big38kex102_332013.htm


EXHIBIT 10.2







Big Three Restaurants, Inc.


9085 Charles E. Limpus Road


Orlando, Florida 32836


Telephone:  516-375-6649







February 20, 2013







To: Janet  Boyle, John P. Day, Christopher M. Gaus, Louise Proffer, Eugene W. Santalucia







Cc: Adam VonRomer







Re: Big Three's Proposed Purchase of Mango's Las Olas







Ladies & Gentlemen,







Big Three Restaurants, Inc., has a desire to acquire 100% of shares of 904 Las Olas, Inc. This document is intended to provide you with several options for your consideration. I have been provided historical revenue and profit numbers on your business. I am recapping this information in the chart below because, as each of you may be aware, a multiple will be applied to each of my proposed structures. Additionally, I want to insure that no interested party disputes the numbers I have been provided.







During my limited Due Diligence of Mango's it is my opinion that the interior space of the facility needs a fresh new look. Competition has become more prevalent in the immediate area with some of the new competitors having very deep pockets. The economy is in turmoil, which has caused increases in food costs, transportation expense and disposable goods. The consumer is still eating out, however they are much more cautious. They have higher value expectations and are more willing to test less expensive alternative restaurants. As I was told, several years ago Mango's profits were double what you enjoyed in 2012. I anticipate a continued decline in profit for several years to come unless a significant capital investment is made in Mango's to keep and attract new customers. Therefore my proposed structures will be reflective of some of the aforementioned factors.


 




	
Year

	
Gross Revenue

	
Net Profit


	
2009

	
$5,896,000

	
$996,000


	
2010

	
$5,727,000

	
$909,000


	
2011

	
$5,627,000

	
$742,000


	
2012

	
$5,800,000

	
$785,000







 




  





 











  








 


Proposed Structure #1:  (Less Cash/Higher Multiple/Warrants)


 




	 $785,000 x 3.2 =  $2,512,000    Purchase Price	 
	 	 $2,500,000 	 Cash  [interlined with initials]	 
	 	 $   512,000	 Cash Down	 
	 	 $2,000,000	Seller Financing 2.9% annual interest payable interest only quarterly payments starting month 15 from date of closing. The principal amount will balloon 60-months from the date of closing.	 
	 	 $   750,000	Warrant Kicker: Warrants will have a face value of $750,000 with a 20% discount to the market as quoted on the OTCMarkets.com web site  for the 20-day trading average closing price prior to exercise. Warrants cannot be exercised during the first 36-months and must be exercised prior to 60-months.	 
	Additional Terms:  	 	The purchase contract will have no pre-payment provision. Sellers will have a pre-written forbearance agreement which will provide language if Big Three misses two consecutive payment obligations or is 90-days late paying the principal amount, the sellers will get the Company back without litigation. Big Three would have the right to employ certain key personal it deems necessary for a smooth transition which may include current shareholders or their spouses.	 
	 	 	 	 
	Proposed Structure #2:  (More Cash/Lower Multiple/Warrants)	 
	 	 
	$785,000 x 3.0 = $2,355,000     Purchase Price	 
	 	 $   800,000	Cash Down	 
	 	 $1,555,000	Seller Financing 2.9% annual interest payable interest only quarterly payments starting month 15 from date of closing. The principal amount will balloon 60-months from the date of closing.	 
	 	 $   500,000	Warrant Kicker: Warrants will have a face value of $500,000 with a 20% discount to the market as quoted on the OTCMarkets.com web site  for the 20-day trading average closing price prior to exercise. Warrants cannot be exercised during the first 36-months and must be exercised prior to 60-months.	 
	 Additional Terms:   	 	The purchase contract will have no pre-payment provision. Sellers will have a pre-written forbearance agreement which will provide language if Big Three misses two consecutive payment obligations or is 90-days late paying the principal amount, the sellers will get the Company back without litigation. Big Three would have the right to employ certain key personal it deems necessary for a smooth transition which may include current shareholders or their spouses.	 





 




  





 











  




 





	Proposed Structure #3:  (Much More Cash/Lower Multiple/Lower Warrants)	 
	 	 
	$785,000 x 2.8 = $2,198,000    Purchase Price	 
	 	 $1,500,000	 Cash Down	 
	 	 $   698,000	Seller Financing 2.9% annual interest payable interest only quarterly payments starting month 15 from date of closing. The principal amount will balloon 60-months from the date of closing.	 
	 	 $   250,000	Warrant Kicker: Warrants will have a face value of $250,000 with a 20% discount to the market as quoted on the OTCMarkets.com web site  for the 20-day trading average closing price prior to exercise. Warrants cannot be exercised during the first 36-months and must be exercised prior to 60-months.	 
	 	 	 	 
	 Additional Terms:  	 	The purchase contract will have no pre-payment provision. Sellers will have a pre-written forbearance agreement which will provide language if Big Three misses two consecutive payment obligations or is 90-days late paying the principal amount, the sellers will get the Company back without litigation. Big Three would have the right to employ certain key personal it deems necessary for a smooth transition which may include current shareholders or their spouses.	 
	 	 
	Proposed Structure #4:  (All Cash/Lowest Multiple/ No Warrants)	 
	 	 
	$785,000 x 2.5 = $1,962,000    Purchase Price	 
	 	 $1,962,000	 Cash Down	 
	 	 $    -0-	  NONE	 
	 	 $    -0-  	 NONE	 
	 	 	 	 
	 Additional Terms:	 	 NONE	 
	 	 	 	 
	 Additional Terms:  	 	  NONE	 








               




  





 











  








 


I have provided you with several structures which all follow the same basic format. I would be completely open minded to structures your group might suggest. Big Three is sincere about moving forward and looks forward to a timely response.







Sincerely,


 


 



	 /s/  John V. Whitman, Jr. 	 /s/ [Initials illegible]        Pres
	 	 
	 John V. Whitman Jr.	 /s/ [Initials illegible]        CEO/Chairman
	CEO/Chairman	 
	Big Three Restaurants, Inc.	 
	 	 










[added by hand]







Notes:  Sellers are responsible for fees due to :  Adam VonRomer at 4% of the purchase price.  Subject to Buyers Equity Participants agreeing to the revised terms.