Exhibit 1
October 12, 2005
PERSONAL AND CONFIDENTIAL
Main Street Restaurant Group, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx, Chairman
Xxxxxxx X. Xxxxxxx, CEO, President and Director
Xxxxx Xxxxxxxx, Director
Xxxxx X. Xxxxxxxx, Director
Xxxxxx X. Xxxxx, Director
Xxxxxxx X. Xxxxxxxx, Director
RE: OFFER LETTER
Ladies and Gentlemen:
The purpose of this letter is to set forth an offer pursuant to which I
and/or my affiliates would purchase all of the issued and outstanding shares of
the common stock (the "Common Stock") of Main Street Restaurant Group, Inc., a
Delaware corporation (the "Company"), not currently owned by me (assuming full
conversion or cancellation of all securities convertible or exercisable for
Common Stock) for a purchase price of $5.75 per share of Common Stock, payable
in cash, subject to the terms and conditions set forth below (the "Offer").
Based upon my experience in the restaurant industry, I believe that the
Offer is a fair one and generous to the Company's stockholders. I also believe
that the Offer represents a multiple of approximately 8.7 times the projected
EBITDA of the Company for the current fiscal year and a significant premium over
the Company's historical market trading range. Enclosed herewith please find a
fully executed financing commitment letter from Jefferies Funding LLC
representing an aggregate commitment of $240 million (the "Financing"), which
amount is sufficient to finance the Offer and to repay any and all existing
indebtedness of the Company.
As you know, I am the owner of 2,260,802 shares of Common Stock, which
amount represents approximately 13.32% of the Common Stock currently issued and
outstanding. I am also the President and Chief Executive Officer of The Briad
Group and its affiliates, a privately-held, multi-state owner, developer and
operator of franchised restaurants and limited service hotels. Due to my
familiarity with the restaurant industry,
my current equity position in the Company and the fact that I am already an
authorized franchisee of TGI Friday's restaurants, I believe that I am in a
position to consummate the Offer on an expedited basis.
The Offer is conditioned upon and subject to: (i) the completion within
thirty (30) days to my satisfaction of a legal, accounting and business due
diligence review of the Company (which I believe can be completed quickly due to
my experience in the restaurant industry and my familiarity with the Company's
public filings); (ii) the redemption by the Company's Board of Directors,
effective upon the consummation of the Offer, of the stockholder rights plan
described in the Current Report on Form 8-K filed with the Securities and
Exchange Commission on May 26, 2005; (iii) the waiver by the Board of Directors
of the Company of the applicable provisions of Section 203 of the Delaware
General Corporation Law; (iv) the negotiation, execution and delivery of a
definitive merger agreement, in mutually satisfactory form (the "Merger
Agreement"); (v) the requisite approval, if any, by any governmental or
regulatory agencies to the transaction contemplated by this letter and the
obtaining of all other necessary and agreed upon material third party consents,
including, without limitation, any franchisor or liquor license consents; (vi)
the execution of irrevocable agreements by certain stockholders of the Company,
including, without limitation, Xxxx Xxxxxxx, the Chairman of the Board of
Directors of the Company, and CIC MSRG LP, to vote and/or consent to the terms
of the Offer and the Merger Agreement, and to tender their shares of Common
Stock into a tender offer, if applicable; and (vii) the closing of the
Financing.
I hereby request that the Company promptly make available to me (including
my attorneys and accountants) all documents, instruments and records relating to
the Company set forth on the due diligence request list previously provided by
me to the Company's officers, permit physical inspection of the facilities of
the Company by all such parties, and reasonably cooperate with me to complete my
business, accounting and legal review of the Company.
As an inducement to incur the time and expense of the foregoing due
diligence review, I would request that, during the 30 day period beginning on
the date of your favorable response to this letter and your provision of the due
diligence information to us, (i) the Company negotiate exclusively with me
and/or my affiliates with respect to the Offer and (ii) neither the Company nor
any of its directors, officers, agents, shareholders, affiliates or other
representatives, directly or indirectly, solicit, initiate or entertain offers
from, discuss or negotiate with, or in any manner encourage, accept, respond to
or consider any proposal of any person or entity other than me and/or my
affiliates relating to the acquisition of all or any portion of the Company, its
capital stock, assets or business, in whole or in part, whether through
purchase, merger, consolidation, similar transaction or otherwise.
This letter does not constitute or create, and shall not be deemed to
constitute or create, any legally binding or enforceable obligation on the part
of any party. No such obligation shall be created, except by the negotiation,
signing and delivery of the Merger Agreement, containing such terms of the
proposed transaction as shall be agreed upon by
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the parties, and then only in accordance with the terms and conditions of such
Merger Agreement.
I am prepared to meet with you, or a committee of your members, to discuss
this proposal further and to answer any questions that you may have concerning
this proposal. My counsel is also prepared to talk with the Company's counsel at
an appropriate time to coordinate the due diligence effort and the drafting of
an appropriate Merger Agreement.
I trust that you will give this proposal your immediate consideration, and
that I will receive a prompt and favorable response so that we may schedule a
meeting to initiate discussions with the committee and to commence the due
diligence process.
I look forward to working with you.
Very truly yours,
/s/ Xxxxxxxx X. Xxxxxxxxx
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Xxxxxxxx X. Xxxxxxxxx
cc: Xxxxxx Xxxx, Esq.
Xxxxxxxxx Traurig, LLP
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
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