Exhibit 10.5.1
NEWRIDERS, INC.
000 XXX XXXXXXX XXXXX XXXXX 000
XXXXXXX XXXXX, XXXXXXXXXX 00000
October 7, 1997
Xxxxxxx Xxxxxxx and Xxxxx Xxxxxxx
True Xxxxxxx c/o
M & B Restaurants, L.C.
0000 Xxxx Xxxxxx Xxxxxx Xxxx
Xxxxxxx Xxxxxxx 00000
Dear Xxxx, Mama and True,
This preliminary letter of intent will set forth the conditional
agreement between you collectively (the "Sellers") and Newriders, Inc.
("Newriders") for the sale and purchase of all of your shares (the "Shares"),
constituting all of the outstanding shares of capital stock of M & B
Restaurants, L.C., a Texas corporation, dba El Paso Barbeque Company (the
"Company"). This letter is not intended to be the definitive agreement between
the parties nor binding upon the parties, except with respect to paragraphs 6,
7 and 8 below dealing with the exclusive negotiating rights, confidentiality
and joint public disclosure which shall be binding. The parties' obligation
to sell or purchase the Shares is expressly conditioned on execution of a
definitive Purchase Agreement as described below, and each party's
satisfaction with the terms of the transaction after completion of normal and
customary due diligence investigations of the other. In addition, Newrider's
obligation to purchase the Shares is and in the Purchase Agreement will be,
further expressly conditioned on its receipt of an acceptable financing
commitment in an amount of not less then $3,000,000.00.
The basic terms of the purchase will be as follows:
1. Newriders will purchase the Shares from the Sellers, which at the
closing, will constitute all of the issued and outstanding capital stock of
the Company.
2. The Company's assets at closing will consist of all of the real,
personal and intangible property that it presently owns, subject to normal
business operations, including without limitation, all trademarks, service
marks, trade names, designs, logos, concepts, plans, rights to purchase or
lease future sites and the like.
3. At the closing, the Company's total debt other than ordinary course of
business payables, shall not exceed $2,500,000.00 (the "Existing Debt").
4. The consideration for the sale and purchase of the Shares will consist
of:
a. Newriders' assumption and payment of the Existing Debt;
b. 1,000,000 shares of restricted common stock of Newriders with
anti-dilution protections during the period from the execution of this
preliminary letter of intent through the closing; and
c. Newriders' promissory note in the principal amount of
$3,000,000.00 payable to the Sellers together with interest at the rate of
prime plus one percent, secured by a first lien on the Shares and all due and
payable within 90 days from the closing.
5. In addition to the foregoing, Xxxxxxx Xxxxxxx will become employed by
Newriders effective as of the Sellers' execution of this preliminary letter of
intent, for a period of five years, with the title and in the capacity of its
Chief Executive Officer, reporting to the Board of Directors and its Chairman,
for an annual salary of $200,000.00 per year. As additional compensation,
Xxxxxxx Xxxxxxx will be granted a ten year option to purchase 750,000 shares
of Newriders common stock at an exercise price of $2.50 per share with anti-
dilution protection. One-half of the options will become vested after one year
of continuous service in such capacity and the remainder vested after two
years of continuous service. Newriders will pay reasonable relocation costs to
move Xx. Xxxxxxx'x household from Phoenix to Newport Beach.
6. The Sellers agree that Newriders shall have the exclusive right to
negotiate for the purchase of the Shares for a sixty day period beginning on
the date of their execution of this preliminary letter of intent. During such
period, the Sellers will not solicit, entertain or negotiate any other offers
for the purchase of the Shares.
7. Both parties agree to maintain any information concerning the other
obtained during the due diligence investigation in confidence and have or will
execute and deliver formal confidentiality agreements.
8. Any public announcement or press release relating to the transaction
contemplated in this preliminary letter of intent shall be approved by Sellers
and Newriders in writing in advance of its publication.
9. The parties will use their reasonable best efforts to cause a
definitive Purchase and Sale Agreement (the "Purchase Agreement") containing
the terms set forth herein and such additional terms, provisions, agreements,
covenants, representations and warranties as are usual and customary in such
transactions to be prepared and executed within 20 days of the execution
of this preliminary letter of intent. The Purchase Agreement shall provide
that the due diligence period shall be concluded within 30 days of the
execution of this preliminary letter of intent and provided neither party has
elected to withdraw as provided therein, for the closing of the transaction
within 60 days of the execution of this preliminary letter of intent.
10. From the date hereof through closing, Newriders shall and the
Sellers shall cause the Company to operate in the normal course of their
respective businesses in order to maintain and preserve their respective
property, business and other assets, including the good will of customers,
suppliers and vendors and the stability of their respective labor forces.
11. Each party will beat its own legal, accounting and other fees and
expenses in connection with this transaction.
If the foregoing is acceptable to you, please indicate your acceptance by
executing the enclosed counterpart of this letter in the space provided below
and returning it to the undersigned.
Newriders, Inc.
By /s/Xxxx Xxxxxx
-----------------------
Xxxx Xxxxxx, Chairman
of the Board of Directors
The foregoing is accepted and agreed.
/s/ Xxxxxxx Xxxxxxx Dated: October 10,1997
-----------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxx Xxxxxxx Dated: October 10, 1997
------------------------------
Xxxxx Xxxxxxx
/s/ True Xxxxxxx
------------------------------ Dated: October 9, 1997
True Xxxxxxx
