SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 24, 1999
THE WESTWOOD GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-1590 04-1983910
State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification Number)
190 V.F.W. Parkway
Revere, Massachusetts 02151
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code (781) 284-2600
<PAGE>
Item 2. Acquisition or Disposition of Assets
On September 24, 1999, The Westwood Group, Inc. (the "Company") entered
into a Stock Purchase Agreement (the "Stock Purchase Agreement") with Charles F.
Sarkis (the "Buyer"), pursuant to which the Buyer purchased 450,518 shares of
common stock ("Shares") of Back Bay Restaurant Group, Inc., a Delaware
corporation ("BBRG"), owned by the Company, for an aggregate purchase price of
$2,703,108 (the "Purchase Price"). In exchange for the delivery of the Shares,
the Buyer delivered a promissory note (the "Note") in the amount of the Purchase
Price and a stock pledge agreement relating to the Shares. Under the terms of
the Note, fifty percent (50%) of the Purchase Price is payable on November 30,
1999 and the remaining fifty percent (50%) is payable in four (4) equal annual
installments. Interest on the Note will accrue at an annual rate of nine and
one-half percent (9 1/2%).
The Stock Purchase Agreement was approved by the Company's Board of
Directors, including the disinterested member of the Company's Board of
Directors. The Board of Directors determined that the $6.00 per Share valuation
negotiated with the Buyer was fair and in the best interest of the Company's
stockholders based upon a fairness opinion delivered by its financial advisor
(the "Fairness Opinion").
Simultaneously with the execution of the Stock Purchase Agreement, the
Company entered into a Stock Repurchase Agreement with BBRG (the "Stock
Repurchase Agreement"), pursuant to which BBRG repurchased 222,933 Shares from
the Company in exchange for the cancellation of a certain promissory note, dated
May 2, 1994, issued by the Company in favor of BBRG in the principal amount of
$970,000 and any and all accrued and unpaid interest accrued thereon. The $6.00
per Share valuation negotiated with BBRG in this transaction was also
determined by the Board of Directors of the Company to be fair and in the
best interest of the Company's stockholders based upon the Fairness Opinion.
The Buyer is the Chairman and a majority stockholder of the Company and
the President, Chief Executive Officer and sole director of BBRG. Immediately
prior to consummation of the transactions contemplated by the Stock Purchase
Agreement and Stock Repurchase Agreement, the Company was the majority
stockholder of BBRG.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Pursuant to the instructions to Item 7 of Form 8-K,
the following unaudited financial information
required by Item 7(b) is attached to this filing:
(i)The Westwood Group, Inc.and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet
at June 30, 1999
(ii) The Westwood Group, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Income
Statement at June 30, 1999
(iii) The Westwood Group, Inc.
and Subsidiaries Pro Forma Condensed
Consolidated Income Statement
at December 31, 1998
(c) Exhibits
2.1*+ Stock Purchase Agreement, dated as of September
24, 1999, by and between Charles F. Sarkis and The
Westwood Group, Inc.
2.2*+ Stock Repurchase Agreement, dated as of
September 24, 1999, by and between
Back Bay Restaurant Group, Inc. and The
Westwood Group, Inc.
99.1* The Westwood Group, Inc.and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet
at June 30, 1999
99.2* The Westwood Group, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Income
Statement at June 30, 1999
99.3* The Westwood Group, Inc.
and Subsidiaries Pro Forma Condensed
Consolidated Income Statement
at December 31, 1998
- - --------
* Filed herewith.
+ In accordance with Item 601(b)(2) of Regulation S-K, the exhibits to this
Exhibit have been omitted and a list briefly describing the exhibits is
contained in the Exhibit. The Registrant will furnish supplementally a copy
of any omitted exhibit to the Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE WESTWOOD GROUP, INC.
Date: October 8, 1999 By: /s/ Richard P. Dalton
-----------------------
Richard P. Dalton
President
<PAGE>
Exhibit Index
2.1 Stock Purchase Agreement, dated as of September 24, 1999,
by and between Charles F.Sarkis and The Westwood Group, Inc.
2.2 Stock Repurchase Agreement, dated as of September 24, 1999,
by and between Back Bay Restaurant Group, Inc. and The
Westwood Group, Inc.
99.1* The Westwood Group, Inc.and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet
at June 30, 1999
99.2* The Westwood Group, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Income
Statement at June 30, 1999
99.3* The Westwood Group, Inc.
and Subsidiaries Pro Forma Condensed
Consolidated Income Statement
at December 31, 1998
Exhibit 2.1
STOCK REPURCHASE AGREEMENT
by and between
BACK BAY RESTAURANT GROUP, INC.
and
THE WESTWOOD GROUP, INC.
As of September 24, 1999
<PAGE>
Exhibits
Exhibit A - Fairness Opinion
<PAGE>
HWD2 710166v2
STOCK REPURCHASE AGREEMENT
This Stock Repurchase Agreement (the "Agreement") is made as of
September 24, 1999, by and between Back Bay Restaurant Group, Inc., a Delaware
corporation (the "Company"), and The Westwood Group, Inc., a Delaware
corporation and an existing shareholder of the Company (the "Seller").
WHEREAS, the Seller owns an aggregate of 673,451 shares of common
stock, par value .01 per share, of the Company (the "Common Stock");
WHEREAS, the Company desires to repurchase and the Seller desires to
transfer 222,933 shares of Common Stock (the "Shares") to the Company, and
WHEREAS, the Board of Directors of the Seller has determined that the
per share fair market valuation of each Share is $6.00 (the "Share Valuation").
NOW THEREFORE, in consideration of the foregoing and the mutual
promises and agreements contained herein, the Company and the Seller agrees as
follows:
1. Repurchase of Shares by the Company. Upon the terms and subject to
the conditions set forth herein, simultaneously with the signing of this
Agreement, the Company shall purchase from the Seller, and the Seller shall
sell, transfer and deliver to the Company the Shares, free and clear of any and
all liens, mortgages, deeds of trust, security interests, pledges, charges and
liabilities of any kind. In consideration for the Shares, the Company shall
cancel a currently outstanding inter-company loan to the Seller in the principal
amount of $970,000 and any and all interest accrued thereon evidenced by that
certain promissory note, dated May 2, 1994, as amended, (the "Note").
2. Cancellation of Warrant Obligation. In exchange for the repurchase
of the Shares, the Company's obligation to issue a warrant to the Seller for the
purchase of 12,905 shares of Common Stock shall be cancelled and the Company
shall have no further obligation or liability in connection therewith.
3. Time and Place Closing of the Transaction; Deliveries at Closing.
The closing of the transactions described herein (the "Closing") shall take
place at the office of Hutchins, Wheeler & Dittmar, A Professional Corporation,
101 Federal Street, Boston, Massachusetts 02110 on September 24, 1999, or on
such other date or time as the parties may mutually agree (the "Closing Date").
At the Closing or as soon thereafter as possible, the Seller shall deliver to
the Company a stock certificate representing the Shares duly endorsed for
transfer or accompanied by a stock power duly endorsed in blank.
4. Cancellation of Rights. Upon the cancellation of the Note and
delivery of the Shares, (i) the Seller shall cease to have any rights as a
shareholder of the Company with respect to the Shares and (ii) the Note shall be
cancelled and the Seller shall have no further payment obligations thereunder.
5. Failure to Surrender Shares. If the Seller fails to deliver the
Shares in accordance with the terms of this Agreement, the Company may, at its
option, in addition to all other remedies it may have, cancel the Note in
exchange for such Shares. Thereupon, the Company, upon written notice to the
Seller, shall cancel on its books the certificates representing the Shares to be
sold and all of the Seller's rights in and to such Shares shall immediately
terminate. For the purposes of this Agreement, the Seller hereby irrevocably
constitutes and appoints the Secretary of the Company as its attorney-in-fact to
transfer the Shares on the books of the Company and to execute any document said
attorney deems appropriate in order to carry out the intent of the foregoing.
6. Representations and Warranties of the Seller. The Seller hereby
makes the following representations and warranties:
(a)(i) the Seller owns, beneficially and of record, the
Shares, free and clear of any and all liens, charges, claims, liabilities,
security interests or encumbrances of any nature or kind whatsoever; (ii) the
Seller is not subject to any voting trust agreements, proxies or other contracts
or arrangements restricting voting or dividend rights or the transferability of
the Shares; (iii) the Seller has, and shall have, good and marketable title to
the Shares and full right to transfer title to the Shares; and (iv) that the
transfer of the Shares to the Company pursuant to this Agreement will pass good
and marketable title thereto to the Company, free and clear of all liens,
charges, claims, liabilities, security interests or encumbrances of any nature
or kind whatsoever.
(b) The Seller has full legal power and authority to execute
and deliver this Agreement, and the execution, delivery and performance of this
Agreement and each other agreement, document, instrument and certificate
contemplated hereby have been duly and validly authorized by all necessary
action on the part of the Seller, and that this Agreement constitutes, and each
such other agreement, document, instrument and certificate will constitute when
delivered, the valid and binding obligation of the Seller, enforceable against
the Seller in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights generally or by general equitable principles.
(c) No action taken by or on behalf of the Seller in
connection herewith, including, without limitation, the execution, delivery and
performance or this Agreement and each other agreement, document, instrument and
certificate contemplated hereby, does or will (i) violate or conflict with any
term or provision of the certificate of incorporation or by-laws of the Seller
or any judgment, order, writ, injunction or decree applicable to the Seller;
(ii) violate or conflict with any statute, code, ordinance, rule or regulation
applicable to the Seller; or (iii) violate, conflict with, result in the
termination or modification of, constitute a default or accelerate the maturity
of obligations under, or result in the creation of any lien, security interest,
charge or other encumbrance upon the shares owned by the Seller or any of the
properties or assets of the Seller under any of the terms, conditions or
provisions of any contract, lease, note, bond, mortgage, deed of trust,
indenture, license, security agreement or other instrument or obligation to
which the Seller is a party or by which the Seller or the Seller's properties
may be bound or affected.
(d) The Board of Directors of the Seller has received from
Alouette Capital, Inc., its financial advisor (the "Financial Advisor"), a
written opinion to be dated the date hereof, in substantially the form of
Exhibit A attached hereto, that in connection with this Agreement to the effect
that the Share Valuation is fair from a financial point of view (the "Fairness
Opinion").
(e) Except for any amounts due and owing to the Financial
Advisor, neither the Seller nor anyone acting on its behalf has engaged,
retained, or incurred any liability to any broker, investment banker, finder or
agent nor has the Seller agreed to pay any brokerage fees, commissions, finder's
fees or other fees with respect to the sale of the Shares, this Agreement or the
transactions contemplated hereby.
7. Representations and Warranties of the Company. The Company hereby
makes the following representations and warranties:
(a) The Company has all necessary corporate power and
authority and has taken all necessary action required for (i) the due
authorization, execution, delivery and performance of this Agreement and (ii)
the consummation of the transactions contemplated herein.
(b) The Company has full legal power and authority to execute
and deliver this Agreement, and the execution, delivery and performance of this
Agreement and each other agreement, document, instrument and certificate
contemplated hereby have been duly and validly authorized by all necessary
action on the part of the Company, and that this Agreement constitutes, and each
such other agreement, document, instrument and certificate will constitute when
delivered, the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights generally or by general equitable principles.
(c) Neither the Company nor anyone acting on its behalf has
engaged, retained or incurred any liability to any broker, investment banker,
finder of agent or has agreed to pay any brokerage fees, commissions, finder's
fees or other fees with respect to the purchase of the Shares, this Agreement or
the transactions contemplated hereby.
8. Conditions Precedent to the Obligations of the Seller. The
obligation of the Seller to close the sale of the Shares pursuant to this
Agreement shall be subject to the satisfaction of each of the following
conditions on or prior to the Closing Date:
(a) The Company shall have performed or complied with all
covenants and conditions contained in this Agreement to be performed by it and
any agreement, certificate and instrument to be executed by the Company pursuant
hereto required to be performed or complied with at or prior to the Closing
Date.
(b) The Seller shall have received the Fairness Opinion.
(c) The Board of Directors of the Seller shall have approved
this Agreement and the transactions contemplated hereunder.
(d) The Note shall have been cancelled.
9. Conditions Precedent to Obligation of the Company. The obligation of
the Company to close the repurchase of the shares pursuant to this Agreement
shall be subject to the satisfaction of each of the following conditions on or
prior to the Closing Date:
(a) The Seller shall have delivered, shall have caused to be
delivered, or shall cause to be delivered as soon after the Closing Date as
possible all of the Shares duly endorsed for transfer or accompanied by a stock
power endorsed in blank.
(b) The Seller shall have performed or complied with all
covenants and conditions contained in this Agreement to be performed by it and
any agreement, certificate and instrument to be executed by the Company pursuant
hereto required to be performed or complied with at or prior to the Closing
Date.
(c) The Company shall have received a copy of the Fairness
Opinion.
(d) The Board of Directors of the Company shall have approved
this Agreement and the transactions contemplated hereunder.
10. Survival of Representations and Warranties. The representations and
warranties set forth in this Agreement or in any instrument delivered pursuant
to this Agreement shall survive the Closing Date.
11. Cancellation of Transaction. Notwithstanding anything to contrary
herein, in the event that the Company is unable to obtain the consents of
BankBoston N.A. and FINOVA Capital Corporation, its senior lenders, and State
Street Bank & Trust, as trustee for General Motors Employees, Global Group
Pension Trust as directed by DDJ Capital Management, LLC, its subordinated
lender, then the Company may, in its sole discretion, terminate this Agreement
and return the Shares to the Seller at which time the Note will no longer be
cancelled and will remain in full force and effect whereby the Seller will
continue to be obligated to pay all amounts due and owing thereunder to the
Company. In the event that this Agreement is terminated pursuant to this Section
11, then any and all further obligations of the Seller and the Company under
this Agreement shall terminate without further liability of such party except
with respect to its obligations under Section 12 hereof.
12. Fees and Expenses. Whether or not the transactions contemplated
hereunder shall be consummated, each party hereto shall pay its own expenses
incident to preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.
13. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given when delivered personally or sent by overnight courier (providing proof of
delivery) or telecopy to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to the Company: Back Bay Restaurant Group, Inc.
284 Newbury Street
Boston, Massachusetts 02115
Attn: President
Facsimile No.: (617) 425-5252
with a copy to: Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
Attn: Francis J. Feeney, Jr., Esq.
Facsimile No.: (617) 951-1295
(b) if the Seller: The Westwood Group, Inc.
190 V.F.W. Parkway
Revere, Massachusetts 02151
Attn: President
Facsimile No.: (781) 284-7895
with a copy to: Crowley, Considine & Dray
1 State Street
Boston, Massachusetts 02107
Attn: Kevin Considine, Esq.
Facsimile No.: (617) 720-2055
14. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
15. Entire Agreement; No Third Party Beneficiaries. This Agreement and
the other agreements referred to herein constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement. This Agreement
is not intended to confer upon any person, other than the parties hereto any
rights or remedies.
16. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of The Commonwealth of Massachusetts, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof. Each of the parties hereto agrees that any action or proceeding
brought to enforce the rights or obligations or any party hereto under this
Agreement may be commenced and maintained in any court of competent jurisdiction
located in The Commonwealth of Massachusetts, and that the United States
District Court for the jurisdiction over any such action, suit or proceeding
brought by any of the parties hereto. Each of the parties hereto further agrees
that process may be served upon it by certified mail, return receipt requested,
addressed as more generally provided in Section 13 hereof, and consents to the
exercise of jurisdiction over it and its properties with respect to any action,
suit or proceeding arising out of or in connection with this Agreement or the
transactions contemplated hereby or the enforcement of any rights under this
Agreement.
17. Assignment. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by either party without the prior written consent
of the other party.
18. Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
(without requirement to post a bond) the terms and provisions of this Agreement,
this being in addition to any other remedy to which they are entitled at law or
in equity.
19. Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.
20. Attorney's Fees. If any legal proceeding is initiated by any party
hereto to enforce this Agreement or otherwise with respect to the subject matter
of this Agreement, the prevailing party or parties shall be entitled to recover
reasonable attorney's fees incurred in connection with any such proceedings.
[Remainder of Page Intentionally Left Blank]
<PAGE>
S-1
IN WITNESS WHEREOF, the Company and the Seller have caused this
Agreement to be executed as an agreement under seal by their respective officers
thereunto duly authorized, all as of the date first written above.
BACK BAY RESTAURANT GROUP, INC.
By: /s/ Charles F. Sarkis
Charles F. Sarkis
President
THE WESTWOOD GROUP, INC.
By: /s/ Richard P. Dalton
Richard P. Dalton
President
Exhibit 2.2
STOCK PURCHASE AGREEMENT
by and between
CHARLES F. SARKIS
and
THE WESTWOOD GROUP, INC.
As of September 24, 1999
<PAGE>
Exhibits
Exhibit A - Promissory Note
Exhibit B - Stock Pledge Agreement
Exhibit C - Fairness Opinion
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of September
24, 1999, by and between Charles F. Sarkis, a resident of Boston, Massachusetts
(the "Buyer") and The Westwood Group, Inc., a Delaware corporation (the
"Seller").
WHEREAS, the Seller owns an aggregate of 673,451 shares of common
stock, par value .01 per share (the "Common Stock"), of Back Bay Restaurant
Group, Inc., a Delaware corporation ("BBRG");
WHEREAS, the Buyer desires to purchase and the Seller desire to sell
450,518 shares of common stock (the "Shares");
WHEREAS, the Board of Directors or the Seller has determined that the
fair market per share valuation of each Share is $6.00 (the "Share Valuation");
and
WHEREAS, the Buyer is familiar with the business, financial condition
and prospects of BBRG and acknowledges that he has been afforded the opportunity
to review certain financial information regarding BBRG and to ask questions of
and receive satisfactory answers from management of BBRG concerning the
business, financial condition and prospects of BBRG.
NOW THEREFORE, in consideration of the foregoing and the mutual
promises and agreements contained herein, the Buyer and the Seller agrees as
follows:
1. Purchase of Shares by the Buyer. Upon the terms and subject to the
conditions set forth herein, simultaneously with the signing of this Agreement,
the Buyer shall purchase from the Seller, and the Seller shall sell, transfer
and deliver to the Buyer the Shares, free and clear of any and all liens,
mortgages, deeds of trust, security interests, pledges, charges and liabilities
of any kind. The aggregate purchase price (the "Purchase Price") to be paid by
the Buyer for the Shares shall be $2,703,108, which shall be paid at Closing (as
such term is defined herein) by delivery by the Buyer to the Seller of (i) a
Promissory Note in substantially the form of Exhibit A attached hereto (the
"Note") and (ii) a Pledge Agreement in substantially the form of Exhibit B
attached hereto (the "Pledge Agreement").
2. Time and Place Closing of the Transaction; Deliveries at Closing.
The closing of the transactions described herein (the "Closing") shall take
place at the office of Hutchins, Wheeler & Dittmar, A Professional Corporation,
101 Federal Street, Boston, Massachusetts 02110 on September 24, 1999, or on
such other date or time as the parties may mutually agree (the "Closing Date").
At the Closing or as soon thereafter as possible, the Seller shall deliver to
the Buyer a stock certificate representing the Shares duly endorsed for transfer
or accompanied by a stock power duly executed in blank.
3. Cancellation of Rights. Upon delivery of the Note, the Seller shall
cease to have any rights as a shareholder of the Company with respect to the
Shares.
4. Representations and Warranties of the Seller. The Seller hereby
makes the following representations and warranties:
(a)(i) the Seller owns, beneficially and of record, the
Shares, free and clear of any and all liens, charges, claims, liabilities,
security interests or encumbrances of any nature or kind whatsoever; (ii) the
Seller is not subject to any voting trust agreements, proxies or other contracts
or arrangements restricting voting or dividend rights or the transferability of
the Shares; (iii) the Seller has, and shall have, good and marketable title to
the Shares and full right to transfer title to the Shares; and (iv) that the
transfer of the Shares to the Buyer pursuant to this Agreement will pass good
and marketable title thereto to the Buyer, free and clear of all liens, charges,
claims, liabilities, security interests or encumbrances of any nature or kind
whatsoever.
(b) The Seller has full legal power and authority to execute
and deliver this Agreement, and the execution, delivery and performance of this
Agreement and each other agreement, document, instrument and certificate
contemplated hereby have been duly and validly authorized by all necessary
action on the part of the Seller, and that this Agreement constitutes, and each
such other agreement, document, instrument and certificate will constitute when
delivered, the valid and binding obligation of the Seller, enforceable against
the Seller in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights generally or by general equitable principles.
(c) No action taken by or on behalf of the Seller in
connection herewith, including, without limitation, the execution, delivery and
performance of this Agreement and each other agreement, document, instrument and
certificate contemplated hereby, does or will (i) violate or conflict with any
term or provision of the certificate of incorporation or by-laws of the Seller
or any judgment, order, writ, injunction or decree applicable to the Seller;
(ii) violate or conflict with any statute, code, ordinance, rule or regulation
applicable to the Seller; or (iii) violate, conflict with, result in the
termination or modification of, constitute a default or accelerate the maturity
of obligations under, or result in the creation of any lien, security interest,
charge or other encumbrance upon the shares owned by the Seller or any of the
properties or assets of the Seller under any of the terms, conditions or
provisions of any contract, lease, note, bond, mortgage, deed of trust,
indenture, license, security agreement or other instrument or obligation to
which the Seller is a party or by which the Seller or the Seller's properties
may be bound or affected.
(d) The Board of Directors of the Seller has received from
Alouette Capital, Inc., its financial advisor (the "Financial Advisor"), a
written opinion to be dated the date hereof, in substantially the form of
Exhibit C attached hereto, that in connection with this Agreement to the effect
that the Share Valuation is fair from a financial point of view (the "Fairness
Opinion").
(e) Except for any amounts due and owing to the Financial
Advisor, neither the Seller nor anyone acting on its behalf has engaged,
retained, or incurred any liability to any broker, investment banker, finder or
agent nor has the Seller agreed to pay any brokerage fees, commissions, finder's
fees or other fees with respect to the sale of the Shares, this Agreement or the
transactions contemplated hereby.
5. Representations and Warranties of the Buyer. The Buyer hereby makes
the following representations and warranties:
(a) The Buyer (i) is familiar with the business and financial
condition, properties, operations and prospects of BBRG and its subsidiaries,
and (ii) has been given full access to all material information concerning the
condition, properties, operations and prospects of BBRG and of its subsidiaries
on a consolidated basis including, but not limited to, the audited financial
statements of BBRG for the period ended December 27, 1998. The Buyer has had the
opportunity to consult with and has consulted with his advisors (including
attorneys and accountants of his choice) with respect to the purchase and sale
to be effected hereby and the Buyer and his advisors have had an opportunity to
ask questions of, and to receive information from, the Seller, BBRG and its
subsidiaries and persons acting on their behalf concerning BBRG and its
subsidiaries, their financial condition and prospects, including, but not
limited to, and the terms and conditions of Buyer's purchase of the Shares and
to obtain any additional information necessary to verify such accuracy of the
information and data received by the Buyer, all of which has been received, read
and understood by the Buyer and his advisors. The Buyer is satisfied that there
is no material information concerning the condition, properties, operations and
prospectus of BBRG and its subsidiaries, of which the Buyer is unaware. The
Buyer has made, either alone or together with his advisors, such independent
investigation of BBRG and its subsidiaries, its management and related matters
as the Buyer deems to be, or the Buyer's advisors have advised to be necessary
or advisable in connection with BBRG and its subsidiaries, their financial
condition and prospects and the sale of the Shares; and the Buyer and his
advisors have received all information and data which the Buyer and his advisors
believe to be necessary in order to reach an informed decision as to the
advisability of participating in the purchase of the Shares, all of which has
been received, reviewed and understood by the Buyer and his respective advisors.
The Buyer, either alone or together with his advisors, has such knowledge and
experience in business and financial matters that he is capable of evaluation
the relative risks and merits of this investment. Aside from the financial
information provided to the Buyer regarding BBRG, the Seller has made no
representation or warrant regarding BBRG or its performance or prospects of any
kind of nature.
(b) Neither the Buyer nor anyone acting on his behalf has
engaged, retained or incurred any liability to any broker, investment banker,
finder or agent or has agreed to pay any brokerage fees, commissions, finder's
fees or other fees with respect to the purchase of the Shares, this Agreement or
the transactions contemplated hereby.
(c) The Buyer represents, covenants and warrants that he is
acquiring the Shares for his own account for the purpose of investment and not
with a view to or for sale or in connection with any distribution thereof nor
with the present intention of distributing or selling the Shares. The Buyer will
not knowingly offer to sell or otherwise transfer any of the Shares in violation
of any federal or state securities law.
(d) The Buyer further acknowledges that:
(i) The sale of the Shares to him has not been
registered pursuant to any federal or state
securities laws and that a legend to that
effect may be placed on all certificates
representing such Shares;
(ii) The Buyer may not sell, transfer or dispose
of the Shares unless and until a
registration statement under the Securities
Act of 1933, as amended, has become
effective with respect to such Shares and
Buyer complies with applicable state
securities laws, or Buyer obtains an
exception therefrom, and as a consequence
thereof the Buyer may have to hold such
Shares, and bear the economic risk thereof,
indefinitely; and that it may not be
possible for the Buyer to liquidate his
Shares;
(iii) There is no assurance that the Buyer will
realize any gain from the Buyer's investment
in BBRG;
(iv) This purchase involves a high degree of risk
and he has no need for a current return from
the Shares and that he can bear their risk
of losing his entire investment therein; and
(v) He has adequate means of providing for his
current needs and possible personal
contingencies and has no need for liquidity
through a sale of the Shares, his commitment
to investments which are not readily
marketable is not disproportionate to his
net worth and his purchase of the Shares
will cause his overall financial commitments
to become excessive.
6. Conditions Precedent to the Obligations of The Seller. The
obligation of the Seller to close the sale of the Shares pursuant to this
Agreement shall be subject to the satisfaction of each of the following
conditions on or prior to the Closing Date:
(a) All authorizations, waivers, notices to, consents and
approvals from any and all third parties and governmental authorities and
agencies required to be made or obtained prior to the consummation of the
transactions contemplated by this Agreement shall have been made or obtained.
(b) The Buyer shall have performed or complied with all
covenants and conditions contained in this Agreement to be performed by it and
any agreement, certificate and instrument to be executed by the Buyer pursuant
hereto required to be performed or complied with at or prior to the Closing
Date.
(c) The Seller shall have received the Fairness Opinion, dated
the date hereof.
(d) The Buyer shall have executed and delivered the Note.
(e) The Buyer shall have executed and delivered the Pledge
Agreement.
(f) In addition to the Purchase Price, the Buyer shall loan
the Seller an amount equal to $500,000 on or before September 27, 1999 and
Seller shall deliver a promissory note as evidence of repayment of such loan
(the "$500,000 Note") in substantially the form of Exhibit D attached hereto.
(g) The Board of Directors of the Seller shall have approved
this Agreement and the transactions contemplated hereunder.
7. Conditions Precedent to Obligation of the Buyer. The obligation of
the Buyer to close the purchase of the shares pursuant to this Agreement shall
be subject to the satisfaction of each of the following conditions on or prior
to the Closing Date:
(a) The Seller shall have delivered, shall have caused to be
delivered or shall deliver as soon after the Closing Date as possible, all of
the Shares at or promptly after the Closing Date duly endorsed for transfer or
accompanied by a stock power endorsed in blank.
(b) The Seller shall have performed or complied with all
covenants and conditions contained in this Agreement to be performed by the
Seller at or prior to the closing.
(c) The Buyer shall have received a copy of the Fairness
Opinion.
(d) The Seller shall have executed and delivered the Pledge
Agreement.
(e) The Seller shall have executed and delivered the $500,000
Note.
8. Survival of Representations and Warranties. The representations and
warranties set forth in this Agreement or in any instrument delivered pursuant
to this Agreement shall survive the Closing Date.
9. Fees and Expenses. Whether or not the transactions contemplated
hereunder shall be consummated, each party hereto shall pay its own expenses
incident to preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.
10. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given when delivered personally or sent by overnight courier (providing proof of
delivery) or telecopy to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to the Buyer: Charles F. Sarkis, President
Back Bay Restaurant Group, Inc.
284 Newbury Street
Boston, Massachusetts 02115
Facsimile No.: (617) 425-5252
with a copy to: Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
Attn: Francis J. Feeney, Jr., Esq.
Facsimile No.: (617) 951-1295
(b) if the Seller: The Westwood Group, Inc.
190 V.F.W. Parkway
Revere, Massachusetts 02151
Attn: President
Facsimile No.: (781) 284-7895
with a copy to: Crowley, Considine & Dray
1 State Street
Boston, Massachusetts 02107
Attn: Kevin Considine, Esq.
Facsimile No.: (617) 720-2055
11. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
12. Entire Agreement; No Third Party Beneficiaries. This Agreement and
the other agreements referred to herein constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement. This Agreement
is not intended to confer upon any person, other than the parties hereto, any
rights or remedies.
13. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of The Commonwealth of Massachusetts, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof. Each of the parties hereto agrees that any action or proceeding
brought to enforce the rights or obligations or any party hereto under this
Agreement may be commenced and maintained in any court of competent jurisdiction
located in The Commonwealth of Massachusetts, and that the United States
District Court for the jurisdiction over any such action, suit or proceeding
brought by any of the parties hereto. Each of the parties hereto further agrees
that process may be served upon it by certified mail, return receipt requested,
addressed as more generally provided in Section 10 hereof, and consents to the
exercise of jurisdiction over it and its properties with respect to any action,
suit or proceeding arising out of or in connection with this Agreement or the
transactions contemplated hereby or the enforcement of any rights under this
Agreement.
14. Assignment. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by either party without the prior written consent
of the other party.
15. Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
(without requirement to post a bond) the terms and provisions of this Agreement,
this being in addition to any other remedy to which they are entitled at law or
in equity.
16. Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.
17. Attorney's Fees. If any legal proceeding is initiated by any party
hereto to enforce this Agreement or otherwise with respect to the subject matter
of this Agreement, the prevailing party or parties shall be entitled to recover
reasonable attorney's fees incurred in connection with any such proceedings.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
S-1
IN WITNESS WHEREOF, the Buyer and the Seller have caused this Agreement
to be executed as an agreement under seal by their respective officers thereunto
duly authorized, all as of the date first written above.
THE BUYER:
/s/ Charles F. Sarkis
CHARLES F. SARKIS
THE SELLER:
THE WESTWOOD GROUP, INC.
By: /s/ Richard P. Dalton
Richard P. Dalton
President
Pro Forma Financial Information
The Westwood Group, Inc.and Subsidiaries
Pro Forma Condensed Consolidated
Balance Sheet at
June 30, 1999
(unaudited)
-Pro Forma
Adjustments-
Historical Back Bay(a) Other (b) Pro Forma
ASSETS
Current Assets
Cash and cash
equivalents $3,713,888 $3,562,000 $151,888
Restricted cash 153,274 153,274
Accounts Receivable 411,974 178,000 233,974
Prepaid Expenses and other 2,367,573 ,923,000 444,573
current assets
Note Receivables from 83,993 628,398 (b) 712,391
Officers
Total Current Assets 6,730,702 5,663,000 628,398 1,696,100
Property, Plant, and 39,274,128 33,625,000 5,649,128
Equipment, Net
Intangibles, Net 15,412,439 5,279,067 133,372
Note Receivable from
Officers, 543,505 2,203,108 (b) 2,746,613
less current portion
$61,960,774 $54,567,067 $2,831,506 $10,225,213
===================================================
-Pro Forma
Adjustments-
Historical Back Bay(a) Other Pro Forma
Liabilities and
Stockholder's
Equity
Current liabilities:
Accounts payable and
other accrued $13,854,767 $10,159,000 -$283,003 (b) $3,412,764
liabilities
Current maturities
of long 1,590,777 1,287,000 303,777
term debt
Other current
liabilities 1,239,547 100,000 (c) 1,339,547
Total Current
liabilities 16,685,091 11,446,000 -183,003 5,056,088
Long Term Debt,
less current 39,797,270 34,330,000 -970,000 (b) 4,497,270
maturities
Other Long Term
Liabilties 1,852,082 180,000 1,672,082
Total Liabilities 58,334,443 45,956,000 -1,153,003 11,225,440
------------------------------------------------------------
Minority Interest
in Subsidiary 2,321,100 2,321,100 0
--------------------------------------------------------------
Stockholder's Equity:
Common Stock 19,444 14,000 14,000 (b) 19,444
Class B common stock 9,126 9,126
Additional paid in
capital 13,379,275 5,621,967 5,621,967 (b) 13,379,275
Accumulated deficit -3,888,428 654,000 -1,651,458 -6,193,886
Other comprehensive
loss -249,404 -249,404
-------------------------------------------------------------------
9,270,013 6,289,967 3,984,509 6,964,555
Less: treasury stock -7,964,782 -7,964,782
-------------------------------------------------------------------
-------------------------------------------------------------------
1,305,231 6,289,967 3,984,509 -1,000,227
-------------------------------------------------------------------
$61,960,774 $54,567,067 $2,831,506 $10,225,213
===================================================================
(a) To eliminate the assets and liabilities included in the balance sheet
of the Company's Back Bay Restaurant ("BBRG") business as of June 30, 1999.
(b) To reflect the basis of the transaction (cash / retirement of debt for
the interest in BBRG) $628,398 records the officer note receivable plus $128,398
of accrued interest $2,203,108 represents the long term portion of the officer
note receivable $970,000 and $283,003 eliminates the note due to BBRG and the
related accrued interest $5,635,967 ($14,000 Common Stock /
$5,621,967APIC)eliminates the equity interest in BBRG in the 12/31/98
Consolidated Financial Statements
(c) To reflect transaction costs of the Company
Pro Forma Financial Information
The Westwood Group, Inc. and Subsidiaries
Pro Forma Condensed Consolidated
Income Statement
at
June 30, 1999
(unaudited)
For Six Months
Ended -Pro Forma
Adjustments-
Historical Back Bay(a) Other Pro Forma
Operating Revenue:
Pari - mutuel
commissions $7,425,713 $7,425,713
Restaurants 27,307,000 27,307,000 0
Concessions 1,326,920 1,326,920
Other 240,612 240,612
---------------------------------------------------------------------
Net revenue 36,300,245 27,307,000 0 8,993,245
---------------------------------------------------------------------
Cost of revenue:
Wages, taxes and
benefits 11,462,583 8,173,000 3,289,583
Purses 2,216,550 2,216,550
Cost of food
and beverage 7,582,950 7,358,000 224,950
Administrative 2,822,886 2,628,000 194,886
General
operating 8,070,112 6,018,000 2,052,112
Depreciation and
amortization 1,486,321 1,134,000 352,321
---------------------------------------------------------------------
Total cost
of revenue 33,641,402 25,311,000 0 8,330,402
---------------------------------------------------------------------
Income from
operations 2,658,843 1,996,000 0 662,843
---------------------------------------------------------------------
Other income
(expense)
Interest income
(expense), net -1,207,579 -1,008,000 128,398 (b) -71,181
Equity income
(loss) in -47,600 47,600 (c) 0
investments
Other income,
net -54,000 -54,000 0
---------------------------------------------------------------------
Total other
income -1,309,179 -1,062,000 175,998 -71,181
---------------------------------------------------------------------
Income from operations before
provision for
ncome taxes and
minority 1,349,664 934,000 175,998 239,666
interest in subsidiary
Provision for
income tax 332,800 280,000 52,800
---------------------------------------------------------------------
Income before
minority interst 1,016,864 654,000 175,998 186,866
in subsidiary
Minority interest
in subsidiary -166,247 -166,247
---------------------------------------------------------------------
Net income $850,617 $654,000 $175,998 $20,619
=====================================================================
Basic and diluted per share
data:
Net Income $0.67 $0.52 $0.14 $0.02
=====================================================================
Basic and diluted
weighted average
common shares
outstanding 1,263,225 1,263,225 1,263,225 1,263,225
=====================================================================
(a) To eliminate the income and expenses included in the income statement
of the Company's Back Bay Restaurant Group, Inc. (BBRG) investment (subsidiary)
through June 30, 1999. Restaurant business as of June 30, 1999.
(b) To reflect the basis of the transaction of the sale of BBRG.
(c) To reflect the elimination of the equity interest from BBRG earned in
the first quarter of calendar 1999.
Pro Forma Financial Information
The Westwood Group, Inc.
and Subsidiaries
Pro Forma Condensed Consolidated
Income Statement
at
December
31, 1998
(unaudited)
-Pro Forma
Adjustments-
Historical Back Bay(a) Other Pro Forma
Operating Revenue:
Pari -
mutuel commissions $15,373,562 $15,373,562
Restaurants 0 0
Concessions 1,758,670 1,758,670
Other 1,839,100 1,839,100
--------------------------------------------------------------
18,971,332 0 0 18,971,332
-------------------------------------------------------------------
Cost of revenue:
Wages, taxes and benefits 7,248,903 7,248,903
Purses 4,470,893 4,470,893
Cost of food and beverage 524,296 524,296
Administrative 1,541,658 100,000 (c) 1,641,658
General operating 3,720,757 3,720,757
Depreciation and
amortization 700,106 700,106
-------------------------------------------------------------------
Total cost of
revenue 18,206,613 0 100,000 18,306,613
-------------------------------------------------------------------
Income from operations 764,719 0 -100,000 I 664,719
-------------------------------------------------------------------
Other income (expense)
Interest income
(expense), net -398,284 -26,396 (b) -424,680
Equity income (loss)
in investments 525,292 -525,292 (d) 0
Other income, net 0 0
-------------------------------------------------------------------
Total other
income (expense) 127,008 0 -551,688 -424,680
Income from operations before
provision for
income taxes and
minority interest 891,727 0 -651,688 240,039
in subsidiary
Provision for
income tax 82,400 82,400
-------------------------------------------------------------------
Income before minority
interst in 809,327 0 -651,688 157,639
subsidiary
Minority interest in
subsidiary 0 0
-------------------------------------------------------------------
Income from
continuing operations 809,327 0 -651,688 157,639
Loss from disposal
of investment / -1,867,307 (b) -1,867,307
subsidiary
Gain from discontinued
harness racing
operations ( net of
income taxes of
$20,400 in 1998) 1,000,961 1,000,961
Net Income (Loss) $1,810,288 $0 -$2,518,995 -$708,707
===================================================================
Basic per share data:
Income from
continuing operations $0.64 $0.00 -$0.52 $0.12
Loss from disposal of
investment / $0.00 $0.00 -$1.48 -$1.48
subsidiary
Income (loss) from
discontinued $0.79 $0.00 $0.00 $0.79
operations
----------------------------------------------------------------
Net Income (Loss)
per share $1.44 $0.00 -$2.00 -$0.56
===================================================================
Basic weighted
average common shares 1,261,252 1,261,252 1,261,252 1,261,252
outstanding
===================================================================
Diluted per share data:
Income from continuing
operations $0.63 $0.00 -$0.51 $0.12
Income (loss)
from discontinued $0.00 $0.00 -$1.46 -$1.46
operations
Income (loss)
from discontinued $0.78 $0.00 $0.00 $0.78
operations
----------------------------------------------------------------
Net Income (Loss)
per share $1.41 $0.00 -$1.97 -$0.55
===================================================================
Diluted weighted
average common shares 1,281,243 1,281,243 1,281,243 1,281,243
outstanding
===================================================================
(a) To eliminate the assets and liabilities included in the balance sheet
of the Company's Back Bay Restaurant Group, Inc. (BBRG) investment (subsidiary).
(b) To reflect the basis of the transaction of the sale of BBRG.
(c) To reflect transaction costs incurred by the Company in the sale
of BBRG.
(d) To reflect the the elimination of the equity interest from BBRG
earned in 1998.
