AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 24, 1996
REGISTRATION STATEMENT NO. 333-12751
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 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)
<TABLE>
<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)
----------
COPIES TO:
DAN BUSBEE MARY A. BERNARD
LOCKE PURNELL RAIN HARRELL KING & SPALDING
(A PROFESSIONAL CORPORATION) 120 WEST 45TH STREET
2200 ROSS AVENUE, SUITE 2200 NEW YORK, NEW YORK 10036-4003
DALLAS, TEXAS 75201-6776 (212) 556-2100
(214) 740-8000
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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 OCTOBER 24, 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.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
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Per Share ..... $ $ $
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Total(3) ...... $ $ $
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(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 12 Company-owned restaurants
that were open for the entire twelve-month period ended June 30, 1996
generated average restaurant revenues of approximately $2.9 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, excluding real estate costs and pre-opening expenses,
will be approximately $950,000 or $1.3 million, depending upon whether the
Company converts an existing building or constructs a new restaurant.
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 .....................9,166,002 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
(1) Does not include (i) 216,667 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 June 30, 1996 (at a
weighted-average exercise price of $9.60 per share); and (ii) 166,667 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" and
"Management--1994 Stock Option Plan."
4
<PAGE>
SUMMARY FINANCIAL AND RESTAURANT DATA
(IN THOUSANDS, EXCEPT PER SHARE AND RESTAURANT DATA)
<TABLE>
<CAPTION>
TWENTY SIX
FISCAL YEAR WEEKS ENDED
--------------------------------------- ---------------------------
JULY 2, JUNE 30,
1993 1994 1995 1995 1996
--------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenue .................... $3,465 $ 11,389 $ 34,275 $ 13,773 $ 27,633
Operating income (loss) .......... (540) (1,948) (3,529) (805) 145
Net loss(1) ...................... $ (713) $ (2,519) $ (3,490) $ (632) $ (168)
========= ============= ============= ============= ============
Pro forma net loss per
common share(2) ................ $ (0.65) $ (0.03)
============= ============
Pro forma weighted average shares
outstanding(2) ................. 5,378,474 6,089,394
============= ============
RESTAURANT DATA:
Restaurants open (end of period):
Company-owned(3) ................ 3 6 19 13 23
Franchised(4) ................... 1 2 3 2 5
--------- ------------- ------------- ------------- ------------
Total .......................... 4 8 22 15 28
Average sales per Company-owned
restaurant(5) .................. -- $3,048,581 $2,939,028 $1,524,514 $1,437,029
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
------------------------------
PRO FORMA
PRO AS
FORMA(6) ADJUSTED(6)(7)
------------ ----------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital ..................................................... $(7,067) $15,693
Total assets ........................................................ 56,674 69,236
Due to related parties and long-term debt, including current portion 17,963 7,863
Obligations under capital leases, including current portion ........ 4,414 4,414
Total shareholders' equity .......................................... 28,613 51,373
<FN>
- ----------
(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) Pro forma for the incurrence of an aggregate of $7.0 million of
indebtedness after June 30, 1996, as if it had been incurred at June 30,
1996.
(7) 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."
</FN>
</TABLE>
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. THE DISCUSSION IN THIS
PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTY. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
DISCUSSED HEREIN.
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 $168,000 in Fiscal 1993,
Fiscal 1994, Fiscal 1995 and the twenty-six week period ended June 30, 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, excluding real estate costs and
pre-opening expenses, will be approximately $950,000 or $1.3 million,
depending on whether the Company converts an existing building or constructs
a new restaurant. There can be no assurance that the actual cost of opening
the
6
<PAGE>
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 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
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
7
<PAGE>
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."
RESTAURANT INDUSTRY
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.
CHANGES IN FOOD 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
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."
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
8
<PAGE>
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
9,166,002 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, 4,161,074 shares will be eligible for sale, subject to certain
restrictions, beginning 90 days after the date of this Prospectus and
2,504,928 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 6,524,335 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 interest):
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
General corporate purposes, including opening new restaurants ........ 9,625,000
-------------
Total uses ...................................................... $22,760,000
=============
<FN>
- ----------
(1) Approximate amount as of November 15, 1996.
</FN>
</TABLE>
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."
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 June 30, 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 the incurrence
of an aggregate of $7.0 million of indebtedness after June 30, 1996, as if it
had been incurred at June 30, 1996; 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>
JUNE 30, 1996
------------------------------
PRO FORMA
PRO FORMA AS ADJUSTED
-------------- --------------
<S> <C> <C>
Current portion of long term debt, capital lease obligations
and due to related parties ............................................. $11,158,439 $ 1,058,439
============== ==============
Long-term debt (excluding current portion) ............................... $ 7,065,531 $ 7,065,531
Obligations under capital leases (excluding current portion) ............ 4,152,997 4,152,997
-------------- --------------
Total long-term debt, obligations under capital leases and due to
related parties (excluding current portion) (1) ....................... 11,218,528 11,218,528
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, $0.01 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) .... 199,980 274,980
Additional paid-in capital .............................................. 35,303,506 57,988,506
Retained earnings (deficit) ............................................. (6,890,622) (6,890,622)
-------------- --------------
Total shareholders' equity ............................................ 28,612,864 51,372,864
-------------- --------------
Total capitalization .................................................. $39,831,392 $62,591,392
============== ==============
<FN>
- ----------
(1) See Notes 3, 7 and 8 of Notes to Financial Statements.
(2) Does not include (i) 216,667 shares reserved for issuance upon the
exercise of options outstanding or issuable under the Company's 1994
Stock Option Plan, of which 181,103 shares were subject to outstanding
options at June 30, 1996 (at a weighted-average exercise price of $9.60
per share); and (ii) 166,667 shares reserved for issuance upon the
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" and "Management--1994 Stock Option
Plan."
</FN>
</TABLE>
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 1,918,616 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 June 30, 1996, was approximately $27,753,024, or $4.16
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 June 30, 1996 would have
been approximately $50,513,024, or $5.51 per share, pro forma. This
represents an immediate increase in pro forma net tangible book value per
share of $1.35 to existing shareholders and an immediate dilution of $4.49
per share to new investors. The following table sets forth this per share
dilution.
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share .................. $10.00
Pro forma net tangible book value per share as of June 30,
1996 ........................................................ $4.16
Increase per share attributable to new investors ............. 1.35
---------
Pro forma net tangible book value per share after the Offering . 5.51
---------
Dilution per share to new investors ............................. $ 4.49
=========
</TABLE>
The following table sets forth, as of June 30, 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 166,667 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" and
"Management--1994 Stock Option Plan."
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 twenty-six week periods
ended July 2, 1995 and June 30, 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 twenty-six week period ended June 30,
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>
TWENTY SIX
FISCAL YEARS WEEKS ENDED
---------------------------------------- -------------------------
JULY 2, JUNE 30,
1993 1994 1995 1995 1996
------------ ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues ................................... $3,465 $11,389 $ 34,275 $13,773 $ 27,633
Cost of restaurant sales:
Food and beverage ............................... 1,471 4,085 12,084 4,936 9,364
Labor ........................................... 988 4,606 12,019 4,889 8,627
Occupancy and other ............................. 1,219 2,318 8,710 3,058 5,829
------------ ------------ ------------ ------------ -----------
Total cost of restaurant sales ................. 3,678 11,009 32,813 12,883 23,820
Depreciation and amortization .................... 47 415 1,663 555 1,353
General and administrative ....................... 280 1,913 3,328 1,140 2,315
------------ ------------ ------------ ------------ -----------
Operating income (loss) .......................... (540) (1,948) (3,529) (805) 145
Other income (expense):
Net interest (expense) .......................... (40) (180) (404) (86) (555)
Other income .................................... 3 20 159 61 129
Equity in income (loss) of affiliate(1) ........ (136) (411) 284 198 113
------------ ------------ ------------ ------------ -----------
Total other income (expense) ................... (173) (571) 39 173 (313)
------------ ------------ ------------ ------------ -----------
Net loss ......................................... $ (713) $(2,519) $ (3,490) $ (632) $ (168)
============ ============ ============ ============ ===========
Pro forma net loss per common share(2) ........... $ (0.65) $ (0.03)
============ ===========
Pro forma weighted average shares outstanding(2) 5,378,474 6,089,394
============ ===========
</TABLE>
<TABLE>
<CAPTION>
JANUARY 2, JANUARY 1, DECEMBER 31, JUNE 30,
1994 1995 1995 1996
------------- ------------- --------------- -----------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital ............................................ $(2,040) $ 7,409 $(7,560) $(7,067)
Total assets ............................................... 1,685 24,843 42,201 49,674
Long-term debt and due to related parties,
including current portion ................................ 1,591 4,858 13,324 10,963
Obligations under capital leases, including current portion -- 1,272 4,484 4,414
Preferred stock ............................................ -- 59 59 58
Total shareholders' equity (deficit) ....................... (613) 17,639 20,261 28,613
<FN>
- ----------
(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.
</FN>
</TABLE>
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 13.0% of total revenues in Fiscal 1993, Fiscal 1994, Fiscal
1995 and the twenty-six week period ended June 30, 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.
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 the 27 Roadhouse Grill restaurants opened by the
Company prior to September 29, 1996 was approximately $1.3 million. For the
Company's 11 owned properties, the average real estate acquisition cost was
approximately $880,000. 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 Company expects
that the average cash investment required to open its prototype restaurants,
excluding real estate costs and pre-opening expenses, will be approximately
$950,000 or $1.3 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
restaurant under a management agreement since December 1994 and expects to
continue to do so in the foreseeable future. See "Use of Proceeds."
THIRD QUARTER 1996 RESULTS
Based on preliminary information, management estimates that total revenues
will be approximately $16.1 million for the thirteen-week period ended
September 29, 1996. Accordingly, total revenues are
14
<PAGE>
expected to be approximately $43.8 million for the thirty nine weeks then
ended. This would represent an increase in total revenues of 86.4% compared
to $23.5 million for the thirty nine weeks ended October 1, 1995. During the
thirteen-week period ended September 29, 1996, the Company opened five new
Roadhouse Grill Restaurants, including two in upstate New York and one each
in Florida, Georgia and South Carolina.
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>
TWENTY SIX
FISCAL YEAR WEEKS ENDED
---------------------------------- -----------------------
JULY 2, JUNE 30,
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 33.9
Labor and benefits ...................... 28.5 40.4 35.1 35.5 31.2
Occupancy and other ..................... 35.2 20.4 25.4 22.2 21.1
---------- ---------- ---------- ---------- -----------
Total cost of Company restaurant sales 106.1 96.7 95.8 93.5 86.2
Depreciation and amortization ............ 1.4 3.6 4.9 4.0 4.9
General and administrative ............... 8.1 16.8 9.7 8.3 8.4
---------- ---------- ---------- ---------- -----------
Total operating expenses ............... 115.6 117.1 110.4 105.8 99.5
---------- ---------- ---------- ---------- -----------
Operating income (loss) .................. (15.6) (17.1) (10.4) (5.8) 0.5
Total other income (expense) ............. (5.0) (5.0) 0.1 1.3 (1.1)
---------- ---------- ---------- ---------- -----------
Net loss ................................. (20.6)% (22.1)% (10.3)% (4.5)% (0.6)%
========== ========== ========== ========== ===========
</TABLE>
TWENTY-SIX WEEK PERIOD ENDED JUNE 30, 1996 COMPARED TO TWENTY-SIX WEEK
PERIOD ENDED JULY 2, 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 June 30, 1996, there
were 23 Company-owned restaurants in operation, compared to 12 Company-owned
restaurants at July 2, 1995, a 76.9% year-over-year increase in the number of
Company-owned restaurants.
TOTAL REVENUES. Total revenues increased $13.8 million, or 100.6%, from
$13.8 million for the twenty-six week period ended July 2, 1995 to $27.6
million for the twenty-six week period ended June 30, 1996. This increase was
primarily attributable to the opening of four additional restaurants during
the twenty-six week period ended June 30, 1996 and the inclusion of all 13
Company-owned restaurants added in Fiscal 1995 for the entire twenty-six week
period ended June 30, 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 $4.5 million, or
89.7%, from $4.9 million for the twenty-six week period ended July 2, 1995 to
$9.4 million for the twenty-six week period ended June 30, 1996. However,
food and beverage costs decreased as a percentage of total revenues from
35.8% for the twenty-six week period ended July 2, 1995 to 33.9% for the
comparable period in Fiscal 1996. This decrease reflects (i) the opening of
fewer new restaurants over a larger base of Company-owned restaurants in
operation during the twenty-six week period ended June 30, 1996 compared to
the twenty-six week period ended July 2, 1995 and (ii) a continuing decline
in food costs resulting from
15
<PAGE>
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 benefit costs increased $3.7 million, or
76.4%, from $4.9 million for the twenty-six week period ended July 2, 1995 to
$8.6 million for the twenty-six week period ended June 30, 1996. However,
labor and benefit costs as a percentage of total revenues decreased from
35.5% for the twenty-six week period ended July 2, 1995 to 31.2% 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
twenty-six week period ended June 30, 1996 compared to the twenty-six week
period ended July 2, 1995.
OCCUPANCY AND OTHER. Occupancy and other costs increased $2.7 million, or
90.6%, from $3.1 million for the twenty-six week period ended July 2, 1995 to
$5.8 million for the twenty-six week period ended June 30, 1996. However,
occupancy and other costs decreased as a percentage of total revenues from
22.2% for the twenty-six week period ended July 2, 1995 to 21.1% 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 twenty-six week period ended
June 30, 1996, as compared to the comparable period in Fiscal 1995.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased $798,000, or 143.7%, from $555,000 for the twenty-six week period
ended July 2, 1995 to $1.4 million for the twenty-six week period ended June
30, 1996. Depreciation and amortization as a percentage of total revenues
increased from 4.0% for the twenty-six week period ended July 2, 1995 to 4.9%
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 twenty-six
week period ended June 30, 1996, as compared to the comparable period in
Fiscal 1995.
GENERAL AND ADMINISTRATIVE. General and administrative expense increased
$1.2 million, or 103.1%, from $1.1 million for the twenty-six week period
ended July 2, 1995 to $2.3 million for the twenty-six week period ended June
30, 1996. General and administrative expense as a percentage of total
revenues remained relatively constant at 8.3% for the twenty-six week period
ended July 2, 1995 and 8.4% for the comparable period in Fiscal 1996.
Economies of scale resulting from a greater number of Company-owned
restaurants in operation during the twenty-six week period ended June 30,
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 (EXPENSE). Total other income (expense) decreased from
income of $173,000 for the twenty-six week period ended July 2, 1995 to
expense of $313,000 for the twenty-six week period ended June 30, 1996. This
decrease resulted primarily from interest expense incurred in connection with
the purchase of eight restaurant sites during Fiscal 1995 and the twenty-six
week period ended June 30, 1996 and was partially offset by income earned by
the Kendall, Florida Roadhouse Grill restaurant, which was accounted for
under the equity method of accounting. See Note 5 to the 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 $8.8 million
for the twenty-six week period ended June 30, 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 twenty-six
week period ended June 30, 1996 was approximately $680,000.
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, excluding real estate costs and pre-opening expenses,
will be approximately $950,000 or $1.3 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 ($7.1 million as of June 30, 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 the average cash investment
required to open its prototype restaurants, excluding real estate costs and
pre-opening expenses, will be approximately $950,000 or $1.3 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 12 Company-owned restaurants
which were open for the entire twelve-month period ended June 30, 1996
generated average restaurant revenues of approximately $2.9 million, average
restaurant cash flow of approximately $380,000 and average restaurant
operating income after depreciation and amortization of approximately
$217,000. 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. For the Company's 11 owned properties, the
average real estate acquisition cost was approximately $880,000. 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
Casselberry (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
<FN>
- ----------
(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.
</FN>
</TABLE>
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.
25
<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
Phillip Friedman ........ 50 Director
<FN>
- ----------
(1) Member of Audit, Compensation and Stock Option Committees.
</FN>
</TABLE>
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 April 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 restuarant 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 1982 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.
PHILLIP 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 $100,000 or more during Fiscal 1995.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(1)
----------------------
NAME AND PRINCIPAL POSITION SALARY ($) BONUS ($) ALL OTHER COMPENSATION($)
- --------------------------- ---------- --------- -------------------------
<S> <C> <C> <C>
John D. Toole III --
President & Chief Executive Officer .... $120,000 $34,566
<FN>
- ----------
(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.
</FN>
</TABLE>
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.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
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 $1,084,443 166,667 $550,000
<FN>
- ----------
(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.
</FN>
</TABLE>
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 216,667 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 an option outside of the 1994 Stock Option Plan
to J. David Toole, III pursuant to which Mr. Toole may acquire up to 166,667
shares of the Company's Common Stock. Such options may be exercised at a
price of $7.50 per share and have an expiration date of January 31, 2010.
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.
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
33
<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.
34
<PAGE>
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 fhe
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 "Mmanagement--Compensation Committee Interlocks and
Insider Participation."
35
<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) ......................... 308,334 4.5% 3.3%
Tan Kim Poh (3)(4) ............................ 5,247,385 78.7 57.2
Dr. Christian F. Horn (5)(6) .................. 553,334 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 *
All executive officers and directors
as a group (seven persons)(2)(3)(5)(9) ...... 6,126,608 91.7 66.7
<FN>
- ----------
* Less than 1%
(1) Adjusted to reflect the conversion of the Initial Preferred Stock into
shares of Common Stock.
(2) Includes 166,667 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) 533,334 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 192,555 shares subject to options that are exercisable within 60
days after the date of this Prospectus.
</FN>
</TABLE>
36
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 20 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
4,747,386 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. An application has been made for the Common Stock to be designated
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
9,166,002 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 6,666,002 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.
4,161,074 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 2,504,928 shares will become eligible for sale subject to
certain restrictions at various times between May 1997 and May 1998.
38
<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 1,918,616 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 4,605,719 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 216,667 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 6,666,002 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. 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 seleted 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.
42
<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.
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.
43
<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.
May 27, 1994, except as to
notes 1(n) and 9, which
are as of October 9, 1996
F-4
<PAGE>
<TABLE>
<CAPTION>
ROADHOUSE GRILL, INC.
BALANCE SHEETS
JANUARY 1, 1995 AND DECEMBER 31, 1995 AND JUNE 30, 1996 (UNAUDITED)
JANUARY 1, DECEMBER 31, JUNE 30,
1995 1995 1996
--------------- --------------- --------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................................... $ 7,734,493 $ 2,805,043 $ 277,325
Accounts receivable ................................................. 253,694 119,826 217,835
Due from affiliates ................................................. 572,064 155,263 194,349
Inventory ........................................................... 104,977 405,585 619,327
Current portion of note receivable .................................. -- 76,407 73,639
Pre-opening costs, net .............................................. 65,697 316,638 875,356
Prepaid expenses .................................................... 155,661 241,003 517,425
--------------- --------------- --------------
Total current assets .............................................. 8,886,586 4,119,765 2,775,256
Note receivable ...................................................... -- 265,128 233,563
Property and equipment, net .......................................... 16,439,238 35,844,784 44,246,438
Intangible assets, net of accumulated amortization of $28,366
and $59,226 at December 31, 1995 and June 30, 1996
(unaudited) respectively ........................................... -- 886,594 859,840
Other assets ......................................................... 64,181 1,024,449 1,385,165
Investment in affiliates ............................................. (547,117) 60,510 173,297
--------------- --------------- --------------
Total assets ...................................................... $24,842,888 $42,201,230 $49,673,559
=============== =============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................................... $ 599,925 $ 1,831,950 $ 2,463,514
Accrued expenses .................................................... 473,648 2,299,498 3,220,214
Due to related parties .............................................. -- 6,615,000 3,100,000
Current portion of long term debt ................................... 403,685 695,078 797,886
Current portion of capitalized lease obligations .................... -- 238,560 260,553
--------------- --------------- --------------
Total current liabilities ......................................... 1,477,258 11,680,086 9,842,167
Long-term debt ....................................................... 4,454,638 6,014,268 7,065,531
Capitalized lease obligations ........................................ 1,271,727 4,245,391 4,152,997
--------------- --------------- --------------
Total liabilities ................................................. 7,203,623 21,939,745 21,060,695
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 4,747,386,
respectively ...................................................... 95,444 117,618 142,421
Additional paid-in capital .......................................... 20,717,368 26,807,318 35,303,507
Accumulated deficit ................................................. (3,232,297) (6,722,201) (6,890,622)
--------------- --------------- --------------
Total shareholders' equity ........................................ 17,639,265 20,261,485 28,612,864
Commitments and contingencies (note 13) .............................. -- -- --
--------------- --------------- --------------
Total liabilities and shareholders' equity ........................ $ 24,842,888 $ 42,201,230 $49,673,559
=============== =============== ==============
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
ROADHOUSE GRILL, INC.
STATEMENTS OF OPERATIONS
FOR THE FISCAL YEARS ENDED JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995
AND FOR THE 26 WEEKS ENDED JULY 2, 1995 AND JUNE 30, 1996 (UNAUDITED)
FISCAL YEAR 26 WEEKS ENDED
----------------------------------------------- ------------------------------
JULY 2, JUNE 30,
1993 1994 1995 1995 1996
------------- --------------- -------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Total revenues ............................ $3,465,663 $11,389,060 $34,275,496 $13,772,593 $27,633,047
Cost of restaurant sales:
Food and beverage ...................... 1,470,957 4,085,246 12,084,134 4,935,593 9,363,962
Labor and benefits ....................... 987,952 4,606,156 12,019,723 4,889,378 8,626,993
Occupancy and other ...................... 1,218,900 2,318,014 8,710,597 3,058,036 5,829,113
------------- --------------- --------------- -------------- --------------
Total cost of restaurant sales ........... 3,677,809 11,009,416 32,814,454 12,883,007 23,820,068
Depreciation and amortization ............. 47,103 414,912 1,662,650 555,074 1,352,594
General and administrative ................ 280,418 1,913,446 3,327,680 1,140,177 2,315,692
------------- --------------- --------------- -------------- --------------
Total operating expenses ............... 4,005,330 13,337,774 37,804,784 14,578,258 27,488,354
------------- --------------- --------------- -------------- --------------
Operating income (loss) .................. (539,667) (1,948,714) (3,529,288) (805,665) 144,693
Other income (expense):
Interest expense, net .................... (40,190) (179,803) (404,009) (86,126) (554,818)
Equity in net income (loss) of affiliates (136,035) (411,081) 284,241 198,444 112,787
Other, net ............................... 2,868 20,325 159,152 60,892 128,917
------------- --------------- --------------- -------------- --------------
Total other income (expense) ........... (173,357) (570,559) 39,384 173,210 (313,114)
------------- --------------- --------------- -------------- --------------
Net loss ............................... $ (713,024) $(2,519,273) $(3,489,904) $ (632,455) $ (168,421)
============= =============== =============== ============== ==============
Net loss per common share ................. (0.34) (1.16) (1.02) (0.20) (0.04)
============= =============== =============== ============== ==============
Weighted average common shares and share
equivalents outstanding ................. 2,077,751 2,171,175 3,420,132 3,195,328 4,143,931
============= =============== =============== ============== ==============
Pro forma net loss per common share ...... (0.65) (0.03)
=============== ==============
Pro forma weighted average common shares
and share equivalents outstanding ....... 5,378,474 6,089,394
=============== ==============
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
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 26 WEEKS ENDED JUNE 30, 1996 (UNAUDITED)
COMMON STOCK PREFERRED STOCK
------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ----------- ------------ ----------
<S> <C> <C> <C> <C>
Balance at inception .............. -- $ -- -- $ --
Issuance of common stock ......... 167 500 -- --
Net loss ......................... -- -- -- --
------------ ----------- ------------ ----------
Balance, January 2, 1994 .......... 167 $ 500 -- $ --
Change in par value .............. -- (495) -- --
Stock split ...................... 2,147,982 64,439 -- --
Issuance of:
Common Stock ................. 1,033,333 31,000 -- --
Preferred stock--Series A ...... -- -- 3,525,000 35,250
Preferred stock--Series B ...... -- -- 2,350,025 23,500
Net loss ......................... -- -- -- --
------------ ----------- ------------ ----------
Balance January 1, 1995 ........... 3,181,482 $ 95,444 5,875,025 $58,750
------------ ----------- ------------ ----------
Issuance of common stock ......... 620,624 18,618 -- --
Stock options exercised .......... 118,518 3,556 -- --
Stock options outstanding ........ -- -- -- --
Deferred compensation ............ -- -- -- --
Net loss ......................... -- -- -- --
------------ ----------- ------------ ----------
Balance December 31, 1995 ......... 3,920,624 $117,618 5,875,025 $58,750
------------ ----------- ------------ ----------
Issuance of common stock
(unaudited) .................... 787,037 23,611 -- --
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) -- -- -- --
Net loss (unaudited) ............. -- -- -- --
------------ ----------- ------------ ----------
Balance June 30, 1996 (unaudited) 4,747,386 $142,421 5,755,850 $57,558
============ =========== ============ ==========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN ACCUMULATED
CAPITAL DEFICIT TOTAL
-------------- --------------- --------------
<S> <C> <C> <C>
Balance at inception .............. $ -- $ -- $ --
Issuance of common stock ......... 100,000 -- 100,500
Net loss ......................... -- (713,024) (713,024)
-------------- --------------- --------------
Balance, January 2, 1994 .......... $ 100,000 $ (713,024) $ (612,524)
Change in par value .............. 495 -- --
Stock split ...................... (64,439) -- --
Issuance of:
Common Stock ................. 9,577,500 -- 9,608,500
Preferred stock--Series A ...... 5,252,250 -- 5,287,500
Preferred stock--Series B ...... 5,851,562 -- 5,875,062
Net loss ......................... -- (2,519,273) (2,519,273)
-------------- --------------- --------------
Balance January 1, 1995 ........... $20,717,368 $(3,232,297) $17,639,265
-------------- --------------- --------------
Issuance of common stock ......... 6,000,573 -- 6,019,191
Stock options exercised .......... 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 ......... $26,807,318 $(6,722,201) $20,261,485
-------------- --------------- --------------
Issuance of common stock
(unaudited) .................... 8,476,389 -- 8,500,000
Conversion of Series A to common
stock (unaudited) .............. -- -- --
Conversion of Series B to common
stock (unaudited) .............. -- -- --
Deferred compensation (unaudited) 19,800 19,800
Net loss (unaudited) ............. -- (168,421) (168,421)
-------------- --------------- --------------
Balance June 30, 1996 (unaudited) $35,303,507 $(6,890,622) $28,612,864
============== =============== ==============
</TABLE>
See accompanying notes to financial statements.
F-7
<PAGE>
<TABLE>
<CAPTION>
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 26 WEEKS ENDED JULY 2, 1995 AND JUNE 30, 1996 (UNAUDITED)
JANUARY 2, JANUARY 1, DECEMBER 31, JULY 2, JUNE 30,
1994 1995 1995 1995 1996
-------------- --------------- --------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net loss ................................... $ (713,024) $ (2,519,273) $ (3,489,904) $ (632,455) $ (168,421)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization ............ 47,103 414,912 1,662,650 555,074 1,352,594
Noncash compensation expense ............. -- -- 39,600 -- 19,800
Equity in net income (loss) of affiliate . 136,035 411,081 (284,241) (198,444) (112,787)
Changes in assets and liabilities, net of
acquisitions of businesses:
Decrease (increase) in accounts
receivable .............................. -- (236,079) 133,868 (205,553) (98,009)
Decrease (increase) in other assets ...... -- 7,194 (882,068) (313,744) (81,869)
Increase in prepaid expenses ............. (80,486) (92,629) (85,342) (160,082) (276,422)
Increase in accounts payable ............. 516,228 83,697 911,772 899,706 631,564
Increase in accrued expenses ............. 190,270 283,378 1,760,798 5,609 186,118
Increase in inventory .................... (56,361) (48,777) (300,608) (308,003) (213,742)
Increase in pre-opening costs ............ -- (65,697) (250,941) (169,892) (558,718)
-------------- --------------- --------------- -------------- --------------
Net cash provided by (used in)
operating activities .................. 39,765 (1,762,193) (784,416) (527,784) 680,108
-------------- --------------- --------------- -------------- --------------
Cash flows from investing activities
Advances to affiliates, net ................ (161,000) (572,064) 26,031 434,723 (39,086)
Payments for other assets .................. (71,375) -- -- -- --
Proceeds from payments on note receivable .. -- -- 49,235 -- 34,333
Proceeds from sale leaseback transactions .. -- -- 1,185,960 469,054 450,000
Purchases of property and equipment ........ (1,378,507) (10,112,790) (14,541,042) (7,056,636) (8,834,013)
Acquisition of restaurants ................. -- -- (3,000,000) (3,000,000) --
-------------- --------------- --------------- -------------- --------------
Net cash used in investing activities ... (1,610,882) (10,684,854) (16,279,816) (9,152,859) (8,388,766)
-------------- --------------- --------------- -------------- --------------
Cash flows from financing activities
Increase in cash overdraft ................. -- -- -- -- 734,599
Proceeds from amounts due from related
parties ................................... 1,591,172 29,045 6,615,000 -- --
Repayments of amounts due to related parties (29,045) (1,591,172) -- -- (135,660)
Proceeds from long-term debt ............... -- 1,658,078 -- -- --
Repayments of long-term debt ............... -- (664,592) (407,977) (129,872) (303,929)
Payments on capital lease obligation ....... -- (112,391) (144,765) (23,169) (114,070)
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 3,846,959 5,180,940
-------------- --------------- --------------- -------------- --------------
Increase (decrease) in cash and cash
equivalents ............................... 91,510 7,642,983 (4,929,450) (5,833,684) (2,527,718)
-------------- --------------- --------------- -------------- --------------
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 $ 1,900,809 $ 277,325
============== =============== =============== ============== ==============
Supplementary disclosures:
Interest paid .............................. $ -- $ 343,703 $ 525,276 190,009 $ 452,731
============== =============== =============== ============== ==============
</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 26 week period ended June 30, 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
JUNE 30, 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 the lease term of the respective restaurant
property. The Company evaluates whether changes have occurred that would
require
F-9
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--
(CONTINUED)
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 prior to the opening of a new
restaurant 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
JUNE 30, 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.
(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 June 30, 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) 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
F-11
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--
(CONTINUED)
the estimated effective date of the 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.
(O) RECLASSIFICATIONS
Certain prior year balances have been reclassified to conform to the
current presentation.
(P) UNAUDITED FINANCIAL STATEMENTS
The unaudited financial statements for the 26 weeks ended July 2, 1995 and
June 30, 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.
(2) PROPERTY AND EQUIPMENT
Property and equipment consist of the following at:
<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, JUNE 30, ESTIMATED
1995 1995 1996 USEFUL LIVES
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Buildings ....................... $ 2,926,801 $10,264,366 $10,831,604 20 years
Land ............................ 1,392,391 5,181,900 7,148,945 --
Land held for future development 3,997,315 3,308,069 2,529,095 --
Furniture and equipment ......... 2,885,100 8,324,125 9,598,026 3-7 years
Leasehold improvements .......... 2,617,495 8,763,326 9,476,606 7-10 years
-------------- --------------- -------------- ---------------
13,819,102 35,841,786 39,584,276
Less accumulated depreciation .. 460,498 2,172,857 3,229,684
-------------- --------------- --------------
13,358,604 33,668,929 36,354,592
Construction in progress ........ 3,080,634 2,175,855 7,891,846
-------------- --------------- --------------
$16,439,238 $35,844,784 $44,246,438
============== =============== ==============
</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 $114,000 during the periods ended January
1, 1995, December 31, 1995, and June 30, 1996, respectively, with respect to
qualifying construction projects.
F-12
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(3) CAPITAL LEASES
The following is a schedule of future minimum lease payments required
under capital leases as of December 31, 1995:
YEAR ENDED DECEMBER 31,
-----------------------
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
============
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, 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
==============
F-13
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(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, JUNE 30,
1995 1995 1996
------------- --------------- -------------
<S> <C> <C> <C>
SUMMARIZED BALANCE SHEET:
Current assets ................... $ 59,635 $ 117,246 $ 317,631
Property and equipment, net ..... 1,657,445 823,273 795,942
Other ............................ 62,599 27,325 13,035
------------- --------------- -------------
Total assets ................... 1,779,679 967,844 1,126,608
------------- --------------- -------------
Current liabilities .............. 1,992,644 838,160 641,641
Due to related parties ........... 334,152 79,975 267,226
------------- --------------- -------------
Total liabilities .............. 2,326,796 918,135 908,867
------------- --------------- -------------
Net assets (liabilities) ......... $ (547,117) $ 49,709 $ 217,741
============= =============== =============
SUMMARIZED STATEMENT OF
OPERATIONS:
Revenues ......................... $4,901,572 $3,684,177 $1,823,512
------------- --------------- -------------
Operating income (loss) .......... $ (94,264) $ 403,039 $ 253,301
------------- --------------- -------------
Net income (loss) ................ $ (275,046) $ 319,296 $ 225,573
------------- --------------- -------------
</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 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).
F-14
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(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.
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.
F-15
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(9) CAPITAL STOCK--(CONTINUED)
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 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 June 30, 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. In connection with the granting of these options, the Company
F-16
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(10) STOCK OPTION PLANS--(CONTINUED)
has recorded $39,600 in compensation expense. 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 June 30, 1996, deferred
compensation expense amounted to $79,200 and $59,400, 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.
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.
F-17
<PAGE>
ROADHOUSE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 2, 1994, JANUARY 1, 1995 AND DECEMBER 31, 1995 AND
JUNE 30, 1996 (UNAUDITED)
(11) INCOME TAXES--(CONTINUED)
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.
At June 30, 1996, the Company had 13 restaurants under development. The
estimated cost to complete these restaurants and other capital projects in
process was approximately $10,600,000 at June 30, 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 purchase price was
allocated principally to inventory and property and equipment based on the
fair value of the assets acquired at the time of acquisition. 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 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.
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-18
<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 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 Florida...and the
east coast too!
The Roadhouse Grill...it's an old fashioned steak house and good time
saloon. It's a simple saying with delicious tastes. Built for
steaks, good food and friendly folks!
Enjoy your stay with us and we hope to see you again real soon!
/s/ Cowboy Jim
--------------
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.
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 Locke Purnell Rain Harrell (A Professional Corporation).
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).
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C>
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).
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.
*21.1 List of subsidiaries of the Company.
**23.1 Consent of KPMG Peat Marwick LLP.
**23.2 Consent of Coopers & Lybrand L.L.P.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C>
**23.3 Consent of Stark & Bennett, P.A.
*23.4 Consent of Locke Purnell Rain Harrell (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
<FN>
- ----------
* To be filed by amendment.
** Filed herewith.
</FN>
</TABLE>
(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 24th day of October, 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 October 24, 1996
- ------------------------ Officer and Director
John David Toole, III (Principal Executive Officer)
/s/ Dennis C. Jones Chief Financial Officer, October 24, 1996
- ------------------------ (Principal Financial Officer
Dennis C. Jones and Principal
Accounting Officer)
* Director October 24, 1996
- ------------------------
Dr. Christian F. Horn
* Director October 24, 1996
- ------------------------
K.P. Tan
* Director October 24, 1996
- ------------------------
Phillip Friedman
- -----------------
*BY: /s/ DENNIS C. JONES
---------------------
Attorney-in-fact
II-7
<PAGE>
<TABLE>
<CAPTION>
ROADHOUSE GRILL, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
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 10.33
PROMISSORY NOTE
U.S. $1,500,000.00 Fort Lauderdale, Florida
September 5, 1996
FOR VALUE RECEIVED, the undersigned, Roadhouse Grill, Inc., a Florida
corporation, (hereinafter referred to as the "Maker"), promises to pay to the
order of John Y. Brown, Jr., (hereinafter referred to as the "Holder"), the
principal sum of One Million Five Hundred Thousand Dollars ($1,500,000.00),
together with interest thereon at the rate of five percent (5.00%) per annum
calculated on a daily basis from the date of the disbursement of the principal
up to the date of its full repayment. The principal amount and all accrued
interest shall be due and payable on the earlier of (i) the completion of the
initial public offering of securities or (ii) December 1, 1996.
Maker may prepay the principal amount outstanding in whole or in part
at any time without penalty. All such prepayments shall be applied first to the
payment of all accrued but unpaid interest, and second to the outstanding
principal balance.
Maker shall make all of its payments to Holder at such place as Holder
may designate to Maker.
This Note shall be in default when any payment required to be made
hereunder shall not have been made on the due date. While in default, the
outstanding principal balance shall bear interest at the maximum rate permitted
by law. If Maker is in default by failing to make any payment of principal
and/or interest on its due date, and Maker fails to make such monthly payment
within ten (10) days after the date of Holder's mailing written notice of such
default to Maker or if Maker is otherwise in default as provided for herein,
then the entire outstanding principal balance, and all accrued but unpaid
interest thereon, shall immediately become due and payable at the option of the
Holder without notice to or demand upon Maker. Holder may exercise this option
to accelerate in accordance with the terms of this Note notwithstanding any
prior forbearance. If suit is brought to collect this Note, the Holder shall be
entitled to collect from Maker all costs and expenses of such suit, including,
but not limited to, reasonable attorneys fees through trial and appellate
levels.
Maker and all endorsers and guarantors jointly and severally waive
presentment for payment demand, notice of nonpayment, protest, and notice of
protest, and consent to the terms hereof and to any extension or postponement of
the time for payment or any other indulgence and shall remain fully liable
hereunder in the event of any such extension, postponement or other indulgence.
It is the intention of the Maker and the Holder that the interest
charged hereunder shall in no event ever exceed the maximum rate permitted by
law, and any interest or payments in the nature of interest which would render
this Note usurious shall, at the option of the Holder, be either refunded to the
Maker or credited against the outstanding principal balance.
This Note shall be governed by and construed in accordance with the
laws of the State of Florida.
This Note is secured by a Security Agreement executed by Maker in favor
of Holder of dated July __, 1996. A default by Maker under any of the terms and
conditions of the Security Agreement shall constitute a default by Maker under
this Note.
ROADHOUSE GRILL, INC., a Florida corporation
By: /s/ K.P. TAN
Title: Director
EXHIBIT 10.34
SECURITY AGREEMENT
(CHATTEL MORTGAGE)
THIS SECURITY AGREEMENT (the "Agreement") made as of July 12, 1996, under
the laws of the State of Florida, by and between Roadhouse Grill, Inc., a
Florida corporation, ("Debtor"), whose address is 6600 North Andrews Avenue,
Suite 160, Fort Lauderdale, Florida 33309, and John Y. Brown, Jr. (hereinafter
called the "Secured Party"), whose address if 899 West Cypress Creek Road,
Suite 500, Fort Lauderdale, Florida, 33309.
WITNESSETH:
This Security Agreement is given to secure the payment and performance of
two certain promissory notes (collectively referred to as "Promissory Note"),
one of which is in the original principal amount of Two Million Five Hundred
Thousand Dollars ($2,500,000), and the other of which is in the original
principal amount of One Million Five Hundred Thousand Dollars ($1,500,000),
executed by Debtor as "Maker" to Secured Party as "Holder".
Debtor hereby grants and conveys to the Secured Party a security interest
in and mortgages to the Secured Party the following:
(a) all of the furniture, fixtures and equipment located in Debtor's
restaurants on the date hereof which has not previously been pledged to a third
party.
(b) all proceeds thereof, if any.
DEBTOR WARRANTS, COVENANTS AND AGREES AS FOLLOWS:
To pay the Promissary Note secured by this Agreement in accordance with its
terms.
To defend the title to the collateral against all persons and against all
claims and demands, whatsoever, which collateral, except for the security
interest granted hereby, is lawfully owned by the Debtor and is now free and
clear of any and all liens, security interests, claimms, charges, encumbrances,
taxes and assessments except as may be set forth in the schedule.
On demand of the Secured Party to do the following: furnish further
assurance of title, execute any written agreement or do any other acts necessary
to effectuate the purposes and provisions of this Agreement, execute any
instrument or statement required by law or otherwise in
<PAGE>
order to perform, continue or terminate the security interest of the Secured
Party in the collateral and pay all costs of filing in connection therewith.
To retain possession of the collateral during the existence of this
Agreement and not to sell, exchange, assign, lend, deliver, lease, mortgage or
otherwise dispose of same without the written consent of the Secured Party.
To keep the collateral at the location specified in the schedule and not to
remove same (except in the usual course of business for temporary periods)
without the prior written consent of the Secured Party.
To keep the collateral free and clear of all liens, charges, encumbrances,
taxes and assessments.
To pay, when due, all taxes, assessments and license fees relating to the
collateral.
To keep the collateral, at Debtor's own cost and expense, in good repair
and condition and available for inspection by the Secured Party at all
reasonable times.
To keep the collateral fully insured against loss by fire, theft and other
casualties; Debtor shall give immediate written notice to the Secured Party and
to insurers of loss or damage to the collateral and shall promptly file proofs
of loss with insurers.
THE PARTIES FURTHER AGREE:
Waiver or acquiescence in any default by the Debtor, or failure of the
Secured Party to insist upon strict performance by the Debtor of any warranties
or agreements in this Security Agreement, shall not constitute a waiver of any
subsequent or other default or failure.
Notices to either party shall be in writing and shall be delivered
personally or by mail or addressed to the party at the address herein set forth
or otherwise designated in writing.
The Uniform Commercial Code shall govern the rights, duties and remedies of
the parties and any provisions herein declared invalid under any law shall not
invalidate any other provisions of this Agreement.
If any provision of this Agreement shall be invalid or unenforceable, all
other provisions shall remain valid and enforceable to the fullest extent
permitted by law.
ANY OF THE FOLLOWING SHALL CONSTITUTE A DEFAULT BY DEBTOR:
A. Failure of Debtor to pay when due any payment under the Promissory Note,
or any other default by Debtor under the Promissory Note:
2
<PAGE>
B. Failure of Debtor to comply with or perform any term, covenant,
agreement, obligation or condition of this Agreement;
C. False or misleading representations or warranties made or given by
Debtor in connection with this Agreement;
D. Subjection of the collaterial to levy of execution or other judicial
process;
E. Commencement of any insolvency proceeding by or against the Debtor and
if against the Debtor, such proceeding is not dismissed within sixty (60) days
of filing; or
F. A default under any agreement with Secured Party.
Upon any such default, the Secured Party shall have all the rights,
remedies and privileges with respect to repossession, retention and sale of the
collateral and disposition of the proceeds as are accorded by the applicable
sections of the Uniform Commercial Code respecting "Default".
Upon any default and upon demand, Debtor shall assemble the collateral and
make it available to the Secured Party at the place and at the time designated
in the demand.
At its option, the Secured Party may, if Debtor has failed to do so, but
shall in no way be obligated to, discharge taxes, liens or security interests.
Upon any default, the Secured Party's reasonable attorney's fees and the
legal and other expenses for pursuing, searching for, receiving, taking,
keeping, storing, advertising, and selling the collateral shall be chargeable to
the Debtor.
The Debtor shall remain liable for any deficiency resulting from a sale of
the collateral and shall pay any such deficiency forthwith on demand.
If the Debtor shall default in the performance of any of the provisions of
this Agreement on the Debtor's part to be performed, Secured Party may perform
same for the Debtor's account, and any monies expended in so doing shall be
chargeable with interest at the maximum rate permitted by law to the Debtor, and
shall be payable by Debtor to Secured Party upon demand.
The Secured Party is hereby authorized to file a financing Statement.
The terms, warranties and agreements herein contained shall bind and inure
to the benefit of the respective parties hereto, and their respective legal
representatives, successors and assigns.
This Agreement may not be changed orally.
3
<PAGE>
IN WITNESS WHEREOF, the Parties have respectively signed and sealed these
presents the day and year above written.
DEBTOR:
ROADHOUSE GRILL, INC., a Florida
corporation
BY: /s/ J. DAVID TOOLE III
----------------------
TITLE: PRESIDENT
----------------------
SECURED PARTY:
-------------------------
JOHN Y. BROWN, JR.
4
EXHIBIT 10.35
PROMISSORY NOTE
U.S. $3,000,000.00 Fort Lauderdale, Florida
September 27, 1996
FOR VALUE RECEIVED, the undersigned, Roadhouse Grill, Inc., a Florida
corporation, (hereinafter referred to as the "Maker"), promises to pay to the
order of Berjaya Group (Cayman) Limited, (hereinafter referred to as the
"Holder"), the principal sum of Three Million Dollars ($3,000,000.00), together
with interest thereon at the rate of eight and one half percent (8.50%) per
annum calculated on a daily basis from the date of the disbursement of the
principal up to the date of its full repayment. Interest shall be payable at the
earlier of (i) when the principal amount is due and payable or (ii) every three
months with the first payment due November 1, 1996. The principal amount shall
be due and payable on the earlier of (i) the completion of the initial public
offering of Maker's securities or (ii) July 31, 1997.
Maker may prepay the principal amount outstanding in whole or in part
at any time without penalty. All such prepayments shall be applied first to the
payment of all accrued but unpaid interest, and second to the outstanding
principal balance.
Maker shall make all of its payments to Holder at such place as Holder
may designate to Maker.
This Note shall be in default when any payment required to be made
hereunder shall not have been made on the due date. While in default, the
outstanding principal balance shall bear interest at the maximum rate permitted
by law. If Maker is in default by failing to make any payment of principal
and/or interest on its due date, and Maker fails to make such monthly payment
within ten (10) days after the date of Holder's mailing written notice of such
default to Maker or if Maker is otherwise in default as provided for herein,
then the entire outstanding principal balance, and all accrued but unpaid
interest thereon, shall immediately become due and payable at the option of the
Holder without notice to or demand upon Maker. Holder may exercise this option
to accelerate in accordance with the terms of this Note notwithstanding any
prior forbearance. If suit is brought to collect this Note, the Holder shall be
entitled to collect from Maker all costs and expenses of such suit, including,
but not limited to, reasonable attorneys fees through trial and appellate
levels.
Maker and all endorsers and guarantors jointly and severally waive
presentment for payment demand, notice of nonpayment, protest, and notice of
protest, and consent to the terms hereof and to any extension or postponement of
the time for payment or any other indulgence and shall remain fully liable
hereunder in the event of any such extension, postponement or other indulgence.
It is the intention of the Maker and the Holder that the interest
charged hereunder shall in no event ever exceed the maximum rate permitted by
law, and any interest or payments in the nature of interest which would render
this Note usurious shall, at the option of the Holder, be either refunded to the
Maker or credited against the outstanding principal balance.
This Note shall be governed by and construed in accordance with the
laws of the State of Florida.
ROADHOUSE GRILL, INC., a Florida corporation
By: /s/ J. DAVID TOOLE, III
Title: President
EXHIBIT 10.36
SUNTRUST PROMISSORY NOTE
$500,000.00 SEPTEMBER 27, 1996
The undersigned (whether one or more hereinafter called "Maker"),
jointly and severally, promise(s) to pay to the order of SUNTRUST BANK, MIAMI,
N.A. (herein called "Bank") at its offices located at 777 BRICKELL AVE, MIAMI
Florida, FIVE HUNDRED THOUSAND AND 00/00 Dollars ($500,000.00), together with
interest from the date hereof at the rate hereinafter provided, and applicable
fees in the following manner.
REPAYMENT SCHEDULE:
[X] Single Payment Principal Due in Full On: DECEMBER 31, 1996
Interest Payable: MONTHLY, BEGINNING
OCTOBER 30, 1996
[_] Installment Payment
(Including interest): In_______ ________
(No.) (Period)
Installments of $_________ commencing on
_______, 19___, and on the same day of each
successive_____ thereafter, together with a
FINAL PAYMENT of $_____due and payable on
_______, 19___.
[_] Installment Payment
(plus interest):______________ _________
(No.) (Period)
Principal installments of $_________, plus
interest, commencing on ____, 19_____, and
on the same day of each successive________
thereafter, together with a FINAL PAYMENT
of $______, plus accrued interest due and
payable on________, 19___
[_] Multiple Payment Principal and interest are payable as
follows:___________________________________
___________________________________________
[_] ON DEMAND Principal payable ON DEMAND with Interest
payable______________commencing on_________
and each______________thereafter.
[_] Prepayment Right Bank shall have the absolute and
unconditional right, at its sole
discretion, to require Maker to pay the
entire loan balance, along with accrued
unpaid interest at any time after the
sixty-first (61st) month from the note
date. If the bank elects to exercise such
right of payment, Bank will provide Maker
ninety (90) days prior written notice of
its intention to demand payment, if Bank
does not exercise such right of payment,
the loan balance outstanding, along with
accrued unpaid interest is due and payable
on the one hundred twentieth (120th)
installment.
THE INTEREST RATE IS AS FOLLOWS: [_] if checked here, the interest rate provided
herein shall be computed on the basis of a 365 day year and shall be calculated
for the actual number of days elapsed, if not checked, the Interest rate shall
be computed on the basis of a 360 day year and shall be calculated for the
actual number of days elapsed.
Variable Interest Rate
[_] Not Applicable
[X] Applicable, provided, however, that the interest rate charged hereunder
shall never exceed the maximum rate allowed, from time to time, by law, if this
loan is for a consumer purpose and is secured by a dwelling, the maximum
interest rate charged will never exceed 18% per annum or the state usury
ceiling, whichever is less.
If applicable, the interest rate stated herein shall, from time to time,
automatically increase or decrease so that at all times it shall be equivalent
to (check appropriate box and complete):
[X] 1.0% over the annual interest rate announced by SUNTRUST BANKS OF FLORIDA,
INC., from time to time, as the prime rate (which interest rate is only a bench
mark, is purely discretionary and is not necessarily the best or lowest rate
charged borrowing customers of any subsidiary bank of SUNTRUST BANKS OF
FLORIDA, INC. Any such change in prime rate will increase or decrease your
periodic interest payments. Any change in prime rate shall be effective at the
beginning of the business day on which such change is announced; or,
[_] _____% over the___________________________________________________________
__________________________________________________________________________
FIXED RATE [_] Applicable at _____% per annum, simple interest.
[X] Not Applicable.
LATE CHARGE FEE If a payment is late, you may be charged 5% of such
payment as a late charge. A payment which is not
received on the due date shall be deemed late.
SERVICE FEE A service fee of the lesser of $50.00 or 2 percent
of the principal amount of this loan will be charged.
The service fee charge will not be refunded in the
event of prepayment.
ADDITIONAL FEES The Bank may charge various additional fees for servicing or
processing the loan. The name of the fee shall describe the work performed.
In the event any installment of principal or interest or any part
thereof is not paid when it becomes due, or in the event of any default
thereunder, the principal sum remaining unpaid hereunder, together with all
accrued and past due interest thereon, shall immediately and without notice
become due and payable at the election of the holder at any time thereafter.
Notwithstanding any rate of interest provided herein, the interest
rate on any payment or payments of principal or interest, or any part thereof,
which is not made when due shall, thereafter, be at the maximum rate allowed,
from time to time, by law. Minimum interest of $10.00 on any single payment
loan or $15.00 on any installment loan will be charged.
This note is [_] SECURED [X] UNSECURED (Notwithstanding the fact that this note
is marked 'unsecured,' Maker understands and agrees that any other security
interest the Bank now holds or may hereafter acquire from the Maker may secure
this note).
As security for the payment of this note Maker has pledged or
deposited with Bank and hereby grants to Bank a security interest in the
following property:____________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(including all cash, stock and other dividends and all rights to subscribe for
securities incident to, declared, or granted in connection with such property
and including any returned or unearned premiums from any insurance financed
hereunder), which property, together with all additions and substitutions
hereafter pledged or deposited with Bank is called the Collateral. The
Collateral is also pledged as security for all other liabilities (primary,
secondary, direct, contingent, sole, joint, or several), due or to become due or
which may be hereafter contracted or acquired, of each Maker (including each
Maker and any other person to Bank and for all renewals, extensions or
modifications of this note. The surrender of this note, upon payment or
otherwise, shall not affect the right of Bank to retain the Collateral for such
other liabilities.
Lender may request periodically as it deems necessary, complete and
current financial statements, balance sheets, profit and loss statements, and
cash flow information for Maker and Cosigner.
Maker understands and agrees that the jury waiver, the additional
agreements and provisions on the reverse side hereof, hereby incorporated by
reference, constitute agreements of the Maker and a part of this note. Maker
acknowledges receipt of a completed copy of this note.
- -------------------------------------------------------------------------------
Notice to Cosigner: You are being asked to guarantee this debt. Think
carefully before you do. If the borrower doesn't pay the debt, you will have
to. Be sure you can afford to pay if you have to, and that you want to accept
this responsibility.
You may have to pay up to the full amount of the debt if the borrower
does not pay. You may also have to pay late fees or collection costs, which
increase this amount.
The Bank can collect this debt from you without first trying to collect
from the borrower. The Bank can sue the same collection methods against you that
can be used against the borrower, such as suing you, garnishing your wages, etc.
If this debt is ever in default, that fact may become part of YOUR credit
record.
This notice is not the contract that makes you liable for the debt.
- -------------------------------------------------------------------------------
Address: 6600 N. Andrews Ave., Ste. 160
Ft. Lauderdale, FL 33309
ROADHOUSE GRILL, INC. (Seal)______________
Date
By: /s/ Dennis Jones (Seal)_____________
Dennis Jones, CFO Date
===============================================================================
EXHIBIT 10.38
STOCK PURCHASE AGREEMENT
BETWEEN
ROADHOUSE GRILL, INC.
AND
THE SEVERAL PURCHASERS NAMED IN SCHEDULE I
DATED AS OF MAY 26, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I - THE COMMON SHARES ......................................... 1
Section 1.01 Issuance, Sale and Delivery Of The Common Shares ... 1
Section 1.02 Closing ............................................ 1
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY ........... 1
Section 2.01 Organization, Qualification and Corporate Power .... 2
Section 2.02 Authorization of Agreements, Etc ................... 2
Section 2.03 Validity ........................................... 3
Section 2.04 Authorized Capital Stock ........................... 3
Section 2.05 Financial Statements ............................... 4
Section 2.06 Events Subsequent to the date of the Balance Sheet . 5
Section 2.07 Litigation; Compliance with Law .................... 5
Section 2.08 Proprietary Information of Third Parties ........... 6
Section 2.09 Title to Properties ................................ 7
Section 2.10 Leasehold Interests ................................ 7
Section 2.11 Insurance .......................................... 7
Section 2.12 Taxes .............................................. 7
Section 2.13 Loans and Advances ................................. 8
Section 2.14 Assumptions, Guarantanties, Etc. of Indebtedness
of Other Persons .............................................. 8
Section 2.15 Significant Suppliers And Licensees ................ 8
Section 2.16 Governmental Approvals ............................. 8
Section 2.17 Disclosure ......................................... 9
Section 2.18 Offering of The Commmon Stock ...................... 9
Section 2.19 Brokers ............................................ 9
Section 2.20 Officers ........................................... 9
Section 2.21 Transactions with Affiliates ....................... 9
Section 2.22 Employees .......................................... 10
Section 2.23 U.s. Real Property Holding Corporation ............. 10
Section 2.24 License ............................................ 10
Section 2.25 Restaurants Under Development ...................... 10
Section 2.26 Compliance with Franchise Laws ..................... 10
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER ........ 11
ARTICLE IV - CONDITIONS TO THE CLOSING ............................... 12
Section 4.01 Conditions to the Obligations of the Purchaser...... 12
Section 4.02 Conditions to the Obligations of the Company ....... 12
i
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ARTICLE V - COVENANTS OF THE COMPANY ........................................13
Section 5.01 Financial Statements, Reports, Etc.......................13
Section 5.02 Right of First Refusal ..................................14
Section 5.03 Corporate Existence .....................................15
Section 5.04 Properties, Business, Insurance .........................15
Section 5.05 Restrictive Agreements Prohibited .......................16
Section 5.06 Transactions with Affiliates ............................16
Section 5.07 Expenses of Directors ...................................16
Section 5.08 Use of Proceeds .........................................16
Section 5.09 Board of Directors Meetings .............................16
Section 5.10 Compensation ............................................16
Section 5.11 By-Laws .................................................17
Section 5.12 Maintenance of Ownership of Subsidiaries,................17
Section 5.13 Distributions By Subsidiaries ...........................17
Section 5.14 Compliance with Laws ....................................17
Section 5.15 Keeping of Records and Books of Account..................17
Section 5.16 U.S. Real Property Interest Statement....................17
ARTICLE VI - MISCELLANEOUS ..................................................18
Section 6.01 Expenses ................................................18
Section 6.02 Survival of Agreements ..................................18
Section 6.03 Brokerage ...............................................18
Section 6.04 Parties in Interes ......................................18
Section 6.05 Notices .................................................19
Section 6.06 Governing Law ...........................................19
Section 6.07 Entire Agreement ........................................19
Section 6.08 Counterparts ............................................19
Section 6.09 Amendments ..............................................20
Section 6.10 Severability ............................................20
Section 6.11 Titles and Subtitles ....................................20
Section 6.12 Certain Defined Terms ...................................20
INDEX TO EXHIBITS:
EXHIBITS A: FORM OF AMENDMENT TO 1994 REGISTRATION RIGHTS AGREEMENT
ii
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as of May 26, 1995 between
ROADHOUSE GRILL, INC., a Florida corporation (the "Company"), and the serveral
purchasers named in the attached SCHEDULE I (individually a "Purchaser" and
collectively the "Purchasers").
WHEREAS, the Company wishes to issue and sell to the Purchasers a
minimum of 1,250,000 shares of the authorized but unissued Common Stock, $.01
par value, of the Company (the "Common Stock"); and
WHEREAS, the Purchaser wishes to purchase the shares of Common Stock on
the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
ARTICLE I
THE COMMON SHARES
Section 1.01 ISSUANCE, SALE AND DELIVERY OF THE COMMON SHARES.
Subject to the terms and conditions hereof and in reliance upon the
representations, warranties and agreements contained herein, the Company agrees
to issue and sell to each Purchaser, and each Purchaser hereby agrees to
purchase from the Company, the number of shares of Common Stock set forth
opposite the name of such Purchaser under heading "Number of Shares of Common
Stock to be Purchased" on SCHEDULE I, at a price of $3.20 per share.
Section 1.02 CLOSING.
The closing under this Agreement shall take place at the offices of the
Company within ten (10) days following execution of this Agreement (such closing
being called the "Closing" and such dated and time being called the "Closing
Date"). At the Closing, the Company shall deliver to each Purchaser a
certificate or certificates in such denominations and registered in such names
as set forth on Schedule I, representing the number of shares to be purchased by
such Purchaser from the Company, against payment by such Purchaser to the
Company of the full purchase price in the amount set forth opposite the name of
each Purchase under the heading "Aggregate Purchase Price" on Schedule I by wire
transfer of immediately available funds or as otherwise agreed by the Company
and the Purchasers.
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers that, except as
set forth in the Disclosure Schedule attached as SCHEDULE II (which Disclosure
Schedule makes explicit reference to the particular representation or warranty
as to which exception is taken, which in each case shall constitute the sole
representation and warranty as to which such exception shall apply):
Section 2.01 ORGANIZATION, QUALIFICATION AND CORPORATE POWER.
(a) The Company is a corporation incorporated and organized under
the laws of the State of Florida and its status is active, and it is duly
licensed or qualified to transact business as a foreign corporation and is in
good standing each jurisdiction in which the nature of the business transacted
by it or the character of the properties owned or leased by it requires such
licensing or qualification. The Company has the corporate power and authority to
own and hold its properties and to carry on its business as now conducted and as
proposed to be conducted, to execute, deliver and perform this Agreement and the
second amendment to the 1994 Registration Rights Agreement with the Purchasers
in the form attached as EXHIBIT A (the "Second Amendment to the 1994
Registration Rights Agreement") and to issue, sell and deliver the Common Stock.
(b) Except as provided in SCHEDULE II, the Company has no
subsidiaries and does not own of record or benefically, directly or indirectly,
(i) any shares of capital stock or securities convertible into capital stock of
any other corporation, or (ii) any participating interest in any partnership,
joint venture or other non-coprporate business enterprise, or (iii) control,
directly or indirectly, any other entity.
Section 2.02 AUTHORIZATION OF AGREEMENTS, ETC.
(a) The execution and delivery by the Company of this Agreement
and the Second Amendment to the 1994 Registration Rights Agreement, the
performance by the Company of its obligations hereunder and thereunder, and the
issuance, sale and delivery of the Common Stock have been duly authorized by all
requisite corporate action and will not violate any provisiion of law, any order
of any court or other agency of government, the Articles of Incorporation of the
Company, as amended or supplemented (the "Charter"), or the By-Laws of the
Company, or any provision of any indenture, agreement or other instrument to
which the Company or any of its properties or assets is bound or conflict with,
result in a breach of or constitue (with due notice or lapse of time or both) a
default under any such indenture, agreement or other instrument, or result in
the creation or imposition of any lien, charge, restriction, claim or
encumbrance of any nature whatsoever upon any of the properties or assets of the
Company.
(b) The shares of Common Stock have been duly authorized and, when
issued in accordance with this Agreement, will validly issued, fully paid and
nonassessable with no
2
<PAGE>
personal liability attaching to the ownership thereof and will be free and clear
of all liens, charges, restrictions, claims and encumbrances imposed by or
through the Company except as set forth in the 1994 Registration Rights
Agreement, as amended, the 1994 Voting Agreement dated as of February 10, 1994
("1994 Voting Agreement"), the Stock Purchase Agreement between Roadhouse
Grill, Inc. and Berjaya Group (Cayman) Limited dated as of September 26, 1994 or
as set forth elsewhere herein. The issuance, sale or delivery of the shares of
Common Stock is not subject to any preemptive right of stockholders of the
Company or to any right of first refusal or other right in favor of any person.
Section 2.03 VALIDITY
This Agreement has been duly executed and delivered by the Company and
constitues the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms. The Second Amendment to the 1994 Registration
Rights Agreement, when it is executed and delivered in accordance with this
Agreement, will constitute a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
Section 2.04 AUTHORIZED CAPITAL STOCK
Immediately prior to the Closing, the authorized capital stock of
the Company will consist of (i) 10,000,000 shares of Preferred Stock, $.01 par
value (the "Preferred Stock"), of which 3,525,000 have been designated Series A
Convertible Preferred Stock and 2,366,700 shares have been designated Series B
Convertible Preferred Stock, and (ii) 30,000,000 shares of Common Stock.
Immediately prior to the Closing, 9,544,445 shares of Common Stock will be
validly issued and outstanding, fully paid and nonassessable with no personal
liability attaching to the ownership thereof, 3,525,000 shares of Series A
Convertible Preferred Stock will be validly issued and outstanding, fully paid
and nonassessable with no personal liability atttaching to the ownership thereof
and 2,350,025 shares of Series B Convertible Preferred Stock will be validly
isssued and outstanding, fully paid and nonassessable with no personal liability
attaching to the ownership thereof. The stockholders of record of the Company
and the number of shares of Common Stock and Preferred Stock held by each are
set forth in the attached SCHEDULE III, and except as set forth herein and as
contemplated by this Agreement, there are no subscriptions, warrants, options,
convertible securities, and other rights (contingent or otherwise) to purchase
or otherwise acquire equity securities of the Company. The Company has granted
an option to J. David Toole, III to purchase 355,555 shares of Common Stock at
$.15 per share (the "Toole Option") and an option to J. David Toole, III to
purchase 500,000 shares of Common Stock at $2.50 per share (the "Second Toole
Option"). The Company has adopted a 1994 Stock Option Plan providing for the
issuance of not more than 200,000 shares of Common Stock (the "Option Plan") and
form of option agreements for the issuance of options to purchase shares of the
Company's Common Stock to employees and consultants of the Company and members
of the Board of Directors who are not employees. Except for the shares of Common
Stock issuable upon the conversion of the Series A Preferred Shares, the Series
B Preferred Shares, and the 200,000 shares of Common Stock reserved for issuance
pursuant to the Option Plan, and the 355,555 and 500,000 shares of Common Stock
reserved for issuance
3
<PAGE>
pursuant to the Toole Option and the Second Toole Option, respectively, no
shares of Common Stock or other capital stock of the Company are reserved for
possible future issuance. The designations, powers preferences, rights,
qualifications, limitations and restrictions in respect of each class and series
of authorized capital stock of the Company are as set forth in the Charter, and
all such designations, powers, preferences, rights, qualifications, limitations
and restrictions are valid, binding and enforceable and in accordance with all
applicable laws. Except as set forth in the attached SCHEDULE II or SCHEDULE IV,
(i) no person owns of record or is known to the Company to own beneficially any
share of Common Stock or capital stock of the Company, (ii) no subscription,
warrant, option, convertible security, or other right (contingent or otherwise)
to purchase or otherwise acquire equity securities of the Company is authorized
or outstanding, and (iii) there is no commitment by the Company to issue shares,
subscriptions, warrants, options, convertible securities, or other such rights
or to distribute to holders of any of its equity securities any evidence of
indebtedness or asset. Except as provided for in the Charter, or as set forth in
the attached SCHEDULE II or SCHEDULE IV, the Company has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any of its
equity securities or any interest therein or to pay any dividend or make any
other distribution in respect thereof. Except as provided in this Agreement or
in the 1994 Voting Agreement, to the best of the Company's knowledge, there are
no voting trusts or agreements, stockholders' agreements, pledge agreements,
buy-sell agreements, rights of first refusal, preemptive rights or proxies
relating to any securities of the Company or any of its subsidiaries (whether or
not the Company or any of its subsidiaries is a party thereto), except as set
forth in the attached SCHEDULE II or SCHEDULE IV. All of the outstanding
securities of the Company were issued in compliance with all applicable Federal
and state securities laws.
Section 2.05 FINANCIAL STATEMENTS.
(a) The Company has furnished to the Purchasers the audited
balance sheet of the Company as of January 2, 1994, and the related statements
of operations, changes in shareholders' deficiency and cash flows of the Company
for the year ended January 2, 1994. The Company has furnished to the Purchasers
the unaudited balance sheet of the Company as of January 26, 1995 ("Balance
Sheet"), and the related statements of operations of the Company for the period
ended January 26, 1995. All such financial statements have been prepared in
accordance with the generally accepted accounting principles consistently
applied and fairly present the financial position of the Company as of such
dates and the results of its operations for the period then ended. Since the
date of the Balance Sheet, other than as disclosed in SCHEDULE II (i) there has
been no material change in the assets, liabilities or financial condition of the
Company from that are reflected in the Balance Sheet except for changes in the
ordinary course of business which in the aggregate have not been materially
adverse, and (ii) none of the business, prospects, financial condition,
operations, property or affairs of the Company have been materially adversely
affected by any occurence or development, individually or in the aggregate,
whether or not insured against.
(b) Except as provided in documents referred to in SCHEDULE IV
hereto, the Company has no material liability or obligation, absolute or
contingent (individually or in the aggregate), including, without limiting the
generality of the foregoing, any tax liabilities due or to
4
<PAGE>
become due, not reflected in the above referred to financial statements, except
(i) obligations and liabilities incurred after the date of the Balance Sheet in
the ordinary course of business that are not individually or in the aggregate
material, and (ii) obligations and liabilities incurred in the ordinary course
of business that would not be required to be reflected in financial statements
prepared in accordance with generally accepted accounting principles. Without
limiting the generality of the foregoing, the Company does not know, and has no
reasonable ground to know, of any basis for the assertion against the Company
as of the date hereof of any material liabilities (not reflected in SCHEDULE
IV(A) or the above referred to financial statements).
Section 2.06 EVENTS SUBSEQUENT TO THE DATE OF THE BALANCE SHEET.
Since the date of the Balance Sheet, other than as disclosed on
SCHEDULE II, the Company has not (i) issued any stock, bond or other corporate
security or partnership interest, (ii) borrowed any amount or incurred or become
subject to any liability (absolute, accrued or contingent), except current
liabilities incurred and liabilities under contracts entered into in the
ordinary course of business, (iii) discharged or satisfied any lien or
encumbrance or incurred or paid any obligation or liability (absolute, accrued
or contingent) other than current liabilities shown on the Balance Sheet and
current liabilities incurred since the date of the Balance Sheet in the ordinary
course of business and in connection with the development of the Company's
restaurants, (iv) declared or made any payment or distribution to stockholders
or partners or purchased or redeemed any share of its capital stock or
partnership interests or other security, (v) mortgaged, pledged or subjected to
lien any of its assets, tangible or intangible, other than liens of current real
property taxes no yet due and payable (vi) sold, assigned or transferred any of
its tangible assets except in the ordinary course of business, or canceled any
debt or claim, (vii) sold, assigned, transferred or granted any exclusive
license with respect to any patent, trademark, trade name, service mark,
copyright, trade secret or other intangible asset, except rights or licenses
granted in the ordinary course of business to licensees of the Company, (viii)
suffered any loss of property or waived any right of substantial value whether
or not in the ordinary course of business, (ix) made any material change in
officer compensation, (x) made any material change in the manner of business or
operations, (xi) entered into any transaction except in the ordinary course of
business or as otherwise contemplated hereby, (xii) entered into any commitment
(contingent or otherwise) to do any of the foregoing, or (xiii) engaged in any
transaction with any director, officer, employee, stockholder or partner of the
Company.
Section 2.07 LITIGATION: COMPLIANCE WITH LAW.
Other than (a) routine litigation occurring in the ordianry course of
business against which the Company is adequately insured, (b) the matters
described in the attached SCHEDULE II, or (c) in the case of a threatened
action, suit, claim, proceeding or investigation, one that is not material to
the Company or its business, there is no (i) action, suit, claim, proceeding or
investigation pending or, to the best of the Company's knowledge, threatened
against or affecting the Company, at law or in equity, or before or by any
Federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, (ii) arbitration
proceeding relating to the Company pending under collective bargaining
agreements or otherwise,
5
<PAGE>
or (iii) governmental inquiry pending or, to the best of the Company's
knowledge, threatened against or affecting the Company (including without
limitation any inquiry as to the qualification of the Company to hold or receive
any license or permit), and to the Company's knowledge, there is no basis for
any of the foregoing. Except as described in the attached SCHEDULE II, the
Company has not received any opinion or memorandum or legal advice from legal
counsel to the effect that it is exposed from a legal standpoint, to any
liability or disadvantage which may be material to its business prospects,
finanical condition, operations, properties or affairs. The Company is not in
default with respect to any order, writ, injunction or decree known to or served
upon the Company of any court or of any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign. Except as described in the attached SCHEDULE II, there is
no action or suit by the Company pending or threatened against others. The
Company has complied in all material respects with all laws, rules, regulations
and orders which are material and applicable to its business, operations,
properties, assest, products and services, and the Company has all necessary
permits, licenses and other authorizations required to conduct its business as
conducted and as proposed to be conducted in all material respects, including
all laws regulating the development and operation of restaurants and all
applicable environmental laws. There is no existing law, rule, regulation or
order, and the Company is not aware of any proposed law, rule, regulation or
order, whether Federal or state, which would prohibit or restrict the Company
from, or otherwise materially adversely affect the Company in, conducting its
business in any jurisdiction in which it is now conducting business or in which
it proposes to conduct business.
Section 2.08 PROPRIETARY INFORMATION OF THIRD PARTIES.
Except as disclosed in the attached SCHEDULE II, no third party has
claimed or has reason to claim that any person now or previously employed or
engaged as a consultant by the Company has (a) violated or, to the Company's
knowledge, may be violating any of the terms or conditions of his employment,
non-competition or non-disclosure agreement with such third party, (b) disclosed
or, to the best of the Company's knowledge, may be disclosing or utilized or, to
the best of the Company's knowledge, may be utilizing any trade secret or
proprietary information or documentation of such third party or violated any
confidential relationship which such person may have had with such third party
in connection with the development, manufacture or sale of any product or
proposed product or the development or sale of any service or proposed service
of the Company, or (c) interfered or may be interfering in the employment
relationship between such third party and any of its present or former
employees. Except as described in the attached SCHEDULE II, no third party has
requested information from the Company which reasonably suggests that such a
claim might be contemplated. To the best of the Company's knowledge, none of the
execution or delivery of this Agreement, or the carrying on of the business of
the Company as officers, employees or agents by any officer, director or key
employee of the Company, or the conduct or proposed conduct of the business of
the Company, will conflict with or result in a breach of the terms, conditions
or provisions of or constitute a default under any contract, covenant or
instrument under which any such person is obligated.
6
<PAGE>
Section 2.09 TITLE TO PROPERTIES
The Company has good and marketable title to its properties and assets
reflected on the Balance Sheet, or acquired by it since the date of the Balance
Sheet (other than properties and assets disposed of in the ordinary course of
business since the date of the Balance Sheet), and all such porperties and
assets are free and clear of mortgages, pledges, security interests, liens,
charges, claims restrictions and other encumbrances, except for liens for
current taxes not yet due and payable and minor imperfections of title, if any,
not material in nature or amount and not materially detracting from the value or
impairing the use of the property subject thereto or impairing the operations or
proposed operations of the Company, except as reflected on the Balance Sheet or,
with respect to properties and assets acquired after date of the Balance Sheet,
except as disclosed in the attached SCHEDULE II.
Section 2.10 LEASEHOLD INTERESTS.
Each lease or agreement to which the Company is a party under which it
is a lessee of any property, real or personal, is a valid and subsisting
agreement, without any material default of the Company thereunder and, to the
best of the Company's knowledge, without any material default thereunder of any
other party thereto. No event has occurred and is continuing which, with due
notice or lapse of time or both, would consitute a default or event of default
by the Company under any such lease or agreement or, to the best of the
Company's knowledge, by any other party thereto. The Company's possession of
such property has not been distrubed and, to the best of the Company's
knowledge, no claim has been asserted against the Company adverse to its rights
in such leasehold interest.
Section 2.11 INSURANCE.
The Company holds valid policies covering all of the insurance required
to be maintained by it under Section 5.05.
Section 2.12 TAXES
The Company has filed all tax returns, Federal, state, county and
local, required to be filed by it and, with respect to such state, county and
local returns, if not filed would have a material adverse effect on its
financial condition or operations, and the Company paid all taxes shown to be
due by such returns as well as all other taxes, assessments and governmental
charges which have become due or payable, including without limitation all taxes
which the Company is obligated to withhold from amounts owing to employees,
creditors and third parties. All such taxes with respect to which the Company
has become obligated pursuant to elections made by the Company in accordance
with generally accepted practice have been paid and adequate reserves have been
established for all taxes accrued but not yet payable. The Federal income tax
returns of the Company have never been audited by the Internal Revenue Service.
No deficiency assessment with respect to or proposed adjustment of the Company's
Federal, state, county or local taxes is pending
7
<PAGE>
or, to the best of the Company's knowledge, threatened. There is no tax lien,
whether imposed by any Federal, state, county or local taxing authority,
outstanding against the assets, properties or business of the Company. Except as
set forth in the attached SCHEDULE II, neither the Company nor any of its
stockholders have ever filed a consent pursuant to Section 341(f) of the
Internal Revenue Code("Code"), relating to collapsible corporations.
Section 2.13 LOANS AND ADVANCES.
Except as described in the attached SCHEDULE II, the Company does not
have any outstanding loans or advances to any person and is not obligated to
made any such loans or advances, except, in each case, for advances to employees
of the Company in respect of reimbursable business expenses anticipated to be
incurred by them in connection with their performance of services for the
Company.
Section 2.14 ASSUMPTIONS, GUARANTIES, ETC. OF INDEBTEDNESS OF OTHER
PERSONS
The Company has not assumed, guaranteed, endorsed or otherwise become
directly or contingently liable on any indebtedness of any other person
(including, without limitation, liability by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to or
otherwise invest in the debtor, or otherwise to assure the creditor against
loss), except for guaranties by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business.
Section 2.15 SIGNIFICANT SUPPLIERS AND LICENSEES.
No supplier or licensee during the period covered by the financial
statements referred to in Section 2.05 or which has been material to the Company
thereafter, has terminated, materially reduced or, to the knowledge of the
Company, threatened to terminate or materially reduce its provision of products
or services to the Company or has terminated or materially amended or modified a
license agreement.
Section 2.16 GOVERNMENTAL APPROVALS.
Subject to the accuracy of the representations and warranties of the
Purchasers set forth in Article III, no registration or filing with, or consent
or approval of or other action by, any Federal, state or other governmental
agency or instrumentality is or will be necessary for the valid execution,
delivery and performance by the Company of this Agreement or the Amendment to
the 1994 Registration Rights Agreement, or the Issuance, sale and delivery of
the Common Stock, other than (i) filings pursuant to Federal and State
securities laws (all of which filings have been or, with respect to those
filings which may be duly made after the Closing will be, made by or on behalf
of the Company) in connection with the sale of the Common Stock, and (ii) with
respect to the 1994 Registration Rights Agreement, as amended, the registration
of the shares covered therby with the Commission and filings pursuant to Federal
and state securities laws.
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Section 2.17 DISCLOSURE.
This Agreement, including any Schedule or Exhibit to this Agreement,
does not contain an untrue statement of a material fact or omits a material fact
necessary to make the statements contained herein or therein not misleading.
None of the statements, documents, certificates or other items prepared or
supplied by the Company with respect to the transactions contemplated hereby
contains an untrue statement of a material fact or omits a material fact
necessary to make the statements contained therein not misleading. There is no
fact which the Company has not disclosed to the Purchasers and their counsel in
writing and of which the Company is aware which materially and adversely affects
or could materially and adversely affect the business, prospects, financial
condition, operations, property or affairs of the Company.
Section 2.18 OFFERING OF THE COMMON STOCK
Neither the Company nor any person authorized or employed by the
Company as agent, broker, dealer or otherwise is connection with the offering or
sale of the Common Stock or any security of the Company similar to the Common
Stock has offered the Common Stock or any such similar security for sale to, or
solicited any offer to buy the Common Stock or any such similar security from,
or otherwise approached or negotiated with respect thereto with, any person or
persons, and neither the Company nor any person acting on its behalf has taken
or will take any other action (including, without limitation, any offer,
issuance or sale of any security of the Company under circumstances which might
require the integratiion of such security with the Common Stock under the
Securities Act or the rules and regulations of the Commission thereunder), in
either case so as to subject the offering, issuance or sale of the Common Stock
to the registration provisions of the Securities Act.
Section 2.19 BROKERS
Except as set forth in the attached SCHEDULE II, the Company has no
contract, arrangement or understanding with any broker, finder or similar agent
with respect to the transactions contemplated by this Agreement.
Section 2.20 OFFICERS
Set forth in SCHEDULE II is a list of the names of the officers of the
Company, together with the title or job classification of each such person.
Except as set forth in SCHEDULE II, none of such person has an employment
agreement or understanding, whether oral or written, with the Company or any of
its subsidiaries, which is not terminable on notice by the Company or such
subsidiary, without cost or other liability to the Company or such subsidiary.
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Section 2.21 TRANSACTIONS WITH AFFILIATES
Except as set forth in the attached SCHEDULE II, no director, officer,
employee or stockholder of the Company, or member of the family of any such
person, or any corporation, partnership, trust or other entity in which any such
person, or any member of the family of any such person, has a substantial
interest or is an officer, director, trustee, partner or holder of more than
five percent of the outstanding capital stock thereof, is presently or
contemplated to be a party to any transaction with the Company, including any
contract, agreement or other arrangement providing for the employment of,
furnishing of services by, rental of real or personal property from or otherwise
requiring payments to any such person or firm.
Sectiion 2.22 EMPLOYEES
Each of the officers of the Company, each key employee and each other
employee now employed by the Company who has access to proprietary business
information of the Company including, without limitation, the Company's recipes,
operating system, business strategy and other information related to the
operations of the Company, has executed an Employee Confidential Disclosure
Agreement substantially in the form of EXHIBIT C attached hereto (collectively,
the "Confidentiality Agreements"), and the Confidentiality Agreements are in
full force and effect. No officer or key employee of the Company has advised the
Company (orally or in writing) that he or she intends to terminate employment
with the Company. The Company has complied in all material respects with all
applicable laws relating to the employment of labor, including provisions
relating to wages, hours, equal opportunity, collective bargaining and the
payment of Social Security and other taxes, and with the Employee Retirement
Income Security Act of 1974, as amended.
Section 2.23 U.S. REAL PROPERTY HOLDING CORPORATION.
The Company is not now and has never been a "United States real
property holding corporation," as defined in Section 897(c)(2) of the Code and
Section 1.987-2(b) of the Regulations promulgated by the Internal Revenue
Service.
Section 2.24 LICENSE
Except as set forth in SCHEDULE II, all of the Company's license
agreements are in good standing, full force and effect as of the date hereof and
no party to any such agreemnts is in material default thereof.
Section 2.25 RESTAURANTS UNDER DEVELOPMENT.
SCHEDULE II describes all currently outstanding plans, arrangements,
contracts, agreements or negotiations relating to the purchase, development,
construction or renovation of restaurants by the Company.
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Section 2.26 COMPLIANCE WITH FRANCHISE LAWS.
The Company has complied with the applicable laws, rules and
regulations relating to franchising all jurisdictions where the conduct of the
Company's business requires such qualification to the extent necessary such that
any failure to so comply will not have a material adverse effect upon the
Company or its operations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Each Purchaser serverally represents and warrants to the Company that:
(a) it is an "accredited investor" within the meaning of Rule 501
under the Securities Act and was not organized for the specific purpose of
acquiring the Shares of Common Stock;
(b) it has sufficient knowledge and experience in investing in
companies similar to the Company in terms of the Company's stage of development
so as to be able evaluate the risks and merits of its investemnt in the Company
and it is able financially to bear the risks thereof;
(c) it has received and reviewed the finanical statements and
projections of the Company, and it has had an opportunity to discuss the
Company's business, management and financial affairs with the Company's
management;
(d) it has made an independent investigation of the business of
the Company and is making this investment as a result of this investigation and
not as a result of any projections made by the Company;
(e) the Common Stock being purchased by it are being acquired for
its own account for the purpose of investment and not with a view to or
for-sale in connection with any distribution thereof;
(f) it understands that (i) the Common Stock has not been
registered under the Securities Act by reason of their issuance in a transaction
exempt from the registration requirements of the Securities Act pursuant to
Section 4(2) or Section 3(b) thereof or Rule 505 or 506 promulgated under the
Securities Act, (ii) the Common Stock must be held indefinitely unless a
subsequent disposition thereof is registered under the Securities Act or is
exempt from such registration, (iii) the Common Stock will bear a legend to such
effect, and (iv) the Company will make a notation on its transfer books to such
effect;
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(g) if an entity and not a natural person, it is validly existing
under the laws of the state of its organization and the consummation of the
transactions contemplated hereby is authorized by, and will not result in a
violation of, state law or its Charter or other organizing documents; and
(h) it has full right, power and authority to execute this
Agreement and the Second Amendment to the 1994 Registration Rights Agreement and
to perform its obligations hereunder and thereunder.
ARTICLE IV
CONDITIONS TO THE CLOSING
Section 4.01 CONDITONS TO THE OBLIGATIONS OF THE PURCHASER.
The obligations of each Purchaser to purchase and pay for the Common
Stock being purchased by it on the Closing Date is, at its option, subject to
the satisfaction, on or before the Closing Date, of the following conditions:
(a) PERFORMANCE. The Company shall have performed and complied
with all agreements contained herein required to be performed or complied with
by it prior to or at the Closing Date, and the Chief Executive Officer of the
Company shall have certified to the Purchaser in writing to such effect and to
the further effect that all of the conditions set forth in this Article IV have
been satisfied.
(b) ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be satisfactory in
form and substance to the Purchaser and the Purchaser shall have received all
such counterpart originals or certified or other copies of such documents as it
reasonably may request.
(c) 1994 REGISTRATION RIGHTS AGREEMENT. The Company shall have
executed and delivered the Second Amendment to the 1994 Registration Rights
Agreement in the form attached as EXHIBIT A.
(d) ADDITIONAL AGREEMENTS. The Company shall have delivered such
other agreements and instruments as the Purchasers shall have reasonably
requested.
All such documents shall be satisfactory in form and substance to the
Purchasers.
Section 4.02 CONDITION TO THE OBLIGATIONS OF THE COMPANY.
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The obligation of the Company to sell the Common Stock being sold by it
on the Closing Date is, at its option, subject to the satisfaction, on or before
the Closing Date, of the following conditions:
(a) 1994 REGISTRATION RIGHTS AGREEMENT. The Purchasers shall have
accepted the terms of and executed and delivered the Second Amendment to the
1994 Registration Rights Agreements.
(b) ADDITIONAL AGREEMENTS. The Purchasers shall have delivered
such other agreements and instruments as the Company shall have reasonably
requested.
ARTICLE V
CONVENANTS OF THE COMPANY
The company covenants and agrees with each Purchaser that so long as
Purchaser owns at least fifty percent (50%) of the Commoan Stock being acquired
hereunder.
Section 5.01 FINANCIAL STATEMENTS, REPORTS, ETC.
The Company shall furnish:
(a) to each Purchaser, within ninety (90) days after the end of
each fiscal year of the Company, or as soon as practicable thereafter, a
consolidated balance sheet of the Company and its subsidiaries as of the end of
such fiscal year and the related consolidated statements of income,
stockholders' equity and cash flows for the fiscal year then ended, prepared in
accordance with generally accepted accounting principles and certified by
Coopers & Lybrand or such other "Big 6" accounting firm selected by the Board of
Directors of the Company and an annual report containing a narrative discussion
of the results of the Company's operations for the past fiscal year and the
status of the Company's liquidity and capital resources as of the end of such
year materially conforming to the disclosure requirements contained in Item 303
of Regulation S-K or Regulation S-B, if applicable, under the Securities Act;
(b) to each Purchaser owning more than 500,000 shares (as the
same may be adjusted for stock splits, stock dividends, recapitalizations or
other similar events) ("Major Purchaser") within thirty (30) days after the end
of each month a consolidated balance sheet of the Company and its subsidiaries
and the related consolidated statements of income and cash flows, unaudited but
prepared in accordance with generally accepted accounting principles and
certified the Chief Financial Officer of the Company, or the principal
accounting officer if the Company does not have a Chief Financial Officer, such
consolidated balance sheet to be as of the end of such quater and such
consolidated statements of income and cash flows to be for such quarter and for
the period from the beginning of the fiscal year to the end of such quarter, in
each case with comparative
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statements for the prior fiscal year; provided that the Company's obligations
under this Section 5.01 shall terminate upon the completion of a firm commitment
underwritten public offering of the Company's securities where the Company
becomes and continues to be subject to the reporting requirements of the
Securities Exchange Act of 1934;
(c) to each Purchaser, at the time of delivery of each annual
financial statement pursuant to Section 5.01 (a), a certificate executed by the
Chief Financial Officer of the Company, or the principal accounting officer if
the Company does not have a Chief Financial Officer, stating that he has
reviewed this Agreement and has no knowldedge of any default by the Company in
the performance or observance of any of the provisions of the Agreement, or, if
such officer has such knowledge, specifying such default and the nature thereof;
(d) to each Major Purchaser, at the time of delivery of each
monthly statment pursuant to Section 5.01 (b), a management narrative report
explaining all significant variances from forecasts and all significant current
developments in staffing, marketing, sales and operations; and
(e) to each Purchaser, within thirty (30) days prior to the end of
each fiscal year, an annual business plan.
Section 5.02 RIGHT OF FIRST REFUSAL.
(a) The Company shall, prior to (or as soon thereafter as is
reasonably practical) any issuance by the Company of any of its securities
(other than debt securities with no equity feature), offer to Purchaser
continuing to hold at least fifty percent (50%) of the Common Stock purchased
hereby (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 Company assuming the conversion of all
Preferred Shares) 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 5.02 shall not apply to securities issued (A) upon conversion of any of
the Series A Preferred Shares or the Series B Preferred Shares, (B) upon
exercise of the Toole Option or the Second Toole Option, (C) as a stock dividend
or upon any subdivision of shares of Common Stock, provided that the securities
issued pursuant to such stock divident or subdivision are limited to additional
share of Common Stock, (D) pursuant to the Company's Option Plan, and (E)
pursuant to a firm commitment underwritten public offering. The Company shall
use reasonable efforts to enable Purchaser to purchase shares in the Company's
initial public offering equal to Purchaser's proportionate interest in the
Company. The Company's written notice to the Eligible Purchasers shall describe
the securities proposed to be issued by the Company and specify the number,
price and payment terms.
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Each Eligible Purchaser may accept the Company'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 Company prior to the expiration of the aforesaid
thirty (30) day period, in which event the Company shall promptly sell and such
Eligible Purchaser shall buy, upon the terms specified, the number of securites
agreed to be purchased by such Eligible Purchaser.
(b) The Company 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
5.02, to offer and sell to any third party or parties the number of such
securities not agreed by the Purchasers or 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 Company 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 Company shall not sell such securities as shall not
have been purchased within such period without again complying with this Section
5.02.
(c) In case the Company issues any of its securites 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 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 Company 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 securites not purchased by the
Incomplete Purchasers. Notwithstanding anything in Section 5.02(b) to the
contrary, as used in this Section 5.02(c) 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 share of such Incomplete Purchaser's
Preferred Shares or other convertible securities, if any, are convertible.
Section 5.03 CORPORATE EXISTENCE
The Company shall maintain and cause any subsidiary which it may create
to maintain their respective corporate existence, rights and franchises in full
force and effect; provided however, that the Company may liquidate or merge any
subsidiary into the Company if the Board of Directors deems such action
appropriate.
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Section 5.04 PROPERTIES, BUSINESS, INSURANCE.
The Company shall maintain and cause any subsidiary which it may create
to maintain as to their respective properties and business, with financially
sound and reputable insurers, insurance against such casualties and
contingencies and of such types and in such amounts as is customary for
companies similarly situated, which insurance shall be deemed by the Company to
be sufficient. The Company shall not cause or permit any assigment or change in
beneficiary and shall not borrow against any such policy.
Section 5.05 RESTRICTIVE AGREEMENTS PROHIBITED.
Neither the Company nor any of its subsidiaries shall become aparty to
any agreement which by its terms restricts the Company's performance of this
Agreement or the 1994 Registration Rights Agreement, as amended.
Section 5.06 TRANACTIONS WITH AFFILIATES.
Except for transaction contemplated by this Agreement or as other wise
approved by the Board of Directors, neither the Company nor any of its
subsidiaries shall enter into any transaction with any director, officer,
employee or holder of more than five percent of the outstanding capital stock of
any class or series of capital stock of the Company or any of its subsidiaries,
member of the family of any such person, or any corporation, partnership, trust
or other entity in which any such person, or member of the family of any such
person, is a director, officer, trustee, partner or holder of more than five
percent of the outstanding capital stock thereof, except for transactions on
customary terms related to such prson's employment and transactions on terms
which are no less favorable than could be obtained with an independent third
party in an arm's length rransaction and which are approved by a majority of the
disinterested directors of the Company.
Section 5.07 EXPENSES OF DIRECTORS
The Company shall prompty reimburse in full each director of the
Company who is not an employee of the Company for all of his reasonable
out-of-pocket expenses incurred in attending each meeting of the Board of
Directors of the Company or any Committee thereof.
Section 5.08 USE OF PROCEEDS.
The Company shall use the proceeds from the sale of the Common Stock
for expansion and working capital.
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Section 5.09 BOARD OF DIRECTORS MEETING
The Company shall use its best efforts to ensure that meeting of its
Board of Directors are held at least quarterly as well as to obtain directors
and officers insurance coverage as approved by the Board of Directors.
Section 5.10 COMPENSATION.
The Company shall play to its officers compensation as determined by
the Board of Directors upon the recommendation of the compensation committee of
the Board of Directors.
Section 5.11 BY-LAWS.
The Company shall at all times maintain provisions in its By-Laws
and/or Charter indemnifying all directors against liability and absolving all
directors from liability to the Company and its stockholders to the maximum
extent permitted under the laws of the state of Florida.
Section 5.12 MAINTENANCE OF OWNERSHIP OF SUBSIDIARIES.
The Company shall not sell or otherwise transfer any shares of capital
stock of any subsidiary which it may create, except to the Company or another
subsidiary which it may create, or permit any subsidiary which it may create to
issue, sell or otherwise transfer any shares of its capital stock or the capital
stock of any subsidiary which it may create, except to the Company or another
subsidiary which it may create.
Section 5.13 DISTRIBUTIONS BY SUBSIDIARIES.
The Company shall not permit any subsidiary which it may create to
purchase or set aside any sums for the purchase of, or pay any dividend or make
any distribution on, any shares of its stock, except for dividends or other
distributions payable to the Company or another subsidiary which it may create.
Section 5.14 COMPLIANCE WITH LAWS.
The Company shall comply, and cause each subsidiary to comply with, all
applicable laws, rules, regulations and orders, non-compliance with which could
materially adversely affect its business or condition, financial or otherwise,
including all laws relating to the offer and sale of franchises, and the
development and operation of the restaurants and applicable environmental laws.
Section 5.15 KEEPING OF RECORDS AND BOOKS OF ACCOUNT.
The Company shall keep, and cause each subsidiary to keep, adequate
records and books of account, in which complete entries will be made in
accordance with generally accepted accounting
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principles consistently applied, reflecting all financial transactions of the
Company and such subsidiary, and in which, for each fiscal year, all proper
reserves for depreciation, depletion, obsolescence, amortization, taxes, bad
debts and other purposes in connection with its business shall be made.
Section 5.16 U.S. REAL PROPERTY INTEREST STATEMENT.
Upon a written request by any Purchaser, the Company shall provide such
Purchaser with a written statement informing the Purchaser whether such
Purchaser's interest in the Company constitutes a U.S. real property interest.
The Company's determination shall comly with the requirements of Treasury
Regulation Section 1.897-2(h)(1) or any successor regulation, and the Company
shall provide timely notice to the Internal Revenue Service, in accordance with
and to the extent required by Treasury Regulation Section 1.897-2(h)(2) or any
successor regulation, that such statement has been made. The Company's written
statement to any Purchaser shall be delivered to such Purchaser within ten (10)
days of such Purchaser's written request therefor. The Company's obligation to
furnish a written statement pursuant to this Ection 5.16 shall continue
notwithstanding the fact that a class of the Company's stock may be regularly
traded on an extablished securities market.
ARTICLE VI
MISCELLANEOUS
Section 6.01 EXPENSES.
Each party hereto will pay its own expenses in connection with the
transactions contemplated hereby whether or not such tranactions shall be
consummated.
Section 6.02 SURVIAL OF AGREEMENTS.
All convenants, agreements, representations and warranties made herein
or in the 1994 Registration Rights Agreement, as amended, or any certificate or
instrument delivered to the Purchasers pursuant to or in connection with this
Agreement or the 1994 Registration Rights Agreement, as amended, shall survive
the execution and delivery of this Agreement, the 1994 Registration Rights
Agreement, as amended, the issuance, sale and delivery of the Common Stock, and
all statements contained in ay certificate or other instrument delivered by the
Company hereunder or thereunder or in connection herewith or therewith shall be
deemed to constitute representations and warranties made by the Company.
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Section 6.03 BROKERAGE.
Each party hereto will indemnify and hold harmless the others against
and in respect of any claim or brokerage or other commissions relative to this
Agreement or to the tranactions contemplated hereby, based in any way on
agreements, arrangements or understandings made or claimed to have been made by
such party with any third party.
Section 6.04 PARTIES IN INTEREST.
All representation, covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. Without limiting the generality of the foregoing,
all representations, covenants and agreements benefitting the Purchasers shall
inure to the benefit of any and all subsequent holders from time to time of
Common Stock.
Section 6.05 NOTICES
All notices, requests, consents and other communications hereunder
shall be in writing and shall be delivered in person or mailed by certified or
registered mail, return receipt requested, or sent by facsmile transmission in
the case of non-U.S. residents, addressed as follows:
(a) If to the Company:
4801 South University Drive, Suite 304 East
Davie, Florida 33328
Attention: Chief Executive Office
(b) If to any Purchaser, at the address of
such Purchaser set forth in Schedule I.
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
Section 6.06 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida.
Section 6.07 ENTIRE AGREEMENT.
This Agreement, including the Schedules and Exhibits hereto,
constitutes the sole and entire agreement of the parties with respect to the
subject matter hereof. All Schedules and Exhibits hereto are hereby incorporated
herein by reference.
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Section 6.08 COUNTERPARTS.
This Agreement may be executed in tow or more counterparts, each of
which shall be deemed an original, but all of which together shall consitute one
and the same instrument.
Section 6.09 AMENDMENTS.
This Agreement may not be amended or modified, and no provisions hereof
may be waived, without the written consent of the Company and the Purchaser.
Section 6.10 SEVERABILITY.
If any provision of this Agreement shall be declared void or
unenforceable by any judicial or administrative authority, the validity of any
other provision and of the entire Agreement shall not be affected thereby.
Section 6.11 TITLES AND SUBTITLES.
The titles and subtitles used in this Agreement are for convenience
only, and are not to be considered in construing or interpreting any term or
provision of this Agreement.
Section 6.12 CERTAIN DEFINED TERMS.
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
(a) "affiliate" shall mean a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, the person specified.
(b) "person" shall mean an individual, corporation, trust,
partnership, joint venture, unincorprated organization, government agency or any
agency or political subdivision thereof, or other entity.
(c) "subsidiary" shall mean, as to the Company, any corporation of
which more than 50% of the outstanding shares having ordinary voting power to
elect a majority of the Board of Directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned by the Company, or
by one or more of its subsidiaries, or by the Company and one or more of its
subsidiaires.
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IN WITNESS WHEREOF, the Company and the Purchase have executed this
Agreement as of the day and year first above written.
Attest: ROADHOUSE GRILL, INC.
/s/ CHARLES D. BARRETT By: /s/ JOHN DAVID TOOLE, III
- -------------------------- -----------------------------
Charles D. Barret John David Toole III
Secretary Title: President
PURCHASERS
/s/ TAN KIM POH
-----------------------------
Tan Kim Poh
Authorized Signatory
(May 20, 1995)
-----------------------------
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IN WITNESS WHEREOF, the Company and the Purchaser have executed this
Agreement as of the day and year first above written.
Attest: ROADHOUSE GRILL, INC.
By:
- --------------------------- ------------------------------
Secretary Title:
PURCHASERS
(Illegible)
---------------------------------
ARAB MULTINATIONAL INVESTMENT CO.
---------------------------------
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IN WITNESS WHEREOF, the Company and the Purchaser have executed this
Agreement as of the day and year first above written.
Attest: ROADHOUSE GRILL, INC.
By:
- -------------------------- --------------------------
Secretary Title:
PURCHASERS
GRACE VENTURES PARTNERSHIP II
By: Horn Venture Partners II
------------------------------
/s/ ROBERT E. PEDIGO
------------------------------
Robert E. Pedigo
General Partner
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SCHEDULE I
PURCHASERS
NUMBER OF SHARES AGGREGATE
NAME AND MAILING OF COMMON STOCK PURCHASE PRICE
ADDRESS OF PURCHASER TO BE PURCHASED FOR COMMON STOCK
- -------------------- --------------- ----------------
Grace Ventures Partnership 156,250 $ 500,000
III, L.P.
20300 Stevens Creek Blvd.
Cupertino, CA 95014
Arab Multinational 10,000 $ 32,000
Investment Co.
Berjaya Group (Cayman) Ltd. 1,083,750 $3,468,000
c/o K.P. Tan
Level 28
Shahzan Prudential Tower
30 Jalan Sultan Ismail
50250 Kuala Lumpur
Malaysia
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SCHEDULE II
TO COMMON STOCK
PURCHASE AGREEMENT
Section 2.01 (a). QUALIFICATIONS.
None
Section 2.01 (b). SUBSIDIARIES, JOINT VENTURES AND AFFILIATES.
2.01 (b)(ii) The Company is the only member of North Miami Roadhouse
Grill, L.C., a Florida limited liability company that
owns the Roadhouse Grill restaurant located at 12599
Biscayne Boulevard, North Miami, Florida 33181. North
Miami Roadhouse Grill, L.C. owns all of the issued and
outstanding shares of Roadhouse Grill North Miami, Inc.
Roadhouse Grill North Miami, Inc. holds the lease to the
premises at 12599 Biscayne Boulevard, North Miami, Florida
33181.
The Company is a member of Kendall Roadhouse Grill, L.C.,
a Florida limited liability company that owns the
Roadhouse Grill being constructed at 7199 S.W. 117th
Avenue, Miami, Florida.
2.01 (b)(iii) The Company may be deemed to have control over North Miami
Roadhouse Grill, L.C. and Kendall Roadhouse Grill, L.C.
Section 2.04 AUTHORIZED CAPITAL STOCK.
John Y. Brown, Jr. and J. David Toole, III, have agreed
that in case of the death of John Y. Brown, Jr., J. David
Toole, III shall have the right to vote the shares of the
Company's common stock owned by the estate or heirs of
John Y. Brown, Jr.
Section 2.05 FINANCIAL STATEMENTS AND PROJECTIONS
No material change.
Section 2.06 EVENTS SUBSEQUENT TO JANUARY 26, 1995.
None
Section 2.07 LITIGATION.
23
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The Company is the defendant in a lawsuit entitled
ROBERTS V. ROADHOUSE GRILL, INC., Case No. 93-25277, in
the circuit court for Broward County, Florida. The case
alleges food poisoning from the sale of bad fish. It is
being handled by the Company's insurance carrier.
The Company is the defendant in a lawsuit entitled
BESWICK V. ROADHOUSE GRILL, INC., Case No. 94-03640. The
case alleges that the plaintiff fell in one the Company's
restaurants. The case is being handled the the Company's
insurance carrier.
The Company is the defendant in a lawsuit entitled ESCOBAR
V. ROADHOUSE GRILL, INC., Case No. 94-03289. The case
alleges that the plaintiff fell in one the Company's
restaurants. The case is being handled by the Company's
insurance carrier.
The Company is the defendant in a lawsuit entitled
PICCIANO V. ROADHOUSE GRILL, INC., Case No. 94-03759. The
case alleges that the plaintiff fell in one of the
Company's restaurants. The case is being handled by the
Company's insurance carrier.
Section 2.09 TITLE TO PROPERTIES.
The Company may be subject to mechanics liens in
connection with recently opened restaurants and
improvements to other restaurants under development.
The Company has purchased a restaurant site located at
200 Yacht Club Drive, North Palm Beach, Florida. The
purchase price was $1,100,000, of which $900,000 was
financied by delivering to the seller a promissary note
bearing interest at eight percent (8%) per annum payable
over ten (10) years and which is secured by a mortgage on
the property.
The Company has purchased a restaurant site and
neighboring parking lot located at 5051 14th Street West,
Bradenton, Florida. The purchase price was $1,025,000, of
which approximately $629,990 was financed by assuming an
existing mortgage which bears interest at 9% per annum for
a remaining term of 8 years.
The Company has purchased a restaurant site located at US
192 & Hoabland Blvd., Kissimmee, Florida. The purchase
price was $900,000, of which approximately $700,000 was
financed by
24
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delivering to the seller a promissory note bearing
interest at 9% per annum for a term of 7 years and which
is secured by a mortgage on the property.
The Company has purchased a restaurant site located at
2226 N. Monroe St., Tallahassee, Florida. The purchase
price was $1,200,000, of which $900,000 was financed by
delivering to the seller a promissary note bearing
interest at 9% per annum for a term of 10 years and which
is secured by a mortgage on the property.
The Company has purchased a restaurant site located at
2300 Hwy 434 West, Altamonte Springs, Florida. The
purchase price was $1,100,000, of which $900,000 was
financed by delivering to the seller a promissary note
bearing interest at 8% per annum for a term of 10 years
and which is secured by a mortgage on the property.
The Company has purchased a restaurant site located at
Old St. Augustine Road, Jacksonville, Florida. The
purchase price was $1,050,000, of which $850,000 was
financed by delivering to the seller a promissary note
bearing interest at 8% per annum for a term of 10 years
and which is secured by a mortgage on the property.
Section 2.11 INSURANCE.
The Company has obtained key man life insurance as
required by previous agreements.
Section 2.13 LOANS AND ADVANCES.
None
Section 2.20 OFFICERS.
The following is a list of the names and titles of the
officers of the Company:
John Y. Brown, Jr. Chairman of the Board
J. David Toole, III President and Chief Executive
Officer
J. David Toole, Jr. Vice President
Charles D. Barnett Secretary
Clyde Larman Controller
25
<PAGE>
Section 2.25 RESTAURANTS UNDER DEVELOPMENT
The following are restaurants under development by the
Company:
1. Restaurant to be located at 5051 14th Street West,
Bradenton, Florida.
2. Restaurant to be located at 13151 N. Dale Mabry Hwy,
Tampa, Florida.
3. Restaurant to be located at Indian Trace Shopping
Center, Weston, Florida.
4. Restaurant to be located at 3105 Hwy 98 N., Lakeland,
Florida.
5. Restaurant to be located at 498 Seminole Blvd.,
St. Petersburg, Florida.
6. Restaurant to be located at Orlando South Market
Square at South Side, Orlando, Florida.
7. Restaurant to be located at 8th Street and 67th
Avenue, Miami, Florida.
8. Restaurant to be located at 2226 N. Monroe Street,
Tallahassee, Florida.
9. Restaurant to be located at US 192 and Hoabland
Blvd., Kissimmee, Florida.
10. Restaurant to be located at Linton Ave. and Federal
Hwy., Delray Beach, Florida.
11. Restaurant to be located at 2300 Hwy 434 West,
Altamonte Springs, Florida.
12. Restaurant to be located at 9743 Old St. Augustine
Road, Jacksonville, Florida.
26
<PAGE>
SCHEDULE III
TO COMMON STOCK
PURCHASE AGREEMENT
SHAREHOLDERS OF THE COMPANY
The following is a list of the shareholders of the Company's common stock,
and the number of shares to be owned by each at the Closing.
NAME NUMBER OF SHARES
- ---- ----------------
John Y. Brown, Jr. 2,835,000
J. David Toole, III 144,445
Berjaya Group (Cayman) Ltd. 6,565,000
The following is a list of the shareholders of the Company's Series A
Preferred Stock, and the number of shares to be owned by each at the Closing.
NAME NUMBER OF SHARES
- ---- ----------------
Grace Ventures Partnership III, L.P. 1,220,000
J.P. Bolduc 76,250
J.Peter Grace 76,250
D.W. Robbins, Jr. 76,250
Christian F. Horn 76,250
Banque Scandinave En Suisse 1,000,000
Berjaya Group (Cayman) Ltd. 1,000,000
The following is a list of shareholders of the Company's Series B Preferred
Stock and the number of shares to be owned by each at the Closing.
NAME NUMBER OF SHARES
- ---- ----------------
Grace Ventures Partnership III, L.P. 300,000
J.P. Bolduc 16,675
J. Peter Grace 16,675
D. W. Robbins, Jr. 16,675
Berjaya Group (Cayman) Ltd. 1,000,000
Societe Financiere Privee 600,000
Arab Multinational Investment 400,000
27
<PAGE>
SCHEDULE IV
TO COMMON STOCK
PURCHASE AGREEMENT
AGREEMENTS
Unless otherwise defined herein, terms used herein shall have the same
meaning as set forth in the Purchase Agreement dated _________________, 1995 and
in Schedule II.
A. The following is a list of certain contracts, agreements and instruments of
the Company.
1. The 1994 Stock Option Plan.
2. The North Miami Roadhouse Grill, L.C. Articles of Organization and
Operating Agreement.
3. The Roadhouse Grill Kendall, L.C. Articles of Organization and
Operating Agreement.
4. Lease Agreement between Prudential-Bache/CNL National Net Lease
Properties, Ltd. and the Company for the restaurant located at 8525
Pines Boulevard, Pembroke Pines, Florida.
5. Sublease Agreement between Meatballs, Inc. and Roadhouse Grill North
Miami, Inc. for the restaurant located at 12599 Biscayne Boulevard,
North Miami, Florida.
6. Lease Agreement between Steve Cohen, as Trustee and the Company for
the restaurant located at 1580 University Drive, Coral Springs,
Florida.
7. Lease Agreement between Wise Oak Corp. and the Company for a
restaurant being developed at 4201 Okeechobee Boulevard, West Palm
Beach, Florida.
8. Lease Agreement between Muben-Lamar, L.P. and the Company for a
restaurant being developed at 7199 S.W. 117th Avenue, Miami, Florida.
9. Mortgage between the Company and Jean D. Allegretti for the restaurant
located at 200 Yacht Club Drive, North Palm Beach, Florida.
10. Lease Agreement for a restaurant located at 1870 Semoran Boulevard,
Winter Park, Florida.
28
<PAGE>
11. Lease Agreement for a restaurant being developed at 13151 N. Dale
Mabry Hwy., Tampa, Florida.
12. Lease Agreement for a restaurant being developed at Indian Trace
Shopping Center, Weston, Florida.
13. Lease Agreement for a restaurant being developed at 3105 Hwy. 98 N.,
Lakeland, Florida.
14. Lease Agreement for a restaurant being developed at Orlando South
Market Square, Orlando, Florida.
15. Lease Agreement for a restaurant being developed at Linton Ave. and
Federal Highway, Delray Beach, Florida.
16. Lease Agreement for a restaurant being developed at 498 Seminole
Blvd., St. Petersburg, Florida.
17. Agreement between J. David Toole, III and John Y. Brown, Jr. dated
July 12, 1992 as amended June 10, 1993.
18. Agreement with Rodberg Construction Co. for construction and
improvements of the various restaurants under development by the
Company.
19. Agreement between J. David Toole, III and John Y. Brown, Jr. dated
July 12, 1992, as amended June 10, 1993 and which has been assumed by
the Company.
20. 1994 Stock Option Plan.
21. Stock Option Agreements with J. David Toole, III.
22. An apartment is being furnished to certain of the employees of the
Company at a monthly rental of $600 per month on an interim basis.
23. Agreement between Americana Entertainment Group, Inc. and John Y.
Brown and David Toole dated August 1992 which was amended as of
October 7, 1992.
24. Agreement between the Company and Lone Star Roasters dated as of
May 17, 1993.
25. Mortgage on the site where a restaurant under development is to be
located at 5051 14th Street West, Bradenton, Florida.
29
<PAGE>
26. Mortgage on the site where a restaurant under development is to be
located at US 192 and Hoabland Blvd., Kissimmee, Florida.
27. Mortgage on the site where a restaurant under development is to be
located at 2226 N. Monroe Street, Tallahassee, Florida.
28. Mortgage on the site where a restaurant under development is to be
located at 2300 Hwy. 434 West, Altamonte Springs, Florida.
29. Mortgage on the site where a restaurant under development is to be
located at 9743 Old St. Augustine Road, Jacksonville, Florida.
30
EXHIBIT 10.39
BERJAYA GROUP (CAYMAN) LIMITED
LEVEL 28
SHAHZAN PRUDENTIAL TOWER
30 JALAN SULTAN ISMAIL
50240 KUALA LUMPUR
MALAYSIA
Roadhouse Grill, Inc.
6600 North Andrews Avenue
Suite 160
Ft. Lauderdale, Florida 33309
Gentlemen:
This agreement (this "Agreement") set forth the terms pursuant to which
the undersigned (referred to as ("Purchaser") agrees to purchase 606,060 shares
(the "Shares") of common stock, $0.01 par value per share (the "Common Stock"),
of Roadhouse Grill, Inc. (the ("Company") for $3.30 (U.S.) per share. The
purchase of the Shares shall close on or before October 27,1995. Purchaser
further sets forth statements upon which the Company or its affiliates may rely
to determine the suitability of the Purchaser to acquire the Shares.
1. PRIVATE OFFERING. Subject to the terms and conditions set forth in this
Agreement, Purchaser hereby tenders this subscription.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF PURCHASER. In connection
with Purchaser's investment or subscription, Purchaser hereby makes the
following representations, warranties, and agreements and confirms the following
understandings:
(a) INVESTMENT PURPOSE. Purchaser is acquiring the Shares for its own
account and for investment purposes only and not with a view to, or for resale
in connection with, any distribution thereof.
(b) REVIEW AND EVALUATION OF INFORMATION REGARDING THE COMPANY.
Purchaser and its representatives have received a copy of the Company's Articles
of Incorporation, as amended (the "Charter"), and Bylaws. Purchaser and its
representatives have received and reviewed the audited financial statements for
the year ended January 1, 1995, the unaudited financial statements for the
period ending September 10, 1995 as well as the projections of the Company for
the balance of 1995. Purchaser and its representatives have received monthly
income statements and balance sheets from the Company since April 1, 1994,
including the operating statements from the Company's individual restaurants.
Purchaser's representatives have attended or have had the opportunity to attend
all meetings of the Company's Board of Directors since April 1, 1994, and have
met for extended periods with the Company's officers and management.
Additionally, Purchaser has
<PAGE>
completed the purchase of either Common Stock or shares of the Company's
preferred stock on March 21, 1994, April 8, 1994, June 8, 1994, November 28,
1994 and May 26, 1995.
Purchaser acknowledges that Purchaser has reviewed the above-referenced
documents. Purchaser further acknowledges that Purchaser has had the
opportunity to ask the Company's management questions about the Company's
business and financial condition and that Purchaser has obtained such
information as requested to the extent deemed necessary by Purchaser to permit
Purchaser to fully evaluate the merits and risks of an investment in the
Company. Further, Purchaser has consulted with such other of its investment
and/or accounting and/or legal and/or tax advisors as Purchaser has deemed
necessary and appropriate in making the decision to acquire the Shares.
(c) PURCHASER'S FINANCIAL EXPERIENCE. Purchaser is a sophisticated
investor and is sufficiently experienced in financial and business matters to be
capable of evaluating the merits and risks of Purchaser's investment in the
Company.
(d) SUITABILITY OF INVESTMENT. Purchaser has evaluated the merits and
risks of Purchaser's proposed investment in the Company, including those risks
particular to Purchaser's situation, and has determined that this investment is
suitable for Purchaser. Purchaser had adequate financial resources for an
investment of this character, and at this time Purchaser could bear a complete
loss of its investment.
(e) UNREGISTERED OFFERING. Purchaser understands that the Shares are
not being registered, on the basis that this issuance is exempt from
registration under the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations promulgated thereunder, as a "transaction by an issuer not
involving any public offering," and under such other exemptions as may be
available, and that reliance on such exemption is predicated, in part, on
Purchaser's representations and warranties contained in this Agreement.
Purchaser understands that no action has been taken by the Company which would
permit an offering of the Shares or the distribution of any material in relation
to the Company or the Shares in any country or jurisdiction where action for
that purpose is required by applicable law. Specifically, the Company has taken
no action to ensure compliance with the laws of Malaysia in connection with the
transactions contemplated hereby.
(f) LIMITATIONS ON DISPOSITION. The Shares have not been registered
under the Act or under applicable state securities laws and, therefore, cannot
be sold, assigned, or otherwise transferred unless they are subsequently
registered under the Act and under applicable state securities laws or an
exemption from such registration is then available. Purchaser hereby agrees that
Purchaser will not sell, assign, or transfer the Shares unless they are
registered under the Act and under applicable state securities laws or an
exemption from such registration is then available, according to an opinion
acceptable to the Company. Purchaser represents that Purchaser can afford to
hold the Shares for an indefinite period of time. Purchaser further represents
that, if requested by an underwriter of the Company's common voting stock,
Purchaser will agree not to sell or otherwise
2
<PAGE>
dispose of the Shares for a period of up to 120 days after the effective date of
any registration statement covering the Company's common voting stock.
(g) ABSENCE OF OFFICIAL EVALUATION. Purchaser understands that no
federal or state agency has made any findings or determination as to the
fairness of the terms of an investment in the Company, nor any recommendation
or endorsement of the Shares offered hereby.
(h) RESIDENCE. Purchaser is a corporation organized under laws other
than those of the United States.
(i) NON-RELIANCE. Purchaser is not relying on the Company, or its
affiliates, or any representation contained herein or in the documents referred
to herein with respect to the tax and economic effect of the investment in the
Company.
(j) PROHIBITION ON CANCELLATION, TERMINATION, REVOCATION,
TRANSFERABILITY, AND ASSIGNMENT. Purchaser hereby acknowledges and agrees that,
except as may be specifically provided herein or by applicable law, Purchaser is
not entitled to cancel, terminate, or revoke this Agreement, and this Agreement
shall survive any assignment of the Shares. Purchaser further agrees that
Purchaser may not transfer or assign the rights under this Agreement, and
understands that if the subscription is accepted, the assignment and
transferability of the Shares will be restricted.
(k) INDEMNIFICATION OF THE COMPANY AND ITS AFFILIATES. Purchaser agrees
to indemnify and hold harmless the Company and its affiliates against and in
respect of any and all loss, liability, claim, damage, deficiency and all
actions, suits, proceedings, demands, assessments, judgments, costs and expenses
whatsoever (including, but not limited to, and all expenses whatsoever,
including attorney's fee, reasonably incurred in investigating, preparing, or
defending against any litigation commenced or threatened or any claim
whatsoever through all appeals) arising out of or based upon any false
representation or warranty or breach or failure by Purchaser to comply with any
covenant or agreement made by Purchaser herein or in any other document
furnished by Purchaser in connection with its subscription.
(l) AUTHORITY TO ENTER INTO AGREEMENT. The Purchaser has the full
right, power, and authority to execute and deliver this Agreement and perform
its obligations hereunder.
(m) OBLIGATION. This Agreement constitutes a valid and legally binding
obligation of the Purchaser, and neither the execution of this Agreement, nor
the consummation of the transactions contemplated hereby, will constitute a
violation of the laws of its jurisdiction or organizing documents.
(n) APPROVALS REQUIRED. No approval, authorization, consent, order or
other action of, or filing with, any person, firm or corporation or any court,
administrative agency or other governmental authority is required in connection
with the execution and delivery of this Agreement by the Purchaser or the
consummation of the transactions described herein.
3
<PAGE>
3. REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company hereby
represents and warrants, as of the date hereof and the time of the Closing, as
follows:
(a) ORGANIZATION, QUALIFICATIONS AND CORPORATE POWER. The Company is a
corporation incorporated and organized under the laws of the State of Florida
and its status is active, and it is qualified to transact business as a foreign
corporation and is in good standing in each jurisdiction in which the nature of
business transacted by it or the character of the properties owned or leased by
it requires such licensing or qualification, except where the failure to be so
qualified would not have a material adverse effect on the financial condition,
results of operations, business or properties of the Company. The Company has
the corporate power and authority to own and hold its properties and to carry on
its business as now conducted and as proposed to be conducted, to execute,
deliver and perform this Agreement.
(b) AUTHORIZATION OF AGREEMENTS, ETC.
(i) The execution and delivery by the Company of this Agreement,
the performance by the Company of its obligation hereunder and the issuance,
sale and delivery of the Shares have been duly authorized by all requisite
corporate action and will not violate any provision of law, any order of any
court or other agency of government, the Charter of the Company, or the By-laws
of the Company, or any provision of any indenture, agreement or to her
instrument to which the Company or any of its properties or assets is bound, or
conflict with, result in a breach of or constitute (with due notice of lapse of
time or both) a default under any such indenture, agreement or other instrument
or result in the creation or imposition of any lien, charge, restriction, claim
or encumbrance of any nature whatsoever upon any of the properties or assets of
the Company.
(ii) The Shares have been duly authorized and, when the Shares are
issued in accordance with this Agreement, the Shares will be validly issued,
fully paid and nonassessable with no personal liability attaching to the
ownership thereof and will be free and clear of all liens, charges,
restrictions, claims and encumbrances imposed by or through the Company.
(c) VALIDITY. This Agreement has been duly executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms.
(d) AUTHORIZED CAPITAL STOCK. The authorized capital stock of the
Company consists of (i) 10,000,000 shares of preferred stock and (ii) 30,000,000
shares of Common Stock. Immediately prior to the issuance of the Shares and
assuming no conversion of the Series A Preferred Stock, the Series B Preferred
Stock or exercise of any of the Company's stock options, 11,150,000 shares of
Common Stock will be validly issued and outstanding, fully paid and
nonassessable with no personal liability attaching to the ownership thereof, and
3,525,000 shares of the Series A Preferred Stock and 2,350,025 shares of the
Series B Preferred Stock will have been issued. All of the outstanding
securities of the Company were issued in compliance with all applicable federal
and state securities laws.
4
<PAGE>
(e) TITLE TO PROPERTIES. The Company has good and marketable title to
the properties and assets reflected on the audited balance sheet at January 1,
1995 or acquired by it since the date of those balance sheets (other than
properties and assets disposed of in the ordinary course of business since the
date of those balance sheets), and all such properties and assets are free and
clear of mortgages, pledges, security interests, liens, charges, claims,
restrictions and other encumbrances, except for liens for or current taxes not
yet due and payable and minor imperfections of title, if any, not material in
nature or amount and not materially detracting from the value or impairing the
use of the property subject thereto or impairing the operations or proposed
operation of the Company, except as reflected on the audited balance sheet at
January 1, 1995 or, with respect to properties and assets acquired after the
date of those balance sheets, except as disclosed in SCHEDULE II, which will be
delivered by the Company to Purchaser as soon as practicable, but in no event
later than ten (10) days from the date hereof.
(f) LEASEHOLD INTERESTS. Each lease or agreement to which the Company
is a party under which it is a lessee of any property, real or personal, is a
valid and subsisting agreement without any material default of the Company
thereunder and, to the best of the Company's knowledge, without any material
default thereunder of any other party thereto. No event has occurred and is
continuing which, with due notice or lapse of time or both, would constitute a
default or event of default by the Company under any such lease or agreement or,
to the best of the Company's knowledge, by any other party thereto. The
Company's possession of such property has not been disturbed and, to the best of
the Company's knowledge, no claim has been asserted against the Company adverse
to its rights in such leasehold interests.
(g) TAXES. The Company has filed all tax returns, federal, state,
county and local, required to be filed by it and, with respect to such state,
county and local returns, if not filed would have a material adverse effect on
its financial condition, and the Company has paid all taxes shown to be due by
such returns as well as all other taxes, assessments and governmental charges
which have become due or payable, including without limitation all taxes which
the Company is obligated to withhold from amounts owing to employees, creditors
and third parties. All such taxes with respect to which the Company has become
obligated pursuant to elections made by the Company in accordance with generally
accepted practice have been paid and adequate reserves have been established for
all taxes accrued but not yet payable. The federal income tax returns of the
Company have never been and are not being audited by the Internal Revenue
Service. No deficiency assessment with respect to or proposed adjustment of the
Company's federal, state, county or local taxes is pending or, to the best of
the Company's knowledge, threatened. To the best of the Company's knowledge,
there is no tax lien, whether by any federal, state, county or local taxing
authority, outstanding against the assets, properties or business of the
Company.
(h) GOVERNMENTAL APPROVALS. Subject to the accuracy of the
representations and warranties of the Purchaser set forth in Section 2(n), no
approval, authorization, consent, order or other action of, or filing with, any
person, firm or corporation or any court, administrative agency or other
governmental authority is required in connection with the execution and
delivery of this
5
<PAGE>
Agreement by the Company or the consummation of the transactions described
herein, except as disclosed herein.
4. REGISTRATION RIGHTS. The Shares being acquired may be registered
pursuant to the terms of the Registration Rights Agreement dated February 10,
1994 between the Company and the Purchaser. At the Closing, the Registration
Rights Agreement shall be amended to reflect this change.
5. RIGHT OF FIRST REFUSAL. The Company shall, prior to (or as soon
thereafter as is reasonably practical) any issuance by the Company of any of its
securities (other than debt securities with no equity feature), offer to
Purchaser continuing to hold at least fifty percent (50%) of the Common Stock
purchased hereby (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 Company assuming the conversion
of all Preferred Shares) 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 shall not apply to securities issued (A) upon conversion of any of the
Series A Preferred Shares or the Series B Preferred Shares, (B) upon exercise of
the Option held by J. David Toole, III to purchase 500,000 shares of Common
Stock, (C) 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, (D) pursuant to
the Company's Option Plan, and (E) pursuant to a firm commitment underwritten
public offering. The Company shall use reasonable efforts to enable Purchaser to
purchase shares in the Company's initial public offering equal to Purchaser's
proportionate interest in the Company. The Company's written notice to the
Eligible Purchasers shall describe the securities proposed to be issued by the
Company and specify the number, price and payment terms.
Each Eligible Purchaser may accept the Company'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 Company prior to the expiration of the aforesaid
thirty (30) day period, in which event the Company 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 Company 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, to
offer and sell to any third party or parties the number of such securities not
agreed by the Purchasers or 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
Company 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 Company shall not sell such
6
<PAGE>
securities as shall not have been purchased within such period without again
complying with this Section.
(c) In case the Company 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 Company 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 5(b) to the contrary,
as used in this Section 5(c) 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 share of Common Stock into
which the shares of such Incomplete Purchaser's Preferred Shares or other
convertible securities, if any, are convertible.
6. MODIFICATION, DISCHARGE, TERMINATION. Neither this Agreement nor any
provisions hereof shall be modified, discharged, or terminated except by an
instrument in writing signed by the party against whom any waiver, change,
discharge, or termination is sought.
7. NOTICES. Any notice, demand, or other communication that any party
hereto may be required, or may elect, to give to anyone interested hereunder
shall be sufficiently given if (a) deposited, postage prepaid, registered or
certified, return receipt requested, addressed to such address as may be given
herein; or (b) delivered personally at such address.
8. SEPARATE SIGNATURE PAGES. This Agreement may be executed through the
use of separate signature pages or in any number of counterparts, and each of
such counterparts shall, for all purposes, constitute one agreement binding on
all the parties, notwithstanding that all parties are not signatories to the
same counterpart.
9. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the parties' benefit and the
benefit of the parties' successors, legal representatives, and assigns.
10. SURVIVAL OF REPRESENTATIVES, WARRANTIES, COVENANTS AND AGREEMENTS. The
representatives, warranties, covenants and agreements contained herein shall
survive Purchaser's
7
<PAGE>
delivery of and payment for the Shares and acceptance by the Company of its
subscription to acquire the Shares.
11. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties, and there are no representations, covenants, or other agreements except
as stated or referred to herein.
12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, both substantive and remedial.
13. SEVERABILITY. If any provision of this Agreement shall be held to be
void or unenforceable under the laws of any place governing its construction or
enforcement, this Agreement shall not be void or vitiated thereby, but shall be
construed to be in force with the same effect as though such provisions were
omitted.
14. SECTION HEADINGS. The section heading contained herein are for
reference purpose only and shall not in any way affect the meaning or
interpretation of this Agreement.
Please confirm that the foregoing correctly sets forth our agreement by
executing and returning one copy of this letter agreement.
BERJAYA GROUP (CAYMAN) LIMITED
By: /s/ TAN KIM POH
--------------------------
Title: Authorized Signatory
--------------------------
Date: October 25, 1995
--------------------------
ACCEPTED:
ROADHOUSE GRILL, INC.
By: /s/ JOHN DAVID TOOLE, III
-------------------------
Title: President
-------------------------
Date: October 25, 1995
-------------------------
8
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 the registration statement. 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
October 23, 1996
Miami, Florida
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in the registration statement on Form S-1 (File No.
333-12751) 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
October 23, 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 and
our statement dated September 25, 1996 in the Registration Statement (Form S-1)
and the related Prospectus of Roadhouse Grill, Inc. for the registration of its
Common Stock.
Plantation, Florida
October 23, 1996
/s/ STARK & BENNETT, P.A.
--------------------------------
Stark & Bennett, P.A.
EXHIBIT 24.2
POWER OF ATTORNEY
KNOW ALL MEN AND WOMEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John David Toole, III and Dennis
Jones, and each of them, such individual's true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for such
individual and in his or her name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and any registration statement
related to the offering contemplated by this registration statement that is
to be effective upon filing pursuant to Rule 462(b) under the Securities Act
of 1933, and to file the same, with all exhibits thereto, and all documents
in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or
their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
/s/ Phillip Friedman
------------------------------
Phillip Friedman
Director
October 23, 1996
