Exhibit 2
XXXXXX'S FAMOUS, INC.
November 25, 1998
Miami Subs Corporation
0000 Xxxxxxxxx 00xx Xxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxx, President
Gentlemen:
Xxxxxx's Famous, Inc., a Delaware corporation (the "Purchaser"), hereby
submits this letter with regard to its proposal to acquire all of the remaining
issued and outstanding shares of Common Stock (including the assumption of
options and warrants relating thereto) of Miami Subs Corporation, a Florida
corporation ("Miami Subs"), by merging with Miami Subs and being the surviving
corporation subsequent to such merger, subject to the terms herein, such
purchase being referred to herein as the "Transaction."
1. The parties will enter into a Merger Agreement which will provide for
payment to the stockholders of Miami Subs in common stock and warrants of the
Purchaser (the "Transaction Consideration), which securities shall be registered
pursuant to a registration statement on Form S-4. The Transaction Consideration
for each share of Common Stock of Miami Subs shall consist of (a) common stock
of Purchaser having a market price of $.517 per share at closing provided that
Purchaser shall not be required to issue more than one share of its common stock
for each eight shares of common stock of Miami Subs; and (b) warrants to acquire
Purchaser's Common Stock at an exercise price of $6.00 per share at the rate of
one warrant for each four shares of Purchaser's common stock received by Miami
Subs stockholders in the Transaction. The Transaction Consideration will be
appropriately adjusted to reflect any stock split (including a reverse stock
split), dividend, reclassification, recapitalization or similar transaction
effectuated by either the Purchaser or Miami Subs prior to the closing of the
Transaction. The Transaction will be subject to shareholder approval by
Purchaser's stockholders and Miami Subs stockholders at special meetings of
stockholders in accordance with applicable state and Federal laws and Purchaser
and Miami Subs receipt of fairness opinions indicating that the Transaction
Consideration is fair, from a financial point of view, to Purchaser's
stockholders or Miami Subs stockholders, as the case may be.
2. Consummation of the Transaction is contingent upon the Purchaser and Miami
Subs completing, and being satisfied with the results of, a due diligence review
of Miami Subs. and the Purchaser, as the case may be. The purpose of such review
is to provide the Purchaser and Miami Subs, as the case may be, with information
with regard to the operations and prospects of Miami Subs and the Purchaser, as
the case may be, to ensure that the acquisition is appropriate as proposed. To
assist the Purchaser and Miami Subs, as the case may be, in conducting this
review, Miami Subs and the Purchaser, as the case may be, will provide, or cause
to be provided, all information with respect to itself as the Purchaser and
Miami Subs, as the case may be, may reasonably request, including any interim
audited financial information.
3. In addition to Miami Subs shareholder approval and receipt of the fairness
opinion referenced in item (1), consummation of the Transaction is subject to,
among other things, (a) the execution of mutually acceptable definitive
documentation which contains such representations, warranties, covenants and
other terms as are customary, (b) approval of the Transaction by the Board of
Directors of the Purchaser and Miami Subs, (c) consent to the Transaction and
the granting of any necessary waivers by any necessary third parties, (d) the
absence of any pending or threatened litigation or other contingent liabilities
or obligations which could prevent the closing of the Transaction or materially
adversely affect the business of Miami Subs (the "Business"), (e) compliance by
the Purchaser and Miami Subs with the requirements of applicable Florida
anti-takeover and related statutes.
4. Whether or not the Transaction is completed, each party will bear its own
expenses (including, without limitation, any broker's or finder's fees and any
attorney's and accountant's fees) incurred in connection with this letter and
the Transaction.
5. Miami Subs agrees that during the period from the date hereof through the
closing of the Transaction (a) the Business will be operated only in the
ordinary course, (b) Miami Subs will not dispose of any of its assets used in
connection with its business other than in the ordinary course of business, and
(c) Miami Subs will not make any distribution or any other payment, in cash or
in securities, to its shareholders, officers, directors or its or their
affiliates, other than salary paid in the ordinary course of business consistent
with past practice. Additionally, Miami Subs represents and warrants that the
Business has been operated in the ordinary course of business since August 31,
1998.
6. Miami Subs represents that it has filed all forms, reports and documents
required to be filed by it with the Securities and Exchange Commission ("SEC")
since filing its Report on Form 10-Q for the quarter ended August 31, 1998 and
has made available to Purchaser such forms, reports and documents in the form
filed with the SEC. All such required forms, reports and documents (including
those which Miami Subs may file subsequent to the date hereof) are designated as
the "SEC Reports." As of their respective dates, the SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to the SEC Reports, and (ii) did not at the time they were
filed (or amended or superseded) contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
7. Miami Subs agrees to use its best efforts to retain for the benefit of
Miami Subs all employees of Miami Subs determined by the Purchaser to be
necessary to Miami Subs' operations. Xxxxxxxxx agrees to enter into employment
agreements with each of Xxxxxx Xxxxxx, Xxxxx Xxxx and Xxxxx Xxxxx on the terms
and conditions set forth on Exhibit "A" attached hereto.
8. From the date hereof until the earlier of (a) 60 days from the date of
this letter, or (b) the date on which the parties have terminated discussions
regarding the Transaction, Miami Subs shall not, and Miami Subs shall use
reasonably commercial efforts to cause Miami Subs to cause its officers,
directors, employees and other agents not to, directly or indirectly, take any
action to (i) solicit, initiate or encourage any offer or proposal or indication
of interest in a merger, consolidation or other business combination involving
any capital stock in, or a substantial portion of the assets of Miami Subs,
other than in connection with the transactions contemplated by the Transaction,
or (ii) participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. Miami Subs shall notify the Purchaser immediately if any person makes
any proposal, offer, inquiry, or contract with respect to any of the foregoing.
9. Without the consent of Miami Subs (in the case of Purchaser) or the
consent of Purchaser (in the case of Miami Subs), none of the parties shall
issue any press release or make any public announcement with regard to the
Transaction; provided, however, nothing herein shall be deemed to prohibit any
party hereto from making any disclosure which its counsel deems necessary or
advisable in order to fulfill such party's disclosure obligations imposed by law
or the rules of any national securities exchange or automated quotation system,
so long as the disclosing party uses all commercially reasonable efforts to
consult with the other parties prior to such disclosure.
10. Each of the Purchaser and Miami Subs agrees that it will keep
confidential (except for such disclosure to attorneys and other representatives
as may be appropriate in furtherance of this transaction and except for
disclosure as may be required by applicable law) all confidential information
obtained by it from the other party or parties in connection with the
Transaction. Confidential information does not include any information that was
available by a party on a non-confidential basis prior to its receipt of such
information or thereafter became publicly available not as a result of a breach
of this Agreement. Information shall be deemed "publicly available" if it
becomes a matter of public knowledge or is contained in materials available to
the public or is obtained from any source other than Purchaser or Miami Subs (or
their respective directors, officers, employees, agents, representatives or
advisors), as the case may be.
11. This letter shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without regard to conflicts of law
principles thereof.
If the above properly meets with your approval with respect to the proposed
Transaction, please sign where indicated below.
XXXXXX'S FAMOUS, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Accepted and Agreed as of the date first above written:
MIAMI SUBS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
President & Chief Operating Officer
