Parent
and Acquisition Sub shall have delivered to the Company a certificate of an
appropriate officer to that effect.

Section 7.3.            Conditions to the Obligations of
Parent and Acquisition Sub.  The
respective obligations of Parent and Acquisition Sub to effect the Merger are
subject to the satisfaction or waiver (by Parent or Acquisition Sub only) at or
prior to the Closing of the following conditions:

(a)           the representations and warranties of
the Company in this Agreement or in any other document delivered pursuant
hereto that are qualified as to materiality shall be true and correct and those
not so qualified shall be true and correct in all material respects, as of the
date of this Agreement and as of the Closing Date as though made on the Closing
Date, except to the 

 

47

 

extent
such representations and warranties expressly relate to an earlier date (in
which case such representations and warranties qualified as to materiality
shall be true and correct, and those not so qualified shall be true and correct
in all material respects, on and as of such earlier date) and, at the Closing,
the Company shall have delivered to Parent a certificate of an appropriate
officer to that effect;

(b)           each of the covenants and obligations
of the Company to be performed at or before the Closing Date pursuant to the
terms of this Agreement shall have been duly performed in all material respects
at or before the Closing Date and, at the Closing, the Company shall have
delivered to Parent a certificate of an appropriate officer to that effect;

(c)           the Company shall have obtained (i)
those consents or approvals of third parties identified on Schedule 7.3(c)
and (ii) such other consents and approvals required to prevent a breach of, a
default under or a termination of, any Material Contract as a result of the
Merger, except where the failure to obtain such other consents and approvals,
individually or in the aggregate, has not had, and would not reasonably be
expected to have, a Material Adverse Effect on the Company; provided that this clause (c) shall not
apply to the leases set forth on Schedule 4.12(b)(i), for which Section
7.3(k) shall apply.

(d)           The Transaction Financing, or
alternative financing as provided in Section 6.14, shall have been
obtained by Parent; provided that
this condition shall be deemed satisfied (and Parent shall be obligated to
consummate the Merger) in the event that (i) any of Parent, Acquisition Sub or
any of their respective Affiliates is in breach of Sections 5.5 or 6.14
and such breach results in the Transaction Financing not being obtained or (ii)
Parent does not draw down the Transaction Financing even though the
conditions to the Transaction Financing are satisfied and the Lenders have not
defaulted in their obligations to fund pursuant to the Commitment Letters or
otherwise;

(e)           the Company shall have taken all
actions necessary to make the Shareholder Rights Plan inapplicable to the
transactions contemplated by this Agreement;

(f)            Parent shall have received either
(i) a certificate from the Company to the effect that none of the Company or
any Company Subsidiary is a U.S. real property holding company meeting the
requirements of Treasury Regulations 1.1445-2(c)(3) and 1.897-2(h), or (ii) a
certificate pursuant to Treasury Regulation 1.1445-2(b)(2) from each person
described in Treasury Regulation 1.897-1(c)(2)(iii)(A);

(g)           Parent shall have received the
executed resignation, effective as of the Closing, of each member of the
Company Board;

(h)           the Company shall deliver to Parent a
certificate of its corporate secretary setting forth the voting results from
the Company Stockholders Meeting;

(i)            no Material Adverse Effect will have
occurred;

(j)            the Company shall have cancelled,
concurrently with the Merger, the Corporate-Owned Life Insurance Policies
issued to the Company on June 1, 1985 by Manufacturers Life Insurance Company;
and

 

48

 

(k)           with respect to at 50 leases set
forth on Schedule 4.12(b)(i), either no consents or approvals with
respect to the consummation of the transactions contemplated by this Agreement
shall be required or the Company shall have obtained such consents or
approvals.

ARTICLE VIII

 

TERMINATION; AMENDMENT;
WAIVER

Section 8.1.            Termination.  This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after Company Stockholder Approval has been obtained:

(a)           by mutual written consent of Parent,
Acquisition Sub and the Company;

(b)           by either Parent and Acquisition Sub
or the Company if (i) any court of competent jurisdiction or other
Governmental Entity shall have issued a final order, decree or ruling or taken
any other final action restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action is or shall have become
nonappealable; (ii) the Merger has not been consummated by the Outside
Date; provided, that no party may terminate
this Agreement pursuant to this clause (ii) if such party’s failure to fulfill
any of its obligations under this Agreement shall have been the reason that the
Effective Time shall not have occurred on or before said date or (iii) upon a
vote at a duly held meeting to obtain the Company Stockholder Approval, the
Company Stockholder Approval is not obtained;

(c)           by the Company if (i) there
shall have been a breach of any representation or warranty on the part of
Parent or Acquisition Sub set forth in this Agreement, or if any representation
or warranty of Parent or Acquisition Sub shall have become untrue, in either
case such that the conditions set forth in Section 7.2(a) would be
incapable of being satisfied by the Outside Date or (ii) there shall have
been a breach by Parent or Acquisition Sub of any of their respective covenants
or agreements hereunder having a Material Adverse Effect on Parent or
materially adversely affecting (or materially delaying) the consummation of the
Merger, and Parent or Acquisition Sub, as the case may be, has not cured such
breach within twenty (20) business days after notice by the Company
thereof; provided, that the Company has not
breached any of its obligations hereunder;

(d)           by Parent and Acquisition Sub if
(i) there shall have been a breach of any representation or warranty on
the part of the Company set forth in this Agreement, or if any representation
or warranty of the Company shall have become untrue, in either case such that
the conditions set forth in Section 7.3(a) would be incapable of being
satisfied by the Outside Date, (ii) there shall have been a breach by the
Company of its covenants or agreements hereunder having a Material Adverse
Effect on the Company or materially adversely affecting (or materially
delaying) the consummation of the Merger, and the Company has not cured such
breach within twenty (20) business days after notice by Parent or
Acquisition Sub thereof; provided,
that neither Parent nor Acquisition Sub has breached any of its respective
obligations hereunder or (iii) a Material Adverse Effect upon the Company
occurs at any time before the 

 

49

 

Effective
Time, and the Company has not cured such breach before the earlier of (A) the
Outside Date and (B) forty-five (45) days after the occurrence of the Material
Adverse Effect; or

(e)           by Parent and Acquisition Sub if the
Company Board or any committee thereof (i)
withdraws or modifies in a manner adverse to Parent or Acquisition Sub, or publicly resolves to withdraw or modify
in a manner adverse to Parent or Acquisition Sub, its adoption, approval
or recommendation of this Agreement or the Merger, (ii) fails to recommend to the Company’s stockholders that they
give the Company Stockholder Approval,(iii) approves or recommends, or
proposes to approve or recommend, any Company Takeover Proposal or (iv) fails
to reconfirm the recommendation referred to in clause (i) above or fails to
publicly announce that it is not recommending any Company Takeover Proposal, if
so requested by Parent; or

(f)            by the Company concurrently with its
acceptance of a Superior Takeover Proposal; provided
that the Company has complied with all provisions of Section 6.4 and
makes simultaneous payment as provided in Section 8.2(b).

Section 8.2.            Effect of Termination.

(a)           In the event of the termination and
abandonment of this Agreement pursuant to Section 8.1, this Agreement
shall forthwith become void and have no effect without any liability on the
part of any party hereto or its Affiliates, directors, officers or
stockholders, other than any liability
of the Company, Parent or Acquisition Sub, as the case may be, for fraud or
willful or intentional breach of any representation, warranty, covenant or
agreement under this Agreement occurring prior to such termination; provided, however,
nothing herein shall be deemed to waive any rights of specific performance of
this Agreement available to any party.  The
provisions of this Section 8.2 and Sections 6.3(c), 9.2, 9.6
and 9.10 shall survive any such termination.

(b)           In the event that this Agreement
shall be terminated pursuant to Section 8.1(b)(iii), Section 8.1(e)
or Section 8.1(f), Parent would suffer direct and substantial damages,
which damages cannot be determined with reasonable certainty.  To compensate Parent for such damages, the
Company shall pay to Parent or its designees by wire transfer of immediately
available funds the amount of Eight Million Four Hundred Twenty Thousand
Dollars ($8,420,000) as liquidated damages immediately (and in any event within
one business day) upon the occurrence of the termination of this Agreement
pursuant to Section 8.1(b)(iii), Section 8.1(e) or Section
8.1(f).  It is specifically agreed
that the amount to be paid pursuant to this Section 8.2(b) represents
liquidated damages and not a penalty. 
The Company hereby waives any right to set-off or counterclaim against
such amount.

(c)           In the event that this Agreement
shall be terminated pursuant to Section 8.1(b)(i), Section 8.1(b)(ii)
or Section 8.1(d), the Company shall, within one Business Day of such
termination, reimburse the Parent or its designees, by wire transfer of
immediately available funds, for all out-of-pocket expenses of the Parent or
the Acquisition Sub, including all fees and expenses payable to all legal,
accounting, financial and professional advisers and the cost of any currency
exposure hedge transaction, relating to the Merger, this Agreement or the
transactions 

 

50

 

contemplated
hereby; provided that the Company
shall in no event be required to reimburse Parent for more than Five Million
Six Hundred Ten Thousand Dollars ($5,610,000).

Section 8.3.            Amendment.  This Agreement may be amended by action taken
by the boards of directors of the Company, Parent and Acquisition Sub at any
time before or after Company Stockholder Approval has been obtained, but, after
Company Stockholder Approval has been obtained, no amendment shall be made
which requires the approval of such stockholders under applicable Law or the
listing standards of the New York Stock Exchange without such approval.  This Agreement may be amended only by an
instrument in writing signed on behalf of the parties hereto.

Section 8.4.            Extension;
Waiver.  At any time prior to the
Effective Time, each party hereto may (a) extend the time for the
performance of any of the obligations or other acts of the other party,
(b) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document, certificate or writing
delivered pursuant hereto or (c) waive compliance by the other party with
any of the agreements or conditions contained herein.  Any agreement on the part of any party hereto
to any such extension or waiver shall be valid only if set forth in an
instrument, in writing, signed on behalf of such party.  The failure of any party hereto to assert any
of its rights hereunder shall not constitute a waiver of such rights.  The waiver by any party hereto of a breach of
any term or provision of this Agreement shall not be construed as a waiver of
any subsequent breach.

ARTICLE IX

 

GENERAL PROVISIONS

Section 9.1.            Nonsurvival of Representations
and Warranties.  None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time.  This Section 9.1 shall not limit
any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.

Section 9.2.            Notices.  All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed given upon
personal delivery, one (1) business day after being sent via a nationally
recognized overnight courier service if overnight courier service is requested
or upon receipt of electronic or other confirmation of transmission if sent via
facsimile (or at such other address for a party as shall be specified by like
notice):

 

	
  if to Parent or
  Acquisition Sub:

  	
   

  	
  Aus Bidco Pty Limited

  
	
   

  	
   

  	
  c/o Pacific Equity
  Partners Pty Limited

  
	
   

  	
   

  	
  Level 36, The Chifley
  Tower

  
	
   

  	
   

  	
  2 Chifley Square

  
	
   

  	
   

  	
  Sydney, NSW 2000

  
	
   

  	
   

  	
  Australia

  
	
   

  	
   

  	
  Telecopier:
  61.2.9231.2804

  
	
   

  	
   

  	
  Attention: Rob Koczkar

  

 

51

 

	
  with a copy to:

  	
   

  	
  Clayton Utz

  
	
   

  	
   

  	
  1 O’Connell Street

  
	
   

  	
   

  	
  Sydney, NSW 2000

  
	
   

  	
   

  	
  Australia

  
	
   

  	
   

  	
  Telecopier:
  61.2.8220.6700

  
	
   

  	
   

  	
  Attention: Philip Kapp

  
	
   

  	
   

  	
  and David Stammers

  
	
   

  	
   

  	
   

  
	
  and:

  	
   

  	
  Ropes & Gray LLP

  
	
   

  	
   

  	
  One International Place

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
  Telecopier: (617)
  951-7050

  
	
   

  	
   

  	
  Attention: Raj
  Marphatia

  
	
   

  	
   

  	
   

  
	
  if to the Company to:

  	
   

  	
  Worldwide Restaurant
  Concepts, Inc.

  
	
   

  	
   

  	
  15301 Ventura Blvd.,
  Building B, Suite 300

  
	
   

  	
   

  	
  Sherman Oaks, CA 91403

  
	
   

  	
   

  	
  Telecopier: (818)
  530-0189

  
	
   

  	
   

  	
  Attention: Michael
  Green, General Counsel

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Gibson Dunn &
  Crutcher LLP

  
	
   

  	
   

  	
  2029 Century Park East

  
	
   

  	
   

  	
  Los Angeles, California
  90067

  
	
   

  	
   

  	
  Telecopier: (310)
  551-8741

  
	
   

  	
   

  	
  Attention: Robert K.
  Montgomery, Esq.

  

or to such other address
as the person to whom notice is given may have previously furnished to the
others in writing in the manner set forth above.

Section 9.3.            Entire Agreement.  This Agreement (including the Company
Disclosure Schedule) and the Confidentiality Agreement constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.

Section 9.4.            Assignment.  Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties. 
Any purported assignment without such consent shall be void.  Subject to the preceding sentences, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.

Section 9.5.            Severability.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect 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 determination that any term or other 

 

52

 

provision
is invalid, illegal or incapable of being enforced, the parties hereto 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 to the end
that transactions contemplated hereby are fulfilled to the extent possible.

Section 9.6.            Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard
to the principles of conflicts of law thereof.

Section 9.7.            Interpretation.  When a reference is made in this Agreement to
a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated.  The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.  Whenever the words “include,”
“includes” or “including” are used in this Agreement, they shall be deemed to
be followed by the words “without limitation.” 
All references to “dollars” or “$” are references to United States
Dollars.

Section 9.8.            Parties in Interest.  This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors and
permitted assigns and, except as provided in Article III and Section 6.8,
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.

Section 9.9.            Personal Liability.  This Agreement shall not create or be deemed
to create or permit any personal liability or obligation on the part of any
direct or indirect stockholder of the Company or Parent or any officer,
director, employee, agent, representative or investor of any party hereto.

Section 9.10.          Fees
and Expenses.  Except as otherwise
provided in Sections 8.2(b) and 8.2(c), each of the parties
hereto shall bear all legal, accounting, investment banking and other expenses
incurred by it or on its behalf in connection with the transactions contemplated
by this Agreement, whether or not such transactions are consummated, except
that expenses incurred in connection with (i) filing, printing and mailing the
Proxy Statement (including all applicable filing fees) and (ii) the filing of
pre-merger notification forms under the HSR Act or any similar foreign Laws
shall be shared equally by Parent and the Company.

Section 9.11.          Specific
Performance.  The parties hereby
acknowledge and agree that the failure of any party to perform its agreements
and covenants hereunder, including its failure to take all actions as are
necessary on its part to consummate the Merger, shall cause irreparable injury
to the other parties, for which damages, even if available, would not be an
adequate remedy.  Accordingly, each party
hereby consents to the issuance of injunctive relief by any court of competent
jurisdiction to compel performance of such party’s obligations and to the
granting by any court of the remedy of specific performance of its obligations
hereunder, this being in addition to any other remedy to which they are
entitled at law or in equity.

Section 9.12.          Venue.  Each of the parties hereto (a) consents
to submit itself to the personal jurisdiction of any Delaware state court or
any federal court located in the State of 

 

53

 

Delaware
in the event any dispute arises out of this Agreement or the Merger,
(b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court,
(c) agrees that it will not bring any action relating to this Agreement or
the Merger in any court other than any Delaware state court or any federal
court sitting in the State of Delaware and (d) waives any right to trial
by jury with respect to any action related to or arising out of this Agreement
or the Merger.

Section 9.13.          WAIVER OF JURY TRIAL.  EACH
OF THE PARTIES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAWS, WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY.

Section 9.14.          Counterparts.  This Agreement may be executed by facsimile
in one or more counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.

Section 9.15.          Disclosure
Generally.  If and to the extent any
information required to be furnished in any Schedule is contained in this
Agreement or disclosed on any Schedule attached hereto, such information shall
be deemed to be included in all Schedules in which the information is required
to be included to the extent such disclosure is reasonably apparent on its
face.  The inclusion of any information
in any Schedule attached hereto shall not be deemed to be an admission or
acknowledgment by the Company, in and of itself, that such information is
required by the terms hereof to be disclosed or is material to or outside the
ordinary course of the business of the Company.

 

54

IN WITNESS WHEREOF, each
of the parties has caused this Agreement to be duly executed on its behalf as
of the day and year first above written.

 

	
  WORLDWIDE RESTAURANT CONCEPTS, INC.

  
	
   

  
	
   

  
	
  By: 

  	
  /s/ 

  	
  Charles L. Boppell

  
	
   

  	
   

  	
  Name: Charles L. Boppell

  
	
   

  	
   

  	
  Title: President and CEO

  
	
   

  	
   

  	
   

  
	
  AUS BIDCO PTY LIMITED

  
	
   

  
	
   

  
	
  By: 

  	
  /s/ 

  	
  Rob Koczkar

  
	
   

  	
   

  	
  Name: Rob Koczkar

  
	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  	
   

  
	
  US MERGECO, INC.

  
	
   

  
	
   

  
	
  By: 

  	
  /s/ 

  	
  Rob Koczkar

  
	
   

  	
   

  	
  Name: Rob Koczkar

  
	
   

  	
   

  	
  Title: Director

  

 

 

 

 

 

[Signature page to Agreement and Plan of Merger]Exhibit
10(n)

DIRECTORS STOCK GRANT PROGRAM

 

 

	
  1.

  	
   

  	
  PURPOSE

  
	
   

  	
   

  	
  The purpose of the Directors Stock Grant Program
  (the “Program”) is to attract and retain qualified individuals to serve as
  directors of TCF Financial Corporation (“TCF Financial”) and its subsidiaries,
  and to encourage and enhance ownership of TCF Common Stock by these
  individuals.

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  ADMINISTRATION

  
	
   

  	
   

  	
  Full power to construe, interpret and administer the
  program is vested with a committee consisting of the non-employee directors
  (as defined by Rule 16b-3 of the Securities and Exchange Commission (the
  “SEC”) of the Board of TCF Financial (the “Committee”). In the event such
  directors at some time do not qualify as disinterested administrators for
  purposes of Rule 16b-3, if disinterested administration is then required in
  order for the shares of TCF Stock awarded under the Program to be exempt
  under Rule 16b-3, then the Board of Directors will appoint a new Committee
  which qualifies under the provisions of Rule 16b-3 as then in effect. The Committee
  shall interpret the Program, prescribe, amend and rescind rules and
  regulations relating thereto, and make all other determinations necessary or
  advisable for the administration of the Program. A majority of the members of
  the Committee shall constitute a quorum, and all determinations of the
  Committee shall be made by a majority of its members. Any determination of
  the Committee under the Program may be made without notice of meeting of the
  Committee by writing signed by a majority of the Committee members.

  
	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  PARTICIPANTS

  
	
   

  	
   

  	
  Participants in the Program will consist of the
  outside directors of TCF Financial and its subsidiaries from time to time.

  
	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  BENEFITS

  
	
   

  	
   

  	
  Director restricted stock awards will consist of
  common shares transferred to Directors without other payment as additional
  compensation for their services to TCF Financial or one of its subsidiaries.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Each director of TCF Financial will periodically
  receive formula awards of restricted shares. 
  Each award will be equal in value to three (3) times the total amount
  of his or her annual retainer fee. 
  Awards will be made in January of the applicable year to all directors
  then eligible.  A director elected by
  the board between grants will receive a pro-rated award based on the number
  of months from the beginning of board service until the next stock award
  date.  Value will be determined on the
  basis of the Fair Market Value of TCF Stock on the day the award is made,
  based on the annual retainer (not including Committee chair retainer fees) in
  effect on that day. During the time the shares are restricted, they will not
  be transferable by the directors and a

  

 

 

 

	
   

  	
   

  	
  legend will be placed on the stock certificates to
  that effect. Vesting will occur over a minimum of three years, and is based
  on the attainment of the goal (currently 20% ROTE) set for the award by the
  Committee. If the goal is not achieved, no vesting occurs for that year.
  There is not, however, a forfeiture in years (if any) when the goal is not
  achieved, so that the grant is effectively extended for an additional year in
  such circumstances. The director must be on the board on December 31 of the
  year in order to receive shares vesting based on that year’s performance. If
  the goal is achieved, one-third of the shares will vest effective as of
  January 1 following the fiscal year in which the goal is achieved. Once the
  shares have vested, another formula award of the same number of shares is
  automatically made.  If some or all of
  the restricted shares are not vested on the basis of goals by ten (10) years
  after the grant date, and if the director is still with the company on that
  date, then any remaining restricted shares will become vested on that
  date.  If a director retires from service
  on the board of TCF Financial pursuant to board policy on director retirement
  in effect at that time, the restricted period will lapse and all shares will
  become fully vested. There is no vesting in the event of full or partial
  disability.

  
	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  DEFINITIONS

  

 

	
   

  	
   

  	
   

  	
  FAIR MARKET VALUE.

  
	
   

  	
   

  	
   

  	
  The term “Fair Market Value” of TCF Financial’s
  Common Shares at any time shall be the average of the high and low sales
  prices for TCF Financial’s Common Shares for the date, as reported on the New
  York Stock Exchange.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  SUBSIDIARY

  
	
   

  	
   

  	
   

  	
  The term “subsidiary” shall mean any corporation,
  partnership, joint venture or business trust, fifty percent (50%) or more of
  the control of which is owned, directly or indirectly, by TCF Financial.

  

 

	
   

  	
   

  	
   

  	
  CHANGE IN CONTROL

  
	
   

  	
   

  	
   

  	
  A “Change in Control” shall be deemed to have
  occurred if:

  
	
   

  	
   

  	
   

  	
   

  	
  (a)

  	
  any “person” as defined in Sections 13(d) and 14(d)
  of the Securities Exchange Act of 1934 (the “Exchange Act”) is or becomes the
  “beneficial owner” as defined in Rule 13d-3 under the Exchange Act, directly
  or indirectly, of securities of TCF Financial representing thirty percent
  (30%) or more of the combined voting power of TCF Financial’s then
  outstanding securities. For purposes of this clause (a), the term “beneficial
  owner” does not include any employee benefit plan maintained by TCF Financial
  that invests in TCF Financial’s voting securities; or

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (b)

  	
  during any period of two (2) consecutive years (not
  including any period prior to April 1995) there shall cease to be a majority
  of the Board comprised as follows: individuals who at the beginning of such
  period constitute the Board or as new directors whose nomination for 

  

 

 

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  election by TCF Financial’s shareholders was
  approved by a vote of at least two-thirds (2/3) of the directors then still
  in office who either were directors at the beginning of the period or whose
  election or nomination for election was previously so approved; or

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (c)

  	
  the shareholders of TCF Financial approve a merger
  or consolidation of TCF Financial with any other corporation, other than a
  merger or consolidation which would result in the voting securities of TCF
  Financial outstanding immediately prior thereto continuing to represent
  (either by remaining outstanding or by being converted into voting securities
  of the surviving entity) at least 70% of the combined voting power of the
  voting securities of TCF Financial or such surviving entity outstanding
  immediately after such merger or consolidation, or the shareholders of TCF
  Financial approve a plan of complete liquidation of TCF Financial or an
  agreement for the sale or disposition by TCF Financial of all or
  substantially all TCF Financial’s assets; provided, however, that no change
  in control will be deemed to have occurred if such merger, consolidation,
  sale or disposition of assets, or liquidation is not subsequently
  consummated.

  

 

	
   

  	
   

  	
   

  	
  DISABILITY

  
	
   

  	
   

  	
   

  	
  The term “disability” for all purposes of this
  Program shall be determined by the Committee in such manner as the Committee
  deems equitable or required by the applicable laws or regulations.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  RETIREMENT

  
	
   

  	
   

  	
   

  	
  The term “retirement” means a retirement under the
  policies of the Board of Directors of TCF Financial in effect at the time of
  a director’s departure from the Board.

  

 

	
  6.

  	
   

  	
  ADJUSTMENT PROVISIONS

  
	
   

  	
   

  	
  If TCF Financial shall at any time change the number
  of issued Common Shares without new consideration to TCF Financial (such as
  by stock dividends or stock splits), the total number of shares reserved for
  issuance under this Program, the number of shares covered by each outstanding
  Benefit shall be adjusted so that the limitations, the aggregate
  consideration payable to TCF Financial, and the value of each such Benefit
  shall not be changed. The Committee shall also have the right to provide for
  the continuation of Benefits or for other equitable adjustments after changes
  in the Common Shares resulting from reorganization, sale, merger,
  consolidation or similar occurrence.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notwithstanding any other provision of this Program,
  and without affecting the number of shares otherwise reserved or available
  hereunder, the Committee may authorize the issuance or assumption of the
  grants in connection with any merger,

  

 

 

 

	
   

  	
   

  	
  consolidation, acquisition of property or stock, or
  reorganization upon such terms and conditions as it may deem appropriate.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All terms and conditions of all restricted stock
  awards outstanding shall be deemed satisfied and all such awards shall vest
  as of the date of a Change in Control.

  
	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  AMENDMENT AND TERMINATION OF PROGRAM

  
	
   

  	
   

  	
  The Board of Directors of TCF Financial or the
  Committee may amend this Program from time to time, but not more often than
  once every six months, other than to comply with requirements of the Internal
  Revenue Code, or may terminate this Program at any time, but no action shall
  reduce the then existing amount of any participant’s benefit or adversely
  change the terms and conditions thereof without the participant’s consent. No
  amendment of this Program shall result in any Committee member losing his or
  her status as a “disinterested person” as defined in Rule 16b-3 of the
  Securities and Exchange Commission with respect to any employee benefit plan
  of TCF Financial or result in the program losing its status as a protected
  plan under said Rule 16b-3.  This
  Program shall expire ten years from the date of its most recent approval by
  shareholders, unless the shareholders approve renewal of this Program before
  it expires.

  
	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  SHAREHOLDER APPROVAL

  
	
   

  	
   

  	
  This Program will be submitted to the TCF
  Shareholders for approval on April 27, 2005.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}]]