Free Motion for Partial Summary Judgment - District Court of Colorado - Colorado

Case 1:04-cv-00725-RPM

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ANNEXES

TO

THE QUIZNO'S CORPORATION
PROXY STATEMENT

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ANNEX A

FIRST AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER

by and between
FIRENZE COW. and

THE QUIZNO'S CORPORATION

TQC00210

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TABLE OF CONTENTS
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ARTICLE I

THE MERGER
SECTION 1.1 SECTION 1.2 SECTION 1.3 SECTION 1.4 SECTION 1.5 SECTION 1.6 SECTION 1.7 SECTION 1.8 The Merger ................................................................. Effective Time .............................................................. Effects of the Merger ....................................................... Articles of Incorporation and By-laws ....................................... Directors and Officers ......& . .............................................. Vacancies ................................................................... Company Stock Options and Warrants ...................................... Preferred Stock ............................................................. ARTICLE I1 EFFECT OF THE MERGERON THE CAPITAL STOCK THE OF CONSTITUENT CORPORATIONS; EXCHANGE CERTIFICATES OF Effect on Capital Stock ..................................................... Surrender of Certificates .................................................... ARTICLE I11 REPRESENTATIONS WARRANTIES AND SECTION 3.1 SECTION 3.2 Representations and Warranties of the Company ........................... Representations and Warranties of Firenze .................................. ARTICLE IV TO COVENANTS RELATING CONDUCTOF BUSINESS Conduct of Business of the Company ....................................... Conduct of Business of Firenze ............................................. ARTICLE V ADDITIONAL AGREEMENTS Shareholder Approval; Preparation of Proxy Statement ..................... Reasonable Efforts; Notification ............................................. Indemnification ............................................................. Fees and Expenses .......................................................... Public Announcements ...................................................... Purchases of Common Stock of the Other Party ............................ Third Party Standstill Agreements .......................................... Characterization for Federal Income T x Purposes .......................... a A4 A-8 A-1 A-1 A-1 A-2 A-2 A-2 A-2 A-2

SECTION 2.1 SECTION 2.2

A-3 A-3

S E ~ O 4.1 N SECTION 4.2

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A-10

SECTION 5.1 SECTION 5.2 SECTION 5.3 SECTION 5.4 SECTION 5.5 SECTION 5.6 SECTION 5.7 SECTION 5.8

A-10 A-11 A-11 A-12 A-12 A-12 A-12 A-13

SECTION 6.1 SECTION 6.2 SECTION 6.3

ARTICLE VI CONDITIONS PRECEDENT Conditions to Each Party's Obligation to Effect the Merger ................ A-13 A-13 Conditions of the Company ................................................. A-13 Conditions of Firenze .......................................................

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ARTICLE VI1 TERMINATION. AMENDMENT WAIVER AND SECTION 7.1 SECTION 7.2 SECTION7.3 SEC~ION 7.4 Termination ................................................................. Effect of Termination ....................................................... Amendment ................................................................. Extension; Waiver ........................................................... ARTICLE VI11 GENERAL PROVISIONS Nonsurvival of Representations and Warranties ............................. Notices ..................................................................... Definitions .................................................................. Interpretation ............................................................... Counterparts ................................................................ Entire Agreement; No Third-party Beneficiaries ............................ Governing Law ............................................................. Assignment ................................................................. Enforcement of the Agreement ............................................. Attorneys' Fee .............................................................. Severability ................................................................. A-13 A-14 A-14 A-14

SECTION 8.1 SECTION8.2 SECTION 8.3 SECTION 8.4 SECTION8.5 SECTION8.6 SECTION 8.7 SECTION 8.8 SECTION8.9 SECTION 8.10 SECTION 8.11

A-14 A-14 A-15 A-15 A-16 A-16 A-16 A-16 A-16 A-16 A-16

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CORPORATION, Colorado corporation (the "Company"). a WHEREAS, Firenze was formed on May 1,2001, for the sole purpose of entering to the transactions contemplated by this Agreement; WHEREAS, respective Boards of Directors of Firenze and the Company have approved, and the deem it fair to, advisable and in the best interests of their respective companies and shareholders to

Now, THEREFORE, consideration of the premises and the representations, warranties and in agreements herein contained, the parties agree as follows:
ARTICLE I

THE MERGER
SECTION The Merger. Upon the terms and subject to the conditions hereof and in accordance 1.1 with the Colorado Business Corporation Act (the "CBCA"), Firenze will be merged with and into the Company at the Effective Time (as defined). Following the Merger, the separate corporate existence of Firenze will cease and the Company will continue as the surviving corporation (the "Surviving Corporation") and will continue its corporate existence in accordance with the CBCA. SECTION1.2 Effective Time. The closing of the Merger (the "Closing") will take place at the offices of Moye, Giles, O'Keefe, Venneire & Gorrell LLP,in Denver, Colorado, upon the satisfaction or, to the extent permitted hereunder, waiver of the conditions set forth in Article V I and on the date of the meetings of the Company's shareholders to approve the Merger (the "Company Shareholders Meeting"), and of Firenze's shareholders (the "Firenze Shareholders Meeting"), to approve the Merger, or, at such other time and place or such other date as agreed to by Firenze and the Company (the "Closing Date"). If such meetings are not held or concluded on the same date, then the Closing Date will be on the date of the latter of such meetings. As soon as practicable following the Closing the Surviving Corporation will file the Articles of Merger required by the CBCA with respect to the Merger and other appropriate documents (the "Articles of Merger") executed in accordance with the relevant provisions of the CBCA. The Merger will become effective at such time as the Articles of Merger is duly filed with the Colorado Secretary of State (the time the Merger becomes effective being the "Effective Time"). SECTION Effects offhe Merger. The Merger will have the effects set forth in Section 7-111-106 of 1.3 the CBCA. If at any time after the Effective Time, the Surviving Corporation considers or is advised that any further assignments or assurances in law or otherwise are necessary or desirable to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation, all rights, title and interests in all real estate and other property and all privileges, powers and franchises of Firenze and the Company, the Surviving Corporation and its proper officers and directors, in the name and on behalf of Firenze and l the Company, will execute and deliver a l such proper deeds, assignments and assurances in law and do all things necessary and proper to vest, perfect or c o n k title to such property or rights in the A-1

TQC00214

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Surviving Corporation and otherwise to carry out the purpose of this Agreement, and the proper officers and directors of the Surviving Corporation are fully authorized in the name of the Company or otherwise to take any and all such action. SECTION1 4 Articles of Incorporation and By-laws. . (a) The Restated Articles of Incorporation of the Company, as in effect immediately prior to the Effective Time, will be, from and after the Effective Time, the Articles of Incorporation of the Surviving Corporation, until thereafter altered, amended or repealed as provided therein and in accordance with applicable law. (b) The by-laws of the Company, as in effect immediately prior to the Effective Time, will become, from and after the Effective Time, the by-laws of the Surviving Corporation, until thereafter altered, amended or repealed as provided therein and in accordance with applicable law. SECTION Directors and Officers. The directors and officers of the Company immediately prior to 1.5 the Effective Time will become, from and after the Effective Time, the directors and officers of the Surviving Corporation, until their respective successors are duly elected or appointed and qualified or their earlier resignation or removal, in accordance with the Surviving Corporation's articles of incorporation or by-laws. SECTION Vacancies. If at the Effective Time a vacancy exists in the Board of Directors or in any 1.6 of the offices of the Surviving Corporation, such vacancy may thereafter be filled in the manner provided by the CBCA and the Articles of Incorporation and By-laws of the Surviving Corporation. SECTION. Company Stock Options and Warrants. 17 (a) Stock Option Plans. At the Effective Time, the Company's Employee Stock Option Plan (the "Employee Plan"), the Company's Amended and Restated Stock Option Plan for Directors and Advisers (the "Directors Plan") and each outstanding option to purchase Shares under such plans owned by Firenze or the m a t e s named on Schedue 2.1, whether vested or unvested, will be assumed by the Surviving Corporation. Each such option so assumed by the Surviving Corporation under this Agreement shall continue to have, and be subject to, the same terms and conditions set forth in the Employee Plan or the Directors Plan, as the case may be, and the applicable stock option agreement immediately prior to the Effective Time. At the Effective Time, each outstanding option to purchase Shares under the Employee Plan or the Directors Plan which is not owned by Firenze or the Affiliates identified on Schedule 2.1 will automatically be converted into the right to receive an amount in cash equal to eight dollars and fifty cents per share ($8.50),less the applicable exercise price of such option, without interest thereon, upon surrender of the certificate formerly representing such option to the Company. (b) Assumption of Warrants. At the Effective Time, each outstanding Warrant of the Company will be assumed by the Surviving Corporation. Each such Warrant so assumed by the Surviving Corporation under this Agreement shall continue to have the rights and privileges set forth in the Warrant immediately prior to the Effective Time. SECTION Preferred Stock. The Company's shares of.-aass C, Class D and Class E Preferred 1.8 Stock, issued and outstanding as of the date of this Agreement which are not owned by the Schadens or the Affiliates identified on Schedule 2.1 may be redeemed by the Company prior to the Effective Time. The redemption price with respect to the Class C Preferred Stock and the Class E Preferred Stock is not expected to exceed the greater of (i) the Merger Consideration (paid assuming the shares of Class C and Class E Preferred Stock are converted into Company Shares in accordance with their respective terms) or (ii) the liquidation value of the respective class of Preferred Stock, plus accumulated but unpaid dividends, and, in the case of the Class E Preferred Stock, a negotiated fee to terminate certain rights held by the Class E shareholders, which termination fee will be subject to approval by the Company's Board of Directors. The redemption price with respect to the Class D Preferred Stock is not expected to exceed the liquidation value of such Preferred Stock. All shares of the Company's Class A, Class C, Class D and Class E Preferred Stock that have not been redeemed prior to the Effective Time will be assumed by the Surviving Corporation and shall continue to have, and be subject to, the rights and preferences applicable to the Class A, Class C, Class D, and Class E shares, respectively, immediately prior to the Effective Time. A-2

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ARTICLE I1 EFFECT THE MERGER ON THE CAPITAL STOCK OF THE OF CONSTITUENT CORPORATIONS; EXCHANGE CERTIFICATES OF SECTION Effect on Capital Stock. As of the Effective Time, by virtue of the Merger and without 2.1 any action on the part of the holder of any Company Shares: (a) Conversion of Company Shares. At the Effective Time, each Company Share issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares (as defined) and other than Company Shares owned by the Company, Firenze or Affiliates of the Company or Firenze, as set forth on Schedule 2.1) will, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive an amount in cash equal to eight dollars and iifty cents ($8.50) per share payable to the holder thereof, without interest thereon, upon surrender of the certificate formerly representing such Company Shares in accordance with Section 2.2. All such Company Shares, when so converted, will no longer be outstanding and will automatically, by virtue of the Merger, be canceled and retired, and each holder of a certiiicate formerly representing such shares will cease to have any rights with respect thereto, except the right to receive the Merger Consideration. (b) Firenze Owned Company Shares. At the Effective Time, the Company Shares owned by Firenze or Affiliates of Firenze will become authorized but unissued shares of the Surviving Corporation pursuant to Section 7-106-302(1) of the CBCA. (c) Firenze Capital Stock. Each share 'of Firenze common stock issued and outstanding immediately prior to the Effective Time will, by virtue of the Merger and without any action on the part of the holder thereof, be converted into one fully paid and nonassessable share of common stock of the Surviving Corporation. (d) Cancellation of Subsidiary-Owned Stock. Each Company Share owned by any of the Company's subsidiaries, shall be cancelled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor. (e) Dissenting Shares. Notwithstanding anything in this Agreement to the contrary, each Company Share that is issued and outstanding immediately prior to the Effective Time and that is held by a shareholder who has properly exercised and perfected appraisal rights under Article 113 of the CBCA (the "Dissenting Shares"), will not be converted into or exchangeable for the right to receive the Merger Consideration, but will be entitled to receive such consideration as shall be determined pursuant to Article 113 of the CBCA, but the holder thereof will not be entitled to vote or to exercise any other rights of a shareholder of the Company; provided, however, that if such holder fails to perfect or has effectively withdrawn or lost its right to appraisal and payment under the CBCA, each Company Share owned by such holder will thereupon be deemed to have been converted into and to have become exchangeable for, as of the Effective Time, the right to receive the Merger Consideration, without any interest thereon, in accordance with Section 2.2, and such shares will no longer be Dissenting Shares. SECTION2.2 Surrender of Certificates. (a) Transfer Agent. Prior to the Effective Tune, the Company will engage Computershare Trust Co., Inc., or such other bank or trust company reasonably acceptable to the Company, to act as exchange agent (the "Transfer Agent") for the payment of the Merger Consideration upon surrender of CertScates (as defined). (b) Payment of Merger Consideration. The Company will cause there to be provided to the Transfer Agent prior to or at the Effective Time cash or wire transferred the aggregate consideration to be paid upon the surrender of the Company Shares pursuant to Section 2.1. Such funds shall be invested as reasonably directed by the Surviving Corporation in reasonably prudent investments pending payment thereof by the Transfer Agent to holders of the Company Shares. Earnings from such investments shall be the sole and exclusive property of the Surviving Corporation and no part of such earnings shall accrue to the benefit of holders of Company Shares and any Taxes payable on such earnings shall be the sole obligation of the Surviving Corporation. A-3

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(c) Exchange Procedure. As soon as practicable after the Effective Time, the Transfer Agent will mail to each holder of record of a certificate or certificates that immediately prior to the Effective Time represented outstanding Company Shares (the "Certificates"), otlier than the Company, Firenze and any Affiliate of the Company or Firenze, (i) a letter of transmittal (which will specify that delivery will be effected, and risk of loss and title to the Certificates will pass, only upon delivery of the Certificates to the Transfer Agent and will be in a form and have such other provisions as the Company may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration to be paid to the holders of the Certificates. Upon surrender of a Certificate for cancellation to the Transfer Agent or to such other agent or agents as may be appointed by the Surviving Corporation, together with the letter of transmittal, duly executed, and such other documents as may reasonably be required by the Transfer Agent, the holder of such Certificate will be entitled to receive in exchange therefor the Merger Consideration, and the surrendered Certificate will forthwith be canceled. If the any part of the Merger Consideration is to be paid to a Person other than the Person in whose name the Certificate is registered, it will be a condition of exchange that the Certificate will be properly endorsed or otherwise in proper form for transfer and that the Person requesting the exchange will pay any transfer or other taxes required by reason of the exchange to a Person other than the registered holder of such Certificate or establish to the reasonable satisfaction of the Surviving Corporation that such tax has been paid or is not applicable. Until surrendered as contemplated by this Section 2.2, each Certificate will be deemed at any time after the Effective Time to represent only the right to receive, upon surrender of such Certificate, the cash to be paid for such Company Shares and Preferred Shares. (d) No Further Ownership Rights in Company's Shares. The Merger Consideration to be paid upon the surrender of Certificates in accordance with the terms of this Article I1 wl be deemed to have been il exchanged and paid in full satisfaction of all rights pertaining to the Company Shares theretofore represented by such Certilicates and there will be no further registration of transfers on the stock transfer books of the Surviving Corporation of the Company Shares that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, such Certificate will be canceled and exchanged as provided in this 1 Article 1 . (e) At any time following six (6) months after the Effective Time, the Surviving Corporation shall be entitled to require the Transfer Agent to deliver to it any funds (including any earnings with respect thereto) which had been made available to the Transfer Agent and which had not been disbursed to holders of the Company Certificates, and thereafter such holders shall be entitled to look only to the Surviving Corporation (subject to abandoned property, escheat or other similar laws) and only as general creditors thereof with respect to the Merger Consideration payable upon due surrender of their Company Certificates, without any interest thereon. Notwithstanding the foregoing, neither Firenze, the Surviving Corporation nor the Exchange Agent shall be liable to any holder of a Company Certificate for Merger Consideration delivered to a public officialpursuant to any applicable abandoned property, escheat or similar law. ARTICLE 111 REPRESENTATIONS WARRANTIES AND S E ~ I O 3.1 Representations and Warranties of the Company. The Company represents and N warrants to Firenze as follows, subject to any exceptions specilied in the. Disclosure Letter of the Company provided to Firenze on the date hereof (the "Company Disclosure Letter") and except as expressly contemplated by this Agreement: (a) Organization; Standing and Power. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado and has the requisite corporate power and authority to carry on its business as now being conducted. The Company is duly qualified to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary, other than in such jurisdictions where the failure to be so qualified to do business or in good standing (individually, or in the aggregate) would not have a Material Adverse Effect on the Company. A-4

TQCOOZ?7

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(b) Subsidiaries. Except as set forth in the exhibits to the Company SEC Documents (as n defined i Section 3.1(f)), the Company does not own, directly or indirectly, any capital stock or other ownership interest in any subsidiary which would be required to be listed as a subsidiary of the Company under the rules of the Securities and Exchange Commission (the "SEC") with the filing by the Company of an Annual Report on Form 10-K. The Company's subsidiaries that are corporations are corporations duly organized, validly existing and in good standing under the laws of their respective jurisdictions of incorporation and have the requisite corporate power and authority to carry on their respective businesses as they are now being conducted and to own, operate and lease the assets they now own, operate or hold under lease, except where the failure to be so organized, existing or in good standing would not have a Material Adverse Effect on the Company. The Company's subsidiaries that are limited liability companies are companies d d y organized, validly existing and in good standing under the laws of their respective jurisdictions of formation and have the requisite company power and authority to carry on their respective businesses as they are now being conducted and to own, operate and lease the assets they now own, operate or hold under lease, except where the failure to be so organized, existing or in good standing would not have a Material Adverse Effect on the Company. All the outstanding shares of capital stock or membership interests of the Company's subsidiaries that are owned by the Company or its subsidiaries have been duly authorized and validly issued and are fully paid and non-assessable and were not issued in violation of any preemptive rights or other preferential rights of subscription or purchase of any Person other than those that have been waived or otherwise cured or satisfied. All such stock and ownership interests are owned of record and beneficially by the Company or by a direct or indirect wholly owned subsidiary of the Company, free and clear of all liens, pledges, security interests, charges, claims, rights of third parties and other encumbrances of any kind or nature (``Liens"), except as set forth on Schedule 3.l(b). (c) Capital Structure. The authorized capital stock of the Company is as disclosed in the Company SEC Documents and as set forth on Schedule 3.l(c). Except as disclosed in the Company SEC Documents or as set forth on Schedule 3.l(c), no shares of capital stock of the Company are authorized, reserved for issuance or issued and outstanding. AU issued and outstanding shares of Company common stock have been duly authorized and are validly issued, fully paid, nonassessable and free of preemptive rights. Except as disclosed in the Company SEC Documents or as set forth in Schedule 3.l(c), the Company does not have outstanding any subscription, option, put, call, warrant or other right or commitment to issue or any obligation or commitment to redeem or purchase, any of its authorized capital stock or any securities convertible into or exchangeable for any of its authorized capital stock. Except as disclosed in the Company SEC Documents or as set forth on Schedule 3.l(c). there are no shareholder agreements, voting agreements, voting trusts or other similar arrangements to which the Company is a party which have the effect of restricting or limiting the transfer, voting or other rights associated with the capital stock of the Company. (d) Authority; Non-contravention. The Company has the requisite corporate power and authority to enter into this Agreement and, subject to approval of the Merger and this Agreement by the holders of a majority of the outstanding Company Shares as of the record date for the Company Shareholders Meeting ("Company Shareholder Approval"), to consummate the transactions contemplated hereby and to take such actions, if any, as shall have been taken with respect to the matters referred to i Section 3.l(h). The execution and delivery of this Agreement n by the Company and the consummation by the Company of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action on the part of the Company, subject to Company Shareholder Approval. This Agreement has been duly and validly executed and delivered by the Company and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws or judicial decisions now or hereafter in effect relating to creditors' rights generally, () the i remedy of specific performance and injunctive relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought and (E) the enforceability of any indemnification provision contained herein may be limited by applicable federal or state securities laws. The execution and delivery of this Agreement by the Company do A-5

TQC00218

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not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions of this Agreement will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or`give rise to a right of termination, cancellation or acceleration of or "put" right with respect to any obligation or to loss of a material benefit under, or result in the creation of any Lien, upon any of the properties or assets of the Company or any of its significant subsidiaries under, any provision of (i) the Articles of Incorporation or By-laws of the Company or any provision of the comparable organizational documents of its significant subsidiaries, (6) any loan or credit agreement, note, bond, mortgage, indenture, lease, or other agreement, instrument, permit, concession, franchise or license applicable, to the Company or any of its subsidiaries or their respective properties or assets or (iii) subject to the governmental filings and other matters referred to in the following sentence, any judgment, order, decree, statute, law, ordinance, rule or regulation or arbitration award applicable to the Company or any of its subsidiaries or their respective properties or assets, other than, in the case of clause (G), any such conflicts, violations, defaults, rights or Liens that individually or in the aggregate would not have a Material Adverse Effect on the Company and would not materially impair the ability of the Company to perform its obligations hereunder or prevent the consummation of any of the transactions contemplated by this Agreement. (e) Government Approval. No consent, approval, order or authorization of, or registration, declaration, or filing with, any court, administrative agency or commission or other governmental authority or agency, domestic or foreign, including local authorities (each a ``Governmental Entity"), is required by or with respect to the Company in connection with the execution and delivery of this Agreement by the Company or the consummation by the Company of the transactions contemplated by this Agreement, except for (i) the I i h g by the Company of a pre-merger notification and report form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") (if required), ( i the filing with the SEC of (A) a proxy i) statement relating to the Company Shareholder Approval (such proxy statement as amended or supplemented from time to time, the "Proxy Statement") and (B) such reports under Section 13(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as may be required in connection with this Agreement and the transactions contemplated hereby, and (iii) the f i g of the Articles of Merger with the Colorado Secretary of State with respect to the Merger as provided in the CBCA and appropriate documents with the relevant authorities of other states in which the Company is qualified to do business and such other consents, approvals, orders, authorizations, registrations, declarations and filings the failure of which to be obtained or made would not have a Material Adverse Effect on the Company.
( f ) SEC Documents. The Company has fiIed all required reports, schedules, forms, statements and other documents with the SEC since December 31, 1997 (such documents, together with all exhibits and schedules thereto and documents incorporated by reference therein, collectively referred to herein as the "Company SEC Documents"). As of their respective dates, the Company SEC Documents complied in all material respects with the requirements of the Securities Act of 1933 ("Securities Act") or the Exchange Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such Company SEC Documents, and none of the Company SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements of the Company included in the Company SEC Documents complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles ( " G A M " ) (except, in the case of unaudited statements, as permitted by Form 10-Q of the Exchange Act) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Exchange f Act Regulation S-X) and fairly present the consolidated financial position o the Company and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and other adjustments described therein).

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TQC00219

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(g) Absence of Certain Changes or Events. Except as disclosed in the Company SEC Documents, since March 31, 2001, the Company has conducted its business only in the ordinary course consistent with past practice, and there has not been (i) any material adverse change with respect to the Company, (ii) any entry by the Company or any of its subsidiaries into any employment, severance or termination agreement with any such executive officer other than in the ordinary course of business, consistent with past practice; or (2)any damage, destruction or loss not covered by insurance, that has or reasonably could be expected to have a Material Adverse Effect on the Company.

(h) State Takeover Statutes. The Company has taken all action to assure that no takeover or similar provision of the CBCA, will apply to the Merger or any of the other transactions contemplated hereby. Except for the Company Shareholder Approval, no other shareholder action on the part of the Company is required for approval of the Merger, this Agreement and the transactions contemplated by this Agreement. The Company has also taken such other action with respect to any anti-takeover provisions in its By-laws or Articles of Incorporation to the extent necessary to consummate the Merger on the terms set forth in this Agreement. (i) Brokers. Except for Tucker Anthony Sutro Capital Markets, Inc. ("Tucker"), whose fees are to be paid by the Company, no broker, any investment banker or other Person, is entitled to receive from the Company or any of its subsidiaries any investment banking, broker's, finder's or other similar fee or commission in connection with this Agreement or the transactions contemplated by this Agreement, including any fee for any opinion rendered by any investment banker. The engagement letter dated May 1, 2001, between the Company and Tucker, which was provided to Firenze prior to the date of this Agreement, constitutes the entire understanding of the Company and Tucker with respect to the matters referred to therein, and has not been amended or modified, nor will it be amended or modified prior to the Effective T i e .

6) Litigation. Except as disclosed in the Company SEC Documents, there is no claim, suit, action, proceeding or investigation pending or, to the best of the Company's knowledge, threatened against or affecting the Company or any of its subsidiaries that could reasonably be expected to have a Material Adverse Effect on the Company or prevent, hinder or materially delay the ability of the Company to consummate the transactions contemplated by this Agreement, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against the Company or any of its subsidiaries having any such effect.
(k) Taes. Each of the Company and each of its subsidiaries, and any consolidated, combined, unitary or aggregate group for Tax (as defined below) purposes of which the Company or any of its subsidiaries is or has been a member, has timely fled all Tax Returns (as d e h e d below) required to be fled by it and has timely paid or deposited (or the Company has paid or deposited on its behalf) all Taxes which are required to be paid or deposited except where the failure to do so would not have a Material Adverse Effect on the Company and its subsidiaries, taken as a whole. Each of the Tax Returns fled by the Company or any of its subsidiaries is accurate and complete in all material respects. The most recent consolidated financial statements of the Company contained in the fled Company SEC Documents reflect an adequate reserve for all Taxes payable by the Company and its subsidiaries for all taxable periods and portions thereof through the date of such financial statements whether or not shown as being due on any Tax Returns. No deficiencies for any Taxes have been proposed, asserted or assessed against the Company or any of its subsidiaries; no requests for waivers of the time to assess any such Taxes have been granted or are pending; and there are no tax liens upon any assets of the Company or any of its subsidiaries. There are no current examinations of any Tax Return of the Company or any of its subsidiaries being conducted and there are no settlements or any prior examinations which could reasonably be expected to adversely affect any taxable period for which the statute of limitations has not run.A used herein, s "Tax" or "Taxes" will mean all taxes of any kind, including, without limitation, those on or measured by or referred to as income, gross receipts, sales, use, ad valorem, franchise, profits, license, withholding, payroll, employment, estimated, excise, severance, stamp, occupation, premium, value added, property or windfall profits taxes, customs, duties or similar fees, assessments or charges of any kind whatsoever, together with any interest and any penalties,

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TQC00220

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additions to tax or additional amounts imposed by any Governmental Entity, domestic or foreign. As used herein, "Tax Return" will mean any return, report, statement or information required to be filed with any Governmental Entity with respect to Taxes. SECTION Representations and Warranties of Firenze. Firenze represents and warrants to the 3.2 Company as follows, subject to any exceptions specified in the Disclosure Letter of Firenze provided to the Company on the date hereof (the "Firenze Disclosure Letter") and except as expressly contemplated by this Agreement: (a) Organization; Standing and Power. Firenze is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado and has the requisite corporate power and authority to carry on its business as now being conducted. Firenze is duly qualified to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary, other than in such jurisdictions where the failure to be SO qualified to do business (individually or in the aggregate) would not have a Material Adverse Effect on Firenze. (b) Subsidiaries. Firenze does not own, directly or indirectly, any capital stock or other ownership interest in any subsidiary, (c) Capital Structure. The authorized capital stock of Firenze consists of ten million (10,000,000) shares of Firenze Common Stock, no par value ("Firenze Common Stock"). As of the date of this Agreement, one thousand (1,000) shares of Firenze Common Stock are issued and outstanding and the sole shareholders of Firenze are Richard E. Schaden and Richard F. Schaden. Except as stated, no shares of capital stock or other equity or voting securities of Firenze are reserved for issuance or outstanding. All outstanding shares of capital stock of Firenze are validly issued, fully paid and nonassessable and not subject to preemptive rights. Except as described above, as of the date of this Agreement there are no outstanding or authorized securities, options, warrants, calls, rights, commitments, preemptive rights, agreements, arrangements or undertakings of any kind to which Firenze is a party, or by which it is bound, obligating Firenze to issue, deliver or sell, or cause to be issued, delivered or sold, any shares of capital stock or other equity or voting securities of, or other ownership interests in, Firenze or obligating Firenze to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. (d) Authority; Non-contravention. Firenze has the requisite corporate power and authority to enter into this Agreement to consummate the transactions contemplated hereby and to take such actions, if any, as shall have been taken with respect to the matters referred to in Section 3.2(g). The execution and delivery of this Agreement by Firenze and the consummation by Firenze of the transactions contemplated hereby have been duly authorized by al necessary corporate action on l the part of Firenze. This Agreement has been duly executed and delivered by Firenze and constitutes a valid and binding, obligation of Firenze, enforceable against Firenze in accordance with its terms, except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws or judicial decisions now or hereafter in effect relating to creditors' rights generally, (ii) the remedy of specific performance and injunctive relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought and (iii) the enforceability of any indemnification provision contained herein may be limited by applicable federal and state securities laws. The execution and delivery of this Agreement by Firenze do not, and the consummation of the transactions contemplated hereby and compliance with the provisions hereof will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of or "put" right with respect to any obligation or to loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of Firenze, under any provision of (i) the Articles of Incorporation or By-laws of Firenze or any provision of any comparable organizational documents of its subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or license applicable to Firenze or its respective properties or assets or (iii) subject to the governmental filings and other matters referred to in the following sentence, any

A-8

TQC00221

Case 1:04-cv-00725-RPM

Document 41-16

Filed 07/01/2005

Page 14 of 41

judgment, order, decree, statute, law, ordinance, rule or regulation or arbitration award applicable to Firenze or their respective properties or assets, other than, in the case-of clause (ii), any such conflicts, violations, defaults, rights or Liens that individually or in the aggregate would not have a Material Adverse Effect on Firenze and would not materially impair the ability of Firenze- to perform its obligations hereunder or prevent the consummation of any of the transactions contemplated hereby. (e) Government Approval. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to Firenze in connection with the execution and delivery of this Agreement by Firenze or the consummation by Firenze of the transactions contemplated hereby, except for the filing of the Articles.of Merger with the Colorado Secretary of State with respect to the Merger as provided in the CBCA and appropriate documents with the relevant authorities of other states in which Firenze is qualified to do business and such other consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under the "takeover" or "blue sky" laws of various states and such other consents, approvals, orders, authorizations, registrations, declarations and filings the failure of which to be obtained or made would not have a Material Adverse Effect on Firenze. (f) New Entity. Firenze was formed on May 1,2001 and since the date of inception, Firenze has not conducted any business other than action taken in connection with the Merger.
(g) State Takeover Statutes; Absence of Supermajority Provision. Firenze has taken all action to assure that no takeover or similar provision of the CBCA, will apply to the Merger or any of the other transactions contemplated hereby. No additional shareholder action on the part of Firenze is required for approval of the Merger, this Agreement and the transactions contemplated hereby. There are no anti-takeover provisions in the By-laws or Articles of Incorporation of Firenze applicable to the transactions.

(h) Brokers. No broker, investment banker or other Person, is entitled to receive from Firenze any investment banking, broker's, finder's or other similar fee or commission in connection with this Agreement or the transactions contemplated by this Agreement, including any fee for any opinion rendered by any investment banker. (i) Litigation. There is no claim, suit, action, proceeding or investigation pending or, to the best of Firenze's knowledge, threatened against or affecting Firenze, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against Firenze.

6) Employee Benefit Matters. As used in this Section 3.2(j), "Firenze" will include Firenze as defined in the preamble of this Agreement and any member of a controlled group or affiliated service group, as defined in Section 414(b), (c), (m) and (0)of the Code, of which Firenze is a member. Firenze has no employee benefit plan or arrangement.
(k) Tares. Firenze has not iiled any Tax Returns.
(1) Title to Properries. Firenze does not own or lease any real or personal property except Company Shares which have been contributed and duly transferred to Firenze by Richard E. Schaden and Richard E Schaden.

(m) Undisclosed Liabilities. Firenze does not have any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise), required by GAAP to be set forth on a financial statement or in the notes thereto or which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on Firenze.
(n) Board and Stockholder Recommendation. The Board of Directors of Firenze, at a meeting duly called and held, has by vote of those directors present (i) determined that this Agreement and the transactions contemplated hereby, including the Merger and the transactions contemplated thereby, are fair to and in the best interests of the shareholders of Firenze, and (ii) resolved to recommend that the holders of the Firenze Common Stock approve. the Merger and the transactions contemplated thereby.

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TQC00222

Case 1:04-cv-00725-RPM

Document 41-16

Filed 07/01/2005

Page 15 of 41

(0)Shareholder Approval. The shareholders of Firenze have authorized the execution and delivery of this Agreement and have approved the Merger and the transactions contemplated by this Agreement.

ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION Conduct of Business of the Company. 4.1

Ordinary Course. During the period from the date of this Agreement to the Effective Time (except as otherwise specifically contemplated by the terms of this Agreement), the Company will and will cause its subsidiaries to carry on their respective businesses in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and, to the extent consistent therewith, use all reasonable efforts to preserve intact their current business organizations, keep available the services of their current officers and employees and preserve their relationships with customers, suppliers, licensors, licensees, distributors and others having business dealings with them, in each case consistent with past practice, to the end that their goodwill and ongoing businesses will be unimpaired to the fullest extent possible at the Effective Time.

SECTION4.2 Conduct of Business of Firenze. (a) Ordinary Course. Firenze has been formed specifically to complete the transactions contemplated by this Agreement. During the period from the date of this Agreement. to the Effective Time (except as otherwise specifically contemplated by the terms of this Agreement), Firenze will not carry on any business other than business required to consummate the Merger and other transactions contemplated by this Agreement. (b) Other Acrions. Firenze will not take, and will cause its Affiliates not to take, any action that would, or that could reasonably be expected to, result in any of the representations and warranties of Firenze set forth in this Agreement becoming untrue.
ARTICLE V ADDITIONAL AGREEMENTS

SECI-ION Shareholder Approval; Preparation of Proxy Statement. 5.1 (a) Shareholder Meetings. The Company will, as soon as practicable following the execution and delivery of this Agreement on dates to be agreed upon between Firenze and the Company, which dates will be set taking into acto-unt the status of pending regulatory matters pertaining to the transactions contemplated hereby, duly call, give notice of, convene and hold the Company Shareholders Meeting, in accordance with applicable law, for the purpose of approving the Merger, this Agreement and the transactions contemplated hereby. Subject to the provisions of Section 6.1 and Section 6.2 the Company will, through its Board of Directors, recommend to its shareholders the approval and adoption of the Merger. The Company and Firenze will coordinate and co-operate with respect to the timing of the Company Shareholders Meeting and wiU endeavor to hold such meetings as soon as practical after the date hereof. (b) Board Recommendation. The Board may modify its recommendation of the merger if the Board determines in good faith that the failure to modify its recommendation could be expected to constitute a breach of the Board's fiduciary duties to the Company's shareholders under applicable law. (c) Preparation of Proxy Staternent/Schedule13E-3. As soon as practicable following the date of this Agreement, the Company will prepare and file with the SEC the Proxy Statement/Schedule 13E-3. Firenze will provide the Company with the information concerning Firenze required to be included in the Proxy StatementISchedule 13E-3. The Company will use its reasonable efforts to cause the Proxy Statement/Schedule 13E-3to be mailed to the Company's shareholders as promptly as practicable after the Proxy Statement/Schedule 13E-3has been approved by the SEC. The Company will notify Firenze promptly of the receipt of any written or oral comments from the SEC or its staff and of any request by the SEC or its staff for amendments or supplements to the Proxy Statement or for additional

A-10

TQC00223

Case 1:04-cv-00725-RPM

Document 41-16

Filed 07/01/2005

Page 16 of 41

information and will supply Firenze with copies of all correspondence between the Company or any of its representatives, on the one hand, and the SEC or its staff, on the other hand, with respect to the Proxy Statement/Schedule 13E-3 or the Merger. (d) Stock Transfer Records. The Company will cause the Transfer Agent to make stock transfer records relating to the Company available to the extent reasonably necessary to effectuate the intent of this Agreement.

SECTION5.2 Reasonable Efforts; NotiJication.
(a) Reasonable Efforts. Upon the terms and subject to the conditions set forth in this Agreement, except to the extent otherwise required by United States regulatory considerations and otherwise provided in this Section 5.2(a), each of the parties agrees to use reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Merger, and the other transactions contemplated by this Agreement, including (i) the obtaining of all necessary actions or non-actions, waivers, consents and approvals from Governmental Entities and the making of all necessary registrations and filings (including filings with Governmental Entities, if any) and the taking of all reasonable steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental Entity, (ii) the obtaining of all necessary consents, approvals or waivers from third parties, (iii) the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed and (iv) the execution and delivery of any additional instruments (including any required supplemental indentures) necessary to consummate the transactions contemplated by this Agreement. Notwithstanding the foregoing, neither party will be required to agree to any consent, approval or waiver that would require such party to take an action that would impair the value that such party reasonably attributes to the Merger and the transactions Contemplated thereby. In connection with and without limiting the foregoing, each of the Company and Firenze and its respective Board of Directors will (i) take all action necessary to ensure that no state takeover statute or similar statute or regulation is or becomes applicable to the Merger, (ii) if any state takeover statute or similar statute or regulation becomes applicable to the Merger, take all action necessary to ensure that the Merger may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such statute or regulation on the Merger and (iii) reasonably cooperate with each other in the arrangements for refinancing any indebtedness of, or obtaining any necessary new financing for, the Company and the Surviving Corporation. (b) Notice of Material Change. The Company will give prompt notice to Firenze, and F`irenze will give prompt notice to the Company, of (i) any representation or warranty made by it contained in this Agreement becoming untrue or inaccurate in any respect or (ii) the failure by it to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement; provided, however, that no such notification will affect the representations or warranties or covenants or agreements of the parties or the conditions to the obligations of the parties hereunder.

SECHON 5.3 Indemnification.
(a) It is understood and agreed that, subject to the limitations on indemnification contained in the CBCA, the Company shall, to the fullest extent permitted under applicable law and regardless of whether the Merger becomes effective, indemnify and hold harmless, and after the Effective Time, the Surviving Corporation shall, to the fullest extent permitted under applicable law, indemnify, defend and hold harmless each current or former director or officer of the Company and its subsidiaries (the "Indemdied Parties") against all losses, claims, damages, liabilities, costs, fees and expenses, including reasonable fees and disbursements of counsel and judgments, fines, losses, claims, liabilities and amounts paid in settlement (provided, that any such settlement is effected with the written consent of the Surviving Corporation, such consent not to be unreasonably withheld) arising out of actions or

A-11

TQC00224

Case 1:04-cv-00725-RPM

Document 41-16

Filed 07/01/2005

Page 17 of 41

omissions occurring at or prior to the Effective Time to the full extent permitted under applicable law, the terms of the Company's Articles of Incorporation or the By-laws, as in effect at the date hereof. (b) If the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other Person and will not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person, then and in each such case, proper provisions will be made so that the successors and assigns of the Surviving Corporation, which will be financially responsible Persons or entities, assume the obligations set forth in this Section 5.3. (c) The Surviving Corporation shall maintain the Company's existing officers' and directors' liability insurance for a period of not less than six (6) years after the Effective Date, provided, that the Surviving Corporation may substitute therefor policies of substantially equivalent coverage and amounts containing terms no less favorable to such former directors or officers; provided, further, that in no event shall the Surviving Corporation be required to pay aggregate premiums for insurance under this Section 5.3 in excess of two hundred percent (200%) of the aggregate premiums paid by the Company in the twelve months prior to the date of this Agreement, on an annualized basis for such purpose; and provided, further, that if the Surviving Corporation is unable to obtain the amount of insurance required by this Section 5.3 for such aggregate premium, the Surviving Corporation shall obtain as much insurance as can be obtained for an annual premium not in excess of two hundred percent (200%) of the aggregate premiums paid by the Company in the twelve months prior to the date of this Agreement, on an annualized basis for such purpose. (d) All rights and obligations under this Section 5.3 will be in addition to any rights that an Indemnilied Party may have under the Articles of Incorporation or By-Laws of the Company as in effect on the date hereof, or pursuant to any other agreement, arrangement or document i effect prior n to the date hereof. The provisions of this Section 5.3 are intended to be for the benefit of, and will be enforceable by, the parties hereto and each Indemnified Party, his or her heirs and his or her representatives. This Section 5.3 will be binding upon all successors and assigns of the Company, Firenze and the Surviving Corporation. SECTION5.4 Fees and Expenses. Except as provided in Article W and Article VIII, all fees and expenses incurred in connection with the Merger, this Agreement and the transactions contemplated hereby will be paid by the party incurring such fees or expenses, whether or not the Merger is consummated. SECTION Public Announcements. Firenze and the Company will consult with each other before 5.5 issuing any press release or otherwise making any public statements with respect to the transactions contemplated by this Agreement and will not issue any such press release or make any such public statement prior to such consultation, except that each party may respond to questions from shareholders and may respond to inquiries from financial analysts and media representatives in a manner consistent with its past practice and each party may make such disclosure as may be required by applicable law or by obligations pursuant to any listing agreement with any national securities exchange without prior consultation to the extent such consultation 0 not reasonably practicable. The parties agree that the initial press release or releases to be issued in connection with the execution of this Agreement will be mutually agreed upon prior to the issuance thereof. SECTION 5.6 Purchases of Common Stock of the Other Party. During the period from the date hereof through the Effective Time, except as otherwise allowed under this Agreement, Firenze will not purchase any Company Shares, and neither the Company nor any of its subsidiaries or other affiliates will purchase any shares of Firenze Common Stock. SECTION 5.7 Third Party Standstill Agreements. During the period from the date of this Agreement through the Effective Time, neither the Company, Firenze nor any subsidiaries of the Company or Firenze to the extent the same involves a significant transaction involving the Company or Firenze will terminate, amend, modify or waive any provision of any standstill or similar agreement to which it is a party. During such period, the Company, Firenze and any subsidiaries of the Company will enforce, to the fullest extent permitted under applicable law, the provisions of any such agreement, including, but A-12

TQC00225

Case 1:04-cv-00725-RPM

Document 41-16

Filed 07/01/2005

Page 18 of 41

not limited to, by obtaining injunctions to-prevent any breaches of such agreement and to enforce n specifically the terms and provisions thereof i any court having jurisdiction. 5.8 SECTION Characterization for Federal Income Tax Purposes. For federal income tax purposes, it is intended that the formation of Firenze be ignored and that the entire transaction contemplated by this Agreement be treated as a redemption of certain shares of the Company for cash within the meaning of Section 302(b) of the Internal Revenue Code of 1986, as amended (the "Code"). ARTICLE VI CONDITIONS PRECEDENT SECTION6.1 Conditions to Each Party's Obligation to Effect the Merger. The respective obligation of each party to effect the Merger is subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions: (a) Shareholder Approval. The Company Shareholder Approval shall have been obtained.

(b) No Injunctions or Restraints. No final restraining order or permanent injunction or other h a 1 order issued by any court of competent jurisdiction or other legal prohibition preventing the consummation of the Merger are in effect; provided, however, that the parties hereto will, subject to Section 5.2(a), use reasonable efforts to have any such injunction, order, restraint or prohibition vacated. SECTION6.2 Conditions of the Company. The obligation of the Company to consummate the Merger is further subject to the satisfaction at the Effective Time of the following condition: Tucker shall not have revoked, modified or changed its fairness opinion i any manner adverse to the holders of n the Company Shares to whom the fairness opinion is addressed. SECTION Conditions of Firenze. The obligation of Firenze to consummate the Merger is subject 6.3 to the satisfaction at the Effective Time of the following conditions: the Company shall not have incurred and still be incurring a Material Adverse Change (as defined in Section 8.3) and persons holding not more than 170,000 issued and outstanding Company Shares shall have exercised dissenters rights in accordance with the requirements and procedures set forth in the CBCA.
ARTICLE VI1 TERMINATION, AMENDMENT WAIVER AND SECTION Termination. This Agreement may be terminated at any time prior to the Effective 7.1 Time, whether before or after approval of matters presented in connection with the Merger by the shareholders of the Company or by the shareholders of Firenze: (a) by mutual written consent of Firenze and the Company; (b) by either Firenze or the Company: (i) if the shareholders of the Company fail to give any required approval of the Merger and the transactions contemplated hereby upon a vote at a duly held meeting of shareholders of the Company or at any adjournment thereof, (E) if any court of competent jurisdiction or any governmental, administrative or regulatory authority, agency or body shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the Merger; or (iii) if the Merger shall not have been consummated on or before September 30, 2001, unless the failure to consummate the Merger is the result of a material breach of this Agreement by the party seeking to terminate this Agreement; provided that no breach by the Company shall relieve Firenze from closing if the breach was previously known to Firenze or its Affiliates or is the result of actions by Firenze or its Af6liates prior to the date of this Agreement. (c) by Firenze, if the Company breaches in any material respect any of its representations or warranties herein or fails to perform in any material respect any of its covenants, agreements or

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TQC00226

Case 1:04-cv-00725-RPM

Document 41-16

Filed 07/01/2005

Page 19 of 41

obligations under this Agreement which breach is incapable of being cured or cannot be or has not been cured within 20 days after the non-breaching party has given written notice of such breach; and (d) by the Company, if Firenze breaches in any material respect any of its representations or warranties herein or fails to perform in any material respect any of its covenants, agreements or obligations under this Agreement which breach is incapable of being cured or cannot be or has not been cured within 20 days after the non-breaching party has given written notice of such breach; and (e) by the Company if its Board of Directors determines, in good faith, after consultation with -and based upon the advice of legal counsel, that the failure to change its recommendation of the adoption of this Agreement and the Merger could be expected to constitute a breach of its fiduciary duties to the Company's shareholders under applicable law.

SECTION 7.2 Effect of Termination.
(a) In the event of termination of this Agreement by the Company as provided in paragraph 7(e), the Company shall pay to Firenze within five business days of such termination all out-of-pocket expenses incurred by Firenze and its Affiliates in connection with this Agreement and not otherwise reimbursed or paid by the Company. (b) In the event of termination of this Agreement by either the Company or Firenze as provided in Section 7.1, this Agreement will forthwith become void and have no effect, without any liability or obligat