EXHIBIT (e)(2)
AGREEMENT
This Agreement is made as of the 1st day of December, 1999
by and between Cucos, Inc. (the "Company") and Jacksonville
Restaurant Acquisition Corporation, Inc. ("JRAC").
WHEREAS, the Board of Directors of the Company have amended
the Company's Articles of Incorporation to authorize 300,000
shares of preferred stock, no par value, having the rights and
preferences set forth in the Articles of Amendment attached
hereto as Exhibit A (the "Preferred Stock");
WHEREAS, the Company desires to raise capital through the
issuance and sale of 300,000 shares of Preferred Stock for a
purchase price of $1.00 per share;
WHEREAS, the Company is considering the issuance of up to
2,900,000 shares of common stock of the Company (the "Common
Stock") pursuant to a rights offering to the Company's
shareholders (the "Rights Offering");
WHEREAS, JRAC desires to purchase 300,000 shares of
Preferred Stock of the Company and to serve as a stand-by
purchaser in the Rights Offering, all on the terms and conditions
hereinafter set forth;
WHEREAS, JRAC has demonstrated, to the satisfaction of the
Board of Directors of the Company, that JRAC has the financial
ability to perform the commitments made hereunder (which
aggregate approximately $2,900,000);
NOW THEREFORE, it is agreed as follows:
ARTICLE I - SALE OF PREFERRED STOCK
1.01 Initial sale of Preferred Stock. JRAC hereby
purchases 120,000 shares of Preferred Stock for an aggregate
purchase price of $120,000. JRAC acknowledges receipt of a
certificate representing such shares. The Company hereby
acknowledges receipt of a wire transfer of $120,000 in full
payment for such shares.
1.02 Option to acquire additional shares of Preferred Stock.
The Company hereby grants to JRAC the option to purchase 180,000
additional shares of Preferred Stock for a price of $1.00 per
share (the "Option"). The Option shall be exercisable on or
before January 31, 1999, and shall expire on January 31, 1999
(the "Expiration Date"). The Option must be exercised as to the
entire amount of the Preferred Stock covered by the Option. The
Option is may be exercised by delivering to the Company written
notice of exercise, accompanied by a certified check for $180,000
on or before the Expiration Date.
1.03 Accredited investor. JRAC hereby represents and
warrants to the Company that JRAC is an "accredited" investor
within the meaning of Regulation D under the Securities Act of
1933, as amended. JRAC also represents and warrants that JRAC is
a sophisticated investor in the restaurant industry and has made
such investigation as it deems necessary of the Company's
business, financial condition and prospects prior to investing in
the Preferred Stock.
ARTICLE II - DUE DILIGENCE REVIEW
2.01 JRAC's review of the Company's operations. Until the
Expiration Date, JRAC shall be entitled to conduct due diligence
of the Company, and the Company will make available to JRAC all
of the Company's books and records as JRAC shall reasonably
request to assess the advisability of exercising the Option. The
Company shall give JRAC the opportunity to discuss the Company's
financial condition and prospects with third parties (including
the Company's employees, vendors and creditors); provided,
however, that the Company reserves the right to deny JRAC access
to such persons if the Chairman of the Board of the Company, in
his sole discretion, deems it appropriate to deny such access.
2.02 Confidentiality. JRAC agrees that it, and its owners,
officers, employees and agents, will keep confidential any
information about the Company made available to JRAC in
connection with its due diligence review. If JRAC determines not
to exercise the Option, then JRAC will return to the Company all
documentation and other materials delivered to JRAC in connection
with its due diligence review. JRAC acknowledges that the
information to be delivered to JRAC in connection with its due
diligence review may be highly proprietary and confidential.
JRAC further acknowledges that the Company's common stock is
publicly traded, and that neither JRAC nor any of its owners,
officers, employees or agents should engage in the purchase or
sale of shares of the Company's common stock when in possession
of material non-public information. Accordingly, JRAC agrees
that neither JRAC nor any of its owners, officers, employees or
agent will purchase or sell any shares of Common Stock (except
for purchases of Common Stock in connection with the Rights
Offering) for a period of one month following the Expiration
Date.
ARTICLE III - POSSIBLE RIGHTS OFFERING
3.01 Terms of possible Rights Offering. The Company hereby
represents that the Board of Directors is considering the
advisability of a Rights Offering pursuant to which the Company
would distribute to its shareholders the right to acquire
additional shares of Common Stock for a price to be established
by the Board of Directors (the "Rights Offering Price"). JRAC
acknowledges that, upon the effectiveness of a Registration
Statement covering the shares to be issued in the Rights
Offering, the Preferred Stock would be converted, in accordance
with its terms, into shares of Common Stock.
3.02 Commitment by JRAC to be stand-by purchaser. JRAC
hereby agrees that, if JRAC exercises the Option, JRAC will
exercise its rights with respect to the 300,000 shares of Common
Stock to be owned by JRAC upon the automatic conversion of its
Preferred Stock. JRAC further agrees to purchase up to an
additional 2,600,000 shares of Common Stock registered for
issuance in the Rights Offering to other shareholders of the
Company if such shareholders elect not to exercise their rights
to purchase such shares. All purchases by JRAC will be made at
the Rights Offering Price.
ARTICLE IV - MANAGEMENT OF THE COMPANY PRIOR TO
COMPLETION OF RIGHTS OFFERING
4.01 Board of Directors. Upon JRAC's purchase of the
initial 120,000 shares of Preferred Stock, Xxxxxx Xxxxx shall be
elected by the Board of Directors to fill a vacancy currently
existing on the Board of Directors. Xxxxxx Xxxxx shall serve
until the next annual meeting of shareholders and until his
successor shall be elected and have qualified.
4.02 President of Company. The Company agrees that if the
Option is exercised, and until the earlier of (a) the closing of
the Rights Offering; (b) the closing of a transaction involving a
sale of the Company or its assets that is inconsistent with a
rights offering or (c) Xxxxx X. Xxxxxx is relieved of his
position with the Company for "cause", Xxxxx X. Xxxxxx shall be
the president of the Company and responsible for day-to-day
management of the Company. It is agreed that the term "cause"
shall mean an action involving the misappropriation of Company
funds or assets.
4.03 Management of the Company following completion of the
Rights Offering. The Board of Directors of the Company hereby
agrees that, if the Rights Offering is consummated and JRAC
becomes a majority shareholder pursuant to its commitment in
Section 3.02 hereof, then the Company shall hold a shareholders'
meeting at which the Board will propose the following persons to
be directors of the Company: (a) Xxxxx X. Xxxxxx; (b) three other
persons designated by JRAC; and (c) three persons to be
designated by the Board of Directors.
ARTICLE V - ABILITY TO "SHOP" THE COMPANY;
RIGHT OF FIRST REFUSAL
5.01 Right to sell. Nothing contained in this Agreement
shall prohibit the Board of Directors of the Company from
actively seeking a purchaser for the Company or its assets or
from taking any action that the Board believes to be necessary or
appropriate to manage the Company or to sell the Company or its
assets.
5.02 Right of first refusal. If, at any time prior to
November 30, 2000, the Company proposes to enter into a
definitive agreement to sell to a third party (the "Proposed
Purchaser") the Company or substantially all of its assets, then
JRAC shall have the right to purchase the Company or
substantially all of its assets, as the case may be, at the same
price as the Proposed Purchaser has agreed to pay. If the
purchase price to be paid by the Proposed Purchaser in
consideration other than cash, then JRAC shall be entitled to pay
the fair market value of such consideration in cash.
ARTICLE VI - MISCELLANEOUS
6.01 Specific performance. JRAC acknowledges that the
Company may conduct a Rights Offering based upon the Company's
reliance that JRAC will perform its commitments under Section
3.02 hereof. JRAC agrees that the Company shall be entitled to a
remedy of specific performance, in addition to any damages that
may be due, if JRAC refuses to perform its commitments under
Section 3.02 hereof.
6.02 Choice of law and venue. The parties agree that this
Agreement shall be governed by Louisiana law, and that any
dispute related to this agreement would be submitted to the
exclusive jurisdiction of the courts of Xxxxxxxxx xxxxxx,
Louisiana.
6.03 Entire agreement. This Agreement, together with any
written amendment hereto, represents the entire agreement of the
parties with respect to the matters covered hereby.
6.04 Term. This Agreement shall terminate on the Expiration
Date if the Option is not exercised by JRAC. If the Option is
exercised by JRAC, this Agreement shall terminate on the earlier
of (a) the date that the Rights Offering shall have been
consummated; (b) the date that the Company or substantially all
of its assets, is/are sold to a third party; or (c) April 30,
2000.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
CUCOS, INC.
By: /s/ Xxxxx X. Xxxxxxx, Xx.
Xxxxx X. Xxxxxxx, Xx.,
Chairman of the Board
JACKSONVILLE RESTAURANT ACQUISITION CORPORATION, INC.
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
President
