<PAGE>1
<PAGE>2
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington,
D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 11, 1998
REDNECK FOODS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 56-203-5983
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification
Number)
71 Turtle Creek Drive, Asheville, NC 28803
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (828) 277-5577
<PAGE>3
Item 1. Changes in Control of Registrant
Item 2. Acquisition or Disposition of Assets. On September 11,
1998, the Company obtained an extension relating to its ongoing
negotiations to acquire all of the stock of Woody's Bar-B-Q
Holdings, Inc., a 33-unit chain based in Jacksonville Florida. To
obtain this extension, the Company agreed to release to the selling
shareholders of Woody's $805,630, representing the net funds held in
escrow at that time. The Company expects to pay a total of
$1,600,000 in cash plus approximately $4,000,000 of Convertible
Promissory Notes ("the Notes") bearing interest at 10% and maturing
in one year. The final purchase price is subject to adjustment
based upon a closing balance sheet audit. The Notes are
convertible into Common Stock at the lower of $2.93 per Common Share
or the average daily closing prices for the 30 days prior to
conversion. Additionally, the Company will issue Warrants to the
Selling Shareholders to acquire 500,000 shares of the Company's
Common Stock at the lower of $1.71 or the Conversion Price
identified in the Notes. Mr. David Womick, President of Redneck
Foods, Inc., and his wife have also agreed to guarantee the Notes
and they have agreed to pledge 1,000,000 of their Redneck Common
Shares as additional collateral. The Company and the Sellers
extended the closing 3 times until October 8, 1998 to facilitate the
raising of the necessary capital to close the transaction.
The Company is attempting to raise the required cash through a
private placement of convertible debentures. The Company
authorized up to $3,000,000 in aggregate principal amount of Series
1 Secured Convertible Debentures Due 2001 (the "Debentures"). The
Debentures bear interest at 5% per annum, payable quarterly, and are
redeemable at 125% of the principal amount so redeemed. Subsequent
to June 30, 1998, $1,271,200 in Debentures has been sold.
Item 3. Bankruptcy or Receivership. None.
Item 4. Changes in Registrant's Certifying Accountant. No.
Item 5. Other Events. None.
Item 6. Resignation of Registrant's Directors. None.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired. To be filed on
or
before November 20, 1998
(b) Pro forma financial information. To be filed on or before
November 20, 1998
(c) Exhibits. AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
AND EXTENSION LETTER AGREEMENTS
Item 8. Change in Fiscal Year. None.
<PAGE>4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
REDNECK FOODS, Inc.
(Registrant)
By: David Womick, President
----------------------------
Date: September 25, 1998
<PAGE>5
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
THIS AMENDED AND RESTATED STOCK PURCHASE AGREEMENT (this
"Agreement") is made as of the 20th day of August, 1998, by and
between REDNECK FOODS, INC., a Delaware corporation ("Purchaser"),
WOODY'S BAR-B-Q HOLDINGS, INC., a Florida corporation (the
"Company"), JAMES W. MILLS, Jr., a Florida resident ("W. Mills"),
YOLANDA H. MILLS, a Florida resident ("Y. Mills"), SCOTT C. MILLER
and DEBORAH H. MILLER, each of whom is a Florida resident
(collectively "Miller") , and WILLIAM H. MOON, a Florida resident
("Moon"). W. Mills, Y. Mills, Miller and Moon are collectively
referred to herein as the "Sellers," Purchaser, the Company and the
Sellers are collectively referred to herein as the "Parties."
BACKGROUND
The Sellers own all of the issued and outstanding shares of
capital stock of the Company. The Company owns all of the issued
and outstanding shares of capital stock of Woody's Bar-B-Q, Inc., a
Florida corporation, which owns all of the issued and outstanding
capital stock of Woody's Bar-B-Q VI, Inc., and Woody's Bar-B-Q
Franchise Sales, Inc. The Company also owns all of the issued and
outstanding shares of capital stock of Woody's Bar-B-Q I, Inc.,
Woody's Bar-B-Q II, Inc., Woody's Bar-B-Q IV, Inc., Woody's Bar-B-Q
IX, Inc., Woody's Bar-B-Q X, Inc., and Woody's Bar-B-Q XI, Inc.,
each of which is a Florida corporation. The foregoing entities,
owned directly or indirectly by the Company, are collectively
referred to herein as the "Subsidiaries." The Company and the
Subsidiaries are sometimes collectively referred to herein as the
"Acquired Companies."
Certain of the Subsidiaries own and operate seven barbecue
restaurants (the "Company Restaurants") in Jacksonville Florida
under the name "Woody's Bar-B-Q." Woody's Bar-B-Q Franchise Sales,
Inc. (the "Franchise Company"), (i) is the owner of certain
proprietary rights in the "Woody's" name and certain other
trademarks, trade names, service marks and trade dress
(collectively, the "Trademarks"), (ii) has developed certain
training, management, food products, sauces and recipes currently in
use by the Franchised Restaurants and marketing techniques and other
methods of operation (the "Woody's System") used in connection with
the development and operation of restaurants operated under the
Trademarks, (iii) has granted to various persons a franchise and
license to use the Woody's System and the Trademarks in connection
with certain franchised Woody's Bar-B-Q restaurants (the "Franchised
Restaurants") (as hereinafter defined) pursuant to certain franchise
agreements, and (iv) has granted to certain persons a license to use
the Trademarks in connection with certain licensed Woody's Bar-B-Q
restaurants (the "Licensed Restaurants") pursuant to certain license
agreements. The franchising and licensing business conducted by the
Franchise Company and the ownership and operation of the Company
Restaurants are collectively referred to herein as the "Business."
The Company Restaurants, the Franchised Restaurants and the Licensed
Restaurants are identified by name, store number and address in
Schedule 1 attached hereto.
Purchaser desires to acquire all of the issued and
Sellers are willing to sell all of the Shares to Purchaser, all in
accordance with and subject to the terms and conditions of this
Agreement.
Purchaser, Sellers and the Company previously entered into
a Stock Purchase Agreement dated March 4, 1998 (the "Original Stock
Purchase Agreement"). This Agreement amends, restates and
supersedes the Original Stock Purchase Agreement. Purchaser and the
Company have also entered into a letter agreement (the "Letter
Agreement") dated August 20, 1998. To the extent of any conflict
between the terms of this Agreement and the terms of the Letter
Agreement, the provisions of the Letter Agreement shall be deemed to
be controlling.
RECITAL OF CONSIDERATION
Accordingly, in consideration of the mutual covenants
contained herein, Purchaser, the Company and the Sellers agree to
the terms of this Agreement.
ARTICLE I
CAPITALIZED TERMS
Capitalized terms not otherwise defined herein shall have
the respective meanings assigned to such terms in Article X hereof.
<PAGE>6
ARTICLE II
STOCK PURCHASE AND RELATED TRANSACTIONS
2.1 Purchase of Shares. Subject to the terms and
conditions of this Agreement, at the Closing (as hereinafter
defined), Purchaser shall purchase and accept from Sellers, and
Sellers shall sell and transfer to Purchaser, the Shares, free and
clear of all Encumbrances.
2.2 Purchase Price. Subject to adjustment as provided
in Section 2.3 hereof, the purchase price (the "Purchase Price") to
be paid by Purchaser to Sellers for the Shares shall be an amount
equal to Seven Million United States Dollars ($7,000,000.00).
2.3 Adjustment to Purchase Price.
(a) Closing Date Balance Sheet.
(i) As soon as practicable after the
Effective Date, but in no event later than forty-five (45) days
after the Closing Date, Purchaser shall cause its independent
certified public accountants ("Purchaser's Accountants") to prepare
and deliver to Sellers a draft consolidated balance sheet (the
"Draft Closing Date Balance Sheet") for the Acquired Companies as of
the opening of business on the Effective Date. The Draft Closing
Date Balance Sheet (i) shall be prepared in accordance with GAAP and
AICPA review standards applied on a basis consistent with the
preparation of the financial statements described in Section 5.4
hereof but without regard to the transactions contemplated by this
Agreement, and (ii) shall set forth the total liabilities (excluding
any tax liability of the Company resulting from Purchaser's election
to treat the stock purchase as a purchase of assets under the
provisions of Section 338 of the Internal Revenue Code) of the
Acquired Companies as of the opening of business on the Effective
Date (the "Closing Date Total Liabilities") and the stockholder's
equity (defined as the difference between the Acquired Companies'
assets minus their total liabilities) of the Acquired Companies as
of the opening of business on the Effective Date (the "Closing Date
Stockholder's Equity").
(ii) If Sellers holding a majority of
the Shares (the "Requisite Sellers") have any objections to the
Draft Closing Date Balance Sheet, they will deliver a statement
describing in detail their objections to the Purchaser within thirty
(30) days after receiving the Draft Closing Date Balance Sheet. If
no such objections are delivered by the Requisite Sellers within
such thirty (30) day period, the Draft Closing Date Balance Sheet
shall be deemed accepted by the Sellers. The Purchaser and the
Requisite Sellers will use reasonable efforts to resolve any such
objections themselves. If the Purchaser and the Requisite Sellers
do not obtain a final resolution within thirty (30) days after the
Purchaser has received the statement of objections, however, the
Purchaser and the Requisite Sellers will select an accounting firm
mutually acceptable to them to resolve any remaining objections. If
the Purchaser and the Requisite Sellers are unable to agree on the
choice of an accounting firm, they will select a
nationally-recognized accounting firm by lot (after excluding their
respective regular outside accounting firms). The determination of
any accounting firm so selected will be set forth in writing and
will be conclusive and binding upon the Parties. The Purchaser will
revise the Draft Closing Date Balance Sheet as appropriate to
reflect the resolution of any objections thereto pursuant to this
Section 2.3(a)(ii). The ``Closing Date Balance Sheet'' shall mean
the Draft Closing Date Balance Sheet together with any revisions
thereto pursuant to this Section 2.3(a)(ii).
(iii) If the Parties submit any
unresolved objections to an accounting firm for resolution as
provided in Section 2.3(a)(ii) above, the Purchaser and the Sellers
will share responsibility for the fees and expenses of the
accounting firm as follows:
(A) if the accounting firm
resolves all of the remaining objections in favor of the Purchaser
(the Closing Date Stockholder's Equity so determined is referred to
herein as the "Low Value"), the Sellers will be responsible for all
of the fees and expenses of the accounting firm;
(B) if the accounting firm
resolves all of the remaining objections in favor of the Sellers
(the Closing Date Stockholder's Equity so determined is referred to
herein as the "High Value"), the Purchaser will be responsible for
all of the fees and expenses of the accounting firm; and
(C) if the accounting firm
resolves some of the remaining objections in favor of the Purchaser
and the rest of the remaining objections in favor of the Sellers
(the Closing Date Stockholder's Equity so determined is referred to
herein as the "Actual Value"), the Sellers will be responsible for
<PAGE>7
that fraction of the fees and expenses of the accounting firm equal
to (x) the difference between the High Value and the Actual Value
over (y) the difference between the High Value and the Low Value,
and the Purchaser will be responsible for the remainder of the fees
and expenses.
(iv) The Purchaser and the
Purchaser's Accountants will make the work papers and back-up
materials used in preparing the Draft Closing Date Balance Sheet,
and the books, records, and financial staff of the Acquired
Companies available to the Sellers and their accountants and other
representatives at reasonable times and upon reasonable notice at
any time during (A) the preparation by the Purchaser of the Draft
Closing Date Balance Sheet, (B) the review by the Sellers of the
Draft Closing Date Balance Sheet, and (C) the resolution by the
Parties of any objections thereto. The Sellers will maintain the
work papers and backup materials furnished to the Sellers so as to
be readily available to Purchaser's accountants.
(b) Stockholders' Equity Adjustment. Upon
determination of the Closing Date Balance Sheet, the Purchase Price
shall be increased or decreased (as appropriate), on a dollar for
dollar basis, to the extent (if any) by which the Closing Date
Stockholder's Equity (as defined above in Section 2.3(a)(i)), as
shown on the Closing Date Balance Sheet, is greater than or less
than (as the case may be) the sum of One Million Three Hundred Fifty
Thousand Dollars ($1,350,000.00). The Purchase Price shall be (i)
decreased pursuant to this Section 2.3(b) if the Closing Date
Stockholder's Equity is less than $1,350,000.00 or (ii) increased
pursuant to this Section 2.3(b) if the Closing Date Stockholder's Equity
is greater than $1,350,000.00. In determining the Closing Date
Stockholder's Equity, no accounts payable from parties related by
blood or marriage to the current officers, directors or shareholders
of the Acquired Companies shall be considered to be assets of the
Acquired Companies.
2.4 Payment of Purchase Price. The Purchase Price
shall be paid by Purchaser to Sellers as follows:
(a) Deposit. Purchaser has delivered to the
Sellers the sum of $100,000.00 (the "$100,000 Deposit"). In
addition, Purchaser has delivered to Sellers' attorneys, Martin,
Ade, Birchfield & Mickler, P.A. ("Escrow Agent"), the sum of
$770,930.00 (exclusive of $35,000.00 in Sellers' attorneys' fees
paid by Purchaser pursuant to Section 2.11 hereof) (the "Additional
Deposit"). The amount of the Additional Deposit may be increased
from time to time by the Purchaser by delivery of additional amounts
to Escrow Agent.
(b) Cash Portion of Purchase Price. At the
Closing, Purchaser shall pay to Sellers, by wire transfer to one or
more bank accounts designated by Sellers, the sum of One Million Six
Hundred Thousand Dollars ($1,600,000.00) (the "Cash Portion of the
Purchase Price"). At the Closing, (i) the $100,000 Deposit shall be
credited against the Cash Portion of the Purchase Price, and (ii)
Escrow Agent shall deliver the Additional Deposit, together with
accrued interest thereon, to Sellers, and the Additional Deposit and
accrued interest shall be credited against the Cash Portion of the
Purchase Price.
(c) Balance of Purchase Price. The balance
of the Purchase Price shall be paid in accordance with the terms of
the Convertible Promissory Notes attached hereto as Exhibit 2.4(b)-1
(the "Convertible Notes"). Upon the determination of any adjustment
to the Purchase Price in accordance with Section 2.3, the principal
amount of the Convertible Notes shall be correspondingly adjusted
and Purchaser shall provide replacement Convertible Notes with the
adjusted principal amounts against surrender of the original
Convertible Notes.
(d) Allocation of Purchase Price. The Cash
Portion of the Purchase Price and the Convertible Notes shall be
allocated among the Sellers in proportion to their respective
holdings of the Shares.
2.5 Noncompetition Agreement. At Closing, Sellers
will enter into a Noncompetition agreement with Purchaser in the
form attached hereto as Exhibit 2.5 (the "Noncompetition
Agreement").
2.6 Roosevelt Boulevard Store. At Closing, the
Company and the Franchise Company shall enter into a license
agreement in the form attached hereto as Exhibit 2.6-1 with Woody's
Bar-B-Q Roosevelt, Inc., a Florida corporation which operates the
Woody's Bar-B-Q restaurant located at 4291 Roosevelt Boulevard in
Jacksonville, Florida ("Woody's Roosevelt"). At Closing, Y. Mills,
W. Mills and Purchaser shall enter into an acquisition agreement in
the form attached hereto as Exhibit 2.6-2 (the "Roosevelt
Acquisition Agreement").
<PAGE>8
2.7 Lease Agreements. At Closing, Purchaser and MVM,
a Florida general partnership, will enter into lease agreements for
the properties currently leased by the Company Restaurants located
at 1638 University Boulevard South and 5930 Powers Avenue in
Jacksonville, Florida in accordance with the terms and in the form
attached hereto as Exhibit 2.7 (the "Lease Agreements").
2.8 Related Party Indebtedness. Prior to or at
Closing, Sellers will pay in full, or cause to be paid in full, to
the Company any indebtedness owed by Sellers or their affiliates to
the Company. Related Parties as used herein includes the current
shareholders, officers, directors or persons related thereto by
either blood or marriage.
2.9 Consulting Agreements. At Closing, Purchaser
shall enter into a consulting agreement with W. Mills in the form
attached hereto as Exhibit 2.9-1 and a consulting agreement with Y.
Mills in the form attached hereto as Exhibit 2.9-2 (collectively,
the "Consulting Agreements").
2.10 Warrants to Purchase Common Stock. At Closing,
Purchaser shall issue to the Sellers, as additional consideration
for the sale of the Shares, warrants to purchase 400,000 shares (the
"Warrant Shares") of Purchaser Common Stock, which Warrants shall be
in the form attached hereto as Exhibit 2.10 (the "Warrants"). The
Warrants shall be exercisable at the Conversion Price at any time
within five (5) years after the Closing Date. If the Closing does
not occur on or before August 26, 1998, the number of shares that
may be purchased pursuant to the Warrants shall be increased from
400,000 shares to 500,000 shares.
2.11 Attorneys' Fees. On the Effective Date,
Purchaser shall pay the fees of counsel to the Sellers in the amount
of $35,000.00. At Closing, Purchaser shall pay the additional fees
of counsel to the Sellers not to exceed $7,500.00.
2.12 Indemnity of Sellers. Purchaser shall indemnify
and hold Sellers harmless against all of the liabilities of the
Acquired Companies reflected on the Closing Date Balance Sheet.
Without limiting the foregoing, Purchaser shall indemnify and hold
W. Mills harmless from any and all liabilities that W. Mills may
incur as a result of his guaranty of certain indebtedness of the
Acquired Companies to American National Bank, and Purchaser shall
cause W. Mills to be released from such guaranty within twelve (12)
months after the Effective Date.
2.13 Registration of Conversion Shares and Warrant
Shares. Purchaser shall:
(a) promptly following the Closing Date but
in no event later than forty-five (45) business days thereafter,
file with the Securities and Exchange Commission (the "Commission")
a registration statement on a form available for the registration
and sale of the Conversion Shares and the Warrant Shares
(collectively, the "Registerable Shares") by the Sellers from time
to time on the OTC-BB Market or in privately-negotiated transactions
(the "Registration Statement");
(b) use its best efforts, subject to receipt
of necessary information from the Sellers, to cause the Registration
Statement to become effective within ninety (90) days after it has
been filed with the Commission (the Registration Statement, at the
time it becomes effective, shall comply as to form in all material
respects with the applicable requirements of the Securities Act, the
General Rules and Regulations and Instructions of the Commission,
and at such time neither the Registration Statement nor the
prospectus included therein shall contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading; provided,
however, that the Purchaser makes no representations or warranties
as to any statement made in the Registration Statement or the
prospectus included therein in reliance upon and in conformity with
information furnished in writing to Purchaser by or on behalf of any
Seller, specifically for use in connection with the preparation of
the Registration Statement and such prospectus);
(c) subject to receipt of necessary
information from the Sellers, prepare and file with the Commission
with all reasonable speed under the circumstances such amendments
and supplements to the Registration Statement and the prospectus
used in connection therewith and such reports as may be required to
be filed pursuant to the Exchange Act to keep the Registration
Statement effective until the earlier of (i) the time all the
Registerable Shares have been sold pursuant thereto or otherwise;
(ii) the time all the Registerable Shares then held by Sellers could
be sold without a registration statement under Rule 144 promulgated
under the Securities Act;
<PAGE>9
(d) furnish (so long as Purchaser shall be obligated
to keep the Registration Statement effective pursuant to paragraph
(c) of this Section 2.13 to each Seller with respect to the
Registerable Shares registered under the Registration Statement (and
to each underwriter, if any, of such Registerable Shares) such
number of copies of prospectuses and preliminary prospectuses in
conformity with the requirements of the Securities Act and such
other documents as the Purchaser may reasonably request, in order to
facilitate the public sale or other disposition of all or any of the
Registerable Shares by the Purchasers;
(e) file (so long as Purchaser shall be
obligated to keep the Registration Statement effective pursuant to
paragraph (c) of this Section 2.13 documents required of Purchaser
for normal blue sky clearance in states specified in writing by the
Sellers; provided, however, that Purchaser shall not be required to
qualify to do business, or qualify as a broker or dealer in
securities or subject itself to taxation in any jurisdiction in
which it is not now so qualified or so subjected;
(f) at the request of a Seller following the
effectiveness of the Registration Statement, cause to be issued
certificates representing the Registerable Shares free of
restrictive legends; and
(g) bear all reasonable expenses in
connection with the procedures in paragraphs (a) through (f) of this
Section 2.13, other than fees and expenses, if any, of counsel to
the Sellers.
2.14 Transfer of Shares After Registration. Sellers
acknowledge that although the Registerable Shares will be freely
transferable after registration, a limited trading market currently
exists for the Purchaser Common Stock and the sale of a substantial
portion of the Registerable Shares in open-market transactions
likely would depress the trading price of the Purchaser Common
Stock. Accordingly, Sellers agree that if Sellers desire to sell
more than ten percent (10%) of the Registerable Shares owned by the
Sellers in any three (3) month period (other than in privately
negotiated transactions) (a "Significant Disposition"), Sellers will
give Purchaser at least ten (10) days notice prior to initiating a
Significant Disposition. Upon receipt of such notice, Purchaser
shall use its best efforts to locate a purchaser for the
Registerable Shares that Sellers desire to sell in such Significant
Disposition in a privately negotiated transaction at a net price to
Sellers equal to seventy-five percent (75%) of the average closing
bid price of the Purchaser Common Stock for the immediately
preceding ten (10) days.
2.15 Indemnification.
(a) For purposes of this Section 2.15, the
following definitions shall be applicable:
(i) the term "Registration Statement" shall
include any final prospectus, exhibit, supplement, or
amendment included in or relating to the Registration
Statement referred to in Section 2.13; and
(ii) the term "untrue statement" shall include
any untrue statement or alleged untrue statement, or any
omission or alleged omission to state in the Registration
Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of
the circumstances in which they were made, not misleading.
(b) Purchaser agrees to indemnify and hold harmless
the Sellers from and against any losses, claims, damages, or
liabilities to which the Sellers may become subject (under the
Securities Act or otherwise) insofar as such losses, claims,
damages, or liabilities (or actions or proceedings in respect
thereof) arise out of, or are based upon, any untrue statement
contained in the Registration Statement on the effective date
thereof, or arise out of any failure by Purchaser to fulfill any
undertaking included in the Registration Statement and Purchaser
will reimburse the Sellers for any reasonable legal or other
expenses reasonably incurred in investigating, defending, or
preparing to defend any such action, proceeding, or claim; provided,
however, that Purchaser shall not be liable in any such case to the
extent that such loss, claim, damage, or liability arises out of, or
is based upon, an untrue statement made in such Registration
Statement in reliance upon and in conformity with written
information furnished to Purchaser by or on behalf of the Sellers
for use in preparation of the Registration Statement.
(c) The Sellers agree to indemnify and hold harmless
Purchaser (and each person, if any, who controls Purchaser within
the meaning of Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended, each officer of
Purchaser who signs the Registration Statements and each director of
Purchaser) from and against any losses, claims, damages, or
<PAGE>10
liabilities to which Purchaser (or any such officer, director, or
controlling person) may become subject (under the Securities Act or
otherwise), insofar as such losses, claims, damages, or liabilities
(or actions or proceedings in respect thereof) arise out of, or are
based upon, any untrue statement contained in the Registration
Statement on the effective date thereof if such untrue statement was
made in reliance upon and in conformity with written information
furnished by or on behalf of the Sellers for use in preparation of
the Registration Statement, and the Sellers will reimburse Purchaser
(or such officer, director, or controlling person), as the case may
be, for any reasonable legal or other expenses reasonably incurred
in investigating, defending, or preparing to defend any such action,
proceeding, or claim.
(d) Promptly after receipt by an indemnified person of
notice of the commencement of any action (including any governmental
investigation or inquiry), such indemnified person will, if a claim
in respect thereof is to be made against an indemnifying person
pursuant to this Section 2.15, give written notice to such
indemnifying person of the commencement thereof, but the omission so
to notify the indemnifying person will not relieve it from any
liability that it may have to any indemnified person otherwise than
pursuant to the provisions of this Section 2.15. In case any such
action is brought against any indemnified person, and it notifies an
indemnifying person of the commencement thereof, the indemnifying
person will be entitled to participate in, and to the extent that it
may wish, jointly with any other indemnifying person similarly
notified, to assume the defense thereof, with counsel satisfactory
to such indemnified person, and after notice from the indemnifying
person to such indemnified person, the indemnifying person shall
not, except as hereinafter provided, be responsible for any legal or
other expenses subsequently incurred by such indemnified person in
connection with the defense thereof.
(e) Such indemnified person shall have the right to
employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be
the expense of such indemnified person unless (i) the indemnifying
person has agreed to pay such fees and expenses or (ii) the
indemnifying person shall have failed to assume the defense of such
action or proceeding or has failed to employ counsel satisfactory to
such indemnified person in any such action or proceeding or (iii)
the named parties to any such action or proceeding (including any
impleaded parties) include both such indemnified person and the
indemnifying person, and such indemnified person shall have been
advised by counsel that representation of both parties by the same
counsel would be inappropriate due to actual material differing
interests between them (in which case, if such indemnified person
notifies the indemnifying person in writing that it elects to employ
separate counsel at the expense of the indemnifying person, the
indemnifying person shall not have the right to assume the defense
of such action or proceeding on behalf of such indemnified person,
it being understood, however, that the indemnifying person shall
not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings
in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys at any time for such indemnified
person and any other indemnified persons, which firm shall be
designated in writing by such indemnified parties). The
indemnifying person shall not be liable for any settlement of any
such action or proceeding effected without its written consent,
which consent shall not be unreasonably be withheld, delayed, or
conditioned, but if settled with its written consent, or if there by
a final judgment for the plaintiff in any such action or proceeding,
the indemnifying person agrees to indemnify and hold harmless such
indemnified person or persons from and against any loss or liability
by reason of such settlement or judgment.
(f) In order to provide for just and equitable
contribution, if a claim for indemnification pursuant to this
Section 2.15 is made but it is found in a final judgment of a court
of competent jurisdiction (not subject to further appeal) that such
indemnification may not be enforced in such case, even though the
express provisions hereof provided for indemnification in such case,
then the Purchaser, on the one hand, and the Sellers, on the other
hand, shall contribute to the losses, claims, damages, liabilities,
or costs to which the indemnified persons may be subject in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified parties in connection with the
actions that resulted in such losses, claims, liabilities, or costs,
as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified parties
shall be determined with reference to, among other things, whether
any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information, and
<PAGE>11
opportunity to correct or prevent such action. The amount paid or
payable by a party as a result of the losses, claims, damages,
liabilities, or costs referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation or proceeding.
2.16 Information Available. So long as the
Registration Statement is effective covering the resale of
Registerable Shares owned by each Seller, Purchaser will furnish to
each Seller:
(a) as soon as practicable after available
(but in the case of Purchaser's annual report to shareholders,
within 120 days after the end of each fiscal year of the Company),
one copy of (i) its annual report to shareholders (which annual
report shall contain financial statements audited in accordance with
generally accepted accounting principles), (ii) its annual report on
Form 10-K, (iii) its quarterly reports on Form 10-Q, (iv) a full
copy of the particular Registration Statement covering the
Registerable Shares, (v) proxy statements, (vi) press releases, and
(vii) any other reports sent to stockholders of the Company or filed
with the Commission; and
(b) upon the reasonable request of the
Sellers, an adequate number of copies of the prospectuses to supply
to NASDAQ or any other party requiring such prospectuses.
ARTICLE III
CLOSING
3.1 Closing Time and Place. The closing of the
transactions contemplated by this Agreement (the "Closing") shall
take place at the offices of Martin, Ade, Birchfield & Mickler,
P.A., Suite 3000, One Independent Square, Jacksonville, Florida
32202, at 10:00 a.m. (local time) on September 9, 1998 (which date
may be extended pursuant to the Letter Agreement), or such earlier
date upon which Purchaser and Sellers may mutually agree (the
"Closing Date"). The Closing shall be effective as of the opening
of business on August 20, 1998 (the "Effective Date"), regardless of
the actual date on which the Closing occurs. Subject to the
provisions of Article VII hereof, the failure to consummate the
transactions contemplated by this Agreement on the date and time
determined pursuant to this Section 3.1 will not result in the
termination of this Agreement and will not relieve any Party of any
obligation under this Agreement.
3.2 Closing Deliveries by Seller. At the Closing,
Sellers shall deliver to Purchaser the following:
(a) Stock certificates representing the
Shares, accompanied by duly executed stock powers endorsed to
Purchaser.
(b) A closing certificate in the form
attached hereto as Exhibit 3.2(b).
(c) The Noncompetition Agreement, duly
executed by the Sellers.
(d) The Lease Agreements, duly executed by
MVM.
(e) The Roosevelt Acquisition Agreement, duly
executed by W. Mills and Y. Mills.
(f) The Stock Pledge Agreement, duly executed
by the Sellers.
(g) The Consulting Agreements, duly executed
by W. Mills, and Y. Mills.
(h) The written resignations of all officers
and directors of the Acquired Companies.
(i) An opinion of counsel to the Sellers and
the Company in the form attached hereto as Exhibit 3.2(i).
3.3 Closing Deliveries by Purchaser. At Closing,
Purchaser shall deliver to the Sellers the following:
(a) The Cash Portion of the Purchase Price.
(b) The Convertible Promissory Notes, duly
executed by Purchaser.
(c) A closing certificate in the form
attached hereto as Exhibit 3.3(c).
<PAGE>12
(d) The Warrants, duly executed by the
Purchaser.
(e) The Stock Pledge Agreement, duly executed
by Purchaser.
(f) The Consulting Agreements, duly executed
by Purchaser.
(g) The Employment Agreements, duly executed
by Purchaser.
(h) The Lease Agreements, duly executed by
Purchaser.
(i) The Roosevelt Acquisition Agreement, duly
executed by Purchaser.
(j) An opinion of counsel to Purchaser in the
form attached hereto as Exhibit 3.3(j).
3.4 Conditions Precedent to Purchaser's Obligations.
Purchaser's obligation to purchase the Shares and to take the other
actions required to be taken by Purchaser at the Closing is subject
to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Purchaser, in
whole or in part):
(a) Accuracy of Representations. Subject to
Section 7.3 hereof, all of Sellers' representations and warranties
in this Agreement must be accurate in all material respects as of
the Closing Date as if made on the Closing Date. All
representations and warrants made by the Seller will survive the
Closing for the period specified in this Agreement and will not
merge with the Closing Documents.
(b) Seller's Performance. Subject to Section
7.3 hereof, all of the covenants and obligations that Sellers are
required to perform or to comply with pursuant to this Agreement at
or prior to the Closing (including the deliveries described in
Section 3.2 hereof) must have been duly performed and complied with
in all material respects. All representations and warranties made
by the Sellers will survive the Closing for the period specified in
this Agreement and will not merge with the Closing Documents.
(c) Consents. Each of the Consents
identified in Part 5.2 of the Disclosure Schedule, if any, must have
been obtained and must be in full force and effect, except where the
failure to obtain such consent would not have a material adverse
effect on the Company.
(d) No Proceedings. Since the date of this
Agreement, nor in the twelve (12) months prior to the date of this
Agreement, there must not have been commenced or overtly threatened
against Purchaser any Proceeding (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the
Contemplated Transactions, or (b) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with
any of the Contemplated Transactions.
(e) No Prohibition. Neither the consummation
nor the performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time),
materially contravene, or conflict with, or result in a material
violation of, any applicable Legal Requirement or Order.
3.5 Conditions Precedent to Sellers' Obligations.
Sellers' obligation to sell the Shares and to take the other actions
required to be taken by Sellers at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by the Requisite Sellers, in
whole or in part):
(a) Accuracy of Representations. All of
Purchaser's representations and warranties in this Agreement must be
accurate in all material respects as of the Closing Date as if made
on the Closing Date. All representations and warranties made by the
Purchaser will survive the Closing for the period specified in this
Agreement and will not merge with the Closing Documents.
(b) Purchaser's Performance. All of the
covenants and obligations that Purchaser is required to perform or
to comply with pursuant to this Agreement at or prior to the Closing
must have been performed and complied with in all material respects.
(c) Consents. Each of the Consents
identified in Part 6.2 of the Disclosure Schedule, if any, must have
been obtained and must be in full force and effect, except where the
failure to obtain such consent would not have a material adverse
effect on the Company.
<PAGE>13
(d) No Proceedings. Since the date of this
Agreement, nor in the twelve (12) months prior to the date of this
Agreement, there must not have been commenced or overtly threatened
against Sellers any Proceeding (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the
Contemplated Transactions, or (b) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with
any of the Contemplated Transactions.
(e) No Prohibition. Neither the consummation
nor the performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time),
materially contravene, or conflict with, or result in a material
violation of, any applicable Legal Requirement or Order.
ARTICLE IV
COVENANTS PENDING CLOSING
4.1 Covenants of Sellers and Acquired Companies Prior
to Closing. Between the date hereof and until the Closing Date, the
Acquired Companies and Sellers will take the actions described in
this Section 4.1.
(a) Access and Investigation. Between the
date of this Agreement and the Closing Date, Sellers and the
Acquired Companies will (a) afford Purchaser reasonable access to
the Acquired Companies' properties, contracts, books and records,
and other documents and data (subject to the confidentiality
provisions contained herein), (b) furnish Purchaser with copies of
all such contracts, books and records, and other existing documents
and data as Purchaser may reasonably request, and (c) furnish
Purchaser with such additional financial, operating, and other data
and information regarding the Acquired Companies as Purchaser may
reasonably request.
(b) Operation of the Business. Between the
date of this Agreement and the Closing Date, Sellers and the
Acquired Companies will (a) conduct the Business only in the
Ordinary Course of Business, and (b) use their best efforts
(consistent with prudent business practices) to preserve intact the
current business organization of the Acquired Companies.
(c) Negative Covenant. Except as otherwise
expressly permitted by this Agreement, between the date of this
Agreement and the Closing Date, Sellers and the Acquired Companies
will not, without the prior consent of Purchaser, take any
affirmative action, or fail to take any reasonable action within
their control, as a result of which any of the changes or events
listed in Section 5.7 is likely to occur.
(d) Required Covenants. Between the date of
this Agreement and the Closing Date, Sellers and the Acquired
Companies will cooperate with Purchaser in obtaining all Consents
identified in Part 5.2 of the Disclosure Schedule
(e) No Negotiation. Until such time, if any,
as this Agreement is terminated pursuant to Article VII, Sellers and
the Acquired Companies will not directly or indirectly solicit,
initiate, or encourage any inquiries or proposals from or negotiate
with any Person (except as contemplated by this Agreement) relating
to any transaction involving the sale of the business or assets of
the Acquired Companies, or any merger, consolidation, business
combination, or similar transaction involving the Company.
(f) Best Efforts. Between the date of this
Agreement and the Closing Date, Sellers and the Acquired Companies
will use their Best Efforts to cause the conditions in Article III
hereof to occur, to the extent the same are within their control.
4.2 Covenants of Purchaser Prior to Closing. Between
the date hereof and until the Closing Date, Purchaser will take the
actions described in this Section 4.2.
(a) Required Consents. Between the date of
this Agreement and the Closing Date, Purchaser will cooperate with
Sellers in obtaining all Consents identified in Part 5.2 of the
Disclosure Schedule.
(b) Best Efforts. Between the date of this
Agreement and the Closing Date, Purchaser will use its Best Efforts
to cause the conditions in Article III hereof to be satisfied, to
the extent the same are within Purchaser's control.
<PAGE>14
ARTICLE V
REPRESENTATIONS AND
WARRANTIES OF SELLERS
Each of the Sellers represent and warrant to Purchaser
that, except as set forth in the Disclosure Schedule attached
hereto, all of the representations and warranties contained in this
Article V are true and correct:
5.1 Organization and Good Standing. Part 5.1 of the
Disclosure Schedule contains a complete and accurate list for each
Acquired Company of its name, its jurisdiction of incorporation,
other jurisdictions in which it
is authorized to do business, and its capitalization (including the
identity of each stockholder and the number of shares held by each).
Each Acquired
Company is a corporation duly organized, validly existing, and in
good standing under the laws of Florida, with full corporate power
and authority to conduct its business as it is now being conducted,
to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under Applicable Contracts.
Each Acquired Company is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, except where the
failure to so qualify would not have a material adverse effect on
such Acquired Company.
5.2 Authority; No Conflict.
(a) This Agreement constitutes the legal,
valid, and binding obligation of Sellers, enforceable against
Sellers in accordance with its terms. Sellers have the absolute and
unrestricted right, power, authority, and capacity to execute and
deliver and to perform their obligations under this Agreement.
(b) Except as set forth in Part 5.2 of the
Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time):
(i) contravene, conflict with, or
result in a violation of (A) any provision of the Organizational
Documents of the Acquired Companies, or (B) any resolution adopted
by the Board of Directors or the stockholders of any Acquired
Company;
(ii) contravene, conflict with, or
result in a violation of, or give any Governmental Body or other
Person the right to challenge any of the Contemplated Transactions
or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which any Acquired Company or any of the
assets owned or used by any Acquired Company, may be subject;
(iii) contravene, conflict with, or
result in a violation or breach of any provision of, or give any
Person the right to declare a default or exercise any remedy under,
or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract; or
(iv) result in the imposition or
creation of any Encumbrance upon or with respect to any of the
assets owned or used by any Acquired Company.
Except as set forth in Part 5.2 of the Disclosure Schedule, no
Seller or Acquired Company is or will be required to give any notice
to or obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions.
5.3 Capitalization. The authorized equity securities
of the Company consist of 50,000 shares of Class A voting common
stock, par value $.01 per share, of which 10,638 shares are issued
and outstanding and constitute the Shares, and 50,000 shares of
Class B non-voting common stock, par value $.01 per share, of which
no shares are issued and outstanding. Sellers are and will be on the
Closing Date the record and beneficial owners and holders of the
Shares, free and clear of all Encumbrances. The Shares are owned by
Sellers in the proportions set forth in Part 5.1 of the Disclosure
Schedule. With the exception of the Shares (which are owned by
Sellers), all of the outstanding equity securities and other
securities of each Acquired Company are owned of record and
beneficially by one or more of the Acquired Companies, free and
clear of all Encumbrances. No legend or other reference to any
purported Encumbrance appears upon any certificate representing
equity securities of any Acquired Company. All of the outstanding
equity securities of each Acquired Company have been duly authorized
<PAGE>15
and validly issued and are fully paid and nonassessable. There are
no Contracts relating to the issuance, sale, or transfer of any
equity securities or other securities of any Acquired Company.
5.4 Financial Statements. Sellers have delivered to
Purchaser unaudited consolidated balance sheets of the Acquired
Companies as at December 31, 1995, 1996, and 1997, and the related
unaudited consolidated statements of income, changes in
stockholders' equity, and cash flow for each of the fiscal years
then ended, and the unaudited consolidated balance sheet of the
Acquired Companies as at June 30, 1998 (the "Interim Balance
Sheet"), and the related unaudited consolidated statements of
income, changes in stockholders' equity, and cash flow for the six
(6) months then ended. Such financial statements and notes fairly
present the financial condition and the results of operations,
changes in stockholders' equity, and cash flow of the Acquired
Companies as at the respective dates of and for the periods referred
to in such financial statements, all in accordance with GAAP,
subject to the absence of notes (and in the case of the Interim
Balance Sheet, subject to normal year end adjustments, the effect of
which will not be material). The financial statements referred to
in this Section 5.4 reflect the consistent application of such
accounting principles throughout the periods involved, except as
disclosed in the notes to such financial statements. No financial
statements of any Person other than the Acquired Companies are
required by GAAP to be included in the consolidated financial
statements of the Company.
5.5 Title to Properties; Encumbrances. The Acquired
Companies own (and at Closing will own) all the properties and
assets (whether real, personal, or mixed and whether tangible or
intangible) that they purport to own, including all of the
properties and assets reflected in the Interim Balance Sheet (except
for assets held under capitalized leases and personal property sold
since the date of the Interim Balance Sheet, as the case may be, in
the Ordinary Course of Business). All material properties and assets
reflected in the Interim Balance Sheet are free and clear of all
Encumbrances except, with respect to all such properties and assets,
(a) mortgages or security interests shown on the Interim Balance
Sheet as securing specified liabilities or obligations, each of
which is identified in Part 5.5 of the Disclosure Schedule,
(b) mortgages or security interests incurred in connection with the
purchase of property or assets after the date of the Interim Balance
Sheet (such mortgages and security interests being limited to the
property or assets so acquired), and (c) liens for current taxes not
yet due. A prorated amount of any real and personal property taxes
will be reflected as a liability on the Closing Date Balance Sheet.
5.6 No Undisclosed Liabilities. Except as set forth
in Part 5.6 of the Disclosure Schedule, the Acquired Companies have
no liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent, or otherwise)
except for liabilities or obligations reflected or reserved against
in the Interim Balance Sheet (and disclosed in Part 5.6 of the
Disclosure Schedule) and current liabilities incurred in the
Ordinary Course of Business since the respective dates thereof. As
of the Closing Date, the total liabilities of the Acquired
Companies, computed in accordance with GAAP, shall not exceed
$1,650,000.
5.7 Events Subsequent to Interim Balance Sheet. Since
the date of the Interim Balance Sheet:
(a) none of the Acquired Companies has sold,
leased, transferred, conveyed or otherwise assigned any of its
assets, tangible or intangible, other than in the Ordinary Course of
Business (and in any event has not disposed of or conveyed any asset
with a fair market value of greater than $5,000, except as noted in
Part 5.7 of the Disclosure Schedule);
(b) none of the Acquired Companies has
entered into any agreement, contract, lease, or license (or series
of related agreements, contracts, leases, and licenses) either
involving more than $10,000 or outside the Ordinary Course of
Business;
(c) no party (including any of the Acquired
Companies) has accelerated, terminated, modified, or canceled any
Applicable Contract involving more than $10,000 to which any of the
Acquired Companies is a party or by which any of them is bound;
(d) none of the Acquired Companies has
imposed any Encumbrance upon any of its assets, tangible or
intangible;
(e) none of the Acquired Companies has made
any capital expenditure (or series of related capital expenditures)
either involving more than $10,000 or outside the Ordinary Course of
Business;
<PAGE>16
(f) none of the Acquired Companies has
granted any license or sublicense of any rights under or with
respect to the Marks;
(g) there has been no change made or
authorized in the charter or bylaws of any of the Acquired
Companies;
(h) none of the Acquired Companies has
issued, sold, or otherwise disposed of any of its capital stock, or
granted any options, warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of its
capital stock;
(i) none of the Acquired Companies has
declared, set aside, or paid any dividend or made any distribution
with respect to its capital stock (whether in cash or in kind) or
redeemed, purchased, or otherwise acquired any of its capital stock;
(j) none of the Acquired Companies has
experienced any material damage, destruction, or loss not covered by
insurance to its property;
(k) none of the Acquired Companies has
entered into any employment contract or collective bargaining
agreement, written or oral (other than contracts for employment at
will); and
(l) none of the Acquired Companies has
granted any increase in the base compensation of any of its
directors, officers, and employees outside the Ordinary Course of
Business. Since the date of the Interim Balance Sheet, none of the
Acquired Companies has granted any bonus to any officer or director
or employee in an aggregate amount greater than $5,000.
5.8 Legal Compliance. Each of the Acquired Companies
is, and has for the past 24 months been, in compliance with all
applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and
all agencies thereof), and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to
comply, except where the failure to so comply would not have a
material adverse effect on the Acquired Companies.
5.9 Tax Matters.
(a) Each of the Acquired Companies has filed
all Tax Returns that it was required to file. All such Tax Returns
were correct and complete in all respects. All Taxes owed by any of
the Acquired Companies (whether or not shown on any Tax Return) have
been paid. None of the Acquired Companies currently is the
beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a
jurisdiction where any of the Acquired Companies does not file Tax
Returns that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of the assets
of any of the Acquired Companies that arose in connection with any
failure (or alleged failure) to pay any Tax.
(b) Each of the Acquired Companies has
withheld and paid all Taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(c) No Seller or director or officer (or
employee responsible for Tax matters) of any of the Acquired
Companies expects any taxing or revenue authority to assess any
additional Taxes for any period for which Tax Returns have been
filed. There is no dispute or claim concerning any Tax liability of
any of the Acquired Companies either (A) claimed or raised by any
authority in writing or (B) as to which any of the Sellers has
Knowledge based upon any contact with any agent of such authority.
(d) None of the Acquired Companies has waived
any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.
5.10 Contracts.
(a) Part 5.10 of the Disclosure Schedule
contains a complete and accurate list of:
(i) each Applicable Contract that
involves performance of services or delivery of goods or materials
by or to one or more Acquired Companies of an amount or value in
excess of $10,000;
(ii) each Applicable Contract that
was not entered into in the Ordinary Course of Business and that
involves expenditures or receipts of one or more Acquired Companies
in excess of $10,000;
<PAGE>17
(iii) each lease, rental or occupancy
agreement, and other Applicable Contract affecting the ownership of,
leasing of, title to, or any leasehold or other interest in, any
real or personal property (except personal property leases and
installment and conditional sales agreements having a value per item
or aggregate payments of less than $10,000 and with terms of less
than one year);
(iv) each franchise agreement or
licensing agreement or other Applicable Contract with respect to
trademarks, copyrights, or other intellectual property (including a
summary of the material terms and commencement and termination dates
of each such agreement, copies of which have been provided to
Purchaser);
(v) each collective bargaining
agreement and other Applicable Contract to or with any labor union
or other employee representative of a group of employees;
(vi) each joint venture, partnership,
and other Applicable Contract (however named) involving a sharing of
profits, losses, costs, or liabilities by any Acquired Company with
any other Person; and
(vii) each Applicable Contract
containing covenants that in any way purport to restrict the
business activity of any Acquired Company or limit the freedom of
any Acquired Company to engage in any line of business or to compete
with any Person.
(viii) a description of each warranty
in Purchaser's possession issued by any manufacturer or supplier
with respect to each mechanical system, appliance, physical
improvement or any other item owned by any of the Acquired
Companies.
(b) Except as set forth in Part 5.10 of the
Disclosure Schedule, each Contract identified in 5.10 of the
Disclosure Schedule is in full force and effect and is valid and
enforceable in accordance with its terms.
(c) Except as set forth in Part 5.10 of the
Disclosure Schedule:
(i) each Acquired Company is in
substantial compliance with all applicable terms and requirements of
each Contract identified in Part 5.10 of the Disclosure Schedule;
and
(ii) to the Knowledge of the Sellers,
each other Person that has or had any obligation or liability under
any Contract identified in Part 5.10 of the Disclosure Schedule is
in substantial compliance with all applicable terms and requirements
of such Contract.
5.11 Litigation. Section 5.11 of the Disclosure
Schedule sets forth each instance in which any of the Acquired
Companies (i) is subject to any outstanding Order, or (ii) is a
party or to the Knowledge of any of the Sellers is Threatened to be
made a party to any Proceeding. None of the Proceedings set forth in
Section 5.11 of the Disclosure Schedule could result in any material
adverse change in the business, financial condition, operations,
results of operations, or future prospects of any of the Acquired
Companies. None of the Sellers has any reason to believe that any
such Proceeding may be brought or Threatened against any of the
Acquired Companies.
5.12 Employees. None of the Acquired Companies is a
party to or bound by any collective bargaining agreement, nor has
any of them experienced any strikes, grievances, claims of unfair
labor practices, or other collective bargaining disputes. None of
the Acquired Companies has committed any unfair labor practice. None
of the Sellers has any Knowledge of any organizational effort
presently being made or Threatened by or on behalf of any labor
union with respect to employees of any of the Acquired Companies.
5.13 Employee Benefits.
(a) Part 5.13 of the Disclosure Schedule
lists each Employee Benefit Plan that any of the Acquired Companies
maintains or to which any of the Acquired Companies contributes.
(i) Each such Employee Benefit Plan
complies in form and in operation in all respects with the
applicable requirements of ERISA, the IRC, and other applicable
laws.
(ii) All required reports and
descriptions have been filed or distributed appropriately with
respect to each such Employee Benefit Plan. The requirements of Part
<PAGE>18
6 of Subtitle B of Title I of ERISA and of IRC Sec. 4980B have been
met with respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(iii) All contributions (including all
employer contributions and employee salary reduction contributions)
which are due have been paid to each such Employee Benefit Plan
which is an Employee Pension Benefit Plan.
(iv) Each such Employee Benefit Plan
which is an Employee Pension Benefit Plan meets the requirements of
a "qualified plan" under IRC Sec. 401(a) and has received a
favorable determination letter from the Internal Revenue Service.
(b) with respect to each Employee Benefit
Plan that any of the Acquired Companies maintains or ever has
maintained or to which any of them contributes, ever has
contributed, or ever has been required to contribute:
(i) No such Employee Benefit Plan
which is an Employee Pension Benefit Plan (other than any Multi-
employer Plan) has been completely or partially terminated or been
the subject of a Reportable Event as to which notices would be
required to be filed with the PBGC. No proceeding by the PBGC to
terminate any such Employee Pension Benefit Plan (other than any
Multi-employer Plan) has been instituted.
(ii) There have been no Prohibited
Transactions with respect to any such Employee Benefit Plan.
(iii) None of the Acquired Companies
has incurred, and none of the Sellers has any reason to expect that
any of the Acquired Companies will incur, any liability to the PBGC
(other than PBGC premium payments) or otherwise under Title IV of
ERISA (including any withdrawal liability) or under the IRC with
respect to any such Employee Benefit Plan which is an Employee
Pension Benefit Plan.
(c) None of the Acquired Companies
contributes to, ever has contributed to, or ever has been required
to contribute to any Multi-employer Plan or has any liability
(including withdrawal liability) under any Multi-employer Plan.
(d) None of the Acquired Companies maintains
or ever has maintained or contributes, ever has contributed, or ever
has been required to contribute to any Employee Welfare Benefit Plan
providing medical, health, or life insurance or other welfare-type
benefits for retired or terminated employees, their spouses, or
their dependents (other than in accordance with IRC Sec. 4980B).
5.14 Environmental Matters.
(a) Each of the Acquired Companies has
complied with all Environmental Laws, and no Proceeding has been
filed or commenced against any of them alleging any failure so to
comply. Without limiting the generality of the preceding sentence,
each of the Acquired Companies has obtained and is in compliance
with all of the terms and conditions of all permits, licenses, and
other authorizations which are required under, and is in compliance
with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables
which are contained in, all Environmental Laws, except where the
failure to so comply would not have a material adverse effect on the
Acquired Companies.
(b) None of the Acquired Companies has any
liability (and none of the Acquired Companies has handled or
disposed of any substance, arranged for the disposal of any
substance, exposed any employee or other individual to any substance
or condition, or owned or operated any property or facility in any
manner that could form the basis for any present or future
Proceeding against any of the Acquired Companies giving rise to any
liability) for damage to any site, location, or body of water
(surface or subsurface), for any illness of or personal injury to
any employee or other individual, or for any reason under any
Environmental Law.
(c) Purchaser shall be entitled to order, not
later than March 15, 1998 and at Purchaser's expense, a Phase I
Environmental Report on all parcels of real property owned by any of
the Acquired Companies, issued by a regionally recognized
environmental firm (the "Environmental Reports"). If the
Environmental Reports reveal environmental contamination on such
properties that would impair the operation of such properties as
currently operated and that Sellers decline to remediate within
sixty (60) days thereafter, Purchaser shall be entitled to terminate
this Agreement and receive a refund of the Additional Deposit.
<PAGE>19
5.15 Intellectual Property.
(a) Part 5.15 of Disclosure Schedule contains
a complete and accurate list of all fictional business names, trade
names, registered and unregistered trademarks, service marks and
applications for trademarks or service marks (collectively the
"Marks"). One or more of the Acquired Companies is the owner of all
right, title, and interest in and to each of the Marks, free and
clear of all Encumbrances.
(b) Part 5.15 of the Disclosure Schedule
contains a complete and accurate list of all Contracts relating to
the Marks.
(c) All Marks that have been registered with
the United States Patent and Trademark Office are currently in
compliance with all formal legal requirements (including the timely
post-registration filing of affidavits of use and incontestability
and renewal applications) and are valid and enforceable.
(d) No Mark is involved in any opposition,
invalidation, or cancellation Proceeding and, to Sellers' Knowledge,
no such Proceeding is Threatened.
(e) To Sellers' Knowledge, there is no
potentially interfering trademark or trademark application of any
third party.
(f) No Mark is infringed or, to Sellers'
Knowledge, has been challenged or threatened in any way. None of the
Marks used by any Acquired Company infringes or is alleged to
infringe any trade name, trademark, or service mark of any third
party.
5.16 Brokers or Finders. Sellers and their agents have
incurred no obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar
payment in connection with this Agreement.
5.17 Franchise Agreements. Attached hereto as Part
5.17 of the Disclosure Schedule are copies of all franchise
agreements to which any of the Acquired Companies is a party (the
"Franchise Agreements"). Except with respect to the Franchise
Agreement with Richard Marso and Derwin Kilpatrick and except as set
forth in the Disclosure Schedule, (i) each Franchise Agreement is in
full force and effect and is valid and enforceable in accordance
with its terms, (ii) each Acquired Company is in substantial
compliance with all applicable terms and requirements of the
Franchise Agreements, (ii) to the Knowledge of the Sellers, each
franchisee under the Franchise Agreements is in substantial
compliance with all applicable terms and requirements of the
Franchise Agreements (other than royalty payments that are not more
than thirty (30) days delinquent), (iii) other than with respect to
the performance of obligations under the Franchise Agreements during
the period from and after the Effective Date or the payment of
royalties that are not more than thirty (30) days delinquent, there
are no unresolved claims by any franchisee against the Acquired
Companies or any unresolved claims by the Acquired Companies against
any franchisee, and (iv) the Company has complied with all
applicable franchise laws.
ARTICLE VI
REPRESENTATIONS AND
WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers as follows:
6.1 Organization and Good Standing. Purchaser is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware.
6.2 Authority; No Conflict.
(a) This Agreement constitutes the legal,
valid, and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms. Purchaser has the absolute
and unrestricted right, power, and authority to execute and deliver
and to perform its obligations under this Agreement.
(b) Except as set forth in Schedule 6.2,
neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions
will give any Person the right to prevent, delay, or otherwise
interfere with any of the Contemplated Transactions pursuant to (i)
any provision of Purchaser's Organizational Documents, (ii) any
resolution adopted by the Board of Directors or the stockholders of
Purchaser, (iii) any Legal Requirement or Order to which Purchaser
may be subject, or (iv) any Contract to which Purchaser is a party
or by which Purchaser may be bound.
<PAGE>20
6.3 Investment Intent. Purchaser is acquiring the
Shares for its own account and not with a view to their distribution
within the meaning of Section 2(11) of the Securities Act.
6.4 Certain Proceedings. There is no pending
Proceeding that has been commenced against Purchaser and that
challenges, or may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the Contemplated
Transactions. To Purchaser's Knowledge, no such Proceeding has been
Threatened.
6.5 Brokers or Finders. Except as set forth in
Schedule 6.5, Purchaser and its officers and agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in
connection with this Agreement and will indemnify and hold Sellers
harmless from any such payment alleged to be due by or through
Purchaser as a result of the action of Purchaser or its officers or
agents.
6.6 Public Filings. Purchaser has made all filings
with the Commission that it has been required to make since the
inception of Purchaser. Purchaser has delivered to Sellers complete
copies of all of the filings that it has made with the Commission
since inception of Purchaser (the "Public Reports"). Each of the
Public Reports has complied with the applicable requirements of the
Securities Exchange Act of 1934, as amended, and the Securities Act.
None of the Public Reports, as of their respective dates, contained
any untrue statements of a material fact or omitted to state a
material fact necessary to make the statements contained therein, in
light of the circumstances under which they were made, not
misleading.
ARTICLE VII
TERMINATION
7.1 Termination Events. This Agreement may, by notice
given prior to or at the Closing, be terminated:
(a) by mutual written consent of Purchaser
and the Requisite Sellers;
(b) by the Requisite Sellers if a material
Breach of any representation, warranty, covenant or agreement has
been committed by Purchaser and has not been waived;
(c) by Purchaser if the Requisite Sellers
elect not to cure (or fail to cure within the applicable cure
period) the Objections (as defined in Section 7.3 below) and the
cost of curing such Objections exceeds $25,000 in the aggregate;
(d) by Purchaser if any of the conditions in
Sections 3.4(d) or 3.4(e) has not been satisfied as of the Closing
Date or if satisfaction of such a condition is or becomes impossible
(other than through the failure of Purchaser to comply with its
obligations under this Agreement) and Purchaser has not waived such
condition on or before the Closing Date; or (ii) by the Requisite
Sellers, if any of the conditions in Sections 3.5(d) or 3.5(e) has
not been satisfied of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure
of Sellers to comply with their obligations under this Agreement)
and the Requisite Sellers have not waived such condition on or
before the Closing Date; or
(e) by either Purchaser or the Requisite
Sellers if the Closing has not occurred (other than through the
failure of any party seeking to terminate this Agreement to comply
fully with its obligations under this Agreement) on or before
September 9, 1998 (the "Closing Deadline"). The Closing Deadline
shall be extended to September 23, 1998 if Purchaser increases the
amount of the Additional Deposit by $400,000.00 on or before
September 9, 1998.
7.2 Effect of Termination. Each party's right of
termination under Section 7.1 is in addition to any other rights it
may have under this Agreement. If this Agreement is terminated
pursuant to Section 7.1, all further obligations of the parties
under this Agreement will terminate, except that the obligations in
Sections 9.1 and 9.3 hereof and the obligations under the Letter
Agreement will survive; provided, however, that (i) if the Sellers
wrongfully refuse to close after the conditions precedent to their
obligation to close have been satisfied, then Purchaser shall be
entitled to pursue all legal remedies against the Sellers (including
specific performance), and (ii) if the Closing does not occur on or
before the Closing Deadline (other than due to wrongful refusal of
the Sellers to close), the $100,000.00 Deposit shall be retained by
the Sellers, and the Additional Deposit shall be paid by Escrow
Agent to Sellers and retained by Sellers all as liquidated damages
and not as a penalty or forfeiture. Purchaser and Sellers agree
that it would be difficult to determine the damages actually
suffered by the Sellers and the Company, and this provision for
<PAGE>21
liquidated damages represents the best efforts of the Parties to
determine the actual damages which would be suffered by Sellers. In
any event, the provision for payment of liquidated damages hereunder
shall not constitute (or be deemed to constitute) a penalty or
forfeiture, and Purchaser expressly waives any defense to, or right
to otherwise contest, the payment of the liquidated damages provided
hereunder.
7.3 Objections by Purchaser. Purchaser shall, within
five (5) days of discovery, notify the Sellers of any alleged breach
of representation, warranty, covenant or agreement by the Company
or Sellers arising prior to Closing (an "Objection"). Sellers, upon
receipt of such notice, may elect to cure such Objections by written
notice to Purchaser within five (5) days of receipt of the
Objections. If Sellers so elect, Sellers shall cure the Objections
within thirty (30) days thereafter (or as soon thereafter as may be
practicable but in no event later than sixty (60) days thereafter)
and the Closing Date and the date set forth in Section 7.1(e) shall
be automatically extended by such cure period. If Sellers elect not
to cure the Objections or fail to cure the Objections within such
cure period, the Objections are valid, and the cost of cure exceeds
$25,000 in the aggregate, Purchaser's only remedy shall be to
terminate this Agreement pursuant to Section 7.1(c) above.
Notwithstanding anything contained herein to the contrary, Purchaser
shall not be entitled to terminate this Agreement if the cost to
cure all Objections does not exceed $25,000 in the aggregate.
7.4 Asheville Restaurant. The Parties acknowledge
that a dispute has arisen between the Purchaser and the Company
regarding the Woody's franchised restaurant located in Asheville,
North Carolina (the "Asheville Restaurant") that has been purchased
by Purchaser and is being converted by Purchaser into a "Foxworthy's
Backyard Bar-B-Q Restaurant." The Parties agree that if the Closing
does not occur for any reason on or before the Closing Date,
Purchaser shall (i) pay to the Company the sum of $25,000.00 in
immediately available funds, and (ii) for a period of ten (10) years
after the Closing Date, pay to the Company on a monthly basis an
amount equal to 4% of the gross revenues of any restaurant operated
by Purchaser or any of its affiliates, successors or assigns at the
location of the Asheville Restaurant. All such monthly payments
shall be accompanied by a report on the sales of such restaurant for
the immediately preceding calendar month. The Parties acknowledge
that the payments to be made by Seller hereby represent an agreed-
upon settlement of the Company's damages for the loss of its
Asheville franchise. Such payments shall be in addition to, and not
exclusive of, any other payments to which the Company or Sellers may
be entitled under this Agreement.
ARTICLE VIII
INDEMNIFICATION AND REMEDIES
8.1 Survival. All representations, warranties,
covenants, and obligations in this Agreement shall survive the
Closing for a period of one (1) year.
8.2 Indemnification and Payment of Damages by Sellers.
Sellers, jointly and severally, and each individually, will
indemnify and hold harmless Purchaser, the Acquired Companies, and
their respective Representatives, stockholders, controlling persons,
and affiliates (collectively, the "Indemnified Persons") for, and
will pay to the Indemnified Persons the amount of, any loss,
liability, claim, damage, expense (including reasonable attorneys'
fees) whether or not involving a third-party claim (collectively,
"Damages"), arising, directly or indirectly, from or in connection
with:
(a) any Breach of any representation or
warranty made by Sellers in this Agreement (other than any Breach of
which Purchaser has knowledge prior to Closing);
(b) any Breach by Sellers of any covenant or
obligation of Sellers in this Agreement (other than any Breach of
which Purchaser has knowledge prior to Closing); or
(c) any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by any such
Person with Sellers or any Acquired Company in connection with any
of the Contemplated Transactions.
(d) any and all undisclosed liabilities of
either the Sellers or the Acquired Companies which are asserted by
any person or entity (including Federal, State or Local tax
deficiencies following any audits) subsequent to the Closing Date
and which arose during the period of time preceding the Closing
Date, except to the extent reflected in the Closing Date Balance
Sheet.
<PAGE>22
8.3 Indemnification and Payment of Damages by
Purchaser. Purchaser will indemnify and hold harmless Sellers, and
will pay to Sellers the amount of any Damages arising, directly or
indirectly, from or in connection with (a) any Breach of any
representation or warranty made by Purchaser in this Agreement, (b)
any Breach by Purchaser of any covenant or obligation of Purchaser
in this Agreement, or (c) any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by such Person
with Purchaser in connection with any of the Contemplated
Transactions.
8.4 Time Limitations. If the Closing occurs, Sellers
will have no liability (for indemnification or otherwise) with
respect to any representation or warranty, or covenant or obligation
to be performed and complied with prior to the Closing Date, unless
on or before one (1) year from the Closing Date, Purchaser notifies
Sellers of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Purchaser. If the
Closing occurs, Purchaser will have no liability (for
indemnification or otherwise) with respect to any representation or
warranty, or covenant or obligation to be performed and complied
with prior to the Closing Date, unless on or before one (1) year
from the Closing Date Sellers notify Purchaser of a claim specifying
the factual basis of that claim in reasonable detail to the extent
then known by Sellers. Notwithstanding the foregoing, the applicable
statute of limitations shall be applicable to any claim by Purchaser
based on fraud or based on the Sellers' intentional misstatement of
a material fact contained in this Agreement or Sellers' intentional
omission to state a material fact necessary to make the statements
made in this Agreement not misleading ("Fraud Claims").
8.5 Limitations on Amount of Indemnity by Sellers.
Sellers will have no liability (for indemnification or otherwise)
until the total of all Damages with respect to such matters exceeds,
Ten Thousand Dollars ($10,000.00). Notwithstanding the foregoing,
(i) each Seller's total liability for Damages under this Agreement
will not exceed one-third of that Seller's proportionate share of
the Cash Portion of the Purchase Price, except in the case of
Damages resulting from Fraud Claims, and (ii) in the case of Damages
resulting from Fraud Claims, each Sellers' total liability for
Damages under this Agreement will not exceed that Sellers'
proportionate share of the Purchase Price.
8.6 Procedure for Indemnification for Third Party
Claims.
(a) Promptly after receipt by an indemnified
party under Section 8.2 or 8.3 of notice of the commencement of any
Proceeding against it, such indemnified party will, if a claim is to
be made against an indemnifying party under such Section, give
notice to the indemnifying party of the commencement of such claim,
but the failure to notify the indemnifying party will not relieve
the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party
demonstrates that the defense of such action is prejudiced by the
indemnifying party's failure to give such notice.
(b) If any Proceeding referred to in Section
8.6(a) is brought against an indemnified party and it gives notice
to the indemnifying party of the commencement of such Proceeding,
the indemnifying party will be entitled to participate in such
Proceeding and, to the extent that it wishes, to assume the defense
of such Proceeding (at its own and sole expense) with counsel
satisfactory to the indemnified party and, after notice from the
indemnifying party to the indemnified party of its election to
assume the defense of such Proceeding, the indemnifying party will
not, as long as it diligently conducts such defense, be liable to
the indemnified party under this Article VIII for any fees of other
counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the indemnified
party in connection with the defense of such Proceeding. If the
indemnifying party assumes the defense of a Proceeding, (i) it will
be conclusively established for purposes of this Agreement that the
claims made in that Proceeding are within the scope of and subject
to indemnification; (ii) no compromise or settlement of such claims
may be effected by the indemnifying party without the indemnified
party's consent unless (A) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of
any Person and no effect on any other claims that may be made
against the indemnified party, and (B) the sole relief provided is
monetary damages that are paid in full by the indemnifying party;
and (iii) the indemnified party will have no liability with respect
to any compromise or settlement of such claims effected without its
consent. If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not,
within fifteen (15) days after the indemnified party's notice is
given, give notice to the indemnified party of its election to
<PAGE>23
assume the defense of such Proceeding, the indemnifying party will
be bound by any determination made in such Proceeding or any
compromise or settlement effected by the indemnified party.
8.7 Procedure for Indemnification for other Claims. A
claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom
indemnification is sought.
ARTICLE IX
GENERAL PROVISIONS
9.1 Expenses. Except as otherwise expressly provided
in this Agreement (including Section 2.12 hereof), each party to
this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and
expenses of agents, representatives, counsel, and accountants.
Purchaser will pay all amounts payable to Business Intermediary
Services, Ltd., in connection with this Agreement and the
Contemplated Transactions. In the event of termination of this
Agreement, the obligation of each party to pay its own expenses will
be subject to any rights of such party arising from a breach of this
Agreement by another party.
9.2 Public Announcements. Any public announcement or
similar publicity with respect to this Agreement or the Contemplated
Transactions shall be subject to the prior approval of the Requisite
Sellers. Unless consented to by the other party in advance or
required by Legal Requirements (and except as provided in the Letter
Agreement), prior to the Closing each party shall keep this
Agreement strictly confidential and may not make any disclosure of
this Agreement to any Person. Sellers and Purchaser will consult
with each other concerning the means by which the Acquired
Companies' employees, customers, and suppliers and others having
dealings with the Acquired Companies will be informed of the
Contemplated Transactions.
9.3 Confidentiality. Subject to the provisions of
Section 9.2, immediately above, between the date of this Agreement
and the Closing Date, if the Closing occurs, or between the date of
this Agreement and the date which is five (5) years after the date
of termination of this Agreement for any reason, if the Closing does
not occur, Purchaser and Sellers will maintain in confidence, and
will cause the directors, officers, employees, agents, and advisors
of Purchaser and the Acquired Companies to maintain in confidence,
and not use to the detriment of another party or an Acquired Company
any written, oral, or other information obtained in confidence from
another party in connection with this Agreement or the Contemplated
Transactions, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such
party, (b) the use of such information is necessary in making any
filing or obtaining any consent or approval required for the
consummation of the Contemplated Transactions, or (c) the furnishing
or use of such information is required by legal proceedings. If the
Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other
party may reasonably request.
9.4 Notices. All notices, consents, waivers, and
other communications under this Agreement must be in writing and
will be deemed to have been duly given when (a) delivered by hand
(with written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate
addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate by notice
to the other parties):
SELLERS:
James W. Mills, Jr. Yolanda H. Mills
203 N. Roscoe Blvd. 100 Kingfisher Drive
Ponte Vedra Beach, Florida 32082 Ponte Vedra Beach, Florida 32082
Scott C. Miller William H. Moon
3333 Atlantic Boulevard Vedra Landing Ct.
Jacksonville, Florida Ponte Vedra Beach, Florida 32082
with a copy to: Daniel B. Nunn, Jr.
Martin, Ade, Birchfield &
Mickler, P.A.
One Independent Square,
Suite 3000
Jacksonville, Florida 32202
Facsimile No. (904) 354-5842
<PAGE>24
PURCHASER:
REDNECK FOODS, INC.
71 Turtle Creek Drive
Asheville, North Carolina 28803
Attention: David Womick
Facsimile No. (704) 277-0504
with a copy to: Gary A. David
Blanc Williams Johnston & Kronstadt, LLP
1900 Avenue of the Stars
Los Angeles, CA 90067-4403
Facsimile No. (310) 552-1191
9.5 Dispute Resolution. Any dispute arising between
the Parties relating to this Agreement shall be resolved in
accordance with the following procedures:
(a) Negotiation. A meeting shall be held
between the Parties within fifteen (15) days following written
notice by one Party to the other of a dispute, setting forth in
reasonable detail the disputed issue(s). The meeting shall be
attended by individuals with decision making authority, and such
individuals shall attempt in good faith to negotiate the resolution
of the dispute. If the Parties do not succeed in negotiating a
resolution of the dispute at the meeting, either Party may submit
the dispute to binding arbitration in accordance with the procedures
set forth in this Section 9.5.
(b) Claims Subject to Arbitration. The
disputes and controversies subject to arbitration under this Section
9.5 include all disputes and controversies which may arise between
the Parties (i) with respect to any or all of the terms and
conditions set out in this Agreement or which are related to or
arise out of this Agreement or (ii) the interpretation, construction
or application of this Agreement or any or all of the agreements
identified herein (collectively, the "Arbitrable Claims").
Arbitrable Claims include, but shall not limited to, all contract
and tort claims of any nature, as well as all claims based upon the
application or enforcement of any federal, state, or local law,
statute, regulation or ordinance; however, only claims under
applicable workers' compensation law and unemployment insurance
claims shall not be subject to this Section 9.5. Arbitration shall
be final and binding upon the parties and shall be the exclusive
remedy for all Arbitrable Claims.
(c) Waiver of Jury Trial. Each of the
Parties hereby understands and acknowledges that by executing this
agreement they will be waiving any constitutional rights that they
may have to a trial by jury in regard to all Arbitrable Claims.
(d) Arbitration Procedure. All arbitrations
of Arbitrable Claims shall be conducted in accordance with the
Commercial Rules adopted by the American Arbitration Association
("AAA Rules"). All Arbitrable Claims must be initiated within the
time period specified in this Agreement, or they shall be deemed to
be time barred. Arbitration shall be initiated by providing written
notice to the other party with a statement of the claim(s) asserted,
the facts upon which the claim(s) are based and the remedy sought.
In any arbitration, the burden of proof shall be allocated as
provided by applicable law. All arbitration hearings under this
Agreement shall be conducted in Jacksonville, Florida or as
otherwise agreed by the parties.
(e) Arbitrator Selection and Authority. All
disputes involving Arbitrable Claims shall be decided by three (3)
arbitrators selected by the American Arbitration Association
("AAA"). The arbitrators shall have the authority to award all
equitable relief, damages, costs, and fees provided by law for the
particular claim(s) asserted. The fees of the arbitrators as well
as reasonable counsel fees and affiliated costs (such as
depositions, expert witnesses, etc.) of the substantially prevailing
party shall be paid by the substantially nonprevailing party, as
determined by the arbitrators. The arbitrators shall have exclusive
authority to resolve all Arbitrable Claims, including, but not
limited to, any claim that all or any part of this Agreement is void
or unenforceable. Any finding or award of the arbitrators may be
enforced through the courts.
(f) Arbitration Confidentiality. All
proceedings and all documents prepared in connection with any
Arbitrable Claim shall be confidential and, unless otherwise
required by law, the subject matter thereof shall not be disclosed
to any person. All documents filed with the arbitrators or with a
court shall be filed under seal. The parties shall stipulate to all
arbitration and court orders necessary to effectuate fully the
provisions of this Section concerning confidentiality.
<PAGE>25
(g) Limitations on Bringing Claims. All
Arbitrable Claims must be initiated within the time periods set out
in the Agreement. Each of the Parties hereby understands and
acknowledges that by executing this Agreement they will be waiving
all rights under statutes of limitations which provide different
limitation provisions for the commencement of actions.
9.6 Further Assurances. The parties agree (a) to
furnish upon request to each other such further information, (b) to
execute and deliver to each other such other documents, and (c) to
do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
9.7 Waiver. The rights and remedies of the parties to
this Agreement are cumulative and not alternative. Neither the
failure nor any delay by any party in exercising any right, power,
or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of
such right, power, or privilege or the exercise of any other right,
power, or privilege.
9.8 Entire Agreement and Modification. Except with
respect to the Letter Agreement, this Agreement supersedes all prior
agreements between the parties with respect to its subject matter
(including the Letter of Intent between Purchaser and Sellers dated
August 1, 1997 and the Original Stock Purchase Agreement) and
constitutes (along with the documents referred to in this Agreement)
a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed
by the party to be charged with the amendment.
9.9 Assignments, Successors, and No Third-Party
Rights. Neither party may assign any of its rights under this
Agreement without the prior consent of the other parties. Subject to
the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to
in this Agreement will be construed to give any Person other than
the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to
this Agreement and their successors and assigns.
9.10 Severability. If any provision of this Agreement
is held invalid or unenforceable by any court of competent
jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force
and effect to the extent not held invalid or unenforceable.
9.11 Schedules. Each schedule to this Agreement shall
be considered a part hereof as if set forth herein in full. Each
schedule hereto shall be updated by Sellers within a reasonable
period of time after acquiring information the disclosure of which
is required to make the schedules accurate and complete. Purchaser
shall have the right within five (5) days after receipt of any such
update to object to any such amendment if, but for approval of the
amendment by Purchaser, the information contained in such amendment
would result in a breach of a representation or warranty contained
herein, and such objection shall be treated as an Objection as
described in Section 7.3 hereof.
9.12 Section Headings, Construction. The headings of
Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references
to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will be
construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
9.13 Time of Essence. With regard to all dates and
time periods set forth or referred to in this Agreement, time is of
the essence.
9.14 Governing Law. This Agreement will be governed by
the laws of the State of Florida without regard to conflicts of laws
principles.
9.15 Counterparts. This Agreement may be executed in
one or more counterparts, each of which will be deemed to be an
original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
<PAGE>26
ARTICLE X
DEFINITIONS
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Article X:
10.1 [Intentionally Omitted]
10.2 "Acquired Companies"--the Company and its
Subsidiaries, collectively.
10.3 "Actual Value"--as defined in Section 2.3.
10.4 "Applicable Contract"--any Contract (a) under
which any Acquired Company has any rights, (b) under which any
Acquired Company has any obligation or liability, or (c) by which
any Acquired Company or any of the assets owned or used by it is
bound.
10.5 "Best Efforts"--the efforts that a prudent Person
desirous of achieving a result would use in similar circumstances to
ensure that such result is achieved as expeditiously as possible;
provided, however, that an obligation to use Best Efforts under this
Agreement does not require the Person subject to that obligation to
take actions that would result in a materially adverse change in the
benefits to such Person of this Agreement and the Contemplated
Transactions.
10.6 "Breach"--a "Breach" of a representation,
warranty, covenant, obligation, or other provision of this Agreement
or any instrument delivered pursuant to this Agreement will be
deemed to have occurred if there is or has been any material
inaccuracy in or breach of, or any material failure to perform or
comply with, such representation, warranty, covenant, obligation, or
other provision.
10.7 "Closing"--as defined in Section 3.1.
10.8 "Closing Date"--the date and time as of which the
Closing actually takes place.
10.9 "Closing Date Balance Sheet"--as defined in
Section 2.3.
10.10 "Closing Date Stockholder's Equity"--as defined in
Section 2.3.
10.11 "Closing Date Total Liabilities"--as defined in
Section 2.3.
10.12 "Company"--as defined in page 1 of this Agreement.
10.13 "Company Restaurants"--as defined in the
Background to this Agreement.
10.14 "Consent"--any approval, consent, ratification,
waiver, or other authorization (including any Governmental
Authorization).
10.15 "Contemplated Transactions"--all of the
transactions contemplated by this Agreement, including:
(a) the sale of the Shares by Sellers to
Purchaser;
(b) the execution, delivery, and performance
of the Noncompetition Agreements, the Leases, and the Roosevelt
Acquisition Agreement; and
(c) the performance by Purchaser and Sellers
of their respective covenants and obligations under this Agreement.
10.16 "Contract"--any agreement, contract, obligation,
promise, or undertaking (whether written or oral and whether express
or implied) that is legally binding.
10.17 "Damages"--as defined in Section 7.1.
10.18 "Deposit"--as defined in Section 2.4.
10.19 "Disclosure Schedule"--the disclosure schedule
delivered by Sellers to Purchaser concurrently with the execution
and delivery of this Agreement.
10.20 "Draft Closing Date Balance Sheet"--as defined in
Section 2.3.
10.21 "Employee Benefit Plan"--means any (i)
nonqualified deferred compensation or retirement plan or arrangement
which is an Employee Pension Benefit Plan, (ii) qualified deferred
contribution retirement plan or arrangement which is an Employee
<PAGE>27
Pension Benefit Plan, (iii) qualified defined benefit retirement
plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (iv) Employee Welfare Benefit
Plan or material fringe benefit plan or program.
10.22 "Employee Pension Benefit Plan"--has the meaning
set forth in ERISA Section 3(2).
10.23 "Employee Welfare Benefit Plan"--has the meaning
set forth in ERISA Section 3(1).
10.24 "Encumbrance"--any charge, claim, community
property interest, equitable interest, lien, option, pledge,
security interest, right of first refusal or similar restriction.
10.25 "Environment"--soil, land surface or subsurface
strata, surface waters (including navigable waters, ocean waters,
streams, ponds, drainage basins, and wetlands), groundwaters,
drinking water supply, stream sediments, ambient air (including
indoor air), and plant and animal life.
10.26 "Environmental Law"--any currently existing Legal
Requirement that requires or relates to:
(a) advising appropriate authorities,
employees, and the public of intended or actual releases of
pollutants or hazardous substances or materials, violations of
discharge limits, or other prohibitions and of the commencements of
activities, such as resource extraction or construction, that could
have significant impact on the Environment;
(b) preventing or reducing to acceptable
levels the release of pollutants or hazardous substances or
materials into the Environment;
(c) reducing the quantities, preventing the
release, or minimizing the hazardous characteristics of wastes that
are generated;
(d) protecting resources, species, or
ecological amenities;
(e) reducing to acceptable levels the risks
inherent in the transportation of hazardous substances, pollutants,
oil, or other potentially harmful substances;
(f) cleaning up pollutants that have been
released, preventing the threat of release, or paying the costs of
such clean up or prevention; or
(g) making responsible parties pay private
parties, or groups of them, for damages done to their health or the
Environment, or permitting self-appointed representatives of the
public interest to recover for injuries done to public assets.
10.27 "Environmental Reports"--as defined in Section
5.14.
10.28 "ERISA"--the Employee Retirement Income Security
Act of 1974 or any successor law, and regulations and rules issued
pursuant to that Act or any successor law.
10.29 "Franchise Company"--as defined in the Background
to this Agreement.
10.30 "Franchise Restaurants"--as defined in the
Background to this Agreement.
10.31 "GAAP"--generally accepted United States
accounting principles, applied on a basis consistent with the basis
on which the Interim Balance Sheet and the other financial
statements referred to in Section 5.4 were prepared.
10.32 "Governmental Authorization"--any approval,
consent, license, permit, waiver, or other authorization issued,
granted, given, or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal
Requirement.
10.33 "Governmental Body"--any:
(a) nation, state, county, city, town,
village, district, or other jurisdiction of any nature;
(b) federal, state, local, municipal,
foreign, or other government;
<PAGE>28
(c) governmental or quasi-governmental
authority of any nature (including any governmental agency, branch,
department, official, or entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise,
any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.
10.34 "High Value"--as defined in Section 2.3.
10.35 "Initial Deposit"--as defined in Section 2.4(a).
10.36 "Interim Balance Sheet"--as defined in Section
5.4.
10.37 "IRC"--the Internal Revenue Code of 1986 or any
successor law, and regulations issued by the IRS pursuant to the
Internal Revenue Code or any successor law.
10.38 "Knowledge"--an individual will be deemed to have
"Knowledge" of a particular fact or other matter if such individual
is actually aware of such fact or other matter.
10.39 "Lease Agreements"--as defined in Section 2.7.
10.40 "Licensed Restaurants"--as defined in the
Background to this Agreement.
10.41 "Low Value"--as defined in Section 2.3.
10.42 "Legal Requirement"--any federal, state, local,
municipal, foreign, international, multinational, or other
administrative order, constitution, law, ordinance, principle of
common law, regulation, statute, or treaty.
10.43 "Marks"--as defined in Section 5.15.
10.44 "Multiemployer Plan"--has the meaning set forth in
ERISA Section 3(37).
10.45 "Noncompetition Agreements"--as defined in Section
2.5.
10.46 "Order"--any award, decision, injunction,
judgment, order, ruling, subpoena, or verdict entered, issued, made,
or rendered by any court, administrative agency, or other
Governmental Body or by any arbitrator.
10.47 "Ordinary Course of Business"--an action taken by
a Person will be deemed to have been taken in the "Ordinary Course
of Business" if:
(a) such action is consistent with the past
practices of such Person and is taken in the ordinary course of the
normal day-to-day operations of such Person; or
(b) such action is not required to be
authorized by the board of directors of such Person (or by any
Person or group of Persons exercising similar authority).
10.48 "Organizational Documents"--(a) the articles or
certificate of incorporation and the bylaws of a corporation;
(b) the partnership agreement and any statement of partnership of a
general partnership; (c) the limited partnership agreement and the
certificate of limited partnership of a limited partnership; (d) any
charter or similar document adopted or filed in connection with the
creation, formation, or organization of a Person; and (e) any
amendment to any of the foregoing.
10.49 "Parties"--as defined in page 1 of this Agreement.
10.50 "PBGC"--the Pension Benefit Guaranty Corporation.
10.51 "Person"--any individual, corporation (including
any non-profit corporation), general or limited partnership, limited
liability company, joint venture, estate, trust, association,
organization, labor union, or other entity or Governmental Body.
10.52 "Proceeding"--any action, arbitration, audit,
hearing, investigation, litigation, or suit (whether civil,
criminal, administrative, investigative, or informal) commenced,
brought, conducted, or heard by or before, or otherwise involving,
any Governmental Body or arbitrator.
10.53 "Prohibited Transaction"--has the meaning set
forth in ERISA Section 406 and IRC Section 4975.
10.54 "Purchase Price"--as defined in Section 2.2.
<PAGE>29
10.55 "Purchaser"--as defined in Page 1 of this
Agreement.
10.56 "Purchaser's Accountants"--as defined in Section
2.3.
10.57 "Reportable Event"--has the meaning set forth in
ERISA Section 4043.
10.58 "Representative"--with respect to a particular
Person, any director, officer, employee, agent, consultant, advisor,
or other representative of such Person, including legal counsel,
accountants, and financial advisors.
10.59 "Requisite Sellers"--as defined in Section 2.3.
10.60 "Securities Act"--the Securities Act of 1933 or
any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
10.61 "Sellers"--as defined in the first paragraph of
this Agreement.
10.62 "Shares"--as defined in the Background of this
Agreement.
10.63 "Subsidiaries"--as defined in the Background to
this Agreement.
10.64 "Tax Return"--any return (including any
information return), report, statement, schedule, notice, form, or
other document or information filed with or submitted to, or
required to be filed with or submitted to, any Governmental Body in
connection with the determination, assessment, collection, or
payment of any Tax or in connection with the administration,
implementation, or enforcement of or compliance with any Legal
Requirement relating to any Tax.
10.65 "Threatened"--a claim, Proceeding, dispute,
action, or other matter will be deemed to have been "Threatened" if
any demand or statement has been made (orally or in writing) or any
notice has been given (orally or in writing), that would lead a
prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken,
or otherwise pursued in the future.
10.66 "Trademarks"--as defined in the Background to this
Agreement.
10.67 "Woody's System"--as defined in the Background to
this Agreement.
[Signatures on next page]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
as of the date first above written.
WOODY'S BAR-B-Q HOLDINGS, INC., REDNECK FOODS, INC.,
a Florida corporation a Delaware corporation
By: By:____________________________
James W. Mills, Jr., President David Womick, President
"COMPANY" "PURCHASER"
__________________________________
James W. Mills, Jr.
Yolanda H. Mills
Scott C. Miller
Deborah H. Miller
William H. Moon
"SELLERS"
<PAGE>30
WOODY'S BAR-B-Q HOLDINGS, INC.
1620 Atlantic University Circle
Jacksonville, Florida 32207
September 30, 1998
Redneck Foods, Inc.
Attn: David A. Womick
71 Turtle Creek Drive
Asheville, NC 28803
Dear David:
Reference is hereby made to (i) that certain Amended and
Restated Stock Purchase Agreement (the "Purchase Agreement") that
has been negotiated by Redneck Foods, Inc. ("Redneck"), Woody's Bar-
B-Q Holdings, Inc. ("Woody's"), and the shareholders of Woody's
("Sellers"), and (ii) that certain letter agreement dated August 20,
1998 (the "August 20 Letter Agreement"), between Redneck and
Woody's. This letter agreement (this "Supplement") constitutes a
supplement and amendment to the August 20 Letter Agreement.
Capitalized terms used in this Supplement shall have the respective
meanings ascribed to such terms in the August 20 Letter Agreement
or, if such capitalized terms are not defined in the August 20
Letter Agreement, such capitalized terms shall have the respective
meanings ascribed to such terms in the Purchase Agreement.
Pursuant to paragraph 1 of the August 20 Letter Agreement,
Redneck previously delivered the $100,000 Deposit and the Additional
Deposit (in the amount of $805,930) to the trust account of Woody's
attorneys. The $100,000 Deposit was previously delivered by Woody's
attorneys to the Sellers in accordance with paragraph 1 of the
August 20 Letter Agreement. In addition, the attorneys' fees of
Woody's attorneys in the amount of $35,000 were disbursed from the
Additional Deposit. Under the terms of paragraph 4 of the Letter
Agreement, the Additional Deposit is due to be paid to the Sellers,
as the closing of the Purchase Agreement did not occur on or before
September 9, 1998 (the "Closing Deadline").
This will confirm our agreement with respect to the
following matters:
1. Extension of Closing Deadline. In
consideration of the other agreements set forth herein, the parties
hereby agree to extend the Closing Deadline to 2:00 Eastern Standard
Time on September 23, 1998. If the closing of the Purchase
Agreement does not occur on or before September 23, 1998 (other than
due to the wrongful refusal of the Sellers to close), all agreements
between Redneck, Woody's and the Sellers will be terminated, except
as set forth in paragraph 5 of the August 20 Letter Agreement.
Without limiting the foregoing, the management relationship
described in paragraph 3 of the August 20 Letter Agreement shall be
terminated as of 2:00 p.m. Eastern Standard Time on September 23,
1998, if the closing of the Purchase Agreement has not occurred
(other than due to the wrongful refusal of the Sellers to close),
and Redneck will promptly vacate all premises of Woody's and
relinquish possession and control of the assets and operations of
Woody's at such time. Time is of the essence of this agreement.
2. Additional Deposit. Redneck hereby
acknowledges and agrees that the Additional Deposit may be
distributed by Woody's attorneys to the Sellers on September 10,
1998. If the closing of the Purchase Agreement occurs on or before
2:00 p.m. Eastern Standard Time on September 23, 1998, the
Additional Deposit will be credited against the Cash Portion of the
Purchase Price. If the closing of the Purchase Agreement does not
occur on or before 2:00 p.m. Eastern Standard Time on September 23,
1998 (other than due to the wrongful refusal of the Sellers to
close), the Additional Deposit will be retained by the Sellers as
liquidated damages and not as a penalty and in consideration of,
among other matters, the extension of the Closing Deadline. Redneck
hereby waives any claim to the Additional Deposit and waives any
claim to seek recovery of the Additional Deposit, except that (i) if
the Closing occurs on or before 2:00 p.m. Eastern Standard Time on
September 23, 1998, the Additional Deposit will be credited against
the Cash Portion of the Purchase Price, and (ii) Redneck reserves
the right to assert a claim for recovery of the Additional Deposit
if the Sellers wrongfully refuse to close the Purchase Agreement.
Redneck further releases Woody's attorneys' from any liability for
distributing the Additional Deposit to the Sellers.
3. Approval of Expenditures. Redneck will not incur
any expenditures on behalf of Woody's during the period from
September 9, 1998 to September 23, 1998, without the prior approval
of James W. Mills, Jr.
<PAGE>31
4. Modification of Stock Purchase Agreement.
Redneck acknowledges that Redneck has conducted considerable due
diligence with respect to Woody's and its assets and operations,
and Redneck has managed the operations of Woody's since September 9,
1998. The parties hereby agree that the Purchase Agreement shall be
modified to provide that the obligation of the Sellers to indemnify
Redneck against breaches of representations and warranties shall
only be applicable with respect to (i) breaches of representations
and warranties with respect to title to the Shares of Woody's being
purchased pursuant to the Purchase Agreement, and (ii) knowing or
intentional misrepresentations or omissions by the Sellers
(including, without limitations, known liabilities that are not
disclosed to Redneck).
5. No Waiver or Modification. The agreement of
Woody's to extend the Closing Deadline shall not be deemed to
establish any course of dealing or waiver of the right of Woody's to
insist upon strict compliance with the terms of this Supplement and
the August 20 Letter Agreement (as modified by this Supplement).
The August 20 Letter Agreement shall remain in full force and
effect, except as expressly modified by this Supplement.
Please confirm our understanding of these matters by
signing as indicated below and returning one copy of this letter to
me by facsimile, with your original signature to follow by overnight
delivery.
Very truly yours,
WOODY'S BAR-B-Q HOLDINGS, INC.
By:____________________________________
Its:____________________________________
Accepted and Agreed this 10th
day of September, 1998
REDNECK FOODS, INC.
By:_______________________________
David A. Womick, President
STATE OF FLORIDA )
)
COUNTY OF DUVAL )
The foregoing instrument was acknowledged before me this _____ day
of _________________, 1998, by _____________________, as
___________________ of Woody's Bar-B-Q Holdings, Inc. a Florida
corporation, on behalf of the corporation. He or she is personally
known to me or has produced ___________________ as identification
and did not take an oath.
_______________________________
Notary Public, State of Florida
Printed _______________________
My Commission expires:
Commission No.:
STATE OF )
)
COUNTY OF )
The foregoing instrument was acknowledged before me this
_____ day of _________________, 1998, by David A. Womick, as
President of Redneck Foods, Inc., a Delaware corporation, on behalf
of the corporation. He is personally known to me or has produced
___________________ as identification and did not take an oath.
Notary Public, State of Florida
Printed _______________________
My Commission expires:
Commission No.:
<PAGE>34
WOODY'S BAR-B-Q HOLDINGS, INC.
1620 Atlantic University Circle
Jacksonville, Florida 32207
September 24, 1998
Redneck Foods, Inc.
Attn: David A. Womick
71 Turtle Creek Drive
Asheville, NC 28803
Dear David:
Reference is hereby made to (i) that certain Amended and
Restated Stock Purchase Agreement (the "Purchase Agreement") that
has been negotiated by Redneck Foods, Inc. ("Redneck"), Woody's Bar-
B-Q Holdings, Inc. ("Woody's"), and the shareholders of Woody's
("Sellers"), (ii) that certain letter agreement dated August 20,
1998 (the "August 20 Letter Agreement"), between Redneck and
Woody's, and (iii) that certain letter agreement dated September 10,
1998 (the "September 10 Letter Agreement"). This letter agreement
(this "September 24 Letter Agreement") constitutes a supplement and
amendment to the August 20 Letter Agreement and the September 10
Letter Agreement. Capitalized terms used in this September 24
Letter Agreement shall have the respective meanings ascribed to such
terms in the September 10 Letter Agreement and the August 20 Letter
Agreement or, if such capitalized terms are not defined in the
September 10 Letter Agreement or the August 20 Letter Agreement,
such capitalized terms shall have the respective meanings ascribed
to such terms in the Purchase Agreement.
This will confirm and evidence our agreement with respect
to the following matters:
1. Funding for Woody's Operations. Redneck shall
provide additional funding to Woody's in the amount of $50,000 on or
before 2:00 p.m. Friday, September 25, 1998. In addition, Redneck
shall provide additional funding to Woody's in the amount of $50,000
on or before 2:00 p.m. Friday, October 2, 1998. Such amounts shall
be used for payment of accounts payable of Woody's, as mutually
determined by Redneck and Woody's. In no event shall Woody's be
required to repay such amounts to Redneck. Time is of the essence
of this Agreement.
2. Delivery of Redneck Shares. David A. Womick
("Mr. Womick") shall transfer to the Sellers 250,000 shares of
common stock of Redneck on September 24, 1998. On September 24,
1998, Mr. Womick shall deliver a certificate representing at least
250,000 share of common stock of Redneck to Woody's attorneys,
together with executed stock transfer
Redneck Foods, Inc.
September 24, 1998
Page 2
powers transferring 250,000 shares to the Sellers (in proportion to
their ownership of stock of Woody's) and a letter to Redneck's
transfer agent requesting that new stock certificates be issued to
the Sellers representing such shares. Such 250,000 shares shall be
included in the Registrable Shares.
3. Personal Guarantee. If the Closing occurs, the
obligations of Redneck under the Convertible Notes shall be
personally guaranteed by Mr. Womick and his wife, Theresa R. Womick.
Such guaranty shall be secured by a pledge of 1,000,000 shares of
common stock of Redneck owned by Mr. Womick.
4. Adjustment to Warrant Price. It shall be a
condition to the Sellers' obligation to close that the per share
exercise price described in paragraph 2.(i) of the Warrants shall be
reduced from $2.932163 to $1.71875. Woody's acknowledges that this
provision will require the approval of the Board of Directors of
Redneck.
5. Extension of Closing Deadline. In consideration
of the other agreements set forth herein (and provided that Redneck
and Mr. Womick comply with the other provisions of this September 24
Letter Agreement and the August 20 Letter Agreement and the
September 10 Letter Agreement (as modified by this September 24
<PAGE>35
Letter Agreement)), the parties hereby agree to extend the Closing
Deadline to 2:00 Eastern Standard Time on October 8, 1998. If
Redneck delivers to Woody's, on or before 2:00 p.m. Eastern Standard
Time on October 8, 1998, a financing commitment in an amount at
least equal to the amount due to the Sellers at Closing, the Closing
Deadline shall be further extended to 2:00 Eastern Standard Time on
October 15, 1998. If the closing of the Purchase Agreement does not
occur on or before the Closing Deadline, as extended pursuant to
this paragraph 5 (other than due to the wrongful refusal of the
Sellers to close), all agreements between Redneck, Woody's and the
Sellers will be terminated, except as set forth in paragraph 5 of
the August 20 Letter Agreement and paragraph 2 of the September 10
Letter Agreement (which shall remain in full force and effect).
Without limiting the foregoing, the management relationship
described in paragraph 3 of the August 20 Letter Agreement shall be
terminated as of 2:00 p.m. Eastern Standard Time on the Closing
Deadline if the closing of the Purchase Agreement has not occurred,
and Redneck and its representatives will promptly vacate the
premises of Woody's and relinquish possession and control of the
assets and operations of Woody's at such time. Time is of the
essence of this Agreement.
6. No Waiver or Modification. The agreement of
Woody's to extend the Closing Deadline shall not be deemed to
establish any course of dealing or waiver of the right of Woody's to
insist upon strict compliance with the terms of this September 24
Letter Agreement and the August 10 Letter Agreement and the
September 10 Letter Agreement (as modified by this September 24
Letter Agreement). The August 10 Letter Agreement and the
September 24 Letter Agreement shall remain in full force and effect,
except as expressly modified by this September 24 Letter Agreement.
7. Attorneys' Fees. The cap on attorneys' fees
payable at Closing shall be increased from $7,500 to $9,000.
Please confirm our agreement with respect to these matters
by signing as indicated below and returning one copy of this letter
to me.
Very truly yours,
WOODY'S BAR-B-Q HOLDINGS, INC.
By: James W. Mills, Jr.
Accepted and Agreed this 24th day
of September, 1998
REDNECK FOODS, INC.
By:
David A. Womick, President
_________________________________
David A. Womick, Individually
