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EXHIBIT 2.1
WYNDCREST HOLDINGS, LLC
August 15, 2001
Xx. Xxx Xxxx
Chairman of the Board
Mexican Restaurants, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Dear Xx. Xxxx,
The purpose of this letter ("Letter of Intent") is to define the terms pursuant
to which Wyndcrest Holdings, LLC, a Florida limited liability company, to be
designated ("Wyndcrest"), would purchase the capital stock and warrants of
Mexican Restaurants, Inc. and any of its subsidiaries ("MRI"), on and subject to
the following terms and conditions, and subject to the execution by MRI and
Wyndcrest of a mutually acceptable definitive agreement (the "Definitive
Agreement") and related ancillary documents encompassing the terms contained
herein.
SECURITIES/INSTRUMENTS
PURCHASED: Wyndcrest shall acquire all 3,522,905 of the
outstanding shares of common stock (the "Common
Stock") in MRI, all 855,766 warrants issued by MRI
(the "Warrants"), and refinance MRI's outstanding
bank debt (the "Bank Debt") through a stock
purchase transaction valued at approximately $27.6
million.
PURCHASE PRICE: Wyndcrest shall pay $5.00 for each share of Common
Stock, $2.25 for each Warrant, and shall refinance
100% of the outstanding principal balance of Bank
Debt outstanding at the time of the Closing of this
transaction (the "Closing"). This equates to a
purchase price of approximately $27.6 million.
NUMBER PURCHASE
ACQUIRED PRICE CONSIDERATION
---------- -------- -------------
Common Stock 3,522,905 $ 5.00 $ 17,614,525
Warrants 855,766 $ 2.25 $ 1,925,474
Bank Debt 8,100,000 $ 1.00 $ 8,100,000
-------------
TOTAL CONSIDERATION $ 27,639,999
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FORM OF CONSIDERATION: Wyndcrest will issue 10% monthly income notes with
principal due at or before 5 years from the Closing
date (the "Bonds") to all holders of Common Stock
based on the ratio of one $25.00 bond for each 5
shares of Common Stock, and to all holders of
Warrants in the ratio of one $25.00 bond for each
11.11 Warrants. Such 10% Bonds will be registered
with the Securities and Exchange Commission
pursuant to Section 12(b) or (g) of the Securities
and Exchange Act of 1934.
Wyndcrest will pay cash to refinance the Bank Debt.
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MANAGEMENT: Upon approval and acceptance of this Letter of
Intent, Wyndcrest will negotiate with the existing
management team of MRI to retain such individuals
on a long-term basis. It is anticipated, though not
required, that management employment agreements be
executed in advance of closing. Such agreements are
likely to include both cash and stock grant
compensation.
DUE DILIGENCE: We anticipate that due diligence would require no
more than 20 days to complete.
ACCESS: MRI will provide Wyndcrest and its representatives
full access, at all reasonable times after the date
hereof until the Closing, to the books, records,
property and personnel of MRI as Wyndcrest may
reasonably request to facilitate a complete
investigation, inspection and analysis by Wyndcrest
of MRI and its prospects. MRI will also make
available its attorneys, accountants and other
outside consultants for the purpose of discussing
with Wyndcrest and its representatives the business
and prospects of MRI.
CONDITIONS TO CLOSE: The obligations of each party to consummate the
proposed purchase of the Common Stock and Warrants
will be subject to the satisfaction of various
conditions. These conditions include:
(i) Approval by the Board of Directors of
MRI and their recommendation to
shareholders to accept the offer (if
such recommendation is necessary).
(ii) The parties shall have entered into the
Definitive Agreement and related
ancillary documents including without
limitation bond documents, in form and
substance satisfactory to each party in
its sole discretion
(iii) No material litigation or governmental
action shall be pending or threatened
with respect to the transactions
contemplated hereby.
(iv) Wyndcrest shall have obtained, on terms
and conditions satisfactory to it, loans
for the purpose of refinancing the Bank
Debt.
(v) All representations and warranties made
to such party in the Definitive
Agreement and ancillary documents shall
be true, correct and complete as of the
date of Closing.
(vi) MRI shall have provided evidence
satisfactory to Wyndcrest that MRI has
obtained the consent or approval of all
third parties, including, but not
limited to, applicable governmental or
regulatory authorities, whose consent or
approval is necessary or desirable in
connection with the consummation of the
transactions contemplated by this Letter
of Intent or for Wyndcrest's
unencumbered operation of MRI following
the Closing.
(vii) Each party shall have performed and
complied in all material respects with
all agreements and conditions to be
performed or complied with by them prior
to the Closing.
(viii) The results of the investigations by
Wyndcrest and its representatives of MRI
shall be satisfactory to Wyndcrest in
all respects, and Wyndcrest shall have
received a favorable legal opinion from
counsel to MRI with respect to such
subjects regarding MRI and the
transactions contemplated by this Letter
of Intent as are customary in
transactions of this nature.
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(ix) MRI shall have provided Wyndcrest a
report of an examination of title to all
real property included in the assets of
MRI and a current survey of all real
property included in those assets,
Wyndcrest's counsel shall have reviewed
the same and determined that the title
and other matters relating to all such
property is satisfactory, and Wyndcrest
shall have received a commitment for an
owner's title insurance policy covering
such property and issued by a title
insurance company acceptable to
Wyndcrest showing Wyndcrest as the
insured, with coverage in such amount as
Wyndcrest shall deem appropriate at
standard rates, insuring fee simple
title in such property to Wyndcrest and
showing title exceptions only for such
matters as are acceptable to Wyndcrest.
(x) MRI shall have provided evidence
satisfactory to Wyndcrest that no
material adverse change shall have
occurred in MRI, including the
operation, condition or prospects
thereof or liabilities relating thereto,
on or prior to the Closing date.
CONDUCT OF
MRI'S BUSINESS: Between the date of this Letter of Intent and the
Closing, MRI will conduct and operate itself in the
usual and ordinary course and in substantially the
manner as heretofore conducted by MRI, and MRI
shall not take any action which shall have a
material adverse effect on the organization,
financial structure, practices or operations of the
business of MRI. Without limiting the foregoing (i)
MRI will use its best efforts to (a) retain the
present employees, customers, contracts and
suppliers of the business, (b) continue to
replenish the inventory of the business in
accordance with past practices, and (c) maintain,
preserve and repair the assets of MRI and to keep
such assets in substantially the same state or
condition as on the date hereof; (ii) after the
date hereof (x) no dividend or other distribution
or payment will be declared with respect to any of
the stock or other securities, as applicable, of
MRI, and MRI will not redeem, purchase or otherwise
acquire any of their stock or other securities; (y)
no change will be made in the articles of
incorporation, bylaws or other organizational
documents of MRI; (z) no change will be made in the
authorized or issued capital stock of MRI or the
outstanding securities of MRI; and (iii) MRI will
not grant any wage or salary increase.
NO DISCUSSIONS
WITH OTHERS: In consideration of Wyndcrest entering into this
Letter of Intent and undertaking to investigate the
businesses of MRI and to incur expenses in
connection therewith, MRI agrees that, until 5:00
p.m. Eastern Standard Time the day that is 90 days
after the date of this Letter of Intent, neither
MRI nor any of its respective affiliates, officers,
directors, management employees, agents, or
advisors shall, directly or indirectly, solicit or
entertain offers from, negotiate with or in any
manner encourage, discuss, accept, or consider any
proposal of any other person or entity relating to
the acquisition of the assets or capital stock of
MRI, in whole or in part, through purchase, merger,
consolidation, share exchange or otherwise (except
for sales of inventory in the ordinary course of
business), or any other business combination
involving MRI. In addition, MRI agrees immediately
to cease and cause to be terminated any previously
undertaken or ongoing activities, discussions or
negotiations with any other person or entity with
respect to any transaction of the type described in
the preceding sentence. Furthermore, if MRI or any
of its respective shareholders, affiliates,
officers, directors, management
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employees, agents, or advisors receives any
communication regarding any offer or proposal of
the type described in the first sentence of this
Section during the 90 day period mentioned above,
then MRI shall immediately notify Wyndcrest of the
receipt of such proposal and shall promptly provide
to Wyndcrest a copy of such proposal (or if such
proposal is not in writing, a written summary of
its terms).
NO BROKERS: MRI shall indemnify Wyndcrest and hold it harmless
from and against all claims or demands for
commissions or other compensation by any broker,
finder or similar agent claiming to have been
employed by or on behalf of MRI.
NO CONFLICTING
OBLIGATIONS: MRI represents and warrants to Wyndcrest that MRI
is not a party to any letter of intent, agreement
or understanding (except this Letter of Intent)
relating to any purchase or other transaction
involving any of the capital stock or any merger,
consolidation, sale of substantial assets of MRI,
or other business combination or change in control
of MRI, or which otherwise could prevent or
restrict MRI from entering into this Letter of
Intent and performing his, her or its obligations
hereunder.
EXPENSES OF
THE PARTIES: Except as otherwise expressly provided elsewhere in
this Letter of Intent and regardless of whether or
not the transaction contemplated hereunder is
consummated, (i) Wyndcrest shall be solely
responsible for, and shall bear, its own costs and
expenses, including, without limitation, expenses
and fees of legal counsel, accountants, advisors
and all others, incurred at any time in connection
with the inspection or investigation of MRI, the
negotiation of the terms and conditions contained
or to be contained in this Letter of Intent and the
Definitive Agreement and related documents, and the
consummation of the transactions contemplated
hereby, and (ii) MRI shall be solely responsible
for, and shall bear, any such costs and expenses
incurred by MRI. If MRI terminates the discussions
with Wyndcrest regarding the acquisition of the
capital stock of MRI, MRI shall be liable for the
reimbursement of any and all expenses Wyndcrest has
incurred in connection with this Letter of Intent
and the transactions contemplated hereunder.
EFFECT: Other than the provisions of the section entitled
"EXPENSES OF THE PARTIES" (which is and shall be a
binding and enforceable agreement of MRI), This
Letter of Intent does not constitute a binding
agreement by the parties hereto; instead, it
expresses the intention of the parties to proceed
expeditiously to negotiate, prepare, reach
agreement on and execute a Definitive Agreement and
related documents as contemplated by this Letter of
Intent. Except for the section entitled EXPENSES OF
THE PARTIES, which shall survive any termination
hereof, this Letter of Intent shall terminate and
be of no further force or effect if the execution
and delivery of the Definitive Agreement has not
occurred on or before November 21, 2001.
GOVERNING LAW: This Letter of Intent shall be governed by and
construed and enforced in accordance with the laws
of the State of Florida, without regard to
conflicts of laws principles.
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Please indicate MRI's agreement to the terms hereof by having this Letter of
Intent signed in the spaces provided below and returning a copy to the
undersigned (Fax No.: 000-000-0000) no later than 5:00 p.m., Eastern Standard
Time, on August 22, 2001 (at which time this Letter of Intent, if not so signed
and returned, will expire). This Letter of Intent may be signed in any number of
counterparts, all of which together shall constitute a single Letter of Intent.
Signatures of the parties transmitted by facsimile will be valid and binding for
all purposes.
Very truly yours,
WYNDCREST HOLDINGS, LLC
By:
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Name: Xxxx Xxxxxx
Title: Pres. of the Managing Member
ACCEPTED AND AGREED TO:
MEXICAN RESTAURANTS, INC.
By:
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Name:
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Title:
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