UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
- --------------------------------------------------------------------------------
(Mark one)
XX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --------
ACT OF 1934
For the quarterly period ended March 31, 1998
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________
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Commission File Number: 0-27006
MILLION DOLLAR SALOON, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 13-3428657
(State of incorporation) (IRS Employer ID Number)
6848 Greenville Avenue, Dallas, TX 75231
(Address of principal executive offices)
(214) 691-6757
(Issuer's telephone number)
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES X NO
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: April 30, 1998: 6,144,451
Transitional Small Business Disclosure Format (check one): YES NO X
<PAGE>
MILLION DOLLAR SALOON, INC.
Form 10-QSB for the Quarter ended March 31, 1998
Table of Contents
Page
----
Part I - Financial Information
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 11
Part II - Other Information
Item 1 Legal Proceedings 12
Item 2 Changes in Securities 12
Item 3 Defaults Upon Senior Securities 13
Item 4 Submission of Matters to a Vote of Security Holders 13
Item 5 Other Information 13
Item 6 Exhibits and Reports on Form 8-K 13
2
<PAGE>
<TABLE>
<CAPTION>
Part 1 - Item 1 - Financial Statements
MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1998 and December 31, 1997
ASSETS
(Unaudited) (Audited)
March 31, December 31,
1998 1997
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash on hand and in bank $ 785,680 $ 149,952
Note receivable - current portion 22,604 22,604
Prepaid income taxes receivable 4,248 37,248
Inventory 13,339 16,097
Prepaid expenses 81,782 73,544
----------- -----------
Total current assets 907,653 299,445
----------- -----------
PROPERTY AND EQUIPMENT
Buildings and related improvements 1,955,132 1,955,132
Furniture and equipment 757,110 757,110
Vehicles 52,728 52,728
----------- -----------
2,764,970 2,764,970
Less accumulated depreciation (1,497,934) (1,475,570)
----------- -----------
1,267,036 1,289,400
Land 741,488 741,488
----------- -----------
Net property and equipment 2,008,524 2,030,888
----------- -----------
OTHER ASSETS
Note receivable - noncurrent portion 99,995 105,442
Accounts receivable from officers, shareholders and affiliates 815,824 805,684
Organization costs, net of accumulated amortization
of $38,406 and $34,658, respectively 36,522 40,270
Loan costs, net of accumulated amortization of
$15,804 and $14,222 respectively 15,803 17,384
Other 7,725 7,725
----------- -----------
Total other assets 975,869 976,505
----------- -----------
TOTAL ASSETS $ 3,892,046 $ 3,306,838
=========== ===========
</TABLE>
- Continued -
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
3
<PAGE>
<TABLE>
<CAPTION>
MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
March 31, 1998 and December 31, 1997
LIABILITIES AND SHAREHOLDERS' EQUITY
(Unaudited)(Audited)
March 31, December 31,
1998 1997
----------- -----------
<S> <C>
CURRENT LIABILITIES
Current portion of long-term debt $ 163,288 $ 163,288
Accounts payable - trade 24,393 22,571
Accrued liabilities 46,200 35,622
Dividends payable 61,445 54,095
Tenant deposits 7,510 6,500
---------- ----------
Total current liabilities 302,836 282,076
---------- ----------
LONG-TERM LIABILITIES
Long-term debt, net of current maturities 295,631 334,872
Deferred tax liability 98,936 98,936
---------- ----------
Total liabilities 697,403 715,884
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock - $0.001 par value. 5,000,000 shares
authorized. None issued and outstanding -- --
Common stock - $0.001 par value. 50,000,000 shares
authorized. 6,144,451 and 5,409,451 issued
and outstanding, respectively 6,144 5,409
Additional paid-in capital 598,965 --
Retained earnings 2,461,976 2,585,545
---------- ----------
Total shareholders' equity 3,194,643 2,590,954
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,892,046 $3,306,838
========== ==========
</TABLE>
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
4
<PAGE>
MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three months ended March 31, 1998 and 1997
(Unaudited)
1998 1997
----------- -----------
REVENUES
Bar and restaurant sales $ 829,942 $ 841,070
Rental income 125,422 110,805
----------- -----------
Total revenues 955,364 951,875
----------- -----------
COST OF SALES - BAR AND
RESTAURANT OPERATIONS 464,553 473,558
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GROSS PROFIT 490,811 478,317
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OPERATING EXPENSES
General and administrative expenses 366,187 257,130
Interest expense 13,202 17,291
Depreciation and amortization 27,691 29,452
----------- -----------
Total operating expenses 407,080 303,873
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INCOME FROM OPERATIONS 83,731 174,444
OTHER INCOME (EXPENSES)
Interest and other miscellaneous 13,048 9,566
Gain on sale of fixed assets -- 48,499
----------- -----------
INCOME BEFORE
INCOME TAXES 96,779 232,509
INCOME TAX (EXPENSE) BENEFIT
Currently payable (33,000) (54,000)
Deferred -- --
----------- -----------
NET INCOME $ 63,779 $ 178,509
=========== ===========
Earnings per share of
common stock outstanding $ 0.01 $ 0.04
=========== ===========
Weighted-average number
of shares outstanding 5,515,618 5,010,084
=========== ===========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
5
<PAGE>
<TABLE>
<CAPTION>
MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 1998 and 1997
(Unaudited)
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 63,779 $ 178,509
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 27,691 29,452
Gain on sale of fixed assets -- (48,499)
Common stock issued for consulting fees 69,700 --
Interest income from shareholders capitalized as principal (10,140) (10,683)
(Increase) decrease in
Federal income taxes receivable 33,000 --
Inventory 2,758 (556)
Prepaid expenses (8,238) (23,517)
Deferred tax asset and other -- --
Increase (decrease) in
Accounts payable and other accrued liabilities 12,402 (26,369)
Tenant deposits 1,010 --
Income taxes payable -- 54,000
--------- ---------
Net cash provided by operating activities 191,962 152,337
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Principal collections on note receivable 5,447 3,386
Net proceeds from sale of fixed assets -- 149,374
Purchases of property and equipment -- (1,081)
--------- ---------
Net cash used in investing activities 5,447 151,679
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CASH FLOWS FROM FINANCING ACTIVITIES
Private placement of common stock 530,000 --
Principal payments on long-term notes payable (39,241) (60,057)
Funds advanced to affiliated and shareholders - net -- --
Dividends paid (52,440) (150,301)
--------- ---------
Net cash used in financing activities 439,319 (210,358)
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 635,728 93,658
Cash and cash equivalents at beginning of period 149,952 267,856
--------- ---------
Cash and cash equivalents at end of period $ 785,680 $ 361,514
========= =========
</TABLE>
- Continued -
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
6
<PAGE>
MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Three months ended March 31, 1998 and 1997
(Unaudited)
1998 1997
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SUPPLEMENTAL DISCLOSURES OF
INTEREST AND INCOME TAXES PAID
Interest paid during the period $13,202 $ 17,291
======= ========
Income taxes paid (refunded) $ -- $ --
======= ========
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Declaration of first quarter
dividend at $0.01 and $0.04
per share, respectively $61,445 $200,401
======= ========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
7
<PAGE>
MILLION DOLLAR SALOON, INC.
Notes to Financial Statements
Note 1 - Basis of Presentation
Million Dollar Saloon, Inc. (Company) was incorporated under the laws of the
State of Nevada on September 28, 1987. These financial statements reflect the
books and records of Million Dollar Saloon, Inc. (Nevada), Million Dollar
Saloon, Inc. (Texas), Furrh, Inc., Tempo Tamers, Inc., Corporation Lex and Don,
Inc. for the periods ended March 31, 1998 and 1997, respectively. All
significant intercompany transactions have been eliminated in combination. The
consolidated entities are referred to as Company.
During interim periods, the Company follows the accounting policies set forth in
its Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act
of 1934 on Form 10-KSB filed with the Securities and Exchange Commission. The
December 31, 1997 balance sheet data was derived from audited financial
statements of the Company, but does not include all disclosures required by
generally accepted accounting principles. Users of financial information
provided for interim periods should refer to the annual financial information
and footnotes contained in its Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934 on Form 10-KSB when reviewing the interim
financial results presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the instructions for Form 10-QSB, are unaudited and
contain all material adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial condition, results of
operations and cash flows of the Company for the respective interim periods
presented. The current period results of operations are not necessarily
indicative of results which ultimately will be reported for the full fiscal year
ending December 31, 1998.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note 2 - Summary of Significant Accounting Policies
a) Accounting principles adopted and pending adoption
In June 1997, the Financial Accounting Standards Board released Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income",
(SFAS130) which established standards for reporting and displaying
comprehensive income and its components (revenues, expenses, gains and
losses) in a full set of general purpose financial statements. SFAS130
requires that all items that are required to be recognized under accounting
standards as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. SFAS130 was effective for periods beginning after December 15,
1997. The Company does not have any items which would be required to be
presented in this separate statement and experienced no material impact from
this change in presentation of its consolidated financial statements.
8
<PAGE>
MILLION DOLLAR SALOON, INC.
Notes to Financial Statements - Continued
Note 2 - Summary of Significant Accounting Policies - Continued
a) Accounting principles adopted and pending adoption - continued
In June 1997, the Financial Accounting Standards Board released Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information", (SFAS131) which establishes revised
standards for the method in which public business enterprises are to report
information about operating segments in their annual financial statements and
requires those enterprises to report selected information about operating
segments in interim financial reports issued to shareholders. This statement
also revises the related disclosures about products and services, geographic
areas and major customers. SFAS131 replaces the "industry segment" concept
established in Statement of Financial Accounting Standard No. 14 with a
"management approach" concept as the basis for identifying reportable
segments. SFAS131 is effective for financial statements for annual periods
beginning after December 31, 1997 and for interim periods presented after
December 31, 1998. The Company does not anticipate a material impact from
this change in disclosure presentation in its consolidated financial
statements upon adoption of this standard.
Note 3 - Property and equipment
During the first quarter of 1997, the Company sold a rental property for
gross cash proceeds of approximately $149,474, net of closing costs, and
recognized a gain of approximately $48,499.
Note 4 - Common stock transactions
On March 19, 1998, the Company sold 530,000 shares of restricted, unregistered
common stock to an individual under a Stock Purchase Agreement (Agreement) at a
price of $1.00 per share for total proceeds to the Company of$530,000. The
Agreement also contains a "second closing" clause whereby the individual will
acquire an additional 400,000 shares of equivalent restricted, unregistered
common stock at $1.10 per share for gross proceeds of $440,000, on or before
July 15, 1998.
Further, the Company has granted the individual the option to purchase an
additional 1,000,000 shares of restricted, unregistered common stock at a price
of $1.25 per share on or before February 28, 1999. The option expiration may be
accelerated if the Company's common stock is traded on the NASDAQ Small-Cap
Market or other national exchange and the closing bid price equals or exceeds
$1.75 per share for 10 consecutive trading days (Trading Period). In this event,
the expiration date of the option shall be the 90th day after the Trading Period
and the Company must notify the individual of the acceleration in writing.
9
<PAGE>
MILLION DOLLAR SALOON, INC.
Notes to Financial Statements - Continued
Note 4 - Common stock transactions - Continued
On March 19, 1998, concurrent with the Stock Purchase Agreement discussed above,
the Company entered into a Consulting Agreement with a separate individual for
consulting, advisory and management services to be performed as directed by the
Company's Board of Directors. The Consulting Agreement is for a term of one (1)
year and may be terminated by either party with ten (10) days written notice.
The compensation for the Consulting Agreement was paid in restricted,
unregistered common stock of the Company as follows: 150,000 shares as payment
for for consulting, advisory and management services to be performed as directed
by the Company's Board of Directors and an additional 55,000 shares upon receipt
of the $530,000 discussed above. An additional 45,000 shares will be issued to
the consultant upon receipt of the $440,000 due on or before July 15, 1998.
The Company, upon execution of the Consulting Agreement and receipt of the
$530,000 related to the Stock Purchase Agreement, issued the respective 150,000
and 55,000 shares due under the terms of the Consulting Agreement. These
transactions were valued at approximately $0.34 per share, or an aggregate
$69,700, which approximated the "fair value" of the Company's restricted stock
issued on the transaction date.
(Remainder of this page left blank intentionally)
10
<PAGE>
Part I - Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(1) Results of Operations
Bar and restaurant operations remained relatively constant between the first
quarter of 1998 as compared to the first quarter of 1997. Total bar and
restaurant sales for the 1998 period were approximately $830,000 as compared to
approximately $841,000 for the 1997 period. The decline of approximately $11,000
was due to fluctuations in patronage, which is dependent upon convention and
visitor activity and other uncontrollable factors in the Dallas-Ft. Worth
Metroplex geographic area. Additionally, rental income increased by
approximately $15,000 for the same period from approximately $111,000 for the
first quarter of 1997 to approximately $125,000 for the first quarter of 1998.
This is due to scheduled increases in weekly rental income on the Company's
properties.
The Company continues to seek effective marketing and advertising methods to
maintain and increase its bar and restaurant patronage.
Cost of sales decreased by approximately $9,000 during the first three months of
1998 as compared to the same expenses for the same period in 1996. This decrease
reflects the effect of the restructured inventory management controls which were
implemented during the second quarter of 1997. Gross profit percentages
increased slightly to 51.3% for the first three months of 1998 versus 50.2% for
the first three months of 1997.
General and administrative expenses increased by approximately $109,000 in the
first three months of 1998 versus the first three months of 1997. Included in
this increase is a non-cash charge of $69,700 as compensation under the
Consulting Agreement to Steve Wheeler, increased legal and professional fees
incurred by management related to preliminary investigations of potential merger
and/or acquisition candidates and development of overall corporate operational
strategies and other broad based increases in general corporate overhead
expenses. As of this filing, management has not identified any suitable merger
or acquisition candidates as a result of their preliminary investigations.
Further, management continues to monitor its expenditure levels to achieve
optimum financial results.
Net income before income taxes, excluding the gain on the sale of fixed assets
of approximately $48,000, was approximately $184,000 for the first three months
of 1997 versus approximately $97,000 for the first three months of 1996.
After-tax net income has declined by approximately $115,000 yielding earnings
per share of approximately $0.01 per share for the first three months of 1998 as
compared to approximately $0.04 per share for the first three months of 1997.
(2) Liquidity
As of March 31, 1998, the Company has working capital of approximately $608,198
as compared to approximately $17,369at December 31, 1997 and approximately
$103,000 at March 31, 1997. The Company achieved positive cash flows from
operations of approximately $192,000 for the first three months of 1998 versus
approximately $152,000 for the first three months of 1997. The Company's working
capital position was greatly enhanced by the receipt of approximately $530,000
in proceeds related to the sale of approximately 530,000 shares of restricted,
unregistered common stock on March 19, 1998.
11
<PAGE>
The Company has identified no significant capital requirements for the current
annual period. Liquidity requirements mandated by future business expansions or
acquisitions, if any are specifically identified or undertaken, are not readily
determinable at this time as no substantive plans have been formulated by
management.
The Stock Purchase Agreement specifically details and limits the utilization of
the $530,000 received as follows:1) potential acquisition of a similar bar and
restaurant operation in Denver, Colorado; 2) expansion and renovation of the
Company's existing Dallas, Texas bar and restaurant operation; 3) expansion and
renovation of property owned by the Company which is under lease to an unrelated
third party and which lease expires during 1998; 4) acquisition of treasury
stock and 5) other corporate expenses related to strategic planning. As of this
filing, the Company has no definitive agreements to acquire or expand any
properties.
The Company anticipates the continuance of dividend payments and paid
approximately $52,000 during the first quarter of 1998 and declared a dividend
of approximately $61,400 to be paid in the second quarter of 1998. Future
operating liquidity, debt service and dividend payments are expected to be
sustained from continuing operations. Additionally, management is of the opinion
that there is additional potential availability of incremental mortgage debt and
the opportunity for the sale of additional common stock through either private
placements or secondary offerings.
Part II - Other Information
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
On March 19, 1998, the Company sold 530,000 shares of restricted,
unregistered common stock pursuant to an exemption from registration to Linda
S. Weaver, an individual unrelated to the Company, (Weaver) for gross
proceeds of $530,000. Weaver will also purchase an additional 400,000 shares
of restricted, unregistered common stock at $1.10 per share, for gross
proceeds of $440,000, on or before July 15, 1998. Further, the Company
granted Weaver an option to purchase up to an additional 1,000,000 shares of
restricted, unrestricted common stock on or before February 28, 1998 at a
price of $1.25 per share. This option expires on February 28, 1998 and the
expiration may be accelerated if the Company's common stock is traded on the
NASDAQ Small-Cap Market or other national exchange and the closing bid price
equals or exceeds $1.75 per share for 10 consecutive trading days (Trading
Period). In this event, the expiration date of the option shall be the 90th
day after the Trading Period and the Company must notify the individual of
the acceleration in writing.
On March 19, 1998, the Company issued an aggregate 205,000 shares of
restricted, unregistered common stock to Steve Wheeler (Wheeler) under the
terms of a Consulting Agreement for consulting, advisory and management
services to be performed as directed by the Company's Board of Directors. The
Consulting Agreement is for a term of one (1) year and may be terminated by
either party with ten (10) days written notice. The compensation for the
Consulting Agreement was paid in restricted, unregistered common stock of the
Company as follows: 150,000 shares as payment for for consulting, advisory
and management services to be performed as directed by the Company's Board of
Directors and an additional 55,000 shares upon receipt of the $530,000
discussed above. An additional 45,000 shares will be issued to Wheeler upon
receipt of the $440,000 due on or before July 15, 1998.
12
<PAGE>
Upon execution of the Consulting Agreement and receipt of the $530,000
related to the Stock Purchase Agreement, the Company issued to Wheeler the
respective 150,000 and 55,000 shares due under the terms of the Consulting
Agreement. These transactions were valued at approximately $0.34 per share,
or an aggregate $69,700, which approximated the "fair value" of the Company's
restricted stock issued on the transaction date.
Item 3 - Defaults on Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
The Company has held no regularly scheduled, called or special meetings of
shareholders during the reporting period.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
Exhibit 10.1 - Stock Purchase Agreement by and among Million Dollar Saloon,
Inc., Bjorn Heyerdahl, The Joshua Furrh Trust (Sellers) and
Linda S. Weaver (Purchaser)
Exhibit 10.2 - Consulting Agreement by and between Million Dollar Saloon,
Inc. and Steve Wheeler
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MILLION DOLLAR SALOON, INC.
April 30 , 1998 /s/ Nina J. Furrh
-------- ------------------------------------
Nina J. Furrh
President and Director
April 30 , 1998 /s/ Ronald W. Johnston
-------- -----------------------------------
Ronald W. Johnston
Chief Financial Officer and Director
14
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into this 19th day of March, 1998, by and among MILLION DOLLAR SALOON, INC., a
Nevada corporation, BJORN HEYERDAHL and THE JOSHUA FURRH TRUST (collectively,
the "Sellers"), and LINDA S. WEAVER (the "Purchaser").
RECITALS
WHEREAS, the Sellers and Purchaser desire to enter into this definitive
agreement whereby the Purchaser is acquiring 1,000,000 shares of common stock,
par value $0.01 per share, of Million Dollar Saloon, Inc. (the "Company") (the
"Company Shares") from the Sellers on the terms and conditions provided for in
this Agreement; and
WHEREAS, the Company will grant Purchaser an option, subject to certain
limitations, to purchase an additional 1,000,000 shares of the Common Stock of
the Company (the "Option Shares") on the terms and conditions provided for in
this Agreement.
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants contained herein, and for other good and valuable consideration, the
parties hereto agree as follows:
1. Purchase of Company Shares. Subject to and upon the terms and
conditions contained herein:
(a) At the First Closing Date (as defined herein), the Sellers shall
sell, transfer, assign, convey and deliver to the Purchaser, free and clear of
all adverse claims, security interest, liens, claims and encumbrances (other
than restrictions under applicable securities laws) and the Purchaser shall
purchase, accept and acquire from the Sellers, the Company Shares for the
following consideration:
Number of Company Shares
Seller to be Sold to Purchaser Consideration
- ----------------------- -------------------------- -------------------------
Bjorn Heyerdahl 40,000 $40,000
The Joshua Furrh Trust 30,000 $30,000
Company 530,000 $530,000
------- --------
600,000 $600,000
(b) The Purchase price payable to Sellers by Purchaser for the initial
purchase of 600,000 shares of the Company Shares (the "Initial Company Shares")
shall be $1.00 per share (the "Purchase Price") or an aggregate of $600,000. The
Purchase Price shall be paid to each of the Sellers by Purchaser in the amounts
as designated in Section 1(a) above. The Purchase Price shall be payable by
Purchaser by cashiers check or such other form of payment as may be acceptable
to Sellers, and shall be paid to the Sellers on March 19, 1998 (the "First
Closing Date").
(c) On or before July 15, 1998 (the "Second Closing Date"), the Company
shall sell, transfer, assign, convey and deliver to Purchaser, free and clear of
all adverse claims, security interests, liens, claims and encumbrances (other
than restrictions under applicable securities laws) and Purchaser
STOCK PURCHASE AGREEMENT -- Page 1
<PAGE>
shall purchase, accept and acquire from the Company the remaining 400,000 shares
of the Company Shares for $440,000 or $1.10 per share. The Purchase Price shall
be payable by the Purchaser by cashiers check or such other form of payment as
may be acceptable to the Company, and shall be paid to the Company on the Second
Closing Date.
2. Closings. The sale and purchase of the Company Shares on the First
and Second Closing Dates (the "Closings") shall take place either (i) at the
executive offices of the Company, (ii) by the exchange of documents via
facsimile transmission, or (iii) such other place as may be mutually agreed upon
between the parties, on each respective Closing Date.
3. Representations and Warranties of the Seller. Unless specifically
stated otherwise, the Sellers hereby represent and warrant to Purchaser that the
following are true and correct as of the date hereof and will be true and
correct through the First and Second Closing Dates and through the closing date
of the sale of the Option Shares as if made on each respective date:
(a) Organization and Good Standing Qualification. The Company
is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation, with all requisite
corporate power and authority to carry on the business in which it is
engaged, to own the properties it owns, and is duly qualified and
licensed to do business and is in good standing in all jurisdictions
where the nature of its business makes such qualification necessary.
(b) Capitalization. As of the execution date of this
Agreement, the authorized capital stock of the Company consists of (i)
50,000,000 shares of common stock, par value $0.01 per share (the
"Common Stock"), of which 5,409,451 shares are issued and outstanding
and (ii) 5,000,000 shares of preferred stock, par value $0.01 per
share, of which no shares are issued and outstanding. All of the issued
and outstanding shares of Common Stock of the Sellers are duly
authorized, validly issued, fully paid and nonassessable. Upon the sale
and issuance of 930,000 shares of the Company Shares to Purchaser, and
receipt by the Company of the consideration therefor, and upon sale and
issuance of the Option Shares to Purchaser, and receipt by the Company
of the consideration therefor, such shares shall be duly authorized,
validly issued, fully paid and nonassessable.
(c) Documents Genuine. All originals and/or copies of the
Company's articles of incorporation and bylaws, each amended to date,
and all minutes of meetings and written consents in lieu of meetings of
shareholders, directors and committees of directors of the Company,
financial data and any and all other documents, material, data, files
or information which have been or upon request will be furnished to
Purchaser, are true, complete, correct and unmodified originals and/or
copies of such documents, information, data, files or materials.
(d) Authorization and Validity. The execution, delivery and
performance by the Company of this Agreement and any other agreements
contemplated hereby, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by the
Company. This Agreement and any other agreement contemplated hereby
have been or will be as of the First and Second Closing Dates duly
executed and delivered by the Company and constitutes or will
constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally or the availability
STOCK PURCHASE AGREEMENT -- Page 2
<PAGE>
of equitable remedies. Neither the sale of 930,000 of the Company
Shares nor the sale of the Option Shares to the Purchaser will impair
the ability or authority of the Company to carry on its business as
now conducted in any respect.
(e) Title to Company Shares. On the First Closing Date, each
Seller, and on the Second Closing Date, the Company, will have full
right, power and authority to sell and convey the Company Shares and
such shares will be free and clear of any and all liens, mortgages,
pledges or the rights or encumbrances whatsoever, disclosed or
undisclosed, except for restrictions required under applicable federal
and state securities laws. Upon issuance and delivery of the Company
Shares to Purchaser for the considerations set forth herein, the
Purchaser shall be deemed to have obtained good and merchantable title
to the Company Shares.
(f) Consents/Approvals/Conflict. Except for the compliance
with applicable federal and state securities laws, no consent,
approval, authorization or order of any court or governmental agency or
other body is required for the Sellers to consummate the sale of the
Company Shares. Neither the execution, delivery, consummation or
performance of this Agreement shall conflict with, constitute a breach
of the Company's articles of incorporation or bylaws, as amended to
date, or any note, mortgage, indenture, deed of trust or other
agreement or instrument to which any Seller is a party or by which they
are bound nor, to the best of each Seller's knowledge and belief, any
existing law, rule, regulation or any decree of any court or
governmental department, agency, commission, board or bureau, domestic
or foreign, having jurisdiction over any of the Sellers, nor result in
the creation of any lien or other encumbrance upon the Company Shares.
(g) Financial Statements. The Company has furnished to
Purchaser its Annual Report on Form 10-KSB for the fiscal years ended
December 31, 1996 and December 31, 1997, respectively. The Company will
furnish to Purchaser future annual and quarterly reports of the
Company.
(h) Taxes. To the best knowledge and belief of the Company,
all income, excise, unemployment, social security, occupational,
franchise and any and all other taxes of the Company, due to any state
or municipal government or subdivision or instrumentality thereof which
are due and payable by the Company as of the Closing Dates have been
duly paid, or adequate reserve for the payment thereof has been made,
and all required tax returns or reports concerning any such items have
been duly filed.
(i) Pending or Threatened Litigation. Except as set forth in
the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1997, there are no material actions, governmental
investigations, suits, arbitrations or other administrative, criminal
or civil actions pending or threatened against the Company which would
prevent the Company from consummating the transactions contemplated
herein. There are no material actions, governmental investigations,
suits, arbitrations or other administrative, criminal or civil actions
pending or threatened against any individual Seller which would prevent
any Seller from consummating the transactions contemplated herein.
As of each Closing Date, there shall not be (i) any effective
writs, judgments, decrees, orders, injunctions or mandates outstanding
of any nature whatsoever issued by a court or governmental agency of
STOCK PURCHASE AGREEMENT -- Page 3
<PAGE>
competent jurisdiction directing that the proposed sale of the Company
Shares not be consummated or (ii) any action, suit or proceeding
pending or threatened by or before any court or governmental body in
which it is or may be sought to prohibit, substantially delay or
rescind the proposed sale of the Company Shares.
(j) Environmental Matters. The Company has received no written
notice of any investigation or inquiry by any governmental entity under
any applicable laws pertaining to health or the environment, including
without limitation (i) the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, as amended, and (ii) the
Resource Conservation and Recovery Act of 1976, as amended by the Used
Oil Recycling Act of 1980, the Solid Waste Disposal Act Amendments of
1980, and the Hazardous and Solid Waste Amendments of 1984, as amended.
To the actual knowledge of the Company, the Company has not disposed of
any hazardous substance on any property owned or leased by the Company
and no condition exists on such property which would subject the
Company or such property to any remedial obligations under any
applicable environmental laws.
(k) Access to Information. The Company agrees to make
available to Purchaser access to any and all corporate files and
records of Company that may be reasonably requested by Purchaser. All
statements in this Agreement, or in any ancillary information,
document, financial statement, data, file or material furnished or
delivered to Purchaser in association herewith by the Company are true,
correct and complete to the best of Company's knowledge and belief.
4. Representations and Warranties of Purchaser. Unless specifically
stated otherwise, the Purchaser represents and warrants to the Sellers that the
following are true and correct as of the date hereof and will be true and
correct through the First and Second Closing Dates and through the closing date
of the sale of the Option Shares as if made on each respective date:
(a) Investment Intent. Purchaser is acquiring the Company
Shares and Option Shares, if applicable, for its own account for
investment and not with a view to, or for sale or other disposition in
connection with, any distribution of all or any part thereof, except
(i) in an offering covered by a registration statement filed with the
Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act") covering the
Company Shares, or (ii) pursuant to an applicable exemption under the
Securities Act. In acquiring the Company Shares, the Purchaser is not
offering or selling, individually or collectively, and will not offer
or sell, for any Seller any of the Company Shares in connection with
any distribution of the such shares.
(b) Disclosure of Information. Purchaser acknowledges she has
been furnished such information regarding the Company as she has deemed
necessary. Purchaser further represents that she has had an opportunity
to ask questions of and receive answers from management of the Company
regarding the Company and its business, assets, results of operation,
and financial condition and the terms and conditions of the issuance of
the Company Shares and Option Shares.
(c) Investment Experience. Purchaser acknowledges that she is
able to fend for herself, can bear the economic risk of the investment
in the Company Shares, and she has such knowledge and experience in
STOCK PURCHASE AGREEMENT -- Page 4
<PAGE>
financial and business matters that she is capable of evaluating the
merits and risks of an investment in the Company Shares and Option
Shares, if applicable.
(d) Restricted Securities. Purchaser understands that the
Company Shares, and the Option Shares when issued, have not been
registered pursuant to the Securities Act or any applicable state
securities laws, that the Company and Option Shares will be
characterized as "restricted securities" under federal securities laws,
and that under such laws and applicable regulations the Company Shares
and Option Shares cannot be sold or otherwise disposed of without
registration under the Securities Act or an exemption therefrom. In
this connection, Purchaser represents that she is familiar with Rule
144 promulgated under the Securities Act, as currently in effect, and
understands the resale limitations imposed thereby and by the
Securities Act. Stop transfer instructions may be issued to the
transfer agent for securities of the Company (or a notation may be made
in the appropriate records of the Company) in connection with the
Company Shares and Option Shares.
Under Commission Rule 144, a person, including an affiliate of
the Company (or persons whose shares are aggregated into such
affiliate), who has owned restricted shares of Common Stock
beneficially for at least one year is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater
of one percent of the total number of outstanding shares of the same
class or the average weekly trading volume of the Common Stock during
the four calendar weeks preceding the sale. A person who has not been
an affiliate of the Company for at least the three months immediately
preceding the sale and who has beneficially owned shares of Common
Stock for at least two years is entitled to sell such shares under Rule
144(k) without regard to any of the limitations described above.
(e) Legend. It is agreed and understood by Purchaser that the
certificates representing the Company Shares and Option Shares shall
each conspicuously set forth on the face or back thereof a legend in
substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED.
(f) Pending or Threatened Litigation. Purchaser is currently a
party to various lawsuits which have been disclosed in writing to the
Company. Other than as disclosed to the Company, there are no material
actions, governmental investigations, suits, arbitrations or other
administrative, criminal or civil actions pending or threatened against
the Purchaser or her affiliates which would prevent Purchaser from
consummating the transactions contemplated herein.
As of each Closing Date there shall not be (i) any effective
writs, judgments, decrees, orders, injunctions or mandates outstanding
or any nature whatsoever issued by a court or governmental agency of
competent jurisdiction directing that the proposed sale of the Company
STOCK PURCHASE AGREEMENT -- Page 5
<PAGE>
Shares or Option Shares, if applicable, not be consummated or (ii) any
action, suit, or proceeding pending or threatened by or before any
court or governmental body in which it is or may be sought to prohibit,
substantially delay, or rescind the proposed sale of the Company Shares
or Option Shares.
(g) Authorization and Validity. The execution, delivery and
performance by the Purchaser of this Agreement and any other agreements
contemplated hereby, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by the
Purchaser. This Agreement and any other agreement contemplated hereby
have been or will be as of each Closing Date duly executed and
delivered by the Purchaser and constitutes or will constitute legal,
valid and binding obligations of the Purchaser, enforceable against the
Purchaser in accordance with their respective terms, except as may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
The purchase of the Company Shares and Option Shares by the Purchaser
will not impair the ability or authority of the Purchaser to carry on
its business as now conducted in any respect.
(h) Consents/Approvals/Conflict. No consent, approval,
authorization or order of any court or governmental agency or other
body is required for the Purchaser to consummate the purchase of the
Company Shares or Option Shares. Neither the execution, delivery,
consummation or performance of this Agreement shall conflict with,
constitute a breach of any note, mortgage, indenture, deed of trust,
trust agreement or other agreement or instrument to which the Purchaser
is a party or by which she is bound nor, to the best of the Purchaser's
knowledge and belief, any existing law, rule, regulation or any decree
of any court or governmental department, agency, commission, board or
bureau, domestic or foreign, having jurisdiction over the Purchaser,
nor result in the creation of any lien or other encumbrance upon the
Company Shares or Option Shares.
(i) Access to Information. All statements in this Agreement or
in any ancillary information, document, financial statement, data, file
or material furnished or delivered to Sellers by the Purchaser are
true, correct and complete to the best of Purchaser's knowledge and
belief.
5. To Be Delivered to the Purchaser At First and Second Closing.
(a) At the First Closing, each individual Seller shall deliver
to Purchaser certificate(s) representing the number of Company Shares
set forth next to each individual Seller's name in Section 1(a) hereof,
accompanied with a "Medallion" endorsement to Purchaser. The Company
shall deliver to Purchaser a certificate for 530,000 of the Company
Shares in the name of Purchaser, or its nominees as designated by
Purchaser.
(b) At the Second Closing, the Company shall deliver to
Purchaser a certificate for 400,000 of the Company Shares in the name
of Purchaser, or its nominees as designated by Purchaser.
STOCK PURCHASE AGREEMENT -- Page 6
<PAGE>
6. To Be Delivered to the Sellers at First and Second Closing.
(a) At the First Closing, Purchaser shall deliver to each
individual Seller the consideration (an aggregate of $70,000) for the
Company Shares owned by each respective individual Seller in the
amounts as set forth next to each individual Seller's name in Section
1(a) hereof. The Purchaser shall deliver to the Company $530,000 as
consideration for the purchase of 530,000 of the Company Shares.
(b) At the Second Closing, the Purchaser shall deliver to the
Company $440,000 as consideration for the purchase of 400,000 of the
Company Shares.
(c) The Purchase Price for the Company Shares shall be by
cashier's check, wire transfer, or such other form of payment as may be
acceptable to Sellers.
7. Indemnification by Purchaser. Purchaser hereby agrees to indemnify
and hold harmless the Sellers and their successors and assigns for the full
amount of all losses, claims, expenses, or liabilities (including without
limitation reasonable attorneys' fees) arising from or relating to (i) any
breach of the representations and warranties made by Purchaser in this
Agreement, and (ii) any failure of Purchaser to duly perform any covenants in
this Agreement to be performed by the Purchaser.
8. Indemnification by the Sellers. Sellers hereby agree to indemnify
and hold harmless the Purchaser from the full amount of all losses, claims
expenses or liabilities (including without limitation reasonable attorneys'
fees) arising from or relating to (i) any breach of the representations and
warranties made by the Sellers in this Agreement or (ii) any failure of the
Sellers to duly perform any of their covenants in this Agreement.
9. Necessary Information. The Sellers have furnished to the Purchaser
all information as requested regarding the Company and its business, assets,
properties, and financial condition which, in the reasonable judgment of the
Purchaser, is necessary to enable the Purchaser to conduct her due diligence
relating to the purchase of the Company Shares by Purchaser. Each of the parties
hereto has furnished to the others all information, if requested, concerning
such party (including financial statements and statistical information) required
for inclusion in any application or statement to be filed or made by the other
party with or to any governmental agency or third party in connection with the
purchase of the Company Shares.
10. No Registration of Company Shares. The Company is not obligated to
file with the Commission a registration statement on any form under the
Securities Act with respect to the Company Shares or the Option Shares or to
include the Company Shares or Option Shares in any such registration statement
filed with the Commission by the Company in the future.
11. Option Agreement. The Company hereby grants to Purchaser an option
(the "Option") to purchase up to 1,000,000 shares of the Company's Common Stock
(the "Option Shares") for $1,250,000 or $1.25 per share (the "Option Shares
Purchase Price"). The Option may be exercised at any time by Purchaser until
5:00 p.m. Dallas, Texas time on February 28, 1999, subject to certain
limitations as set forth herein, by delivery to the Company of a cashier's check
or wire transfer in the aggregate amount equal to the number of Option Shares to
be purchased times $1.25 per share. Upon receipt by the Company of the Option
Shares Purchase Price, the Company shall immediately deliver to Purchaser, or
nominees of Purchaser, a certificate(s) issued in the name of Purchaser
representing the number of Option Shares purchased. The sale of the Option
STOCK PURCHASE AGREEMENT -- Page 7
<PAGE>
Shares shall be subject to the terms and conditions of this Agreement, including
the representations and warranties of the Company and Purchaser herein which
shall continue to be true and correct as of the exercise date of the Option.
Provided the Company's Common Stock is traded on the Nasdaq SmallCap
market or other national exchange, the expiration of the Option shall be
accelerated if the closing bid price of the Company's Common Stock as quoted on
the Nasdaq SmallCap Market system or any other national stock exchange in which
the Company's Common Stock is traded equals or exceeds $1.75 per share for 10
consecutive trading days (the "Trading Period"). In such event, the expiration
date of the Option shall be at 5:00 p.m. Dallas, Texas time on the 90th calendar
day after the Trading Period. The Company shall notify Purchaser in writing if
the Option expiration date has been accelerated as a result of the foregoing
events.
12. Use of Proceeds. There shall be no restriction on the Company for
the use of any proceeds from the sale of the Option Shares. The $970,000 of
proceeds from the sale of the Company Shares by the Company shall only be
utilized by the Company for any of the following projects, unless otherwise
agreed to in writing by Purchaser:
(a) Cash consideration and expenses related to acquisition of
Bavarian Restaurant, Inc., d/b/a Shot Gun Willy's Inn, Denver,
Colorado;
(b) Expansion, renovation, furniture and equipment costs and
expenses, not to exceed $50,000, relating to The Million Dollar Saloon
located on Greenville Avenue in Dallas, Texas;
(c) Expansion, construction, furniture and equipment costs
related to remodeling of Baby Doll's Club, Highway 157, Tarrant County,
Texas;
(d) Expenses and initial capital related to organization of
off-shore corporation to operate the Company's proposed international
business (not to exceed an aggregate of $10,000); and
(e) Up to $30,000 may be used to purchase up to 30,000 shares
of the Company's Common Stock from Dona G. Furrh at a price of $1.00
per share.
The above use of proceeds is merely an intended use of proceeds and the
Company does not represent that it has any written contracts or agreements for
such use of funds.
13. Miscellaneous.
(a) Amendment. This Agreement may be amended, modified, or
supplemented only by an instrument in writing executed by all the
parties hereto.
(b) Assignment. Neither this Agreement or any right created
hereby or in any agreement entered into in connection with the
transactions contemplated hereby shall be assignable by any party
hereto without the written consent of the party or parties not seeking
assignment.
STOCK PURCHASE AGREEMENT -- Page 8
<PAGE>
(c) Parties in Interest; No Third Party Beneficiaries. Except
as otherwise provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the
respective heirs, legal representatives, successors and assigns of the
parties hereto. Neither this Agreement nor any other agreement
contemplated hereby shall be deemed to confer upon any person not a
party hereto or thereto any rights or remedies hereunder or thereunder.
(d) Entire Agreement. This Agreement and the agreements
contemplated hereby constitute the entire agreement of the parties
regarding the subject matter hereof, and supersede all prior agreements
and understandings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof.
(e) Severability. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, such provision shall be fully
severable and this Agreement shall be construed and enforce as if such
illegal, invalid or unenforceable provision never comprised a part
hereof, and the remaining provisions hereof shall remain in full force
and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance here from.
(f) Survival of Representations, Warranties and Covenants.
Except as specifically provided herein, the representations,
warranties, and covenants contained herein shall survive the respective
Closings and all statements contained in any certificate, exhibit or
other instrument delivered by or on behalf of the Purchaser or the
Sellers, as the case may be, shall survive the respective Closings.
(g) Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES
GOVERNING CONFLICTS OF LAWS) OF THE STATE OF TEXAS, AND THAT THE CITY
OF DALLAS AND THE COUNTY OF DALLAS IS THE APPROPRIATE VENUE FOR ANY
ACTION COMMENCED UNDER THIS AGREEMENT.
(h) Captions. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
any of the terms or provisions hereof.
(i) Gender and Number. When the context requires the gender of
all words used herein shall include the masculine, feminine and neuter
and the number of all words shall include the singular and plural.
(j) Reference to Agreement. Use of the words "herein",
"hereof", "hereto" and the like in this Agreement shall be construed as
references to this Agreement as a whole and not to any particular
Article, Section or provision in this Agreement, unless otherwise
noted.
(k) Confidentiality; Publicity and Disclosures. Each party
shall keep this Agreement and its terms confidential, and shall make no
press release or public disclosure, either written or oral, regarding
the transactions contemplated by this Agreement without the prior
knowledge and consent of the other parties hereto; provided that the
foregoing shall not prohibit any disclosure (i) by press release,
STOCK PURCHASE AGREEMENT -- Page 9
<PAGE>
filing or otherwise that is required by federal securities laws, and
(ii) to attorneys, accountants, investment bankers or other agents of
the parties assisting the parties in connection with the transactions
contemplated by this Agreement. In the event that the transactions
contemplated hereby are not consummated for any reason whatsoever, the
parties hereto agree not to disclose or use any confidential
information they may have concerning the affairs of the other parties,
except for information that is required by law to be disclosed.
(l) Notice. Any notice or communications hereunder or in any
agreement entered into in connection with the transaction contemplated
hereby must be in writing and given by depositing the same in the
United States mail, addressed to the party to be notified, postage
prepaid and registered or certified with return receipt requested, or
by delivering the same in person. Such notice shall be deemed received
on the date on which it is hand delivered or on the third business day
following the date on which it is to be mailed. For purposes of notice,
the addresses of the parties shall be:
If to PURCHASER: Linda S. Weaver
c/o Gary Gardenhouser, Esq.
629 24th Avenue Southwest
Norman, Oklahoma 73069
If to SELLERS: MILLION DOLLAR SALOON, INC., a Nevada
corporation
6848 Greenville Avenue
Dallas, Texas 75231
(m) Expenses. The Company shall pay the fees and expenses
incurred by Sellers in connection with the proposed sale of the Company
Shares, and all fees and expenses incurred by Purchaser in connection
with the purchase of the Company Shares shall be paid by Purchaser.
(n) Counterparts. This Agreement may be executed in multiple
counterparts each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument. Execution
and delivery of this letter by exchange of facsimile copies bearing
facsimile signature of a party shall constitute a valid and binding
execution and delivery of this letter of intent by such party. Such
facsimile copies shall constitute enforceable original documents.
STOCK PURCHASE AGREEMENT -- Page 10
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the day and year
first above written.
COMPANY:
MILLION DOLLAR SALOON, INC.
By:
--------------------------------------
Name:
--------------------------------------
Its:
--------------------------------------
INDIVIDUAL SELLERS:
--------------------------------------------
BJORN HEYERDAHL
JOSHUA FURRH TRUST
By: ---------------------------------------
Sharon Furrh, Trustee
PURCHASER:
--------------------------------------------
LINDA S. WEAVER
STOCK PURCHASE AGREEMENT -- Page 11
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into as
of the 12th day of March, 1998, by and between Steve Wheeler ("Consultant") and
The Million Dollar Saloon, Inc., a Nevada corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Company and Consultant desire to enter into this agreement
whereby Consultant will provide to the Company certain consulting services in
the operation of its business; and
WHEREAS, Consultant is willing to enter into such arrangements in
accordance with the terms and conditions of this Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I.
DEFINITIONS
-----------
For purposes of this Agreement, each of the following terms shall have
the meaning ascribed thereto unless otherwise specified or clearly required by
the context in which such term is used.
1.1 "Affiliates" means, with respect to a party hereto, entities that
directly or indirectly through one or more intermediaries control, or are
controlled by, or are under common control with, such party, and the term
"control" shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of an entity,
whether through the ownership of voting securities, by contract or otherwise;
provided, however, such term, with respect to each party, shall not mean the
other party or Parties.
1.2 "Commencement Date" means the date of this Agreement.
ARTICLE II.
TERM AND TERMINATION OF THE AGREEMENT
-------------------------------------
2.1 Term. The term of this Agreement shall begin on the Commencement
Date and shall continue for a period of one (1) year from such date, unless
earlier terminated by either party upon at least ten (10) days prior written
notice to the other party (the "Term"). Upon termination, neither party will
have any further obligation or liability to the other party, except for the
obligation under Section 3(a) hereof.
CONSULTING AGREEMENT - Page 1
<PAGE>
ARTICLE III.
CONSULTING SERVICES PROVIDED TO THE COMPANY
-------------------------------------------
3.1 Consulting Duties. Consultant is hereby retained to serve as a
consultant to the Company, to perform such consulting, advisory and management
services on behalf of the Company as the Board of Directors of the Company may
from time to time request in writing. Consultant shall also assist the Company
with locating and evaluating possible acquisitions by the Company. Consultant
shall only devote such time to his consulting duties for the Company as may be
requested from time to time in writing by the Board of Directors of the Company.
Consultant shall devote approximately 40% of his consulting time under this
Agreement in assisting the Company with its capital raising efforts with the
remaining 60% of his consulting time being devoted to seeking and evaluating
acquisitions for the Company if such services are requested by the Company.
Consultant agrees to devote his attention, skills, benefits and reasonable
efforts to the performance of his duties hereunder and to the promotion of the
business and interest of the Company.
3.2 Independent Contractor Status. Consultant agrees that Consultant is
an independent contractor under this Article III with respect to Consultant
providing consulting services to the Company and shall in no way be considered
to be an agent or employee of the Company and, accordingly, Consultant shall not
be entitled to any benefits, coverages or privileges made available to employees
of the Company, including without limitation, social security, unemployment,
medical or pension payments. Consultant shall only consult and render advice,
and shall not undertake to commit the Company to any course of action in
relation to third persons, except as requested by the Company.
3.3 Compensation and Consulting Services. In consideration for the
services provided to the Company by Consultant under this Article III,
Consultant shall be entitled to receive the following:
(a) Issuance of Company Common Stock. In consideration of the
services to be provided to the Company, the Company shall issue and
deliver to Consultant 150,000 shares of the Common Stock of the Company
upon execution of this Agreement by the parties hereto. Further, as
payment for the assistance to the Company in obtaining financing from
Linda S. Weaver ("Weaver"), the Company shall issue additional shares
of Common Stock of the Company to Consultant as follows:
(i) upon receipt in March 1998 by the Company of the
initial funding to be provided by Weaver , expected to be
approximately $530,000, the Company shall issue and deliver to
Consultant an additional 55,000 shares of Common stock; and
(ii) upon receipt in July 1998 by the Company of the
remaining funding to be provided by Weaver, expected to be
approximately $440,000, the Company shall issue and deliver to
Consultant an additional 45,000 shares of Common Stock.
The obligation of the Company to issue and deliver to Consultant the
additional 100,000 shares of Common Stock of the Company is subject to
the receipt by the Company of the funding from Weaver as noted above.
CONSULTING AGREEMENT - Page 2
<PAGE>
(b) Restricted Securities. The shares of Common Stock to be
issued to Consultant hereunder are "restricted securities" and are not
publicly tradeable unless the requirements of SEC Rule 144 are met or
an effective registration statement is on file with the Securities and
Exchange Commission covering such shares. The parties hereto
acknowledge the Company has no obligation to file a registration
statement with the SEC covering the shares to be issued to Consultant
and does not intend to do so. The parties further acknowledge that on
March 12, 1998, the closing bid price of the Company's Common Stock as
quoted on the OTC Electronic Bulletin Board was $0.65 per share. The
parties hereto further acknowledge and agree that since the shares to
be issued and delivered to Consultant are restricted securities, they
have a value of less than the current market price. The parties hereto
agree that the restricted shares of Common Stock to be received by
Consultant hereunder shall have a value of $0.35 per share.
(c) Expenses. Provided Consultant has obtained the prior
written consent of the Board of Directors to incur expenses in
rendering consulting services hereunder, during the term hereof, the
Company shall reimburse Consultant for all reasonable and necessary
out-of-pocket travel and other expenses incurred by Consultant in
rendering consulting services required under the terms of this Article
III, such reimbursement to be on a monthly basis upon submission of a
detailed monthly statement and reasonable documentation.
The compensation set forth in this Section 3.3 will be the sole compensation
payable to Consultant for consulting services and no additional compensation or
fee will be payable by the Company to Consultant by reason of any benefit gained
by the Company directly or indirectly through Consultant's consulting efforts on
the Company's behalf, nor shall the Company be liable in any way for any
additional compensation or fee for consulting services unless the Company shall
have expressly agreed thereto in writing.
IV.
CONFIDENTIALITY
---------------
4.1 Acknowledgment of Proprietary Interest. Consultant recognizes the
proprietary interest of the Company in any Confidential and Proprietary
Information (as hereinafter defined) of the Company. As used in this Section 4,
the "Company" shall include any Affiliates or subsidiaries of the Company.
Consultant acknowledges and agrees that any and all Confidential and Proprietary
Information communicated to, learned of, developed or otherwise acquired by
Consultant during the course of his engagement by the Company after the date
hereof, whether developed by Consultant alone or in conjunction with others or
otherwise, shall be and is the property of the Company. Consultant further
acknowledges and understands that his disclosure of any Confidential and
Proprietary Information of the Company will result in irreparable injury and
damage to the Company. As used herein, "Confidential and Proprietary
Information" means, but is not limited to, information derived from reports,
investigations, experiments, research, work in progress, drawings, designs,
plans, proposals, codes, marketing and sales programs, client lists, client
mailing lists, financial projections, cost summaries, pricing formula, contracts
analyses, financial information, projections, confidential filings with any
national or local agency, and all other concepts, ideas, materials or
information prepared or performed for, by or on behalf of the Company by its
employees, officers, directors, agents, representatives or consultants.
CONSULTING AGREEMENT - Page 3
<PAGE>
4.2 Covenant Not-to-Divulge Confidential and Proprietary Information.
Consultant acknowledges and agrees that the Company is entitled to prevent the
disclosure of Confidential and Proprietary Information. As a portion of the
consideration for the retainment of Consultant and for the compensation being
paid to Consultant by the Company, Consultant agrees at all times during the
term of this Agreement and thereafter to hold in strictest confidence and not to
disclose to any person, firm or corporation, other than to persons engaged by
the Company to further the business of the Company, and not to use except in the
pursuit of the business of the Company, Confidential and Proprietary
Information, without the prior written consent of the Company, including
Confidential and Proprietary Information developed by Consultant during the
course of his engagement with the Company; provided, however, that
notwithstanding the foregoing, Consultant shall not be obligated to keep secret
and not to disclose Confidential and Proprietary Information generally known to
the public through no wrongful act of Consultant.
4.3 Return of Materials. In the event of any termination of this
Agreement for any reason whatsoever, or at any time upon the request of the
Company, Consultant will promptly deliver to the Company all documents, data and
other information pertaining to Confidential and Proprietary Information.
Consultant shall not take any documents or other information, or any
reproduction or excerpt thereof, containing or pertaining to any Confidential
and Proprietary Information, unless as otherwise authorized in writing by the
President of the Company.
ARTICLE V.
NONCOMPETITION
--------------
5.1 Agreement Not-To-Compete. Without the prior written consent of the
Company, Consultant shall not, during the Term and for a period of one-year
thereafter, directly or indirectly, invest (other than investments in
publicly-owned companies which constitute not more than 5% of the voting
securities of any such company), engage or participate in any business which
engages in the business which the Company operates as of the date hereof or
which the Company and/or its Affiliates conduct during the Term anywhere in the
Dallas-Fort Worth Metroplex.
ARTICLE VI.
MISCELLANEOUS
-------------
6.1 Relationship of Parties. This Agreement does not create a
partnership, joint venture, or association; nor does this Agreement, or the
operations hereunder, create the relationship of lessor and lessee or bailor and
bailee. Nothing contained in this Agreement or in any agreement made pursuant
hereto shall ever be construed to create a partnership, joint venture, or
association, or the relationship of lessor and lessee or bailor and bailee, or
to impose any duty, obligation, or liability that would arise therefrom with
respect to any of the Parties.
6.2 No Third Party Beneficiaries. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
heirs, legal representatives, successors and assigns of the parties hereto. No
person or entity shall be deemed a third party beneficiary of this Agreement
except to the extent a third party is expressly given rights herein. Consultant
may not assign any of his rights, obligations or duties hereunder without the
prior written consent of the Company.
CONSULTING AGREEMENT - Page 4
<PAGE>
6.3 Remedies. Consultant recognizes and acknowledges that in the event
of any default in, or breach of any of, the terms, conditions or provisions of
this Agreement (either actual or threatened) by Consultant, the Company's
remedies at law shall be inadequate. Accordingly, Consultant agrees that in such
event, the Company shall have the right of specific performance and/or
injunctive relief in addition to any and all other remedies and rights at law or
in equity, and such rights and remedies shall be cumulative.
6.4 Notices. Any notices, consents, demands, requests, approvals and
other communications to be given under this Agreement by either party to the
other must be in writing and given by personal delivery, facsimile transmission,
courier service or sent by mail, registered or certified, postage prepaid with
return receipt requested. Such notice shall be deemed received on the date on
which it is personally delivered, transmitted by facsimile or couriered, or on
the third business day following the date on which it so mailed. For purposes of
notices, the addresses of the parties shall be:
If to the Company: Million Dollar Saloon, Inc.
6848 Greenville Avenue
Dallas, Texas 75231
Attention: President
Fax No.: (214) 691-6788
If to Consultant: Steve Wheeler
2152 West Northwest Highway
Suite 118
Dallas, Texas 75220
Fax No.: (972) 409-9639
Phone No.: (972) 432-0800
Any party may change its address for notice by written notice given to the other
party in accordance with this Section.
6.5 Governing Law. THIS AGREEMENT HAS BEEN EXECUTED AND DELIVERED IN
AND SHALL BE INTERPRETED, CONSTRUED, AND ENFORCED PURSUANT TO AND IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS.
6.6 Enforcement. In the event any party shall resort to legal action to
enforce the terms and provisions of this Agreement, the prevailing party may
recover from the other party the costs of such action, including, without
limitation, reasonable attorneys' fees.
6.7 Severability. In the event any provision of this Agreement is held
to be unenforceable for any reason, such provision shall be severable from this
Agreement if it is capable of being identified with and apportioned to
reciprocal consideration or to the extent that it is a provision that is not
essential and the absence of which would not have prevented the parties from
entering into this Agreement. The unenforceability of a provision that has been
performed shall not be grounds for invalidation of this Agreement under
circumstances in which the true controversy between the parties does not involve
such provision.
CONSULTING AGREEMENT - Page 5
<PAGE>
6.8 Entire Agreement. This Agreement supersedes all previous contracts,
agreements and understandings between the parties concerning the subject matter
hereof, and constitutes the entire agreement between the parties with respect to
the subject matter hereof. No oral statements or prior written material not
specifically incorporated herein shall be of any force and effect, and no
changes in or additions to this Agreement shall be recognized unless
incorporated herein by amendment, such amendment(s) to become effective on the
date(s) stipulated therein.
6.9 Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented without the prior written consent of all
parties.
6.10 Headings. The headings of the Sections and paragraphs of this
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
6.11 Waiver of Breach. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a wavier of
any subsequent breach by any party.
6.12 Other Obligations. Consultant represents and warrants that she has
not as of the execution of this Agreement assumed any obligations inconsistent
with those contained herein.
6.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be taken to be an original; but such
counterparts will together constitute one document.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE MILLION DOLLAR SALOON, INC.
By:
------------------------------------
Name:
------------------------------------
Its:
------------------------------------
------------------------------------------
STEVE WHEELER
CONSULTING AGREEMENT - Page 6
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