EXHIBIT 10.1
WSMP Inc
A Food Service Company
P.O. Box 399, WSMP Drive, Claremont, NC 28610
(704) 459-7626/FAX (704) 459-0733
September 25, 1997
Sagebrush, Inc.
3238 West Main Street
Claremont, North Carolina 28610
Attention: Mr. Charles F. Connor, Jr.
Chairman of the Board
-and-
Mr. L. Dent Miller
President
Gentlemen:
This will confirm our understanding concerning the proposed exchange of
shares between WSMP, Inc. ("WSMP") and the shareholders of Sagebrush, Inc.
("Sagebrush") by which WSMP will issue 0.3214 shares of its common stock (the
"WSMP Stock") to the sagebrush shareholders for each of the 6,071,200 shares
of the Sagebrush common stock outstanding (the "Sagebrush Stock"). This
exchange of shares (hereinafter, the "Transaction") shall be diligently
pursued by the parties until the Transaction is consummated or negotiations
with respect thereto are terminated. This letter does not contain all matters
upon which agreement be reached in order for the Transaction to be
consummated, but is intended solely as an outline of certain material
provisions. The terms of our understanding are as follows:
1. The exchange rate for the Sagebrush Shares is based upon a valuation of
WSMP Shares of $17.50 per share, and Sagebrush Shares at $5.625 per share
2. Matters concerning possible future service to WSMP by Messrs. Connor and
Miller are intentionally omitted herefrom, pending a review by them of
future plans and expectations. Both officers shall enter into Non-
Competition Agreements concerning their employments and livelihoods after
the completion of any service to Sagebrush or WSMP, as the case may be.
3. The Transaction is subject to WSMP receiving assurances sufficient to
itself that the Transaction may be accounted for, for financial reporting
purposes, as a pooling of interests transaction.
4. The Transaction is subject to the approval of WSMP's Board of Directors.
5. The Transaction is subject to approval of Sagebrush's Board of Directors
and Sagebrush's shareholders, and receipt by the Board of Directors of a
fairness opinion acceptable to it.
6. The Transaction is subject to the consent of WSMP's lenders.
7. The Transaction is subject to satisfactory findings from our due
diligence review.
8. The parties shall announce their intent in a joint press release attached
hereto. The parties shall cooperate in connection with any further press
releases related to the Transaction, and each party will give the other
party reasonable prior notice of any press release it intends to release.
9. The parties shall agree upon a timetable for the Transaction and filing
of a registration statement (the "Registration Statement") in the office
of the Securities and Exchange Commission (the "SEC"). Such Registration
Statement, covering the acquisition of the Sagebrush Shares and the
issuance of WSMP Shares will be carefully prepared by WSMP with the
cooperation of its legal and accounting advisors, and Sagebrush. The
Registration Statement shall be in such form as shall comply in all
material respects with the Securities Act of 1933, as amended (the
"Act"), and shall, as amended, and when the same becomes effective,
conform fully to the requirements of the Act. No filing will be made
with the SEC to which WSMP or its counsel have reasonable objections.
WSMP will comply with the applicable Blue Sky requirements.
Following your signature, the parties will cause their respective
officers, employees, counsel, agents, accountants, and other representatives
working on the Transaction to cooperate with each other with respect to the
Transaction until the Transaction is consummated or negotiations with respect
thereto are terminated.
Following your signature, until the Transaction is consummated or
negotiations with respect thereto are terminated, each party will afford to
the officers, employees, counsel, agents, investment bankers, accountants, and
other representatives of the other party working on the Transaction and
lenders and prospective lenders of each party free and full access to its
restaurants, properties, books and records, will permit them to make extracts
from and copies of such books and records, and will from time to time furnish
them such additional financial and operating data and other information as its
financial condition, results of operations, business, properties, assets,
liabilities, or future prospects as they from time to time may request. Each
party will cause its independent certified public accountants, Deloitte and
Touche, LLP ("Deloitte") to make available to the other party the work papers
relating to any audit of its financial statements. Each party will allow the
other party to do any environmental testing or other physical examinations of
assets and properties that are reasonable and necessary for its due diligence
review.
Each party shall insure that all confidential information which such
party or any of its respective officers, directors, employees, counsel,
agents, investment bankers, or accountants and, in case of WSMP, its lenders,
or prospective lenders may now possess or may hereafter create or obtain
relating to the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the other party, any
affiliate of the other party, or any customer or supplier of such other party
or any such affiliate shall not be published, disclosed, or made accessible by
any of them to any other person or entity at any time or used by any of them,
in each case without the prior written consent of the other party; provided,
however, that the restrictions of this sentence shall not apply (a) as may
otherwise be required by law, (b) as may be necessary or appropriate in
connection with the enforcement of this Agreement, (c) to the extent such
information shall have otherwise become publicly available, or (d) as to WSMP,
to disclosure by or on its behalf to lenders, or prospective lenders or to
others whose consent may be required or desirable in connection with obtaining
the financing or consents which are required or desirable to consummate the
Transaction. Each party shall, and shall cause all of such other persons and
entities who received confidential data from it to, deliver to the other party
all tangible evidence of such confidential information to which the
restrictions of the foregoing sentence apply at such time as negotiations with
respect to the Transaction are terminated before the parties enter into any
formal agreement as contemplated by this letter of intent.
It is understood that this is a letter of intent only and while the
parties hereto agree in principle to the contents hereof and agree to proceed
in good faith to work out the details of the Transaction, neither of them
shall have any legal obligations to the other as a result of this letter
(other than those obligations contained in this paragraph or the preceding
paragraph of this letter, and the obligations contained in the preceding
paragraph and the last sentence of this paragraph shall continue to apply
after negotiations with respect to the Transaction are terminated).
Accordingly, except as set forth in the preceding sentence, this letter does
not constitute a binding agreement nor does it constitute an agreement to
enter an agreement and the terms hereof are subject to the execution and
delivery of formal agreements. This letter may not be assigned by either of
the parties hereto. Neither party shall be responsible for any of the other's
expenses in connection with the negotiations, documents, or transactions
contemplated hereby.
If this letter accurately reflects our understanding, please so indicate
by signing the original and duplicate of this letter, and returning a full
executed copy to me, so that we can promptly commence work on the formal
documents relating to the Transaction.
Very truly yours,
WSMP, INC.
BY: /s/ Matthew Hollifield
Accepted and agreed to
September 25, 1997.
SAGEBRUSH, INC.
BY: /s/ Charles F. Connor, Jr.