XXXXXXX FOODS INC.
000 Xxxxxxxxx 00xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
May 19, 2006
Xxxxxxx Management, Inc.
Xx. Xxxx Xxxxxx
and
Xx. Xxxx Xxxxxx
c/o Vaughan Foods Inc.
000 Xxxxxxxxx 00xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Dear Herb and Xxxx:
This will set forth the agreement pursuant to which we will acquire,
through a wholly owned subsidiary formed for that purpose, all of your current
40% limited partnership interests in Allison's Gourmet Kitchens, LP ("Allisons")
and the general partnership interest in Allison's of Xxxxxxx Management, Inc.
("Xxxxxxx").
1. Simultaneously with the effectiveness of an initial public
offering of our equity securities ("IPO"), we will acquire all of the limited
partnership interests held by you for $3.5 million (the "Purchase Price"), $2.5
million payable in cash and $1 million payable in shares of our Common Stock.
The Purchase Price will be payable immediately after the closing of the IPO. For
this purpose, each share of our Common Stock will have a value equal to the
initial public offering price per share in the IPO. If the IPO consists of units
that include shares of Common Stock and other securities, the value of a share
of Common Stock shall be equal to the initial public offering price of the unit
divided by the number of shares of Common Stock included in the unit plus the
number of shares of Common Stock issuable upon the exercise of any conversion
right with respect to any convertible security included in the unit provided
that such conversion right is not contingent on the payment of any sum of money
or the transfer of any other property by the holder of such convertible
security. The Purchase Price will be divided 12(1)/2% to Xxxx and 87(1)/2% to
Herb.
2. Simultaneously with the transfer of the limited partnership
interests, Xxxxxxx will assign to us its general partnership interest in
Allison's in return for our undertaking, as set forth herein, to indemnify and
hold harmless Xxxxxxx from all liability as the former general partner of
Allison's other than those liabilities, if any, resulting from Xxxxxxx'x
criminal conduct or gross negligence.
3. The limited partnership interests in Allison's conveyed
hereunder, together with the 60% interest in Allison's currently owned by Xxxx
X. Xxxxxxx and Xxxxxx X. Xxxxxx, Xx. and to be conveyed under a separate
agreement, will be held in a separate subsidiary that we will organize for that
purpose. Herb will serve as the President and Chief Operating Officer of that
subsidiary and be a member of its Board of Directors and will be compensated in
accordance with the agreement previously reached with us.
If this letter accurately sets forth our understanding, please sign and
return a copy of this letter to us.
Very truly yours,
XXXXXXX FOODS INC.
By: /s/ Xxxx X. Xxxxxxx, President
------------------------------
Xxxx X. Xxxxxxx, President
Accepted and agreed to
this 19th day of May, 2006
/s/ Xxxx Xxxxxx
-------------------
Xxxx Xxxxxx
/s/ Xxxx Xxxxxx
-------------------
Xxxx Xxxxxx
Xxxxxxx Management, Inc.
By: /s/ Xxxx Xxxxxx
--------------------
President
2
