AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 15, 1996
REGISTRATION STATEMENT NO. 333-12751
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ROADHOUSE GRILL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
FLORIDA 5812 65-0367604
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
6600 N. ANDREWS AVE., SUITE 160
FORT LAUDERDALE, FLORIDA 33309
(954) 489-9699
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOHN DAVID TOOLE III
CHIEF EXECUTIVE OFFICER
ROADHOUSE GRILL, INC.
6600 N. ANDREWS AVE., SUITE 160
FORT LAUDERDALE, FLORIDA 33309
(954) 489-9699
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES TO:
DAN BUSBEE
LOCKE PURNELL RAIN HARRELL MARY A. BERNARD
(A PROFESSIONAL CORPORATION) KING & SPALDING
2200 ROSS AVENUE, SUITE 2200 120 WEST 45TH STREET
DALLAS, TEXAS 75201-6776 NEW YORK, NEW YORK 10036-4003
(214) 740-8000 (212) 556-2100
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [x]
- -----------------------------------------------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
SUBJECT TO COMPLETION, DATED NOVEMBER 15, 1996
PROSPECTUS
DATED , 1996
2,500,000 SHARES
ROADHOUSE GRILL [LOGO]
COMMON STOCK
All of the 2,500,000 shares of Common Stock offered hereby are being issued
and sold by Roadhouse Grill, Inc. (the "Company").
Prior to this offering (the "Offering"), there has been no public market for
the Common Stock of the Company. It is currently estimated that the initial
public offering price will be between $9.00 and $11.00 per share. See
"Underwriting" for a discussion of the factors to be considered in
determining the initial public offering price. The Common Stock has been
approved for listing on the Nasdaq National Market under the symbol "GRLL."
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
===============================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
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Per Share ..... $ $ $
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Total(3) ...... $ $ $
===============================================================================
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $490,000.
(3) The Company has granted the Underwriters a 30-day option to purchase up
to an aggregate of 375,000 additional shares of Common Stock solely to
cover over-allotments, if any, at the per share Price to Public less the
Underwriting Discount. If the Underwriters exercise this option in full,
the total Price to Public, Underwriting Discount and Proceeds to Company
will be $ , $ and $ , respectively. See
"Underwriting."
The shares of Common Stock are offered by the several Underwriters subject to
prior sale when, as and if delivered to and accepted by the Underwriters and
subject to their right to reject orders in whole or in part. It is expected
that certificates for such shares will be available for delivery at the
offices of Piper Jaffray Inc. in Minneapolis, Minnesota on or about ,
1996.
PIPER JAFFRAY INC. ROBERTSON, STEPHENS & COMPANY
<PAGE>
[INSIDE FRONT COVER]
Appendix "A" contains a description of the artwork on inside front cover and the
inside front fold-out.
<PAGE>
APPENDIX "A"
INSIDE FRONT COVER
The inside front cover contains a full-page photograph of the outside of the
Bradenton, Florida Roadhouse Grill restaurant with the caption "Bradenton,
Florida."
INSIDE FRONT FOLD-OUT
The inside front fold-out contains the following five photographs with the
Company's motto ("Good Food and a Smile...That's Roadhouse Style!") on a
background of peanuts in the shell:
1. The game room at the Ft. Lauderdale, Florida Roadhouse Grill
restaurant with the caption "Ft. Lauderdle, Florida - Game
Room."
2. A plate with ribs and a baked potato with the caption "Full Rack BBQ
Baby Back Ribs."
3. A basket of rolls next to a rolling pin and a bag of flour with the
caption "Homemade Yeast Rolls."
4. The inside of the Delray Beach, Florida Roadhouse Grill
restaurant with the caption "Delray Beach, Florida."
<PAGE>
The Company intends to furnish its shareholders with annual reports
containing audited financial statements and quarterly reports for the first
three quarters of each fiscal year containing unaudited interim financial
information.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ
IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND THE FINANCIAL
STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS
OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS (I) REFLECTS A
ONE-FOR-THREE REVERSE SPLIT OF THE COMPANY'S COMMON STOCK WHICH WILL OCCUR
PRIOR TO THE OFFERING, (II) ASSUMES NO EXERCISE OF THE UNDERWRITERS'
OVER-ALLOTMENT OPTION AND (III) GIVES EFFECT TO THE CONVERSION OF ALL
OUTSTANDING SHARES OF THE COMPANY'S SERIES A PREFERRED STOCK AND SERIES B
PREFERRED STOCK (TOGETHER, THE "ISSUED PREFERRED STOCK") INTO SHARES OF
COMMON STOCK, WHICH CONVERSION WILL OCCUR CONCURRENTLY WITH THE CLOSING OF
THE OFFERING. THE TERMS "COMPANY" AND "ROADHOUSE GRILL" REFER TO ROADHOUSE
GRILL, INC.
THE COMPANY
The Company currently owns and operates 30 and franchises or licenses six
full-service, casual dining restaurants under the name "Roadhouse Grill." The
Roadhouse Grill concept offers a fun, value-oriented dining experience that
features premium quality grilled entrees and friendly service consistent with
the Company's motto: "Good Food and a Smile . . . That's Roadhouse
Style."/registered trademark/ The comfortable, entertaining roadhouse setting
is designed to appeal to a broad range of customers, including business
people, couples, singles and particularly families.
Roadhouse Grill restaurants have an energetic and casual atmosphere. The
interior of each restaurant is large, open and visually appealing, featuring
exposed ceilings and brick and lapboard cedar walls decorated with colorful,
hand-painted murals and neon signs. Multi-level seating provides guests with
a full view of the restaurant, including the exhibition grill and display
kitchen, allowing everyone to enjoy the Roadhouse Grill experience. The
exhibition cooking area features a mesquite-fired grill, a kitchen where
homemade yeast rolls are made throughout the day and a display case filled
with fresh cuts of meat, seafood and salads. To help create Roadhouse Grill's
casual ambience, metal pails of roasted peanuts top each table, guests are
encouraged to toss peanut shells on the floor, drinks are served in mason
jars, long neck beers are delivered in metal buckets filled with ice, and a
classic jukebox entertains guests with popular rock and country and western
music. The exterior of each restaurant features rough-sawed siding, a
wrap-around wood plank porch, a tin roof trimmed in neon and an oversized
"Roadhouse Grill" sign.
The Roadhouse Grill menu features aged USDA Choice steaks hand cut at each
restaurant, ribs, chicken and seafood, all of which are grilled to order. In
addition to grilled selections, the menu offers a variety of appetizers,
sandwiches, salads and desserts, including signature items such as Roadhouse
cheese wraps, hot-out-of-the-oven yeast rolls made from scratch each day and
a daily selection of homemade ice cream. Prices range from $2.99 to $6.29 for
lunch entrees and from $4.99 to $15.99 for dinner entrees. For the nine
months ended September 29, 1996, the average guest check, including beverage,
was approximately $8.75 for lunch and $13.25 for dinner.
Since opening its first Roadhouse Grill in March 1993, the Company has
grown rapidly, adding two additional restaurants in 1993, three restaurants
in 1994, 13 restaurants in 1995 and, to date, 11 restaurants in 1996.
Although the Company has recently opened restaurants in Georgia, South
Carolina and upstate New York, the Company-owned Roadhouse Grill restaurants
are located primarily in Florida. The Company's growth strategy is to
continue opening Company-owned restaurants primarily in the Southeastern and
Gulf Coast regions of the United States. The Company currently plans to open
two more restaurants in 1996 and approximately 15 restaurants in 1997.
3
<PAGE>
The Company currently has six franchised or licensed restaurants. Of
these, three are located in Malaysia and three are located in the United
States. The Company expects that its international franchisees will open at
least two additional Roadhouse Grill restaurants in Asia and the Pacific Rim
by the end of 1997. Although the Company has granted certain domestic
franchise/development rights, it intends to focus on expansion of
Company-owned restaurants in the United States.
The Company believes that Company-owned Roadhouse Grill restaurants have
achieved attractive unit level economics. The 15 Company-owned restaurants
that were open for the entire twelve-month period ended September 29, 1996
generated average restaurant revenues of approximately $2.8 million for such
period. The average cash investment, excluding real estate costs and
pre-opening expenses, required to open each of the 27 Roadhouse Grill
restaurants opened by the Company prior to September 29, 1996 was
approximately $1.3 million. The Company's current prototype restaurant is
approximately 6,800 square feet with seating for approximately 210 guests.
The Company expects that the average cash investment required to open such a
prototype restaurant, including pre-opening expenses but excluding real
estate costs, will be approximately $1.1 million or $1.4 million, depending
upon whether the Company converts an existing building or constructs a new
restaurant. Real estate costs will vary depending upon whether the Company
purchases or leases restaurant properties and depending upon market
conditions and location of the properties. The average real estate
acquisition cost for the 11 restaurant sites owned by the Company was
approximately $898,000. The average monthly occupancy cost in Fiscal 1996
(through September 29, 1996) for the 19 restaurant sites leased by the
Company was approximately $11,000 per site.
Roadhouse Grill restaurants are based upon a roadhouse-style concept
developed in 1991 by the Company's founder and Chief Executive Officer, John
David Toole III. During the last two years, the Company has assembled a
corporate management team averaging more than 11 years of experience in the
restaurant industry. The Company believes that personable, well-trained
employees are essential to the overall success of Roadhouse Grill restaurants
and, accordingly, selects employees based upon personality and initiative,
devotes significant resources to employee development and emphasizes training
and internal promotion.
The Company was incorporated in Florida in October 1992, and its principal
executive offices are located at 6600 N. Andrews Avenue, Suite 160, Fort
Lauderdale, Florida 33309. Its telephone number at that address is (954)
489-9699.
THE OFFERING
Common Stock offered by the Company ......2,500,000 shares
Common Stock to be outstanding
after the Offering .....................9,165,996 shares(1)
Use of proceeds .......................... To repay indebtedness, finance the
opening of additional restaurants and
for other general corporate purposes.
See "Use of Proceeds."
Proposed Nasdaq National Market symbol ... GRLL
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(1) Does not include (i) 216,666 shares reserved for issuance upon the exercise
of options outstanding or issuable under the Company's Amended and Restated
1994 Stock Option Plan (the "1994 Stock Option Plan"), of which 181,103
shares were subject to outstanding options at September 29, 1996 (at a
weighted-average exercise price of $9.60 per share); and (ii) 166,666 shares
reserved for issuance upon exercise of outstanding options held by the
Company's President and Chief Executive Officer (at an exercise price of
$7.50 per share). See "Management--Executive Compensation,"
"Management--1994 Stock Option Plan" and "Management--Employment Agreement."
4
<PAGE>
SUMMARY FINANCIAL AND RESTAURANT DATA
(IN THOUSANDS, EXCEPT PER SHARE AND RESTAURANT DATA)
<TABLE>
<CAPTION>
THIRTY NINE
FISCAL YEAR WEEKS ENDED
--------------------------------------- ------------------------------
OCTOBER 1, SEPTEMBER 29,
1993 1994 1995 1995 1996
-------- ------------ ----------- ----------- -------------
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STATEMENT OF OPERATIONS DATA:
Total revenue .................... $3,465 $ 11,389 $ 34,275 $ 23,465 $ 43,780
Operating income (loss) .......... (540) (1,948) (3,529) (1,641) (65)
Net loss(1) ...................... $ (713) $ (2,519) $ (3,490) $ (1,500) $ (569)
======== ============ =========== =========== =============
Pro forma net loss per
common share(2) ................ $ (0.65) $ (0.09)
=========== =============
Pro forma weighted average shares
outstanding(2) ................. 5,378,474 6,295,541
=========== =============
RESTAURANT DATA:
Restaurants open (end of period):
Company-owned(3) ................ 3 6 19 15 28
Franchised(4) ................... 1 2 3 2 6
-------- ------------ ----------- ----------- -------------
Total .......................... 4 8 22 17 34
Average sales per Company-owned
restaurant(5) .................. -- $3,048,581 $2,939,028 $2,253,613 $2,087,533
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 29, 1996
----------------------------
AS
ACTUAL ADJUSTED(6)
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<S> <C> <C>
BALANCE SHEET DATA:
Working capital ..................................................... $(12,759) $10,000
Total assets ........................................................ 59,438 71,914
Due to related parties and long-term debt, including current portion 17,774 7,674
Obligations under capital leases, including current portion ........ 4,359 4,359
Total shareholders' equity .......................................... 28,222 50,982
</TABLE>
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(1) In its first three years of operation, the Company incurred net operating
losses. Accordingly, the Company has made no provision for taxes payable,
and at December 31, 1995 had a net operating loss carryforward of
approximately $5.9 million. A full valuation reserve has been established
for all net deferred tax assets.
(2) Gives effect to the conversion of the Issued Preferred Stock into Common
Stock, which will occur concurrently with the closing of the Offering.
(3) Includes two restaurants in which the Company originally held a 50%
ownership interest. The Company acquired the remaining 50% ownership
interest in one of such restaurants in March 1995 and recently contracted
to acquire the remaining 50% ownership interest in the other restaurant.
See "Business--Restaurant Locations."
(4) In March 1995, the Company acquired two franchised restaurants, one of
which was closed for a three-month period in Fiscal 1995 for remodeling.
See "Business--Restaurant Locations."
(5) Includes Company-owned restaurants (including the two restaurants in
which the Company originally held a 50% ownership interest) that were in
operation for the full period.
(6) Adjusted to reflect the sale of the 2,500,000 shares of Common Stock
offered hereby at an assumed initial public offering price of $10.00 per
share and the application of the net proceeds therefrom. See "Use of
Proceeds" and "Capitalization."
THE COMPANY OPERATES ON A 52 OR 53 WEEK FISCAL YEAR ENDING ON THE SUNDAY
NEAREST TO DECEMBER 31. REFERENCES IN THIS PROSPECTUS TO "FISCAL 1993,"
"FISCAL 1994," "FISCAL 1995" AND "FISCAL 1996" REFER TO THE COMPANY'S FISCAL
YEARS ENDED OR ENDING, AS THE CASE MAY BE, ON JANUARY 2, 1994, JANUARY 1,
1995, DECEMBER 31, 1995 AND DECEMBER 29, 1996, RESPECTIVELY. EACH OF FISCAL
1993, FISCAL 1994 AND FISCAL 1995 WAS, AND FISCAL 1996 WILL BE, COMPRISED OF
52 WEEKS.
5
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS,
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN
EVALUATING AN INVESTMENT IN THE COMMON STOCK.
LIMITED OPERATING HISTORY; OPERATING LOSSES
The Company was incorporated in October 1992, and the first Company-owned
Roadhouse Grill restaurant was opened in March 1993. The Company incurred
losses of $713,000, $2.5 million, $3.5 million and $569,000 in Fiscal 1993,
Fiscal 1994, Fiscal 1995 and the thirty-nine week period ended September 29,
1996, respectively, and there can be no assurance that the Company's
operations will be profitable in the future.
RISKS OF RAPID EXPANSION; MANAGEMENT OF GROWTH
The Company's continued growth will depend on its ability to open and
operate new restaurants on a timely and profitable basis. The Company intends
to open two new restaurants during the balance of 1996 and approximately 15
restaurants during 1997. The ability of the Company to open and operate new
restaurants on a timely and profitable basis is subject to various
contingencies, some of which are beyond the Company's control. These
contingencies include, among others, the Company's ability to secure suitable
restaurant sites on a timely basis and on satisfactory terms, to obtain
required governmental permits and approvals, to complete construction on a
cost-effective and timely basis, to hire, train and retain skilled management
and other personnel, to obtain adequate financing or other capital resources
and to successfully integrate new restaurants into the Company's existing
operations. There can be no assurance that the Company will be able to
achieve its planned expansion or that its expansion will be profitable.
Profitability may be adversely affected by costs associated with developing a
significant number of new restaurants over a relatively short period of time.
New restaurants typically incur above-average operating costs during the
first several months of operation, which have a material adverse effect on
the profitability of such restaurants during such period. In addition,
although the Company intends to open new restaurants within its current
market area, it also intends to open new restaurants in geographic markets in
which the Company has limited or no previous operating experience. Failure of
the Company to achieve its planned expansion on a profitable basis would have
a material adverse effect on the Company's results of operations and
financial condition.
The Company is subject to a variety of business risks associated with
rapidly growing companies, including the risk that existing management,
information systems and financial controls will be inadequate to support the
Company's planned expansion. There can be no assurance that the Company will
be able to respond on a timely basis to all of the changing demands that its
planned expansion will impose on management and such systems and controls. In
addition, several members of the Company's management team have recently
joined the Company and have no experience operating a large restaurant chain.
The failure to continue to evaluate and improve management, information
systems and financial controls or unexpected difficulties encountered during
expansion could have a material adverse effect on the Company's results of
operations and financial condition.
FUTURE CAPITAL NEEDS
The Company currently intends to finance new restaurants with cash from
operations and the net proceeds from the Offering. The Company intends to
open two new restaurants during the balance of 1996 and approximately 15
restaurants in 1997. The Company expects that the average cash investment
required to open its prototype restaurants, including pre-opening expenses
but excluding real estate costs, will be approximately $1.1 million or $1.4
million, depending upon whether the Company converts an existing building or
constructs a new restaurant. Real estate costs will vary depending upon
whether the Company purchases or leases restaurant properties and depending
upon market conditions and location of the properties. The average real
estate acquisition cost for the 11 restaurant sites owned
6
<PAGE>
by the Company was approximately $898,000. The average monthly occupancy cost
in Fiscal 1996 (through September 29, 1996) for the 19 restaurant sites
leased by the Company was approximately $11,000 per site. There can be no
assurance that the actual cost of opening the Company's prototype restaurants
will not be significantly greater than that expected by the Company.
Historically, the Company has funded its working capital needs through sales
of Common and Preferred Stock and borrowings from related parties. The
Company believes that the net proceeds of the Offering together with cash
from operations, will be sufficient to fund its working capital needs and
anticipated expansion for the next eight months. In order to complete its
anticipated expansion through 1997, the Company will be required to incur
short-term or long-term indebtedness or issue, in public or private
transactions, equity or debt securities. However, there can be no assurance
that such debt or equity financing will be available on terms acceptable to
the Company, if at all. The Company currently does not have a credit facility
with a bank or other financial institution. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."
GEOGRAPHIC CONCENTRATION; SMALL RESTAURANT BASE
Of the 30 restaurants currently owned and operated by the Company, 24 are
located in Florida. Consequently, the Company's results of operations may be
materially adversely affected by downturns in Florida's economy or by
hurricanes or other adverse weather conditions in Florida. Also, adverse
publicity in Florida relating to Roadhouse Grill restaurants could have a
more pronounced effect on the Company's results of operations than might be
the case if its restaurants were broadly dispersed geographically. Further,
there can be no assurance that continued expansion in the Company's current
market areas will not adversely affect the financial performance of other
restaurants already operated by the Company in those areas. In addition, the
Company has recently opened new restaurants in Georgia, South Carolina and
upstate New York. However, the Company has not previously managed restaurants
that are geographically dispersed, and there can be no assurance that the
Company will be able to operate restaurants profitably outside Florida.
The operating results achieved to date by the Company's relatively small
restaurant base may not be indicative of the future operating results of a
larger number of restaurants. In addition, due to the Company's small
restaurant base, poor operating results at any one restaurant could adversely
affect the results of operations of the entire Company.
SEASONALITY AND FLUCTUATIONS IN QUARTERLY RESULTS
The Company's sales and earnings fluctuate seasonally, and the Company's
highest sales and earnings historically have occurred in its first and fourth
fiscal quarters. The Company's restaurants are located primarily in Florida,
and the Company believes that the effects of seasonality are more pronounced
in Florida than in other states. In addition, quarterly results are
significantly affected by the timing of new restaurant openings, as new
restaurants incur above-average operating costs during the first several
months of operation. Accordingly, to the extent that restaurant openings are
concentrated in any fiscal period, results of operations for such fiscal
period and subsequent fiscal periods may be materially adversely affected.
Due to the seasonality of the Company's business and the impact of new
restaurant openings, results of operations may fluctuate significantly from
quarter to quarter, and the Company's results of operations for any
particular quarter are not necessarily indicative of the results that may be
achieved for the full fiscal year. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Seasonality and Quarterly
Results."
COMPETITION FOR CUSTOMERS, SITES AND LABOR
The restaurant industry is highly competitive. The Company competes with a
broad range of restaurants, including national and regional casual dining
chains as well as locally-owned restaurants, some of which operate with
concepts similar to that of the Company. Many of the Company's competitors
are well established and have substantially greater market presence and
financial and other resources than the Company. The entrance of new
competitors into the Company's market areas or the
7
<PAGE>
expansion of operations by existing competitors could have a material adverse
effect on the Company's results of operations and financial condition. In
addition, the Company competes with other restaurant companies and retailers
for sites, labor and, in many cases, customers. The Company believes that the
key competitive factors in the restaurant industry are quality of food and
service, price, location and concept. To the extent that one or more of its
competitors becomes more successful in respect of any key competitive factor,
the Company's business could be adversely affected. See "Business--
Competition; Restaurant Industry."
CERTAIN RISKS OF THE RESTAURANT INDUSTRY; CHANGES IN DEMOGRAPHIC AND ECONOMIC
CONDITIONS; AVAILABILITY OF QUALIFIED EMPLOYEES
The restaurant industry is affected by changes in consumer tastes as well
as national, regional and local economic conditions, demographic trends,
traffic patterns, and the type, number and location of competing restaurants.
Dependence on fresh meats and produce also subjects restaurant companies to
the risk that shortages or interruptions in supply could adversely affect the
availability, quality or cost of ingredients. In addition, factors such as
inflation, increased food, labor and employee benefit costs and the
availability of qualified management and hourly employees also may adversely
affect the restaurant industry generally and the Company's restaurants in
particular. The success and future profitability of the Company will depend
in part on its ability to identify and respond to changing conditions within
the restaurant industry.
ADVERSE CHANGES IN FOOD, LABOR AND OTHER COSTS; SUPPLY RISKS
The profitability of the Company is significantly dependent on its ability
to anticipate and react to changes in food, labor, employee benefits and
similar costs over which the Company has little or no control. The Company is
dependent on frequent deliveries of fresh beef and produce, the cost of which
represented approximately 16% of total revenues for Fiscal 1995. Shortages or
interruptions in the supply of fresh beef and produce, which may be caused by
adverse weather or other conditions, could have a material adverse effect on
the Company's results of operations and financial condition. In addition, the
Company purchased approximately 87% of its food and other products from two
distributors during Fiscal 1995. On August 5, 1996, the Company began doing
business with only one of these two principal distributors and anticipates
that approximately 80% of its food and other products will be purchased from
that distributor in the future. While the Company believes that alternative
sources of supply are readily available, the loss of this distributor could
have a material adverse effect on the Company's results of operations during
the period in which alternative supply arrangements are established.
GOVERNMENT REGULATION CONCERNING RESTAURANT OPERATIONS, EMPLOYEES AND
ALCOHOLIC BEVERAGES
The Company is subject to numerous federal, state and local government
laws and regulations, including those relating to the sale of food and
alcoholic beverages and the development, construction and operation of the
Company's restaurants. The failure to comply with any such laws and
regulations, including the failure to obtain or maintain any liquor licenses,
could have a material adverse effect on the Company's results of operations
and financial condition. The Company is also subject to laws governing its
relationship with employees, including minimum wage requirements, laws and
regulations relating to overtime and working and safety conditions and
citizenship requirements. Material increases in the minimum hourly wage,
unemployment tax rates, sales taxes or the cost of compliance with any
applicable law or regulation could materially and adversely affect the
Company. The Company is also subject in certain states to "dram-shop"
statutes which generally provide a person injured by an intoxicated person
the right to recover damages from an establishment that wrongfully served
alcoholic beverages to the intoxicated person. Any liability of the Company
under such statutes could have a material adverse effect on the Company's
results of operations and financial condition. In connection with its
franchise operations, the Company is required to comply with Federal Trade
Commission and state laws and regulations that govern the offer, sale and
termination of franchises and the refusal to renew franchises. See
"Business--Government Regulation."
8
<PAGE>
DEPENDENCE ON SENIOR MANAGEMENT
The Company's success will depend largely on the abilities of its senior
management, including John D. Toole III, President and Chief Executive
Officer of the Company. The loss of Mr. Toole's services or the services of
other members of senior management could have a material adverse effect on
the Company's results of operations and financial condition. As the Company
expands its operations, the success of its business will depend increasingly
upon the Company's ability to attract and retain skilled restaurant
management personnel. There can be no assurance that the Company will be able
to attract and retain sufficient personnel, and the inability to do so would
have a material adverse effect on the Company's results of operations and
financial condition. See "Management" and "Business--Restaurant Operations
and Management."
CONTROL BY PRINCIPAL SHAREHOLDER
Upon completion of the Offering, Berjaya Group (Cayman) Limited
("Berjaya") will beneficially own, directly or indirectly, approximately
57.2% of the Company's outstanding Common Stock. As a result, Berjaya will be
able to control the vote on all matters requiring approval by the
shareholders of the Company, to elect the entire Board of Directors and,
effectively, to control the Company. In addition, Berjaya and the other
existing shareholders of the Company are entitled to certain rights of first
refusal with respect to the issuance of equity securities of the Company,
other than shares issued in connection with an underwritten public offering.
See "Principal Shareholders" and "Description of Capital Stock."
ABSENCE OF PUBLIC MARKET; PRICE VOLATILITY
Prior to the Offering there has been no public market for the Common
Stock, and there can be no assurance that an active public market will
develop or continue after the Offering. The initial public offering price of
the Common Stock will be determined through negotiations between the Company
and the Representatives of the Underwriters, and there can be no assurance
that the market price of the Common Stock after the Offering will not decline
below the initial public offering price. See "Underwriting" for a discussion
of the factors to be considered in determining the initial public offering
price.
The market price of the Common Stock could fluctuate significantly in
response to variations in quarterly operating results and other factors,
including the performance of other restaurant companies. In addition, the
securities markets have experienced significant price and volume fluctuations
from time to time in recent years that often have been unrelated or
disproportionate to the operating performance of particular companies. These
broad fluctuations may adversely affect the market price of the Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have outstanding
9,165,996 shares of Common Stock, of which the 2,500,000 shares sold pursuant
to the Offering will be fully tradeable without restriction or further
registration under the Securities Act of 1933, as amended (the "Securities
Act"). The remaining shares will be restricted securities as defined by Rule
144 under the Securities Act. Of such shares constituting restricted
securities, 4,161,069 shares will be eligible for sale, subject to certain
restrictions, beginning 90 days after the date of this Prospectus and
2,504,927 shares will become eligible for sale, subject to certain
restrictions, at various times between May 1997 and May 1998. Sales of
substantial amounts of Common Stock in the public market, or the perception
that such sales may occur, could adversely affect the prevailing market price
of the Common Stock or the ability of the Company to raise capital through a
public offering of its equity securities. In addition, certain shareholders
have the right to require the Company to register up to 6,524,330 shares of
Common Stock under the Securities Act. See "Shares Eligible for Future Sale."
9
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,500,000 shares of
Common Stock offered hereby at an assumed initial public offering price of
$10.00 per share are estimated to be approximately $22,760,000 ($26,247,500
if the Underwriters' over-allotment option is exercised in full), after
deducting the underwriting discount and estimated expenses of the Offering.
The Company intends to use the net proceeds as follows:
<TABLE>
<CAPTION>
USE AMOUNT(1)
- --- ---------
<S> <C>
Repayment of outstanding indebtedness (principal and accrued inter-
est):
Notes payable to a former Chairman of the Board of the Company ..... $ 4,192,000
Notes payable to the principal shareholder of the Company .......... 5,083,000
Note payable to the owner of a 50% interest in Kendall
Roadhouse Grill, L.C. ............................................. 600,000
Note payable to SunTrust Bank, Miami, N.A. .......................... 506,000
------------
Total indebtedness to be repaid ................................... 10,381,000
Purchase price for remaining interest in Kendall Roadhouse Grill, L.C. 2,300,000
Purchase price for 50% interest in the Boca Raton, Florida Roadhouse
Grill restaurant .................................................... 454,000
Opening new restaurants(2) ............................................ 9,625,000
------------
Total uses ...................................................... $22,760,000
============
</TABLE>
- ------------
(1) Approximate amount as of November 15, 1996.
(2) Although this amount will be used primarily for opening new restaurants,
some portion may be used for other general corporate purposes at the
discretion of the Board of Directors.
The indebtedness to be repaid with a portion of the net proceeds of the
Offering was incurred for the purpose of opening or acquiring Roadhouse Grill
restaurants and for other general corporate purposes. For a discussion of the
terms of the indebtedness being repaid with the net proceeds of the Offering,
see "Management's Discussion and Analysis of Financial Condition and Results
of Operations--Liquidity and Capital Resources" and "Management--Compensation
Committee Interlocks and Insider Participation."
If the Company does not consummate either or both of the purchases of the
remaining 50% interest in Kendall Roadhouse Grill, L.C. and the 50% interest
in the Boca Raton, Florida Roadhouse Grill restaurant, the Company intends to
use the net proceeds of the Offering that would have been applied to pay such
purchase price or prices primarily for the opening of new restaurants,
although a portion of such net proceeds may be used for other general
corporate purposes at the discretion of the Board of Directors.
Pending the use of the net proceeds as described above, the Company plans
to invest such net proceeds in short-term, investment-grade, interest-bearing
securities.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its outstanding
capital stock. The Company intends to retain any earnings to finance
operations and expansion and does not intend to pay cash dividends on the
Common Stock in the foreseeable future. The payment of cash dividends, if
any, in the future will be at the discretion of the Board of Directors and
will depend upon such factors as earnings, capital requirements, the
Company's financial condition and other factors deemed relevant by the Board
of Directors. Future loan agreements may restrict or prohibit the payment of
dividends.
10
<PAGE>
CAPITALIZATION
The following table sets forth (i) the short-term obligations and pro
forma capitalization of the Company at September 29, 1996, giving effect to
the conversion of the Issued Preferred Stock into Common Stock, which
conversion will occur concurrently with the closing of the Offering; and (ii)
such short-term obligations and pro forma capitalization as adjusted to
reflect the sale of the 2,500,000 shares of Common Stock offered hereby at an
assumed initial public offering price of $10.00 per share and the application
of the estimated net proceeds therefrom. See "Use of Proceeds." This table
should be read in conjunction with the Financial Statements and the Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 29, 1996
------------------------------
PRO FORMA
PRO FORMA AS ADJUSTED
------------- --------------
<S> <C> <C>
Current portion of long term debt, capital lease obligations
and due to related parties ............................................. $11,196,522 $ 1,096,522
============= ==============
Long-term debt (excluding current portion) ............................... $ 6,860,225 $ 6,860,225
Obligations under capital leases (excluding current portion) ............ 4,075,869 4,075,869
------------- --------------
Total long-term debt and obligations under capital leases
(excluding current portion) (1) ....................................... 10,936,094 10,936,094
Shareholders' equity:
Preferred Stock, $0.01 par value, 10,000,000 shares
authorized, no shares issued and outstanding,
pro forma and pro forma as adjusted ................................... -- --
Common Stock, $0.03 par value, 30,000,000 shares
authorized; 6,666,002 shares issued and outstanding, pro forma;
9,166,002 shares issues and outstanding, pro forma as adjusted (2) .... 199,979 274,979
Additional paid-in capital .............................................. 35,313,407 57,998,407
Retained earnings (deficit) ............................................. (7,291,669) (7,291,669)
------------- --------------
Total shareholders' equity ............................................ 28,221,717 50,981,717
------------- --------------
Total capitalization .................................................. $39,157,811 $61,917,811
============= ==============
</TABLE>
- ------------
(1) See Notes 3, 7 and 8 of Notes to Financial Statements.
(2) Does not include (i) 216,666 shares reserved for issuance upon the
exercise of options outstanding or issuable under the 1994 Stock Option
Plan, of which 181,103 shares were subject to outstanding options at
September 29, 1996 (at a weighted-average exercise price of $9.60 per
share); and (ii) 166,666 shares reserved for issuance upon exercise of
outstanding options held by the Company's President and Chief Executive
Officer (at an exercise price of $7.50 per share). See
"Management--Executive Compensation," "Management--1994 Stock Option Plan"
and "Management--Employment Agreement."
11
<PAGE>
DILUTION
Pro forma net tangible book value per share is determined by dividing the
tangible net worth of the Company (tangible assets less liabilities) by the
pro forma aggregate number of outstanding shares of Common Stock (which
includes as outstanding the 1,918,612 shares of Common Stock issuable upon
the conversion of the Issued Preferred Stock, which conversion will occur
concurrently with the closing of the Offering). The net tangible book value
of the Company as of September 29, 1996, was approximately $27,365,511, or
$4.11 per share, pro forma. After giving effect to the sale of the 2,500,000
shares of Common Stock offered hereby at an assumed initial public offering
price of $10.00 per share and the application of the net proceeds therefrom
after deducting the underwriting discount and estimated expenses of the
Offering, the net tangible book value of the Company as of September 29, 1996
would have been approximately $50,125,511, or $5.47 per share, pro forma.
This represents an immediate increase in pro forma net tangible book value
per share of $1.36 to existing shareholders and an immediate dilution of
$4.53 per share to new investors. The following table sets forth this per
share dilution.
<TABLE>
<CAPTION>
<S> <C> <C>
ASSUMED INITIAL PUBLIC OFFERING PRICE PER SHARE ..................... $10.00
Pro forma net tangible book value per share as of September 29, 1996 $4.11
Increase per share attributable to new investors .................. 1.36
-------
Pro forma net tangible book value per share after the Offering ..... 5.47
--------
Dilution per share to new investors ................................. $ 4.53
========
</TABLE>
The following table sets forth, as of September 29, 1996, the difference
between existing shareholders and new investors with respect to the number of
shares of Common Stock purchased from the Company (assuming for purposes of
such calculation that all Issued Preferred Stock has been converted into
Common Stock), the total consideration paid to the Company and the average
price per share paid by (i) the existing shareholders of the Company and (ii)
new investors (at an assumed initial public offering price of $10.00 per
share).
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------------- -------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ---------- -------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders 6,666,002 72.7% $35,244,107 58.5% $ 5.29
New investors ......... 2,500,000 27.3 25,000,000 41.5 10.00
----------- ---------- -------------- ----------
Total ................. 9,166,002 100.0% $60,244,107 100.0%
=========== ========== ============== ==========
</TABLE>
The tables set forth above do not give effect to the exercise of (i)
outstanding options to purchase 181,103 shares of Common Stock (at a
weighted-average exercise price of $9.60 per share) under the Company's 1994
Stock Option Plan; (ii) outstanding options to purchase 166,666 shares of Common
Stock (at an exercise price of $7.50 per share) granted to the Company's
President and Chief Executive Officer; and (iii) options to purchase up to an
additional 35,564 shares of Common Stock available for issuance under the
Company's 1994 Stock Option Plan. To the extent that these options become
exercisable and are exercised, there will be further dilution to new investors.
See "Management--Executive Compensation," "Management--1994 Stock Option Plan"
and "Management--Employment Agreement."
12
<PAGE>
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The selected financial data presented below for and as of the end of
Fiscal 1993, Fiscal 1994 and Fiscal 1995 have been derived from the Financial
Statements of the Company, which Financial Statements have been audited by
Stark & Bennett, P.A., Coopers & Lybrand L.L.P. and KPMG Peat Marwick LLP,
respectively. The Financial Statements for each of such fiscal years, and the
respective reports thereon, are included elsewhere in this Prospectus. The
selected financial data for and as of the end of the thirty-nine week periods
ended October 1, 1995 and September 29, 1996 have been derived from
unaudited Financial Statements of the Company which, in the opinion of the
Company's management, include all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of the information
set forth therein. The operating results for the thirty-nine week period
ended September 29, 1996 are not necessarily indicative of the operating
results that may be expected for the full fiscal year. The selected financial
data should be read in conjunction with the Financial Statements and Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THIRTY-NINE
FISCAL YEARS WEEKS ENDED
---------------------------------------- -----------------------------
OCTOBER 1, SEPTEMBER 29,
1993 1994 1995 1995 1996
--------- ----------- ---------- -------- --------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues ................................... $3,465 $11,389 $ 34,275 $23,465 $ 43,780
Cost of restaurant sales:
Food and beverage ............................... 1,471 4,085 12,084 8,393 14,984
Labor ........................................... 988 4,606 12,019 8,153 13,629
Occupancy and other ............................. 1,219 2,318 8,710 5,657 9,572
--------- ----------- ---------- -------- ------------
Total cost of restaurant sales ................. 3,678 11,009 32,813 22,203 38,185
Depreciation and amortization .................... 47 415 1,663 981 2,177
General and administrative ....................... 280 1,913 3,328 1,922 3,483
--------- ----------- ---------- -------- ------------
Operating income (loss) .......................... (540) (1,948) (3,529) (1,641) (65)
Other income (expense):
Net interest (expense) .......................... (40) (180) (404) (206) (881)
Other income, net ............................... 3 20 159 122 211
Equity in income (loss) of affiliate(1) ........ (136) (411) 284 225 166
--------- ----------- ---------- -------- ------------
Total other income (expense) ................... (173) (571) 39 141 (504)
--------- ----------- ---------- -------- ------------
Net loss ......................................... $ (713) $(2,519) $ (3,490) $(1,500) $ (569)
========= =========== ========== ======== =============
Pro forma net loss per common share(2) ........... $ (0.65) $ (.09)
========== =============
Pro forma weighted average shares outstanding(2) 5,378,474 6,295,541
========== =============
</TABLE>
<TABLE>
<CAPTION>
JANUARY 2, JANUARY 1, DECEMBER 31, SEPTEMBER 29,
1994 1995 1995 1996
------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital ............................................ $(2,040) $ 7,409 $(7,560) $(12,759)
Total assets ............................................... 1,685 24,843 42,201 59,438
Long-term debt and due to related parties,
including current portion ................................ 1,591 4,858 13,324 17,774
Obligations under capital leases, including current portion -- 1,272 4,484 4,359
Preferred stock ............................................ -- 59 59 58
Total shareholders' equity (deficit) ....................... (613) 17,639 20,261 28,222
</TABLE>
- ------------
(1) See Note 1 of Notes to Financial Statements.
(2) Gives effect to the conversion of the Issued Preferred Stock into Common
Stock, which will occur concurrently with the closing of the Offering.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations should be read in conjunction with the Company's Financial
Statements and Notes thereto appearing elsewhere in this Prospectus.
INTRODUCTION
The Company opened its first restaurant in March 1993 in Pembroke Pines,
Florida. As of the date of this Prospectus, there were 36 Roadhouse Grill
restaurants in operation, consisting of 30 Company-owned and six franchised
or licensed restaurants. Of the Company-owned restaurants, 24 are located in
Florida and six are located in Georgia, South Carolina and upstate New York.
The Company plans to open an additional two restaurants during the remainder
of 1996 and approximately 15 restaurants in 1997. See "Risk Factors--Risks of
Rapid Expansion; Management of Growth."
The Company's revenues are derived primarily from the sale of food and
beverages. Sales of alcoholic beverages accounted for approximately 12.5%,
13.7%, 13.9% and 12.4% of total revenues in Fiscal 1993, Fiscal 1994, Fiscal
1995 and the thirty-nine week period ended September 29, 1996, respectively.
Franchise and management fees have accounted for less than 1.0% of the
Company's total revenues for all periods since its inception.
The Company's new restaurants can be expected to incur above-average costs
during the first few months of operation. Pre-opening costs, such as employee
recruiting and training costs and other initial expenses incurred in
connection with the opening of a new restaurant, are amortized over a
twelve-month period commencing the first full month after the restaurant
opens. During Fiscal 1996 (through September 29, 1996), pre-opening expenses
incurred in connection with the opening of new Company-owned Roadhouse Grill
restaurants averaged approximately $155,000.
In its first three fiscal years of operation, Fiscal 1993, Fiscal 1994 and
Fiscal 1995, the Company incurred net losses of $713,000, $2.5 million and
$3.5 million, respectively. Accordingly, the Company has made no provision
for taxes payable for such fiscal years. At December 31, 1995, the Company
had a net operating loss carryforward of approximately $5.9 million.
The average cash investment, excluding real estate costs and pre-opening
expenses, required to open each of the 27 Roadhouse Grill restaurants opened
by the Company prior to September 29, 1996 was approximately $1.3 million.
The average real estate acquisition cost for the 11 restaurant sites owned by
the Company was approximately $898,000. The Company has obtained financing in
connection with the acquisition of its owned properties, which financing
generally has required a down payment of 10% of the purchase price. The
average monthly occupancy cost in Fiscal 1996 (through September 29, 1996)
for the 19 restaurant sites leased by the Company was approximately $11,000
per site. The Company expects that the average cash investment required to
open its prototype restaurants, including pre-opening expenses but excluding
real estate costs, will be approximately $1.1 million or $1.4 million,
depending upon whether the Company converts an existing building or
constructs a new restaurant.
In August 1996, the Company contracted to purchase from an unaffiliated
third party the remaining 50% interest in Kendall Roadhouse Grill, L.C. The
contract provides for the closing of such purchase within 15 days after the
closing of the Offering or as soon thereafter as the conditions to closing
have been satisfied; however, there can be no assurance that such purchase
will be consummated. If the purchase is consummated, the Company will own
100% of the Kendall, Florida Roadhouse Grill restaurant. In addition, the
Company is currently negotiating the purchase of a 50% interest in the Boca
Raton, Florida Roadhouse Grill restaurant from an unaffiliated third party
and expects to use a portion of the net proceeds from the Offering to pay the
purchase price therefor; however, there can be no assurance that such
purchase will be consummated. The Company has managed the Boca Raton
14
<PAGE>
restaurant under a management agreement since December 1994 and expects to
continue to do so in the foreseeable future. See "Use of Proceeds."
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain selected
statement of operations data expressed as a percentage of total revenues.
<TABLE>
<CAPTION>
THIRTY NINE
FISCAL YEAR WEEKS ENDED
---------------------------------- -----------------------------
OCTOBER 1, SEPTEMBER 29,
1993 1994 1995 1995 1996
---------- ---------- ---------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Total revenues ........................... 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Cost of Company restaurant sales:
Food and beverage ....................... 42.4 35.9 35.3 35.8 34.2
Labor and benefits ...................... 28.5 40.4 35.1 34.7 31.1
Occupancy and other ..................... 35.2 20.4 25.4 24.1 21.9
------- ------- ------- ------- ----------
Total cost of Company restaurant sales 106.1 96.7 95.8 94.6 87.2
Depreciation and amortization ............ 1.4 3.6 4.9 4.2 5.0
General and administrative ............... 8.1 16.8 9.7 8.2 8.0
------- ------- ------- ------- ----------
Total operating expenses ............... 115.6 117.1 110.4 107.0 100.2
------- ------- ------- ------- ----------
Operating income (loss) .................. (15.6) (17.1) (10.4) (7.0) (0.2)
Total other income (expense) ............. (5.0) (5.0) 0.1 0.6 (1.2)
------- ------- ------- ------- ----------
Net loss ................................. (20.6)% (22.1)% (10.3)% (6.4)% (1.4)%
======= ======= ======= ======= ==========
</TABLE>
THIRTY-NINE WEEK PERIOD ENDED SEPTEMBER 29, 1996 COMPARED TO THIRTY-NINE
WEEK PERIOD ENDED OCTOBER 1, 1995
RESTAURANTS OPEN. At the beginning of Fiscal 1996, there were 19
Company-owned restaurants in operation (including the Kendall, Florida
Roadhouse Grill restaurant which was owned by a limited liability company in
which the Company held a 50% ownership interest). At September 29, 1996,
there were 28 Company-owned restaurants in operation, compared to 15
Company-owned restaurants at October 1, 1995, a 86.7% year-over-year increase
in the number of Company-owned restaurants.
TOTAL REVENUES. Total revenues increased $20.3 million, or 86.6%, from
$23.5 million for the thirty-nine week period ended October 1, 1995 to $43.8
million for the thirty-nine week period ended September 29, 1996. This
increase was primarily attributable to the opening of nine additional
restaurants during the thirty-nine week period ended September 29, 1996 and
the inclusion of all 13 Company-owned restaurants added in Fiscal 1995 for
the entire thirty-nine week period ended September 29, 1996, and was
partially offset by modest decreases in sales at other restaurants open
during such period.
FOOD AND BEVERAGE. Food and beverage costs increased $6.6 million, or
78.5%, from $8.4 million for the thirty-nine week period ended October 1,
1995 to $15.0 million for the thirty-nine week period ended September 29,
1996. However, food and beverage costs decreased as a percentage of total
revenues from 35.8% for the thirty-nine week period ended October 1, 1995 to
34.2% for the comparable period in Fiscal 1996. This decrease reflects (i)
the opening of new restaurants over a larger base of Company-owned
restaurants in operation during the thirty-nine week period ended September
29, 1996 compared to the thirty-nine week period ended October 1, 1995 and
(ii) a continuing decline in food costs resulting from increased efficiencies
associated with the implementation in Fiscal 1995 of detailed recipes,
training manuals, inventory controls and other management tools.
15
<PAGE>
LABOR AND BENEFITS. Labor and benefit costs increased $5.4 million, or
67.2%, from $8.2 million for the thirty-nine week period ended October 1,
1995 to $13.6 million for the thirty-nine week period ended September 29,
1996. However, labor and benefit costs as a percentage of total revenues
decreased from 34.7% for the thirty-nine week period ended October 1, 1995 to
31.1% for the comparable period in Fiscal 1996. The decrease was primarily
attributable to spreading the costs associated with training managers for new
restaurants over a larger base of Company-owned restaurants in operation
during the thirty-nine week period ended September 29, 1996 compared to the
thirty-nine week period ended October 1, 1995.
OCCUPANCY AND OTHER. Occupancy and other costs increased $3.9 million, or
69.2%, from $5.7 million for the thirty-nine week period ended October 1,
1995 to $9.6 million for the thirty-nine week period ended September 29,
1996. However, occupancy and other costs decreased as a percentage of total
revenues from 24.1% for the thirty-nine week period ended October 1, 1995 to
21.9% for the comparable period in Fiscal 1996. The decrease in this
percentage resulted primarily from a significant increase in the percentage
of restaurants owned, as opposed to leased, by the Company during the
thirty-nine week period ended September 29, 1996, as compared to the
comparable period in Fiscal 1995.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased $1.2 million, or 121.9%, from $981,000 for the thirty-nine week
period ended October 1, 1995 to $2.2 million for the thirty-nine week period
ended September 29, 1996. Depreciation and amortization as a percentage of
total revenues increased from 4.2% for the thirty-nine week period ended
October 1, 1995 to 5.0% for the comparable period in Fiscal 1996. The
increase in this percentage resulted primarily from a significant increase in
the percentage of restaurants owned by the Company as opposed to leased
during the thirty-nine week period ended September 29, 1996, as compared to
the comparable period in Fiscal 1995.
GENERAL AND ADMINISTRATIVE. General and administrative expense increased
$1.6 million, or 81.2%, from $1.9 million for the thirty-nine week period
ended October 1, 1995 to $3.5 million for the thirty-nine week period ended
September 29, 1996. General and administrative expense as a percentage of
total revenues decreased slightly from 8.2% for the thirty-nine week period
ended October 1, 1995 to 8.0% for the comparable period in Fiscal 1996.
Economies of scale resulting from a greater number of Company-owned
restaurants in operation during the thirty-nine week period ended September
29, 1996, as compared to the comparable period in Fiscal 1995, were offset by
increased expenses in the latter half of Fiscal 1995 associated with
increasing the management and support staff infrastructure in anticipation of
future expansion.
TOTAL OTHER INCOME. Total other income increased from $141,000 for the
thirty-nine week period ended October 1, 1995 to $504,000 for the thirty-nine
week period ended September 29, 1996. This increase resulted primarily from
income earned by the Kendall, Florida Roadhouse Grill restaurant, which was
accounted for under the equity method of accounting and was partially offset
by interest expense incurred in connection with the purchase of a total of
ten restaurant sites during Fiscal 1995 and the thirty-nine week period ended
September 29, 1996. See Note 5 to Financial Statements.
FISCAL 1995 COMPARED TO FISCAL 1994
RESTAURANTS OPEN. At the beginning of Fiscal 1994, there were three
Company-owned restaurants in operation (including the North Miami, Florida
Roadhouse Grill restaurant which was owned by a limited liability company in
which the Company held a 50% ownership interest). During Fiscal 1994, the
Company added three restaurants (including the Kendall, Florida Roadhouse
Grill restaurant which was owned by a limited liability company in which the
Company held a 50% ownership interest), and during Fiscal 1995 the Company
added thirteen restaurants. As of the end of Fiscal 1995, the Company had 19
Company-owned restaurants in operation.
TOTAL REVENUES. Total revenues increased $22.9 million, or 201.0%, from
$11.4 million in Fiscal 1994 to $34.3 million in Fiscal 1995. This increase
was attributable to the addition of 13 Company-owned restaurants during
Fiscal 1995 and the inclusion of a full year of operations for the two 100%
16
<PAGE>
Company-owned restaurants opened in Fiscal 1994 and was partially offset by
modest decreases in sales at certain restaurants opened in Fiscal 1993 and
Fiscal 1994.
FOOD AND BEVERAGE. Food and beverage costs increased $8.0 million, or
195.8%, from $4.1 million in Fiscal 1994 to $12.1 million in Fiscal 1995, but
decreased as a percentage of total revenues from 35.9% in Fiscal 1994 to
35.3% in Fiscal 1995. This decrease reflects a decline in food costs
resulting from increased efficiencies associated with the implementation in
Fiscal 1995 of detailed recipes, training manuals, inventory controls and
other management tools.
LABOR AND BENEFITS. Labor and benefits costs increased $7.4 million, or
160.9%, from $4.6 million in Fiscal 1994 to $12.0 million in Fiscal 1995, but
decreased as a percentage of total revenues from 40.4% in Fiscal 1994 to
35.1% in Fiscal 1995. This decline was primarily attributable to decreased
training and recruiting costs resulting from lower restaurant employee
turnover in Fiscal 1995 compared to Fiscal 1994.
OCCUPANCY AND OTHER. Occupancy and other costs increased by $6.4 million,
or 275.8%, from $2.3 million in Fiscal 1994 to $8.7 million in Fiscal 1995.
As a percentage of total revenues, occupancy and other costs increased from
20.4% in Fiscal 1994 to 25.4% in Fiscal 1995. This increase resulted
primarily from expanded advertising and promotional activities of the Company
and greater pre-opening expenses in Fiscal 1995 compared to Fiscal 1994.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased by $1.3 million, or 300.7%, from $415,000 in Fiscal 1994 to $1.7
million in Fiscal 1995. As a percentage of total revenues, depreciation and
amortization expense increased from 3.6% in Fiscal 1994 to 4.9% in Fiscal
1995. This percentage increase resulted from higher depreciation expense
associated with the purchase of five restaurant sites in Fiscal 1995 and from
the amortization of goodwill associated with three restaurants acquired from
franchisees in Fiscal 1995. All of the Company-owned restaurants opened prior
to Fiscal 1995 are leased.
GENERAL AND ADMINISTRATIVE. General and administrative expense increased
by $1.4 million, or 73.9%, from $1.9 million in Fiscal 1994 to $3.3 million
in Fiscal 1995. This increase was a result of increasing the management and
support staff infrastructure in anticipation of future expansion. As a
percentage of total revenues, general and administrative expense declined
from 16.8% in Fiscal 1994 to 9.7% in Fiscal 1995. The decrease in this
percentage was primarily attributable to economies of scale resulting from a
greater number of Company-owned restaurants in operation during Fiscal 1995.
TOTAL OTHER INCOME (EXPENSE). Total other income (expense) increased by
$610,000 from a $571,000 expense in Fiscal 1994 to income of $39,000 in
Fiscal 1995. This increase in total other income (expense) was primarily
attributable to the Company's share of income earned by the Kendall, Florida
Roadhouse Grill restaurant, which was accounted for under the equity method
of accounting, and income from game rooms in new Company-owned restaurants,
which income was partially offset by increased interest expense incurred in
connection with the purchase of five restaurant sites in Fiscal 1995.
FISCAL 1994 COMPARED TO FISCAL 1993
RESTAURANTS OPEN. At the beginning of Fiscal 1993, there were no
Company-owned restaurants in operation. The Company added three restaurants
in each of Fiscal 1993 and Fiscal 1994 (including the North Miami, Florida
Roadhouse Grill restaurant added in Fiscal 1993, which was owned by a limited
liability company in which the Company held a 50% ownership interest, and the
Kendall, Florida Roadhouse Grill restaurant added in Fiscal 1994, which was
owned by a separate limited liability company in which the Company held a 50%
ownership interest). As of the end of Fiscal 1994, the Company had six
Company-owned restaurants in operation.
TOTAL REVENUES. Total revenues increased $7.9 million, or 228.6%, from
$3.5 million in Fiscal 1993 to $11.4 million in Fiscal 1994. This increase
was attributable to the opening of two 100% Company-owned restaurants during
Fiscal 1994 and the inclusion of a full year of operations for the two 100%
Company-owned restaurants opened in Fiscal 1993.
17
<PAGE>
FOOD AND BEVERAGE. Food and beverage costs increased by $2.6 million, or
177.7%, from $1.5 million in Fiscal 1993 to $4.1 million in Fiscal 1994, but
decreased as a percentage of total revenues from 42.4% in Fiscal 1993 to
35.9% in Fiscal 1994. This decrease was attributable primarily to lower food
costs during Fiscal 1994 that resulted from the introduction of portion
controls and improved inventory management.
LABOR AND BENEFITS. Labor and benefits costs increased by $3.6 million, or
366.2%, from $988,000 in Fiscal 1993 to $4.6 million in Fiscal 1994. As a
percentage of total revenues, labor and benefits costs increased from 28.5%
in Fiscal 1993 to 40.4% in Fiscal 1994. This increase in labor and benefits
costs was a result of overstaffing existing restaurants in order to hire and
train managers and staff for restaurants to be opened.
OCCUPANCY AND OTHER. Occupancy and other costs increased by $1.1 million,
or 90.2%, from $1.2 million in Fiscal 1993 to $2.3 million in Fiscal 1994,
but decreased as a percentage of total revenues from 35.2% in Fiscal 1993 to
20.4% in Fiscal 1994. The decrease in this percentage reflects unusually high
occupancy and other costs as a percentage of total revenues in Fiscal 1993,
which resulted primarily from spreading costs associated with the opening of
the Company's first three restaurants over a small revenue base in Fiscal
1993.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased by $368,000 from $47,000 in Fiscal 1993 to $415,000 in Fiscal 1994.
As a percentage of total revenues, depreciation and amortization increased
from 1.4% in Fiscal 1993 to 3.6% in Fiscal 1994 primarily as a result of
depreciation associated with two restaurants opened late in Fiscal 1993 and
three restaurants opened in Fiscal 1994.
GENERAL AND ADMINISTRATIVE. General and administrative expense increased
by $1.6 million from $280,000 in Fiscal 1993 to $1.9 million in Fiscal 1994.
As a percentage of total revenues, general and administrative expense
increased from 8.1% in Fiscal 1993 to 16.8% in Fiscal 1994. This increase was
the result of the recruitment and hiring of additional management and support
staff in anticipation of future growth.
TOTAL OTHER INCOME (EXPENSE). Total other income (expense) decreased by
$398,000 from a $173,000 expense in Fiscal 1993 to a $571,000 expense in
Fiscal 1994. The decrease in total other income (expense) was primarily
attributable to losses incurred by the North Miami and Kendall, Florida
Roadhouse Grill restaurants, which were accounted for under the equity method
of accounting, and incremental financing costs associated with the Company's
growth.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires capital principally for the opening of new
restaurants and has financed its requirements through the private placement
of Common Stock and Preferred Stock and loans from certain private parties,
including present and former shareholders of the Company.
In July 1996, the Company issued promissory notes in the principal amounts
of $1.5 million and $500,000 to a former Chairman of the Board of Directors
of the Company and to a shareholder of the Company, respectively. These notes
were repaid by the Company in August 1996 with the funds received in
connection with the issuance of a promissory note in the principal amount of
$2.0 million to Berjaya, the Company's principal shareholder. In September
1996, the Company issued another promissory note in the principal amount of
$1.5 million to such former Chairman of the Board. Also in September 1996,
the Company issued an additional promissory note in the principal amount of
$3.0 million to Berjaya. The proceeds of these loans were used for opening
new restaurants, and the Company intends to repay these notes with the net
proceeds of the Offering. See "Management--Compensation Committee Interlocks
and Insider Participation."
In September 1996, the Company borrowed $500,000 from SunTrust Bank,
Miami, N.A. Such loan is unsecured, bears interest at the bank's prime rate
plus 1% and is due and payable on December 31, 1996. The proceeds of this
loan will be used for general corporate purposes.
18
<PAGE>
The Company's capital expenditures aggregated approximately $14.2 million
for the thirty-nine week period ended September 29, 1996, substantially all
of which was used to open Roadhouse Grill restaurants. During such period,
the Company received approximately $5.0 million from the private placement of
Common Stock. Net cash provided by operating activities during the
thirty-nine week period ended September 29, 1996 was approximately $4.0
million.
The Company's capital expenditures aggregated $14.5 million for Fiscal
1995, substantially all of which was used to open Roadhouse Grill
restaurants. In addition, the Company acquired two restaurants for aggregate
cash consideration of $3.0 million. During Fiscal 1995, the Company received
approximately $6.0 million from the private placement of Common Stock. It
also borrowed funds in the aggregate amount of approximately $2.5 million
from a former Chairman of the Board of Directors of the Company (who is also
a former shareholder), which loans were consolidated and extended in January
1996. In addition, the Company borrowed $600,000 from the owner of a 50%
interest in Kendall Roadhouse Grill, L.C. and approximately $3.5 million from
Berjaya. Net cash used in operating activities during Fiscal 1995 was
approximately $784,000.
The Company's capital expenditures aggregated approximately $10.1 million
for Fiscal 1994, substantially all of which was used to open Roadhouse Grill
restaurants. During Fiscal 1994, the Company received approximately $20.8
million from the private placement of the Issued Preferred Stock and Common
Stock. Net cash used in operating activities during Fiscal 1994 was $1.8
million.
The Company's capital expenditures aggregated $1.4 million during Fiscal
1993, substantially all of which was used to open Roadhouse Grill
restaurants. During Fiscal 1993, the Company received $1.6 million in
connection with the issuance of promissory notes to Berjaya and $100,500 from
the private placement of Common Stock. In addition, net cash provided by
operating activities during 1993 was approximately $40,000.
The Company expects to open two additional Roadhouse Grill restaurants
during the remainder of 1996 and approximately 15 restaurants during 1997.
The Company expects that the average cash investment required to open its
prototype restaurants, including pre-opening expenses but excluding real
estate costs, will be approximately $1.1 million or $1.4 million, depending
on whether the Company converts an existing building or constructs a new
restaurant. The Company believes that the net proceeds of the Offering
together with cash from operations, will be sufficient to fund its working
capital needs for the next eight months. In order to complete its anticipated
expansion through 1997, the Company will be required to incur short-term or
long-term indebtedness or issue, in public or private transactions, equity or
debt securities. Upon completion of the Offering, the Company intends to seek
a bank line of credit for purposes of obtaining additional funding for such
expansion. However, there can be no assurance that such line of credit, or
any other debt or equity financing will be available on terms acceptable to
the Company, if at all, or, if available, will be available in an amount
sufficient to fund the Company's working capital needs, including anticipated
expansion.
As is common in the restaurant industry, the Company has generally
operated with negative working capital ($12.8 million as of September 29,
1996). The Company does not have significant receivables or inventory and
receives trade credit on its purchases of food and supplies.
SEASONALITY AND QUARTERLY RESULTS
The Company's sales and earnings fluctuate seasonally. Historically, the
Company's highest earnings have occurred in its first and fourth fiscal
quarters. In addition, quarterly results have been, and in the future are
likely to be, substantially affected by the timing of new restaurant
openings. Because of the seasonality of the Company's business and the impact
of new restaurant openings, results for any quarter are not necessarily
indicative of the results that may be achieved for a full fiscal year.
IMPACT OF INFLATION
The Company does not believe that inflation has materially affected its
results of operations during the past three fiscal years. Substantial
increases in costs and expenses, particularly food, supplies, labor
19
<PAGE>
and operating expenses could have a significant impact on the Company's
operating results to the extent that such increases cannot be passed along to
customers.
ACCOUNTING MATTERS
Statement of Financial Accounting Standards No. 121, "Accounting for
Long-Lived Assets and for Long-Lived Assets to be Disposed of", requires that
long-lived assets and certain identifiable intangibles to be held and used by
an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Impairment is evaluated by comparing future cash flows
(undiscounted and without interest charges) expected to result from use of
the asset and its eventual disposition to the carrying amount of the asset.
This new accounting principle was adopted by the Company effective January 1,
1996. As of January 1, 1996 and June 30, 1996, this new accounting principle
had no material impact on the Company's financial position or results of
operations.
In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard No. 123, "Accounting for
Stock-Based Compensation" (SFAS No. 123), which becomes effective for
financial statements for fiscal years beginning after December 15, 1995. SFAS
No. 123 defines a fair value based method of accounting for an employee stock
option or similar equity instrument and encourages all entities to adopt that
method of accounting for all of their employee stock compensation plans.
However, it also allows an entity to continue to measure compensation cost
for those plans using the intrinsic value based method of accounting
prescribed by Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB 25). The Company is currently accounting for
stock-based compensation under APB 25, and will continue accounting for
stock-based compensation under this method.
20
<PAGE>
BUSINESS
GENERAL
The Company currently owns and operates 30 and franchises or licenses six
full-service, casual dining restaurants under the name "Roadhouse Grill." The
Roadhouse Grill concept offers a fun, value-oriented dining experience that
features premium quality grilled entrees and friendly service consistent with
the Company's motto: "Good Food and a Smile . . . That's Roadhouse
Style."/registered trademark/ The comfortable, entertaining roadhouse setting
is designed to appeal to a broad range of customers, including business
people, couples, singles and particularly families.
Roadhouse Grill restaurants are based upon a roadhouse-style concept
developed in 1991 by the Company's founder and chief executive officer, John
D. Toole, III. In March 1993, Mr. Toole introduced the roadhouse-style
concept to South Florida by opening the first Roadhouse Grill restaurant in
Pembroke Pines (Fort Lauderdale) with the financial backing of other
restaurant entrepreneurs. Since that time, the Company has grown rapidly,
adding two additional restaurants in 1993, three restaurants in 1994, 13
restaurants in 1995 and, to date, 11 restaurants in 1996. The Company also
franchises or licenses three restaurants in Malaysia and three restaurants in
the United States. A substantial portion of the funding for the Company's
rapid expansion was obtained from capital investments and loans from Berjaya,
its principal shareholder and an affiliate of the Company's franchisees for
Asia and the Pacific Rim.
THE ROADHOUSE GRILL CONCEPT
The key elements that define the Roadhouse Grill concept are:
/bullet/ COMFORTABLE, OPEN LAYOUT. Roadhouse Grill restaurants have an
energetic and casual atmosphere. The interior of each restaurant
is large, open and visually appealing, with exposed ceilings and
brick and lapboard cedar walls decorated with colorful,
hand-painted murals and neon signs. Multi-level seating provides
guests with a full view of the restaurant, including the
exhibition grill and display kitchen, allowing everyone to enjoy
the Roadhouse Grill experience. The exhibition cooking area
features a mesquite-fired grill, a kitchen where homemade yeast
rolls are made throughout the day and a display case filled with
fresh cuts of meat, seafood and salads. To help create Roadhouse
Grill's casual ambience, metal pails of roasted peanuts top each
table, guests are encouraged to toss peanut shells on the floor,
drinks are served in mason jars, long neck beers are delivered in
metal buckets filled with ice, and a classic jukebox entertains
guests with popular rock and country and western music. The
exterior of each restaurant features rough-sawed siding, a
wrap-around wood plank porch, a tin roof trimmed in neon and an
oversized "Roadhouse Grill" sign.
/bullet/ PREMIUM QUALITY GRILLED ENTREES AND DIVERSE MENU. The Roadhouse
Grill menu features aged USDA Choice steaks, ribs, chicken and
seafood. An in-house butcher at each restaurant cuts and trims
the steaks and prime rib, which are aged both before and after
carving. In addition to grilled selections, the menu includes a
variety of appetizers, sandwiches, salads and desserts, including
signature items such as Roadhouse cheese wraps,
hot-out-of-the-oven yeast rolls made from scratch each day and a
daily selection of homemade ice cream.
/bullet/ HIGH VALUE TO GUESTS. Roadhouse Grill strives to provide a high
value dining experience for its guests by offering a broad,
moderately-priced menu and serving generous portions. At
Roadhouse Grill restaurants, the price of each entree includes a
choice of house or caesar salad, a choice of baked sweet potato,
baked potato, home fries, french fries or rice pilaf and
hot-out-of-the-oven homemade yeast rolls. From 11 a.m. to 3 p.m.
Monday through Friday, each Roadhouse Grill offers a selection of
13 "Lunch in a Rush" menu items ranging from grilled steak salad
to a half-order of ribs, all served to order in under 10 minutes
and priced at $5.99 or less. For the nine months ended September
29, 1996, the average guest check, including beverage, was
approximately $8.75 for lunch and $13.25 for dinner.
21
<PAGE>
/bullet/ BROAD CUSTOMER APPEAL; FOCUS ON FAMILIES. The Roadhouse Grill
concept is designed to appeal to a broad range of customers,
including business people, couples, singles and particularly
families. The Company believes that to be attractive to families
a concept must be appealing to both children and parents.
Consequently, Roadhouse Grill restaurants furnish children with
coloring menus, balloons and a free souvenir cup, and all
Roadhouse Grill prototype restaurants have a game room featuring
pinball and video games. In addition, each restaurant offers a
special "Kids' Menu" featuring an assortment of entrees for
$2.99. In 1995, Roadhouse Grill was voted a "Best Family
Restaurant" in a survey conducted by SOUTH FLORIDA PARENTING
magazine. For adults, each Roadhouse Grill restaurant offers
beverages from its full-service bar, which is separated from the
dining area.
/bullet/ EFFICIENT, PERSONALIZED SERVICE. The Company believes that a
distinctive, enjoyable dining experience is made possible through
excellent service. Accordingly, the Company hires individuals who
possess strong initiative and the ability to provide quality and
personalized service. Roadhouse Grill attempts to foster the
individuality of its employees, encouraging them to converse and
interact with guests on a friendly, casual basis. Servers often
sit down at the table with guests to take orders, and the
restaurant manager visits each table to help ensure customer
satisfaction.
EXPANSION STRATEGY
The Company's primary expansion strategy is to continue opening
Company-owned restaurants in targeted markets in the United States. The
Company plans to open restaurants primarily in selected medium and large
metropolitan areas primarily in the Southeast and Gulf Coast regions. In
addition, the Company is evaluating prospects for opening restaurants in Ohio
and is considering opening additional restaurants in upstate New York. In
each target market, the Company intends to cluster multiple restaurants to
help build brand awareness and increase efficiencies in marketing and
management. As of the date hereof, the Company had added eleven restaurants
in 1996, and it plans to open two additional Company-owned restaurants during
the remainder of 1996. In 1997, the Company plans to open approximately 15
restaurants, for a total of approximately 47 Company-owned restaurants by the
end of 1997.
The Company also intends to actively support the development of Roadhouse
Grill restaurants in Asia and the Pacific Rim through its international
franchisees, Roadhouse Grill Asia Pacific (H.K.) Limited, a Hong Kong
corporation ("Roadhouse Grill Hong Kong"), and Roadhouse Grill Asia Pacific
(Cayman) Limited, a Cayman Islands corporation ("Roadhouse Grill Asia"), both
of which are wholly-owned subsidiaries of Berjaya. The Company expects that
Roadhouse Grill Asia, which currently operates three Roadhouse Grill
restaurants in Kuala Lumpur, Malaysia, will develop at least two additional
Roadhouse Grill restaurants in 1997. Berjaya is a wholly-owned subsidiary of
Berjaya Group Berhad ("Berjaya Berhad"), a publicly-traded Malaysian company
with diversified interests, which operates more than 25 other restaurants in
Asia and the Pacific Rim. Although the Company has granted rights for the
development of Roadhouse Grill restaurants in certain areas of the United
States, it plans to concentrate domestic expansion on the opening of
Company-owned restaurants.
SITE SELECTION; DESIGN AND LAYOUT
The Company believes the site selection process is critical to the
long-term success of any restaurant and, accordingly, devotes significant
time and effort to the investigation and evaluation of potential locations.
Among the factors it considers in the site selection process are market
demographics (including population, age and median household income), traffic
patterns and activity, site visibility and accessibility, and proximity to
residential developments, office complexes, hotels, retail establishments and
entertainment areas. The Company also considers existing or potential
competition in the area and attempts to analyze the performance of other area
restaurants. Currently, Company-owned restaurants are operated on both owned
and leased sites, with a majority being leased.
22
<PAGE>
Management generally determines which geographic areas may be suitable for
Roadhouse Grill restaurants and then employs real estate agents and brokers
to identify potential sites in each area. In connection with the Company's
evaluation, Company personnel visit and analyze each potential site. After a
location has been leased or purchased and the necessary licenses and permits
obtained, the average time for construction of new Roadhouse Grill
restaurants has been approximately 120 days and the average time for
renovation of an existing building has been approximately 90 days. However,
there can be no assurance that such construction schedules can be maintained
in the future.
Roadhouse Grill restaurants are large, open and visually appealing, with
exposed ceilings and brick and lapboard cedar walls decorated with colorful,
hand-painted murals and neon signs. The prototypical interior also includes
multi-level seating, an exhibition grill and display kitchen and a game room
featuring pinball and video games. The exterior of each restaurant features
rough-sawed siding, a wrap-around wood plank porch, a tin roof trimmed in
neon and an oversized "Roadhouse Grill" sign. Company-owned restaurants
opened prior to March 1996 range generally from 6,000 to 8,500 square feet in
size. During the last year, the Company refined its prototype from
approximately 7,500 square feet (with seating for approximately 235 guests)
to approximately 6,800 square feet (with seating for approximately 210
guests) in an effort to reduce construction costs without significantly
impacting restaurant sales. The Company expects that the average cash
investment required to open its prototype restaurants, including pre-opening
expenses but excluding real estate costs, will be approximately $1.1 million
or $1.4 million, depending on whether the Company converts an existing
building or constucts a new restaurant. However, there can be no assurance
that the cost of opening Roadhouse Grill restaurants in the future will not
increase. See "Risk Factors--Limited Operating History; Operating Losses" and
"Risk Factors--Risks of Rapid Expansion; Management of Growth."
RESTAURANT ECONOMICS
The Company believes that Company-owned Roadhouse Grill restaurants have
achieved attractive unit level economics. The 15 Company-owned restaurants
which were open for the entire twelve-month period ended September 29, 1996
generated average restaurant revenues of approximately $2.8 million, average
restaurant cash flow of approximately $378,000 and average restaurant
operating income after depreciation and amortization of approximately
$238,000. The average cash investment, excluding real estate costs and
pre-opening expenses, required to open each of the 27 Company-owned Roadhouse
Grill restaurants opened by the Company prior to September 29, 1996 was
approximately $1.3 million. The average real estate acquisition cost for the
11 restaurant sites owned by the Company was approximately $898,000. The
average monthly occupancy cost in Fiscal 1996 (through September 29, 1996)
for the 19 restaurant sites leased by the Company was approximately $11,000
per site. The average amount of pre-opening expenses incurred for each
Company-owned Roadhouse Grill restaurant opened during Fiscal 1996 (through
September 29, 1996) was approximately $155,000. However, there can be no
assurance that existing or new restaurants will achieve unit economics in the
future at the levels achieved in the twelve months ended June 30, 1996 or
that the cost of opening a Roadhouse Grill restaurant will not increase. See
"Risk Factors--Limited Operating History; Operating Losses" and "Risk
Factors--Risks of Rapid Expansion; Management of Growth."
23
<PAGE>
RESTAURANT LOCATIONS
The following table provides information with respect to each of the
Company's owned, franchised and licensed restaurants as of the date of this
Prospectus.
<TABLE>
<CAPTION>
APPROXIMATE
SQUARE OWNED, LEASED,
FOOTAGE/SEATING LICENSED OR
LOCATION OPENING DATE CAPACITY(1) FRANCHISED
- -------- ----------------- --------------- -------------
<S> <C> <C> <C>
COMPANY-OWNED:
Pembroke Pines (Fort Lauderdale), FL March 1, 1993 5,800/210 Leased
North Miami, FL(2) November 1, 1993 7,800/220 Leased
Coral Springs (Fort Lauderdale), FL December 6, 1993 10,000/230 Leased
West Palm Beach, FL February 21, 1994 6,000/220 Leased
Kendall (Miami), FL(2) June 28, 1994 8,000/230 Leased
Winter Park (Orlando), FL September 10, 1994 12,000/240 Leased
Deerfield Beach (Fort Lauderdale), FL January 16, 1995 7,500/230 Leased
Bradenton, FL February 20, 1995 10,000/280 Owned
Davie (Fort Lauderdale), FL(2) March 15, 1995 5,800/210 Leased
Tampa, FL April 10, 1995 8,600/220 Leased
St. Petersburg, FL May 16, 1995 6,200/190 Leased
Delray Beach, FL June 27, 1995 7,500/230 Leased
Kissimmee, FL July 18, 1995 7,500/230 Owned
Lakeland, FL July 18, 1995 6,300/190 Leased
Jacksonville, FL August 15, 1995 8,300/210 Owned
Orlando South, FL October 10, 1995 7,500/230 Leased
Tallahassee, FL October 30, 1995 7,500/230 Owned
Ocala, FL October 31, 1995 7,500/230 Owned
Fort Lauderdale, FL (2)(3) December 14, 1995 12,000/200 Leased
North Palm Beach, FL February 15, 1996 8,500/230 Owned
Sandy Springs (Atlanta), GA(4) March 14, 1996 6,800/210 Leased
Longwood (Orlando), FL May 13, 1996 7,500/230 Owned
Orange Park (Jacksonville), FL(4) May 30, 1996 6,800/210 Owned
Fort Myers, FL(4) July 2, 1996 6,800/210 Owned
Columbia, SC July 2, 1996 8,400/220 Owned
Cheektowaga (Buffalo), NY August 27, 1996 5,000/190 Leased
Kennesaw (Atlanta), GA(4) September 4, 1996 6,800/210 Leased
Amherst (Buffalo), NY September 24, 1996 5,000/190 Leased
Lake Worth (West Palm Beach), FL October 22, 1996 6,000/200 Leased
Greenville, SC(4) October 22, 1996 6,800/210 Owned
FRANCHISED OR LICENSED:
Gresham, OR January 23, 1993 8,200/190 Licensed
Boca Raton, FL (5) December 12, 1994 7,200/230 Franchised
Bangsar Baru, Malaysia November 20, 1995 5,800/160 Franchised
San Diego, CA January 22, 1996 8,600/270 Licensed
Ampang, Malaysia April 24, 1996 7,000/200 Franchised
Jalan Sultan Ismail, Malaysia July 11, 1996 5,000/170 Franchised
</TABLE>
- ------------
(1) Excludes bar seating.
(2) The North Miami and Kendall restaurants originally were owned by limited
liability companies in which the Company held a 50% ownership interest.
The Davie and Fort Lauderdale restaurants were opened in March 1993 as
franchised restaurants. The Company acquired 100% ownership of the North
Miami, Davie and Fort Lauderdale restaurants in March 1995 and has
contracted to acquire 100% ownership of the Kendall restaurant.
(3) The Fort Lauderdale restaurant was closed for remodeling from September
to December 1995. The date indicated in the above chart is the
restaurant's re-opening date.
(4) Prototype restaurant.
(5) The Company is currently negotiating the purchase of a 50% interest in
the Boca Raton restaurant from an unaffiliated third party; however there
can be no assurance that such purchase will be consummated.
24
<PAGE>
The Company currently has under construction, and expects to open by the
end of 1996, two restaurants, one each in Rochester, New York and Duluth
(Atlanta), Georgia. In addition to the foregoing, nine sites for restaurants
that are expected to open in 1997 have been acquired or leased, one each in
Mobile, Alabama; Melbourne and Doral (Miami), Florida; Gretna and Shreveport,
Louisiana; Biloxi and Jackson, Mississippi; Columbus, Ohio; and Columbia,
South Carolina, four of which are currently under construction.
Of the Company's 30 restaurants, 19 are located on leased sites. Existing
restaurant leases have expiration dates ranging from December 1996 to April
2015. The Company leases approximately 8,000 square feet for its corporate
offices in Fort Lauderdale, Florida under a three year lease which expires
September 30, 1998.
MENU AND PRICING
The Roadhouse Grill menu features USDA Choice steaks and prime rib, beef
ribs, chicken and seafood, all of which are grilled to order. The Company's
steaks and prime rib are aged both before and after being cut and trimmed by
each restaurant's in-house butcher. The menu features over sixty items,
including eight cuts of steak ranging from 6 oz. to 18 oz. In addition to
grilled selections, the menu offers a wide variety of appetizers, sandwiches,
salads and desserts, including signature items such as Roadhouse cheese
wraps, hot-out-of-the-oven yeast rolls made from scratch each day and a daily
selection of homemade ice cream. Each entree is served with a choice of a
house salad or caesar salad, a choice of baked sweet potato, baked potato,
home fries, french fries or rice pilaf and homemade yeast rolls. Roadhouse
Grill restaurants are open seven days a week for lunch and dinner and offer
full bar service. Prices range from $2.99 to $6.29 for lunch entrees and from
$4.99 to $15.99 for dinner entrees. From 11 a.m. to 3 p.m. Monday through
Friday, in addition to its full menu, each Roadhouse Grill offers a selection
of 13 "Lunch in a Rush" menu items ranging from grilled steak salad to a
half-order of ribs, all prepared to order in under 10 minutes and priced at
$5.99 or less. For the nine months ended September 29, 1996, the average
guest check, including beverage, was approximately $8.75 for lunch and $13.25
for dinner.
RESTAURANT OPERATIONS AND MANAGEMENT
RESTAURANT PERSONNEL. The Company believes that excellent service
contributes significantly to a distinctive, enjoyable dining experience.
Accordingly, the Company seeks to hire individuals who possess strong
initiative and the ability to provide quality and personalized service.
Roadhouse Grill attempts to foster the individuality of its employees,
encouraging them to interact with customers on a friendly, casual basis.
Consistent with the Company's preference to promote from within, restaurant
managers generally are selected from Company personnel. The Company seeks to
retain high-quality restaurant managers and personnel by providing them with
opportunities for promotion and financial incentives based on individual
restaurant performance. These financial incentives include a bonus plan which
enables each restaurant manager to earn a portion of a bonus pool by
achieving certain predetermined performance goals. During Fiscal 1995, the
Company's turnover rates were approximately 55% for restaurant staff and 21%
for restaurant managers, which are significantly below the restaurant
industry averages of 92% for staff employees and 50% for managers (as
reported by the National Restaurant Association).
Roadhouse Grill restaurants generally operate with five managers,
including a general manager, an assistant general manager, a kitchen manager
and two assistant managers. The general manager of each restaurant has
primary responsibility for managing the day-to-day operations of the
restaurant in accordance with Company standards. The general manager and
kitchen manager of each restaurant generally are responsible for
interviewing, hiring and training restaurant staff. Each restaurant has a
staff of approximately 90 employees, which includes at least one full-time,
in-house butcher. The Company currently employs eight area supervisors, each
of whom is responsible for three to four restaurants. The supervisors report
to regional directors, each of whom has responsibility for four supervisors.
The Company currently has two regional directors, who communicate daily with
the Vice President of Operations.
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<PAGE>
The Company devotes a significant amount of time and resources to
restaurant management and staff training. Each new manager participates in an
eight-week training program, which is conducted at designated training
restaurants, before assuming an assistant manager position (or, in some
instances, a kitchen manager position) at a Roadhouse Grill restaurant. This
program is designed to provide training in all areas of restaurant
operations, including food preparation and service, alcoholic beverage
service, Company philosophy, operating standards, policies and procedures,
and business management and administration techniques. The managers of the
training restaurant conduct weekly evaluations of each manager trainee.
In connection with the opening of each new restaurant, the Company sends
one of its two full-time, 16-member training teams to train and assist the
new restaurant employees. The training team generally arrives at each
restaurant two weeks prior to opening and remains for four weeks after
opening. Typically, the top three managers (the general manager, the
assistant general manager and the kitchen manager) of each new restaurant are
individuals who have been managers at an existing Roadhouse Grill restaurant.
INTERNAL CONTROLS; RESTAURANT REPORTING. The Company maintains financial
and accounting controls for each of its restaurants through the use of
centralized accounting and management information systems. The Company uses a
computerized point-of-sale system to collect sales information from each
restaurant, and restaurant managers are provided access to the operating
statements for their restaurants.
PURCHASING. Roadhouse Grill operates a centralized purchasing system that
is utilized by all restaurants operated by the Company (except those located
in upstate New York). The Company purchased approximately 87% of its food and
other products from two distributors during Fiscal 1995. Beginning August 5,
1996, the Company began doing business with only one of these two principal
distributors and anticipates that approximately 80% of its food and other
products will be purchased from that distributor. See "Risk Factors--Changes
in Food and Other Costs; Supply Risks."
ADVERTISING AND MARKETING
The Company attempts to build brand awareness by providing a distinctive
dining experience that results in a significant number of new customers being
attracted through word of mouth, as well as by traditional marketing efforts
and promotional activities. The Company believes that clustering multiple
restaurants in target markets will help build brand awareness and increase
efficiencies in its marketing efforts. The Company's marketing efforts are
centered around print media and radio advertisements using the voice of
"Cowboy Jim," the Company's mascot, and, to a lesser extent, the use of
outdoor billboards. The Company also markets at the restaurant level through
sponsorship of community charity activities, sporting events, festivals and
Chamber of Commerce events. Prior to opening a restaurant, the Company
typically conducts a six-week print and radio advertising campaign and holds
a "VIP Night" at which city officials, Chamber of Commerce members, police,
fire and rescue personnel, local business people, area media and others are
invited to have "dinner on the Roadhouse." At certain restaurants, the
Company also is test marketing t-shirts and other merchandise bearing the
Roadhouse Grill name and logo to increase the Company's brand recognition.
During the thirty-nine week period ended September 29, 1996, the Company
spent approximately 3.9% of its revenues on advertising and marketing
activities.
FRANCHISING
The Company has granted franchise rights to the Roadhouse Grill concept in
Asia and the Pacific Rim and in certain limited geographic areas in the
United States. Pursuant to its expansion strategy, the Company expects to
concentrate its future franchising activity in Asia and the Pacific Rim
through its international franchisees, Roadhouse Grill Hong Kong and
Roadhouse Grill Asia. Although the Company's United States franchisees may
open a limited number of additional franchised restaurants in their
respective territories, the Company does not intend to grant additional
franchise rights in the
26
<PAGE>
United States, other than any rights that may be granted to the licensee of
the Gresham, Oregon and San Diego, California Roadhouse Grill restaurants.
See "--Domestic Franchising."
INTERNATIONAL FRANCHISING. In January 1996, the Company entered into a
Master Development Agreement with Roadhouse Grill Hong Kong, which provides
for the development and franchising of Roadhouse Grill restaurants in Hong
Kong. Under the agreement, Roadhouse Grill Hong Kong is not required to
develop any specific number of restaurants in Hong Kong, but any restaurants
that it develops are credited against the development obligations of
Roadhouse Grill Asia under Roadhouse Grill Asia's Master Development
Agreement with the Company. Roadhouse Grill Hong Kong is not required to pay
any franchise or reservation fee for restaurants that it develops, but it is
responsible for paying or reimbursing approved expenses incurred by the
Company in connection with the opening of each restaurant. In addition,
Roadhouse Grill Hong Kong is required to pay a royalty in connection with the
operation of each of its restaurants in the amount of 2.0% of gross sales for
each restaurant's first three years of operation and 3.0% thereafter. Under
certain circumstances, Roadhouse Grill Hong Kong or the Company may grant
franchises to third parties in Hong Kong. In that event, the Company is
entitled to receive 50% of any franchise and reservation fees and 50% of any
royalty fee payable by the third party franchisee, subject to limitations on
the amounts payable to the Company of $10,000 per restaurant in the case of
franchise and reservations fees and 2.5% of gross sales in the case of
royalty fees.
In January 1996, the Company also entered into a Master Development
Agreement with Roadhouse Grill Asia which covers countries in Asia and the
Pacific Rim (other than Hong Kong), including, but not limited to, Australia,
China, India, Indonesia, Japan, Malaysia, New Zealand, North Korea, South
Korea, The Philippines and Thailand. Under the agreement, Roadhouse Grill
Asia is required to open and maintain at least 30 Roadhouse Grill Restaurants
during the first ten years of the term of the agreement, with a minimum of
two restaurants to be developed each year. Under certain circumstances,
Roadhouse Grill Asia or the Company may grant franchises to third parties in
the territory. The fee arrangements under the agreement are substantially the
same as those under the agreement between the Company and Roadhouse Grill
Hong Kong. See "Certain Transactions."
DOMESTIC FRANCHISING. The Company has entered into franchise or license
arrangements for the development and operation of Roadhouse Grill restaurants
in Gresham, Oregon, Boca Raton, Florida, San Diego, California, Clark County,
Nevada and the Greater Delaware Valley Region of Pennsylvania. The Gresham
Roadhouse Grill has been in operation since January 1993; the Boca Raton
Roadhouse Grill has been in operation since December 1994; the San Diego
Roadhouse Grill has been in operation since January 1996; the Nevada
franchisee commenced construction of its first restaurant in July 1996; and
the Pennsylvania franchisee is currently evaluating sites for its restaurant.
The Company is currently in negotiations with one of its licensees regarding
exclusive development rights relating to additional Roadhouse Grill
restaurants in a limited number of states in the western United States. There
can be no assurance that an agreement on the terms currently being discussed
will be reached or that an agreement will be reached at all.
COMPETITION; RESTAURANT INDUSTRY
The restaurant industry is highly competitive. The Company competes with a
broad range of restaurants, including national and regional casual dining
chains as well as locally-owned restaurants, some of which operate with
concepts similar to that of the Company. Many of the Company's competitors
are well established and have substantially greater market presence and
financial and other resources than the Company. The entrance of new
competitors into the Company's market areas or the expansion of operations by
existing competitors could have a material adverse effect on the Company's
results of operations and financial condition. In addition, the Company
competes with other restaurant companies and retailers for sites, labor and,
in many cases, customers. The Company believes that the key competitive
factors in the restaurant industry are quality of food and service, price,
location and concept. To the extent that one or more of its competitors
becomes more successful in respect of any key competitive factors, the
Company's business could be adversely affected. See "Risk Factors--
Competition."
27
<PAGE>
The restaurant industry is affected by changes in consumer tastes as well
as national, regional and local economic conditions, demographic trends,
traffic patterns, and the type, number and location of competing restaurants.
Dependence on fresh meats and produce also subjects restaurant companies to
the risk that shortages or interruptions of supply could adversely affect the
availability, quality or cost of ingredients. In addition, factors such as
inflation, increased food, labor and employee benefit costs and the
availability of qualified management and hourly employees also may adversely
affect the restaurant industry generally and the Company's restaurants in
particular. The success and future profitability of the Company will depend
in part on its ability to identify and to respond appropriately to changing
conditions within the restaurant industry. See "Risk Factors--Restaurant
Industry."
GOVERNMENT REGULATION
Each Roadhouse Grill restaurant is subject to numerous federal, state and
local laws and governmental regulations, including those relating to the
preparation, sale and service of food and alcoholic beverages, designation of
non-smoking and smoking areas, accessibility of restaurants to disabled
customers, development and construction of restaurants and environmental
matters. Roadhouse Grill also is subject to laws governing its relationship
with employees, including minimum wage requirements, overtime, working
conditions and immigration requirements. Difficulties or failures in
obtaining the required construction and operating licenses, permits or
approvals could delay or prevent the opening of a new restaurant. Roadhouse
Grill believes that it is operating in compliance in all material respects
with applicable laws and regulations that govern its operations. See "Risk
Factors--Government Regulation."
Alcoholic beverage control regulations require each Roadhouse Grill
restaurant to apply to a state authority and, in certain locations, county or
municipal authorities for a license or permit to sell alcoholic beverages on
the premises and to provide service for extended hours. Typically, licenses
must be renewed annually and may be revoked or suspended for cause at any
time. If a liquor license for any restaurant were lost, revenues for that
restaurant would be adversely affected. Alcoholic beverage control
regulations relate to numerous aspects of the Company's restaurants,
including minimum age of patrons consuming and employees serving alcoholic
beverages, hours of operation, advertising, wholesale purchasing, inventory
control, and handling, storage and dispensing of alcoholic beverages. The
Company is also subject to "dram-shop" statutes which generally provide a
person injured by an intoxicated person the right to recover damages from an
establishment that wrongfully served alcoholic beverages to the intoxicated
person. The Company carries liquor liability coverage as part of its existing
comprehensive general liability insurance.
In connection with its sale of franchises, the Company is subject to the
United States Federal Trade Commission rules and regulations and state laws
that regulate the offer and sale of franchises. The Company also is subject
to laws that regulate certain aspects of the franchise relationship.
The Company is subject to various local, state and federal laws regulating
the discharge of pollutants into the environment. The Company believes that
its operations are in compliance in all material respects with applicable
environmental laws and regulations. The Company conducts environmental audits
of a proposed restaurant site in order to determine whether there is any
evidence of contamination prior to purchasing or entering into a lease with
respect to the site. However, there can be no assurance that the Company will
not incur material environmental liability in connection with any of its
owned or leased properties.
EMPLOYEES
At September 25, 1996, the Company employed 283 salaried employees, of
whom 29 served in corporate and administrative capacities and 254 served as
restaurant management personnel. In addition, the Company employed 3,195
persons on an hourly basis. None of the Company's employees is covered by a
collective bargaining agreement, and the Company has never experienced an
organized work stoppage, strike or labor dispute. The Company believes its
relations with its employees are good.
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<PAGE>
TRADEMARKS, SERVICE MARKS AND TRADE DRESS
Roadhouse Grill believes its trademarks, service marks and trade dress are
important to its marketing efforts. Roadhouse Grill has registered the
"Roadhouse Grill" service mark, the "Cowboy Jim and rocking chair" design and
the slogan "Good Food and a Smile . . . That's Roadhouse Style" with the U.S.
Patent and Trademark Office. The Company also has applied for registration of
the "Roadhouse Grill" service mark in approximately 30 foreign countries,
including Australia, Brazil, Canada, China, France, Germany, Hong Kong,
Indonesia, Japan, Mexico, New Zealand, The Philippines, South Africa, Spain,
Thailand and the United Kingdom.
LITIGATION
The Company is party to certain legal proceedings arising in the ordinary
course of business. In the opinion of the Company, any resulting liability
will not have a material adverse effect on the Company or its business.
29
<PAGE>
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The directors, executive officers and key employees of the Company are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
John D. Toole III ....... 37 Chief Executive Officer, President and Director
Dennis C. Jones ......... 42 Chief Financial Officer, Vice President of Finance
and Treasurer
John D. Toole, Jr. ...... 59 Vice President of Real Estate and Construction
H. Todd Kaufman ......... 33 Vice President of Operations
Charles D. Barnett ...... 45 Secretary
Mark A. Scobee .......... 32 Director of Human Resources
Brad H. Haber ........... 35 Director of Training
Gerald P. Shore ......... 47 Director of Purchasing
Kim A. Donovan .......... 32 Director of Marketing
Dr. Christian F. Horn(1) 68 Chairman of the Board of Directors
Tan Kim Poh(1) .......... 43 Director
Philip Friedman ......... 50 Director
</TABLE>
- ------------
(1) Member of Audit, Compensation and Stock Option Committees.
JOHN D. TOOLE III. Mr. Toole founded Roadhouse Grill in October 1992 and
has served since that time as Chief Executive Officer, President and a
director of the Company. From 1988 to October 1992, Mr. Toole served as
President of Bluegrass Steaks, Inc., where he developed the initial Logan's
Roadhouse casual dining steakhouse concept. From 1983 to 1988, Mr. Toole was
employed by Ryan's Family Steak Houses, Inc. ("Ryan's") in various
capacities, including restaurant general manager and area supervisor. In
1988, Ryan's was a 120-unit chain which operated in the Southeast, Northeast
and Midwest regions of the United States. Mr. Toole is the son of John D.
Toole, Jr., the Vice President of Real Estate and Construction of the
Company.
DENNIS C. JONES. Mr. Jones has served as Chief Financial Officer, Vice
President of Finance and Treasurer of the Company since March 1996. From
October 1994 to January 1996, Mr. Jones served as Chief Financial Officer of
Louise's Trattoria, Inc., which operated 19 Italian restaurants, primarily in
southern California. From 1984 to October 1994, Mr. Jones was employed by
Acapulco Restaurants, Inc., which operated approximately 50 Mexican
restaurants, primarily in California, in various financial management
positions, including Chief Financial Officer from January 1991 to October
1994.
JOHN D. TOOLE, JR. Mr. Toole has served as Vice President of Real Estate
and Construction of the Company since March 1993. From 1986 to March 1993,
Mr. Toole owned and operated a real estate brokerage company in Smyrna,
Georgia. Mr. Toole is the father of John D. Toole III, the Chief Executive
Officer and President of the Company.
H. TODD KAUFMAN. Mr. Kaufman has served as Vice President of Operations of
the Company since December 1995. Mr. Kaufman joined the Company in March 1994
and has served in various capacities, including as an area supervisor and
regional director. From September 1991 until February 1994, Mr. Kaufman served
as an area supervisor in the Atlanta market for O'Charley's Restaurants, Inc.
From 1987 until 1991, Mr. Kaufman served as a restaurant manager for Ryan's.
CHARLES D. BARNETT. Mr. Barnett has served as Secretary of the Company
since its inception in October 1992. Since August 1992, Mr. Barnett has
served as General Counsel of Roasters Corp., a company that operates Kenny
Rogers Roasters Restaurants. From July 1990 until joining Roasters Corp., Mr.
Barnett served as General Counsel of Miami Subs Corporation, which operates
and franchises Miami Subs restaurants.
MARK A. SCOBEE. Mr. Scobee has served as Director of Human Resources of
the Company since August 1994. Mr. Scobee joined the Company in March 1993
and has served the Company in various
30
<PAGE>
capacities, including restaurant manager, area supervisor and Director of
Operations. Mr. Scobee served as a general manager of various Logan's
Roadhouse restaurants from August 1991 to February 1993 and as a general
manager of various Applebee's restaurants from January 1989 to August 1990.
BRAD H. HABER. Mr. Haber has served as Director of Training of the Company
since March 1995. From February 1992 to March 1995, Mr. Haber served as
Manager Training Supervisor and a restaurant general manager of O'Charley's
Restaurants, Inc. From June 1990 to February 1992, Mr. Haber was employed by
Brinker International, Inc. as the manager of a Chili's restaurant.
GERALD P. SHORE. Mr. Shore has served as Director of Purchasing of the
Company since December 1995. From January 1994 until joining the Company, Mr.
Shore was a marketing associate with Sysco Food Services South Florida, a
food and restaurant products distributor, and, in such capacity, exclusively
serviced Roadhouse Grill restaurants. Since 1979, Mr. Shore and his wife have
owned part of and operated Marino's Italian Restaurant in Fort Lauderdale,
Florida.
KIM A. DONOVAN. Ms. Donovan has served as Director of Marketing of the
Company since January 1996. Ms. Donovan joined the Company in March 1995 as
Marketing Assistant. From August 1993 until joining the Company, Ms. Donovan
served as Marketing Coordinator for Brothers Gourmet Coffees. From November
1990 to October 1994, Ms. Donovan operated her own retail bakery and
concession business. From 1988 to October 1990, Ms. Donovan was a senior
consultant with Abbington Associates, Ltd., a restaurant and hospitality
recruiting firm serving the Boston area. From 1986 to 1988, Ms. Donovan
served in various capacities, including store manager and corporate trainer,
for Au Bon Pain, Inc.
DR. CHRISTIAN F. HORN. Dr. Horn has served as a director of the Company
since January 1994 and as Chairman of the Board since August 1996. Since
1990, Dr. Horn has been the Managing Partner of Horn Venture Partners II,
L.P., a general partner of Cupertino Ventures Partnership III, L.P. (formerly
known as Grace Ventures Partnership III, L.P.) ("Cupertino"), which is a
shareholder of the Company. From 1983 until December 1995, Dr. Horn was also
President of Grace Ventures Corp., which had been a General Partner of Grace
Ventures Partnership III, L.P. Dr. Horn is a director of Buffets, Inc., a
buffet-style restaurant chain, a subsidiary of which operates Roadhouse Grill
restaurants in Gresham, Oregon and San Diego, California pursuant to
licensing arrangements with the Company.
TAN KIM POH. Mr. Tan has served as a director of the Company since May
1995. Since 1991, Mr. Tan has served as Group Executive Director of Berjaya
Berhad. Mr. Tan has also served as a director of the following companies
since the indicated dates: Berjaya Industrial Berhad, since May 1990; Berjaya
Prudential Assurance Berhad, since March 1992; Berjaya Capital Berhad, since
March 1995; Topgroup Holdings Berhard, since January 1995; UNZA Holdings
Berhad, since January 1995; Berjaya Holdings (H.K.) Ltd., since July 1993;
Rossmont Plc, since September 1994; STM Wireless, Inc., since October 1994;
and Carlovers Carwash Ltd., since December 1994.
PHILIP FRIEDMAN.--Mr. Friedman has served as a director of the Company
since October 1996. Since January 1996, Mr. Friedman has served as President
of Panda Management, Inc. In addition, since June 1986, Mr. Friedman has
served as the President of P. Friedman & Associates, Inc., a business
planning and management consulting firm. Mr. Friedman is also a director of
Eateries, Inc.; T.J. Cinnamons, Inc.; and P&E Production Technology
Management, Inc. On occasion, Mr. Friedman has taken interim advisory
positions with his clients; these positions have included: Advisor to the
President of Roy Rogers Restaurants (1993), Chief Financial Officer for
Service America Corporation (1990) and Executive Vice President for Sutton
Place Gourmet (1988). From 1984 to 1986, Mr. Friedman was Vice President,
Finance, Administration and Senior Planning Associate of Cini-Little
International, Inc. Prior to that, he was Vice President of Planning and Vice
President, Big Boy Franchising for Marriott Corporation. Mr. Friedman held
similar executive positions with Chi-Chi's, Inc. and Pepsico's Pizza Hut
division.
All executive officers of the Company are elected annually by, and serve
at the discretion of, the Board of Directors. Directors are elected annually
by the Company's shareholders and serve until their
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<PAGE>
successors are elected and qualified. The Company intends to add one director
not affiliated with the Company within 90 days after completion of the
Offering.
DIRECTORS COMPENSATION
During Fiscal 1995, the Company reimbursed its non-employee directors for
out-of-pocket expenses incurred in connection with attendance at board
meetings. Following completion of the Offering, the Company intends to pay
its non-employee directors a fee for each board and committee meeting
attended, as well as out-of-pocket expenses.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The table below sets forth certain information
concerning the compensation received during Fiscal 1995 by the Company's
Chief Executive Officer. No other employee of the Company received
compensation of $100,000 or more during Fiscal 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
----------------------
NAME AND PRINCIPAL POSITION SALARY ($) BONUS ($) ALL OTHER COMPENSATIONS($)
- --------------------------- ---------- --------- --------------------------
<S> <C> <C> <C>
John D. Toole III
President & Chief Executive Officer $120,000 $34,566 --
</TABLE>
- ------------
(1) The aggregate amount of perquisites and other personal benefits, if any,
did not exceed the lesser of $50,000 or 10% of the total annual salary
and bonus reported for the Company's Chief Executive Officer and has
therefore been omitted.
OPTION GRANTS, AGGREGATED OPTION TABLE. No stock options were granted to
the Company's Chief Executive Officer during Fiscal 1995. The table below
sets forth certain information with respect to options exercised during, and
options held at the end of, Fiscal 1995 by the Company's Chief Executive
Officer. All of such options were issued outside of the Option Plan. All of
such options that were held at the end of Fiscal 1995 are currently
exercisable.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SHARES SUBJECT IN-THE-MONEY
SHARES TO UNEXERCISED OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT END OF FISCAL
NAME EXERCISE REALIZED(1) END OF FISCAL 1995 1995(2)
- ---- ----------- ----------- ------------------ -------------
<S> <C> <C> <C> <C>
John D. Toole III 118,518 $1,084,443 166,666 $550,000
</TABLE>
- ------------
(1) The value shown is based on management's estimate of the fair market
value of the Common Stock at the date of exercise of $3.20 per share.
(2) All options are options to purchase Common Stock of Roadhouse Grill, Inc.
As there is no existing public market for the Common Stock, the value
shown is based on management's estimate of the fair market value of the
Common Stock at the end of Fiscal 1995 of $3.60 per share.
1994 STOCK OPTION PLAN
The Company's 1994 Stock Option Plan was adopted effective February 14,
1994. The 1994 Stock Option Plan provides for grants of nonqualified stock
options to Company employees and to non-employee officers, directors and
consultants of the Company. the 1994 Stock Option Plan is administered by the
Stock Option Committee. A maximum of 216,666 shares of Common Stock may be
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<PAGE>
issued pursuant to the 1994 Stock Option Plan. As of the date hereof, options
to purchase 181,103 shares were outstanding under the 1994 Stock Option Plan
at a weighted-average exercise price of $9.60 per share. All of the options
granted to date under the 1994 Stock Option Plan vest over a three year
period from the date of grant, subject to the acceleration of vesting upon a
change of control of the Company.
The term of options is as determined by the Stock Option Committee but in
any event may not exceed ten years from the date of grant. The exercise price
may be paid in cash, property (including Common Stock) or a combination of
both cash and property.
In addition to options that have been granted under the 1994 Stock Option
Plan, the Company has granted two options outside of the 1994 Stock Option
Plan to J. David Toole, III. Pursuant to these options. Mr. Toole may acquire
up to 166,666 shares of the Company's Common Stock at a price of $7.50 per
share and up to 150,000 shares of the Company's Common Stock at the initial
public offering price. These options have expiration dates of January 31,
2010 and October 29, 2004, respectively.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Pursuant to the Company's Articles of Incorporation and Bylaws, the
Company is obligated to indemnify each of its directors and officers to the
fullest extent permitted by Florida law with respect to all liability and
loss suffered, and reasonable expense incurred, by such person in any action,
suit or proceeding in which such person was or is made or threatened to be
made a party or is otherwise involved by reason of the fact that such person
is or was a director or officer of the Company. The Company is also obligated
to pay the reasonable expenses of indemnified directors or officers in
defending such proceedings if the indemnified party agrees to repay all
amounts advanced should it be ultimately determined that such person is not
entitled to indemnification.
The Company maintains an insurance policy covering directors and officers
under which the insurer agrees to pay, subject to certain exclusions, for any
claim made against the directors and officers of the Company for a wrongful
act for which they may become legally obligated to pay or for which the
Company is required to indemnify its directors or officers.
EMPLOYMENT AGREEMENT
The Company and John David Toole, III have entered into an employment
agreement providing for Mr. Toole's employment as President of the Company
through September 30, 1997. The agreement provides for an annual base salary
of $120,000 and an annual bonus based on performance of the Company and
certain of the Company's restaurants. The agreement provides that Mr. Toole
will not compete with the Company for three years after termination of his
employment. The Company and Mr. Toole are currently negotiating the terms of
an amended employment agreement which would extend the term of Mr. Toole's
employment through December 31, 1999, increase Mr. Toole's annual base salary
to $200,000 and modify the terms of Mr. Toole's annual bonus. Under the
amended agreement, Mr. Toole would be entitled to an annual bonus of
$100,000, payable within ninety days after Fiscal 1996 and after each fiscal
year of the Company if the Company's net income before taxes for such fiscal
year exceeded the net income before taxes for the preceeding fiscal year. In
addition, the amended agreement would provide for the grant of certain
options to purchase Common Stock to Mr. Toole on an annual basis, including an
option to purchase 150,000 shares of Common Stock at an exercise price equal to
the initial public offering price which will be granted in connection with the
execution of the amended employment agreement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During Fiscal 1995, the Company had no Compensation Committee or other
committee of the Board of Directors performing similar functions. Decisions
concerning the compensation of executive officers were made by the full Board
of Directors. In January 1996, the Board of Directors established a
Compensation Committee.
In Fiscal 1995, the Company obtained loans in the aggregate amount of
approximately $2.5 million from John Y. Brown, Jr. During Fiscal 1995, Mr.
Brown was the former Chairman of the Board of
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<PAGE>
Directors of the Company and was a shareholder. In January 1996, these loans
were consolidated and extended under the Company's unsecured promissory note
dated January 15, 1996, in the principal amount of $2.5 million, bearing
interest at 8.5% per annum, the principal of and accrued interest on which
are due and payable in full upon the closing, and from the proceeds, of the
Offering. The funds obtained by the Company from such loan were used to
finance the opening of new restaurants. The loan was initially unsecured but
in July 1996 was cross-collateralized by the lien granted on the additional
$1.5 million loan described in the next paragraph.
In July 1996, the Company borrowed an additional $1.5 million from Mr.
Brown under the Company's secured promissory note dated July 12, 1996,
bearing interest at 8.5% per annum, the principal of and accrued interest on
which were paid on August 19, 1996 from a portion of the proceeds of the
Company's $2.0 million loan from Berjaya described below. The loan, the
proceeds of which were used to finance the opening of new restaurants, was
secured by a lien on all of the furniture, fixtures and equipment located in
the Company's restaurants on July 12, 1996 that had not been previously
pledged to a third party. Following the repayment of this loan, the Company
in September 1996 obtained a new loan from Mr. Brown in the amount of $1.5
million, which was secured by the same collateral as the July 1996 note and
which is evidenced by the Company's promissory note dated September 5, 1996,
bearing interest at 5.0% per annum and payable in full upon the closing of
the Offering. The proceeds of this loan were used for general corporate
purposes, including opening new restaurants.
In July 1996, the Company borrowed $500,000 from Cupertino, a shareholder
of the Company, under the Company's unsecured promissory note dated July 15,
1996, bearing interest at 8.5% per annum, the principal of and accrued
interest on which were paid on August 19, 1996. The proceeds of this loan
were used to finance the opening of new restaurants. Dr. Christian F. Horn,
the Chairman of the Board of Directors of the Company, is the Managing
Partner of Horn Ventures Partners II, L.P., which is a General Partner of
Cupertino.
In August 1996, the Company borrowed $2.0 million from Berjaya, its
principal shareholder, under an unsecured promissory note dated August 16,
1996, bearing interest at 8.5% per annum, the principal of and accrued
interest on which are due and payable in full upon the closing of the
Offering. The proceeds of this loan were used to repay the July 1996 $1.5
million loan from Mr. Brown and the $500,000 loan from Cupertino described
above. In September 1996, the Company borrowed $3.0 million from Berjaya, its
principal shareholder, under an unsecured promissory note dated September 27,
1996, bearing interest at 8.5% per annum, the principal of and accrued
interest on which are due and payable in full upon the closing of the
Offering. The proceeds of this loan were used for general corporate purposes,
including opening new restaurants. Tan Kim Poh, a director of the Company, is
Group Executive Director of Berjaya Berhad, which directly or indirectly owns
Berjaya.
Berjaya directly or indirectly owns Roadhouse Grill Hong Kong and
Roadhouse Grill Asia. In January 1996, the Company entered into a Master
Development Agreement with Roadhouse Grill Hong Kong which provides for the
development and franchising of Roadhouse Grill restaurants in Hong Kong.
Under the agreement, Roadhouse Grill Hong Kong is not required to develop any
specific number of restaurants in Hong Kong, but any restaurants that it
develops are credited against the development obligations of Roadhouse Grill
Asia under Roadhouse Grill Asia's Master Development Agreement with the
Company. Roadhouse Grill Hong Kong is not required to pay any franchise or
reservation fee for restaurants that it develops, but it is responsible for
paying or reimbursing approved expenses incurred by the Company in connection
with the opening of each restaurant. In addition, Roadhouse Grill Hong Kong
is required to pay a royalty in connection with the operation of each of its
restaurants in the amount of 2.0% Of gross sales for each restaurant's first
three years of operation and 3.0% thereafter. Under certain circumstances,
Roadhouse Grill Hong Kong or the Company may grant franchises to third
parties in Hong Kong. In that event, the Company is entitled to receive 50%
of any franchise and reservation fees and 50% of any royalty fee payable by
the third party franchisee, subject to limitations on the amounts payable to
the Company of $10,000 per restaurant in the case of franchise and
reservations fees and 2.5% Of gross sales in the case of royalty fees.
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In January 1996, the Company also entered into a Master Development
Agreement with Roadhouse Grill Asia, which covers countries in Asia and the
Pacific Rim (other than Hong Kong), including, but not limited to, Australia,
China, India, Indonesia, Japan, Malaysia, New Zealand, North Korea, South
Korea, The Philippines and Thailand. Under the agreement, Roadhouse Grill
Asia is required to open and maintain at least 30 Roadhouse Grill Restaurants
during the first ten years of the term of the agreement, with a minimum of
two restaurants to be developed each year. Under certain circumstances,
Roadhouse Grill Asia or the Company may grant franchises to third parties in
the territory. The fee arrangements under the agreement are substantially the
same as those under the agreement between the Company and Roadhouse Grill
Hong Kong. See "Certain Transactions."
The obligations of the original tenant, New York Roasters, Inc., Under the
leases for the sites covering the Company's two restaurants in Buffalo, New
York were assumed by the Company in December 1995. At the time of such
assumptions, Mr. Brown was Chairman of the Board of Directors of the Company
and also President of Roasters Corp. New York Roasters, Inc. was a former
franchisee of Roasters Corp. Except for the franchise relationship, neither
Mr. Brown nor Roasters Corp. had, or currently has, any financial or other
interest in New York Roasters, Inc.
Dr. Christian F. Horn, the Chairman of the Board of Directors of the
Company, is a director of Buffets, Inc. A subsidiary of Buffets, Inc. Is the
licensee of the Company in the operation of Roadhouse Grill restaurants in
Gresham, Oregon and San Diego, California, and is presently negotiating with
the Company for the development of additional Roadhouse Grill restaurants.
See "Business--Franchising--Domestic Franchising."
CERTAIN TRANSACTIONS
For a description of certain transactions between the Company and certain
of its affiliates, see "Management--Compensation Committee Interlocks and
Insider Participation."
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<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of October 1, 1996, and as
adjusted to reflect the sale of the Common Stock offered hereby, with respect
to (i) each person known by the Company to own beneficially more than 5% of
the Common Stock; (ii) the Chief Executive Officer and each of the directors
of the Company; and (iii) all directors and executive officers of the Company
as a group. Except as set forth below, the shareholders named below have sole
voting and investment power with respect to all shares of Common Stock shown
as being beneficially owned by them.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY PERCENT OF CLASS PERCENT OF CLASS
NAME OWNED(1) PRIOR TO OFFERING AFTER OFFERING
- --- ------------ ----------------- ----------------
<S> <C> <C> <C>
John D. Toole III (2) ........................ 252,777 3.7% 2.7%
Tan Kim Poh (3)(4) ........................... 5,247,385 78.7 57.2
Dr. Christian F. Horn (5)(6) ................. 553,331 8.3 6.0
Phillip Friedman ............................. 0 -- --
Berjaya Group (Cayman) Limited (4) ........... 5,242,385 78.6 57.2
Cupertino Ventures Partnership III, L.P. (6) 533,334 8.0 5.8
Ayman Sabi (7)(8) ............................ 669,999 10.0 7.3
Banque Scandinave En Suisse (8) .............. 333,333 5.0 3.6
All executive officers and directors
as a group (seven persons)(2)(3)(5)(9) ..... 6,071,046 91.1 66.2
</TABLE>
- ------------
(1) Adjusted to reflect the conversion of the Initial Preferred Stock into
shares of Common Stock.
(2) Includes 111,111 shares subject to options beneficially owned by Mr.
Toole that are exercisable within 60 days after the date of this
Prospectus.
(3) Includes (i) 5,000 shares subject to options beneficially owned by Mr.
Tan that are exercisable within 60 days after the date of this Prospectus
and (ii) 5,242,385 shares beneficially owned by Berjaya. As Group
Executive Director of Berjaya Berhad, the owner of 100% of the
outstanding shares of Berjaya, Mr. Tan may be deemed to be the beneficial
owner of all of the shares owned by Berjaya in accordance with Rule 13d-3
under the Securities Exchange Act of 1934. Mr. Tan disclaims beneficial
ownership of the shares beneficially owned by Berjaya.
(4) The address for Mr. Tan and Berjaya is Level 16, Shahzan Prudential
Tower, 30 Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia.
(5) Includes (i) 3,333 shares subject to options beneficially owned by Dr.
Horn that are exercisable within 60 days after the date of this
Prospectus and (ii) 533,332 shares beneficially owned by Cupertino. As
the Managing Partner of Horn Venture Partners II, L.P., a general partner
of Cupertino, Dr. Horn may be deemed to be the beneficial owner of all of
the shares owned by Cupertino in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934.
(6) The address for Dr. Horn and Cupertino is 20300 Stevens Creek Blvd.,
Suite 330, Cupertino, California 95014.
(7) Mr. Sabi owns no shares of record. The number above represents (i)
136,666 shares beneficially owned by Arab Multinational Investment; (ii)
333,333 shares beneficially owned by Banque Scandinave En Suisse and
(iii) 200,000 shares beneficially owned by Societe Financiere Privee. As
agent for these entities, Mr. Sabi may be deemed to be the beneficial
owner of all of the shares owned by these entities in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934.
(8) The address for Ayman Sabi and Banque Scandinave En Suisse is c/o Ayman
Sabi, 6118 St. Giles Street, Raleigh, North Carolina 27612.
(9) Includes 136,997 shares subject to options that are exercisable within 60
days after the date of this Prospectus.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 30 million shares of Common Stock, par
value $.03 per share, and 10 million shares of Preferred Stock, par value
$.01 per share. As of October 1, 1996, the Company had issued and outstanding
4,747,384 shares of Common Stock, 3,422,500 shares of Series A Convertible
Preferred Stock ("Series A Preferred Stock") and 2,333,350 shares of Series B
Convertible Preferred Stock ("Series B Preferred Stock"). As of September 25,
1996, the Company had four holders of record of Common Stock, seven holders
of record of Series A Preferred Stock and six holders of record of Series B
Preferred Stock, respectively.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share held
on all matters submitted to a vote of shareholders. Cumulative voting in the
election of directors is not permitted and the holders of a majority of the
number of outstanding shares of Common Stock are entitled to vote in any
election of directors and may elect all of the directors standing for
election.
Holders of Common Stock are entitled to receive ratably such dividends, if
any, as may be declared by the Board of Directors out of funds legally
available therefor, subject to any preferential dividend rights of
outstanding Preferred Stock. Upon a liquidation, dissolution or winding up of
the Company, the holders of Common Stock are entitled to receive ratably the
net assets of the Company available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding Preferred
Stock. The holders of Common Stock have no preemptive, subscription,
redemption or conversion rights. The outstanding shares of Common Stock are,
and the shares offered by the Company in this Offering, will be, when issued
and paid for, fully paid and nonassessable.
PREFERRED STOCK
The Company currently has issued and outstanding an aggregate of 3,422,500
shares of Series A Preferred Stock and 2,333,350 shares of Series B Preferred
Stock. Upon the closing of the Offering, all Issued Preferred Stock will be
converted automatically into an aggregate of 1,918,616 shares of Common
Stock.
After the Offering, the Company will have authorized 10,000,000 shares of
undesignated Preferred Stock, 4,124,975 of which will be available for
issuance. The Board of Directors is empowered by the Company's Articles of
Incorporation to designate and issue from time to time one or more classes or
series of such Preferred Stock without shareholder approval. The Board of
Directors may fix and determine the relative rights, preferences and
privileges of each class or series of Preferred Stock so issued. Because the
Board of Directors has the power to establish the preferences and rights of
each class or series of Preferred Stock, it may afford the holders of any
series or class of Preferred Stock preferences, powers and rights, with
respect to voting, liquidation or otherwise, senior to the rights of holders
of Common Stock. The issuance of Preferred Stock could have the effect of
delaying or preventing a change in control of the Company. The Board of
Directors has no present plans to issue any shares of Preferred Stock.
CERTAIN PROVISIONS OF FLORIDA LAW
Florida law provides that, unless the corporation has elected to opt out
of such provisions in its Articles of Incorporation or Bylaws, a public
corporation organized under Florida law is subject to certain statutory
provisions that may have anti-takeover effects and that require special
approvals for certain "affiliated transactions." These provisions, which are
contained in the Florida Business Corporation Act, require, subject to
certain exceptions, that an "affiliated transaction" be approved by the
holders of two-thirds of the voting shares other than those beneficially
owned by an "interested shareholder" or by a majority of disinterested
directors and that voting rights be conferred on "control shares" acquired in
specified control share acquisitions generally only to the extent conferred
by
37
<PAGE>
resolution approved by the shareholders, excluding holders of shares defined
as "interested shares." The Company has elected to opt out of the
"control-share" acquisition provisions, but has not elected to opt out of the
affiliated transactions provisions. In addition, Florida law presently limits
the personal liability of a corporate director for monetary damages, except
where the director (i) breaches his or her fiduciary duties and (ii) such
breach constitutes or includes certain unlawful distributions or certain
other reckless, wanton or willful acts or misconduct.
RIGHTS OF FIRST REFUSAL
Berjaya and several other existing shareholders of the Company are
entitled to certain rights of first refusal with respect to the issuance of
equity securities of the Company, other than shares issued in connection with
an underwritten public offering .
REGISTRATION RIGHTS
In connection with the private placement of its Common Stock and Issued
Preferred Stock, the Company has granted certain registration rights to
certain holders of its Issued Preferred Stock and Common Stock. The Company
will have ongoing obligations with respect to those registration rights. See
"Shares Eligible for Future Sale--Registration Rights."
TRADING MARKET AND TRANSFER AGENT
No established trading market for the Common Stock existed prior to the
Offering. The Company's Common Stock has been approved for listing on the
Nasdaq National Market under the symbol "GRLL." The transfer agent for the
Common Stock is American Stock Transfer & Trust Company, and its address is
40 Wall Street, New York, New York 10005.
SHARES ELIGIBLE FOR FUTURE SALE
GENERAL
Upon completion of the Offering, the Company will have outstanding
9,165,996 shares of Common Stock (assuming no exercise of outstanding options
to purchase shares of Common Stock). Of these shares, the 2,500,000 shares of
Common Stock sold in the Offering will be freely tradeable without
restriction or further registration under the Securities Act, except for any
of such shares held by "affiliates" (as defined under the Securities Act) of
the Company, which may generally only be sold in compliance with the
applicable provisions of Rule 144 adopted under the Securities Act ("Rule
144"). The holders of the remaining 6,665,996 shares (the "Restricted
Shares") will be entitled to sell their shares in the public securities
market only if registered under the Securities Act or if sold in accordance
with an applicable exemption from registration, such as Rule 144 or Rule 701
promulgated under the Securities Act.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate of the Company, who has
beneficially owned Restricted Shares for at least two years is entitled to
sell, within any three-month period, up to the number of Restricted Shares
that does not exceed the greater of (i) one percent of the then outstanding
shares of Common Stock (approximately 91,660 shares immediately after the
Offering); or (ii) the average weekly trading volume during the four calendar
weeks preceding the date on which notice of the sale is filed with the
Securities and Exchange Commission (the "Commission"). Sales under Rule 144
are subject to certain restrictions relating to manner of sale, volume of
sales and the availability of current public information about the Company.
4,161,069 of the Restricted Shares will be eligible for sale pursuant to Rule
144, subject to these restrictions, beginning 90 days after the date of this
Prospectus, and 2,504,927 shares will become eligible for sale subject to
certain restrictions at various times between May 1997 and May 1998.
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<PAGE>
Further, a person (or persons whose shares are aggregated) who is not deemed
to have been an affiliate of the Company at any time during the three months
immediately preceding the sale is entitled to sell Restricted Shares pursuant
to rule 144(k) without regard to the volume limitations, current public
information or manner of sale requirements of Rule 144, provided that at
least three years have expired since the later of the date on which the
Restricted Shares were acquired from the Company or the date they were
acquired from an affiliate of the Company. Currently none of the Restricted
Shares are eligible for sale pursuant to Rule 144(k). In addition to the
foregoing, affiliates of the Company must comply with the restrictions and
requirements of Rule 144 (other than the holding period requirement) in order
to sell any Common Stock they own that does not constitute Restricted Shares.
See "Risk Factors--Shares Eligible for Future Sale."
An employee, officer or director of, or consultant to, the Company who
purchased his or her shares pursuant to a written compensatory plan or
contract is entitled to rely on the resale provisions of Rule 701 under the
Securities Act of 1933, which permits non-affiliates to sell their Rule 701
Shares without having to comply with the public information, holding period,
volume limitation or notice provisions of Rule 144 and permits affiliates to
sell their Rule 701 shares without having to comply with Rule 144's holding
period requirements, in each cash commencing 90 days after the date of this
Prospectus.
The Company, its officers and directors and shareholders have agreed that
they will not offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, any shares of Common Stock or other securities of the
Company that are substantially similar to the shares, including but not
limited to any securities that are convertible into or exchangeable for, or
that represent the right to receive, shares of Common Stock or any such
substantially similar securities, for a period of 180 days after the date of
this Prospectus without the prior written consent of the Representatives,
except that the Company may issue shares pursuant to the over-allotment
option.
Prior to the Offering, there has been no market for the Common Stock, and
there can be no assurance that an active public market will develop or
continue after the Offering. Sales of substantial amounts of Common Stock in
the public market, or the perception that sales may occur, could adversely
affect the prevailing market price of the Common Stock or the ability of the
Company to raise capital through a public offering of its equity securities.
See "Risk Factors--Absence of Public Market; Price Volatility."
REGISTRATION RIGHTS
Pursuant to certain registration rights agreements, the holders of the
Series A Preferred Stock and the Series B Preferred Stock have certain demand
registration rights with respect to the 1,918,612 shares of Common Stock
issuable upon conversion of such Series A and B Preferred Stock and certain
holders of Common Stock have certain demand registration rights with respect
to 4,605,718 shares of Common Stock (collectively, the "Subject Shares"). The
demand registration rights, which require the Company to use its best efforts
to effect the registration of the Subject Shares under the Securities Acts
may be exercised by the holders of at least 50% of the Subject Shares after
February 10, 1997, subject to limited exceptions. The Company is obligated to
register Subject Shares pursuant to this demand registration right on two
occasions only; provided, however, that the Company's obligation is deemed
satisfied only when a registration statement covering at least 75% of the
Subject Shares has become effective and, if the shares are to be sold in a
firm commitment underwritten public offering, all of such shares have been
sold pursuant to such offering. Notwithstanding the foregoing, holders of
Subject Shares have unlimited demand registration rights to the extent the
Company may register Subject Shares on Form S-3 or any successor thereto,
provided that the reasonably anticipated aggregate price to the public of the
offering would exceed $500,000. The Company also is obligated to offer the
holders of Subject Shares the right to register their shares pursuant to
certain registration statements filed by the Company.
The Company has agreed to indemnify the holders of the Subject Shares for
certain liabilities under applicable state and federal securities laws in
connection with any offering pursuant to the
39
<PAGE>
exercise of registration rights. The Company will not indemnify the holders
of Subject Shares for any liabilities resulting from information furnished in
writing by such holders. Except in certain limited circumstances, the Company
is obligated to pay all expenses incidental to a demand registration,
excluding underwriters' discounts and commissions.
REGISTRATION STATEMENT RELATING TO 1994 STOCK OPTION PLAN
The Company has reserved 216,666 shares of Common Stock for issuance under
the 1994 Stock Option Plan, and options for an aggregate of 181,103 shares of
Common Stock are currently outstanding thereunder. The Company intends to
file a registration statement under the Securities Act, covering the shares
of Common Stock reserved for issuance under the 1994 Stock Option Plan. Such
registration statement is expected to be filed soon after the date of this
Prospectus and will automatically become effective upon filing. Accordingly,
shares registered under such registration statement will be available for
sale in the open market, unless such shares are subject to vesting
restrictions with the Company or the contractual restrictions described
above. See "Management--1994 Stock Option Plan."
40
<PAGE>
UNDERWRITING
The Company has entered into a Purchase Agreement (the "Purchase
Agreement") with the underwriters listed in the table below (the
"Underwriters"), for whom Piper Jaffray Inc. and Robertson, Stephens &
Company LLC are acting as representatives (the "Representatives"). Subject to
the terms and conditions set forth in the Purchase Agreement, the Company has
agreed to sell to the Underwriters, and each of the Underwriters has
severally agreed to purchase, the number of shares of Common Stock set forth
opposite each Underwriter's name in the table below.
NUMBER
NAME OF SHARES
- ---- ---------
Piper Jaffray Inc. .............................
Robertson, Stephens & Company LLC...............
---------
Total ........................................ 2,500,000
=========
Subject to the terms and conditions of the Purchase Agreement, the
Underwriters have agreed to purchase all of the Common Stock being sold
pursuant to the Purchase Agreement, if any is purchased (excluding shares
covered by the over-allotment option granted therein). In the event of a
default by any Underwriter, the Purchase Agreement provides that, in certain
circumstances, purchase commitments of the nondefaulting Underwriters may be
increased or the Purchase Agreement may be terminated.
The Representatives have advised the Company that the Underwriters propose
to offer the Common Stock directly to the public initially at the public
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession of not more than $ per share.
Additionally, the Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per share to certain other dealers. After
the Offering, the public offering price and other selling terms may be
changed by the Underwriters.
Of the 2,500,000 shares of Common Stock offered hereby by the Company, up
to 250,000 of such shares will be reserved for sale to persons designated by
the Company. There can be no assurance that such shares will be purchased by
these persons. Shares not so purchased will be reoffered immediately by the
Underwriters to the public at the initial public offering price.
The Company has granted to the Underwriters an option, exercisable by the
Representatives within 30 days after the date of the Purchase Agreement, to
purchase up to an additional 375,000 shares of Common Stock at the same price
per share to be paid by the Underwriters for the other shares offered hereby.
If the Underwriters purchase any of such additional shares pursuant to this
option, each Underwriter will be committed to purchase such additional shares
in approximately the same proportion as set forth in the table above. The
Underwriters may exercise the option only for the purpose of covering
over-allotments, if any, made in connection with the distribution of the
Common Stock offered hereby.
The Representatives have informed the Company that neither they, nor any
member of the National Association of Securities Dealers, Inc. (the "NASD")
participating in the distribution of the Offering, will make sales of the
Common Stock offered hereby to accounts over which they exercise
discretionary authority without the prior specific written approval of the
customer.
The Offering of the shares of Common Stock is made for delivery when, as
and if accepted by the Underwriters and subject to prior sale and to
withdrawal, cancellation or modification of the Offering without notice. The
Underwriters reserve the right to reject an order for the purchase of shares
in whole or in part.
41
<PAGE>
The officers, directors and shareholders of the Company who will
beneficially own in the aggregate 6,665,996 shares of Common Stock after the
Offering, have agreed that they will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any shares of Common
Stock or other securities of the Company that are substantially similar to
the shares, including but not limited to any securities that are convertible
into or exchangeable for, or that represent the right to receive, shares of
Common Stock or any such substantially similar securities, owned by them
prior to the date of the Prospectus for a period of 180 days after the date
of this Prospectus, without the prior written consent of Piper Jaffray Inc.
The Company has agreed that it will not, without the Representatives' prior
written consent, offer, sell, contract to sell, pledge, or otherwise dispose
of any shares of Common Stock, options or warrants to acquire shares of
Common Stock or securities exchangeable for or convertible into shares of
Common Stock during the 180-day period following the date of this Prospectus,
except that the Company may issue shares upon the exercise of options and
warrants granted prior to the date hereof, and may grant additional options
under the 1994 Stock Option Plan.
Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock offered hereby
has been determined by negotiation among the Company and the Representatives.
Among the factors considered in determining the initial public offering price
were prevailing market and economic conditions, the Company's revenue and
earnings, estimates of the business potential and prospects of the Company,
the present state of the Company's business operations, an assessment of the
Company's management and the consideration of the above factors in relation
to the market valuations of companies in similar businesses. The initial
public offering price for the Common Stock should not be considered an
indication of the actual value of the Common Stock offered hereby. In
addition, there can be no assurance that the Common Stock can be resold at a
price equal to or greater than the initial public offering price. See "Risk
Factors--Absence of Public Market; Price Volatility."
The Company has agreed to indemnify the Underwriters and their controlling
persons against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments the Underwriters may be required
to make in respect thereof.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Ruden, McClosky, Smith, Schuster & Russell, P.A.,
Fort Lauderdale, Florida. Certain legal matters will be passed upon for the
Company by Locke Purnell Rain Harrell (A Professional Corporation), Dallas,
Texas and by Charles D. Barnett, Esq., Ft. Lauderdale, Florida. Certain legal
matters in connection with the Offering will be passed upon for the
Underwriters by King & Spalding, Atlanta, Georgia. Locke Purnell Rain Harrell
(A Professional Corporation) and King & Spalding will rely on Ruden,
McClosky, Smith, Schuster & Russell, P.A. with respect to certain matters of
Florida law.
EXPERTS
The Financial Statements and schedules of Roadhouse Grill, Inc. as of
December 31, 1995 and for the year then ended included herein and elsewhere
in the Registration Statement have been audited and reported upon by KPMG
Peat Marwick LLP, independent certified public accountants. Certain financial
information for the year ended December 31, 1995 in the table under "Selected
Financial Data" included herein and in the Registration Statement has been
derived from financial statements audited by KPMG Peat Marwick LLP and has
been reported upon by KPMG Peat Marwick LLP to the extent set forth in their
report. Such Financial Statements, schedules, and selected financial data
have been included herein and in the Registration Statement in reliance upon
the report of KPMG Peat Marwick LLP, appearing elsewhere herein, and upon the
authority of said firm as experts in accounting and auditing.
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<PAGE>
The financial statements of Roadhouse Grill, Inc. as of January 1, 1995
and for the year then ended included in this registration statement have been
audited and reported upon by Coopers & Lybrand L.L.P., independent certified
public accountants. Certain financial information as of and for the year
ended January 1, 1995, in the table under "Selected Financial Data" included
in this registration statement has been derived from financial statements
audited by Coopers & Lybrand L.L.P. and has been reported upon by Coopers &
Lybrand L.L.P. to the extent set forth in their report. Such financial
statements and selected financial data have been included in this
registration statement in reliance upon the report of Coopers & Lybrand
L.L.P., given on the authority of that firm as experts in accounting and
auditing.
The Financial Statements of the Company for and as of the end of Fiscal
1993 appearing in this Prospectus and Registration Statement have been
audited by Stark & Bennett, P.A., independent auditors, and the statement of
operations data and balance sheet data under the heading "Selected Financial
Data" for and as of the end of Fiscal 1993 appearing in this Prospectus and
Registration Statement have been derived from the Financial Statements of the
Company audited by Stark & Bennett, P.A., as set forth in their report
thereon appearing elsewhere herein. Such Financial Statements and statement
of operations data and balance sheet data are included herein in reliance
upon such reports given upon the authority of such firm as experts in
accounting and auditing.
As indicated above, the Company dismissed its auditors on February 13, 1995
and again on November 28, 1995. Both such dismissals were approved by the Board
of Directors of the Company, and neither was the result of the resignation of
either auditing firm. Further, the changes were not the result of any
disagreement with the former auditors on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure.
The reports rendered by such auditors for Fiscal 1993 and Fiscal 1994 do not
contain an adverse opinion or a disclaimer of opinion and are not qualified
or modified as to uncertainty, audit scope or accounting principles. During
Fiscal 1994 and Fiscal 1995, there were no disagreements or "reportable events"
with the former accountants.
AVAILABLE INFORMATION
The Company has filed a Registration Statement on Form S-1 (the
"Registration Statement") under the Securities Act with the Commission in
Washington, D.C., with respect to the shares of Common Stock offered hereby.
This Prospectus, which is part of the Registration Statement, does not
contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto, certain portions of which are omitted as
permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock, reference is
made to the Registration Statement and exhibits and schedules contained
therein, which may be inspected without charge at the principal office of the
Commission in Washington, D.C. and copies of all or any part of which may be
obtained from the Commission upon payment of the prescribed fees. The
summaries contained in this Prospectus concerning information included in the
Registration Statement, or in any exhibit or schedule thereto, are qualified
in their entirety by reference to such information, exhibit or schedule.
As a result of the Offering, the Company will become subject to the
informational requirements of the Securities Exchange Act of 1934, as
amended, and in accordance therewith will file reports and other information
with the Commission. Reports, registration statements, proxy statements and
other information filed by the Company with the Commission can be inspected
and copied at the public reference facilities of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following regional offices of the Commission: Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60621 and 7 World Trade Center,
Suite 1300, New York, New York 10048, upon payment of the charges prescribed
therefor by the Commission. The Commission maintains a web site, located at
http://www.sec.gov, that contains reports, proxy and information statements
regarding registrants that file electronically with the Commission.
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<PAGE>
INDEX TO FINANCIAL STATEMENTS
ROADHOUSE GRILL, INC.
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Report of Independent Auditors (KPMG Peat Marwick LLP) .................................. F-2
Report of Independent Accountants (Coopers & Lybrand L.L.P.) ............................ F-3
Report of Independent Accountants (Stark & Bennett, P.A.) ............................... F-4
Balance Sheets at January 1, 1995 and December 31, 1995 and June 30, 1996 (Unaudited) .. F-5
Statements of Operations for the fiscal years ended January 2, 1994,
January 1, 1995 and December 31, 1995 and for the
Twenty-six Week Period Ended July 2, 1995 and June 30, 1996 (Unaudited) ............... F-6
Statements of Changes in Stockholders' Equity for the fiscal years ended
January 2, 1994, January 1, 1995, December 31, 1995 and the
Twenty-six Week Period Ended June 30, 1996 (Unaudited) ................................ F-7
Statements of Cash Flows for the fiscal years ended January 2, 1994,
January 1, 1995 and December 31, 1995 and for the
Twenty-six Week Period Ended July 2, 1995 and June 30, 1996 (Unaudited) ............... F-8
Notes to Financial Statements ........................................................... F-9
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Roadhouse Grill, Inc.:
We have audited the accompanying balance sheet of Roadhouse Grill, Inc. as of
December 31, 1995 and the related statements of operations, stockholders'
equity and cash flows for the fiscal year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Roadhouse Grill, Inc. as of
December 31, 1995, and the results of its operations and its cash flows for
the fiscal year then ended in conformity with generally accepted accounting
principles.
In our opinion, the information set forth in the selected financial data for
the year ended December 31, 1995, appearing on page 13, is fairly stated, in
all material respects, in relation to the financial statements from which it
has been derived. The selected financial data for the fiscal years ended
January 2, 1994 and January 1, 1995 were derived from financial statements
not audited by us and accordingly, we do not express an opinion on such
selected financial data.
KPMG Peat Marwick LLP
June 28, 1996, except as to
notes 1(n), 9 and 10, which
are as of October 9, 1996
Miami, Florida
F-2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Roadhouse Grill, Inc.
We have audited the accompanying balance sheet of Roadhouse Grill, Inc. as of
January 1, 1995, and the related statements of operations, changes in
stockholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Roadhouse Grill, Inc. as of
January 1, 1995, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
In our opinion, the information set forth in the selected financial data as
of and for the year ended January 1, 1995, appearing on page 13, is fairly
stated, in all material respects, in relation to the financial statements
from which it has been derived.
Coopers & Lybrand L.L.P.
Miami, Florida
March 10, 1995, except as to
notes 1(n), 9 and 10, which
are as of October 9, 1996
F-3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of Roadhouse Grill, Inc.
Davie, Florida
We have audited the accompanying balance sheet of Roadhouse Grill, Inc. as of
January 2, 1994 and the related statements of income (loss) and changes in
stockholders' equity (deficiency) for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Roadhouse Grill, Inc. as of
January 2, 1994, and the results of its operations for the year then ended in
conformity with generally accepted accounting principles.
In our opinion, the information set forth in the selected financial data for
the year ended January 2, 1994, appearing on page 13, is fairly stated, in
all material respects, in relation to the financial statements from which it
has been derived. The selected financial data for the fiscal years ended
January 1, 1995 and December 31, 1995 were derived from financial statements
not audited by us and accordingly, we do not express an opinion on such
selected financial data.
Stark & Bennett, P.A.
Plantation, Florida
May 27, 1994, except as to
notes 1(n) and 9, which
are as of October 9, 1996
F-4
<PAGE>
ROADHOUSE GRILL, INC.
BALANCE SHEETS
JANUARY 1, 1995 AND DECEMBER 31, 1995 AND SEPTEMBER 29, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, SEPTEMBER 29,
1995 1995 1996
--------------- --------------- ---------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .......................................... $ 7,734,493 $ 2,805,043 $ 4,352,196
Accounts receivable ................................................ 253,694 119,826 263,684
Due from affiliates ................................................ 572,064 155,263 208,884
Inventory .......................................................... 104,977 405,585 658,867
Current portion of note receivable ................................. -- 76,407 75,122
Pre-opening costs, net ............................................. 65,697 316,638 1,354,416
Prepaid expenses ................................................... 155,661 241,003 607,224
--------------- --------------- ---------------
Total current assets ............................................. 8,886,586 4,119,765 7,520,393
Note receivable ..................................................... -- 265,128 226,165
Property and equipment, net ......................................... 16,439,238 35,844,784 48,966,689
Intangible assets, net of accumulated amortization of $28,366
and $59,226 at December 31, 1995 and June 30, 1996
(unaudited) respectively .......................................... -- 886,594 856,206
Other assets ........................................................ 64,181 1,024,449 1,911,710
Investment in affiliates ............................................ (547,117) 60,510 226,648
--------------- --------------- ---------------
Total assets ..................................................... $24,842,888 $42,201,230 $59,437,811
=============== =============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................................... $ 599,925 $ 1,831,950 $ 6,314,639
Accrued expenses ................................................... 473,648 2,299,498 2,768,839
Due to related parties ............................................. -- 6,615,000 9,600,000
Current portion of long term debt .................................. 403,685 695,078 1,313,317
Current portion of capitalized lease obligations ................... -- 238,560 283,205
--------------- --------------- ---------------
Total current liabilities ........................................ 1,477,258 11,680,086 20,280,000
Long-term debt ...................................................... 4,454,638 6,014,268 6,860,225
Capitalized lease obligations ....................................... 1,271,727 4,245,391 4,075,869
--------------- --------------- ---------------
Total liabilities ................................................ 7,203,623 21,939,745 31,216,094
Shareholders' equity:
Preferred stock $.01 par value. Authorized 10,000,000 shares;
issued and outstanding Series A--3,525,000,
3,525,000, and 3,422,500 shares, respectively .................... 35,250 35,250 34,225
Series B--2,350,025, 2,350,025, and 2,333,350 shares, respectively 23,500 23,500 23,333
Common stock $.03 par value. Authorized 30,000,000 shares;
issued and outstanding 3,181,482, 3,920,624 and 4,747,384,
respectively ..................................................... 95,444 117,618 142,421
Additional paid-in capital ......................................... 20,717,368 26,807,318 35,313,407
Accumulated deficit ................................................ (3,232,297) (6,722,201) (7,291,669)
--------------- --------------- ---------------
Total shareholders' equity ....................................... 17,639,265 20,261,485 28,221,717
Commitments and contingencies (note 13) ............................. -- -- --
--------------- --------------- ---------------
Total liabilities and shareholders' equity ....................... $ 24,842,888 $ 42,201,230 $59,227,484
=============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
ROADHOUSE GRILL, INC.
STATEMENTS OF OPERATIONS
FOR THE FISCAL YEARS ENDED JANUARY 2, 1994, JANUARY 1, 1995 AND
DECEMBER 31, 1995 AND FOR THE 39 WEEKS ENDED OCTOBER 1, 1995 AND
SEPTEMBER 29, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
FISCAL YEAR 39 WEEKS ENDED
----------------------------------------------- -------------------------------
OCT. 1, SEPTEMBER 29,
1993 1994 1995 1995 1996
------------- --------------- --------------- --------------- -----------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Total revenues ............................ $3,465,663 $11,389,060 $34,275,496 $23,464,950 $43,780,261
Cost of restaurant sales:
Food and beverage ...................... 1,470,957 4,085,246 12,084,134 8,393,196 14,984,599
Labor and benefits ....................... 987,952 4,606,156 12,019,723 8,153,284 13,629,089
Occupancy and other ...................... 1,218,900 2,318,014 8,710,597 5,656,469 9,571,812
------------- --------------- --------------- --------------- -------------
Total cost of restaurant sales ........... 3,677,809 11,009,416 32,814,454 22,202,949 38,185,500
Depreciation and amortization ............. 47,103 414,912 1,662,650 980,994 2,176,787
General and administrative ................ 280,418 1,913,446 3,327,680 1,922,470 3,483,532
------------- --------------- --------------- -------------- --------------
Total operating expenses ............... 4,005,330 13,337,774 37,804,784 25,106,413 43,845,819
------------- --------------- --------------- -------------- --------------
Operating income (loss) .................. (539,667) (1,948,714) (3,529,288) (1,641,463) (65,558)
Other income (expense):
Interest expense, net .................... (40,190) (179,803) (404,009) (206,074) (881,047)
Equity in net income (loss) of affiliates (136,035) (411,081) 284,241 225,289 166,134
Other, net ............................... 2,868 20,325 159,152 121,794 211,003
------------- --------------- --------------- -------------- --------------
Total other income (expense) ........... (173,357) (570,559) 39,384 141,009 (503,910)
------------- --------------- --------------- -------------- --------------
Net loss ............................... $ (713,024) $(2,519,273) $(3,489,904) $(1,500,454) $ (569,468)
============= ============= =============== ============== ==============
Net loss per common share ................. (0.34) (1.16) (1.02) (0.45) (0.13)
============= ============= =============== ============= ===============
Weighted average common shares and share
equivalents outstanding ................. 2,077,751 2,171,175 3,420,132 3,305,731 4,359,091
============= ============= =============== ============= ===============
Pro forma net loss per common share ...... (0.65) (0.09)
=============== ===============
Pro forma weighted average common shares
and share equivalents outstanding ....... 5,378,474 6,295,541
=============== ===============
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
ROADHOUSE GRILL, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE FISCAL YEARS ENDED JANUARY 2, 1994, JANUARY 1, 1995, DECEMBER 31, 1995
AND THE 39 WEEKS ENDED SEPTEMBER 29, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK ADDITIONAL
---------------------- --------------------- PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------- -------- --------- ------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at inception ........ -- $ -- -- $ -- $ -- $ -- $ --
Issuance of common stock ... 167 500 -- -- 100,000 -- 100,500
Net loss ................... -- -- -- -- -- (713,024) (713,024)
--------- -------- --------- ------- ----------- ----------- -----------
Balance, January 2, 1994 .... 167 $ 500 -- $ -- $ 100,000 $ (713,024) $ (612,524)
Change in par value ........ -- (495) -- -- 495 -- --
Stock split ................ 2,147,982 64,439 -- -- (64,439) -- --
Issuance of:
Common Stock ........... 1,033,333 31,000 -- -- 9,577,500 -- 9,608,500
Preferred stock--Series A -- -- 3,525,000 35,250 5,252,250 -- 5,287,500
Preferred stock--Series B -- -- 2,350,025 23,500 5,851,562 -- 5,875,062
Net loss ................... -- -- -- -- -- (2,519,273) (2,519,273)
--------- -------- --------- ------- ----------- ----------- -----------
Balance January 1, 1995 ..... 3,181,482 $ 95,444 5,875,025 $58,750 $20,717,368 $(3,232,297) $17,639,265
Issuance of common stock ... 620,624 18,618 -- -- 6,000,573 -- 6,019,191
Stock options exercised .... 118,518 3,556 -- -- 49,777 -- 53,333
Stock options outstanding .. -- -- -- -- 118,800 -- 118,800
Deferred compensation ...... -- -- -- -- (79,200) -- (79,200)
Net loss ................... -- -- -- -- -- (3,489,904) (3,489,904)
--------- -------- --------- ------- ----------- ----------- -----------
Balance December 31, 1995 ... 3,920,624 $117,618 5,875,025 $58,750 $26,807,318 $(6,722,201) $20,261,485
Issuance of common stock
(unaudited) .............. 787,035 23,611 -- -- 8,476,389 -- 8,500,000
Conversion of Series A to
common stock (unaudited) . 34,167 1,025 (102,500) (1,025) -- -- --
Conversion of Series B to
common stock (unaudited).. 5,558 167 (16,675) (167) -- -- --
Deferred compensation
(unaudited)................ -- -- -- -- 29,700 29,700
Net loss (unaudited) ....... -- -- -- -- -- (569,468) (569,468)
--------- -------- --------- ------- ----------- ----------- -----------
Balance September 29, 1996
(unaudited) ............... 4,747,384 $142,421 5,755,850 $57,558 $35,313,407 $(7,291,669) $28,221,717
========= ======== ========= ======= =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-7
<PAGE>
ROADHOUSE GRILL, INC.
STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED JANUARY 2, 1994, JANUARY 1, 1995 AND
DECEMBER 31, 1995 AND FOR THE 39 WEEKS ENDED OCTOBER 1, 1995
AND SEPTEMBER 29, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
JANUARY 2, JANUARY 1, DECEMBER 31, OCTOBER 1, SEPTEMBER 29,
1994 1995 1995 1995 1996
----------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net loss ..................................... $ (713,024) $ (2,519,273) $ (3,489,904) $(1,500,454) $ (569,468)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization ................. 47,103 414,912 1,662,650 980,994 2,176,787
Noncash compensation expense .................. -- -- 39,600 -- 29,700
Equity in net income (loss) of affiliate ..... 136,035 411,081 (284,241) (225,289) (166,134)
Changes in assets and liabilities, net of
acquisitions of businesses:
Decrease (increase) in accounts receivable.... -- (236,079) 133,868 166,445 (143,858)
Decrease (increase) in other assets ......... -- 7,194 (882,068) (326,856) (608,414)
Increase in prepaid expenses ................. (80,486) (92,629) (85,342) (247,266) (366,221)
Increase in accounts payable ................. 516,228 83,697 911,772 2,257,520 4,482,689
Increase in accrued expenses ................. 190,270 283,378 1,760,798 407,731 469,342
Increase in inventory ........................ (56,361) (48,777) (300,608) (328,111) (253,282)
Increase in pre-opening costs ................ -- (65,697) (250,941) (116,026) (1,037,778)
----------- ------------ ------------ ----------- ------------
Net cash provided by (used in)
operating activities ...................... 39,765 (1,762,193) (784,416) 1,068,688 4,013,363
----------- ------------ ------------ ----------- ------------
Cash flows from investing activities
Advances to affiliates, net .................. (161,000) (572,064) 26,031 94,868 (53,621)
Payments for other assets ...................... (71,375) -- -- -- -0-
Proceeds from payments on note receivable ..... -- -- 49,235 37,980 40,248
Proceeds from sale leaseback transactions ..... -- -- 1,185,960 1,185,960 450,000
Purchases of property and equipment ............ (1,378,507) (10,112,790) (14,541,042) (9,671,428) (14,240,487)
Acquisition of restaurants ..................... -- -- (3,000,000) (3,000,000) -0-
----------- ------------ ------------ ----------- ------------
Net cash used in investing activities ...... (1,610,882) (10,684,854) (16,279,816) (11,352,620) (13,803,860)
----------- ------------ ------------ ----------- ------------
Cash flows from financing activities
Increase in cash overdraft ..................... -- -- -- -- -0-
Proceeds from short term debt and amounts due
from related parties ......................... 1,591,172 29,045 6,615,000 -- 7,000,000
Repayments of amounts due to related parties .. (29,045) (1,591,172) -- -- -0-
Proceeds from long-term debt ................... -- 1,658,078 -- -- -0-
Repayments of long-term debt ................... -- (664,592) (407,977) (236,641) (493,804)
Payments on capital lease obligation ........... -- (112,391) (144,765) (85,943) (168,546)
Proceeds from issuance of common and
preferred stock .............................. 100,500 20,771,062 6,072,524 4,000,000 5,000,000
----------- ------------ ------------ ----------- ------------
Net cash provided by financing activities .. 1,662,627 20,090,030 12,134,782 3,677,416 11,337,650
----------- ------------ ------------ ----------- ------------
Increase (decrease) in cash and cash equivalents 91,510 7,642,983 (4,929,450) (6,606,516) (1,547,153)
Cash and cash equivalents at beginning of year . -- 91,510 7,734,493 7,734,493 2,805,043
----------- ------------ ------------ ----------- ------------
Cash and cash equivalents at end of year ....... $ 91,510 $ 7,734,493 $ 2,805,043 $ 1,127,977 $ 4,352,196
=========== ============ ============ =========== ============
Supplementary disclosures:
Interest paid ................................ $ - $ 343,703 $ 525,276 190,009 $ 761,361
=========== ============ ============ =========== ============
</TABLE>
Noncash investing and financing activities:
Capital lease obligations and seller financing mortgage agreeements of
$1,271,727 and $4,924,458 respectively were entered into in the year ended
January 1, 1995.
During the fiscal year ended December 31, 1995 the Company entered into
capital leases for property and equipment in the amount of $4,100,000.
In addition, the Company entered into mortgage notes payable amounting to
approximately $2,000,000 during the fiscal year ended December 31, 1995.
The Company assumed $270,000 in debt in connection with the assumption of a
lease from a third party.
During the 39 week period ended September 29, 1996, $3,500,000 of long-term
debt was converted to common stock.
The Company entered into capital lease obligations and seller financing
mortgage agreements of $44,000 and $1,458,000, respectively, during the
period from January 1, 1996 to April 21, 1996.
See accompanying notes to financial statements.
F-8
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
SEPTEMBER 29, 1996 (UNAUDITED)
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BUSINESS
Roadhouse Grill, Inc. (the "Company") was incorporated under the laws of
the state of Florida in 1992. The principal business of the Company is the
operation of specialty restaurants located primarily in the state of Florida.
The Company has also granted franchises and licenses to operate restaurants
under the "Roadhouse Grill" name.
At December 31, 1995, there were 18 company-owned restaurants open. There
were two restaurants operating under franchise agreements and one restaurant
operating under a license agreement. In addition, at December 31, 1995, the
Company had a 50 percent interest in Kendall Roadhouse Grill, L.C., a limited
liability company that owns the Kendall, Florida Roadhouse Grill restaurant
("Kendall"). The Company manages the operations of the Kendall restaurant
pursuant to an operating agreement. Under the operating agreement, the
Company receives management fees and is allocated its share of the
restaurant's profit and losses. The Company previously had a 50 percent
interest in North Miami Roadhouse Grill, L.C., a limited liability company
that owned the North Miami Roadhouse Grill restaurant ("North Miami"), under
a similar arrangement. The remaining interest was acquired by the Company in
the first quarter of 1995.
(B) INVESTMENT IN AFFILIATE
The Company's 50 percent interest in Kendall is accounted for under the
equity method. In addition, the Company's 50 percent interest in North Miami
was accounted for under the equity method until the Company acquired a 100%
interest in that restaurant, which occurred in the first quarter of 1995.
(C) PROPERTY AND EQUIPMENT
Property and equipment are carried at cost less accumulated depreciation.
The cost of restaurants held under capital leases is recorded at the lower of
the net present value of the minimum lease payments or the fair value of the
leased property at the inception of the lease. Repairs and maintenance are
charged to expense as incurred. Major renewals and betterments which
substantially extend the useful life of the property are capitalized and
depreciated over the useful life of the asset. When assets are retired or
otherwise disposed of, the cost and accumulated depreciation are removed from
their respective accounts and any gain or loss is recognized.
Depreciation is calculated using the straight-line method over the
estimated useful lives of the assets. Amortization of capitalized lease
assets is calculated using the straight-line method over the shorter of the
estimated useful life of the leased asset or the lease term.
(D) INTANGIBLES
Intangibles consist primarily of goodwill recorded as a result of a
restaurant acquisition during 1995 (see Note 14) and is being amortized on a
straight-line basis over 17 years, which is the lease term of the respective
restaurant property. The Company evaluates whether changes have occurred that
would
F-9
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS-(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
SEPTEMBER 29, 1996 (UNAUDITED)
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES-(CONTINUED)
require revision of the remaining estimated useful life of the assigned
goodwill or rendered goodwill not recoverable. If such circumstances arise,
the Company uses undiscounted future cash flows to determine whether the
goodwill is recoverable. In 1996, the Company adopted Statement of Financial
Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived
Assets to Be Disposed Of," (see Note 1m).
(E) CASH AND CASH EQUIVALENTS
The Company considers all short-term investments with an original maturity
of three months or less to be cash equivalents.
(F) INVENTORY
Inventories are valued at the lower of cost (based on first-in, first-out
inventory costing) or net realizable value and consist primarily of
restaurant food items, beverages and paper supplies.
(G) INCOME TAXES
Prior to January 1994, the Company had elected to be treated as a S
Corporation under the appropriate sections of the Internal Revenue Code and,
accordingly, was not subject to federal and state income taxes. Instead, the
Company's taxable income or loss and available credits were the
responsibility of the Company's shareholders.
Effective January 1994, the Company terminated its S Corporation status
and consequently, became subject to federal and state income taxes. Upon
termination of the Company's S Corporation status, the Company adopted
Financial Accounting Standards Board Statement No. 109, "Accounting for
Income Taxes," which requires the utilization of the liability method of
accounting for deferred income taxes. Under this method, deferred income tax
assets and liabilities are recorded based on the difference between the
financial statement and tax bases of assets and liabilities using tax rates
in effect for the year in which the differences are expected to reverse.
(H) PRE-OPENING COSTS
Pre-opening costs are costs incurred in the opening of new stores
(primarily payroll costs) which are capitalized and amortized over a one-year
period commencing with the first period after the new restaurant opens.
Deferred costs related to sites subsequently determined to be
unsatisfactory, and general site selection costs which cannot be identified
with a specific restaurant, are charged to operations.
(I) FISCAL YEAR
The Company's fiscal year ends on the Sunday nearest December 31.
(J) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
F-10
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS-(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
SEPTEMBER 29, 1996 (UNAUDITED)
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES-(CONTINUED)
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
(K) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of financial instruments has been determined
based on available information and appropriate valuation methodologies. The
carrying amounts of accounts receivable, accounts payable and accrued
expenses approximate fair value due to the short-term nature of the accounts.
The fair value of long-term debt is estimated based on market rates of
interest currently available to the Company. The fair value of long-term debt
at December 31, 1995 is approximately $6,240,000.
The fair value of long-term debt approximates carrying value at January 1,
1995.
(L) REVENUE RECOGNITION
Total revenues include sales at Company-operated restaurants, royalties
received from restaurants operating under franchise and license agreements, and
fees earned under management agreements. Revenue earned from the game rooms and
vending machines in the restaurants is included in other income.
(M) NEW ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (SFAS No.
121), which becomes effective for financial statements for fiscal years
beginning after December 15, 1995. The statement establishes accounting
standards for the impairment of long-lived assets, certain identifiable
intangible assets and goodwill related to those assets to be held and used,
and for long-lived assets and certain identifiable intangible assets to be
disposed of. The Company has adopted SFAS No. 121 and as of January 1, 1996
and September 29, 1996, there is no material impact to the financial position
or results of operations of the Company.
In October 1995, the FASB issued Statement of Financial Accounting
Standard No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123),
which becomes effective for financial statements for fiscal years beginning
after December 15, 1995. SFAS No. 123 defines a fair value based method of
accounting for an employee stock option or similar equity instrument and
encourages all entities to adopt that method of accounting for all of their
employee stock compensation plans. However, it also allows an entity to
continue to measure compensation cost for those plans using the intrinsic
value based method of accounting prescribed by Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25). The
Company is currently accounting for stock-based compensation under APB 25 and
has opted to continue accounting for stock-based compensation under this
method.
(N) ADVERTISING COSTS
During 1995, the Company adopted Statement of Position 93-7, "Reporting on
Advertising Costs" (SOP 93-7). The adoption of SOP 93-7 did not have a
material impact on the Company's financial position or results of operations.
The Company expenses all advertising costs as incurred. Advertising
F-11
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS-(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
SEPTEMBER 29, 1996 (UNAUDITED)
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES-(CONTINUED)
expense for the fiscal years ending January 2, 1994, January 1, 1995 and
December 31, 1995 amounted to approximately $106,000, $414,000 and $1,273,000,
respectively.
(O) NET LOSS PER COMMON SHARE AND PRO FORMA NET LOSS PER COMMON SHARE
Net loss per common share for all periods is based on the weighted average
number of common shares outstanding plus all common shares, stock options and
warrants issued within one year prior to the initial filing date of the
registration statement for the anticipated initial public offering. Common
stock equivalents prior to such period are included in the determination of
loss per share only where such inclusion is dilutive.
Pro forma net loss per common share includes the conversion of all
outstanding preferred shares into common shares in connection with the
initial public offering (unaudited).
On October 9, 1996, the Board of Directors declared a one-for-three
reverse stock split (see Note 9). All per share data appearing in the
financial statements have been retroactively adjusted for the reverse split.
(P) RECLASSIFICATIONS
Certain prior year balances have been reclassified to conform to the
current presentation.
(Q) UNAUDITED FINANCIAL STATEMENTS
The unaudited financial statements for the 39 weeks ended October 2, 1995 and
September 29, 1996 include, in the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
financial information set forth herein. The results of operations for the
interim periods are not necessarily indicative of the results to be expected for
an entire fiscal year.
F-12
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS-(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
SEPTEMBER 29, 1996 (UNAUDITED)
(2) PROPERTY AND EQUIPMENT
Property and equipment consist of the following at:
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, SEPTEMBER 29, ESTIMATED
1995 1995 1996 USEFUL LIVES
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Buildings ....................... $ 2,926,801 $10,264,366 $15,042,854 20 years
Land ............................ 1,392,391 5,181,900 8,845,646 --
Land held for future development 3,997,315 3,308,069 1,064,828 --
Furniture and equipment ......... 2,885,100 8,324,125 11,745,708 3-7 years
Leasehold improvements .......... 2,617,495 8,763,326 10,270,734 7-10 years
-------------- --------------- --------------- ---------------
13,819,102 35,841,786 46,969,770
Less accumulated depreciation .. 460,498 2,172,857 4,302,266
-------------- --------------- ---------------
13,358,604 33,668,929 42,667,504
Construction in progress ........ 3,080,634 2,175,855 6,029,185
-------------- --------------- ---------------
$16,439,238 $35,844,784 $48,696,689
============== =============== ===============
</TABLE>
Included in property and equipment are buildings under capital lease of
$1,190,605 and $4,621,318 at January 1, 1995 and December 31, 1995,
respectively, (see Note 3). The Company capitalized interest cost of
approximately $86,400, $273,000 and $150,544 during the periods ended January 1,
1995, December 31, 1995, and September 29, 1996, respectively, with respect to
qualifying construction projects.
(3) CAPITAL LEASES
The following is a schedule of future minimum lease payments required
under capital leases as of December 31, 1995:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
<S> <C>
1996 ......................................... $ 741,230
1997 ......................................... 743,737
1998 ......................................... 753,938
1999 ......................................... 758,127
2000 ......................................... 599,339
Thereafter ................................... 5,602,467
------------
Total minimum lease payments ..................... 9,198,838
Less amount representing interest at varying
rates ranging from 9.5 percent to 13 percent.... 4,714,887
------------
4,483,951
Less current portion ............................. 238,560
------------
Present value of minimum obligations ............. $4,245,391
============
</TABLE>
During the fiscal year ended December 31, 1995, the Company entered into
several agreements for the sale and leaseback of restaurant equipment for a
period of sixty months at four Company stores,
F-13
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS-(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
SEPTEMBER 29, 1996 (UNAUDITED)
(3) CAPITAL LEASES-(CONTINUED)
which were recorded as capital leases. The equipment was sold at book value of
approximately $1,200,000, and as such, no gain or loss resulted from the
transaction.
(4) OPERATING LEASES
The Company leases the majority of its operating restaurant facilities.
The lease terms vary from 5 to 10 years and generally provide for renewal
options extending the lease term to 20 years.
The following is a schedule of future minimum lease payments required
under operating leases that have remaining noncancelable lease terms in
excess of one year as of December 31, 1995:
1996 ........................ $ 1,297,657
1997 ........................ 1,400,294
1998 ........................ 1,371,115
1999 ........................ 1,238,745
2000 ........................ 1,104,552
Thereafter .................. 5,044,804
--------------
Total minimum lease payments $11,457,167
==============
(5) INVESTMENT IN AFFILIATE
As discussed in Note 1, the Company had a 50 percent interest in Kendall
at January 1, 1995 and December 31, 1995. In addition, the Company had a 50
percent interest in North Miami at January 2, 1994 and January 1, 1995. The
Company accounted for these investments under the equity method. Summarized
balance sheet and income statement information for these investments is as
follows:
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, SEPTEMBER 29,
1995 1995 1996
------------- --------------- ---------------
<S> <C> <C> <C>
SUMMARIZED BALANCE SHEET:
Current assets .............................. $ 59,635 $ 117,246 $ 400,311
Property and equipment, net ................. 1,657,445 823,273 766,644
Other ....................................... 62,599 27,325 13,035
------------- --------------- ---------------
Total assets .............................. 1,779,679 967,844 1,179,990
------------- --------------- ---------------
Current liabilities ......................... 1,992,644 838,160 655,758
Due to related parties and other liabilities 334,152 79,975 206,571
------------- --------------- ---------------
Total liabilities ......................... 2,326,796 918,135 862,329
------------- --------------- ---------------
Net assets (liabilities) .................... $ (547,117) $ 49,709 $ 317,661
============= =============== ===============
SUMMARIZED STATEMENT OF OPERATIONS:
Revenues .................................... $4,901,572 $3,684,177 $2,677,634
------------- --------------- ---------------
Operating income (loss) ..................... $ (94,264) $ 403,039 $ 462,783
------------- --------------- ---------------
Net income (loss) ........................... $ (275,046) $ 319,296 $ 337,598
------------- --------------- ---------------
</TABLE>
Under the terms of the operating agreement, profits and losses are
allocated 50 percent to each partner and cash distributions are paid 25
percent to the Company and 75 percent to its partner until
F-14
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS-(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
SEPTEMBER 29, 1996 (UNAUDITED)
(5) INVESTMENT IN AFFILIATE-(CONTINUED)
such time as the partner recovers their investment. Thereafter, the cash
distributions are paid 50 percent to each partner. The Company absorbed all of
the losses of both affiliates during Fiscal 1994.
(6) MAJOR SUPPLIERS
For the fiscal year ended December 31, 1995, two suppliers comprised
approximately 87 percent of the Company's purchases. Purchases from these
suppliers were approximately $11,800,000 for the fiscal year.
(7) DUE TO RELATED PARTIES
Due to related parties consists principally of $2,500,000 due to a former
Chairman of the Board of Directors of the Company and $600,000 due the other
50 percent owner of the Kendall restaurant. The notes bear interest at 8.5
percent and 13 percent, respectively, and the latter requires monthly
payments of principal and interest through October 1996. A note payable to
Berjaya Group (Cayman) Ltd. ("Berjaya") at December 31, 1995 in the amount of
$3,500,000 was converted into common stock in April of 1996. (See Note 9).
(8) LONG-TERM DEBT
The Company acquired several properties through seller financing
arrangements. These arrangements are collateralized by the properties and
bear interest at rates varying from 7 percent to 9 percent. Monthly principal
and interest payments are due through December 2004.
Annual maturities on the mortgage notes payable as of December 31, 1995
are as follows:
1996 ................ $ 695,078
1997 ................ 746,179
1998 ................ 811,066
1999 ................ 886,794
2000 ................ 882,573
Thereafter .......... 2,687,656
------------
6,709,346
Less current portion 695,078
------------
$6,014,268
============
The carrying amount of assets used as collateral is approximately
$9,200,000 and $18,700,000 at January 1, 1995 and December 31, 1995,
respectively.
(9) CAPITAL STOCK
As of January 2, 1994, the Company's capital structure consisted of 1,000
shares of authorized common stock, with a par value of $1.00 of which 500
shares were issued and outstanding.
During the fiscal year ended January 1, 1995 the total number of shares of
all classes of stock which the Company had authority to issue was amended to
40 million of which 10 million shares are preferred stock having a $0.01 par
value per share and 30 million are shares of common stock having a $0.01 par
value per share.
F-15
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS-(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
SEPTEMBER 29, 1996 (UNAUDITED)
(9) CAPITAL STOCK-(CONTINUED)
In 1994, the Company declared a stock split whereby 12,888.88 shares of
the Company's common stock were issued for each share of common stock issued
and outstanding prior to the declaration.
In April 1996, Berjaya converted the $3,500,000 of debt into shares of
common stock at $3.60 per share. In addition, Berjaya purchased an additonal
$5,000,000 of shares of common stock at $3.60 per share.
On October 9, 1996, the Board of Directors approved a one-for-three
reverse common stock split, which will be effective prior to the date of the
Company's initial public offering. In addition, the Board of Directors
approved an increase in the common stock par value from $0.01 to $0.03. The
number of shares in the accompanying financial statements have been restated
to retroactively reflect the reverse stock split. There are no changes to the
Company's common stock and additional paid-in capital accounts as a result of
the reverse stock split and par value change.
Preferred stock consists of the following:
(A) SERIES A SHARES
The Company issued 3,525,000 shares of the Series A Shares at a purchase
price of $1.50 per share for the purpose of expansion and working capital.
The Series A Shares have a liquidation value of $1.50 per share plus unpaid
declared dividends and are convertible, subject to adjustments, into one
share of common stock per Series A Share, at the option of the holder.
Dividends are payable at $0.105 per share as adjusted, and when and if
declared. Such dividends are noncumulative. The holders of the Series A
Shares are entitled to one vote for each share held on an as converted basis
and as adjusted. Series A Shares are mandatorily convertible into common
shares upon an initial public offering of $10,000,000 or greater.
(B) SERIES B SHARES
The Company issued 2,350,025 of the 2,366,700 authorized Series B Shares
at a purchase price of $2.50 per share for the purpose of expansion and
working capital. The Series B Shares have a liquidation value of $2.50 per
share plus unpaid declared dividends and rank pari passu with the Series A
Shares with respect to any liquidation. The Series B Shares are convertible,
subject to adjustments, into one share of common stock per Series B Share at
the option of the holder. Dividends are payable at $0.175 per share as
adjusted, when and if declared. Such dividends are noncumulative. The holders
of the Series B Shares are entitled to one vote for each share held on an as
converted basis and as adjusted. Series B Shares are mandatorily convertible
into common shares upon an initial public offering of $10,000,000 or greater.
(10) STOCK OPTION PLANS
During the fiscal year ended January 1, 1995, options were issued to the
president and chief executive officer to purchase 355,555 shares of the
authorized, but unissued shares of common stock at a purchase price of $.15
per share in connection with the founding of the Company. An additional
500,000
F-16
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS-(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
SEPTEMBER 29, 1996 (UNAUDITED)
(10) STOCK OPTION PLANS-(CONTINUED)
options were issued to the Chief Executive Officer at $2.50 per share
during the fiscal year ended January 1, 1995. These options are exercisable
at any time prior to January 31, 2010. During the fiscal year ending December
31, 1995, certain of these options were exercised whereby 355,555 shares of
common stock were purchased at $0.15 per share.
A stock option plan was adopted for employees of the Company and members of
the board of directors who are not employees, and 250,000 and 650,000 shares of
the Company's common stock were reserved for issuance pursuant to such plan at
December 31, 1995 and September 29, 1996, respectively. These options are
exercisable for a period of ten years after grant. On April 25, 1994, options
were issued to a consultant of the Company to purchase 10,000 shares of common
stock at a purchase price of $1.50 per share. During the fiscal year ending
December 31, 1995, the Company granted options to employees under the stock
option plan to purchase 158,000 shares of common stock at $2.50 per share. In
addition, the Company granted options to purchase 20,000 shares of common stock
to certain directors of the Company at a price of $2.50 per share. The fair
market value of common stock at the time of the issuance of these options, as
determined by the Board of Directors of the Company, was $3.10 per share. In
connection with the granting of these options, the Company recorded $39,600 and
$29,700 in compensation expense for the fiscal year ended December 31, 1995 and
the 39 week period ended September 29, 1996, respectively. In 1996, the Company
granted additional options to purchase 355,300 shares of common stock at a price
of $3.60 per share. At December 31, 1995 and September 29, 1996, deferred
compensation expense amounted to $79,200 and $49,500, respectively, and is
included in additional paid-in capital.
As discussed in note 9, the Board of Directors declared a one-for-three
reverse stock split in October 1996. Concurrent with the reverse split, the
number of shares issuable upon the exercise of each outstanding option will
be adjusted for the one-for-three reverse split and the exercise price of
each outstanding option will be adjusted such that the total amount paid upon
exercise of the option in full will not change.
(11) INCOME TAXES
The Company adopted SFAS No. 109, effective January 3, 1994, the date it
converted from an S Corporation to a C corporation. The effect of adopting
SFAS No. 109 was not significant.
As a result of the Company's net operating losses for fiscal years ended
January 1, 1995 and December 31, 1995, there is no income tax payable.
F-17
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS-(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
SEPTEMBER 29, 1996 (UNAUDITED)
(11) INCOME TAXES-(CONTINUED)
The tax effects of the temporary differences comprising deferred tax
assets and liabilities are as follows:
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1995 1995
------------- ---------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward ............................ $1,002,000 $ 2,237,000
Stock options .............................................. -- 44,000
Less valuation allowance ................................... (969,000) (2,230,000)
------------- ---------------
33,000 51,000
Deferred tax liabilities:
Property and equipment and pre-opening expenses,
principally due to differences in depreciation and
amortization ............................................. (33,000) (51,000)
------------- ---------------
$ -- $ --
============= ===============
</TABLE>
At January 1, 1995 and December 31, 1995, the Company had no deferred tax
assets or liabilities reflected on its financial statements since the net
deferred tax assets are completely offset by a valuation allowance. In
assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers the level of historical income, scheduled reversal of deferred tax
liabilities, and projected future taxable income in making this assessment.
At December 31, 1995, the Company has a net operating loss carryforward of
$5,945,000 consisting of $2,515,000 and $3,430,000 expiring in varying
amounts through 2010 and 2011, respectively.
(12) CONCENTRATIONS OF BUSINESS AND CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash in bank and
investment custodian accounts. At times, the Company maintains cash balances
in excess of insured limits. The custodian of the investment account is a
major financial institution.
Approximately 82 percent of the restaurants currently owned and operated
by the Company are located in the state of Florida. Consequently, the
operations of the Company are affected by fluctuations in the Florida
economy. Furthermore, the Company may be affected by changing conditions
within the foodservice industry.
(13) COMMITMENTS AND CONTINGENCIES
The Company is a party to legal proceedings arising in the ordinary course
of business, many of which are covered by insurance. In the opinion of
management, disposition of these matters will not materially affect the
Company's financial condition.
F-18
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS-(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
SEPTEMBER 29, 1996 (UNAUDITED)
(13) COMMITMENTS AND CONTINGENCIES-(CONTINUED)
At September 29, 1996, the Company had 13 restaurants under development.
The estimated cost to complete these restaurants and other capital projects
in process was approximately $9.6 million at September 29, 1996.
(14) ACQUISITIONS
At January 1, 1995, the Company was a 50 percent owner in North Miami
Roadhouse Grill, L.C. ("NMRG"), which owned the North Miami, Florida
Roadhouse Grill restaurant. In January 1995, the Company acquired the
remaining 50 percent interest in NMRG for $800,000. The transaction was
accounted for using the purchase method of accounting. The purchase price was
allocated based on the fair value of the assets acquired at the time of
acquisition. Approximately $797,000 was allocated to property and equipment
and approximately $65,000 was allocated to inventory and other assets. In
connection with the acquisition, the Company also assumed certain liabilities
in the amount of $385,000.
During March 1995, the Company acquired two Roadhouse Grill restaurants
from a franchisee for $2.2 million. The transaction was accounted for using
the purchase method of accounting. The purchase price of the restaurants was
allocated to property and equipment based on the estimated fair value of the
assets at the date of acquisition. Approximately $1,555,000 was allocated to
property and equipment as a result of the acquisition. The acquisition
generated goodwill of approximately $645,000.
The Company's proforma revenue, net loss, and net loss per share as if the
above acquisitions had taken place at the beginning of fiscal 1994 are as
follows (unaudited):
Revenue $21,411,270
Net loss $(1,759,769)
Net loss per common share $ (0.81)
The proforma information includes adjustments for amortization of
intangibles arising from the transactions. Such proforma amounts are not
necessarily indicative of what the actual results of operations might have
been if the acquisitions had been effective at the beginning of fiscal 1994.
In August 1996, the Company entered into an agreement to purchase the
remaining 50 percent interest in the Kendall Roadhouse Grill, L.C. from the
joint venture partner for a purchase price of $2,300,000. If an initial
public offering is not completed by the Company by December 31, 1996, either
party may terminate the agreement without any further rights or obligations.
F-19
<PAGE>
[INSIDE BACK COVER]
Appendix "B" contains a description of the artwork on inside back cover and the
inside back fold-out.
<PAGE>
APPENDIX "B"
INSIDE BACK COVER
The inside back cover contains:
1. A map indicating the location of the Company-owned restaurants and
whether they are existing or under construction.
2. A letter from Cowboy Jim, the Company's spokesperson, that reads:
HOWDY FOLKS!
My name is COWBOY JIM /registered mark/ and I'm gonna' tell you a
little story 'bout how the south was won...Won over to the finest
steaks, chicken, burgers, ribs and seafood ever served up in these
here parts. Of course, the Roadhouse Grill didn't just spring up
overnight...it took a lot of good friendly hardworking folks to make
up the "house" we call home.
"Southern hospitality with a smile, there's just no substitute!"
That's what my grandaddy used to say.
So, here at the Roadhouse Grill that's exactly what we believe and if
you don't see it, hear it, and feel it, then jump up and say so!
'Cause we pride ourselves on being different.
Some of our neighbors near and far have tried to move in on our
territory, but we both know there's nothing like coming home and
there's nobody like the "original" Roadhouse Grill. A lot of folks
think we're pretty special 'round here and you know what? We are
'cause you make us that way!
So hitch up your family and head down the trail (just follow the
peanut shells) 'cause we're settlin' in all over southeast... and
movin' into the rest of the country too! The Roadhouse Grill...it's
an old fashioned road house built for good food and friendly folks!
/s/ Cowboy Jim
--------------
ROADHOUSE GRILL LOGO
{Excerpt from back of a Roadhouse Grill menu]
3. A quarter page photograph of the outside of the Winter Park, Florida
Roadhouse Grill restaurant with the caption "Winter Park, Florida".
INSIDE BACK FOLD-OUT
The inside back fold-out contains a two-page copy of the menu for the Roadhouse
Grill restaurants.
<PAGE>
No dealer, sales representative or other person has been authorized to give
any information or make any representation not contained in this Prospectus
in connection with the offer made by this Prospectus, and, if given or made,
such information or representation must not be relied upon as having been
authorized by the Company or the Underwriters. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby by anyone in any jurisdiction in which such offer
or solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to anyone to whom it is unlawful to
make such offer or solicitation. Neither the delivery of this Prospectus nor
any sale made hereunder shall under any circumstances create any implication
that there has been no change in the affairs of the Company since the date
hereof or that the information contained herein is correct as of any time
subsequent to the date of this Prospectus.
------------------------
TABLE OF CONTENTS
Page
Prospectus Summary ................. 3
Risk Factors ....................... 6
Use of Proceeds .................... 10
Dividend Policy .................... 10
Capitalization ..................... 11
Dilution ........................... 12
Selected Financial Data ............ 13
Management's Discussion and Analysis
of Financial Condition and
Results of Operations .............. 14
Business ........................... 21
Management ......................... 30
Certain Transactions ............... 35
Principal Shareholders ............. 36
Description of Capital Stock ....... 37
Shares Eligible for Future Sale .... 38
Underwriting ....................... 41
Legal Matters ...................... 42
Experts ............................ 42
Available Information .............. 43
Index to Financial Statements ...... F-1
------------------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THE PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
2,500,000 SHARES
[ROADHOUSE GRILL LOGO]
COMMON STOCK
------------------------
P R O S P E C T U S
------------------------
PIPER JAFFRAY INC.
ROBERTSON, STEPHENS & COMPANY
, 1996
<PAGE>
PART II
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table indicates the expenses expected to be incurred in
connection with the Offering described in this Registration Statement, all of
which will be paid by the Company:
SEC Registration Fee ................... $ 11,897
NASD Filing Fee ....................... 3,950
Nasdaq National Market Listing Fee ... 1,000
Transfer Agent and Registrar Fees .... 10,000
Blue Sky Fees (including counsel fees) 20,000
Accountants' Services and Expenses ... 75,000
Legal Services ........................ 200,000
Printing and Engraving Fees ........... 120,000
Miscellaneous ......................... 48,153
----------
TOTAL ............................... $490,000
==========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 607.0850 of the Florida Business Corporation Act permits, and, in
certain cases, requires, a corporation to indemnify certain persons,
including officers and directors and former officers and directors, and to
purchase insurance with respect to liability arising out of their capacity or
status as officers and directors. Such law provides further that the
indemnification permitted thereunder will not be deemed exclusive of any
other rights to which officers and directors may be entitled under the
corporation's articles of incorporation, bylaws, any agreement or otherwise.
In addition, Section 607.0831 of the Florida Business Corporation Act
presently limits the personal liability of a director for monetary damages,
except where the director (i) breaches his or her fiduciary duties and (ii)
such breach constitutes or includes certain unlawful distributions or certain
other reckless, wanton or willful acts or misconduct.
Paragraph 10 of the Company's Articles of Incorporation and Article IX of
the Company's Bylaws provide that the Company, to the fullest extent
permitted by the Florida Business Corporation Act, shall indemnify any person
made, or threatened to be made, a party to any action or suit because he or
she was or is a director or officer of the Company or was serving at the
request of the Company as a director or officer of another corporation.
Paragraph 10 of the Company's Articles of Incorporation and Article IX of the
Company's Bylaws, which will be filed as Exhibits 3.1 and 3.2, respectively,
to this Registration Statement, will be incorporated herein by reference.
The Company intends to maintain liability insurance for the benefit of its
directors and officers.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following information relates to all securities issued or sold by the
Company within the past three years and not registered under the Securities
Act:
1. Pursuant to a Series A Convertible Preferred Stock Purchase Agreement
dated February 10, 1994, issued 2,000,000 shares of Series A Convertible
Preferred Stock for $1.50 per share on February 10, 1994 and 1,000,000 shares
of Series A Convertible Preferred Stock for $1.50 per share on March 21, 1994
to the persons identified below, with aggregate proceeds to the Company of
$4,500,000. These shares will be converted into an aggregate of 1,000,000
shares of Common Stock upon completion of the Offering.
II-1
<PAGE>
NUMBER OF
NAME SHARES(1)
- ---- ----------
Grace Ventures Partnership, III, L.P.
(now named Cupertino Ventures Partnership, III,
L.P.) .............................................. 800,000
J. P. Bolduc ......................................... 50,000
J. Peter Grace, Jr. .................................. 50,000
D. W. Robbins, Jr. ................................... 50,000
Christian F. Horn .................................... 50,000
Banque Scandinava en Suisse .......................... 1,000,000
Berjaya Group (Cayman) Limited ....................... 1,000,000
- ------------
(1) All shareholders other than Berjaya Group (Cayman) Limited acquired
shares on February 10, 1994. Berjaya Group (Cayman) Limited acquired its
shares on March 21, 1994.
2. Pursuant to the exercise of warrants issued under the Series A
Convertible Preferred Stock Purchase Agreement dated February 10, 1994,
issued 498,750 shares of Series A Convertible Preferred Stock for $1.50 per
share on June 6, 1994 and 26,250 shares of Series A Convertible Preferred
Stock for $1.50 per share on June 7, 1994 to the persons identified below,
with aggregate proceeds to the Company of $787,500. These shares will be
converted into an aggregate of 175,000 shares of Common Stock upon completion
of the Offering.
NUMBER OF
NAME SHARES(1)
- ---- ----------
Grace Ventures Partnership, III, L.P.
(now named Cupertino Ventures Partnership, III,
L.P.) .............................................. 420,000
Christian F. Horn .................................... 26,250
David Walter Robbins, Jr., Trustee
under Declaration of Trust dated October 31, 1991 .. 26,250
J. Peter Grace, Jr. .................................. 26,250
J. P. Bolduc ......................................... 26,250
- ------------
(1) All shareholders other than J. P. Bolduc acquired shares on June 6, 1994.
Mr. Bolduc acquired his shares on June 7, 1994.
3. Pursuant to a Series B Convertible Preferred Stock Purchase Agreement
dated June 8, 1994, issued 1,300,000 shares of Series B Convertible Preferred
Stock for $2.50 per share on June 6, 1994 and 1,000,000 shares of Series B
Convertible Preferred Stock for $2.50 per share on September 26, 1994 to the
persons identified below, with aggregate proceeds to the Company of
$5,750,000. These shares will be converted into an aggregate of 766,666
shares of Common Stock upon completion of the Offering.
NAME NUMBER OF SHARES
---- -----------------
Grace Ventures Partnership, III, L.P.(1)
(now named Cupertino Ventures Partnership, III,
L.P.) .............................................. 300,000
Berjaya Group (Cayman) Limited(1) .................... 1,000,000
Arab Multinational Investment Co.(2) ................. 400,000
Societe Financiere Privee(2) ......................... 600,000
- ------------
(1) Acquired shares on June 6, 1994.
(2) Acquired shares on September 26, 1994.
4. Issued 50,025 shares of Series B Convertible Preferred Stock for $2.50
per share on November 2, 1994 to the persons identified below, with aggregate
proceeds to the Company of $125,062.50. These shares will be converted into
an aggregate of 16,675 shares of Common Stock upon completion of the
Offering.
II-2
<PAGE>
NAME NUMBER OF SHARES
---- ----------------
J. P. Bolduc ..................................... 16,675
J. Peter Grace, Jr. .............................. 16,675
David Walter Robbins, Jr., Trustee
under Declaration of Trust dated October 31,
1991 ........................................... 16,675
5. Pursuant to a Stock Purchase Agreement dated September 26, 1994, issued
3,100,000 shares of Common Stock for $3.10 per share on November 28, 1994 to
Berjaya Group (Cayman) Limited, with aggregate proceeds to the Company of
$9,610,000.
6. Pursuant to a Stock Purchase Agreement dated May 26, 1995, issued
1,250,000 shares of Common Stock for $3.20 per share on such date to the
persons identified below, with aggregate proceeds to the Company of
$4,000,000.
NAME NUMBER OF SHARES
---- -----------------
Grace Ventures Partnership, III, L.P.
(now named Cupertino Ventures Partnership, III,
L.P.) .............................................. 156,250
Berjaya Group (Cayman) Limited ....................... 1,083,750
Arab Multinational Investment Co. .................... 10,000
7. Pursuant to the exercise of a stock option, issued 355,555 shares of
Common Stock for $.15 per share on July 5, 1995 to J. David Toole, III, the
Company's President and Chief Executive Officer, with aggregate proceeds to
the Company of $53,333.25.
8. Pursuant to a stock purchase agreement entered into October 25, 1995,
issued 606,060 shares of Common Stock for $3.30 per share on such date to
Berjaya Group (Cayman) Limited, with aggregate proceeds to the Company of
$1,999,998.
9. Issued 5,811 shares of Common Stock for $3.30 per share on November 30,
1995 to J. P. Bolduc, with aggregate proceeds to the Company of $20,919.60.
10. Pursuant to a stock purchase agreement entered into January 15, 1996,
issued an aggregate of 2,361,111 shares of Common Stock for $3.60 per share
to Berjaya Group (Cayman) Limited, with aggregate proceeds to the Company of
$8,500,000. Of such shares, 972,222 shares were issued on January 16, 1996,
555,555 shares were issued on April 15, 1996, and 833,334 shares were issued
on May 16, 1996.
All of the shares of capital stock described above were issued without
registration under the Securities Act pursuant to the exemption from
registration afforded by Section 4(2) of the Securities Act or the rules and
regulations promulgated thereunder.
II-3
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
ITEM 27. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C>
**1.1 Form of Purchase Agreement.
**3.1 Articles of Incorporation of the Company, as amended November 14, 1996.
3.2 Bylaws of the Company.
4.1 Specimen of Certificate of Common Stock of the Company.
4.2 Relevant Portions of the Articles of Incorporation of the Company (reference is hereby made to
Exhibit 3.1 above).
4.3 Relevant Portions of the Bylaws of the Company (reference is hereby made to Exhibit 3.2 above).
4.4 Relevant Portions of the Series A Convertible Preferred Stock Purchase Agreement dated as of February
10, 1994 between the Company and the several purchasers named in Schedule I (reference is hereby
made to Exhibit 10.15 below).
4.5 Relevant Portions of the Series B Convertible Preferred Stock Purchase Agreement dated as of June
8, 1994 between the Company and the several purchasers named in Schedule I (reference is hereby
made to Exhibit 10.17 below).
4.6 Relevant Portions of the Stock Purchase Agreement dated as of September 26, 1994 between the Company
and Berjaya (reference is hereby made to Exhibit 10.18 below).
4.7 Relevant Portions of the 1994 Registration Rights Agreement, dated February 10, 1994 (reference
is hereby made to Exhibit 10.19 below).
4.8 Relevant Portions of the Amendment to 1994 Registration Rights Agreement, dated June 8, 1994 (reference
is hereby made to Exhibit 10.20 below).
4.9 Relevant Portions of the Amendment to 1994 Registration Rights Agreement, dated July 26, 1996 (reference
is hereby made to Exhibit 10.21 below).
4.10 Relevant Portions of the Stock Option Agreement, dated February 10, 1994 (reference is hereby made
to Exhibit 10.22 below).
4.11 Relevant Portions of the Berjaya Registration Rights Agreement, dated November , 1994 (reference
is hereby made to Exhibit 10.23 below).
4.12 Relevant Portions of the Investment Agreement, dated July 30, 1996 between Berjaya and John Y.
Brown (reference is hereby made to Exhibit 10.25 below).
4.13 Relevant Portions of the Investment Agreement, dated January 15, 1996, between Berjaya and the
Company (reference is hereby made to Exhibit 10.26 below).
** 5.1 Opinion of Ruden, McClosky, Smith, Schuster & Russell, P.A.
10.1 Employment Agreement by and between the Company and John David Toole III, dated October 1, 1994.
10.2 Form of the Company's Development Agreement.
10.3 Form of the Company's Franchise Agreement.
10.4 Intentionally omitted.
10.5 Form of the Company's Stock Option Agreement.
10.6 Sub-Lease Agreement, dated July 31, 1995, between Equitable Real Estate Investment, Inc., Compass
Management and Leasing, Inc. and the Company, for property located at 6600 N. Andrews Ave., Ste.
160, Ft. Lauderdale, Florida 33309.
10.7 Assignment and Assumption Agreement, dated March 15, 1995, between Roadhouse Waterway, Inc. and
Roadhouse Grill Commercial, Inc., for property located in Fort Lauderdale, Florida (lease of restaurant
premises).
10.8 Lease Agreement, dated April 26, 1994, between Piccadilly Cafeterias, Inc. and the Company, for
property located in Winter Park, Florida (lease of restaurant premises).
10.9 Ground Lease, dated May 25, 1995, between Bruno, Inc. and the Company, for property located in
Sandy Springs, Georgia (lease of restaurant premises).
II-4
<PAGE>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
10.10 Lease, dated April 17, 1995, between Captec Net Lease Realty, Inc. and New York Roasters, for property
located in Cheektowaga, New York (lease of restaurant premises, assumed by the Company).
10.11 Operating Agreement, dated April 28, 1994, of Kendall Roadhouse Grill, L.C.
10.12 Management Agreement, dated November 8, 1994, between Boca Roadhouse, Inc. and the Company.
10.13 Promissory Note, dated January 15, 1996, made by the Company in favor of John Y. Brown.
10.14 Promissory Note, dated September 27, 1995, made by the Company in favor of Hal Dickson.
10.15 Series A Convertible Preferred Stock Purchase Agreement, dated as of February 10, 1994, between
the Company and the several purchasers named in Schedule I.
10.16 Initial Stockholders Agreement, dated February 10, 1994, among the Company, the several purchasers
of the Series A Preferred Shares, and the initial shareholders of the Company.
10.17 Series B Convertible Preferred Stock Purchase Agreement, dated as of June 8, 1994, between the
Company and the several purchasers named in Schedule I.
10.18 Stock Purchase Agreement, dated as of September 26, 1994, between the Company and Berjaya.
10.19 1994 Registration Rights Agreement, dated February 10, 1994.
10.20 Amendment to 1994 Registration Rights Agreement, dated June 8, 1994.
10.21 Amendment to 1994 Registration Rights Agreement, dated July 26, 1996.
10.22 Stock Option Agreement, dated February 10, 1994, between the Company and J. David Toole III.
10.23 Intentionally omitted.
10.24 Consulting Agreement, dated August , 1992, between Americana Entertainment Group, Inc. and David
Toole, as amended on October 7, 1992.
10.25 Investment Agreement, dated July 30, 1995, between Berjaya and John Y. Brown.
10.26 Investment Agreement, dated January 15, 1996, between Berjaya and the Company.
10.27 Assignment and Assumption Agreement, dated February 10, 1994, by and between John Y. Brown, Jr.
and the Company.
10.28 Purchase and Sale Agreement, dated August 30, 1996, between Roadwear, Inc. and the Company, relating
to the Kendall restaurant.
10.29 Intentionally omitted.
10.30 Promissory note, dated August 16, 1996, made by the Company in favor of Berjaya.
10.31 Master Development Agreement, dated January 5, 1996, between the Company and Roadhouse Grill Asia.
10.32 Lease Transfer and Assumption Agreement for equipment used in New York Roadhouse Grill restaurant,
dated March 29, 1995, assumed by the Company.
10.33 Promissory note, dated September 5, 1996, made by the Company in favor of John Y. Brown.
10.34 Security Agreement, dated July 12, 1996, between the Company and John Y. Brown, Jr.
10.35 Promissory note, dated September 27, 1996, made by the Company in favor of Berjaya.
10.36 Promissory note, dated September 27, 1996, made by the Company in favor of SunTrust Bank, Miami,
N.A.
**10.37 Amended and Restated 1994 Stock Option Plan.
10.38 Stock Purchase Agreement, dated May 26, 1995, between the Company and the several purchasers named
in Schedule I.
10.39 Investment Agreement, dated October 25, 1995, between Berjaya and the Company.
**10.40 Form of Employment Agreement between the Company and J. David Toole, III.
**10.41 Form of Stock Option Agreement between the Company and J. David Toole, III dated October 24, 1996.
**10.42 Form of Stock Option Agreement between the Company and J. David Toole, III dated October 1, 1994.
**16.1 Letter from Stark and Bennett, P.A. dated November 14, 1996.
**16.2 Letter from Coopers and Lybrand L.L.P. dated November 15, 1996.
**21.1 List of subsidiaries of the Company.
II-5
<PAGE>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
**23.1 Consent of KPMG Peat Marwick LLP.
**23.2 Consent of Coopers & Lybrand L.L.P.
**23.3 Consent of Stark & Bennett, P.A.
23.4 Consent of Ruden, McClosky, Smith, Schuster & Russell, P.A. (A Professional Corporation) (reference
is hereby made to Exhibit 5.1).
24.1 Powers of Attorney (included on signature pages).
24.2 Power of Attorney of Phillip Friedman.
**27.1 Financial Data Schedule
</TABLE>
- ------------
** Filed herewith.
(b) Financial Statement Schedules.
[None]
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission have been
omitted because they are not required under the related instructions, are not
applicable or the information has been provided in the Financial Statements
or the notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Company hereby undertakes to provide the representative of
the Underwriters at the closing specified in the Underwriting Agreement
certificates in such denominations and registered in such names as required
by the Underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Company, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by any director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
The Company hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of Prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Miami, State of
Florida, on this 14th day of November, 1996.
ROADHOUSE GRILL, INC.
By: /s/ Dennis C. Jones
Dennis C. Jones
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURES TITLE DATE
---------- ----- ----
* President, Chief Executive November 14, 1996
John David Toole, III Officer and Director
(Principal Executive Officer)
/s/ Dennis C. Jones Chief Financial Officer, November 14, 1996
Dennis C. Jones (Principal Financial Officer
and Principal
Accounting Officer)
* Director November 14, 1996
Dr. Christian F. Horn
* Director November 14, 1996
K.P. Tan
* Director November 14, 1996
Phillip Friedman
- ------------
*BY: /S/ DENNIS C. JONES
Attorney-in-fact
II-7
<PAGE>
ROADHOUSE GRILL, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END OF
DESCRIPTION OF PERIOD EXPENSES WRITE-OFFS PERIOD
- ----------- ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS -- $29,015 (29,015) $ --
</TABLE>
S-1
EXHIBIT 1.1
2,500,000 SHARES(1)
Roadhouse Grill, Inc.
Common Stock
PURCHASE AGREEMENT
November __, 1996
PIPER JAFFRAY INC.
ROBERTSON STEPHENS & COMPANY
As Representatives of the several
Underwriters named in Schedule I hereto
c/o Piper Jaffray Inc.
Piper Jaffray Tower
222 South Ninth Street
Minneapolis, Minnesota 55402
Gentlemen:
Roadhouse Grill, Inc., a Florida corporation (the "Company"), proposes
to sell to the several Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of 2,500,000 shares (the "Firm Shares") of Common
Stock, $.03 par value per share (the "Common Stock"), of the Company. The Firm
Shares consist of 2,500,000 authorized but unissued shares of Common Stock to be
issued and sold by the Company. The Company has also granted to the several
Underwriters an option to purchase up to 375,000 additional shares of Common
Stock on the terms and for the purposes set forth in Section 3 hereof (the
"Option Shares"). The Firm Shares and any Option Shares purchased pursuant to
this Purchase Agreement are herein collectively called the "Securities."
The Company hereby confirms their agreement with respect to the sale of
the Securities to the several Underwriters, for whom you are acting as
Representatives (the "Representatives").
- --------
1 Plus an option to purchase up to 375,000 additional shares to cover
over-allotments.
<PAGE>
1. REGISTRATION STATEMENT AND PROSPECTUS. A registration statement on
Form S-1 (File No. 333-12751) with respect to the Securities, including a
preliminary form of prospectus, has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations ("Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed with the
Commission; one or more amendments to such registration statement have also been
so prepared and have been, or will be, so filed; and, if the Company has elected
to rely upon Rule 462(b) of the Rules and Regulations to increase the size of
the offering registered under the Act, the Company will prepare and file with
the Commission a registration statement with respect to such increase pursuant
to Rule 462(b). Copies of such registration statement(s) and amendments and each
related preliminary prospectus have been delivered to you.
If the Company has elected not to rely upon Rule 430A of the Rules and
Regulations, the Company has prepared and promptly will file an amendment to the
registration statement and an amended prospectus (including a term sheet meeting
the requirements of Rule 434 of the Rules and Regulations). If the Company has
elected to rely upon Rule 430A of the Rules and Regulations, it will prepare and
file a prospectus (or a term sheet meeting the requirements of Rule 434)
pursuant to Rule 424(b) that discloses the information previously omitted from
the prospectus in reliance upon Rule 430A. Such registration statement as
amended at the time it is or was declared effective by the Commission, and, in
the event of any amendment thereto after the effective date and prior to the
First Closing Date (as hereinafter defined), such registration statement as so
amended (but only from and after the effectiveness of such amendment), including
a registration statement (if any) filed pursuant to Rule 462(b) of the Rules and
Regulations increasing the size of the offering registered under the Act and
information (if any) deemed to be part of the registration statement at the time
of effectiveness pursuant to Rules 430A(b) and 434(d) of the Rules and
Regulations, is hereinafter called the "Registration Statement." The prospectus
included in the Registration Statement at the time it is or was declared
effective by the Commission is hereinafter called the "Prospectus," except that
if any prospectus (including any term sheet meeting the requirements of Rule 434
of the Rules and Regulations provided by the Company for use with a prospectus
subject to completion within the meaning of Rule 434 in order to meet the
requirements of Section 10(a) of the Rules and Regulations) filed by the Company
with the Commission pursuant to Rule 424(b) (and Rule 434, if applicable) of the
Rules and Regulations or any other such prospectus provided to the Underwriters
by the Company for use in connection with the offering of the Securities
(whether or not required to be filed by the Company with the Commission pursuant
to Rule 424(b) of the Rules and Regulations) differs from the prospectus on file
at the time the Registration Statement is or was declared effective by the
Commission, the term "Prospectus" shall refer to such differing prospectus
(including any term sheet within the meaning of Rule 434 of the Rules and
Regulations) from and after the time such prospectus is filed with the
Commission or transmitted to the Commission for filing pursuant to such Rule
424(b) (and Rule 434, if applicable) or from and after the time it is first
provided to the Underwriters by the Company for such use. The term "Preliminary
Prospectus" as used herein means any preliminary prospectus included in the
Registration Statement prior to the time it becomes or became effective under
the Act and any prospectus subject to completion as described in Rule 430A or
434 of the Rules and Regulations.
-2-
<PAGE>
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company represents and warrants to, and agrees
with, the several Underwriters as follows:
(i) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission and each
Preliminary Prospectus, at the time of filing thereof, did not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; except that the foregoing shall not apply to statements
in or omissions from any Preliminary Prospectus in reliance upon, and
in conformity with, written information furnished to the Company by
you, or by any Underwriter through you, specifically for use in the
preparation thereof.
(ii) As of the time the Registration Statement (or
any post-effective amendment thereto, including a registration
statement (if any) filed pursuant to Rule 462(b) of the Rules and
Regulations increasing the size of the offering registered under the
Act) is or was declared effective by the Commission, upon the filing or
first delivery to the Underwriters of the Prospectus (or any supplement
to the Prospectus (including any term sheet meeting the requirements of
Rule 434 of the Rules and Regulations)) and at the First Closing Date
and Second Closing Date (as hereinafter defined), (A) the Registration
Statement and Prospectus (in each case, as so amended and/or
supplemented) conformed or will conform in all material respects to the
requirements of the Act and the Rules and Regulations, (B) the
Registration Statement (as so amended) did not or will not include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (C) the Prospectus (as so supplemented) did
not or will not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which
they are or were made, not misleading; except that the foregoing shall
not apply to statements in or omissions from any such document in
reliance upon, and in conformity with, written information furnished to
the Company by you, or by any Underwriter through you, specifically for
use in the preparation thereof. If the Registration Statement has been
declared effective by the Commission, no stop order suspending the
effectiveness of the Registration Statement has been issued, and no
proceeding for that purpose has been initiated or, to the Company's
knowledge, threatened by the Commission.
(iii) The financial statements of the Company,
together with the notes thereto, set forth in the Registration
Statement and Prospectus comply in all material respects with the
requirements of the Act and fairly present the financial condition of
the Company as of the dates indicated and the results of operations and
changes in cash flows for the periods therein specified in conformity
with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise stated therein);
and the
-3-
<PAGE>
supporting schedules included in the Registration Statement present
fairly the information required to be stated therein. No other
financial statements or schedules are required to be included in the
Registration Statement or Prospectus. KPMG Peat Marwick LLP, Coopers &
Lybrand LLP and Stark & Bennett, P.A, which have expressed their
respective opinions with respect to the financial statements and
schedules filed as a part of the Registration Statement and included in
the Registration Statement and Prospectus, are independent public
accountants as required by the Act and the Rules and Regulations.
(iv) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation. In addition to the subsidiaries
listed on Exhibit 21 to the Registration Statement, the Company
beneficially owns 50% of the outstanding units of Kendall Roadhouse
Grill, L.C. (together with the subsidiaries listed on Exhibit 21 to the
Registration Statement and Boca Roadhouse, Inc., the "Subsidiaries").
Each of the Company and the Subsidiaries has full corporate power and
authority to own its properties and conduct its business as currently
being carried on and as described in the Registration Statement and
Prospectus, and is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction in which it owns or
leases real property or in which the conduct of its business makes such
qualification necessary and in which the failure to so qualify would
have a material adverse effect upon its business, condition (financial
or otherwise) or properties, taken as a whole.
(v) Except as contemplated in the Prospectus,
subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, neither the Company nor
any of the Subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock or other
equity interests; and there has not been any change in the capital
stock (other than a change in the number of outstanding shares of
Common Stock due to the issuance of shares upon the exercise of
outstanding options or warrants), or any material change in the
short-term or long-term debt, or any issuance of options, warrants,
convertible securities or other rights to purchase the capital stock of
the Company or any Subsidiary, or any material adverse change, or any
development involving a prospective material adverse change, in the
general affairs, condition (financial or otherwise), business, key
personnel, property, prospects, net worth or results of operations of
the Company and the Subsidiaries, taken as a whole.
(vi) Except as set forth in the Prospectus, there is
not pending or, to the knowledge of the Company, threatened or
contemplated, any action, suit or proceeding to which the Company or
any Subsidiary is a party before or by any court or governmental
agency, authority or body, or any arbitrator, which might result in any
material adverse change in the condition (financial or otherwise),
business, prospects, net worth or results of operations of the Company
and the Subsidiaries, taken as a whole.
-4-
<PAGE>
(vii) There are no contracts or documents of the
Company or any Subsidiary that are required to be filed as exhibits to
the Registration Statement by the Act or by the Rules and Regulations
that have not been so filed.
(viii) This Agreement has been duly authorized,
executed and delivered by the Company, and constitutes a valid, legal
and binding obligation of the Company, enforceable in accordance with
its terms, except as rights to indemnity hereunder may be limited by
federal or state securities laws or the public policy underlying such
laws and except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity. The
execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not result in
a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any agreement or instrument to
which the Company is a party or by which it is bound or to which any of
its property is subject, the Company's charter or by-laws, or any
order, rule, regulation or decree of any court or governmental agency
or body having jurisdiction over the Company or any of its properties;
no consent, approval, authorization or order of, or filing with, any
court or governmental agency or body is required for the execution,
delivery and performance of this Agreement or for the consummation of
the transactions contemplated hereby, including the issuance or sale of
the Securities by the Company, except such as may be required under the
Act or state securities or blue sky laws; and the Company has full
power and authority to enter into this Agreement and to authorize,
issue and sell the Securities as contemplated by this Agreement.
(ix) All of the issued and outstanding shares of
capital stock of the Company, including the outstanding shares of
Common Stock, are duly authorized and validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and
applicable state securities laws, were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or
purchase securities, and the holders thereof are not subject to
personal liability by reason of being such holders; the Securities
which may be sold hereunder by the Company have been duly authorized
and, when issued, delivered and paid for in accordance with the terms
hereof, will have been validly issued and will be fully paid and
nonassessable, and the holders thereof will not be subject to personal
liability by reason of being such holders; and the capital stock of the
Company, including the Common Stock, conforms to the description
thereof in the Registration Statement and Prospectus. Except as
otherwise stated in the Registration Statement and Prospectus, there
are no preemptive rights or other rights to subscribe for or to
purchase, or any restriction upon the voting or transfer of, any shares
of Common Stock pursuant to the Company's charter, by-laws or any
agreement or other instrument to which the Company is a party or by
which the Company is bound. Neither the filing of the Registration
Statement nor the offering or sale of the Securities as contemplated by
this Agreement gives rise to any rights for or relating to the
registration of any shares of Common Stock or other securities of the
Company which have not been effectively waived in a writing which is in
full force and effect as of the date hereof.
-5-
<PAGE>
All of the issued and outstanding units or shares of capital stock of
each of the Subsidiaries has been duly and validly authorized and
issued and is fully paid and nonassessable, and, with respect to the
units or shares referred to in Section 2(a)(iv), the Company
beneficially owns all such units and shares free and clear of any
security interests, claims, liens, proxies, equities or other
encumbrances. Other than the Subsidiaries, the Company does not own,
directly or indirectly, any capital stock or other equity securities of
any other corporation or any ownership interest in any partnership,
joint venture or other association. Except as described in the
Registration Statement and the Prospectus, there are no options,
warrants, agreements, contracts or other rights in existence to
purchase or acquire from the Company or any of the Subsidiaries any
shares of the capital stock of the Company. The Company has an
authorized and outstanding capitalization as set forth in the
Registration Statement and the Prospectus.
(x) The Company and each of the Subsidiaries holds,
and is operating in compliance in all material respects with, all
franchises, grants, authorizations, licenses, permits, easements,
consents, certificates and orders of any governmental or
self-regulatory body required for the conduct of its business and all
such franchises, grants, authorizations, licenses, permits, easements,
consents, certifications and orders are valid and in full force and
effect; and the Company and each of the Subsidiaries is in compliance
in all material respects with all applicable federal, state, local and
foreign laws, regulations, orders and decrees.
(xi) The Company and the Subsidiaries have good and
marketable title to all property described in the Registration
Statement and Prospectus as being owned by them, in each case free and
clear of all liens, claims, security interests or other encumbrances
except such as are described in the Registration Statement and the
Prospectus; the property held under lease by the Company and the
Subsidiaries is held by them under valid, subsisting and enforceable
leases with only such exceptions with respect to any particular lease
as do not interfere in any material respect with the conduct of the
business of the Company; the Company and each of the Subsidiaries owns
or possesses all patents, patent applications, trademarks, service
marks, tradenames, trademark registrations, service mark registrations,
copyrights, licenses, inventions, trade secrets and rights necessary
for the conduct of the business of the Company and the Subsidiaries as
currently carried on and as described in the Registration Statement and
Prospectus; except as stated in the Registration Statement and
Prospectus, no name which the Company or any of the Subsidiaries uses
and no other aspect of the business of the Company or any of the
Subsidiaries will involve or give rise to any infringement of, or
license or similar fees for, any patents, patent applications,
trademarks, service marks, tradenames, trademark registrations, service
mark registrations, copyrights, licenses, inventions, trade secrets or
other similar rights of others material to the business or prospects of
the Company or any of the Subsidiaries, and neither the Company nor any
of the Subsidiaries has received any notice alleging any such
infringement or fee.
(xii) Neither the Company nor any of the Subsidiaries
is in violation of its respective charter or by-laws or other governing
instruments or in breach of or otherwise in default in the performance
of any material obligation, agreement or condition contained in any
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<PAGE>
bond, debenture, note, indenture, loan agreement or any other material
contract, lease or other instrument to which it is subject or by which
it may be bound, or to which any of the material property or assets of
the Company or any of the Subsidiaries is subject.
(xiii) The Company and the Subsidiaries have filed
all federal, state, local and foreign income and franchise tax returns
required to be filed and are not in default in the payment of any taxes
which were payable pursuant to said returns or any assessments with
respect thereto, other than any which the Company or any such
Subsidiary is contesting in good faith.
(xiv) The Company has not distributed and will not
distribute any prospectus or other offering material in connection with
the offering and sale of the Securities other than any Preliminary
Prospectus or the Prospectus or other materials permitted by the Act to
be distributed by the Company.
(xv) The Securities have been conditionally approved
for listing on the NASDAQ National Market System, and, on the date the
Registration Statement became or becomes effective, the Company's
Registration Statement on Form 8-A or other applicable form under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
became or will become effective.
(xvi) Other than the Subsidiaries, the Company owns
no capital stock or other equity or ownership or proprietary interest
in any corporation, partnership, association, trust or other entity.
(xvii) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability
for assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(xviii) Other than as contemplated by this Agreement,
the Company has not incurred any liability for any finder's or broker's
fee or agent's commission in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated
hereby.
(xix) Neither the Company nor any of its affiliates
is presently doing business with the government of Cuba or with any
person or affiliate located in Cuba.
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<PAGE>
(xx) To the best knowledge of the Company, each of
the franchise agreements and development agreements entered into by the
Company relating to its conveyance of franchise and development rights,
respectively, in connection with its Roadhouse Grill restaurants has
been duly authorized, executed and delivered by the parties to such
agreement, and is a valid, legal and binding obligation of the parties
thereto, and is enforceable by the Company in accordance with its terms
(except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity).
(xxi) The Company maintains insurance, which is in
full force and effect, of the types and in the amounts adequate, in its
reasonable opinion, for its business and in line with the insurance
maintained by similar companies and businesses.
(b) Any certificate signed by any officer of the Company and
delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
3. PURCHASE, SALE AND DELIVERY OF SECURITIES.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to issue and sell Firm Shares to the several
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto. The purchase price for each Firm Share
shall be $ per share. The obligation of each Underwriter to the Company shall be
to purchase from the Company that number of Firm Shares (to be adjusted by the
Representatives to avoid fractional shares) which represents the same proportion
of the number of Firm Shares to be sold by the Company pursuant to this
Agreement as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto represents to the total number of Firm Shares
to be purchased by all Underwriters pursuant to this Agreement. In making this
Agreement, each Underwriter is contracting severally and not jointly; except as
provided in paragraph (c) of this Section 3 and in Section 8 hereof, the
agreement of each Underwriter is to purchase only the respective number of Firm
Shares specified in Schedule I.
The Firm Shares will be delivered by the Company to you for
the accounts of the several Underwriters against payment of the purchase price
therefor by wire transfer of immediately available funds to an account which
shall be designated in writing by the Company, as appropriate, at least two full
business days prior to the First Closing Date, at the offices of Piper Jaffray
Inc., Piper Jaffray Tower, 222 South Ninth Street, Minneapolis, Minnesota, or
such other location as may be mutually acceptable, at 9:00 a.m. Central time on
the third (or if the Securities are priced, as contemplated by Rule 15c6-1(c)
under the Exchange Act, after 4:30 p.m. Eastern time, the fourth) full business
day following the date hereof, or at such other time and date as you and the
Company determine pursuant to Rule 15c6-1(a) under the Exchange Act, such time
and date of delivery being
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<PAGE>
herein referred to as the "First Closing Date." If the Representatives so elect,
delivery of the Firm Shares may be made by credit through full fast transfer to
the accounts at The Depository Trust Company designated by the Representatives.
Certificates representing the Firm Shares, in definitive form and in such
denominations and registered in such names as you may request upon at least two
business days' prior notice to the Company, will be made available for checking
and packaging not later than 10:30 a.m., Central time, on the business day next
preceding the First Closing Date at the offices of Piper Jaffray Inc., Piper
Jaffray Tower, 222 South Ninth Street, Minneapolis, Minnesota, or such other
location as may be mutually acceptable.
(b) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants to the several Underwriters an option to
purchase all or any portion of the Option Shares at the same purchase price as
the Firm Shares, for use solely in covering any over-allotments made by the
Underwriters in the sale and distribution of the Firm Shares. The option granted
hereunder may be exercised at any time (but not more than once) within 30 days
after the effective date of this Agreement upon notice (confirmed in writing) by
the Representatives to the Company and to the Attorneys-in-Fact setting forth
the aggregate number of Option Shares as to which the several Underwriters are
exercising the option, the names and denominations in which the certificates for
the Option Shares are to be registered and the date and time, as determined by
you, when the Option Shares are to be delivered, such time and date being herein
referred to as the "Second Closing" and "Second Closing Date", respectively;
provided, however, that the Second Closing Date shall not be earlier than the
First Closing Date nor earlier than the second business day after the date on
which the option shall have been exercised. If the option is exercised, the
obligation of each Underwriter shall be to purchase from the Company up to an
aggregate of ______ Option Shares. The number of Option Shares to be purchased
by each Underwriter shall be the same percentage of the total number of Option
Shares to be purchased by the several Underwriters as the number of Firm Shares
to be purchased by such Underwriter is of the total number of Firm Shares to be
purchased by the several Underwriters, as adjusted by the Representatives in
such manner as the Representatives deem advisable to avoid fractional shares. No
Option Shares shall be sold and delivered unless the Firm Shares previously have
been, or simultaneously are, sold and delivered.
The Option Shares will be delivered by the Company, as
appropriate, to you for the accounts of the several Underwriters against payment
of the purchase price therefor by wire transfer of immediately available funds
to an account which shall be designated in writing by the Company, as
appropriate, at least two full business days prior to the second Closing Date,
at the offices of Piper Jaffray Inc., Piper Jaffray Tower, 222 South Ninth
Street, Minneapolis, Minnesota, or such other location as may be mutually
acceptable at 9:00 a.m., Central time, on the Second Closing Date. If the
Representatives so elect, delivery of the Option Shares may be made by credit
through full fast transfer to the accounts at The Depository Trust Company
designated by the Representatives. Certificates representing the Option Shares
in definitive form and in such denominations and registered in such names as you
have set forth in your notice of option exercise, will be made available for
checking and packaging not later than 10:30 a.m., Central time, on the business
day next
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<PAGE>
preceding the Second Closing Date at the office of Piper Jaffray Inc., Piper
Jaffray Tower, 222 South Ninth Street, Minneapolis, Minnesota, or such other
location as may be mutually acceptable.
(c) It is understood that you, individually and not as
Representatives of the several Underwriters, may (but shall not be obligated to)
make payment to the Company on behalf of any Underwriter for the Securities to
be purchased by such Underwriter. Any such payment by you shall not relieve any
such Underwriter of any of its obligations hereunder. Nothing herein contained
shall constitute any of the Underwriters an unincorporated association or
partner with the Company.
4. COVENANTS. The Company covenants and agrees with the several
Underwriters as follows:
(a) If the Registration Statement has not already
been declared effective by the Commission, the Company will use its
best efforts to cause the Registration Statement and any post-effective
amendments thereto to become effective as promptly as possible; the
Company will notify you promptly of the time when the Registration
Statement or any post-effective amendment to the Registration Statement
has become effective or any supplement to the Prospectus (including any
term sheet within the meaning of Rule 434 of the Rules and Regulations)
has been filed and of any request by the Commission for any amendment
or supplement to the Registration Statement or Prospectus or additional
information; if the Company has elected to rely on Rule 430A of the
Rules and Regulations, the Company will prepare and file a Prospectus
(or term sheet within the meaning of Rule 434 of the Rules and
Regulations) containing the information omitted therefrom pursuant to
Rule 430A of the Rules and Regulations with the Commission within the
time period required by, and otherwise in accordance with the
provisions of, Rules 424(b), 430A and 434, if applicable, of the Rules
and Regulations; if the Company has elected to rely upon Rule 462(b) of
the Rules and Regulations to increase the size of the offering
registered under the Act, the Company will prepare and file a
registration statement with respect to such increase with the
Commission within the time period required by, and otherwise in
accordance with the provisions of, Rule 462(b); the Company will
prepare and file with the Commission, promptly upon your request, any
amendments or supplements to the Registration Statement or Prospectus
(including any term sheet within the meaning of Rule 434 of the Rules
and Regulations) that, in your opinion, may be necessary or advisable
in connection with the distribution of the Securities by the
Underwriters; and the Company will not file any amendment or supplement
to the Registration Statement or Prospectus (including any term sheet
within the meaning of Rule 434 of the Rules and Regulations) to which
you shall reasonably object by notice to the Company after having been
furnished a copy a reasonable time prior to the filing.
(b) The Company will advise you, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement, of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any
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<PAGE>
proceeding for any such purpose; and the Company will promptly use its
best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such a stop order should be issued.
(c) Within the time during which a prospectus
(including any term sheet within the meaning of Rule 434 of the Rules
and Regulations) relating to the Securities is required to be delivered
under the Act, the Company will comply as far as it is able with all
requirements imposed upon it by the Act, as now and hereafter amended,
and by the Rules and Regulations, as from time to time in force, so far
as necessary to permit the continuance of sales of or dealings in the
Securities as contemplated by the provisions hereof and the Prospectus.
If during such period any event occurs as a result of which the
Prospectus would include an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in
the light of the circumstances then existing, not misleading, or if
during such period it is necessary to amend the Registration Statement
or supplement the Prospectus to comply with the Act, the Company will
promptly notify you and will amend the Registration Statement or
supplement the Prospectus (at the expense of the Company) so as to
correct such statement or omission or effect such compliance.
(d) The Company will use its best efforts to qualify
the Securities for sale under the securities laws of such jurisdictions
as you reasonably designate and to continue such qualifications in
effect so long as required for the distribution of the Securities,
except that the Company shall not be required in connection therewith
to qualify as a foreign corporation or to execute a general consent to
service of process in any state.
(e) The Company will furnish to the Underwriters
copies of the Registration Statement (three of which will be signed and
will include all exhibits), each Preliminary Prospectus, the
Prospectus, and all amendments and supplements (including any term
sheet within the meaning of Rule 434 of the Rules and Regulations) to
such documents, in each case as soon as available and in such
quantities as you may from time to time reasonably request.
(f) During a period of five years commencing with the
date hereof, the Company will furnish to the Representatives, and to
each Underwriter who may so request in writing, copies of all periodic
and special reports furnished to the stockholders of the Company and
all information, documents and reports filed with the Commission, the
National Association of Securities Dealers, Inc., NASDAQ or any
securities exchange.
(g) The Company will make generally available to its
security holders as soon as practicable, but in any event not later
than 15 months after the end of the Company's current fiscal quarter,
an earnings statement (which need not be audited) covering a 12-month
period beginning after the effective date of the Registration Statement
that shall satisfy the provisions of Section 11(a) of the Act and Rule
158 of the Rules and Regulations.
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<PAGE>
(h) The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is prevented
from becoming effective under the provisions of Section 9(a) hereof or
is terminated, will pay or cause to be paid (i) all expenses (including
transfer taxes allocated to the respective transferees) incurred in
connection with the delivery to the Underwriters of the Securities,
(ii) all expenses and fees (including, without limitation, fees and
expenses of the Company's accountants and counsel but, except as
otherwise provided below, not including fees of the Underwriters'
counsel) in connection with the preparation, printing, filing,
delivery, and shipping of the Registration Statement (including the
financial statements therein and all amendments, schedules, and
exhibits thereto), the Securities, each Preliminary Prospectus, the
Prospectus, and any amendment thereof or supplement thereto, and the
printing, delivery, and shipping of this Agreement and other
underwriting documents, including Blue Sky Memoranda, (iii) all filing
fees and fees and disbursements of the Underwriters' counsel incurred
in connection with the qualification of the Securities for offering and
sale by the Underwriters or by dealers under the securities or blue sky
laws of the states and other jurisdictions which you shall designate in
accordance with Section 4(d) hereof, (iv) the fees and expenses of any
transfer agent or registrar, (v) the filing fees incident to any
required review by the National Association of Securities Dealers, Inc.
of the terms of the sale of the Securities, (vi) listing fees, if any,
and (vii) all other costs and expenses incident to the performance of
its obligations hereunder that are not otherwise specifically provided
for herein. If the sale of the Securities provided for herein is not
consummated by reason of action by the Company pursuant to Section 9(a)
hereof which prevents this Agreement from becoming effective, or by
reason of any failure, refusal or inability on the part of the Company
to perform any agreement on its or their part to be performed, or
because any other condition of the Underwriters' obligations hereunder
required to be fulfilled by the Company, the Company will reimburse the
several Underwriters for all out-of-pocket disbursements (including
fees and disbursements of counsel) incurred by the Underwriters in
connection with their investigation, preparing to market and marketing
the Securities or in contemplation of performing their obligations
hereunder. The Company shall not in any event be liable to any of the
Underwriters for loss of anticipated profits from the transactions
covered by this Agreement.
(i) The Company will apply the net proceeds from the
sale of the Securities to be sold by it hereunder for the purposes set
forth in the Prospectus and will file such reports with the Commission
with respect to the sale of the Securities and the application of the
proceeds therefrom as may be required in accordance with Rule 463 of
the Rules and Regulations.
(j) The Company will not, without your prior written
consent, offer for sale, sell, contract to sell, grant any option for
the sale of or otherwise issue or dispose of any Common Stock or any
securities convertible into or exchangeable for, or any options or
rights to purchase or acquire, Common Stock, except to the Underwriters
pursuant to this Agreement and for a period of 180 days after the
commencement of the public offering of the Securities by the
Underwriters.
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<PAGE>
(k) The Company either has caused to be delivered to
you or will cause to be delivered to you prior to the effective date of
the Registration Statement a letter from each of the Company's
directors and officers; Berjaya Group (Cayman) Limited, Cupertino
Ventures Partnership III, L.P., Mrs. J. Peter Grace; D. W. Robbins,
Jr.; Banque Scandinave En Suisse; Societe Financiere Privee and Arab
Multinational Investment stating that such person agrees that he or she
will not, without your prior written consent, offer for sale, sell,
contract to sell or otherwise dispose of any shares of Common Stock or
rights to purchase Common Stock for a period of 180 days after
commencement of the public offering of the Securities by the
Underwriters.
(l) The Company has not taken and will not take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, or which has constituted,
the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities, and has not
effected any sales of Common Stock which are required to be disclosed
in response to Item 701 of Regulation S-K under the Act which have not
been so disclosed in the Registration Statement.
(m) The Company will not incur any liability for any
finder's or broker's fee or agent's commission in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
(n) The Company will inform the Florida Department of
Banking and Finance at any time prior to the consummation of the
distribution of the Securities by the Underwriters if it commences
engaging in business with the government of Cuba or with any person or
affiliate located in Cuba. Such information will be provided within 90
days after the commencement thereof or after a change occurs with
respect to previously reported information.
(o) The Company shall have KPMG Peat Marwick LLP
perform the procedures specified by the American Institute of Certified
Accountants for a review of interim financial information as described
in SAS 71, Interim Financial Information, on the unaudited consolidated
financial statements of the Company for the three-month periods ending
March __, 1997 and June __, 1997.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters hereunder are subject to the accuracy, as of the date
hereof and at each of the First Closing Date and the Second Closing Date (as if
made at such Closing Date), of and compliance with all representations,
warranties and agreements of the Company contained herein, to the performance by
the Company of its obligations hereunder and to the following additional
conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 p.m., Central time, on the date of this Agreement, or such later
time and date as you, as Representatives of the several Underwriters, shall
approve and all filings required by Rules 424, 430A
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<PAGE>
and 434 of the Rules and Regulations shall have been timely made; no stop order
suspending the effectiveness of the Registration Statement or any amendment
thereof shall have been issued; no proceedings for the issuance of such an order
shall have been initiated or threatened; and any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to your satisfaction.
(b) No Underwriter shall have advised the Company that the
Registration Statement or the Prospectus, or any amendment thereof or supplement
thereto (including any term sheet within the meaning of Rule 434 of the Rules
and Regulations), contains an untrue statement of fact which, in your opinion,
is material, or omits to state a fact which, in your opinion, is material and is
required to be stated therein or necessary to make the statements therein not
misleading.
(c) Except as contemplated in the Prospectus, subsequent to
the respective dates as of which information is given in the Registration
Statement and the Prospectus, neither the Company nor any of the Subsidiaries
shall have incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions, or declared or paid any
dividends or made any distribution of any kind with respect to its capital
stock; and there shall not have been any change in the capital stock (other than
a change in the number of outstanding shares of Common Stock due to the issuance
of shares upon the exercise of outstanding options or warrants), or any material
change in the short-term or long-term debt of the Company [or any of the
Subsidiaries], or any issuance of options, warrants, convertible securities or
other rights to purchase the capital stock of the Company or any of the
Subsidiaries or any material adverse change or any development involving a
prospective material adverse change (whether or not arising in the ordinary
course of business), in the general affairs, condition (financial or otherwise),
business, key personnel, property, prospects, net worth or results of operations
of the Company and the Subsidiaries, taken as a whole, that, in your judgment,
makes it impractical or inadvisable to offer or deliver the Securities on the
terms and in the manner contemplated in the Prospectus.
(d) On each Closing Date, there shall have been furnished to
you, as Representatives of the several Underwriters, the opinion of Locke
Purnell Rain Harrell, counsel for the Company, dated such Closing Date and
addressed to you, to the effect that:
(i) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation. The Company has full corporate power
and authority to own its properties and conduct its business as
currently being carried on and as described in the Registration
Statement and Prospectus, and is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in
which it owns or leases real property or in which the conduct of its
business makes such qualification necessary and in which the failure to
so qualify would have a material adverse effect upon the business,
condition (financial or otherwise) or properties of the Company and the
Subsidiaries, taken as a whole.
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<PAGE>
(ii) The capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus
under the caption "Description of Capital Stock." All of the issued and
outstanding shares of the capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable, and
the holders thereof are not subject to personal liability by reason of
being such holders. The Securities to be issued and sold by the Company
hereunder have been duly authorized and, when issued, delivered and
paid for in accordance with the terms of this Agreement, will have been
validly issued and will be fully paid and nonassessable, and the
holders thereof will not be subject to personal liability by reason of
being such holders. Except as otherwise stated in the Registration
Statement and Prospectus, there are no preemptive rights or other
rights to subscribe for or to purchase, or any restriction upon the
voting or transfer of, any shares of Common Stock pursuant to the
Company's charter, by-laws or any agreement or other instrument known
to such counsel to which the Company is a party or by which the Company
is bound. To the best of such counsel's knowledge, neither the filing
of the Registration Statement nor the offering or sale of the
Securities as contemplated by this Agreement gives rise to any rights
for or relating to the registration of any shares of Common Stock or
other securities of the Company which have not been effectively waived
in a writing which is in full force and effect as of the date hereof.
(iii) To the best of such counsel's knowledge, except
as described in the Registration Statement and Prospectus, there are no
options, warrants, agreements, contracts or other rights in existence
to purchase or acquire from the Company any shares of the capital stock
of the Company.
(iv) The Registration Statement has become effective
under the Act and, to the best of such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceeding for that purpose has been instituted or,
to the best knowledge of such counsel, threatened by the Commission.
(v) The descriptions in the Registration Statement
and Prospectus of statutes, legal and governmental proceedings,
contracts and other documents are accurate and fairly present the
information required to be shown; and such counsel does not know of any
statutes or legal or governmental proceedings required to be described
in the Prospectus that are not described as required, or of any
contracts or documents of a character required to be described in the
Registration Statement or Prospectus or included as exhibits to the
Registration Statement that are not described or included as required.
(vi) The Company has full corporate power and
authority to enter into this Agreement, and this Agreement has been
duly authorized, executed and delivered by the Company and constitutes
a valid, legal and binding obligation of the Company enforceable in
accordance with its terms (except as rights to indemnity hereunder may
be limited by federal or state securities laws or the public policy
underlying such laws and except as such enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws
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<PAGE>
affecting the rights of creditors generally and subject to general
principles of equity); the execution, delivery and performance of this
Agreement and the consummation of the transactions herein contemplated
will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, rule or
regulation, any agreement or instrument known to such counsel to which
the Company is a party or by which it is bound or to which any of its
property is subject, the Company's charter or by-laws, or any order or
decree known to such counsel of any court or governmental agency or
body having jurisdiction over the Company or any of its respective
properties; and no consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required for
the execution, delivery and performance of this Agreement or for the
consummation of the transactions contemplated hereby, including the
issuance or sale of the Securities by the Company, except such as may
be required under the Act or state securities laws.
(vii) To the best of such counsel's knowledge, the
Company holds, and is operating in compliance in all material respects
with, all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates and orders of any governmental or
self-regulatory body required for the conduct of its business and all
such franchises, grants, authorizations, licenses, permits, easements,
consents, certifications and orders are valid and in full force and
effect.
(viii) To the best of such counsel's knowledge, the
Company is not in violation of its respective charter or by-laws. To
the best of such counsel's knowledge, the Company is not in breach of
or otherwise in default in the performance of any material obligation,
agreement or condition contained in any bond, debenture, note,
indenture, loan agreement or any other material contract, lease or
other instrument to which it is subject or by which any of them may be
bound, or to which any of the material property or assets of the
Company is subject.
(ix) The Registration Statement and the Prospectus,
and any amendment thereof or supplement thereto (including any term
sheet within the meaning of Rule 434 of the Rules and Regulations),
comply as to form in all material respects with the requirements of the
Act and the Rules and Regulations; and on the basis of conferences with
officers and other representatives of the Company, counsel for the
underwriters, representatives of the independent public accountants for
the Company and the Representatives, examination of documents referred
to in the Registration Statement and Prospectus and such other
procedures as such counsel deemed appropriate, nothing has come to the
attention of such counsel that causes such counsel to believe that the
Registration Statement or any amendment thereof, at the time the
Registration Statement became effective and as of such Closing Date
(including any Registration Statement filed under Rule 462(b) of the
Rules and Regulations), contained any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or
that the Prospectus (as of its date and as of such Closing Date), as
amended or supplemented, includes any untrue statement of material fact
or omits to state a material fact necessary to make the
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<PAGE>
statements therein, in light of the circumstances under which they were
made, not misleading; it being understood that such counsel need
express no opinion as to the financial statements or other financial
data included in any of the documents mentioned in this clause.
(x) Each of the franchise agreements and development
agreements entered into by the Company relating to its conveyance of
franchise and development rights, respectively, in connection with its
Roadhouse Grill restaurant has been duly authorized, executed and
delivered by, and, assuming due execution and delivery by the other
parties thereto, is a valid, legal and binding obligation of, and is
enforceable by, the Company (except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally and subject to general
principals of equity).
(xi) Such other matters as you may reasonably request.
In rendering such opinion such counsel may rely (i) as to matters of
law other than federal law, upon the opinion or opinions of local counsel
provided that the extent of such reliance is specified in such opinion and that
such counsel shall state that such opinion or opinions of local counsel are
satisfactory to them and that they believe they and you are justified in relying
thereon and (ii) as to matters of fact, to the extent such counsel deems
reasonable upon certificates of officers of the Company provided that the extent
of such reliance is specified in such opinion.
(e) On each Closing Date, there shall have been furnished to
you, as Representatives of the several Underwriters, such opinion or opinions
from King & Spalding, counsel for the several Underwriters, dated such Closing
Date and addressed to you, with respect to the formation of the Company, the
validity of the Securities, the Registration Statement, the Prospectus and other
related matters as you reasonably may request, and such counsel shall have
received such papers and information as they request to enable them to pass upon
such matters.
(f) On each Closing Date you, as Representatives of the
several Underwriters, shall have received a letter of each of KPMG Peat Marwick
LLP, Coopers & Lybrand LLP and Stark & Bennett, P.A., dated such Closing Date
and addressed to you, confirming that they are independent public accountants
within the meaning of the Act and are in compliance with the applicable
requirements relating to the qualifications of accountants under Rule 2-01 of
Regulation S-X of the Commission, and stating, as of the date of such letter
(or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Prospectus, as of a date not more than five days prior to the date of such
letter), the conclusions and findings of said firm with respect to the financial
information and other matters covered by its letter delivered to you
concurrently with the execution of this Agreement, and the effect of the letter
so to be delivered on such Closing Date shall be to confirm the conclusions and
findings set forth in such prior letter.
(g) On each Closing Date, there shall have been furnished to
you, as Representatives of the Underwriters, a certificate, dated such Closing
Date and addressed to you,
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<PAGE>
signed by the chief executive officer and by the chief financial officer of the
Company, to the effect that:
(i) The representations and warranties of the Company
in this Agreement are true and correct in all material respects as if
made at and as of such Closing Date, and the Company has complied with
all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date;
(ii) No stop order or other order suspending the
effectiveness of the Registration Statement or any amendment thereof or
the qualification of the Securities for offering or sale has been
issued, and no proceeding for that purpose has been instituted or, to
the best of their knowledge, is contemplated by the Commission or any
state or regulatory body; and
(iii) The signers of said certificate have carefully
examined the Registration Statement and the Prospectus, and any
amendments thereof or supplements thereto (including any term sheet
within the meaning of Rule 434 of the Rules and Regulations), and (A)
such documents contain all statements and information required to be
included therein, the Registration Statement, or any amendment thereof,
does not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Prospectus, as
amended or supplemented, does not include any untrue statement of
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, (B) since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an
amended or supplemented prospectus which has not been so set forth, (C)
subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, neither the Company nor
any of the Subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, not in the ordinary course of business, or declared or
paid any dividends or made any distribution of any kind with respect to
its capital stock, and except as disclosed in the Prospectus, there has
not been any change in the capital stock (other than a change in the
number of outstanding shares of Common Stock due to the issuance of
shares upon the exercise of outstanding options or warrants), or any
material change in the short-term or long-term debt, or any issuance of
options, warrants, convertible securities or other rights to purchase
the capital stock, of the Company or any of the Subsidiaries, or any
material adverse change or any development involving a prospective
material adverse change (whether or not arising in the ordinary course
of business), in the general affairs, condition (financial or
otherwise), business, key personnel, property, prospects, net worth or
results of operations of the Company and the Subsidiaries, taken as a
whole, and (D) except as stated in the Registration Statement and the
Prospectus, there is not pending, or, to the best knowledge of the
Company, threatened or contemplated, any action, suit or proceeding to
which the Company or any Subsidiary is a party before or by any court
or governmental agency, authority or body, or any arbitrator, which
might result in any material adverse
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<PAGE>
change in the condition (financial or otherwise), business, prospects
or results of operations of the Company and the Subsidiaries, taken as
a whole.
(h) The Company shall have furnished to you and counsel for
the Underwriters such additional documents, certificates and evidence as you or
they may have reasonably requested.
(i) The Common Stock of the Company shall be designated
on the Nasdaq National Market.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are satisfactory
in form and substance to you and counsel for the Underwriters. The Company will
furnish you with such conformed copies of such opinions, certificates, letters
and other documents as you shall reasonably request.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise (including in settlement of any litigation if such settlement is
effected with the written consent of the Company), insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, including the information deemed
to be a part of the Registration Statement at the time of effectiveness pursuant
to Rules 430A and 434(d) of the Rules and Regulations, if applicable, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto
(including any term sheet within the meaning of Rule 434 of the Rules and
Regulations), or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by it in connection with
investigating or defending against such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage, liability or action arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any such amendment or supplement, in reliance
upon and in conformity with written information furnished to the Company by you,
or by any Underwriter through you, specifically for use in the preparation
thereof; provided, further, that, to the extent any such losses, claims, damages
or liabilities to which such Underwriter may become subject arise under Section
12 of the Act, the foregoing indemnity agreement with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting such losses, claims, damages or liabilities purchased
Securities, if a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Underwriter to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the sale
of the Securities to such person, and if
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<PAGE>
the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities arising under Section
12 of the Act.
In addition to their other obligations under this Section
6(a), the Company agrees that, as an interim measure during the pendency of any
claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in this Section 6(a), they will reimburse each Underwriter on a
monthly basis for all reasonable legal fees or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's
obligation to reimburse the Underwriters for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim reimbursement
payment is so held to have been improper, the Underwriter that received such
payment shall promptly return it to the party or parties that made such payment,
together with interest, compounded daily, determined on the basis of the prime
rate (or other commercial lending rate for borrowers of the highest credit
standing) announced from time to time by ____________________ (the "Prime
Rate"). Any such interim reimbursement payments which are not made to an
Underwriter within 30 days of a request for reimbursement shall bear interest at
the Prime Rate from the date of such request. This indemnity agreement shall be
in addition to any liabilities which the Company may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the Company
may become subject, under the Act or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto (including any term sheet within the meaning of Rule 434 of
the Rules and Regulations), or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by you, or by such Underwriter through you,
specifically for use in the preparation thereof, and will reimburse the Company
for any legal or other expenses reasonably incurred by the Company in connection
with investigating or defending against any such loss, claim, damage, liability
or action.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any liability
that it may have to any indemnified party.
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<PAGE>
In case any such action shall be brought against any indemnified party, and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent that
it shall wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of the
indemnifying party's election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under such subsection for
any legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that if, in the sole judgment of the
Representatives, it is advisable for the Underwriters to be represented as a
group by one separate law firm (in addition to any local counsel) the
Representatives shall have the right to employ a single counsel to represent the
Representatives and all Underwriters who may be subject to liability arising
from any claim in respect of which indemnity may be sought by the Underwriters
under subsection (a) of this Section 6, in which event the reasonable fees and
expenses of such separate counsel shall be borne by the indemnifying party or
parties and reimbursed to the Underwriters as incurred (in accordance with the
provisions of the second paragraph in subsection (a) above). An indemnifying
party shall not be obligated under any settlement agreement relating to any
action under this Section 6 to which it has not agreed in writing.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above, (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from the
offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Underwriters on
the other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relevant intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
subsection (d) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the first sentence of this subsection (d). The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with
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<PAGE>
investigating or defending against any action or claim which is the subject of
this subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section 6 shall
be in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 6 shall be in addition to any liability that the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company (including any person who, with
his consent, is named in the Registration Statement as about to become a
director of the Company), to each officer of the Company who has signed the
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the several
Underwriters and the Company contained in Section 6 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter or any controlling person thereof, or the
Company or any of its officers, directors, or controlling persons and shall
survive delivery of, and payment for, the Securities to and by the Underwriters
hereunder.
8. SUBSTITUTION OF UNDERWRITERS.
(a) If any Underwriter or Underwriters shall fail to take up
and pay for the amount of Firm Shares agreed by such Underwriter or Underwriters
to be purchased hereunder, upon tender of such Firm Shares in accordance with
the terms hereof, and the amount of Firm Shares not purchased does not aggregate
more than 10% of the total amount of Firm Shares set forth in Schedule I hereto,
the remaining Underwriters shall be obligated to take up and pay for (in
proportion to their respective underwriting obligations hereunder as set forth
in Schedule I hereto except as may otherwise be determined by you) the Firm
Shares that the withdrawing or defaulting Underwriters agreed but failed to
purchase.
(b) If any Underwriter or Underwriters shall fail to take up
and pay for the amount of Firm Shares agreed by such Underwriter or Underwriters
to be purchased hereunder, upon tender of such Firm Shares in accordance with
the terms hereof, and the amount of Firm Shares not purchased aggregates more
than 10% of the total amount of Firm Shares set forth in Schedule I
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<PAGE>
hereto, and arrangements satisfactory to you for the purchase of such Firm
Shares by other persons are not made within 36 hours thereafter, this Agreement
shall terminate. In the event of any such termination the Company shall not be
under any liability to any Underwriter (except to the extent provided in Section
4(h) and Section 6 hereof) nor shall any Underwriter (other than an Underwriter
who shall have failed, otherwise than for some reason permitted under this
Agreement, to purchase the amount of Firm Shares agreed by such Underwriter to
be purchased hereunder) be under any liability to the Company (except to the
extent provided in Section 6 hereof).
If Firm Shares to which a default relates are to be purchased
by the non-defaulting Underwriters or by any other party or parties, the
Representatives or the Company shall have the right to postpone the First
Closing Date for not more than seven business days in order that the necessary
changes in the Registration Statement, Prospectus and any other documents, as
well as any other arrangements, may be effected. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 8.
9. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective at 10:00 a.m.,
Central time, on the first full business day following the effective date of the
Registration Statement, or at such earlier time after the effective time of the
Registration Statement as you in your discretion shall first release the
Securities for sale to the public; provided, that if the Registration Statement
is effective at the time this Agreement is executed, this Agreement shall become
effective at such time as you in your discretion shall first release the
Securities for sale to the public. For the purpose of this Section, the
Securities shall be deemed to have been released for sale to the public upon
release by you of the publication of a newspaper advertisement relating thereto
or upon release by you of telexes offering the Securities for sale to securities
dealers, whichever shall first occur. By giving notice as hereinafter specified
before the time this Agreement becomes effective, you, as Representatives of the
several Underwriters, or the Company may prevent this Agreement from becoming
effective without liability of any party to any other party, except that the
provisions of Section 4(h) and Section 6 hereof shall at all times be effective.
(b) You, as Representatives of the several Underwriters, shall
have the right to terminate this Agreement by giving notice as hereinafter
specified at any time at or prior to the First Closing Date, and the option
referred to in Section 3(b), if exercised, may be canceled at any time prior to
the Second Closing Date, if (i) the Company shall have failed, refused or been
unable, at or prior to such Closing Date, to perform any agreement on its part
to be performed hereunder, (ii) any other condition of the Underwriters'
obligations hereunder is not fulfilled, (iii) trading on the New York Stock
Exchange or the American Stock Exchange shall have been wholly suspended, (iv)
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required, on the New York Stock
Exchange or the American Stock Exchange, by such Exchange or by order of the
Commission or any other governmental authority having jurisdiction, (v) a
banking moratorium shall have been declared by Federal, New York or Florida
authorities, or (vi) there has occurred any material adverse change in the
financial markets in
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<PAGE>
the United States or an outbreak of major hostilities (or an escalation thereof)
in which the United States is involved, a declaration of war by Congress, any
other substantial national or international calamity or any other event or
occurrence of a similar character shall have occurred since the execution of
this Agreement that, in your judgment, makes it impractical or inadvisable to
proceed with the completion of the sale of and payment for the Securities. Any
such termination shall be without liability of any party to any other party
except that the provisions of Section 4(a)(viii) and Section 6 hereof shall at
all times be effective.
(c) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section, the
Company shall be notified promptly by you by telephone or telecopy, confirmed by
letter. If the Company elects to prevent this Agreement from becoming effective,
you shall be notified by the Company by telephone or telegram, confirmed by
letter.
10. INFORMATION FURNISHED BY UNDERWRITERS. The statements set
forth in the last paragraph of the cover page and under the caption
"Underwriting" in any Preliminary Prospectus and in the Prospectus constitute
the written information furnished by or on behalf of the Underwriters referred
to in Section 2 and Section 6 hereof.
11. NOTICES. Except as otherwise provided herein, all
communications hereunder shall be in writing or by telegraph and, if to the
Underwriters, shall be mailed, telegraphed or delivered to the Representatives
c/o Piper Jaffray Inc., Piper Jaffray Tower, 222 South Ninth Street,
Minneapolis, Minnesota 55402, except that notices given to an Underwriter
pursuant to Section 6 hereof shall be sent to such Underwriter at the address
stated in the Underwriters' Questionnaire furnished by such Underwriter in
connection with this offering; if to the Company, shall be mailed, telegraphed
or delivered to it at 6660 N. Andrews Avenue, Suite 160, Ft. Lauderdale, Florida
33309, Attention: John David Toole III. All notices given by telegram shall be
promptly confirmed by letter. Any party to this Agreement may change such
address for notices by sending to the parties to this Agreement written notice
of a new address for such purpose.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns and the controlling persons, officers and
directors referred to in Section 6. Nothing in this Agreement is intended or
shall be construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any provision
herein contained. The term "successors and assigns" as herein used shall not
include any purchaser, as such purchaser, of any of the Securities from any of
the several Underwriters.
13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota.
[Signature Page Follows]
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<PAGE>
Please sign and return to the Company the enclosed duplicates of
this letter whereupon this letter will become a binding agreement between the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
Roadhouse Grill, Inc.
By
----------------------------------
President
Confirmed as of the date first
above mentioned, on behalf of
themselves and the other several
Underwriters named in Schedule I
hereto.
PIPER JAFFRAY INC.
By
------------------------------------
Managing Director
ROBERTSON STEPHENS & COMPANY
By
-------------------------------------
Managing Director
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<PAGE>
SCHEDULE I
UNDERWRITER NUMBER OF FIRM SHARES (1)
- ----------- -------------------------
---------------
Total. . . . . . . . . . . . . . . 2,500,000
===============
- -----------------
(1) The Underwriters may purchase up to an additional 375,000 Option
Shares, to the extent the option described in Section 3(b) of the
Agreement is exercised, in the proportions and in the manner described
in the Agreement.
-26-
Exhibit 3.1
ARTICLES OF INCORPORATION
OF
ROADHOUSE GRILL, INC.
The undersigned, acting as an incorporator of a corporation under the
Florida Business Corporation Act, adopts the following Articles of
Incorporation:
1. The name of the corporation is Roadhouse Grill, Inc.("Corporation").
2. The mailing address and principal office address of the Corporation
is 600 Corporate Drive, Suite 100, Ft. Lauderdale, Florida 33334.
3. The period of its duration is perpetual, unless sooner dissolved.
4. The date and time of the commencement of the corporate existence
shall be the time of filing of Articles of Incorporation by the Department of
State.
5. The general purpose or purposes for which the Corporation is
organized are to engage in the transaction of any or all lawful business for
which corporations may be incorporated under the provisions of the Florida
Business Corporation Act.
6. The aggregate number of shares which the Corporation shall have
authority to issue is one thousand (1,000) shares, par value One Dollar ($1.00)
per share. All such shares are of one class, and are designated as common
shares.
7. The street address of the initial registered office of the
Corporation is 600 Corporate Drive, Suite 100, Ft. Lauderdale, Florida 33334,
and the name of its initial registered agent at such address is Charles D.
Barnett.
8. Thee affairs and business of the Corporation are to be conducted
(a) by a Board of Directors of such number as the shareholders may select at
each annual meeting of shareholders; (b) by a President, who shall be elected by
the Board of Directors at such time and in such manner as the Board of Directors
may select; and (c) by such other officers, assistant officers and agents as the
Board of Directors may authorize the President of the Corporation to appoint.
The first Board of Directors consisting of one director, who shall
serve until the first annual meeting of shareholders or until his successor(s)
is elected and qualifies, is as follows:
John Y. Brown, Jr.
600 Corporate Drive
Suite 100
Ft. Lauderdale, Florida 33334
9. The name and address of the incorporator is:
<PAGE>
John Y. Brown, Jr.
600 Corporate Drive
Suite 100
Ft. Lauderdale, Florida 33334
DATED October 13, 1992, at Fort Lauderdale, Florida.
/s/ JOHN Y. BROWN, JR.
--------------------------------
JOHN Y. BROWN, JR.
STATE OF FLORIDA ss.
ss.
COUNTY OF BROWARD ss.
The foregoing instrument was acknowledged before me this 13th October,
1992, by John Y. Brown, Jr., for Roadhouse Grill, Inc., and who is person known
to me and did not take an oath.
/s/ CHARLOTTE A. STOCKEMER
--------------------------------
Notary Public, State of Florida
My Commission Expires:
NOTARY SEAL- FLORIDA
CHARLOTTE A. STOCKEMER
MY COMMISSION #
===============
CC 191383
EXPIRES: April 6, 1996
Bonded thru Notary
Public Underwriters
CHARLES D. BARNETT, having been designated to act as Registered Agent,
hereby agrees to act in this capacity.
/s/ CHARLES D. BARNETT
--------------------------------
CHARLES D. BARNETT
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ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION
OF
ROADHOUSE GRILL, INC.
The undersigned, J. David Toole, III, President of Roadhouse Grill, Inc.,
a Florida corporation (the "Corporation"), desiring to amend the Articles of
Incorporation of the Corporation pursuant to the Florida Business Corporation
Act, states as follows:
A. The name of the Corporation is Roadhouse Grill, Inc.
B. Paragraph 6 of the Articles of Incorporation of the Corporation is
hereby amended to read in its entirety as follows:
6. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 35,000,000, of which
5,000,000 shall be preferred stock, (hereinafter called the "Preferred
Stock"), having a $.01 par value per share, and 30,000,000 shares shall be
common stock (hereinafter called the "Common Stock"), having $.01
par value per share.
The Preferred Stock may be issued from time to time in series, with
such designations, preferences, conversion rights, cumulative, relative,
participating, optional or other rights, qualifications, limitations or
restrictions thereof as shall be stated and expressed in the resolution or
resolutions providing for the issuance of such Preferred Stock, adopted by
the Board of Directors pursuant to the authority granted in these
Articles.
C. Pursuant to the provisions of Section 607.0602 of the Florida Business
Corporation Act, the Articles of Incorporation of the Corporation are hereby
amended to provide for the designation of 3,525,000 shares of the Company's
preferred stock as the Series A Convertible Preferred Stock, having the rights
and preferences set forth in the attached "Terms of the Series A Convertible
Preferred Stock" attached hereto as Exhibit "A."
D. The Articles of Incorporation of the Corporation are further amended by
adding the following new paragraph 10.
10. The Corporation shall indemnify, or advance expenses to, to the
fullest extent authorized or permitted by the Florida Business Corporation
Act, any person made, or threatened to be made, a party to any action,
suit or proceeding by reason of the fact that he (i) is or was a director
of the Corporation; (ii) is or was serving at the request of the
Corporation as a director of another corporation; (iii) is or was an
officer of the Corporation, provided that lie is or was at the time a
director of the Corporation; or (iv) is or was serving at the request of
the Corporation as an officer of another corporation, provided that he is
or was at the time a director of the Corporation or a director of such
other corporation, serving at the request of
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the Corporation. Unless otherwise expressly prohibited by the Florida
General Corporation Act, and except as otherwise provided in the foregoing
sentence, the Board of Directors of the Corporation shall have the sole
and exclusive discretion, on such terms and conditions as it shall
determine, to indemnify, or advance expenses to, any person made, or
threatened to be made, a party to any action, suit or proceeding by reason
of the fact that he is or was an officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as an
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. No person falling within the purview
of the foregoing sentence may apply for indemnification or advancement of
expenses to any court of competent jurisdiction.
References to the Florida Business Corporation Act in this paragraph
10 are to that law as from time to time amended. No amendment to the
Corporation's Articles shall affect any right of any person under this
paragraph 10 based on any event, omission or proceeding prior to such
amendment.
E. This Amendment to the Articles of Incorporation of the Corporation was
approved by unanimous consent of the Board of Directors on February 9, 1994.
F. This Amendment was approved by 96 % of the shareholders entitled to
vote at a meeting of the shareholders held on February 9, 1994. 96% was
sufficient.
DATED: February 9, 1994.
ROADHOUSE GRILL, INC.
By: /s/ J. DAVID TOOLE III
-------------------------------
Name: J. DAVID TOOLE III
Title: PRESIDENT
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EXHIBIT "A"
TERMS OF SERIES A CONVERTIBLE PREFERRED STOCK
(To be Included in Charter Document of Roadhouse Grill, Inc.)
The designations, voting powers, preferences and relative participating,
optional or other special rights, and qualifications, limitations or
restrictions of the above classes of the Series A Convertible Preferred Stock
are as follows:
1. VOTING.
A. GENERAL. Except as may be otherwise provided in these terms of
the Series A Convertible Preferred Stock or by law, the Series A Convertible
Preferred Stock shall vote together with all other classes and series of stock
of the Corporation having general voting rights as a single class on all actions
to be taken by the stockholders of the Corporation. Each share of Series A
Convertible Preferred Stock shall entitle the holder thereof to such number of
votes per share on each such action as shall equal the number of shares of
Common Stock (including fractions of a share) into which each share of Series A
Convertible Preferred Stock is then convertible.
B. MATTERS REQUIRING CLASS VOTE. In the event that any shares of
Series A Convertible Preferred Stock are outstanding, the Corporation shall not,
without the affirmative vote of the holders of if least two-thirds of the shares
of Series A Convertible Stock given in writing or by vote at a meeting,
consenting or voting (as the case may be) as a single class:
(i) create or authorize the creation of any additional class or
series of shares of stock unless the same ranks junior to the Series A
Convertible Preferred Stock as to the payment of dividends and the distribution
of assets on the liquidation, dissolution or winding up of the Corporation, or
increase the authorized amount of the Series A Convertible Preferred Stock, or
increase the authorized amount of any additional class or series of shares of
stock unless the same ranks junior to the Series A Convertible Preferred Stock
as to the payment of dividends and the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, or create or
authorize any obligation or security convertible into shares of Series A
Convertible Preferred Stock or into shares of any other class or series of stock
unless the same ranks junior to the Series A Convertible Preferred Stock as to
the payment of dividends and the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, whether any such creation,
authorization or increase shall be by means of amendment to the Charter or by
merger, consolidation or otherwise;
(ii) amend, alter or repeal, whether by merger, consolidation or
otherwise, the Charter of the Corporation; provided, however, that the Charter
may be amended to provide for an increase in the authorized preferred stock of
the Corporation or
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the creation and issuance of any other capital stock of the Corporation ranking
junior in all respects to the Series A Convertible Preferred Stock;
(iii) merge, consolidate, enter into a share exchange or engage
in any other transaction in which the Corporation is not the surviving entity or
in which effective control of the Corporation has been transferred to another
entity; provided however, that this paragraph shall not apply so long as John Y.
Brown, Jr. is a member of the Board of Directors, in which case paragraph 1C
shall apply;
(iv) engage in any transaction that would be considered a "deemed
dividend" transaction under Section 305 of the Code;
(v) consent to any liquidation, dissolution, winding up of the
Corporation or the sale or transfer of all or substantially all of its assets;
(vi) amend, alter or repeal the Corporation's By-Laws;
(vii) purchase or set aside any sums for the purchase of, or pay
any dividend or make any distribution on, any shares of stock other than the
Series A Convertible Preferred Stock; or
C. MERGER, ETC. In the event that any shares of Series A Convertible
Preferred Stock are outstanding and John Y. Brown, Jr. is a member of the Board
of Directors, the Corporation may nor merge, consolidate, enter into a share
exchange or engage in any other transaction in which the Corporation is not the
surviving entity or in which effective control of the Corporation has been
transferred to another entity if all of the holders of more than 500,000 shares
the Series A Convertible Preferred Stock then outstanding have voted against
such transaction.
D. BOARD SIZE. The Corporation shall not, without the written
consent or affirmative vote of the holders of a majority of the then outstanding
shares of Series A Convertible Preferred Stock given in writing or by vote at a
meeting, consenting or voting (as the case may be) separately as a class,
increase (whether by amendment of the Charter or By-Laws or otherwise) the
maximum number of directors constituting the Board of Directors to a number in
excess of five (5).
E. BOARD SEATS. The holders of the Series A Convertible Preferred
Stock, voting as a separate class, shall be entitled to elect one (1) director
of the Corporation. The holders of the Common Stock and the Series A Convertible
Preferred Stock, voting together as a single class, shall be entitled to elect
the other directors of the Corporation.
In the event John Y. Brown, Jr. ceases to be a member of the Board
of Directors, the holders of the Series A Convertible Preferred Stock shall, for
a period of three (3) years beginning on the date on which John Y. Brown, Jr.
ceases to be a member,
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elect a majority of the members of the Board of Directors; provided however,
that the election of a majority of the members of the Board of Directors shall
in no way affect the rights and obligations under the employment agreement with
the Chief Executive Officer or the Chief Executive Officer's right to be a
member of the Board of Directors.
At any meeting (or in a written consent in lieu thereof) held for
the purpose of electing directors, the presence in person or by proxy (or the
written consent) of the holders of a majority of the shares of Series A
Convertible Preferred Stock then outstanding shall constitute a quorum of the
Series A Convertible Preferred Stock for the election of directors to be elected
solely by the holders of the Series A Convertible Preferred Stock.
At a meeting (or in a written consent in lieu thereof) held for the
purpose of electing directors, the presence in person or by proxy (or the
written consent) of the holders of a majority of the shares of Series A
Convertible Preferred Stock then outstanding and a majority of the shares of
Common Stock then outstanding shall constitute a quorum of the Series A
Convertible Preferred Stock and the Common Stock for the election of directors
to be elected jointly by the holders of the Series A Convertible Preferred Stock
and the Common Stock.
A vacancy in any directorship elected solely by the holders of the
Series A Convertible Preferred Stock shall be filled only by vote or written
consent of the holders of the Series A Convertible Preferred Stock; and a
vacancy in the directorship elected jointly by the holders of the Series A
Convertible Preferred Stock and the Common Stock shall be filled only by vote or
written consent of the Series A Convertible Preferred Stock and the Common
Stock, as provided above.
2. DIVIDENDS. The holders of the Series A Convertible Preferred Stock
shall be entitled to receive, out of funds legally available therefor, when, as
and if declared by the Board of Directors, quarterly dividends at the rate per
annum of $.105 per share of Series A Convertible Preferred Stock as adjusted for
stock splits, stock dividends, recapitalizations, reclassifications and similar
events which affect the number of outstanding shares of Series A Convertible
Preferred Stock (together referred to herein as "Recapitalization Events").
Dividends on the Series A Convertible Preferred Stock shall not be cumulative.
3. LIQUIDATION. Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary (a "Liquidation"), the holders of
the shares of Series A Convertible Preferred Stock shall be entitled, before any
distribution or payment is made upon any stock ranking on liquidation junior to
the Series A Convertible Preferred Stock, to be paid an amount equal to $1.50
per share (appropriately adjusted for Recapitalization Events) plus, in the case
of each share, an amount equal to all dividends, if any, declared but unpaid
thereon, computed to the date payment thereof is made available, such amount
payable with respect to one share of Series A Convertible Preferred Stock being
sometimes referred to as the "Series A Liquidation Payment" and with respect to
all shares of Series A Convertible Preferred Stock being sometimes
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referred to as the "Series A Liquidation Payments." If any assets of the
Corporation remain after the Series A Liquidation Payments, the Series A
Convertible Preferred Stock shall be deemed to have been converted into Common
Stock so that the holders of shares of Series A Convertible Preferred Stock will
be entitled to their pro rata share (on an as converted basis) of such net
assets with the shares of Common Stock. If, however upon such Liquidation, the
assets to be distributed among the holders of Series A Convertible Preferred
Stock shall be insufficient to permit payment to the holders of Series A
Convertible Preferred Stock of the amount distributable as aforesaid, then the
entire assets of the Corporation to be so distributed shall be distributed
ratably among the holders of Series A Convertible Preferred Stock.
Written notice of such Liquidation, stating a payment date, the amount of
any payments to be made to the holders of the Series A Convertible Preferred
Stock and the place where said payments shall be payable, shall be given by
mail, postage prepaid, or by facsimile to non-U.S. residents, not less than
twenty (20) days prior to the payment date stated therein, to the holders of
record of Series A Convertible Preferred Stock, such notice to be addressed to
each such holder at its address as shown by the records of the Corporation. The
consolidation or merger of the Corporation into or with any other entity or
entities which results in the holders of the Corporation's outstanding Common
Stock or other voting securities of the Corporation holding less than fifty
percent (50%) of the combined voting power of the entity or entities surviving
such transaction, or the sale or transfer by the Corporation of all or
substantially all of its assets, shall be deemed to be a Liquidation, within the
meaning of the provisions of this Paragraph 3.
For purposes hereof, the Common Stock and any other capital stock of the
Corporation shall rank on Liquidation junior to the Series A Convertible
Preferred Stock.
Notwithstanding anything to the contrary contained in this Section 3,
unless the holders of the Series A Convertible Preferred Stock shall otherwise
notify the Corporation, no such holder shall be deemed to have elected to
convert its shares of Series A Convertible Preferred Stock into Common Stock or
redeemed its shares of Series A Convertible Preferred Stock, as the case may be
as a result of a Liquidation and no such conversion or redemption shall be
effective, unless and until the Liquidation referred to in the notice given to
holders of record of Series A Convertible Preferred Stock pursuant to Section 3
hereof shall have been consummated.
4. CONVERSIONS. The holders of shares of Series A Convertible Preferred
Stock shall have the following conversion rights ("Conversion Rights'):
A. RIGHT TO CONVERT. Subject to the terms and conditions of this
Paragraph 4, the holder of any share or shares of Series A Convertible Preferred
Stock shall have the right, at its option at any time, to convert any such
shares of Convertible Preferred Stock (except that upon any Liquidation of the
Corporation the right of conversion shall terminate at the close of business on
the business day fixed for payment of the amount distributable on the Series A
Convertible Preferred Stock) into such number of fully paid and nonassessable
shares of Common Stock as is obtained by: (i) multiplying
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the number of shares of Series A Convertible Preferred Stock so to be converted
by $1.50 in the case of the Series A Convertible Preferred Stock, and (ii)
dividing the result by the conversion price of $1.50 in the case of the Series A
Convertible Preferred Stock or, in case an adjustment of such price has taken
place pursuant to the further provisions of this Paragraph 4, then by the
conversion price as last adjusted and in effect at the date any share or shares
of Series A Convertible Preferred Stock are surrendered for conversion (such
prices, or such price as last adjusted, being referred to individually as a
"Conversion Price" and collectively as the "Conversion Prices"). Such rights of
conversion shall be exercised by the holder thereof by giving written notice
that the holder elects to convert a stated number of shares of Series A
Convertible Preferred Stock into Common Stock and by surrender of a certificate
or certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of the Series A
Convertible Preferred Stock) at any time during its usual business hours on the
date set forth in such notice, together with a statement of the name or names
(with address and social security or taxpayer identification number) in which
the certificate or certificates for shares of Common Stock shall be issued.
B. ISSUANCE OF CERTIFICATES: TIME CONVERSION EFFECTED. Promptly after
the receipt of the written notice referred to in sub-paragraph 4A and surrender
of the certificate or certificates for the share or shares of Series A
Convertible Preferred Stock to be converted, the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder, registered in such
name or names as such holder may direct, a certificate or certificates for the
number of whole shares of Common Stock issuable upon the conversion of such
share or shares of Series A Convertible Preferred Stock. To the extent permitted
by law, such conversion shall be deemed to have been effected and the Conversion
Price shall be determined as of the close of business on the date on Which such
written notice shall have been received by the Corporation and the certificate
or certificates for such share or shares shall have been surrendered as,
aforesaid, and at such time the rights of the holder of such share or shares of
Series A Convertible Preferred Stock shall cease, and the person or persons in
whose name or names any certificate or certificates for shares of COMMON Stock
shall be issuable upon such conversion shall be deemed to have become the holder
or holders of record of the shares represented thereby.
C. FRACTIONAL SHARES; DIVIDENDS; PARTIAL CONVERSION. No fractional
shares shall be issued upon conversion of Series A Convertible Preferred Stock
into Common Stock and the aggregate number of shares of Common Stock to be
issued to a holder shall be rounded to the nearest whole shares. At the time of
each conversion, the Corporation shall pay in cash an amount equal to all
dividends, if any, declared and unpaid on the shares of Series A Convertible
Preferred Stock surrendered for conversion to the date upon which such
conversion is deemed to take, place as provided in sub-paragraph 4B. In case the
number of shares of Series A Convertible Preferred Stock represented by the
certificate or certificates surrendered pursuant to sub-paragraph 4A exceeds the
number of shares converted, the Corporation shall, upon such conversion, execute
and deliver to the holder, at the expense of the Corporation, a new certificates
or certificates for
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the number of shares of Series A Convertible Preferred Stock represented by the
certificate or certificates surrendered which are not to be converted. If any
fractional share of Common Stock would, except for the provisions of the first
sentence of this sub-paragraph 4C, be delivered upon such conversion, the
Corporation, in lieu of delivering such fractional share, shall pay to the
holder surrendering the Series A Convertible Preferred Stock for conversion an
amount in cash equal to the current market price of such fractional share as
determined in good faith by the Board of Directors of the Corporation.
D. ADJUSTMENT OF PRICE UPON ISSUANCE OF COMMON STOCK. Except as
provided in sub-paragraph 4E, if and whenever the Corporation shall issue or
sell, or is, in accordance with sub-paragraphs 41)(i) through 41)(vii), deemed
to have issued or sold, any shares of Common Stock for a consideration per share
less than the applicable Conversion Price for the Series A Convertible Preferred
Stock immediately prior to the time of such issue or sale (such issuance or sale
shall be referred to as a "Dilutive Issuance"), then, forthwith upon the
Dilutive Issuance, such Conversion Price shall be adjusted by multiplying such
Conversion Price by the fraction:
X + Y
-----
X + Z
where:
X = the number of shares of Common Stock issuable upon conversion of
the Series A Convertible Preferred Stock at the Conversion Price in
effect immediately before the Dilutive Issuance;
Y = the number of shares of Common Stock which the aggregate
consideration received by the Corporation in the Dilutive Issuance
would purchase at the Conversion Price in effect immediately before
the Dilutive Issuance; and
Z = the number of shares of Common Stock issued or deemed issued in the
Dilutive Issuance.
For purposes of this sub-paragraph 4D, the following sub-paragraphs 4D(i)
through 4D(vii) shall also be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. In case at any time the
Corporation shall in any manner grant (whether directly or by assumption in a
merger or otherwise) any warrants or other rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any stock or
security convertible into or exchangeable for Common Stock (such warrants,
rights or options being called "Options" and such convertible or exchangeable
stock or securities being called "Convertible Securities") whether or not such
Options or the right to convert or exchange any such Convertible Securities are
immediately exercisable, and the effective price per share for which Common
Stock is issuable upon the exercise of such Options or upon the conversion or
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exchange of such Convertible Securities (determined by dividing (1) the total
amount, if any, received or receivable by the Corporation as consideration for
the granting of such Options, plus the minimum aggregate amount of additional
consideration payable to the Corporation upon the exercise of all such Options,
plus, in the case of such Options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion or exchange
thereof, by (2) the total maximum number of shares of Common Stock issuable upon
the exercise of all such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options) shall be less
than the applicable Conversion Price for the Series A Convertible Preferred
Stock immediately prior to the time of the granting of such Options or
Convertible Securities, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or exchange of the
total maximum amount of such Convertible Securities issuable upon the exercise
of such Options shall be deemed to have been issued for such effective price per
share as of the date of granting of such Options or the issuance of such
Convertible Securities. Except as otherwise provided in sub-paragraph 41)(iii),
no adjustment of any Conversion Price shall be made upon the actual issue of
such Common Stock or of such Convertible Securities upon exercise of such
Options or upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. In case the Corporation
shall in any manner issue (whether directly or by assumption in a merger or
otherwise) or sell any Convertible Securities, whether or not the rights to
exchange or convert any such Convertible Securities are immediately exercisable,
and the effective price per share for which Common Stock is issuable upon such
conversion or exchange (determined by dividing (1) the total amount received or
receivable by the Corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion or
exchange thereof, by (2) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities)
shall be less than the applicable Conversion Price for the Series A Convertible
Preferred Stock immediately prior to the time of such issue or sale, then the
total maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall be deemed to have been issued
for such effective price per share as of the date of the issue or sale of such
Convertible Securities, provided that (1) except as otherwise provided in
sub-paragraph 41)(iii), no adjustment of any Conversion Price shall be made upon
the actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities, and (2) if any such issue or sale of such Convertible
Securities is made upon exercise of any Options to purchase any such Convertible
Securities for which adjustments of any Conversion Price have been or are to be
made pursuant to other provisions of this subparagraph 4D, no further adjustment
of such Conversion Price shall be made by reason of such issue or sale.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. Upon the happening
of any of the following events, namely, if the purchase price provided for in
any
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Option referred to in sub-paragraph 4D(i) or 4D(ii) shalt change at any time
(including, but not limited to, changes under or by reason of provisions
designed to protect against dilution), the applicable Conversion Price for any
series of Convertible Preferred Stock at the time of such event shall forthwith
be readjusted to the Conversion Price which would have been in effect at such
time had such Options or Convertible Securities still outstanding provided for
such changed purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold, but only if as a
result of such adjustment the Conversion Price then in effect hereunder is
thereby reduced; and on the expiration of any such Option or the termination of
any such right to convert or exchange such Convertible Securities, the
Conversion Price then in effect hereunder shall forthwith be increased to the
Conversion Price which would have been in effect at the time of such expiration
or termination had such Option or Convertible Securities, to the extent
outstanding immediately prior to such expiration or termination, never been
issued.
(iv) STOCK DIVIDEND. In case the Corporation shall declare a dividend
or make any other distribution upon any stock of the Corporation other than on
the Series A Preferred Shares payable in Common Stock, Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as the case may
be, issuable in payment of such dividend or distribution shall be deemed to have
been issued or sold at a consideration equal to $.01 per share.
(v) CONSIDERATION FOR STOCK. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Corporation therefor, without deduction therefrom of any expenses incurred or
any underwriting commissions or concessions paid or allowed by the Corporation
in connection therewith. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith. In case
any Options shall be issued in connection with the issue and sale of other
securities of the Corporation, together comprising one integral transaction in
which no specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued for such consideration
as determined in good faith by the Board of Directors of the Corporation.
(vi) RECORD DATE. In case the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them (1) to receive a
dividend or other distribution payable in Common Stock, Options or Convertible
Securities, or (2) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the
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making of such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(vii) TREASURY SHARES. The disposition of any shares of Common Stock
owned or held by or for the account of the Corporation shall be considered an
issue or sale of Common Stock for the purpose of this sub-paragraph 4D.
E. CERTAIN ISSUES OF COMMON STOCK EXCEPTED. Anything herein to the
contrary notwithstanding, the Corporation shall not be required to make any
adjustment of any Conversion Price in the case of the grant of options or other
rights to acquire Common Stock and the issuance of Common Stock upon exercise of
such options or rights pursuant to the Corporation's Stock Option Plan for
employees and directors who are not employees of the Corporation in connection
with their service as directors or their employment by the Corporation, but not
exceeding in the aggregate 200,000 shares of Common Stock, the exercise of the
Stock Option granted to J. David Toole, III for 355,555 shares of Common Stock,
the issuance of shares of Series A Convertible Preferred Stock upon the exercise
of certain warrants issued pursuant to the Series A Convertible Preferred Stock
Purchase Agreement to be entered into on or about February 10, 1994 between the
Corporation and the Purchasers listed in Schedule I thereto, or the conversion
of any Series A Convertible Preferred Stock into Common Stock.
F. SUBDIVISION OR COMBINATION OF COMMON STOCK. In case the Corporation
shall at any time subdivide (by any stock split, stock dividend or otherwise)
its outstanding shares of Common Stock into a greater number of shares, the
Conversion Price in effect for the Series A Convertible Preferred Stock
immediately prior to such subdivision shall be proportionately reduced and,
conversely, in case the outstanding shares of Common Stock shall be combined
into a smaller number of shares, the Conversion Price in effect for any series
of Convertible Preferred Stock immediately prior to such combination shall be
proportionately increased.
G. REORGANIZATION OR RECLASSIFICATION. If any capital reorganization or
reclassification of the capital stock of the Corporation shall be effected in
such a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization or reclassification, lawful and adequate
provisions shall be made whereby each holder of a share or shares of Series A
Convertible Preferred Stock shall thereupon have the right to receive, upon the
basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore receivable upon the conversion of
such share or shares of Series A Convertible Preferred Stock, such shares of
stock, securities or assets as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such Common Stock immediately theretofore receivable upon
such conversion had such reorganization or reclassification not taken place, and
in any such case appropriate provisions shall be made with respect to the rights
and interests of such holder to the end that the provisions hereof (including
without limitation provisions for adjustments of the applicable Conversion
Price) shall thereafter be applicable, as nearly as may be, in relation
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to any shares of stock, securities or assets thereafter deliverable upon the
exercise of such conversion rights.
H. NOTICE OF ADJUSTMENT. Upon any adjustment of any Conversion Price,
then and in each such case the Corporation shall give written notice thereof, by
first class mail, postage prepaid, or by facsimile to non-U.S. residents,
addressed to each holder of shares of Series A Convertible Preferred Stock at
the address of such holder as shown on the books of the Corporation, which
notice shall state the Conversion Price resulting from such adjustment, setting
forth in reasonable detail the method upon which such calculation is based.
I. OTHER NOTICES. In case at any time:
(i) the Corporation shall declare any dividend upon its Common Stock
payable in cash or stock or make any other distribution to the holders of its
Common Stock;
(ii) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
(iii) there shall be any capital reorganization or reclassification
of the capital stock of the Corporation, or a consolidation or merger of the
Corporation with or into, or a sale of all or substantially all of its assets
to, another entity or entities; or
(iv) there shall be a Liquidation of the Corporation; then, in any
one or more of said cases, the Corporation shall give, by first class mail,
postage prepaid, or by facsimile for non-U.S. residents addressed to each holder
of any shares of Series A Convertible Preferred Stock at the address of such
holder as shown on the books of the Corporation (1) at least twenty (20) days
prior written notice of the date on which the books of the Corporation shall
close or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale or Liquidation, and (2) in the
case of any such reorganization, reclassification, consolidation, merger, sale
or Liquidation, at least twenty (20) days prior written notice of the date when
the same shall take place. Such notice in accordance with the foregoing clause
(1) shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto and such notice in accordance with the foregoing clause (2)
shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale or Liquidation, as the case maybe.
J. STOCK TO BE RESERVED. The Corporation will, at all times, reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of Series A Convertible Preferred Stock as herein
provided, such number of shares of Common Stock as shall then be issuable upon
the conversion of all
10
<PAGE>
outstanding shares of Series A Convertible Preferred Stock and securities
convertible into Series A Convertible Preferred Stock (and the subsequent
conversion of such Series A Convertible Preferred Stock). The Corporation
covenants that all shares of Common Stock which shall be so issued shall be duly
and validly issued and fully paid and nonassessable and free from all taxes,
liens and to charges with respect to the issue thereof and, without limiting the
generality of the foregoing, the Corporation covenants that it will from time to
time take all such action as may be requisite to assure that the par value per
share of the Common Stock is at all times equal to or less than any Conversion
Price in effect at the time for the Series A Convertible Preferred Stock. The
Corporation will take all such action as may be necessary to assure that all
such shares of Common Stock may be so issued without violation of any applicable
law or regulation, or of any requirement of any national securities exchange
upon which the Common Stock may be listed. The Corporation will not take any
action which results in any adjustment of any Conversion Price if the total
number of shares of Common Stock issued and issuable after such action upon
conversion of the Series A Convertible Preferred Stock would exceed the total
number of shares of Common Stock then authorized by the Charter of the
Corporation.
K. NO REISSUANCE OF CONVERTIBLE PREFERRED STOCK. Shares of Series A
Convertible Preferred Stock which are converted into shares of Common Stock as
provided herein shall not be reissued.
L. ISSUE TAX. The issuance of certificates for shares of Common Stock
upon conversion of the Series A Convertible Preferred Stock shall be made
without charge to the holders thereof for any issuance tax in respect thereof,
provided that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Series A Convertible
Preferred Stock which is being converted.
M. CLOSING OF BOOKS. The Corporation will at no time close its transfer
books against the transfer of any Series A Convertible Preferred Stock or of any
shares of Common Stock issued or issuable upon the conversion of any shares of
Series A Convertible Preferred Stock in any manner which interferes with the
timely conversion of such Series A Convertible Preferred Stock, except as may
otherwise be required to comply with applicable securities laws.
N. DEFINITION OF COMMON STOCK. As used in this paragraph 4, the term
"Common Stock" shall mean and include the Corporation's authorized Common Stock,
par value $.01 per share, as constituted on the date of filing of these Terms of
the Series A Convertible Preferred Stock, and shall also include any capital
stock of any class of the Corporation thereafter authorized which shall not be
limited to a fixed sum or percentage of par value in respect of the rights of
the holders thereof to participate in dividends or in the distribution of assets
upon the Liquidation of the Corporation; provided that the shares of Common
Stock receivable upon conversion of shares of Series A Convertible Preferred
Stock shall include only shares designated as Common Stock of the Corporation on
the date of filing of this instrument, or in case of any reorganization or
reclassification of the
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<PAGE>
outstanding shares thereof, the stock, securities or assets provided for in
sub-paragraph 4G.
O. MANDATORY CONVERSION. If at any time the Corporation shall effect a
firm commitment underwritten public offering of shares of Common Stock in which
the aggregate price paid for such shares by the public shall be at least
$10,000,000, then effective upon the closing of the sale of such shares by the
Corporation pursuant to such public offering, all outstanding shares of Series A
Convertible Preferred Stock shall automatically convert to shares of Common
Stock based on the Conversion Price in effect at the time of such closing. The
Corporation shall give each holder of the Series A Convertible Preferred Stock
at least twenty (20) days written notice prior to such public offering.
5. AMENDMENTS. No provision of these terms of the Series A Convertible
Preferred Stock may be amended, modified or waived without the written consent
or affirmative vote of the holders of at least two-thirds of the then
outstanding shares of Series A Convertible Preferred Stock voting separately as
a series.
6. RIGHT OF FIRST REFUSAL.
A. The Corporation shall, prior to (or as soon thereafter as is
reasonably practical) any issuance by the Corporation of any of its securities
(other than debt securities with no equity feature), offer to each holder of
Series A Convertible Preferred Stock continuing to hold at least fifty percent
(50%) of the shares of Series A Convertible Preferred Stock purchased by such
stockholder (the "Eligible Purchaser") by written notice the right, for a period
of thirty (30) days, to purchase a pro rata amount (based on the percentage
ownership of the Common Stock of the Corporation assuming the conversion of the
Series A Convertible Preferred Stock) of such securities on the same terms and
conditions for which such securities are to be issued (unless the Eligible
Purchaser is unable to meet such terms and conditions, in which case the
Eligible Purchaser shall purchase such securities for cash at an amount equal to
the price or other consideration for which such securities are to be issued);
provided, however, that the first refusal rights of the Eligible Purchasers
pursuant to this Section 6A shall not apply to securities issued (1) upon the
exercise of the Warrants, (2) upon conversion of any of the Series A Convertible
Preferred Stock, (3) as a stock dividend or upon any subdivision of shares of
Common Stock, provided that the securities issued pursuant to such stock
dividend or subdivision are limited to additional shares of Common Stock, (4)
pursuant to the Corporation's Option Plan, (5) solely in consideration for the
acquisition (whether by merger or otherwise) by the Corporation or any of its
subsidiaries of all or substantially all of the stock or assets of any other
entity, and (6) pursuant to a firm commitment underwritten public offering. The
Corporation's written notice to the Eligible Purchasers shall describe the
securities proposed to be issued by the Corporation and specify the number,
price and payment terms.
Each Eligible Purchaser may accept the Corporation's offer as to the full
number of securities offered to it or any lesser number, by written notice
thereof given by it to the
12
<PAGE>
Corporation prior to the expiration of the aforesaid thirty (30) day period, in
which event the Corporation shall promptly sell and such Eligible Purchaser
shall buy, upon the terms specified, the number of securities agreed to be
purchased by such Eligible Purchaser.
B. The Corporation shall be free at any time prior to one hundred
twenty (120) days after the date of its notice of offer pursuant to this section
6 to offer and sell to any third party or parties the number of such securities
not agreed by the Eligible Purchasers, as the case may be, to be purchased by
them, at a price and on payment terms no less favorable to the Corporation than
those specified in such notice of offer. However, if such third party sale or
sales are not consummated within such one hundred twenty (120) day period, the
Corporation shall not sell such securities as shall not have been purchased
within such period without again complying with this Section 6.
C. In case the Corporation issues any of its securities at a price per
share (or at a price per share of Common Stock assuming their full conversion
into Common Stock, if applicable) less than the price per share paid by each
Eligible Purchaser hereunder, each Eligible Purchaser shall have aright of
over-allotment such that if any Eligible Purchaser fails to exercise such
Eligible Purchaser's right hereunder to purchase such Eligible Purchaser's full
proportionate share of the securities proposed to be issued (the "Incomplete
Purchasers"), the Purchasers purchasing their full respective proportionate
share of such . securities (the "Complete Purchasers") may purchase the portion
of such securities which has not been purchased by the Incomplete Purchasers as
hereinafter provided. The Complete Purchasers shall have ten (10) days from the
date notice is given by the Corporation to the Complete Purchasers that such
Incomplete Purchasers have rejected or failed to accept their right to purchase
their proportionate share of securities, to agree to purchase up to such
Complete Purchaser's proportionate share of such securities not purchased by the
Incomplete Purchasers. Notwithstanding anything in Section 6B to the contrary,
as used in this Section 6C with respect to the Complete Purchasers only, each
Complete Purchaser's "proportionate share" shall be calculated by excluding from
the denominator of the fraction the total number of shares of Common Stock of
any Incomplete Purchaser and the total number of shares of Common Stock into
which the shares of such Incomplete Purchaser's Preferred Stock or other
convertible securities, if any, are convertible.
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<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
ROADHOUSE GRILL, INC.
The undersigned, Charles D. Barnett, of Roadhouse Grill, Inc., a
Florida corporation (the "Corporation"), desiring to amend the Articles of
Incorporation of the Corporation pursuant to the Florida Business Corporation
Act, states as follows:
1. The name of the Corporation is Roadhouse Grill, Inc.
2. Paragraph 6 of the Articles of Incorporation of the Corporation is
hereby amended to read in its entirety as follows:
6. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 40,000,000, of which
10,000,000 shall be preferred stock (hereinafter called the "Preferred
Stock"), having a $.01 par value per share, and 30,000,000 shares shall
be common stock (hereinafter called the "Common Stock"), having $.01
par value per share.
The Preferred Stock may be issued from time to time in series,
with such designations, preferences conversion rights, cumulative,
relative, participating, optional or other rights qualifications,
limitations or restrictions thereof as shall be stated and expressed in
the resolution or resolutions providing for the issuance of such
Preferred Stock, adopted by the Board of Directors pursuant to the
authority granted in these Articles.
3. Pursuant to the provisions of Section 607.0602 of the Florida
Business Corporation Act, the Articles of Incorporation of the Corporation are
hereby amended to provide for the designation of 2,366,700 shares of the
Company's Preferred Stock as the Series B Convertible Preferred Stock. The
rights and preferences of the Series A Convertible Preferred Stock is hereby
amended and restated in its entirety and the rights and preferences of the
Series B Convertible Preferred Stock is as set forth in the attached "Terms of
the Series A Convertible Preferred Stock and Series B Convertible Preferred
Stock" attached hereto as Exhibit "A."
4. This Amendment to the Articles of Incorporation of the Corporation
was approved by unanimous consent of the Board of Directors on May 23, 1994.
<PAGE>
5. This Amendment was approved by 95% of the shareholders entitled to
vote at a meeting of the shareholders held on June 3, 1994, such number being
sufficient to approve this Amendment.
DATED: June 6, 1994.
ROADHOUSE GRILL, INC.
By: /s/ CHARLES D. BARNETT
Title: Secretary
2
<PAGE>
EXHIBIT "A"
TERMS OF SERIES A CONVERTIBLE PREFERRED STOCK
AND SERIES B CONVERTIBLE PREFERRED STOCK
(To be Included in Charter Document of Roadhouse Grill, Inc.)
There shall be initially two series of Preferred Stock consisting of
3,525,000 shares of Series A Convertible Preferred Stock, $.01 par value
("Series A Preferred Stock") and 2,366,700 shares of Series B Convertible
Preferred Stock, $.01 par value ("Series B Preferred Stock"). The Series A
Preferred Stock and the Series B Preferred Stock are herein sometimes referred
to, collectively, as the "Preferred Stock". Except as expressly set forth
herein, the Series A Preferred Stock and the Series B Preferred Stock shall be
identical in all respects.
1. VOTING.
A. GENERAL. Except as may be otherwise provided herein or by law, the
Preferred Stock shall vote together with all other classes and series of stock
of the Corporation having general voting rights as a single class on all actions
to be taken by the stockholders of the Corporation. Each share of Preferred
Stock shall entitle the holder thereof to such number of votes per share on each
such action as shall equal the number of shares of Common Stock (including
fractions of a share) into which each share of Preferred Stock is then
convertible.
B. MATTERS REQUIRING CLASS VOTE.
I. SERIES A PREFERRED STOCK. In the event that any shares of
Series A Preferred Stock are outstanding, the Corporation shall not, without the
affirmative vote of the holders of at least two-thirds of the shares of Series A
Preferred Stock given in writing or by vote at a meeting, consenting or voting
(as the case may be) as a single class:
(i) create or authorize the creation of any additional class or
series of shares of stock unless the same ranks junior to the Series A Preferred
Stock as to the payment of dividends and the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, or increase the
authorized amount of the Series A Preferred Stock, or increase the authorized
amount of any additional class or series of shares of stock unless the same
ranks junior to the Series A Preferred Stock as to the payment of dividends and
the distribution of assets on the liquidation, dissolution or winding up of the
Corporation, or create or authorize any obligation or security convertible into
shares of Series A Preferred Stock or into shares of any other class or series
of stock unless the same ranks junior to the Series A Preferred Stock as to the
payment of dividends and the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, whether any such creation,
authorization or increase shall be by means of amendment to the Charter or by
merger, consolidation or otherwise.
II. SERIES B PREFERRED STOCK. In the event that any shares of
Series B Preferred Stock are outstanding, the Corporation shall not, without the
affirmative vote of the holders of at least two-thirds of the shares of Series B
Preferred Stock given in writing or by vote at a meeting, consenting or voting
(as the case may be) as a single class:
(i) create or authorize the creation of any additional class or
series of shares of stock unless the same ranks junior to the Series B Preferred
Stock as to the payment of dividends and the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, or increase the
authorized amount of the Series B Preferred Stock, or increase the
<PAGE>
authorized amount of any additional class or series of shares of stock unless
the same ranks junior to the Series B Preferred Stock as to the payment of
dividends and the distribution of assets on the liquidation, dissolution or
winding up of the Corporation, or create or authorize any obligation or security
convertible into shares of Series B Preferred Stock or into shares of any other
class or series of stock unless the same ranks junior to the Series B Preferred
Stock as to the payment of dividends and the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, whether any such
creation, authorization or increase shall be by means of amendment to the
Charter or by merger, consolidation or otherwise;
III. PREFERRED STOCK. In the event that any shares of Preferred
Stock are outstanding, the Corporation shall not, without the affirmative vote
of the holders of at least a majority of the shares of Preferred Stock then
outstanding given in writing or by vote at a meeting, consenting or voting (as
the case may be) as a single class:
(i) amend, alter or repeal, whether by merger, consolidation or
otherwise, the Charter of the Corporation; provided, however, that the Charter
may be amended to provide for an increase in the authorized preferred stock of
the Corporation or the creation and issuance of any other capital stock of the
Corporation ranking junior in all respects to the Preferred Stock;
(ii) merge, consolidate, enter into a share exchange or engage in
any other transaction in which the Corporation is not the surviving entity or in
which effective control of the Corporation has been transferred to another
entity; provided however, that this paragraph shall not apply so long as John Y.
Brown, Jr. is a member of the Board of Directors, in which case paragraph 1C
shall apply;
(iii) engage in any transaction that would be considered a "deemed
dividend" transaction under Section 305 of the Code;
(iv) consent to any liquidation, dissolution, winding up of the
Corporation or the sale or transfer of all or substantially all of its assets;
(v) amend, alter or repeal the Corporation's By-Laws;
(vi) purchase or set aside any sums for the purchase of, or pay
any dividend or make any distribution on, any shares of stock other than the
Preferred Stock; or
(vii) redeem or otherwise acquire any shares of Preferred Stock.
C. MERGER, ETC. In the event that any shares of Preferred Stock are
outstanding and John Y. Brown, Jr. is a member of the Board of Directors, the
Corporation may not merge, consolidate, enter into a share exchange or engage in
any other transaction in which the Corporation is not the surviving entity or in
which effective control of the Corporation has been transferred to another
entity if all of the holders of Series A Preferred Stock, each of whom owns more
than 500,000 shares of the Series A Preferred Stock then outstanding or if all
of the holders of Series B Preferred Stock, each of whom owns more than 250,000
shares of the Series B Preferred Stock then outstanding have voted against such
transaction.
D. BOARD SIZE. The Corporation shall not, without the written consent
or affirmative vote of the holders of a majority of the then outstanding shares
of Preferred Stock given in writing or by vote at a meeting, consenting or
voting (as the case may be) separately as a class, increase (whether by
amendment of the Charter or By-Laws or otherwise) the maximum number of
directors constituting the Board of Directors to a number in excess of five (5).
<PAGE>
E. BOARD SEATS. The holders of the Series A Preferred Stock, voting
as a separate class, shall be entitled to elect one (1) director of the
Corporation. The holders of the Common Stock and the Preferred Stock, voting
together as a single class, shall be entitled to elect the other directors of
the Corporation.
In the event John Y. Brown, Jr. ceases to be a member of the Board of
Directors, the holders of the Series A Preferred Stock shall, for a period of
three (3) years beginning on the date on which John Y. Brown, Jr. ceases to be a
member, elect a majority of the members of the Board of Directors; provided
however, that the election of a majority of the members of the Board of
Directors shall in no way affect the rights and obligations under the employment
agreement with the Chief Executive Officer or the Chief Executive Officer's
right to be a member of the Board of Directors.
At any meeting (or in a written consent in lieu thereof) held for the
purpose of electing directors, the presence in person or by proxy (or the
written consent) of the holders of a majority of the shares of Series A
Preferred Stock then outstanding shall constitute a quorum of the Preferred
Stock for the election of directors to be elected solely by the holders of the
Series A Preferred Stock.
At a meeting (or in a written consent in lieu thereof) held for the
purpose of electing directors, the presence in person or by proxy (or the
written consent) of the holders of a majority of the shares of Preferred Stock
then outstanding and a majority of the shares of Common Stock then outstanding
shall constitute a quorum of the Preferred Stock and the Common Stock for the
election of directors to be elected jointly by the holders of the Preferred
Stock and the Common Stock.
A vacancy in any directorship elected solely by the holders of the
Preferred Stock shall be filled only by vote or written consent of the holders
of the Preferred Stock; and a vacancy in the directorship elected jointly by the
holders of the Preferred Stock and the Common Stock shall be filled only by vote
or written consent of the Preferred Stock and the Common Stock, as provided
above.
2. DIVIDENDS. The holders of the then outstanding Preferred Stock shall be
entitled to receive, out of funds legally available therefor, when, as and if
declared by the Board of Directors, quarterly dividends at the rate per annum of
$.105 per share of Series A Preferred Stock (the "Series A Preferred Dividend")
and $.175 per share of Series B Preferred Stock (the "Series B Preferred
Dividend"), as adjusted for stock splits, stock dividends, recapitalizations,
reclassifications and similar events which affect the number of outstanding
shares of Preferred Stock (together referred to herein as "Recapitalization
Events"). Dividends on the Preferred Stock shall not be cumulative.
3. LIQUIDATION.
A. Upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary (a "Liquidation"), the holders of the shares of
Series A Preferred Stock shall be entitled, before any distribution or payment
is made upon any stock ranking on liquidation junior to the Series A Preferred
Stock, to be paid an amount equal to $1.50 per share (appropriately adjusted for
Recapitalization Events) plus, in the case of each share, an amount equal to all
dividends, if any, declared but unpaid thereon, computed to the date payment
thereof is made available, such amount payable with respect to one share of
Series A Preferred Stock being sometimes referred to as the "Series A
Liquidation Payment" and with respect to all shares of Series A Preferred Stock
being sometimes referred to as the "Series A Liquidation Payments."
B. Upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary (a "Liquidation"), the holders of the shares of
Series B Preferred Stock shall be entitled, before any distribution or payment
is made upon any stock ranking on liquidation junior to the Series B Preferred
Stock, to be paid an amount equal to $2.50 per share (appropriately adjusted for
Recapitalization Events) plus, in the case of each share, an amount equal to all
dividends,
<PAGE>
if any, declared but unpaid thereon, computed to the date payment thereof is
made available, such amount payable with respect to one share of Series B
Preferred Stock being sometimes referred to as the "Series A Liquidation
Payment" and with respect to all shares of Series B Preferred Stock being
sometimes referred to as the "Series A Liquidation Payments."
C. The Series A Preferred Stock and the Series B Preferred Stock shall
rank pari passu with each other with respect to any Liquidation. If any assets
of the Corporation remain after the Series A Liquidation Payments and the Series
B Liquidation Payments, the Preferred Stock shall be deemed to have been
converted into Common Stock so that the holders of shares of Preferred Stock
will be entitled to their pro rata share (on an as converted basis) of such net
assets with the shares of Common Stock. If, however, upon such Liquidation, the
assets to be distributed among the holders of Preferred Stock shall be
insufficient to permit payment to such holders of the full Series A Liquidation
Payments and Series B Liquidation Payments, then the entire assets of the
Corporation to be distributed shall be distributed as follows: (i) ratably among
the holders of Preferred Stock in proportion to $1.50 per share of Series A
Preferred Stock and $2.50 per share of Series B Preferred Stock; and (ii) after
payment in full to the holders of record of the shares of Preferred Stock in
proportion to the remaining unpaid Series A Liquidation Payments and the
remaining unpaid Series B Liquidation Payments.
Written notice of such Liquidation, stating a payment date, the amount of
any payments to be made to the holders of the Preferred Stock and the place
where said payments shall be payable, shall be given by mail, postage prepaid,
or by facsimile to non-U.S. residents, not less than twenty (20) days prior to
the payment date stated therein, to the holders of record of Preferred Stock,
such notice to be addressed to each such holder at its address as shown by the
records of the Corporation. The consolidation or merger of the Corporation into
or with any other entity or entities which results in the holders of the
Corporation's outstanding Common Stock or other voting securities of the
Corporation holding less than fifty percent (50%) of the combined voting power
of the entity or entities surviving such transaction, or the sale or transfer by
the Corporation of all or substantially all of its assets, shall be deemed to be
a Liquidation, within the meaning of the provisions of this Paragraph 3.
For purposes hereof, the Common Stock and any other capital stock of the
Corporation shall rank on Liquidation junior to the Preferred Stock.
Notwithstanding anything to the contrary contained in this Section 3,
unless the holders of the Preferred Stock shall otherwise notify the
Corporation, no such holder shall be deemed to have elected to convert its
shares of Preferred Stock into Common Stock or redeemed its shares of Preferred
Stock, as the case may be, as a result of a Liquidation, and no such conversion
or redemption shall be effective, unless and until the Liquidation referred to
in the notice given to holders of record of Preferred Stock pursuant to Section
3 hereof shall have been consummated.
4. CONVERSIONS. The holders of shares of Preferred Stock shall have the
following conversion rights ("Conversion Rights"):
A. RIGHT TO CONVERT. Subject to the terms and conditions of this
Paragraph 4, the holder of any share or shares of Preferred Stock shall have the
right, at its option at any time, to convert any such shares of Preferred Stock
(except that upon any Liquidation of the Corporation the right of conversion
shall terminate at the close of business on the business day fixed for payment
of the amount distributable on the Preferred Stock) into Common Stock. The
number of shares of Common Stock into which one share of Preferred Stock will be
converted will be equal to $1.50 in the case of the Series A Preferred Stock,
and $2.50 in the case of the Series B Preferred Stock (the "Original Purchase
Price") divided by the Conversion Price (as hereinafter defined) then in effect
for each Series of Preferred Stock, such conversion ratio being referred to as
the "Conversion Rate". The initial Conversion Price for the Preferred Stock will
be the Original Purchase Price and will be
<PAGE>
subject to adjustment as provided herein. Such rights of conversion shall be
exercised by the holder thereof by giving written notice that the holder elects
to convert a stated number of shares of Preferred Stock into Common Stock and by
surrender of a certificate or certificates for the shares so to be converted to
the Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate by notice in writing to the holders
of the Preferred Stock) at any time during its usual business hours on the date
set forth in such notice, together with a statement of the name or names (with
address and social security or taxpayer identification number) in which the
certificate or certificates for shares of Common Stock shall be issued.
B. ISSUANCE OF CERTIFICATES; TIME CONVERSION EFFECTED. Promptly after
the receipt of the written notice referred to in sub-paragraph 4A and surrender
of the certificate or certificates for the share or shares of Preferred Stock to
be converted, the Corporation shall issue and deliver, or cause to be issued and
delivered, to the holder, registered in such name or names as such holder may
direct, a certificate or certificates for the number of whole shares of Common
Stock issuable upon the conversion of such share or shares of Preferred Stock.
To the extent permitted by law, such conversion shall be deemed to have been
effected and the Conversion Price shall be determined as of the close of
business on the date on which such written notice shall have been received by
the Corporation and the certificate or certificates for such share or shares
shall have been surrendered as aforesaid, and at such time the rights of the
holder of such share or shares of Preferred Stock shall cease, and the person or
persons in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of the shares represented thereby.
C. FRACTIONAL SHARES; DIVIDENDS; PARTIAL CONVERSION. No fractional
shares shall be issued upon conversion of the Preferred Stock into Common Stock
and the aggregate number of shares of Common Stock to be issued to a holder
shall be rounded to the nearest whole shares. At the time of each conversion,
the Corporation shall pay in cash an amount equal to all dividends, if any,
declared and unpaid on the shares of the Preferred Stock surrendered for
conversion to the date upon which such conversion is deemed to take place as
provided in sub-paragraph 4B. In case the number of shares of Preferred Stock
represented by the certificate or certificates surrendered pursuant to
sub-paragraph 4A exceeds the number of shares converted, the Corporation shall,
upon such conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Preferred Stock represented by the certificate or certificates surrendered which
are not to be converted. If any fractional share of Common Stock would, except
for the provisions of the first sentence of this sub-paragraph 4C, be delivered
upon such conversion, the Corporation, in lieu of delivering such fractional
share, shall pay to the holder surrendering the Preferred Stock for conversion
an amount in cash equal to the current market price of such fractional share as
determined in good faith by the Board of Directors of the Corporation.
D. ADJUSTMENT OF PRICE UPON ISSUANCE OF COMMON STOCK. Except as
provided in sub-paragraph 4E, if and whenever the Corporation shall issue or
sell, or is, in accordance with sub-paragraphs 4D(i) through 4D(vii), deemed to
have issued or sold, any shares of Common Stock for a consideration per share
less than the applicable Conversion Price for the Preferred Stock immediately
prior to the time of such issue or sale (such issuance or sale shall be referred
to as a "Dilutive Issuance"), then, forthwith upon the Dilutive Issuance, such
Conversion Price shall be adjusted by multiplying such Conversion Price by the
fraction:
X + Y
X + Z
where:
X = the number of shares of Common Stock issuable upon conversion of
the Preferred Stock at the Conversion Price in effect immediately
before the
<PAGE>
Dilutive Issuance;
Y = the number of shares of Common Stock which the aggregate
consideration received by the Corporation in the Dilutive
Issuance would purchase at the Conversion Price in effect
immediately before the Dilutive Issuance; and
Z = the number of shares of Common Stock issued or deemed issued in
the Dilutive Issuance.
For purposes of this sub-paragraph 4D, the following sub-paragraphs 4D(i)
through 4D(vii) shall also be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. In case at any time the
Corporation shall in any manner grant (whether directly or by assumption in a
merger or otherwise) any warrants or other rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any stock or
security convertible into or exchangeable for Common Stock (such warrants,
rights or options being called "Options" and such convertible or exchangeable
stock or securities being called "Convertible Securities") whether or not such
Options or the right to convert or exchange any such Convertible Securities are
immediately exercisable, and the effective price per share for which Common
Stock is issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (1) the total
amount, if any, received or receivable by the Corporation as consideration for
the granting of such Options, plus the minimum aggregate amount of additional
consideration payable to the Corporation upon the exercise of all such Options,
plus, in the case of such Options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion or exchange
thereof, by (2) the total maximum number of shares of Common Stock issuable upon
the exercise of all such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options) shall be less
than the applicable Conversion Price for the Preferred Stock immediately prior
to the time of the granting of such Options or Convertible Securities, then the
total maximum number of shares of Common Stock issuable upon the exercise of
such Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued for such effective price per share as of the date of
granting of such Options or the issuance of such Convertible Securities. Except
as otherwise provided in sub-paragraph 4D(iii), no adjustment of any Conversion
Price shall be made upon the actual issue of such Common Stock or of such
Convertible Securities upon exercise of such Options or upon the actual issue of
such Common Stock upon conversion or exchange of such Convertible Securities.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. In case the Corporation
shall in any manner issue (whether directly or by assumption in a merger or
otherwise) or sell any Convertible Securities, whether or not the rights to
exchange or convert any such Convertible Securities are immediately exercisable,
and the effective price per share for which Common Stock is issuable upon such
conversion or exchange (determined by dividing (1) the total amount received or
receivable by the Corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion or
exchange thereof, by (2) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities)
shall be less than the applicable Conversion Price for the Preferred Stock
immediately prior to the time of such issue or sale, then the total maximum
number of shares of Common Stock issuable upon conversion or exchange of all
such Convertible Securities shall be deemed to have been issued for such
effective price per share as of the date of the issue or sale of such
Convertible Securities, provided that (1) except as otherwise provided in sub-
paragraph 4D(iii), no adjustment of any Conversion Price shall be made upon the
actual issue of such Common Stock upon conversion or exchange of such
<PAGE>
Convertible Securities, and (2) if any such issue or sale of such Convertible
Securities is made upon exercise of any Options to purchase any such Convertible
Securities for which adjustments of any Conversion Price have been or are to be
made pursuant to other provisions of this sub-paragraph 4D, no further
adjustment of such Conversion Price shall be made by reason of such issue or
sale.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. Upon the
happening of any of the following events, namely, if the purchase price provided
for in any Option referred to in sub-paragraph 4D(i) or 4D(ii) shall change at
any time (including, but not limited to, changes under or by reason of
provisions designed to protect against dilution), the applicable Conversion
Price for any series of Preferred Stock at the time of such event shall
forthwith be readjusted to the Conversion Price which would have been in effect
at such time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or conversion
rate, as the case may be, at the time initially granted, issued or sold, but
only if as a result of such adjustment the Conversion Price then in effect
hereunder is thereby reduced; and on the expiration of any such Option or the
termination of any such right to convert or exchange such Convertible
Securities, the Conversion Price then in effect hereunder shall forthwith be
increased to the Conversion Price which would have been in effect at the time of
such expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued.
(iv) STOCK DIVIDEND. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the Corporation other
than on the Preferred Shares payable in Common Stock, Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as the case may
be, issuable in payment of such dividend or distribution shall be deemed to have
been issued or sold at a consideration equal to $.01 per share.
(v) CONSIDERATION FOR STOCK. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Corporation therefor, without deduction therefrom of any expenses incurred or
any underwriting commissions or concessions paid or allowed by the Corporation
in connection therewith. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith. In case
any Options shall be issued in connection with the issue and sale of other
securities of the Corporation, together comprising one integral transaction in
which no specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued for such consideration
as determined in good faith by the Board of Directors of the Corporation.
(vi) RECORD DATE. In case the Corporation shall take a record of
the holders of its Common Stock for the purpose of entitling them (1) to receive
a dividend or other distribution payable in Common Stock, Options or Convertible
Securities, or (2) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(vii) TREASURY SHARES. The disposition of any shares of Common
Stock owned or held by or for the account of the Corporation shall be considered
an issue or sale of Common Stock for the purpose of this sub-paragraph 4D.
E. CERTAIN ISSUES OF COMMON STOCK EXCEPTED. Anything herein to the
contrary
<PAGE>
notwithstanding, the Corporation shall not be required to make any
adjustment of any Conversion Price in the case of the grant of options or other
rights to acquire Common Stock and the issuance of Common Stock upon exercise of
such options or rights pursuant to the Corporation's Stock Option Plan for
employees and directors who are not employees of the Corporation in connection
with their service as directors or their employment by the Corporation, but not
exceeding in the aggregate 200,000 shares of Common Stock, the exercise of the
stock option granted to J. David Toole, III for 355,555 shares of Common Stock,
the issuance of shares of Series A Preferred Stock upon the exercise of certain
warrants issued pursuant to the Series A Convertible Preferred Stock Purchase
Agreement entered into on February 10, 1994 between the Corporation and the
Purchasers listed in Schedule I thereto, or the conversion of any Series A
Preferred Stock or Series B Preferred Stock into Common Stock.
F. SUBDIVISION OR COMBINATION OF COMMON STOCK. In case the Corporation
shall at any time subdivide (by any stock split, stock dividend or otherwise)
its outstanding shares of Common Stock into a greater number of shares, the
Conversion Price in effect for the Preferred Stock immediately prior to such
subdivision shall be proportionately reduced and, conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Conversion Price in effect for any series of Preferred Stock
immediately prior to such combination shall be proportionately increased.
G. REORGANIZATION OR RECLASSIFICATION. If any capital reorganization
or reclassification of the capital stock of the Corporation shall be effected in
such a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization or reclassification, lawful and adequate
provisions shall be made whereby each holder of a share or shares of Preferred
Stock shall thereupon have the right to receive, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore receivable upon the conversion of such share or shares
of Preferred Stock, such shares of stock, securities or assets as may be issued
or payable with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the number of shares of such Common Stock immediately
theretofore receivable upon such conversion had such reorganization or
reclassification not taken place, and in any such case appropriate provisions
shall be made with respect to the rights and interests of such holder to the end
that the provisions hereof (including without limitation provisions for
adjustments of the applicable Conversion Price) shall thereafter be applicable,
as nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise of such conversion rights.
H. NOTICE OF ADJUSTMENT. Upon any adjustment of any Conversion Price,
then and in each such case the Corporation shall give written notice thereof, by
first class mail, postage prepaid, or by facsimile to non-U.S. residents,
addressed to each holder of shares of Preferred Stock at the address of such
holder as shown on the books of the Corporation, which notice shall state the
Conversion Price resulting from such adjustment, setting forth in reasonable
detail the method upon which such calculation is based.
I. OTHER NOTICES. In case at any time:
(i) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other distribution to the holders of
its Common Stock;
(ii) the Corporation shall offer for subscription PRO RATA to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
(iii) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all of
its assets to, another entity or entities; or
<PAGE>
(iv) there shall be a Liquidation of the Corporation;
then, in any one or more of said cases, the Corporation shall
give, by first class mail, postage prepaid, or by facsimile for non-U.S.
residents, addressed to each holder of any shares of Preferred Stock at the
address of such holder as shown on the books of the Corporation (1) at least
twenty (20) days prior written notice of the date on which the books of the
Corporation shall close or a record shall be taken for such dividend,
distribution or subscription rights or for determining rights to vote in respect
of any such reorganization, reclassification, consolidation, merger, sale or
Liquidation, and (2) in the case of any such reorganization, reclassification,
consolidation, merger, sale or Liquidation, at least twenty (20) days prior
written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause (1) shall also specify, in the case of any
such dividend, distribution or subscription rights, the date on which the
holders of Common Stock shall be entitled thereto and such notice in accordance
with the foregoing clause (2) shall also specify the date on which the holders
of Common Stock shall be entitled to exchange their Common Stock for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale or Liquidation, as the case may be.
J. STOCK TO BE RESERVED. The Corporation will, at all times, reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of the Preferred Stock as herein provided, such
number of shares of Common Stock as shall then be issuable upon the conversion
of all outstanding shares of Preferred Stock and securities convertible into the
Preferred Stock (and the subsequent conversion of such Preferred Stock). The
Corporation covenants that all shares of Common Stock which shall be so issued
shall be duly and validly issued and fully paid and nonassessable and free from
all taxes, liens and charges with respect to the issue thereof and, without
limiting the generality of the foregoing, the Corporation covenants that it will
from time to time take all such action as may be requisite to assure that the
par value per share of the Common Stock is at all times equal to or less than
any Conversion Price in effect at the time for the Preferred Stock. The
Corporation will take all such action as may be necessary to assure that all
such shares of Common Stock may be so issued without violation of any applicable
law or regulation, or of any requiremen of any national securities exchange upon
which the Common Stock may be listed. The Corporation will not take any action
which results in any adjustment of any Conversion Price if the total number of
shares of Common Stock issued and issuable after such action upon conversion of
the Preferred Stock would exceed the total number of shares of Common Stock then
authorized by the Charter of the Corporation.
K. NO REISSUANCE OF PREFERRED STOCK. Shares of Preferred Stock which
are converted into shares of Common Stock as provided herein shall not be
reissued.
L. ISSUE TAX. The issuance of certificates for shares of Common Stock
upon conversion of the Preferred Stock shall be made without charge to the
holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Preferred Stock which is being
converted.
M. CLOSING OF BOOKS. The Corporation will at no time close its transfer
books against the transfer of any Preferred Stock or of any shares of Common
Stock issued or issuable upon the conversion of any shares of Preferred Stock in
any manner which interferes with the timely conversion of such Preferred Stock,
except as may otherwise be required to comply with applicable securities laws.
N. DEFINITION OF COMMON STOCK. As used in this paragraph 4, the term
"Common Stock" shall mean and include the Corporation's authorized Common Stock,
par value $.01 per share, as constituted on the date of filing of these Terms,
and shall also include any capital stock of any class
<PAGE>
of the Corporation thereafter authorized which shall not be limited to a fixed
sum or percentage of par value in respect of the rights of the holders thereof
to participate in dividends or in the distribution of assets upon the
Liquidation of the Corporation; provided that the shares of Common Stock
receivable upon conversion of shares of Preferred Stock shall include only
shares designated as Common Stock of the Corporation on the date of filing of
this instrument, or in case of any reorganization or reclassification of the
outstanding shares thereof, the stock, securities or assets provided for in
sub-paragraph 4G.
O. MANDATORY CONVERSION. If at any time the Corporation shall effect a
firm commitment underwritten public offering of shares of Common Stock in which
the aggregate price paid for such shares by the public shall be at least
$10,000,000, then effective upon the closing of the sale of such shares by the
Corporation pursuant to such public offering, all outstanding shares of
Preferred Stock shall automatically convert to shares of Common Stock based on
the Conversion Price in effect at the time of such closing. The Corporation
shall give each holder of the Preferred Stock at least twenty (20) days written
notice prior to such public offering.
5. AMENDMENTS. No provision of these terms of the Preferred Stock may be
amended, modified or waived without the written consent or affirmative vote of
the holders of at least two-thirds of the then outstanding shares of Preferred
Stock voting separately as a series.
6. RIGHT OF FIRST REFUSAL.
A. The Corporation shall, prior to (or as soon thereafter as is
reasonably practical) any issuance by the Corporation of any of its securities
(other than debt securities with no equity feature), offer to each holder of
Preferred Stock continuing to hold at least fifty percent (50%) of the shares of
Preferred Stock purchased by such stockholder (the "Eligible Purchaser") by
written notice the right, for a period of thirty (30) days, to purchase a pro
rata amount (based on the percentage ownership of the Common Stock of the
Corporation assuming the conversion of the Preferred Stock) of such securities
on the same terms and conditions for which such securities are to be issued
(unless the Eligible Purchaser is unable to meet such terms and conditions, in
which case the Eligible Purchaser shall purchase such securities for cash at an
amount equal to the price or other consideration for which such securities are
to be issued); provided, however, that the first refusal rights of the Eligible
Purchasers pursuant to this Section 6A shall not apply to securities issued (1)
upon the exercise of the Warrants, (2) upon conversion of any of the Series A
Preferred Stock, (3) pursuant to the existing option granted to J. David Toole,
III to purchase 355,555 shares of Common Stock, (4) as a stock dividend or upon
any subdivision of shares of Common Stock, provided that the securities issued
pursuant to such stock dividend or subdivision are limited to additional shares
of Common Stock, (5) pursuant to the Corporation's Option Plan, (6) solely in
consideration for the acquisition (whether by merger or otherwise) by the
Corporation or any of its subsidiaries of all or substantially all of the stock
or assets of any other entity, and (7) pursuant to a firm commitment
underwritten public offering. The Corporation's written notice to the Eligible
Purchasers shall describe the securities proposed to be issued by the
Corporation and specify the number, price and payment terms.
Each Eligible Purchaser may accept the Corporation's offer as to the full
number of securities offered to it or any lesser number, by written notice
thereof given by it to the Corporation prior to the expiration of the aforesaid
thirty (30) day period, in which event the Corporation shall promptly sell and
such Eligible Purchaser shall buy, upon the terms specified, the number of
securities agreed to be purchased by such Eligible Purchaser.
B. The Corporation shall be free at any time prior to one hundred
twenty (120) days after the date of its notice of offer pursuant to this section
6 to offer and sell to any third party or parties the number of such securities
not agreed by the Eligible Purchasers, as the case may be, to be purchased by
them, at a price and on payment terms no less favorable to the Corporation than
<PAGE>
those specified in such notice of offer. However, if such third party sale or
sales are not consummated within such one hundred twenty (120) day period, the
Corporation shall not sell such securities as shall not have been purchased
within such period without again complying with this Section 6.
C. In case the Corporation issues any of its securities at a price per
share (or at a price per share of Common Stock assuming their full conversion
into Common Stock, if applicable) less than the price per share paid by each
Eligible Purchaser hereunder, each Eligible Purchaser shall have a right of
over-allotment such that if any Eligible Purchaser fails to exercise such
Eligible Purchaser's right hereunder to purchase such Eligible Purchaser's full
proportionate share of the securities proposed to be issued (the "Incomplete
Purchasers"), the Purchasers purchasing their full respective proportionate
share of such securities (the "Complete Purchasers") may purchase the portion of
such securities which has not been purchased by the Incomplete Purchasers as
hereinafter provided. The Complete Purchasers shall have ten (10) days from the
date notice is given by the Corporation to the Complete Purchasers that such
Incomplete Purchasers have rejected or failed to accept their right to purchase
their proportionate share of securities, to agree to purchase up to such
Complete Purchaser's proportionate share of such securities not purchased by the
Incomplete Purchasers. Notwithstanding anything in Section 6B to the contrary,
as used in this Section 6C with respect to the Complete Purchasers only, each
Complete Purchaser's "proportionate share" shall be calculated by excluding from
the denominator of the fraction the total number of shares of Common Stock of
any Incomplete Purchaser and the total number of shares of Common Stock into
which the shares of such Incomplete Purchaser's Preferred Stock or other
convertible securities, if any, are convertible.
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
ROADHOUSE GRILL, INC.
Pursuant to the provisions of the Florida Business Corporation Act,
Roadhouse Grill, Inc. (the "Corporation") adopts the following Articles of
Amendment to its Articles of Incorporation:
1. The name of the Corporation is Roadhouse Grill, Inc. and its
Charter Number is V72879.
2. The Articles of Incorporation of the Corporation are hereby
amended by amending the first paragraph of paragraph 6 thereof to read in its
entirety as follows:
"6. The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 40,000,000, of which
10,000,000 shall be preferred stock (hereinafter called the "Preferred
Stock"), having a $.01 par value per share, and 30,000,000 shares shall
be common stock (hereinafter called the "Common Stock"), having $.03
par value per share."
3. The Articles of Incorporation of the Corporation are hereby
further amended by adding thereto a new paragraph 11 to read in its entirety as
follows:
"11. Each share of common stock, par value $.01 per share,
issued and outstanding immediately prior to the filing of the Articles
of Amendment dated November 14, 1996 is automatically reclassified and
changed (without any further act on the part of any shareholder of the
Corporation) into one-third of a share of fully-paid and nonassessable
common stock, par value $.03 per share ("New Common Stock"); provided,
however, that, if any shareholder has rights to receive a fraction of a
share of New Common Stock as a result of such reclassification, the
Company will purchase the fractional shares at a purchase price of
$10.00 per share, with the effect that no fractional shares of New
Common Stock shall be issued in connection with such reclassification."
4. The Articles of Incorporation of the Corporation are further
amended by amending paragraph 8 thereof to read in its entirety as follows:
"8. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors. The Board
of Directors may exercise all such authority and powers of the
Corporation and do all such
<PAGE>
lawful acts and things as are not by statute or these Articles of
Incorporation directed or required to be exercised or done by the
shareholders. The number of directors of the Corporation shall be fixed
from time to time in the manner specified in the Bylaws of the
Corporation.
5. The Corporation desires to amend the Articles of Incorporation
of the Corporation to provide that the number of shares of the Corporation's
Preferred Stock designated as Series B Convertible Preferred Stock be decreased
from 2,366,700 to 2,350,025. Accordingly, the Articles of Incorporation of the
Corporation are amended by deleting the first sentence of the Corporation's
Terms of Series A Convertible Preferred Stock and Series B Convertible Preferred
Stock and replacing it with the following:
"There shall be designated two series of Preferred Stock
consisting of 3,525,000 shares of Series A Convertible Preferred Stock,
$.01 par value ("Series A Preferred Stock") and 2,350,025 shares of
Series B Convertible Preferred Stock, $.01 par value ("Series B
Preferred Stock")."
6. Upon written instruction from the Corporation following the
filing of these Articles of Amendment, each holder of outstanding shares of
Common Stock shall surrender the certificate or certificates representing such
shares and shall be entitled to receive a new certificate or certificates
representing the number of shares of Common Stock equal to one-third of the
number of shares of Common Stock indicated on the face of such surrendered
certificate or certificates, adjusted for fractional shares as provided in
paragraph 11 added to the Articles of Incorporation pursuant to paragraph 3
above.
7. Each of the amendments to the Articles of Incorporation of the
Corporation provided for hereby were approved and adopted by the holders of the
outstanding Common Stock of the Corporation, voting as a separate class, and the
holders of the outstanding Preferred Stock of the Corporation, voting as a
separate class, on November 8, 1996. The number of votes cast for each amendment
by the shareholders in each voting group was sufficient for approval by that
voting group.
DATED: November 13, 1996.
ROADHOUSE GRILL, INC.
By: /s/ Charles D. Barnett
Charles D. Barnett
Secretary
RUDEN
McCLOSKY
SMITH
SCHUSTER &
RUSSELL, P.A.
ATTORNEY'S AT LAW
November 14, 1996
Roadhouse Grill, Inc.
6600 North Andrews Avenue, Suite 160
Fort Lauderdale, Florida 33309
Re: Registration Statement on Form S-1
(No. 333-12751)
Ladies and Gentlemen:
We have acted as special local counsel for Roadhouse Grill, Inc., a Florida
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of an aggregate of 2,875,000
shares of the Company's Common Stock, $.01 par value per share (the
"Securities"). We have examined such documents and questions of law as we have
deemed necessary or advisable for purposes of this opinion.
Based upon the foregoing, we are of the opinion that the Securities, when issued
and delivered against payment of the purchase price therefor as described in the
above-referenced Registration Statement (as amended, the "Registration
Statement"), will be legally issued, fully paid and nonassessable.
The opinion expressed above is limited in all respects to the laws of the State
of Florida in effect as of the date hereof.
This letter is furnished by us as counsel to you in connection with the
above-referenced public offering and is solely for your benefit and not for the
benefit of any other person. This letter may not be relied upon by you for any
other purpose or relied upon or furnished to any other person without our prior
written consent.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm in the prospectus contained therein
under the caption "Legal Matters." In giving this consent, we do not hereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Act or the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
Respectfully submitted,
RUDEN, McCLOSKY, SMITH, SCHUSTER & RUSSELL, P.A.
EXHIBIT 10.37
ROADHOUSE GRILL, INC.
AMENDED AND RESTATED
1994 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
The purpose of this Plan is to further the growth of Roadhouse Grill,
Inc., a Florida corporation (the "Company") by offering an incentive to
officers, directors, other key employees and consultants of the Company to
continue in the employ of the Company, and to increase the interest of these
employees in the Company, through additional ownership of its common stock.
2. DEFINITIONS
Whenever used in this Plan, the following terms shall have the meanings
set forth in this Section:
(a) "Board of Directors" means the Board of Directors of the
Company.
(b) "Change of Control" means the acquisition by any person or group
(as that term is defined in the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules promulgated pursuant to that act) in a single
transaction or a series of transactions of 30% or more in voting power of the
outstanding stock of the Company and a change of the composition of the Board of
Directors so that, within two years after the acquisition took place, a majority
of the members of the Board of Directors of the Company, or of any corporation
with which the Company may be consolidated or merged, are persons who were not
directors or officers of the Company or one of its Subsidiaries immediately
prior to the acquisition, or to the first of a series of transactions which
resulted in the acquisition of 30% or more in voting power of the outstanding
stock of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Stock Option Committee of the Company.
(e) "Common Stock" means the common stock, par value $0.01 per
share, of the Company.
(f) "Corporate Transaction" means any (i) reorganization or
liquidation of the Company, (ii) reclassification of the Company's capital
stock, (iii) merger of the Company with or into another corporation, or (iv) the
sale of all or substantially all the assets of the Company, which results in a
significant number of Employees being transferred to a new employer or
discharged or in the creation or severance of a parent-subsidiary relationship.
<PAGE>
(g) "Date of Grant" means, as the case may be: (i) the date fixed in
this Plan for mandatory grants of Options; (2) the date the Committee approves
the grant of an Option pursuant to this Plan; or (3) such later date as may be
specified by the Committee as the date a particular Option granted pursuant to
this Plan will become effective.
(h) "Employee" means any person employed by the Company within the
meaning of Section 3401(c) of the Code and the regulations promulgated
thereunder. For purposes of any Non-Qualified Option only, any officer, director
or consultant of the Company shall be considered an Employee even if he is not
an employee within the meaning of the first sentence of this subsection.
(i) "Exercise Price" means the price per share which must be paid
upon exercise of an Option. The Exercise Price may be paid in cash, property
(including Common Stock) or a combination of both cash and property, as
determined by the Employee upon exercise of the Option and as set forth in
Section 9(c) hereof.
(j) "Fair Market Value" means: (i) if the Common Stock is traded in
a market in which actual transactions are reported, the mean of the high and low
prices at which the Common Stock is reported to have traded on the relevant date
in all markets on which trading in the Common Stock is reported or, if there is
no reported sale of the Common Stock on the relevant date, the mean of the
highest reported bid price and lowest reported asked price for the Common Stock
on the relevant date; (ii) if the Common Stock is Publicly Traded but only in
markets in which there is no reporting of actual transactions, the mean of the
highest reported bid price and the lowest reported asked price for the Common
Stock on the relevant date; or (iii) if the Common Stock is not Publicly Traded,
the value of a share of Common Stock as determined by the most recent valuation
prepared by an independent expert at the request of the Committee.
(k) "Incentive Stock Option" means any Option which, at the time of
the grant, is an incentive stock option within the meaning of Section 422 of the
Code.
(l) "Non-Qualified Option" means any Option that is not an Incentive
Stock Option pursuant to the terms of this Plan.
(m) "Option" means any option granted pursuant to this Plan.
(n) "Publicly Traded" means that a class of stock is required to be
registered pursuant to Section 12 of the Exchange Act, or that stock of that
class has been sold within the preceding 12 months in an underwritten public
offering, or stock that is regularly traded in a public market.
(o) "Retirement" means a Termination of Employment by reason of an
Employee's retirement at a time when the Employee is at least 65 years old,
other than by reason
-2-
<PAGE>
of a termination by resignation, discharge, death or Total Disability or the
resignation, failure to stand for re-election or dismissal from the Board of
Directors.
(p) "Termination of Employment" means the time when the
employee-employer relationship between an Employee and the Company ceases to
exist for any reason including, but not limited to, a termination by
resignation, discharge, death, Total Disability or Retirement or the
resignation, failure to stand for re-election or dismissal from the Board of
Directors.
(q) "Total Disability" means the inability of an Employee to perform
the material duties of his or her job by reason of a medically determinable
physical or mental impairment that can be expected to result in death or that
has lasted or can be expected to last for a continuous period of not less than
12 months. All determinations as to the date and extent of disability, if any,
shall be made pursuant to the written policy of the Company pertaining to
Employee disability. In the absence of a written policy pertaining to Employee
disability, all determinations as to the date and extent of disability of an
Employee will be made by the Committee in its sole and absolute discretion. In
making its determination, the Committee may consider the opinion of the personal
physician of the Employee or the opinion of an independent licensed physician of
the Company's choosing.
3. EFFECTIVE DATE OF THE PLAN
The "Effective Date" of this Plan is February 14, 1994.
4. ADMINISTRATION OF THE PLAN
The Committee shall be responsible for the administration of this Plan,
and shall grant Options pursuant to this Plan; provided, however, that the
Committee shall grant only Non-Qualified Options and shall not grant any
Incentive Stock Option pursuant to this Plan. Subject to the express provisions
of this Plan, the Committee shall have full authority to interpret this Plan, to
prescribe, amend and rescind rules and regulations relating to it, and to make
all other determinations which it believes to be necessary or advisable in
administering this Plan. The determinations of the Committee on the matters
referred to in this Section shall be conclusive. The Committee may not amend
this Plan. No member of the Committee shall be liable for any act or omission in
connection with the administration of this Plan unless it resulted from the
member's willful misconduct.
5. THE COMMITTEE
The Committee shall hold its meeting at such times and places as it may
determine and shall maintain written minutes of its meetings. A majority of the
members of the Committee shall constitute a quorum at any meeting of the
Committee. All determinations of the Committee shall be made by the vote of a
majority of the members who participate in a meeting. The members of the
Committee may participate in a meeting of the Committee in person or by
conference telephone or similar communications equipment by means of which all
members of the Committee shall be
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<PAGE>
as effective as if it had been made by a vote of a majority of the members who
participate in a meeting.
6. STOCK SUBJECT TO THE PLAN
The maximum number of shares of Common Stock as to which Options may be
granted pursuant to this Plan is Six Hundred and Fifty Thousand (650,000)
shares. If any Option expires or is canceled without being exercised in full,
the number of shares as to which the Option is not exercised will once again
become shares as to which new Options may be granted. The Common Stock that is
issued on exercise of Options may be authorized but unissued shares or shares
that have been issued and reacquired by the Company.
7. PERSONS ELIGIBLE TO RECEIVE OPTIONS
Options may be granted only to Employees, as defined in Section 2(h)
above.
8. GRANTS OF OPTIONS
Except as otherwise provided herein, the Committee shall have complete
discretion to determine when and to which Employees Options are to be granted,
the number of shares of Common Stock as to which Options granted to each
Employee will relate and, subject to the limitations in Section 9 below, the
Exercise Price and the term of Options granted to an Employee. Any Options
granted under this Plan shall be Non-Qualified Options.
9. OPTION PROVISIONS
(a) EXERCISE PRICE. The Exercise Price of each Option shall be as
determined by the Committee; provided, however, that the Exercise Price shall
not be less than the minimum legal consideration required therefor under the
laws of the State of Florida or the laws of any jurisdiction in which the
Company or its successors in interest may be organized.
(b) TERM. The term of each Option shall be as determined by the
Committee, but in no event shall the term of an Option be longer than ten (10)
years from the Date of Grant.
(c) MANNER OF EXERCISE. An Option that has vested pursuant to the
terms of this Plan may be exercised in whole or in part, in increments of a
minimum of 100 shares, at any time, or from time to time, during its term. To
exercise an Option, the Employee exercising the Option must deliver to the
Company, at its principal office:
(i) a written notice of exercise of the Option, which states the
extent to which the Option is being exercised and which is executed by the
Employee;
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<PAGE>
(ii) a check in an amount, or Common Stock with a Fair Market
Value, equal to the Exercise Price of the Option times the number of shares
being exercised, or a combination of the foregoing; and
(iii) a check equal to any withholding taxes the Company is
required to pay as a result of the exercise of the Option by the Employee.
The day on which the Company receives all of the items specified in this
subsection shall be the date on which the Option is exercised to the extent
described in the notice of exercise.
(d) DELIVERY OF STOCK CERTIFICATES. As promptly as practicable after
an Option is exercised, the Company shall cause the transfer agent to deliver to
the Employee who exercises the Option certificates, registered in that person's
name, representing the number of shares of Common Stock that were purchased by
the exercise of the Option. Unless the Common Stock was issued in a transaction
that was registered pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), each certificate may bear a legend to indicate that if the
Common Stock represented by the certificate was issued in a transaction that was
not registered pursuant to the Securities Act, and may only be sold or
transferred in a transaction that is registered pursuant to the Securities Act
or is exempt from the registration requirements of the Securities Act.
(e) VESTING OF OPTIONS. Except as otherwise provided in this Plan,
the Options granted hereunder to Employees shall be subject to such conditions
as to vesting as shall be determined by the Committee in its sole and absolute
discretion, at the Date of Grant of the Option, and the terms of such vesting
shall be clearly set forth in the instrument granting the Option; provided,
however, that upon a Change of Control, any Options that have not yet vested in
accordance with the terms of this Plan and the Stock Option Agreement shall vest
upon such Change of Control. An Option shall "vest" at such time as it becomes
exercisable in accordance with this Plan and the Stock Option Agreement. Upon
exercise of an Option and the delivery of the stock certificates as provided
herein, the Common Stock acquired upon exercise of the Option shall not be
subject to forfeiture by the Employee for any reason whatsoever. Notwithstanding
any of the foregoing, except as otherwise expressly permitted under the terms of
the Option, an officer, director or person who beneficially owns ten percent
(10%) or more of the Common Stock (including Options to acquire Common Stock)
shall not sell or otherwise dispose of Common Stock acquired upon exercise of an
Option granted hereunder until at least six months shall elapse from the Date of
Grant of the Option to the date of sale or other disposition of the Common Stock
acquired upon exercise of the Option.
(f) NONTRANSFERABILITY OF OPTIONS. During the lifetime of a person
to whom an Option is granted pursuant to this Plan, the Option may be exercised
only by that person or by his or her guardian or legal representative. An Option
may not be assigned, transferred, sold, pledged or hypothecated in any way;
shall not be subject to levy or execution or disposition under the Bankruptcy
Code of 1978, as amended, or any other state or federal law granting relief to
creditors, whether now or hereafter in effect; and shall not be transferable
otherwise than by will or the laws
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<PAGE>
of descent and distribution. The Company will not recognize any attempt to
assign, transfer, sell, pledge, hypothecate or otherwise dispose of an Option
contrary to the provisions of this Plan, or to any levy, attachment, execution
or similar process upon any Option and, except as expressly stated in this Plan,
the Company shall not be required to, and shall not, issue Common Stock on the
exercise of an Option to anyone who claims to have acquired that Option from the
person to whom it was granted in violation of this subsection.
(g) RETIREMENT OF HOLDER OF OPTION. If there is a Termination of
Employment of an Employee to whom an Option has been granted due to Retirement,
each Option held by the retired Employee, whether or not then vested, may be
exercised until the earlier of: (x) the end of the twelve (12) month period
immediately following the date of such Termination of Employment; or (y) the
expiration of the term specified in the Option.
(h) TOTAL DISABILITY OF HOLDER OF OPTION. If there is a Termination
of Employment of an Employee to whom an Option has been granted by reason of his
or her Total Disability, each Option held by the Employee, whether or not then
vested, may be exercised until the earlier of: (x) the end of the twelve (12)
month period immediately following the date of such Termination of Employment;
or (y) the expiration of the term specified in the Option.
(i) DEATH OF HOLDER OF OPTION. If there is a Termination of
Employment of an Employee to whom as Option has been granted by reason of (i)
his or her death, or (ii) the death of a former Employee within twelve (12)
months following the date of his or her Retirement, or (iii) the death of a
former Employee within twelve (12) months following the date of his or her
Termination of Employment by reason of Total Disability, then each Option held
by the person at the time of his or her death, whether or not then vested, may
be exercised by the person or persons to whom the Option shall pass by will or
by the laws of descent and distribution (but by no other persons) until the
earlier of: (x) the end of the twelve (12) month period immediately following
the date of death (or such longer period as is permitted by the Committee); and
(y) the expiration of the term specified in the Option, provided, however, that
in no event is the term of the Option to be deemed to expire prior to the end of
three (3) months from the date of death of the Employee.
(j) TERMINATION OF EMPLOYMENT OTHER THAN FOR RETIREMENT, DEATH OR
DISABILITY. If there is a Termination of Employment of an Employee to whom an
Option has been granted pursuant to this Plan for any reason other than the
Retirement, death or Total Disability of the Employee, then all Options held by
such Employee which are then vested may be exercised until the earlier of: (x)
the three (3) month period immediately following the date of such Termination of
Employment; or (y) the expiration of the term specified in the Option.
(k) STOCK OPTION AGREEMENT. As promptly as practicable after an
Employee is granted an Option pursuant to this Plan, the Committee shall send
the Employee a document setting forth the terms and conditions of the grant. The
form of grant document shall be substantially as set forth in Exhibit "A"
attached hereto.
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<PAGE>
10. RECAPITALIZATION
(a) IN GENERAL. If the Company increases the number of outstanding
shares of Common Stock through a stock dividend or a stock split, or reduces the
number of outstanding shares of Common Stock through a combination of shares or
similar recapitalization then, immediately after the record date for the change:
(i) the number of shares of Common Stock issuable on the exercise of each
outstanding Option granted pursuant to this Plan (whether or not then vested)
shall be increased in the case of a stock dividend or a stock split, or
decreased in the case of a combination or similar recapitalization that reduces
the number of outstanding shares, by a percentage equal to the percentage change
in the number of outstanding shares of Common Stock as a result of the stock
dividend, stock split, combination or similar recapitalization; (ii) the
Exercise Price of each outstanding Option granted pursuant to this Plan (whether
or not then vested) shall be adjusted so that the total amount to be paid upon
exercise of the Option in full will not change; and (iii) the number of shares
of Common Stock that may be issued on exercise of Options granted pursuant to
this Plan (whether or not then vested) and that are outstanding or remain
available for grant shall be increased or decreased by a percentage equal to the
percentage change in the number of outstanding shares of Common Stock. Any
fractional shares will be rounded up to whole shares.
(b) CORPORATE TRANSACTIONS. If, as a result of a Corporate
Transaction while an Option granted pursuant to this Plan is outstanding
(whether or not then vested), and the holders of the Common Stock become
entitled to receive, with respect to their Common Stock, securities or assets
other than, or in addition to, their Common Stock, then upon exercise of that
Option the holder shall receive what the holder would have received if the
holder had exercised the Option immediately before the first Corporate
Transaction that occurred while the Option was outstanding and as if the Company
had not disposed of anything the holder would have received as a result of that
and all subsequent Corporate Transactions. The Company shall not agree to any
Corporate Transaction unless the other party to the Corporate Transaction agrees
to make available on exercise of the Options granted pursuant to this Plan that
are outstanding at the time of the Corporate Transaction, the securities or
other assets the holders of those Options are entitled pursuant to this
subsection to receive.
11. RIGHTS OF OPTION HOLDER
(a) STOCKHOLDER. The holder of an Option (whether or not then
vested) shall not have any rights as a stockholder by reason of holding that
Option. Upon exercise of an Option granted pursuant to this Plan, the holder
shall be deemed to acquire the rights of a stockholder when, but not before, the
issuance of Common Stock as a result of the exercise is recorded in the stock
transfer records of the Company.
(b) EMPLOYMENT. Nothing in this Plan or in the grant of an Option
shall confer upon any Employee the right to continue in the employ of the
Company or shall interfere with or restrict in any way the rights of the Company
to discharge any Employee at any time for any reason whatsoever, with or without
cause.
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<PAGE>
12. LAWS AND REGULATIONS
The obligation of the Company to sell and deliver shares of Common Stock
on vesting and exercise of Options granted pursuant to this Plan shall be
subject to the condition that counsel for the Company be satisfied that the sale
and delivery thereof wilt not violate the Securities Act or any other applicable
laws, rules or regulations. In addition, the Company may, as a condition to such
sale and delivery, require the Employee to represent and warrant at the time of
any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required pursuant
to such securities laws.
This Plan is intended to meet the requirements of Rule 16b-3 in order to
provide directors, executive officers and ten percent (10%) shareholders with
certain exemptions from the application of Section 16(b) of the Exchange Act. To
the extent any provision of this Plan or action by the Board of Directors or the
Committee fails to meet such requirements, it shall be deemed null and void, to
the extent permitted by law and deemed advisable by the Board of Directors or
the Committee, as applicable.
13. WITHHOLDING OF TAXES
If, because of the exercise of a Non-Qualified Option, the Company becomes
required to pay withholding taxes to any federal, state or other taxing
authority and the Employee fails to provide the Company with the funds with
which to pay that withholding tax, then the Company either may withhold, subject
to applicable state law, up to 50% of each payment of salary or bonus to the
Employee (which will be in addition to any other required or permitted
withholding), until the Company has been reimbursed for the entire withholding
tax it was required to pay.
14. RESERVATION OF SHARES
The Company shall at all times keep reserved for issuance on exercise of
Options granted pursuant to this Plan a number of authorized but unissued or
reacquired shares of Common Stock equal to the maximum number of shares the
Company may be required to issue on exercise of outstanding Options (whether or
not then vested) granted pursuant to this Plan.
15. AMENDMENT OF THE PLAN
The Board of Directors may, at any time and from time to time, modify or
amend this Plan in any respect at any date the Board of Directors determines;
provided, however, that, without the approval of the stockholders of the Company
the Board of Directors may not: (i) increase the maximum number of shares of
Common Stock that may be issued on exercise of Options (whether or not then
vested) granted pursuant to this Plan; (ii) change the categories of Employees
eligible to receive Options; (iii) extend the period during which Options
(whether or not then vested) may be exercised; (iv) change the provisions fixing
the minimum Exercise Price; or (v) change the
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<PAGE>
provisions as to termination of Options. No modification or amendment of this
Plan shall, without the consent of the holder of an outstanding Option (whether
or not then vested), adversely affect the holder's rights pursuant to that
Option.
16. TERMINATION OF THE PLAN
The Board of Directors may suspend or terminate this Plan at any time or
from time to time, but no such action shall adversely affect the rights of a
person holding an outstanding Option, whether or not then vested, granted
pursuant to this Plan prior to that date.
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<PAGE>
EXHIBIT A
ROADHOUSE GRILL, INC.
STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of ________ , 199 , by and between ROADHOUSE
GRILL, INC, (the "Company") and ____________________ , who is an employee,
officer, consultant or director of the Company or one of its subsidiaries (the
"Employee").
WHEREAS, the Employee is a valuable and trusted employee, officer,
consultant or director of the Company, and the Company considers it desirable
and in its best interests that the Employee be given an inducement to acquire a
further proprietary interest in the Company, and an added incentive to advance
the interests of the Company by possessing a right (the "Option Right") to
purchase shares of the Company's common stock, $.01 par value (the "Option
Stock"), in accordance with the Roadhouse Grill, Inc. 1994 stock Option Plan
(the "Plan").
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:
1. DEFINITIONS. All terms not defined herein and defined in the Plan
shall be giver the meaning expressed in the Plan.
2. GRANT OF OPTION. The Company hereby grants to the Employee the
right, privilege and option to purchase the number of shares of
Option Stock, at the purchase price as shown on Schedule I attached
hereto (the "Option Price"), in the manner and subject to the
conditions hereinafter provided in this Agreement and as provided in
the Plan. The Option Right granted hereunder is a Non-Qualified
Option.
3. TIME OF EXERCISE OF OPTION. The aforesaid Option Right may be
exercised at any time, subject to Section 4, below, and from time to
time, until the termination thereof as provided in Section 5, below,
or as otherwise provided in the Plan; provided, however, that the
Option Right granted herein may not be exercised after the
termination date as shown on Schedule 1, unless provided otherwise
in the Plan.
4. VESTING OF OPTION RIGHT. The Option Right shall vest as provided on
Schedule 1.
5. METHOD OF EXERCISE. The Option Right shall be exercised in whole or
in part, in increments of a minimum of 100 shares (unless the total
option Right is for less than 100 shares), at any time, or from time
to time, during its term. To exercise an option, the Employee shall
deliver written notice in the form attached hereto as Schedule II to
the Company at its principal place of business, accompanied by
Exhibit A - Page 1 of 4
<PAGE>
payment of the Option Price per share and in compliance with such
other conditions and requirements as set forth in the Plan. Payment
shall be made by a check and/or by submitting certificates of Common
Stock of the Company endorsed to the Company, which shall be given
their Fair Market Value on the date of exercise of the Option Right,
and by a check equal to any withholding taxes that the Company is
required to pay as a result of the exercise of the Option by the
Employee. Such an exchange of Common Stock, however, is subject to
prior receipt of an opinion of the Company's counsel that the
exchange is allowable for all purposes under the securities laws of
the United States and the laws of applicable states.
Subject to the terms and conditions set forth in the Plan, as
promptly as practicable after an Option is exercised, the Company
shall deliver such shares issuable upon exercise of the Option.
6. TERMINATION OF EMPLOYMENT. The rights and obligations of the
Employee upon Termination of Employment shall be as set forth in the
Plan.
7. RESTRICTIONS ON RESALES. An Employee who may be deemed an
"affiliate" of the Company, as that term is defined by the United
States Securities and Exchange Commission (the "SEC"), may not
resell the shares purchased hereunder except pursuant to
registration under the Securities Act of 1933, as amended (the
"Securities Act") or an exemption therefrom. Generally, directors,
executive officers and holders of ten percent or more of the
Company's shares may be regarded as affiliates of the Company.
An affiliate who desires to reoffer and resell shares acquired from
the Company hereby may do so pursuant to the applicable requirements
of Rule 144 under the Securities Act, including the provisions
governing the amount of securities that may be sold during any
three-month period, the manner of sale and the filing of a Form 144
notice. Alternatively, such an affiliate may reoffer or resell such
shares pursuant to a separate reoffer prospectus, if one is
available. The amount of shares that may be reoffered or resold
pursuant to such prospectus by such affiliate, and any other persons
with whom such affiliate is acting in concert for the purpose of
selling shares, may be subject to limitations specified in Rule
144(e). The Employee's status as an affiliate is determined at the
time of the exercise of the Option.
Resale of shares issuable hereunder may be subject to other state
and federal securities law. The Employee is advised to consult with
legal counsel as to
compliance with the Securities Act, the Securities Exchange Act of
1934, as amended (the "Exchange Act") and such other laws prior to
resale of such shares.
Under the plan, the Company, as a condition to the exercise of an
Option to acquire shares not registered under the Securities Act,
may require the Employee to represent
Exhibit A - Page 2 of 4
<PAGE>
and warrant at the time of any exercise that the shares are being
purchased only for Investment and without any present intention to
sell or distribute such shares if, in the opinion of counsel for the
Company, such a representation is required by the Securities Act.
8. RECLASSIFICATION, MERGER, ETC. The rights and obligations of the
Company and the Employee as result of the transactions specified in
Section 10 of the Plan shall be as provided therein.
9. RIGHTS PRIOR TO EXERCISE OF OPTION. This Option Right is
nonassignable and nontransferable by the Employee except as provided
in the Plan and, during his lifetime, is exercisable only by him.
The Employee shall have no rights as a stockholder with respect to
the Stock Option until payment of the Option Price and delivery to
him of such shares as herein provided. Nothing in this Agreement
shall confer any right in an employee to continue in the employment
of the Company or interfere in any way with the right of the Company
to terminate such employment at any time.
10. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
ROADHOUSE GRILL, INC.
By: By:
----------------------------- --------------------------------
Charles D. Barnett, J. David Toole, III, President
Secretary
Exhibit A - Page 3 of 4
<PAGE>
I hereby accept the Stock Option Right Offered to me by the Company, as
set forth in this Stock Option Agreement dated as of __________ , 19 ____ and
Schedule I, which is attached thereto.
Accepted by:
--------------------------------------------
Employee
--------------------------------------------
Date
Exhibit A - Page 4 of 4
<PAGE>
SCHEDULE I
The information set forth in this Schedule I is subject to all of the
terms of the Roadhouse Grill, Inc. Stock Option Agreement to which this Schedule
is attached.
1. Name of Employee, Officer, Consultant of Director:
--------------------------------------------------------------------------
2. Address:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
3. Social Security Number:
4. Number of Shares:
5. Exercise Price: $___________________ per share
6. Type of Option: Non-Qualified Stock Option
7. NUMBER OF SHARES DATE VESTED TERMINATION DATE
Schedule I - Page 1 of 1
<PAGE>
SCHEDULE II
NOTICE OF EXERCISE
I, the undersigned Employee, hereby give notice of the exercise of the
option described below, to the extent and in the manner specified herein,
subject to all of the terms and conditions of the Roadhouse Grill, Inc. Stock
Option Agreement granting this Option and the Roadhouse Grill, Inc. 1994 Stock
Option Plan. If the shares to be acquired pursuant to this exercise of the
Option are not registered under the Securities Act of 1933, as amended, the
undersigned represents and warrants that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares.
1. Name of Employee, Officer, Consultant of Director:
--------------------------------------------------------------------------
2. Address:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
3. Social Security Number:
4. Number of Shares Being Exercised on This Date:
5. Exercise Price: $___________________ per share
6. Manner of Payment:
_______ Check (Amount enclosed: $____________
________ Stock Certificates (subject to receipt
of opinion of counsel, as specified in
Section 5 of the Stock Option
Agreement)
--------------------------------------------
Signature
--------------------------------------------
Print Name
Schedule II - Page 1 of 1
AMENDED EMPLOYMENT AGREEMENT
THIS AMENDED EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of the 24th day of October, 1996, by and between ROADHOUSE GRILL, INC.,
a Florida corporation (the "Company"), and JOHN DAVID TOOLE, III ("Executive").
BACKGROUND
Executive is employed by the Company as its President pursuant to that
certain Employment Agreement dated as of October 1, 1994 ("Old Agreement"),
which the Company and Executive desire to amend and supersede as hereinafter
provided.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
1. EMPLOYMENT. Effective as of the date hereof, the Old Agreement is
hereby amended and superseded in its entirety by this Agreement, and, as of such
date, upon the terms and conditions hereinafter set forth, the Company hereby
continues Executive's employment as its President and Executive hereby accepts
such employment.
2. TERM. The term ("Term") of Executive's employment hereunder
shall commence on the date hereof and shall end at 5:00 p.m. on October 23,
1999, or such earlier date upon which such employment is terminated in
accordance with the terms of this Agreement.
3. DUTIES AND SERVICES. Executive agrees to serve the Company as its
President for the duration of the Term faithfully and diligently under the
direction of the Board Directors of the Company, and to perform such duties as
are customarily associated with such position and such additional executive
duties as the Board of Directors of the Company shall reasonably request,
PROVIDED that such duties shall be consistent with those normally required of
presidents of comparable companies. Executive shall be required to devote his
best efforts, attention, knowledge and skill to the performance of his duties
hereunder. Executive shall at all times perform his duties hereunder in a
professional manner, in good faith, and in the best interest of the Company.
Executive shall devote substantially his full business time and efforts to the
performance of his duties hereunder. Executive shall be entitled to actively
pursue investment opportunities ("Investment Opportunities") during the Term, so
long as such activity does not materially interfere with the performance of
Executive's duties under this Section 3 and provided such pursuits do not
violate Section 8 hereof. If such Investment Opportunity materially interferes
with Executive's duties under this Section 3, Company may terminate Executive's
employment for Cause and pursuant to Section 5 hereof. No Investment Opportunity
shall be deemed to be a "business opportunity" of the Company and the Company
will have no legal or beneficial right, claim or interest in any Investment
Opportunity except as Executive may otherwise agree in writing, even if the
Investment Opportunity was conceived or developed during Executive's employment
with the Company, nor shall Executive have any fiduciary or other duty to
disclose or offer to Company any such Investment Opportunity.
1
<PAGE>
4. COMPENSATION. In exchange for the services to be rendered
hereunder by Executive, the Company hereby agrees to compensate Executive with
the following ("Compensation"):
A. SALARY. The Company agrees to pay Executive a
salary ("Salary") at the rate of Two Hundred Thousand Dollars ($200,000) per
annum, payable in accordance with the Company's usual payroll practices, but not
less often than bi-weekly.
B. BONUS. In addition to Salary, Executive shall be
entitled to receive "Bonuses" determined and payable in accordance with the
following:
(1) Executive shall be entitled to a Bonus in
the amount of One Hundred Thousand Dollars ($100,000), payable within ninety
(90) days after the Company's 1996 fiscal year, if Net Income (as hereinafter
defined) for such fiscal year exceeded the Net Income for the immediately
preceding fiscal year or if the net loss as reported by the Company for such
fiscal year is less than the net loss for the immediately preceding fiscal year.
Thereafter, Executive shall be entitled to a Bonus in the amount of One Hundred
Thousand Dollars ($100,000), payable within ninety (90) days after each
subsequent fiscal year of the Company ending during Executive's employment
hereunder, if the Company has Net Income and such Net Income for such fiscal
year exceeded the Net Income for the immediately preceding fiscal year.
(2) Executive shall also be entitled to a
Bonus, without reduction or discount, of One Hundred Thousand Dollars
($100,000), payable within ninety (90) days after the end of each fiscal year
begun but not concluded prior to the expiration or termination of Executive's
employment hereunder (regardless of the reason therefor), if Net Income for the
portion of the fiscal year during which the Executive was employed hereunder
("Employment Period") exceeds Net Income for the same period of the immediately
preceding fiscal year, unless, Executive's employment was terminated by the
Company pursuant to Section 5.A.(1) hereof or by Executive unilaterally other
than in accordance with Section 6 hereof during such fiscal year, or such
termination was a Wrongful Termination (in which event Bonus shall be paid as
set forth in Section 5).
(3) In the event that any fiscal year beginning
or ending during the Term hereof is less than three hundred sixty five (365)
days in duration ("Short Year").
(a) For purposes of determining whether
Net Income in the Short Year was exceeded by the Net Income in the subsequent
fiscal year, Net Income for such fiscal year shall be deemed to be the amount of
the Net Income for the twelve (12) month period ending on the last day of the
Short Year; and
(b) For purposes of determining whether
Net Income for the Short Year exceeded the preceding fiscal year, Net Income for
the Short Year shall be deemed to exceed the Net Income for the preceding year
if it exceeded Net Income for the same period of the preceding fiscal year,
unless Executive's employment hereunder terminated during the Short Year (in
which
2
<PAGE>
event Section 4.B.(2) shall apply), and if Net Income for the Short Year exceeds
the Net Income for the immediately preceding year (as so determined), Executive
shall be entitled to a Bonus of One Hundred Thousand Dollars ($100,000)
multiplied by the percentage of a full three hundred sixty five (365) day year
that the Short Year represents.
(4) For purposes of this Agreement, "Net
Income" for any period shall be net income before taxes determined in accordance
with Generally Accepted Accounting Principles based upon the Company's audited
financial statements for such period.
C. OTHER COMPENSATION AND BENEFITS.
(1) The Company shall provide Executive throughout the Term
with health insurance and dental insurance for Executive, his spouse and
children, and all other employee benefits made available to executives of the
Company including any pension, profit-sharing, bonus, or stock option plan,
life, health, medical, dental, hospitalization or surgical insurance plan or
policy, and any vacation or fringe benefit plans or programs, whether now
existing or hereafter established (collectively, "Executive Benefits").
(2) Nothing contained herein shall be deemed to be a waiver by
Executive of, or to diminish or modify, any vested rights which Executive may
have or may hereafter acquire under any employee benefit plan of the Company.
Without limiting the foregoing, Executive shall be entitled to stock options as
provided in the Stock Option Agreements attached as composite Exhibit A.
(3) It is contemplated that, in connection with his employment
hereunder, Executive will incur business, entertainment and travel expenses. The
Company agrees to reimburse Executive in full for all reasonable, ordinary and
necessary business, entertainment and other related expenses, including travel
expenses, incurred or expended by him incident to the performance of his duties
hereunder, and incurred or expended in accordance with the Company's policies
with respect to such expenses, upon submission by Executive to the Company of
such vouchers or expense statements satisfactorily evidencing such expenses as
may be reasonably required by the Company.
(4) Executive shall be entitled to at least four (4) weeks of
paid vacation (taken consecutively or in segments) each year during the Term.
Vacation time that is not used in a year will not be carried over to any
subsequent year.
5. TERMINATION OF EXECUTIVE'S EMPLOYMENT.
A. TERMINATION BY THE COMPANY. The Company shall have the
right to terminate Executive's employment under this Agreement prior to the
expiration of the Term only for Cause (as hereinafter defined) or upon
Executive's death or Permanent Disability.
(1) "Cause" for the Company to terminate
Executive's employment shall exist only if any of the following occur subsequent
to the date hereof.
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(a) Executive, other than as a result
of death or any mental or physical, temporary or permanent incapacity or
disability, shall have failed to perform his material duties hereunder;
PROVIDED, HOWEVER, that the Company shall first have notified Executive in
writing and in reasonable detail as to the manner in which Executive has so
failed to perform his duties hereunder, and Executive shall have failed to cure
such nonperformance within thirty (30) days thereafter or, if cure cannot
reasonably be completed within such period, Executive shall have failed to
commence cure during such period and to thereafter diligently pursue such cure
to completion;
(b) Executive shall have unlawfully
sexually harassed employees;
(c) Executive shall have been convicted
of any felony or found guilty of fraud; or
(d) Executive shall have engaged in
illegal drug use.
(2) Executive shall be deemed to have a
"Permanent Disability" if Executive is not able to perform his essential duties
hereunder, notwithstanding reasonable accommodation by Company, for a period of
three (3) consecutive months or in excess of one hundred eighty (180) days in
any one (1) year period, as a result of an illness or other physical or mental
disability.
(3) In the event the Company elects to
terminate Executive's employment pursuant to this Section 5, the Company shall
give written notice to such effect to Executive, which notice shall describe in
reasonable detail the basis for such termination, and Executive's employment
under this Agreement shall thereupon terminate as of the date said notice is
given.
(4) Any termination of Executive's employment
by the Company other than in strict accordance with this Section 5 shall be
deemed a material breach of this Agreement by the Company and a "Wrongful
Termination" of Executive's employment hereunder. The Company recognizes that,
in the event of a Wrongful Termination of Executive, Executive will be subject
to loss and damage, the monetary value of which will not be readily
ascertainable, and that there exists only a limited number of employment
opportunities comparable to the position held by Executive with the Company.
Therefore, in the event of a Wrongful Termination, Executive shall not be
required, either in mitigation of damages by the terms of this Agreement or
otherwise, to seek or accept other employment and the Company shall pay to
Executive, as liquidated damages and not as a penalty (in addition to the
compensation to which Executive is entitled through the date of such termination
and any benefits in which Executive has a vested right under the terms and
conditions of the plan or program pursuant to which such benefits were granted)
all of the following:
(a) continuation of Executive's Salary
until October 23, 1999, payable not less often than bi-weekly;
(b) continuation of all the Executive
Benefits until October 23, 1996; and
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(c) a Bonus of One Hundred Thousand
Dollars ($100,000) for the fiscal year in which termination occurred and Bonuses
of (i) One Hundred Thousand Dollars ($100,000) for each subsequent fiscal year
that ends prior to October 23, 1999, payable within ninety (90) days after the
end of such fiscal year and (ii) for the fiscal year (if any) that begins
subsequent to the date of the termination of Executive's employment hereunder
but ends after October 23, 1999, a Bonus in an amount equal to One Hundred
Thousand Dollars ($100,000) multiplied by the percentage of a full three hundred
sixty five (365) day year that the period between the commencement of such
fiscal year and the end of the Term represents, payable within ninety (90) days
after the end of such fiscal year.
If Executive terminates his employment hereunder for Cause as defined
in Section 6 hereof, such termination shall be deemed to constitute a Wrongful
Termination of Executive for purposes of this Section 5.
6. TERMINATION OF EXECUTIVE'S EMPLOYMENT BY EXECUTIVE. Executive may
terminate his employment hereunder for "Cause" (which, as it pertains to
termination by Executive, is defined below) or upon his death or Permanent
Disability. For purposes of this Agreement, "Cause" for Executive's termination
of his employment hereunder shall exist only if any of the following have
occurred:
A. the Company shall have failed to pay any amount due
Executive hereunder within ten (10) days of written notice thereof by Executive,
or failed to cure a breach of any of its material obligations under this
Agreement within thirty (30) days of written notice thereof by Executive; or
B. Executive is assigned duties inconsistent with his
position, or the Company withdraws any of his material responsibilities.
7. DEDUCTIONS AND WITHHOLDING. Executive agrees that the Company shall
have the right to withhold from any and all payments required to be made to
Executive pursuant to this Agreement all federal, state, local and/or other
taxes which are required to be withheld in accordance with applicable law.
Except for such withholding, the Company shall not have the right to offset any
amount from the Compensation or other amounts payable to Executive hereunder.
8. CONFIDENTIAL INFORMATION AND NONCOMPETITION COVENANT
A. CONFIDENTIAL INFORMATION. Executive hereby
acknowledges that in and as of a result of his employment hereunder, he will be
making use of, acquiring and/or adding to confidential information of a special
and unique nature and value relating to certain Company records, secrets,
documentation, ledgers and general Company information, account receivable and
payable ledgers, customer lists, prospective franchisees and franchisee lists,
financial and other records of the Company, its subsidiaries and affiliates,
franchisees and other similar matters (all such information, being hereinafter
referred to as "Confidential Information"), and the Executive further
acknowledges that the Confidential Information is of great value to the Company.
The parties recognize that the duties and services to be performed by the
Executive are special and unique and
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that, by reason of his employment hereunder, the Executive will acquire the
Confidential Information. Executive hereby agrees that he will not, at any time,
directly or indirectly, except in connection with Executive's employment
hereunder or as otherwise authorized by the Company's Board of Directors for the
benefit of the Company, divulge to any person, firm or corporation other than
the Company (hereinafter referred to as "Third Parties"), or use or cause to
authorize any Third Parties to use, the Confidential Information or any other
information relating to the business or interests of the Company which he knows
or should know is regarded as Confidential and valuable by the Company, except
as required by law or in any legal action arising from this Agreement, and
except for information that is or becomes publicly known other than through a
breach of this Agreement. Executive agrees that upon expiration of his
employment by the Company for any reason, he shall forthwith deliver or cause to
be delivered to the Company any and all Confidential Information, including
drawings, notebooks, keys, data and other documents and materials belonging to
the Company, which is in his possession or under his control relating to the
Company or its business, and will deliver upon such expiration of employment any
other property of the Company which is in this possession or under his control.
B. AGREEMENT NOT TO COMPETE. Executive hereby agrees, to the
extent permitted by law, that during Executive's employment hereunder and the
three (3) year period subsequent to the date of termination of his employment
with the Company hereunder, the Employee shall not either directly or
indirectly, as a proprietor, partner, investor, shareholder, employee, agent or
consultant:
(1) engage in the operation of any restaurant
(other than the Company's restaurants) that has both of the following
characteristics: (i) it usually derives or expects to derive over forty percent
(40%) of its gross revenues from the sale of steak; and also (ii) the average
dinner bill per person at the restaurant is less than Twenty Dollars ($20.00).
Nothing herein shall prevent the Executive from owning for investment purposes,
up to an aggregate of five percent (5%) of the capital stock of any such
business, provided that such business is a publicly held corporation, whose
stock is listed and traded on national or regional stock exchange, or through
the National Association of Securities Dealers Automated Quotation System
(NASDAQ), provided that Executive does not control any such company; or
(2) directly or indirectly solicit for
employment for or on behalf of himself or any Third Party any person who, within
one (1) year of the termination of Executive's employment hereunder, was an
employee of the Company.
9. INDEMNIFICATION: ADVANCEMENT OF FEES. To the full extent permitted
by applicable law, the Company shall indemnify Executive against all liability,
cost and expense (including, but not limited to, all reasonable attorney's and
other legal fees and costs through all negotiations and all trial and appellate
levels of litigation) that Executive may incur in connection with any proceeding
to which Executive is or may be made party (and all appeals thereof) by reason
of the fact that he is or was a director, officer, employee or agent of the
Company or is or was serving at the request of the Company as director, officer,
employee or agent of any other corporation, partnership, joint venture, trust or
other enterprise. The Company shall advance to Executive all fees and expenses
that Executive may incur in connection with any such proceeding to the full
extent permitted by applicable law, provided that Executive provides an
undertaking
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reasonably acceptable to the Company's Board of Directors to repay such
advancement if Executive is ultimately determined not to be entitled to
indemnification. The provisions of this Section 9 shall survive the termination
of this Agreement and Executive's employment hereunder.
10. ASSIGNABILITY AND BINDING EFFECT. The rights and obligations
arising under this Agreement shall inure to the benefit of and shall be binding
upon the heirs, executors, administrators, successors, and legal representatives
of Executive, and shall inure to the benefit of and be binding upon the Company
and its respective successors and assignees. The Company shall not assign its
rights or delegate its duties hereunder without the prior written consent of
Executive, other than to a company that has acquired all or substantially all
the assets of the Company, and assumes all the Company's obligations hereunder,
provided the assignment is made contemporaneously with such transaction and the
Company remains liable for all its obligations hereunder. Executive shall not
assign his rights or delegate his duties hereunder without the prior written
consent of the Company.
11. NOTICES. All notices, demands or other communications given
hereunder shall be in writing and shall be deemed to have been duly given only
upon hand delivery thereof or upon receipt, if sent by reputable overnight
courier, addressed as follows or, the fourth (4th) business day after mailing by
United States certified mail, return receipt requested, postage prepaid,
addressed as follows:
To Company: ROADHOUSE GRILL, INC.
6600 North Andrews Avenue, Suite 160
Fort Lauderdale, FL 33309
To Executive: JOHN DAVID TOOLE, III
c/o Roadhouse Grill, Inc.
6600 North Andrews, Avenue, Suite 160
Fort Lauderdale, FL 33309
or to such other addresses or such other person as any party shall designate, in
writing, to the other for such purposes and in the manner hereinabove set forth.
12. ENTIRE AGREEMENT. This Agreement supersedes and replaces any and
all prior agreements and understandings between the parties hereto respecting
the employment of Executive by the Company and constitutes the complete
understanding between the parties with respect to the employment of Executive
hereunder, and no statement, representation, warranty or covenant has been made
by any party with respect thereto except as expressly set forth herein.
13. AMENDMENT. The parties hereby irrevocably agree that no
attempted amendment, modification, termination, discharge or change
(collectively, "Amendment") of this Agreement shall be valid and effective,
unless the Company the Executive shall unanimously agree in writing to such
Amendment.
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14. NO WAIVER. No waiver of any provision of this Agreement shall be
effective unless it is in writing and signed by the party against whom it is
asserted, and any such written waiver shall only be applicable to the specific
instance to which it relates and shall not be deemed to be continuing or future
waiver.
15. HEADINGS. The headings set forth in this Agreement are for
convenience only and shall not be considered as part of this Agreement in any
respect nor shall they in any way affect the substance of any provisions
contained in this Agreement.
16. FURTHER ASSURANCES. The parties hereto will execute and
deliver such further instruments and do such further acts and things as may be
reasonably required to carry out the intent and purposes of this Agreement.
17. GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Florida, and any
proceeding arising between the parties in any manner pertaining or related to
this Agreement shall, to the extent permitted by law, be held in Broward County,
Florida.
18. LITIGATION. If any party hereto is required to engage in
litigation against any other party hereto, either as plaintiff or as defendant,
in order to enforce or defend any of its or his rights under this Agreement, and
such litigation results in a final judgment in favor of such party ("Prevailing
Party"), then the party or parties against whom said final judgment is obtained
shall reimburse the Prevailing Party for all direct, indirect or incidental
expenses incurred by the Prevailing Party in so enforcing or defending its or
his rights hereunder, including, but not limited to, all reasonable attorneys'
and other legal fees and court costs and other expenses incurred throughout all
negotiations, trials or appeals undertaken in order to enforce the Prevailing
Party's rights hereunder.
19. SEVERABILITY. If any clause or provision hereof shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect only such clause or provision, or
part thereof, in such jurisdiction, and shall not in any manner affect such
clause or provision in any other jurisdiction, or any other clause or provision
of this Agreement in any jurisdiction.
20. JOINT DRAFTING RESPONSIBILITY. This Agreement is the result of the
joint efforts and negotiations of the parties hereto, with each party being
represented or having the opportunity to be represented by legal counsel of its
own choice. The parties agree that the rule of judicial interpretation to the
effect that any ambiguity or uncertainty contained in an agreement is to be
construed against the party who drafted the Agreement shall not be applied in
the event of any disagreement or dispute arising out of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
Signed, Sealed and Delivered
in the Presence of: COMPANY:
ROADHOUSE GRILL, INC., a
Florida corporation
By:__________________________________
______________________________ Title: Director
______________________________
By:__________________________________
______________________________ Title: Director
______________________________
By:__________________________________
______________________________ Title: Director
______________________________
EXECUTIVE:
______________________________ __________________________________________
JOHN DAVID TOOLE, III
______________________________
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EXHIBIT A
Stock Option Agreements
A-1
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is made and entered into as
of the 24th day of October, 1996 by and between ROADHOUSE GRILL, INC., a Florida
corporation (the "Company"), and JOHN DAVID TOOLE, III ("Optionee").
W I T N E S S E T H:
WHEREAS, the Optionee is a key employee of the Company;
WHEREAS, subject to the terms and conditions set forth herein, the
Company desires to grant Optionee an option to acquire up to Four Hundred Fifty
Thousand (450,000) shares of the Company's common stock, par value $0.01 per
share ("Common Stock"); and
WHEREAS, the Company has filed a registration statement under the
Securities Act of 1933 pertaining to an initial public offering of the Common
Stock ("IPO") that contemplates that the Company will effect a 3-for-1 reverse
stock split prior to the IPO ("Reverse Split").
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereby agree as follows:
1. RECITALS. The forgoing recitals are true and correct and
are hereby incorporated by reference.
2. OPTION. The Company hereby grants Optionee an option ("Option") to
purchase Four Hundred Fifty Thousand (450,000) shares of Common Stock (the
"Option Stock") for Three Dollars and 60/100 ($3.60) per share ("Option Price"),
subject to adjustment for the Reverse Stock Split and for such other adjustments
as hereinafter provided. If the Reverse Stock Split precedes the IPO and both
occur by January 1, 1997, the number of shares of Option Stock shall be adjusted
as provided in Section 6 hereof but the "Option Price" shall be adjusted as of
the date of the consummation of the IPO to be the price to the public per share
in the IPO net of all underwriting discounts and selling concessions,
notwithstanding anything to the contrary in Section 6 hereof. Thereafter and in
all other cases, the Option Stock and Option Price shall be subject to
adjustment as provided elsewhere herein. Except as otherwise provided herein,
the Option shall become exercisable in accordance with Section 3 hereof and,
unless sooner terminated pursuant to this Agreement, shall remain exercisable
until 5:00 p.m. Eastern Time on October 23, 2004 ("Exercise Period").
3. VESTING AND EXERCISE OF OPTION.
A. VESTING. The Option may be exercised for: (i) One
Hundred Fifty Thousand (150,000) shares of the Option Stock beginning one (1)
year after the date hereof; (ii) an additional One Hundred Fifty Thousand
(150,000) shares of the Option Stock beginning two (2)
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years after the date hereof; and (iii) an additional One Hundred Fifty Thousand
(150,000) shares of the Option Stock beginning three (3) years after the date
hereof. The Option shall be deemed "vested" as to all Common Stock for which it
is then exercisable.
B. EXERCISE. Optionee may exercise the Option from time to
time for any or all Option Stock for which it is then exercisable by delivering
written notice thereof ("Exercise Notice") to the Company at any time during the
Exercise Period, which Exercise Notice shall specify the number of shares of
Option Stock for which such exercise is made. The Option Notice shall be
accompanied by the Option Price and the amount of any withholding taxes the
Company is required to pay as a result of the exercise of the Option.
C. MANNER OF PAYMENT. The Option Price and the amount of any
such withholding required to be paid by Optionee may be paid at the election of
the Optionee: (i) in cash or by check; (ii) by directing the Company to withhold
shares of Option Stock purchased upon the exercise of such Option, the Fair
Market Value (as hereinafter defined) of which, as of the date of the Exercise
Notice, corresponds to such Option Price and tax withholding liability to be
paid for therewith; or (iii) any combination of (i) or (ii). For purposes of
this Agreement, "Fair Market Value" means, as to any security on a given day,
the average of the closing prices of such security's sales on all domestic
securities exchanges on which such security may at the time be listed, or, if
there have been no sales on any such exchange on such day, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on such day such security is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M.,
New York time, on such day, or, if on any day such security is not quoted in the
NASDAQ System, the average of the highest bid and lowest asked prices on such
day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization, or, if
the security is not regularly traded in a public market, as determined by a
valuation prepared by an independent expert mutually agreeable to the Optionee
and the Company.
4. EFFECT OF CERTAIN EVENTS ON VESTING AND TERMINATION.
A. CHANGE OF CONTROL. In the event of a Change of Control (as
hereinafter defined), the Option shall immediately be fully vested and
exercisable for all Option Stock and shall thereafter be exercisable as to all
shares of Option Stock for which the Option has not yet been exercised. For
purposes of this Agreement, "Change of Control" shall mean if: (i) the Company
agrees to sell all or substantially all of its assets for cash or property or
for a combination of cash and property; (ii) the Company agrees to any merger,
consolidation, reorganization, division or other Corporate Transaction (as
hereinafter defined) in which the holders of the Company's Common Stock become
entitled to receive, with respect to their Common Stock, cash, securities or
assets other than, or in addition to, their Common Stock, or in which the
Company will not be the surviving entity; (iii) the approval by the shareholders
of the Company of any plan or proposal for the liquidation or dissolution of the
Company; or (iv) the acquisition by any person or group (as that term is defined
in the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules promulgated pursuant to that act) in a single transaction or a series of
transactions of 30% or more in voting power of the outstanding
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stock of the Company and, within two years after the last of such transactions
took place, the individuals who constituted the Board of Directors of the
Company as of immediately prior to the first of such transactions cease for any
reason to constitute at least a majority of the Board of Directors.
B. TERMINATION FOR CAUSE. In the event of a termination of
Optionee's employment with the Company by the Company for "Cause," as defined in
Optionee's Employment Agreement with the Company dated as of October 24, 1996
("Employment Agreement"), or in the event Optionee's employment under the
Employment Agreement is terminated by Optionee without "Cause" (as defined
therein), then the Option may be exercised for the Option Stock for which the
Option is then exercisable until the expiration of the three (3) month period
immediately following the date of such termination of employment.
C. TERMINATION BECAUSE OF DEATH OR PERMANENT DISABILITY OF
OPTIONEE. In the event of a termination of Optionee's employment with the
Company because of his Permanent Disability (as defined in the Employment
Agreement) or death, then the Option shall immediately be fully vested and
exercisable as to all shares of Option Stock for which the Option has not been
exercised, and shall remain exercisable until the expiration of the twelve (12)
month period immediately following the date of such termination of employment.
D. OTHER TERMINATION OF EMPLOYMENT. Upon expiration of the
term of Optionee's employment under the Employment Agreement, termination by
Optionee of the Employment Agreement with Cause, termination by the Company
other than for Cause or because of Optionee's death or Permanent Disability,
termination by mutual consent of Company and Optionee, or any other termination
of Optionee's employment with the Company other than by the Company for Cause,
by Optionee without Cause, or as a result of Optionee's death or Permanent
Disability, the Option shall immediately be fully vested and exercisable as to
all Option Stock for which the Option has not been exercised, and shall remain
exercisable until 5:00 p.m.
Eastern time on October 23, 2004.
5. CORPORATE TRANSACTIONS. While this Option is outstanding (whether or
not then vested), the Company shall give Optionee thirty (30) days prior written
notice of each Corporate Transaction as a result of which the holders of the
Common Stock will become entitled to receive, with respect to their Common
Stock, cash, securities or assets other than, or in addition to, their Common
Stock. Optionee shall be entitled at any time prior to such Corporate
Transaction to exercise the Option for any or all Option Stock (which exercise
may be conditioned by Optionee upon the consummation of the Corporate
Transaction), which exercise (and the issuance of the Option Stock pursuant
thereto) shall be deemed to have occurred immediately before the record date for
determining the holders of the Common Stock entitled to receive such cash,
securities or assets because of such Corporate Transaction.
6. SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Option Price in effect immediately prior to such
subdivision will be proportionately reduced and the number of
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shares of Option Stock obtainable upon exercise of the Option will be
proportionately increased. If the Company at any time combines (by reverse stock
split or otherwise) one or more classes of its outstanding shares of Common
Stock into a smaller number of shares, the Option Price in effect immediately
prior to such combination will be proportionately increased (except, if the
Reverse Split precedes the IPO and both occur by January 1, 1997, the Option
Price shall be as provided in Section 2 hereof) and the number of shares of
Common Stock obtainable upon exercise of the Option will be proportionately
decreased.
7. REGISTRATION OF OPTION STOCK. In the event that any registration
statement under the Securities Act or any applicable State Securities Law is
filed with respect to Company's securities issued or issuable to employees under
any Company Employee Stock Option Plan, the Options and Option Stock issued or
issuable hereunder shall also be included in such registration statement, as if
the Options granted hereunder where granted under such Stock Option Plan.
8. TRANSFERABILITY. The Option will not be assignable or transferable
other than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended. In the event the
Option is transferred by will or the laws of descent, the Option may be
exercised only by an executor or administrator or by the person or persons who
shall have acquired the Option directly from the Optionee by bequest or
inheritance.
9. RESTRICTIONS ON RESALES. The Optionee acknowledges that the Option
and the Option Stock have not been requested under the Securities Act of 1933,
as amended ("Securities Act") or applicable state securities laws and may not be
resold except pursuant to registration under the Securities Act and such state
securities laws or an exemption therefrom.
10. RIGHTS OF THE OPTIONEE. The grant of this Option, execution of this
Agreement or exercise of any portion of this Option shall not confer upon the
Optionee any right to, or guaranty of, a position as an employee, consultant,
advisor or director of the Company or any of its subsidiaries.
11. MISCELLANEOUS.
A. NOTICES. All notices, demands or other
communications given hereunder shall be in writing and shall be deemed to have
been duly given only upon hand delivery thereof or upon the first business day
after mailing by United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
To Company: Roadhouse Grill, Inc.
6600 North Andrews Avenue, Suite 160
Fort Lauderdale, FL 33309
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To Optionee: John David Toole, III
Roadhouse Grill, Inc.
6600 North Andrews Avenue, Suite 160
Fort Lauderdale, FL 33309
or to such other address or such other person as any party shall designate, in
writing, to the other for such purposes and in the manner hereinabove set forth.
B. AMENDMENT. The parties hereby irrevocably agree
that no attempted amendment, modification, termination, discharge or change
(collectively, "Amendment") of this Agreement shall be valid and effective,
unless the parties shall unanimously agree in writing to such Amendment.
C. NO WAIVER. No waiver of any provision of this
Agreement shall be effective unless it is in writing and signed by the party
against whom it is asserted, and any such written waiver shall only be
applicable to the specific instance to which it relates and shall not be deemed
to be a continuing or future waiver.
D. GOVERNING LAW. This Agreement shall be construed
in accordance with the laws of the State of Florida and any proceeding arising
between the parties in any manner pertaining or related to this Agreement shall,
to the extent permitted by law, be held in Broward County, Florida.
E. FURTHER ASSURANCES. The parties hereto will execute
and deliver such further instruments and do such further acts and things as may
be reasonably required to carry out the intent and purposes of this Agreement.
F. ENTIRE AGREEMENT. This Agreement sets forth all
the promises, covenants, agreements, conditions and understandings between the
parties hereto, and supersedes all prior and contemporaneous agreements,
understandings, inducements or conditions, expressed or implied, oral or
written, between the parties with respect to the matters contained herein.
G. PREVAILING PARTY. If any party hereto is required
to engage in litigation against any other party hereto, either as a plaintiff or
as defendant, in order to enforce or defend any rights under this Agreement and
such litigation results in a final judgment in favor of such party ("Prevailing
Party"), then the party or parties against whom said final judgment is obtained
shall reimburse the Prevailing Party for all direct, indirect or incidental
expenses incurred including, but not limited to all attorneys' fees, paralegals'
fees, court costs and other expenses incurred throughout all negotiations,
trials or appeals undertaken in order to enforce the Prevailing Party's rights
hereunder.
H. BINDING EFFECT; ASSIGNMENT. This Agreement shall
be binding upon the parties hereto, their beneficiaries, heirs and
administrators and inure to the benefit of Optionee and his assigns, and shall
be binding upon the Company, its successors and assigns.
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I. JOINT DRAFTING RESPONSIBILITY. This Agreement is the result
of the joint efforts and negotiations of the parties hereto, with each party
being represented or having the opportunity to be represented by legal counsel
of its own choice. The parties agree that the rule of judicial interpretation to
the effect that any ambiguity or uncertainty contained in an agreement is to be
construed against the party who drafted the Agreement shall not be applied in
the event of any disagreement or dispute arising out of this Agreement.
J. INCENTIVE STOCK OPTION PLAN. In the event that the
Company adopts a Stock Option plan that permits the issuance of incentive stock
options within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended, Optionee shall be entitled to exchange the unexercised options
granted hereunder for incentive stock options granted under such plan which
shall be upon the same terms and conditions as are set forth herein, except for
such changes thereto as are necessary to qualify them as incentive stock options
or to permit their issuance under such plan.
6
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year set forth above.
Signed, Sealed and Delivered
in the Presence of: COMPANY:
ROADHOUSE GRILL, INC., a
Florida corporation
__________________________________ By:___________________________________
Its:__________________________________
__________________________________
__________________________________ By:___________________________________
Its:__________________________________
__________________________________
__________________________________ By:___________________________________
Its:__________________________________
__________________________________
OPTIONEE:
___________________________________ _______________________________________
JOHN DAVID TOOLE, III
___________________________________
7
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is made and entered into as
of the 1st day of October, 1994 by and between ROADHOUSE GRILL, INC., a Florida
corporation (the "Company"), and JOHN DAVID TOOLE, III ("Optionee").
W I T N E S S E T H:
WHEREAS, the Optionee is a key employee of the Company; and
WHEREAS, effective as of October 1, 1994, in connection with that
certain Stock Purchase Agreement dated as of September 26, 1994 by and among
Roadhouse Grill Inc. and Berjaya Group (Cayman), and subject to the terms and
conditions set forth herein, the Company granted Optionee an option to acquire
up to Five Hundred Thousand (500,000) shares of the Company's common stock, par
value $0.01 per share ("Common Stock").
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereby agree as follows:
1. RECITALS. The forgoing recitals are true and correct and are
hereby incorporated by reference.
2. OPTION. The Company hereby grants Optionee an option ("Option") to
purchase Five Hundred Thousand (500,000) shares of Common Stock (the "Option
Stock") for Two and 50/100 Dollars ($2.50) per share ("Option Price"), subject
to adjustment as hereinafter provided. Except as otherwise provided herein, the
Option shall become exercisable in accordance with Section 3 hereof and, unless
sooner terminated pursuant to this Agreement, shall remain exercisable until
5:00 p.m. Eastern Time on September 30, 2002 ("Exercise Period").
3. VESTING AND EXERCISE OF OPTION.
A. VESTING. The Option may be exercised for: (i) One Hundred
Sixty Six Thousand Six Hundred Sixty Seven (166,667) shares of the Option Stock
beginning on September 30,1995; (ii) an additional One Hundred Sixty Six
Thousand Six Hundred Sixty Seven (166,667) shares of the Option Stock beginning
on September 30, 1996, and (iii) an additional One Hundred Sixty Six Thousand
Six Hundred Sixty Six (166,666) shares of the Option Stock beginning on
September 30, 1997. The Option shall be deemed "vested" as to all Common Stock
for which it is then exercisable.
B. EXERCISE. Optionee may exercise the Option from
time to time for any or all Option Stock for which it is then exercisable by
delivering written notice thereof ("Exercise Notice") to the Company at any time
during the Exercise Period, which Exercise Notice shall specify the number of
shares of Option Stock for which such exercise is made. The Option Notice
1
<PAGE>
shall be accompanied by the Option Price and the amount of any withholding taxes
the Company is required to pay as a result of the exercise of the Option.
C. MANNER OF PAYMENT. The Option Price and the amount of any
such withholding required to be paid by Optionee may be paid at the election of
the Optionee: (i) in cash or by check; (ii) by directing the Company to withhold
shares of Option Stock purchased upon the exercise of such Option, the Fair
Market Value (as hereinafter defined) of which, as of the date of the Exercise
Notice, corresponds to such Option Price and tax withholding liability to be
paid for therewith; or (iii) any combination of (i) or (ii). For purposes of
this Agreement, "Fair Market Value" means, as to any security on a given day,
the average of the closing prices of such security's sales on all domestic
securities exchanges on which such security may at the time be listed, or, if
there have been no sales on any such exchange on such day, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on such day such security is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M.,
New York time, on such day, or, if on any day such security is not quoted in the
NASDAQ System, the average of the highest bid and lowest asked prices on such
day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization, or, if
the security is not regularly traded in a public market, as determined by a
valuation prepared by an independent expert mutually agreeable to the Optionee
and the Company.
4. EFFECT OF CERTAIN EVENTS ON VESTING AND TERMINATION.
A. CHANGE OF CONTROL. In the event of a Change of Control (as
hereinafter defined), the Option shall immediately be fully vested and
exercisable for all Option Stock and shall thereafter be exercisable as to all
shares of Option Stock for which the Option has not yet been exercised. For
purposes of this Agreement, "Change of Control" shall mean if: (i) the Company
agrees to sell all or substantially all of its assets for cash or property or
for a combination of cash and property; (ii) the Company agrees to any merger,
consolidation, reorganization, division or other Corporate Transaction (as
hereinafter defined) in which the holders of the Company's Common Stock become
entitled to receive, with respect to their Common Stock, cash, securities or
assets other than, or in addition to, their Common Stock, or in which the
Company will not be the surviving entity; (iii) the approval by the shareholders
of the Company of any plan or proposal for the liquidation or dissolution of the
Company; or (iv) the acquisition by any person or group (as that term is defined
in the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules promulgated pursuant to that act) in a single transaction or a series of
transactions of 30% or more in voting power of the outstanding stock of the
Company and, within two years after the last of such transactions took place,
the individuals who constituted the Board of Directors of the Company as of
immediately prior to the first of such transactions cease for any reason to
constitute at least a majority of the Board of Directors.
B. TERMINATION FOR CAUSE. In the event of a
termination of Optionee's employment with the Company by the Company for
"Cause," as defined in Optionee's Employment Agreement with the Company dated as
of October 24. 1996 ("Employment
2
<PAGE>
Agreement"), or in the event Optionee's employment under the Employment
Agreement is terminated by Optionee without "Cause" (as defined therein), then
the Option may be exercised for the Option Stock for which the Option is then
exercisable until the expiration of the three (3) month period immediately
following the date of such termination of employment.
C. TERMINATION BECAUSE OF DEATH OR TOTAL DISABILITY OF
OPTIONEE. In the event of a termination of Optionee's employment with the
Company because of his Permanent Disability (as defined in the Employment
Agreement) or death, then the Option shall immediately be fully vested and
exercisable as to all shares of Option Stock for which the Option has not been
exercised, and shall remain exercisable until the expiration of the twelve (12)
month period immediately following the date of such termination of employment.
D. OTHER TERMINATION OF EMPLOYMENT. Upon expiration of the
term of Optionee's employment under the Employment Agreement, termination by
Optionee of the Employment Agreement with Cause, termination by the Company
other than for Cause (or because of Optionee's death or Permanent Disability),
termination by mutual consent of Company and Optionee, or any other termination
of Optionee's employment with the Company other than by the Company for Cause,
by Optionee without Cause, or as a result of Optionee's death or Permanent
Disability, the Option shall immediately be fully vested and exercisable as to
all Option Stock for which the Option has not been exercised, and shall remain
exercisable until 5:00 p.m.
Eastern time on September 30, 2004.
5. CORPORATE TRANSACTIONS. While this Option is outstanding (whether or
not then vested), the Company shall give Optionee thirty (30) days prior written
notice of each Corporate Transaction as a result of which the holders of the
Common Stock will become entitled to receive, with respect to their Common
Stock, cash, securities or assets other than, or in addition to, their Common
Stock. Optionee shall be entitled at any time prior to such Corporate
Transaction to exercise the Option for any or all Option Stock (which exercise
may be conditioned by Optionee upon the consummation of the Corporate
Transaction), which exercise (and the issuance of the Option Stock pursuant
thereto) shall be deemed to have occurred immediately before the record date for
determining the holders of the Common Stock entitled to receive such cash,
securities or assets because of such Corporate Transaction.
6. SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Option Price in effect immediately prior to such
subdivision will be proportionately reduced and the number of shares of Option
Stock obtainable upon exercise of the Option will be proportionately increased.
If the Company at any time combines (by reverse stock split or otherwise) one or
more classes of its outstanding shares of Common Stock into a smaller number of
shares, the Option Price in effect immediately prior to such combination will be
proportionately increased and the number of shares of Common Stock obtainable
upon exercise of the Option will be proportionately decreased.
3
<PAGE>
7. REGISTRATION OF OPTION STOCK. In the event that any registration
statement under the Securities Act or any applicable State Securities Law is
filed with respect to Company's securities issued or issuable to employees under
the Company's 1994 Employee Stock Option Plan, the Options and Option Stock
issued or issuable hereunder shall also be included in such registration
statement, as if the Options granted hereunder where granted under the 1994
Employee Stock Option Plan.
8. TRANSFERABILITY. The Option will not be assignable or transferable
other than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended. In the event the
Option is transferred by will or the laws of descent, the Option may be
exercised only by an executor or administrator or by the person or persons who
shall have acquired the Option directly from the Optionee by bequest or
inheritance.
9. RESTRICTIONS ON RESALES. The Optionee acknowledges that the Option
and the Option Stock have not been requested under the Securities Act of 1933,
as amended ("Securities Act") or applicable state securities laws and may not be
resold except pursuant to registration under the Securities Act and such state
securities laws or an exemption therefrom.
10. RIGHTS OF THE OPTIONEE. The grant of this Option, execution of this
Agreement or exercise of any portion of this Option shall not confer upon the
Optionee any right to, or guaranty of, a position as an employee, consultant,
advisor or director of the Company or any of its subsidiaries.
11. MISCELLANEOUS.
A. NOTICES. All notices, demands or other
communications given hereunder shall be in writing and shall be deemed to have
been duly given only upon hand delivery thereof or upon the first business day
after mailing by United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
To Company: Roadhouse Grill, Inc.
6600 North Andrews Avenue, Suite 160
Fort Lauderdale, FL 33309
To Optionee: John David Toole, III
Roadhouse Grill, Inc.
6600 North Andrews Avenue, Suite 160
Fort Lauderdale, FL 33309
or to such other address or such other person as any party shall designate, in
writing, to the other for such purposes and in the manner hereinabove set forth.
B. AMENDMENT. The parties hereby irrevocably agree
that no attempted amendment, modification, termination, discharge or change
(collectively, "Amendment") of this
4
<PAGE>
Agreement shall be valid and effective, unless the parties shall unanimously
agree in writing to such Amendment.
C. NO WAIVER. No waiver of any provision of this
Agreement shall be effective unless it is in writing and signed by the party
against whom it is asserted, and any such written waiver shall only be
applicable to the specific instance to which it relates and shall not be deemed
to be a continuing or future waiver.
D. GOVERNING LAW. This Agreement shall be construed
in accordance with the laws of the State of Florida and any proceeding arising
between the parties in any manner pertaining or related to this Agreement shall,
to the extent permitted by law, be held in Broward County, Florida.
E. FURTHER ASSURANCES. The parties hereto will execute
and deliver such further instruments and do such further acts and things as may
be reasonably required to carry out the intent and purposes of this Agreement.
F. ENTIRE AGREEMENT. This Agreement sets forth all
the promises, covenants, agreements, conditions and understandings between the
parties hereto, and supersedes all prior and contemporaneous agreements,
understandings, inducements or conditions, expressed or implied, oral or
written, between the parties with respect to the matters contained herein.
G. PREVAILING PARTY. If any party hereto is required
to engage in litigation against any other party hereto, either as a plaintiff or
as defendant, in order to enforce or defend any rights under this Agreement and
such litigation results in a final judgment in favor of such party ("Prevailing
Party"), then the party or parties against whom said final judgment is obtained
shall reimburse the Prevailing Party for all direct, indirect or incidental
expenses incurred including, but not limited to all attorneys' fees, paralegals'
fees, court costs and other expenses incurred throughout all negotiations,
trials or appeals undertaken in order to enforce the Prevailing Party's rights
hereunder.
H. BINDING EFFECT; ASSIGNMENT. This Agreement shall
be binding upon the parties hereto, their beneficiaries, heirs and
administrators and inure to the benefit of Optionee and his assigns, and shall
be binding upon the Company, its successors and assigns.
I. JOINT DRAFTING RESPONSIBILITY. This Agreement is the result
of the joint efforts and negotiations of the parties hereto, with each party
being represented or having the opportunity to be represented by legal counsel
of its own choice. The parties agree that the rule of judicial interpretation to
the effect that any ambiguity or uncertainty contained in an agreement is to be
construed against the party who drafted the Agreement shall not be applied in
the event of any disagreement or dispute arising out of this Agreement.
5
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
October 24, 1996.
Signed, Sealed and Delivered
in the Presence of: COMPANY:
ROADHOUSE GRILL, INC., a
Florida corporation
________________________________ By:___________________________________
Its:__________________________________
________________________________
________________________________ By:___________________________________
Its:__________________________________
________________________________
________________________________ By:___________________________________
Its:__________________________________
________________________________
OPTIONEE:
_________________________________ ________________________________________
JOHN DAVID TOOLE, III
_________________________________
6
[STARK & BENNETT LETTERHEAD]
November 14, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: Roadhouse Grill, Inc.
Registration Statement on Form S-1
File No. 333-12751
Ladies and Gentlemen:
This letter is provided to you pursuant to Item 304(a)(3) of Regulation
S-K in connection with the above-referenced Registration Statement. The
undersigned confirms that it has received a copy of the disclosures made by the
registrant in response to Item 304(a) of Regulation S-K (which disclosures are
set forth in the "Experts" section of Amendments No. 2 and No. 3 to such
Registration Statement). The undersigned further confirms that it agrees with
the statements made by the registrant in response to Item 304(a).
Very truly yours,
/s/ Stark & Bennett
Stark & Bennett
[COOPERS & LYBRAND LETTERHEAD]
November 15, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: Roadhouse Grill, Inc.
Registration Statement on Form S-1
File No. 333-12751
Ladies and Gentlemen:
This letter is provided to you pursuant to Item 304(a)(3) of Regulation
S-K in connection with the above-referenced Registration Statement. The
undersigned confirms that it has received a copy of the disclosures made by the
registrant in response to Item 304(a) of Regulation S-K (which disclosures are
set forth in the "Experts" section of Amendments No. 2 and No. 3 to such
Registration Statement). The undersigned further confirms that it agrees with
the statements made by the registrant in response to Item 304(a).
Very truly yours,
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
LIST OF SUBSIDIARIES OF THE COMPANY
1. Roadhouse Grill North Miami, Inc., a Florida corporation
2. Roadhouse Grill Commercial, Inc., a Florida corporation
3. Roadhouse Grill of South Carolina, Inc., a South Carolina corporation
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Roadhouse Grill, Inc.:
The audit referred to in our report dated June 28, 1996, included the related
financial statement schedules as of December 31, 1995, and for the fiscal year
ended December 31, 1995, included in Amendment No. 3 to registration statement
No. 333-12751. These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statement schedules based on our audit. In our opinion, such financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
We consent to the use of our report included herein and to the references to our
firm under the headings "Selected Financial Data" and "Experts" in the
prospectus.
KPMG Peat Marwick LLP
November 14, 1996
Miami, Florida
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in the registration statement on Form S-1 (File No.
333-12751) as amended on November 15, 1996 of our report dated March 10, 1995,
on our audit of the financial statements of Roadhouse Grill, Inc. We also
consent to the reference to our firm under the caption "Selected Financial Data"
and "Experts."
Coopers & Lybrand L.L.P.
Miami, Florida
November 15, 1996
INDEPENDENT AUDITOR'S CONSENT
We consent to the reference to our firm under the captions "Experts" and
"Selected Financial Data" and to the use of our report dated May 27, 1994 except
as to notes 1(n) and 9, which are as of October 9, 1996 in the Registration
Statement (Form S-1) and the related Prospectus of Roadhouse Grill, Inc. for the
registration of its Common Stock.
/s/ STARK & BENNETT, P.A.
- --------------------------------
Stark & Bennett, P.A.
Plantation, Florida
November 14, 1996
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<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-END> DEC-31-1995 SEP-29-1996
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58,750 57,558
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