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EXHIBIT 2.1
WYNDCREST HOLDINGS, LLC
July 30, 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/ Wyndcrest shall acquire all 3,522,905 of the outstanding
INSTRUMENTS shares of common stock (the "Common Stock") in MRI, all
PURCHASED: 880,766 warrants issued by MRI (the "Warrants"), and
refinance MRI's outstanding bank debt (the "Bank Debt")
through a stock purchase transaction valued at
approximately $25.7 million.
PURCHASER PRICE: Wyndcrest shall pay $4.50 for each share of Common Stock,
$2.00 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 $25.7
million.
Number Purchase
Acquired Price Consideration
---------- ---------- -------------
Common Stock 3,522,905 $ 4.50 $ 15,853,073
Warrants 880,766 $ 2.00 $ 1,761,532
Bank Debt 8,100,000 $ 1.00 $ 8,100,000
==============
Total Consideration $ 25,714,605
==============
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FORM OF CONSIDERATION: Wyndcrest will issue 10% monthly income notes with
principal due at or before 10 years from the Closing
date (the "Bonds") to all holders of Common Stock
based on the ratio of one $25.00 bond for each 5.56
shares of Common Stock, and to all holders of
Warrants in the ratio of one $25.00 bond for each
12.5 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.
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.
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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
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transactions contemplated by this Letter of
Intent as are customary in transactions of
this nature.
(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 Between the date of this Letter of Intent and the
BUSINESS: 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
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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 In consideration of Wyndcrest entering
OTHERS: 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 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).
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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 MRI represents and warrants to Wyndcrest that MRI is
OBLIGATIONS: 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
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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 October 29, 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.
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 6, 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: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: Managing Member
ACCEPTED AND AGREED TO:
MEXICAN RESTAURANTS, INC.
By:
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Name:
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Title:
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