SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended
June 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
for the transition period from
________ to ________
Commission File Numbers 333-23893; 333-23893-01; 333-23893-02; 333-23893-03
-------------------------
CFP HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 95-4413619
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
2013
(Primary Standard Industrial
Classification Code Number)
CFP GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 95-4616486
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
2013
(Primary Standard Industrial
Classification Code Number)
CUSTOM FOOD PRODUCTS, INC.
(Exact Name of Registrant as Specified in Its Charter)
California 95-3760291
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
2013
(Primary Standard Industrial
Classification Code Number)
QF ACQUISITION CORP.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 22-3174301
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
2013
(Primary Standard Industrial
Classification Code Number)
-------------------------
5501 Tabor Road
Philadelphia, PA 19120
(Address, Including Zip Code of Registrant's Principal Executive Offices)
215-288-0888
(Registrant's telephone number, including area code)
-------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for shorter period that the registrant was required
to file such reports), and (2) has been subject to filing requirements for the
past 90 days.
[x] YES [ ] NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class June 30, 1999
----- -------------
Voting Common Stock - Class A, $.01 par value 14,705
Non-voting common Stock - Class A, $.01 par value 11,241
Non-voting common Stock - Class B $.01 par value 3,059
<PAGE>
CFP Group, Inc. and Subsidiaries
FORM 10-Q
INDEX
Part I. Financial Information Page #
------
Item 1. Financial Statements
Consolidated Balance Sheets - 3
March 31, 1999 and June 30, 1999
Consolidated Statements of Operations - 4
Three months ended June 30, 1999 and 1998
Consolidated Statements of Cash Flows - 5
Three months ended June 30, 1999 and 1998
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of 9
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about 12
market risk
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit Index
2
<PAGE>
Part I Financial Information
Item 1. Financial Statements
<TABLE>
CFP GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<CAPTION>
March 31, June 30,
1999 1999
--------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,820 $ 2,140
Accounts receivable, net of allowance for doubtful accounts of $369,000 and
$374,000 at March 31, 1999 and June 30, 1999, respectively 15,448 14,415
Inventories 16,839 18,942
Prepaid expenses and other current assets 692 1,311
--------- ---------
Total current assets 34,799 36,808
Property and equipment, net 29,922 29,343
Costs in excess of net assets acquired, net 65,195 64,409
Intangible and other assets, net 6,488 6,853
--------- ---------
Total $ 136,404 $ 137,413
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Current portion of long-term debt $ 1,113 $ 1,042
Accounts payable 8,904 6,813
Accrued expenses and other current liabilities 6,689 7,831
--------- ---------
Total current liabilities 16,706 15,686
--------- ---------
Long term debt 145,895 147,696
--------- ---------
Commitments and contingencies
Redeemable common stock 2,319 2,319
--------- ---------
Stockholders' deficiency:
Preferred stock, $.01 par value; 6,472 shares authorized, none issued and
outstanding
Voting common stock - Class A, $.01 par value; 100,000 shares authorized, 3,196 3,196
14,705 shares issued and outstanding
Nonvoting common stock - Class A, $.01 par value; 25,000 shares authorized, 2,204 2,204
11,241 (inclusive of 3,011 shares classified as redeemable common stock)
shares issued and outstanding
Nonvoting common stock - Class B, $.01 par value; 25,000 shares authorized, 623 623
3,059 shares (inclusive of 2,162 shares classified as redeemable common
stock) shares issued and outstanding
Stockholders' notes receivable (203) (191)
Accumulated deficit (34,336) (34,120)
--------- ---------
Total stockholders' deficiency (28,516) (28,288)
--------- ---------
Total $ 136,404 $ 137,413
========= =========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
3
<PAGE>
CFP GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
--------------------
June 30, June 30,
1998 1999
-------- --------
(in thousands)
Sales $ 44,276 $ 47,473
Cost of Sales 36,103 38,302
-------- --------
Gross Profit 8,173 9,171
Selling, general and administrative expenses 4,716 4,595
Terminated transaction related costs 256
-------- --------
Income from operations 3,201 4,576
Interest expense 4,343 4,338
-------- --------
(Loss) income before income taxes and extraordinary item (1,142) 238
Provision for income taxes 50 22
-------- --------
Net (loss) income before extraordinary item (1,192) 216
Extraordinary loss on early extinguishment of debt (1,003)
-------- --------
Net (loss) income $ (2,195) $ 216
======== ========
See accompanying notes to consolidated financial statements.
4
<PAGE>
<TABLE>
CFP GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended
June 30, June 30,
1998 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (2,195) $ 216
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 1,584 982
Amortization of deferred financing costs and original issue discount 300 1,142
Extraordinary loss on early extinguishment of debt 1,003
Changes in assets and liabilities:
Accounts receivable 903 1,033
Inventories (1,154) (2,103)
Prepaid expenses and other current assets (256) (619)
Accounts payable (351) (2,091)
Accrued expenses and other current liabilities 2,782 1,142
-------- --------
Net cash provided by (used in) operating activities 2,616 (298)
-------- --------
Cash flows from investing activities:
Acquisition of property and equipment (1,145) (403)
Other assets (43) (721)
-------- --------
Net cash used in investing activities (1,188) (1,124)
-------- --------
Cash flows from financing activities:
Borrowings under revolving loan facility 1,119 3,978
Repayment of revolving loan facilities (2,000) (2,000)
Proceeds from issuance of long-term debt 14,127
Repayment of long-term debt and capitalized lease obligations (14,177) (248)
Deferred financing costs (509)
Collection of shareholder notes receivable 12
-------- --------
Net cash (used in) provided by financing activities (1,440) 1,742
-------- --------
Net (decrease) increase in cash (12) 320
Cash, beginning of period 1,344 1,820
-------- --------
Cash, end of period $ 1,332 $ 2,140
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 900 $ 707
Income taxes $ 0 $ 344
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
5
<PAGE>
CFP GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of CFP
Group, Inc. and its wholly-owned subsidiaries (the "Company") have been prepared
in accordance with the instructions for Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by GAAP for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
period are not necessarily indicative of the results that may be expected for
the full fiscal year. The accompanying financial statements include the results
of CFP Group, Inc. ("CFP Group") and its wholly-owned subsidiary CFP Holdings,
Inc. ("CFP Holdings"), and CFP Holdings' wholly-owned subsidiaries Custom Food
Products, Inc. ("Custom Foods") and QF Acquisition Corp. ("Quality Foods"). The
consolidated financial statements as presented herein should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1999.
The Company's fiscal year is the 52 or 53 week period ending on the
Saturday nearest to March 31. The Company's three month periods ended on the
Saturday nearest June 30, 1999 and 1998 were 13 weeks in duration. For
simplicity of presentation, the Company has described the interim periods and
year end period herein as ending on June 30 and March 31 respectively.
NOTE 2: INVENTORIES
Inventories consisted of the following:
March 31, June 30
1999 1999
------- -------
Raw materials 5,820 6,304
Work-in-process 3,773 4,646
Finished goods 7,918 8,301
------- -------
Total 17,511 19,251
Reserve (672) (309)
------- -------
Inventories, net 16,839 18,942
======= =======
6
<PAGE>
NOTE 3: LONG-TERM OBLIGATIONS
Long-term obligations consisted of the following:
March 31, June 30,
1999 1999
--------- ---------
Senior notes payable, interest at 11 6.25% payable
semiannually, principal due January 2004 $ 115,000 $ 115,000
Term note payable to a bank, interest at a
reference rate (7.75% at June 30, 1999) or
Eurodollar rate (5.06% at June 30, 1999) plus
2.25%, interest payable monthly, principal
payable on May 1, 2002 10,000 10,000
Revolving loan payable to a bank, interest at a
reference rate (7.75% at June 30, 1999) or
Eurodollar rate (5.06% at June 30, 1999) plus
2.25%, interest payable monthly, expires May 1,
2002 5,763 7,740
Term note payable to a bank, interest at a
reference rate (7.75% at June 30, 1999) or
Eurodollar rate (5.06% at June 30, 1999) plus
2.25%, interest payable monthly, principal
quarterly at $89,285.72, principal payable
January through February 2006 2,500 2,411
Revenue bond payable to a government financing
authority, interest at a reference rate (5.0%
at June 30, 1999) not to exceed 18% payable
monthly, principal payable annually at $100,000
increasing to $400,000 through December 2014 4,100 4,100
Notes payable to a government agency, interest at
2%, payable monthly through April 2012,
collateralized in a second position on the
Company's Philadelphia facility 1,545 1,520
Note payable to a government agency, interest at
0.5% payable monthly beginning February 1999
through July 2005, principal and interest
payable in equal monthly installments from
August 2005 through January 2012,
collateralized in a shared third position on
the Company's Philadelphia facility 1,000 1,000
Notes payable to a government agency, interest at
5.25% payable monthly with principal through
March 2012, collateralized in a shared first
position on the Company's Philadelphia
facility. 678 668
Notes payable to a government agency, interest at
2%, payable with principal monthly through
April 2001 206 181
Capital lease obligations payable in varying
monthly installments through 2021,
collateralized by buildings and equipment with
a net book value of $5,787,000 at March 31,
1999 and $5,683,000 at June 30, 1999 6,216 6,118
--------- ---------
Total 147,008 148,738
Less current portion (1,113) (1,042)
--------- ---------
Long-term debt $ 145,895 $ 147,696
========= =========
7
<PAGE>
<TABLE>
NOTE 4: SEGMENT INFORMATION
<CAPTION>
Three Months Ended June 30, 1999
(In Thousands)
Custom Quality Corporate
Foods Foods and Other Eliminations Total
----- ----- --------- ------------ -----
<S> <C> <C> <C> <C> <C>
Net sales to external customers $ 21,573 $ 25,900 $ 47,473
Interest expense 233 123 $ 3,982 4,338
Depreciation and amortization expense 364 1,401 71 1,836
Segment profit (loss) from operations 2,978 1,756 (158) 4,576
Long-lived assets 27,264 85,476 116,905 $(129,040) 100,605
Total segments assets 41,303 107,799 117,351 (129,040) 137,413
Capital expenditures 266 898 1,124
Three Months Ended June 30, 1998
(In Thousands)
Custom Quality Corporate
Foods Foods and Other Eliminations Total
----- ----- --------- ------------ -----
Net sales to external customers $ 21,234 $ 23,042 $ 44,276
Interest expense 249 1,107 2,987 4,343
Depreciation and amortization expense 382 1,595 71 2,048
Extraordinary item 1,003 1,003
Segment profit (loss) from operations 2,145 1,521 (465) 3,201
Long-lived assets 27,681 75,722 160,164 (161,637) 101,930
Total segments assets 40,472 93,221 160,327 (161,637) 132,383
Capital expenditures 166 1,022 1,188
</TABLE>
NOTE 5: SUBSEQUENT EVENT
On June 28, 1999 the Company's wholly-owned subsidiary, QF Acquisition
Corporation, was merged with QFAC, LLC, a Delaware limited liability company and
another wholly-owned subsidiary of the Company, with QFAC, LLC being the
surviving corporation.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
General
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
operating results during the periods included in the accompanying consolidated
financial statements.
Results of Operations
Three months ended June 30, 1999 compared to three months ended June 30, 1998.
Net Sales. Net sales increased by $3.2 million or 7% to $47.5 million
for the three month period ended June 30, 1999 from $44.3 for the three month
period ended June 30, 1998. Total pounds sold by the Company increased by 11% to
28.3 million pounds for the three months ended June 30, 1999 from 25.6 million
pounds for the three months ended June 30, 1998. The increase in sales was a
result of increases in sales at both the Quality Foods and Custom Foods
divisions of the Company. In addition, sales of higher margin value added
products increased by 16% and 15%, respectively, at the Quality Foods and Custom
Foods divisions. The net sales price decreased to $1.68 per pound from $1.73
primarily as a result of passing lower raw materials prices to our customers.
On July 26, 1999, the Company renewed its supply agreement with Arby's
exclusive purchasing cooperative for a five-year period. The new agreement is on
substantially similar terms.
Gross Profit. Gross profit increased to $9.2 million for the three
months ended June 30, 1999 from $8.2 million for the three months ended June 30,
1998. This $1.0 million increase was primarily due to the increase in sales of
the Company's higher margin value added products and favorable meat prices in
our Custom Foods division. The gross margin increased to 19.3% for the three
months ended June 30, 1999 from 18.5% for the three months ended June 30, 1998
for the same reasons.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased minimally to $4.6 million for the three months
ended June 30, 1999 from $4.7 million for the three months ended June 30, 1998.
Terminated Transaction Related Costs. In the three months ended June
30, 1998, the Company expensed $256,000 in transaction costs associated with a
potential acquisition which was terminated.
Income from Operations. As a result of the foregoing items, income from
operations increased to $4.6 million for the three month period ended June 30,
1999 from $3.2 million for the period ended June 30, 1998.
Interest Expense. Interest expense was unchanged at 4.3 million for the
three month period ended June 30, 1999 when compared to the three month period
ended June 30, 1998.
9
<PAGE>
Provision for Income Taxes. Provision for income taxes decreased
minimally to $21,000 for the three month period ended June 30, 1999 from $50,000
for the three month period ended June 30, 1998.
Extraordinary Loss. In the first quarter of fiscal 1999, the Company
used proceeds from new borrowings under the Loan and Security Agreement to repay
all amounts outstanding under its prior credit agreement. In connection with
these repayments, an extraordinary loss on the extinguishment of debt of
approximately one million dollars was recorded for the three months ended June
30, 1998. This amount principally consisted of unamortized deferred financing
costs.
Net Income (Loss). Net income of $216,000 was realized for the three
months ended June 30, 1999 versus a net loss of $2.2 million for the three
months ended June 30, 1998 due to the net impact of the foregoing items.
Year 2000
Introduction
The term "Year 2000 issue" is a general term used to describe the
various problems that may result from the improper processing of dates and date
sensitive calculations by computers and other equipment as the year 2000 is
approached and reached. These problems generally arise from the fact that
computers and equipment historically used two-digit fields that recognize dates
using the assumption that the first two digits are "19". On January 1, 2000,
systems using two-digit date fields could recognize a date using "00" as 1900
rather than the year 2000, creating erroneous results or system failures.
Company's State of Readiness
The Company has selected a new Year 2000 compliant Enterprise Wide
System; the Ross Systems Renaissance CS Enterprise Resource Planning System
("Ross System"). The Company believes that implementation of the Ross System
will address its major Year 2000 issues. The Company's plan for addressing the
remainder of its Year 2000 issues focuses on the following areas: technical
infrastructure (e.g. networks, servers, desktop and laptop computers);
vendor/customer interfaces; facilities; and third party suppliers, vendors and
customers. The Year 2000 project consists of the following phases: (1) conduct
an inventory of items with Year 2000 implications; (2) assessment of Year 2000
compliance; (3) remediation or replacement of items that are determined not to
be Year 2000 compliant; (4) testing (including verification of remediated or
replaced items); and (5) certification of Year 2000 compliancy. The initial
inventory phase is complete. The assessment phase is substantially completed
with the exception of the vendor disclosure/certification. The Company has
initiated formal communications with selected vendors and customers to determine
the extent to which the Company is vulnerable. This dialogue shall continue
throughout the third quarter of fiscal year 2000 to minimize the probability of
any service interruption. The remediation and testing phases will progress
through the first and second quarter of fiscal year 2000. The Company currently
plans to complete its internal Year 2000 project by the beginning of the third
quarter fiscal year 2000.
10
<PAGE>
Costs
The Company's net total expenditures on the Ross System implementation
through June 30, 1999 are $568,000. The Company currently estimates that the
aggregate cost of its Ross System implementation project will be $1.3 million,
although the amount could be greater. The cost estimate includes expenditures
incurred pursuant to the Company's technology upgrade and business process
reengineering programs occurring concurrently but not directly related to Year
2000 issues. In addition, a portion of the estimated total costs of the Ross
System implementation will be funded by reallocation of existing resources
rather than in incurring incremental costs. This reallocation of resources is
not expected to have a significant impact on the day-to-day operations of the
Company. The Company's aggregate cost estimate does not include costs that may
be incurred by the Company as a result of the failure of any third parties,
including suppliers, to become Year 2000 ready or costs to implement any
contingency plans. Such costs may be material.
Risks
The Company believes that the completion of its Ross System and Year
2000 projects as planned will result in the Company being Year 2000 compliant in
a timely manner. However, the failure to correct a material Year 2000 problem
could result in an interruption in, or a failure of, certain normal business
activities or operations, which could materially and adversely affect the
Company's results of operations, liquidity and financial condition. In addition,
if third parties that provide goods or services that are critical to the
Company's business activities fail to adequately address their Year 2000 issues,
there could be a similar material adverse effect on the Company. The Company
believes that its most reasonably likely worst case scenario is the failure of
such a third party. Such a failure could result in, for example, the inability
of the Company to ship product, a decrease in customer orders, or delays in
product deliveries from vendors. The Company believes that, with the completion
of its Year 2000 project, the possibility of significant interruptions of normal
operations should be reduced. The Company also believes that the level of
uncertainty about the Year 2000 compliance and readiness of material third
parties ("External Parties") should diminish through the second and third
quarter of fiscal year 2000.
Contingency Plans
As part of the Company's Year 2000 project, specific contingency plans
are being developed. The Company expects that these plans will continue to be
modified as the Company obtains additional information regarding the Company's
internal systems and equipment during the remediation and testing phases and
regarding the status of the Year 2000 readiness of External Parties. The Company
expects these plans to be finalized by the date of completion of all other areas
of the Year 2000 projects.
As a normal course of business, the Company maintains and deploys
contingency plans as part of its disaster recovery program designed to address
various potential business interruptions. These plans may be applicable to
address the failure of External Parties to provide goods or services to the
Company as a result of their failure to be Year 2000 ready. During fiscal year
2000, the Company intends to expand its disaster recovery program to cover
systems for which detailed contingency plans do not currently exist.
11
<PAGE>
Readers are cautioned that forward-looking statements contained under
this "Year 2000" caption should be read in conjunction with the Company's
disclosures under the heading "Forward-Looking Statements" below.
Liquidity and Financial Resources
The Company's total consolidated indebtedness was $148.7 million at
June 30, 1999. Interest payments on the 11 5/8% Senior Notes and anticipated
interest and principal payments under the Loan and Security Agreement represent
significant obligations of the Company. The 11 5/8% Senior Notes require
semi-annual interest payments of approximately $6.7 million which commenced in
July 1997. Borrowings under the Loan and Security Agreement bear interest at
floating rates. Approximately $5.0 million of the revolving credit facility (the
"Revolver") under the Loan and Security Agreement is reserved to provide letters
of credit supporting the industrial revenue bond issue with respect to Quality
Foods' Philadelphia facility and other obligations.
The Company's primary sources of liquidity are cash flows from
operations and borrowings under the Revolver. At June 30, 1999 approximately
$7.8 million was available to the Company for borrowings under the Revolver,
subject to inventory and accounts receivable levels. The Company anticipates
that its working capital requirements, capital expenditures and debt service
requirements for the next twelve months will be satisfied through a combination
of cash flow from operations and funds available under the Loan and Security
Agreement.
Forward Looking Statements
This report includes "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and section 21E of the
Securities Exchange Act of 1934, as amended. Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to be correct. Important
factors that could cause actual results to differ materially from the Company's
expectations ("Cautionary Statements") are detailed periodically in the
Company's SEC filings on Forms 10-K and 10-Q. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by the Cautionary Statements.
Item 3. Quantitative and Qualitative Disclosures about market risk.
Long-term Debt
The Company's exposure to market risk for changes in interest rates
relates primarily to the Company's current and future debt obligations, which
have not change materially from those disclosed in the Company's Form 10-K for
the year ended March 31, 1999.
12
<PAGE>
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended June
30, 1999. Reference is made to the Company's Annual Report on Form 10-K and the
exhibits filed therewith. The exhibits filed as part of this form are listed
below:
Exhibit No. Description
---------- -----------
2 Agreement of Merger dated as of June 28, 1999, between QF
Acquisition Corp., a Delaware corporation, and QFAC, LLC, a
Delaware limited liability company.
3.1 Certificate of Formation of QFAC, LLC issued by the Secretary
of State of the State of Delaware on April 15, 1999.
3.2 Operating Agreement of QFAC, LLC dated June 28, 1999.
3.3 By-Laws of QFAC, LLC.
4.1 First Supplemental Indenture among CFP Holdings, Inc., CFP
Group, Inc., Custom Food Products, QFAC, LLC and United States
Trust Company of New York.
10.1 Amendment and Assumption Agreement among QF Acquisition Corp.,
QFAC, LLC, CFP Holdings, Inc., Custom Food Products, Inc., and
Fleet Capital Corporation.
10.2 Pledge and Security Agreement between CFP Holdings, Inc. and
Fleet Capital Corporation in respect of Membership Interests
of QFAC, LLC.
27 Financial Data Schedule
13
<PAGE>
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, thereunto duly authorized.
CFP Group, Inc.
CFP Holdings, Inc.
Custom Food Products, Inc.
QF Acquisition Corp.
August 6, 1999 ___________________________________
Eric W. Ek
Senior Vice President,
Chief Financial
Officer and
Secretary of
CFP Group,
Inc. and CFP
Holdings, Inc.
and its
subsidiaries
14
Exhibit 2
AGREEMENT OF MERGER dated as
of June 28, 1999, between QF
ACQUISITION CORP., a Delaware
corporation ("QFAC"), and QFAC,
LLC, a Delaware limited liability
company ("LLC").
CFP Holdings, Inc., a Delaware corporation ("Holdings"), owns 100
percent of the outstanding capital stock of QFAC and 100 percent of the
outstanding limited liability company interests ("LLC Interests") of LLC.
Holdings has approved the terms and provisions of this Agreement in accordance
with the General Corporation Law of the State of Delaware (the "DGCL") and the
Limited Liability Company Act of the State of Delaware (the "LLC Act"). The
board of directors of QFAC and the board of managers of LLC have duly adopted
and approved this Agreement pursuant to the DGCL and the By-laws of LLC,
respectively.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement, the parties hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. In accordance with the provisions of this Agreement and the LLC
Act, QFAC shall be merged (the "Merger") with and into LLC, which, at and after
the Effective Time shall be, and is sometimes herein referred to as, the
"Surviving Company". QFAC and LLC are sometimes herein referred to as the
"Constituent Entities".
1.2 Effective Time of the Merger. The Merger shall become effective (the
"Effective Time") upon the filing of a certificate of merger in the form
attached hereto as Exhibit A with the Secretary of State of the State of
Delaware.
1.3 Effect of Merger. At the Effective Time, the separate existence of QFAC
shall cease and QFAC shall be merged with and into the Surviving Company, and
the Surviving Company shall continue in existence and the Merger shall in all
respects have the effects provided for by the LLC Act. Upon consummation of the
Merger, all previously issued and outstanding shares of stock of QFAC shall
automatically be cancelled. At the Effective Time, all of the assets and
liabilities of QFAC shall automatically become the assets and liabilities of the
Surviving Company, which shall have the benefit of all rights, and be bound by
all obligations, of QFAC, as if the Surviving Company had originally been the
beneficiary or obligor with respect to such rights or obligations, as
applicable.
1.4 Charter and By-Laws of Surviving Company. From and after the Effective Time,
(a) the Certificate of Formation of LLC shall be the Certificate of Formation
(the "Surviving Certificate") of the Surviving Company, unless and until
altered, amended or repealed as provided in the LLC Act or such Surviving
Certificate, and (b) the by-laws of LLC shall be the by-laws of the Surviving
Company (the "Surviving By-Laws"), unless and until altered, amended or repealed
as provided in the LLC Act, the Surviving Certificate or the Surviving By-Laws.
1.5 Directors and Officers of Surviving Company. From and after the Effective
Time, the managers and officers of LLC shall be the managers and officers,
respectively, of the Surviving
<PAGE>
Company, unless and until removed, or until their respective terms of office
shall have expired, in accordance with the LLC Act, the Surviving Certificate
and the Surviving By-Laws, as applicable.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK AND LLC INTERESTS
OF THE CONSTITUENT CORPORATIONS
2.1 Total Consideration; Effect on Capital Stock and LLC Interests. At the
Effective Time, subject and pursuant to the terms and conditions of this
Agreement, by virtue of the Merger and without any action on the part of the
Constituent Entities or the holders of the capital stock of the Constituent
Entities:
(a) Capital Stock of QFAC. Each issued and outstanding share of Class A
Common Stock, $.01 par value, of QFAC, Class B Common Stock, $.01 par value, and
Preferred Stock, $.01 par value, of QFAC shall be canceled. All shares of
treasury stock of QFAC shall be canceled and retired.
(b) LLC Interests of LLC. Each member's percentage interest in LLC
immediately prior to the Effective Date shall remain the percentage interest of
such member and shall continue to be outstanding, unimpaired by the Merger.
ARTICLE III
APPROVAL OF AGREEMENT;
FILING THEREOF
3.1 Approval. The holders of all shares of QFAC and all LLC Interests of LLC,
respectively, entitled to vote thereon have approved, by written consent, the
Merger and this Agreement. The board of directors of QFAC and the board of
managers of LLC have, by resolutions duly adopted, unanimously approved and
adopted the Merger and this Agreement.
ARTICLE IV
MISCELLANEOUS
4.1 Amendment. This Agreement may be amended by the Constituent Entities, by
action taken by their respective boards of directors or managers, as the case
may be, at any time prior to the Effective Time. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
Constituent Entities.
4.2 Entire Agreement. This Agreement contains the entire agreement among the
parties hereto with respect to the transactions contemplated hereby and
supersedes all prior arrangements or understandings, written or oral, with
respect thereto.
4.3 Notices. All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
nationally-recognized
<PAGE>
overnight courier or by registered or certified mail, postage prepaid, return
receipt requested or by telecopier, with confirmation as provided above
addressed as follows:
(a) if to QFAC, to:
QF Acquisition Corp.
5501 Tabor Road
Philadelphia, PA 19107
Attention: President
(b) if to LLC, to:
QFAC, LLC
5501 Tabor Road
Philadelphia, PA 19107
Attention: President
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All such notices
or communications shall be deemed to be received (i) in the case of personal
delivery or telecopy, on the date of such delivery, (ii) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent and (iii) in the case of mailing, on the third business day following
the date on which the piece of mail containing such communication was posted.
4.4 Counterparts. This Agreement may be executed in any number of counterparts
by original or facsimile signature, each such counterpart shall be an original
instrument, and all such counterparts together shall constitute one and the same
agreement.
4.5 Benefits of Agreement. All the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement shall not be
assignable by any party hereto without the consent of the other party hereto.
4.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed wholly therein.
4.7 Descriptive Headings. Descriptive headings are for convenience only and
shall not control or affect the meaning or construction of any provision of this
Agreement.
* * * *
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement of Merger to be executed and delivered on its behalf as of the date
first above written.
QF ACQUISITION CORP.
By: ________________________________
Name:
Title:
QFAC, LLC
By: ________________________________
Name:
Title:
Exhibit 3.1
CERTIFICATE OF FORMATION
OF
QFAC, LLC
This Certificate of Formation is being executed as of April 15, 1999,
for the purpose of forming a limited liability company (the "Limited Liability
Company") pursuant to the Delaware Limited Liability Company Act, 6 Del. C.
ss.ss. 18-101, et seq.
The undersigned, being duly authorized to execute and file this
Certificate of Formation, does hereby certify as follows:
1. Name. The name of the Limited Liability Company is QFAC, LLC.
2. Registered Office and Registered Agent. The Limited Liability
Company's registered office in the State of Delaware is located at 32 East
Loockerman Square, Dover, Delaware 19901. The registered agent of the Limited
Liability Company for service of process at such address is The Prentice-Hall
Corporation System, Inc.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
of Formation as of the day and year first above written.
Authorized Signatory:
___________________________________
Lincoln L. Ornston
Exhibit 3.2
================================================================================
QFAC, LLC
(a Delaware Limited Liability Company)
--------------------------
OPERATING AGREEMENT
--------------------------
June 28, 1999
================================================================================
<PAGE>
OPERATING AGREEMENT dated as
of June 28, 1999, of QFAC, LLC, a
Delaware limited liability
company (the "Company"), among
the parties listed on Schedule I.
The parties are entering into this Agreement for the purpose of forming
a limited liability company pursuant to the provisions of the Delaware Limited
Liability Company Act, 6 Del. C. ss. 18-101 et seq. (the "Delaware Act").
ACCORDINGLY, in consideration of the mutual covenants and agreements
contained in this Agreement, the sufficiency of which is hereby acknowledged,
the parties agree as follows:
1. Definitions; Rules of Construction.
(a) When used in this Agreement, the following capitalized terms have
the meanings ascribed to them below:
"Affiliate" means, with respect to any Person, (i) a director
or executive officer of such Person, (ii) a spouse, parent, sibling or
descendant of such Person (or a spouse, parent, sibling or descendant of any
director or executive officer of such Person), (iii) the estate of such Person,
(iv) any trust for the benefit of Persons referred to in clause (i), (ii) or
(iii) above and (v) any other Person that, directly or indirectly through one or
more intermediaries controls, is controlled by or is under common control with
such Person. The term "control" means the possession, directly or indirectly, of
the power to direct the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Board of Managers" means the board of managers designated
pursuant to Section 5.
"By-laws" means the By-laws of the Company as amended from
time to time, which are expressly incorporated by reference into this Agreement
and the form of which is attached hereto as Annex A.
"Capital Contribution" means, with respect to any Member, the
amount of capital contributed by such Member to the Company, as determined in
accordance with Section 6.
"Event of Withdrawal of a Member" means the death, insanity,
retirement, resignation, expulsion, bankruptcy or dissolution of a Member or the
occurrence of any other event that terminates the continued membership of a
Member in the Company.
"Fiscal Year" means the 12-month period beginning on April 1
and ending on March 31 of each year.
"GAAP" means generally accepted accounting principles as in
effect from time to time.
<PAGE>
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, and the regulations promulgated thereunder.
"LLC Interest" means the percentage ownership interest of a
Member in the Company, as adjusted from time to time in accordance with this
Agreement, consisting of (a) such Member's right to receive a portion of Net
Profits, Net Losses and distributions, in each case as provided herein, (b) such
Member's right, if any, to vote or grant or withhold consents with respect to
Company matters as provided herein or in the Delaware Act and (c) such Member's
other rights and privileges as herein provided.
"Majority in Interest of Members" means, at any time, the
Members who hold, in the aggregate, greater than fifty (50) percent of the LLC
Interests owned by all the Members at such time.
"Manager" means a member of the Board of Managers as
designated in, or selected pursuant to, Section 5.
"Member" means any Person holding an LLC Interest and any
Person who shall be admitted as an additional or substituted Member pursuant to
this Agreement (including an Additional Member), so long as such Person remains
a Member.
"Net Profits and Net Losses" means the net taxable income or
net taxable loss of the Company, respectively, as determined for Federal income
tax purposes, for each fiscal year of the Company, plus any income that is
exempt from Federal income tax and minus expenses that are not deductible in
computing Federal taxable income and not properly chargeable to capital
accounts, in each case to the extent such items are not otherwise taken into
account in computing Net Profits or Net Losses.
"Person" shall be construed broadly and shall include an
individual, a partnership, a corporation, an association, a joint stock company,
a limited liability company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
"Securities Act" means the Securities Act of 1933, as amended,
or any successor Federal statute, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder, all as the same shall
be in effect from time to time.
"Transfer" as to any LLC Interest, shall be construed broadly
and shall include any sale, assignment, transfer, participation, gift, bequest,
distribution, or other disposition thereof, whether directly or indirectly by
way of liquidation, merger, consolidation or reorganization, or any pledge or
hypothecation thereof, placement of a lien thereon or grant of a security
interest therein or any other encumbrance thereon (other than with respect to
the pledge of collateral made pursuant to the Pledge and Security Agreement
dated June 28, 1999 between CFP Holdings, Inc., a Delaware corporation, as
Pledgor, and Fleet Capital Corporation, as Lender), in each case whether
voluntary or involuntary or arising by operation of law or otherwise and with or
without compensation, or any agreement having the purpose of accomplishing any
of the foregoing.
<PAGE>
(b) The following terms are defined in the following Sections
or other locations:
Section or
Term: other location:
----- ---------------
"Additional Member" 16(b)
"Certificate" 2(b)
"Company" Caption
"Delaware Act" First Paragraph
"Encumbrances" 13(b)(ii)
"Tax Matters Partner" 14(a)
(c) The title of and the section and paragraph headings in
this Agreement are for convenience of reference only and shall not govern the
interpretation of any of the terms or provisions of this Agreement.
(d) The use herein of the masculine, feminine or neuter forms
shall also denote the other forms, as in each case the context may require. The
words "include," "includes" and "including" are deemed to be followed by the
phrase "without limitation".
(e) Except when the context requires otherwise, any reference
in this Agreement to any Section, Clause, Schedule or Annex shall be to the
Sections and Clauses of, and Schedules and Annex to, this Agreement.
2. Name; Formation; Issuance of LLC Interests.
(a) The name of the Company shall be "QFAC, LLC", or such
other name as the Board of Managers may from time to time hereafter designate.
(b) The Company was formed upon the execution and filing by
Lincoln L. Ornston (Lincoln L. Ornston being hereby authorized to take such
action) with the Secretary of State of the State of Delaware of a certificate of
formation (the "Certificate") of the Company in the form attached hereto as
Annex B on April 15, 1999. The parties hereto hereby (i) ratify and confirm the
filing of the Certificate and (ii) adopt and approve the By-laws.
3. Purpose.
The purpose of the Company shall be to engage in any lawful
business that may be engaged in by a limited liability company organized under
the Delaware Act, as such business activities may be determined by the Board of
Managers from time to time.
4. Offices.
(a) The principal office of the Company, and such additional
offices as the Board of Managers may determine to establish, shall be located at
such place or places inside or outside the State of Delaware as the Board of
Managers may designated from time to time.
<PAGE>
(b) The registered office of the Company in the State of
Delaware is located at 32 East Loockerman Square, Dover, Delaware 19901. The
registered agent of the Company for service of process at such address is The
Prentice-Hall Corporation System, Inc..
5. Management of the Company; Board of Managers.
(a) Subject to the delegation of rights and powers provided
for herein and in the By-laws, the Board of Managers shall have the sole right
to manage the business of the Company and shall have all powers and rights
necessary, appropriate or advisable to effectuate and carry out the purposes and
business of the Company.
(b) The Board of Managers shall initially consist of six (6)
Managers and thereafter, from time to time, the number of Managers comprising
the Board of Managers may be increased or decreased as provided in the By-laws.
The Board of Managers shall be selected by a Majority in Interest of Members. A
Manager that is not an individual may act through its duly authorized
representative.
(c) No Member, by reason of such Member's status as such,
shall have any authority to act for or bind the Company but shall have only the
right to vote on or approve the actions herein specified to be voted on or
approved by such Member.
(d) The officers of the Company shall be, and shall be
elected, removed and perform such functions, as are provided in the By-laws. The
Board of Managers may appoint, employ, or otherwise contract with such other
Persons for the transaction of the business of the Company or the performance of
services for or on behalf of the Company as it shall determine in its sole
discretion. The Board of Managers may delegate to any officer of the Company or
to any such other Person such authority to act on behalf of the Company as the
Board of Managers may from time to time deem appropriate in its sole discretion.
(e) Except as otherwise provided by the Board of Managers or
in the By-laws, when the taking of such action has been authorized by the Board
of Managers, any officer of the Company or any other Person specifically
authorized by the Board of Managers may execute any contract or other agreement
or document on behalf of the Company and may execute and file on behalf of the
Company with the Secretary of State of the State of Delaware any certificate of
amendment to the Company's Certificate, one or more restated certificates of
formation and certificate of merger or consolidation and, upon the dissolution
and completion of winding up of the Company, at any time when there are fewer
than two Members, or as otherwise provided in the Delaware Act, a certificate of
cancellation canceling the Company's Certificate.
(f) In the event a vacancy is created on the Board of Managers
by reason of the death, removal or resignation of any Manager, such vacancy
shall be filled by an affirmative vote of a Majority in Interest of Members.
(g) Each Member represents that he or she has not granted and
is not a party to any proxy, voting trust or other agreement which is
inconsistent with or conflicts with the provisions of this Agreement, and no
Member shall grant any proxy or become party to any voting trust or other
agreement which is inconsistent with or conflicts with the provisions of this
Agreement.
<PAGE>
6. Capital Contributions; Capital Accounts.
(a) Each of the Members entering into this Agreement as of the
date hereof has contributed to the Company on the date hereof, in cash, the
amount set forth opposite such Member's name on Schedule II for the LLC Interest
set forth opposite such Member's name on Schedule II.
(b) A separate capital account shall be maintained on the
books of the Company for each Member, which shall be adjusted (1) as of March 31
of each year, (2) immediately prior to the acquisition of any LLC Interest by
any Person or any change in the LLC Interest of any Person, (3) immediately
prior to the date of dissolution of the Company and (4) at such times as the
Board of Managers shall determine, as follows:
(i) the amount of money and the fair market value (as
determined by the Board of Managers in good faith) of property
(net of any liabilities secured by such property that the
Company assumes or takes subject to) contributed by such
Member to the Company shall be credited to such Member's
capital account;
(ii) the amount of any distributions (including the
fair market value (as determined by the Board of Managers in
good faith) of property other than cash (net of any
liabilities that such Member assumes or takes subject to))
distributed to such Member shall be debited from such Member's
capital account;
(iii) Net Profits earned by the Company since the
last date on which Net Profits or Net Losses shall have been
allocated to the Members shall be credited to the Members'
capital accounts as follows:
(A) first, to reverse the allocations of Net
Losses provided for in Section 6(b)(iv); and
(B) next, ratably based upon the LLC
Interests of the Members; and
(iv) Net Losses incurred by the Company since the
last date on which Net Losses or Net Profits shall have been
allocated to the Members shall be debited to the Members'
capital accounts, ratably based upon the LLC Interests of the
Members; provided, that at such time as a Member's capital
account shall be reduced to zero (0) such Member shall be
excluded from the allocations made pursuant to this Section
6(b)(iv) until such time as such Member's capital account has
a positive balance.
(c) Notwithstanding any provision of this Agreement to the
contrary, each Member's capital account shall be maintained and adjusted in
accordance with the Internal Revenue Code, including (i) the adjustments
permitted or required by Internal Revenue Code Section 704(b) and, to the extent
applicable, the principles expressed in Internal Revenue Code Section 704(c) and
the regulations promulgated thereunder and (ii) adjustments required to maintain
capital accounts in accordance with the "substantial economic effect test" set
forth in the regulations promulgated under Internal Revenue Code Section 704(b).
<PAGE>
(d) Upon any distribution in kind, the distribution shall be
treated as if the property were sold for its fair market value (as determined as
of the immediately preceding day by the Board of Managers in good faith) and the
proceeds therefrom distributed to the Members. The deemed gain or loss on such
disposition shall be included in the calculation of Net Profit and Net Loss for
the period in which the distribution occurred. For the purposes of this
Agreement, fair market value for such distributions shall be determined by the
Board of Managers in good faith as of the day immediately preceding the
acquisition or disposition of the relevant property.
(e) Any Member, including any substitute Member, who shall
receive an LLC Interest by means of a Transfer to it of a portion of or all of
the LLC Interest of another Member shall have a capital account that reflects
the capital account associated with the transferred LLC Interest.
7. Distributions.
(a) Within ninety (90) days following the end of each Fiscal
Year, the Company will distribute to each Member an amount (if any) equal to
fifty (50%) percent of the excess of Net Profits over Net Losses previously
allocated to such Member's capital account for such Fiscal Year and all prior
Fiscal Years pursuant to Section 6, less (i) all distributions pursuant to this
Section 7(a) and (ii) any distributions made during such Fiscal Year pursuant to
Section 7(b).
(b) Subject to Section 12(f), all distributions not made
pursuant to Section 7(a) of other assets of the Company, whether in cash or in
kind, shall be made at such times and in such amounts as a Majority in Interest
of Members may determine, and shall be allocated among and made to the Members
ratably based upon the LLC Interests of the Members.
8. Liability for Return of Capital.
No Member or Manager shall have any liability for the return
of any Member's Capital Contribution, which Capital Contribution shall be
payable solely from the assets of the Company at the absolute discretion of a
Majority in Interest of Members, subject to the requirements of the Delaware
Act.
9. Transfers; Restrictions.
(a) No LLC Interest or portion thereof may be Transferred by
any Member without the prior approval of a Majority in Interest of Members
(determined excluding the Member that is seeking to Transfer an LLC Interest or
portion thereof) in their sole discretion.
(b) The restrictions on Transfer described in this Agreement
shall apply to all LLC Interests now owned or hereafter acquired by a Member,
including LLC Interests acquired by reason of any dividend or other
distribution, additional issue of LLC Interests (including upon exercise of any
option, warrant or other right to acquire LLC Interests from the Company) and
acquisition of outstanding LLC Interests from another Person.
(c) Any Transfer or attempted Transfer of any LLC Interest in
violation of any the provisions of this Section 9 shall be void, and the Company
shall not record such Transfer on its books or treat any purported transferee of
such LLC Interest as the owner of such LLC Interest
<PAGE>
for any purpose. The Board of Managers shall amend Schedule I hereto from time
to time to reflect Transfers made in accordance with, and as permitted under,
this Section 9.
10. Certain Members.
Each Member that is an entity that was formed for the purpose
of acquiring an LLC Interest or that has no substantial assets other than its
LLC Interests or any interest in any LLC Interest agrees that (a) shares of its
common stock or other instruments reflecting equity interests in such entity
(and the shares of common stock or other equity interests in any similar
entities controlling such entity) will note the restrictions contained in this
Agreement on the Transfer of LLC Interests as if such common stock or other
equity interests were LLC Interests and (b) no shares of such common stock or
other equity interests may be issued or Transferred to any Person other than in
accordance with the terms and provisions of this Agreement as if such common
stock or other equity interests were LLC Interests.
11. Withdrawal.
No Member shall have the right to withdraw from the Company
except with the consent of all of the Members (excluding the Member seeking to
withdraw) and upon such terms and conditions as may be specifically agreed upon
between the Company and the withdrawing Member. The provisions hereof with
respect to distributions upon withdrawal are exclusive, and no Member shall be
entitled to claim any further or different distribution upon withdrawal under
Section 18-604 of the Delaware Act or otherwise.
12. Dissolution.
(a) Subject to the provisions of Section 12(b), the Company
shall be dissolved and its affairs wound up and terminated upon the first to
occur of the following:
(i) the determination of the Board of Managers and a
Majority in Interest of Members to dissolve the Company; or
(ii) the occurrence of an Event of Withdrawal of a
Member or any other event causing a dissolution of the Company
under Section 18-801 of the Delaware Act.
(b) Notwithstanding the provisions of Section 12(a)(ii), the
occurrence of an Event of Withdrawal of a Member shall not dissolve the Company
if within ninety (90) days after the occurrence of such Event of Withdrawal of a
Member the business of the Company is continued by a Majority in Interest of
Members remaining after such Event of Withdrawal of a Member.
(c) Upon dissolution of the Company, the Company's affairs
shall be promptly wound up in accordance with the provisions of this Section 12.
The Company shall engage in no further business except as may be necessary, in
the reasonable discretion of the Board of Managers, to preserve the value of the
Company's assets during the period of dissolution and liquidation.
(d) Distributions to the Members in liquidation may be made in
cash or in kind, or partly in cash and partly in kind, as determined by the
Board of Managers.
<PAGE>
(e) The Net Profits and Net Losses of the Company during the
period of dissolution and liquidation shall be allocated among the Members in
accordance with the provisions of Section 6.
(f) The assets of the Company (including proceeds from the
sale or other disposition of any assets during the period of dissolution and
liquidation) shall be applied as follows:
(i) First, to repay any indebtedness of the Company,
whether to third parties or to the Members, in the order of
priority required by law;
(ii) Next, to any reserves which the Board of
Managers reasonably deems necessary for contingent or
unforeseen liabilities or obligations of the Company (which
reserves when they become unnecessary shall be distributed in
accordance with the provisions of (iii) below); and
(iii) Next, to the Members ratably based upon the
positive capital account balance of each Member (after taking
into account all adjustments to the Members' capital accounts
required under Section 12(e)).
13. Members; Representations of Members; Representations of the
Company.
(a) The name and business, mailing or residence address and
LLC Interest of each of the Members of the Company as of the date of this
Agreement are set forth on Schedule I. Schedule I shall be amended from time to
time to reflect the names and business, mailing or residence address and LLC
Interest of each Person who shall become a Member after the date hereof and
changes to such information for existing Members.
(b) Upon the acquisition of an LLC Interest, each Member, in
each case severally as to himself or itself (and not as to any other Person),
makes the following representations and warranties to the Company with respect
to this Agreement and such LLC Interest:
(i) Such Member has full legal right, power and authority to
enter into this Agreement and to perform its obligations under this Agreement.
The execution, delivery and performance by such Member of this Agreement have
been duly authorized by all requisite action on the part of such Member. This
Agreement has been duly executed and delivered by such Member and is the valid
and binding obligation of such Member, enforceable against such Member in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium, and similar laws affecting creditors' rights generally
and subject to general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law).
(ii) The execution, delivery and performance by such
Member of this Agreement, the consummation of the transactions
contemplated hereby, and the compliance by such Member with
the provisions hereof, will not (i) violate, conflict with or
constitute (with notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or
acceleration) under, or result in the creation of any
Encumbrance upon such Member's properties or assets pursuant
to, the terms, conditions
<PAGE>
or provisions of any agreement or other instrument or
obligation to which such Member is a party or by which such
Member or such Member's properties or assets are bound, or
(ii) violate any provision of law, statute, rule, regulation,
order, judgment, award, writ, injunction or decree applicable
to such Member or any of such Member's properties or assets.
As used herein, "Encumbrances" means security interests,
mortgages, liens, pledges, charges, reservations,
restrictions, equities, rights of first refusal and all other
encumbrances, whether or not relating to the extension of
credit or the borrowing of money.
(iii) No permit, authorization, consent or approval
of or by, or notification of or filing with, any Person
(governmental or private) is required in connection with the
execution, delivery or performance by such Member of this
Agreement, other than filings contemplated by this Agreement.
(iv) Such Member (A) has been furnished with or has
had access to the information such Member has requested from
the Company, (B) has had the opportunity to discuss with
management of the Company the intended business and financial
affairs of the Company and (C) has such knowledge and
expertise in financial and business matters and with respect
to investments in securities of privately held companies that
he or it is capable of utilizing the information made
available to him or it, to evaluate the merits and risks of an
investment in the Company and to make an informed investment
decision with respect thereto. Such Member is aware that his
or its purchase of such LLC Interest is highly speculative and
he or it is able, without impairing his or its financial
condition, to hold such LLC Interest for an indefinite period
of time and to suffer a complete loss of his or its
investment.
(v) Such Member recognizes that an investment in the
Company involves certain risks, and has taken full cognizance
of, and understands all of, the risk factors related to the
purchase of such LLC Interest. Such Member has consulted with
his or its professional, tax and legal advisors with respect
to the Federal, state, local and foreign income tax
consequences of his or its participation as a Member of the
Company.
(vi) Such Member is acquiring such LLC Interest for
his or its own account and not with a view to the resale or
further distribution thereof, nor with any present intent of
distributing the same, in any such case in violation of
Federal or state securities laws.
(vii) Such Member understands and acknowledges that
the offering of such LLC Interest has not been considered or
approved by any governmental or other entity.
(viii) Such Member understands that there is no
public market for such LLC Interest and that the
transferability of such LLC Interest is restricted.
(ix) Such Member understands that such LLC Interest
has not been registered or qualified for sale under the
Securities Act or otherwise (including under any applicable
state securities laws) and that such LLC Interest cannot be
offered for sale or sold by such Member or by anyone acting
for such Member's account or on such
<PAGE>
Member's behalf without the registration of such LLC Interest
and/or the fulfillment of other regulatory requirements.
(x) Such Member understands that the exemption from
registration afforded by Rule 144 (the provisions of which are
known to such Investor) promulgated under the Securities Act
depends on the satisfaction of various conditions and that, if
applicable, Rule 144 may only afford the basis for sales under
certain circumstances only in limited amounts.
14. Administrative Matters.
(a) The Company hereby designates CFP Holdings, Inc. as the
"Tax Matters Partner" for purposes of Internal Revenue Code Section 6231 and the
regulations promulgated thereunder. The Tax Matters Partner shall promptly
advise each Member of any audit proceedings proposed to be conducted with
respect to the Company.
(b) It is the intention of the Members that the Company shall
be taxed as a "partnership" for Federal, state, local and foreign income tax
purposes. The Members shall take all reasonable actions, including the amendment
of this Agreement and the execution of other documents, as may reasonably be
required in order for the Company to qualify for and receive "partnership"
treatment for Federal, state, local and foreign income tax purposes.
(c) The fiscal year of the Company shall be the calendar year.
The books and records of the Company shall be maintained in accordance with GAAP
and Internal Revenue Code Section 704(b) and the regulations promulgated
thereunder.
15. Limitation on Liability.
The debts, obligations and liabilities of the Company, whether
arising in contract, tort or otherwise, shall be solely the debts, obligations
and liabilities of the Company, and no Member or Manager of the Company shall be
obligated personally for any such debt, obligation or liability of the Company
solely by reason of being a Member or Manager.
16. Additional Members; Changes in LLC Interests.
(a) The Board of Managers shall have the right to cause the
Company to issue additional LLC Interests and to admit Additional Members upon
the acquisition of such LLC Interests upon such terms and conditions (including
but not limited to whether such LLC Interests shall be voting or nonvoting), at
such time or times, and for such capital contributions as shall be determined in
good faith by the Board of Managers. If, at any time after the date of this
Agreement, an Additional Member is admitted to the Company such Additional
Member shall, as a condition to its ownership of an LLC Interest, become party
to this Agreement by executing a counterpart hereof.
(b) If the Company issues an LLC Interest to a Person not then
a Member (an "Additional Member"), or if the LLC Interest of a then current
Member is increased (in either case other than to the extent of a Transfer of
all or a portion of the LLC Interest to another Member in accordance with
Section 9), then the LLC Interest then held by each other Member
<PAGE>
shall be decreased by the number of percentage points equal to the percentage
interest represented by the LLC Interest issued to the Additional Member or the
number of percentage points by which the LLC Interest of the then current Member
is increased, as the case may be. Each other Member's pro rata share of such
decrease shall be the percentage amount determined by multiplying (x) the number
of percentage points equal to such new LLC Interest or such increase, as the
case may be, by (y) a fraction the numerator of which is the LLC Interest of
such other Member immediately prior to such issuance or increase and the
denominator of which is the aggregate of the LLC Interests of all such other
Members at such time. For the purposes of the immediately preceding sentence, in
any case in which a Member's LLC Interest is increasing, such Member shall be
treated as an other Member to the extent of his or her LLC Interest prior to
such increase. Any adjustment pursuant to this Section 16(b) shall be made on a
fully diluted basis, assuming that all warrants, options and other rights to
acquire LLC Interests have been exercised.
17. Severability.
If any provision of this Agreement shall be determined to be
illegal or unenforceable by any court of law, the remaining provisions shall be
severable and enforceable in accordance with their terms.
18. Notices.
All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person or by telecopy or sent by
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or at such other address as may hereafter be designated
in writing by such party to the other parties:
(a) if to the Company, to:
QFAC, LLC
5501 Tabor Road
Philadelphia, PA 19107
Attn: President and Chief Executive Officer
Telephone: (800) 275-8902
Telecopier: (215) 743-8485
(b) if to the Members, to their respective addresses set forth
on Schedule I hereto.
All such notices, requests, consents and other communications
shall be deemed to have been delivered and received (i) in the case of personal
delivery or delivery by telecopy, on the date of such delivery, (ii) in the case
of dispatch by nationally-recognized overnight courier, on the next business day
following such dispatch and (iii) in the case of mailing, on the fifth business
day after the posting thereof.
<PAGE>
19. Modification.
Except as otherwise provided herein, neither this Agreement
nor any provisions hereof can be modified, changed, discharged or terminated
except by an instrument in writing signed by a Majority in Interest of Members.
20. Entire Agreement.
This Agreement and the other writings referred to herein
contain the entire agreement among the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings with
respect thereto.
21. Counterparts.
This Agreement may be executed in any number of counterparts,
and each such counterpart hereof shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one agreement.
22. Governing Law.
This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the state of Delaware.
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this Operating
Agreement as of the date first written above.
CFP Holdings, Inc.
By: ________________________________
Name:
Title:
<PAGE>
SCHEDULES AND ANNEXES
Schedules
Schedule I - Schedule of Members
Schedule II - Schedule of Initial Contributions
Annexes
Annex A - By-laws of the Company
Annex B - Certificate of Formation of the Company
<PAGE>
SCHEDULE I TO
OPERATING AGREEMENT
-------------------
Members
-------
Name and Address
----------------
CFP Holdings, Inc.
1117 West Olympia Boulevard
Montebello, CA 90640
<PAGE>
SCHEDULE II TO
OPERATING AGREEMENT
-------------------
Initial Contributions
---------------------
Initial
Members LLC Interest Initial Contribution
- ------- ------------ --------------------
CFP Holdings, Inc. 100% $100
<PAGE>
ANNEX A TO
OPERATING AGREEMENT
-------------------
By-laws of the Company
----------------------
(See Attached)
<PAGE>
ANNEX B TO
OPERATING AGREEMENT
-------------------
Certificate of Formation
------------------------
(See Attached)
Exhibit 3.3
================================================================================
QFAC, LLC
(a Delaware Limited Liability Company)
--------------------------
By-Laws
--------------------------
Adopted as of June 28, 1999
================================================================================
<PAGE>
BY-LAWS
OF
QFAC, LLC
Introduction
A. Agreement. These By-laws (the "By-laws") are subject to the
Operating Agreement dated as of June 28, 1999, as the same may from time to time
be amended and in effect (the "Operating Agreement"), of QFAC, LLC, a Delaware
limited liability company (the "Company"). In the event of any inconsistency
between the terms hereof and the terms of the Operating Agreement, the terms of
the Operating Agreement shall control.
B. Definitions. Capitalized terms used and not defined in these By-laws
have the meanings ascribed to them in the Operating Agreement.
ARTICLE I
MEETINGS OF MEMBERS
1.1 Place of Meetings and Meetings by Telephone.
Meetings of Members shall be held at any place designated by the Board
of Managers. In the absence of any such designation, meetings of Members shall
be held at the principal place of business of the Company. Any meeting of the
Members may be held by conference telephone or similar communication equipment
so long as all Members participating in the meeting can hear one another, and
all Members participating by telephone or similar communication equipment shall
be deemed to be present in person at the meeting.
1.2 Call of Meetings.
Meetings of Members may be called at any time by the Board of Managers
or the President for the purpose of taking action upon any matter requiring the
vote or authority of the Members as provided herein or in the Operating
Agreement or upon any other matter as to which such vote or authority is deemed
by the Board of Managers or the President to be necessary or desirable.
1.3 Notice of Meetings of Members.
All notices of meetings of Members shall be sent or otherwise given in
accordance with Section 4 of this Article I not less then ten nor more than
sixty days before the date of the meeting. The notice shall specify the place,
date and hour of the meeting.
1.4 Manner of Giving Notice.
Notice of any meeting of Members shall be given personally or by
telephone to each Member or sent by first class mail, postage prepaid, by
telegram or telecopy (or similar
<PAGE>
electronic means) or by a nationally recognized overnight courier, charges
prepaid, addressed to the Member at the address of that Member appearing on the
books of the Company or given by the Member to the Company for the purpose of
notice. Notice shall be deemed to have been given at the time when delivered
either personally or by telephone, or at the time when deposited in the mail or
with a nationally recognized overnight courier, or when sent by telegram or
telecopy (or similar electronic means).
1.5 Adjourned Meeting; Notice.
Any meeting of Members, whether or not a quorum is present, may be
adjourned from time to time by the vote of a Majority in Interest of Members
represented at that meeting, either in person or by proxy. When any meeting of
Members is adjourned to another time or place, notice need not be given of the
adjourned meeting, unless a new record date of the adjourned meeting is fixed or
unless the adjournment is for more than thirty days from the date set for the
original meeting, in which case the Board of Managers shall set a new record
date and shall give notice in accordance with the provisions of Sections 3 and 4
of this Article I. At any adjourned meeting, the Company may transact any
business that might have been transacted at the original meeting.
1.6 Quorum; Voting.
At any meeting of the Members, the presence of a Majority in Interest
of Members, in person or by proxy, shall constitute a quorum for all purposes,
unless or except to the extent that the presence of Members holding such other
percentage of LLC Interests is required by the Operating Agreement, these
By-laws or applicable law. Except as otherwise required by the Operating
Agreement, these By-laws or applicable law, all matters shall be determined by
an affirmative vote of a Majority in Interest of Members.
1.7 Waiver of Notice by Consent of Absent Members.
The transactions of a meeting of Members, however called and noticed
and wherever held, shall be as valid as though taken at a meeting duly held
after regular call and notice if a quorum is present either in person or by
proxy and if either before or after the meeting, each person entitled to vote
who was not present in person or by proxy signs a written waiver of notice or a
consent to a holding of the meeting or an approval of the minutes. The waiver of
notice or consent need not specify either the business to be transacted or the
purpose of any meeting of Members. Attendance by a person at a meeting shall
also constitute a waiver of notice of that meeting, except when the person
objects at the beginning of the meeting to the transaction of any business
because the meeting was not lawfully called or convened.
1.8 Member Action by Written Consent Without a Meeting.
Any action that may be taken at any meeting of Members may be taken
without a meeting and without prior notice if a consent in writing setting forth
the action so taken is signed by a Majority in Interest of Members (or Members
holding such other percentage of LLC Interests as is required to authorize or
take such action under the terms of the Operating Agreement, these By-laws or
applicable law). Any such written consent may be executed and
<PAGE>
given by telecopy or similar electronic means. Such consents shall be filed with
the Secretary of the Company and shall be maintained in the Company's records.
1.9 Record Date for Member Notice, Voting and Giving Consents.
(a) For purposes of determining the Members entitled to vote or act at
any meeting or adjournment thereof, the Board of Managers may fix in advance a
record date which shall not be greater than sixty days nor fewer than ten days
before the date of any such meeting. If the Board of Managers does not so fix a
record date, the record date for determining Members entitled to notice of or to
vote at a meeting of Members shall be at the close of business on the business
day immediately preceding the day on which notice is given, or if notice is
waived, at the close of business on the business day next preceding the day on
which the meeting is held.
(b) The record date for determining the Members entitled to give
consent to action in writing without a meeting, (i) when no prior action of the
Board of Managers has been taken, shall be the day on which the first written
consent is given, or (ii) when prior action of the Board of Managers has been
taken, shall be such date as determined for that purpose by the Board of
Managers, which record date shall not precede the date upon which the resolution
fixing it is adopted by the Board of Managers and shall not be more than twenty
days after the date of such resolution.
(c) Only Members of record on the record date as herein determined
shall have any right to vote or to act at any meeting or give consent to any
action relating to such record date, provided that no Member who transfers all
or part of such Member's LLC Interest after a record date (and no transferee of
such LLC Interest) shall have the right to vote or act with respect to the
transferred LLC Interest as regards the matter for which the record date was
set.
1.10 Proxies.
Every Member entitled to vote or act on any matter at a meeting of
Members shall have the right to do so either in person or by proxy, provided
that an instrument authorizing such a proxy to act is executed by the Member in
writing and dated not more than eleven months before the meeting, unless the
instrument specifically provides for a longer period. A proxy shall be deemed
executed by a Member if the Member's name is placed on the proxy (whether by
manual signature, typewriting, telegraphic transmission or otherwise) by the
Member or the Member's attorney-in-fact. A valid proxy that does not state that
it is irrevocable shall continue in full force and effect unless (i) revoked by
(a) the person executing it before the vote pursuant to that proxy by a writing
delivered to the Company stating that the proxy is revoked or (b) a subsequent
proxy executed by, or by attendance at the meeting and voting in person by, the
person executing that proxy or (ii) written notice of the death or incapacity of
the maker of that proxy is received by the Company before the vote pursuant to
that proxy is counted. A proxy purporting to be executed by or on behalf of a
Member shall be deemed valid unless challenged at or prior to its exercise and
the burden of proving invalidity shall rest on the challenger. Except to the
extent inconsistent with the provisions hereof, the General Corporation Law of
the State of Delaware, and judicial construction thereof by the Courts of the
State of Delaware, shall be applicable to proxies granted by any Member.
<PAGE>
ARTICLE II
MANAGERS AND MEETINGS OF MANAGERS
2.1 Powers.
The powers of the Managers shall be as provided herein and in the
Operating Agreement.
2.2 Number of Managers.
The Board of Managers shall consist of one or more Managers. The number
of Managers shall initially be six and may thereafter be changed from time to
time by action of the Managers or the Members.
2.3 Vacancies.
Newly created vacancies on the Board of Managers resulting from an
increase in the number of Managers and vacancies occurring on the Board of
Managers for any other reason, including the removal of Managers with or without
cause, may be filled by vote of the Members or by the Members' written consent
or by vote of the Managers or by written consent of the Managers .
2.4 Place of Meetings and Meetings by Telephone.
All meetings of the Board of Managers may be held at any place that has
been designated from time to time by resolution of the Board of Managers or in
any notice properly given with respect to any such meeting. In the absence of
such a designation, regular meetings shall be held at the principal place of
business of the Company. Any meeting, regular or special, may be held by
conference telephone or similar communication equipment so long as all Managers
participating in the meeting can hear one another, and all Managers
participating by telephone or similar communication equipment shall be deemed to
be present in person at the meeting.
2.5 Regular Meetings.
Regular meetings of the Board of Managers shall be held at such times
and at such places as shall be fixed by approval of the Managers. Such regular
meetings may be held without notice.
2.6 Special Meetings.
Special meetings of the Board of Managers for any purpose or purposes
may be called at any time by any Manager. Notice of the time and place of a
special meeting shall be delivered to each Manager (a) personally, (b) by
telephone (and confirmed by one of the methods set out in the immediately
succeeding clause (c)), or (c) by telegram, telecopy (or similar electronic
means), first-class mail or nationally recognized overnight courier, charges
prepaid, addressed to each Manager at that Manager's address as it is shown on
the records of the Company. If the notice is mailed, it shall be deposited in
the United States mail at least two calendar days before the time of the holding
of the meeting. If the notice is delivered personally or by telephone or by
<PAGE>
telegram, telecopy (or similar electronic means) or by national recognized
overnight courier, it shall be given at least twenty-four hours before the time
of the holding of the meeting. Any oral notice given personally or by telephone
may be communicated either to the Manager or to a person at the office of the
Manager who the person giving the notice has reason to believe will promptly
communicate it to the Manager. The notice need not specify the purpose of the
meeting.
2.7 Quorum; Chairman.
A majority of the authorized number of Managers shall constitute a
quorum for the transaction of business, except to adjourn as provided in Section
9 of this Article II. Every act or decision done or made by the affirmative vote
of Managers entitled to cast votes at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Managers, except to the
extent that the vote of a higher number of Managers is required by the Operating
Agreement, these By-laws or applicable law. The Board of Managers may from time
to time appoint any Manager to serve as Chairman of the Board of Managers, who
shall preside at all meetings of the Board of Managers and of the Members. If at
the time of any such meeting, there shall not be a Chairman of the Board of
Managers, or the then incumbent Chairman does not attend or participate in such
meeting, then the Board of Managers shall appoint a person to preside at such
meeting.
2.8 Waiver of Notice.
Notice of any meeting need not be given to any Manager who either
before or after the meeting signs a written waiver of notice, a consent to
holding the meeting or an approval of the minutes. The waiver of notice or
consent need not specify the purpose of the meeting. All such waivers, consents,
and approvals shall be filed with the records of the Company or made a part of
the minutes of the meeting. Notice of a meeting shall also be deemed given to
any Manager who attends the meeting without protesting, at or prior to its
commencement, the lack of notice to that Manager.
2.9 Adjournment.
Managers present at any meeting entitled to cast a majority of all
votes entitled to be cast by such Managers, whether or not constituting a
quorum, may adjourn any meeting to another time and place. Notice of the time
and place of holding an adjourned meeting need not be given unless the meeting
is adjourned for more than forty-eight hours, in which case notice of the time
and place shall be given before the time of the adjourned meeting in the manner
specified in Section 6 of this Article II.
2.10 Action Without a Meeting.
Any action to be taken by the Board of Managers at a meeting may be
taken without such meeting by the written consent of all the Managers then in
office. Any such written consent may be executed and given by telecopy or
similar electronic means. Such written consents shall be filed with the minutes
of the proceedings of the Board of Managers.
<PAGE>
2.11 Delegation of Power.
Any Manager may, by power of attorney, delegate his power to any other
Manager or Managers; provided, however, that in no case shall fewer than two
Managers personally exercise the powers granted to the Managers, except as
otherwise provided in the Operating Agreement, these By-laws or by resolution of
the Board of Managers. A Manager represented by another Manager pursuant to such
power of attorney shall be deemed to be present for purposes of establishing a
quorum and satisfying any voting requirements. The Board of Managers may, by
resolution, delegate any or all of their powers and duties granted hereunder or
under the Operating Agreement to one or more committees of the Board of
Managers, each consisting of one or more Managers, or to one or more officers,
employees or agents (including, without limitation, Members), and to the extent
any such powers or duties are so delegated, action by the delegate or delegates
shall be deemed for all purposes to be action by the Board of Managers. Except
as otherwise provided in the Operating Agreement, all such delegates shall serve
at the pleasure of the Board of Managers. To the extent applicable, notice shall
be given to, and action may be taken by, any delegate of the Board of Managers
as herein provided with respect to notice to, and action by, the Board of
Managers.
ARTICLE III
OFFICERS
3.1 Officers.
The officers of the Company shall be a President, a Secretary and a
Treasurer. The Company may also have, at the discretion of the Board of
Managers, such other officers as may be appointed in accordance with the
provisions of Section 3 of this Article III. Any number of offices may be held
by the same person. Officers may, but need not, be Managers.
3.2 Election of Officers.
The officers of the Company shall be chosen by the Board of Managers,
and each shall serve at the pleasure of the Board of Managers, subject to the
rights, if any, of an officer under any contract of employment.
3.3 Additional Officers.
The Board of Managers may appoint and may empower the President to
appoint such additional officers as the business of the Company may require,
each of whom shall hold office for such period, have such authority and perform
such duties as are provided in these By-laws or as the Board of Managers (or, to
the extent the power to prescribe authorities and duties of additional officers
is delegated to him or her, the President) may from time to time determine.
3.4 Removal and Resignation of Officers.
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, with or without cause, by the Board of
Managers at any regular or special meeting of the Board of Managers or by such
officer, if any, upon whom such power of removal
<PAGE>
may be conferred by the Board of Managers. Any officer may resign at any time by
giving written notice to the Company. Any resignation shall take effect at the
date of the receipt of that notice or at any later time specified in that
notice, and unless otherwise specified in that notice, the acceptance of the
resignation shall not be necessary to make it effective. Any resignation is
without prejudice to the rights, if any, of the Company under any contract to
which the officer is a party.
3.5 Vacancies in Offices.
A vacancy in any office because of death, resignation, removal,
disqualification or other cause shall be filled by the Board of Managers. The
President may make temporary appointments to a vacant office reporting to the
President pending action by the Board of Managers.
3.6 President.
The President shall, subject to the control of the Board of Managers,
be responsible for the general supervision, direction and control of the
business and the officers of the Company. He or she shall have the general
powers and duties of management usually vested in the office of President and
Chief Executive Officer of a corporation and shall have such other powers and
duties as may be prescribed by the Board of Managers, the Operating Agreement or
these By-laws.
3.7 Secretary.
The Secretary shall keep or cause to be kept at the principal place of
business of the Company or such other place as the Board of Managers may direct
a book of minutes of all meetings and actions of the Board of Managers,
committees or other delegates of the Board of Managers (appointed in accordance
with the provisions of Section 11 of Article II) and the Members. The Secretary
shall keep or cause to be kept at the principal place of business of the Company
a register or a duplicate register showing the names of all Members and their
addresses, the class and percentage interests in the Company held by each, the
number and date of certificates issued for the same, and the number and date of
cancellation of every certificate surrendered for cancellation. The Secretary
shall give or cause to be given notice of all meetings of the Members and of the
Board of Managers (or committees or other delegates thereof) required to be
given by these By-laws or by applicable law and shall have such other powers and
perform such other duties as may be prescribed by the Board of Managers or the
President or by these By-laws.
3.8 Treasurer.
The Treasurer shall keep and maintain or cause to be kept and
maintained adequate and correct books and records of accounts of the properties
and business transactions of the Company. The books of account shall at all
reasonable times be open to inspection by any Manager. The Treasurer shall
deposit all monies and other valuables in the name and to the credit of the
Company with such depositaries as may be designated by the Board of Managers. He
or she shall disburse the funds of the Company as may be ordered by the Board of
Managers, shall render to the President and the Board of Managers, whenever they
request it, an account of
<PAGE>
all of his or her transactions as Treasurer and of the financial condition of
the Company and shall have other powers and perform such other duties as may be
prescribed by the Board of Managers or the President or these By-laws.
ARTICLE IV
MAINTENANCE AND INSPECTION OF RECORDS
4.1 Member List.
The Company shall maintain at its principal place of business a record
of its Members, giving the names and addresses of all Members and the class and
percentage interests in the Company held by each Member. Subject to such
reasonable standards (including standards governing what information and
documents are to be furnished and at whose expense) as may be established by the
Board of Managers from time to time, each Member has the right to obtain from
the Company from time to time upon reasonable demand for any purpose reasonably
related to the Member's interest as a Member of the Company a record of the
Company's Members.
4.2 By-laws.
The Company shall keep at its principal place of business the original
or a copy of these By-laws as amended to date, which shall be open to inspection
by the Members at all reasonable times during office hours.
4.3 Other Records.
The accounting books and records, minutes of proceedings of the Members
and the Board of Managers and any committees or delegates of the Board of
Managers and all other information pertaining to the Company that is required to
be made available to the Members under the Delaware Act shall be kept at such
place or places designated by the Board of Managers or in the absence of such
designation, at the principal place of business of the Company. The minutes
shall be kept in written form and the accounting books and records and other
information shall be kept either in written form or in any other form capable of
being converted into written form. The books of account and records of the
Company shall be maintained in accordance with generally accepted accounting
principles consistently applied during the term of the Company, wherein all
transactions, matters and things relating to the business and properties of the
Company shall be currently entered, subject to such reasonable standards
(including standards, governing what information and documents are to be
furnished and at whose expense) as may be established by the Board of Managers
from time to time, minutes, accounting books and records and other information
shall be open to inspection upon the written demand of any Member at any
reasonable time during usual business hours for purposes reasonably related to
the Member's interests as a Member. Any such inspection may be made in person or
by an agent or attorney and shall include the right to copy and make extracts.
Notwithstanding the foregoing, the Board of Managers shall have the right to
keep confidential from Members for such period of time as the Board of Managers
deems reasonable any information which the Board of Managers reasonably believes
to be in the nature of trade secrets
<PAGE>
or other information the disclosure of which the Board of Managers in good faith
believes is not in the best interests of the Company or could damage the Company
or its business or which the Company is required by law or by agreement with a
third party to keep confidential.
4.4 Inspection by Managers.
Every Manager shall have the right at any reasonable time to inspect
all books, records and documents of every kind and the physical properties of
the Company for a purpose reasonably related to his position as Manager. This
inspection by a Manager may be made in person or by an agent or attorney and the
right of inspection includes the right to copy and make extracts of documents.
ARTICLE V
GENERAL MATTERS
5.1 Checks, Drafts, Evidence of Indebtedness.
All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness issued in the name of or payable by the Company shall
be signed or endorsed in such manner and by such person or persons as shall be
designated from time to time in accordance with the resolution of the Board of
Managers.
5.2 Representation of Shares of Other Entities Held by Company.
The President or any other person authorized by the Board of Managers
is authorized to vote or represent on behalf of the Company any and all shares
of any corporation, partnership, limited liability company, trusts or other
entities, foreign or domestic, standing in the name of the Company. Such
authority may be exercised in person or by a proxy duly executed by such
designated person.
5.3 Seal.
The Board of Managers may approve and adopt an official seal of the
Company, which may be altered by them at any time. Unless otherwise required by
the Board of Managers, any seal so adopted shall not be necessary to be placed
on, and its absence shall not impair the validity of, any document, instrument
or other paper executed and delivered by or on behalf of the Company.
ARTICLE VI
AMENDMENTS AND INCORPORATION BY REFERENCE
6.1 Amendment.
These By-laws may be restated, amended, supplemented or repealed only
by an affirmative vote of a Majority in Interest of Members (or such other vote
of Members holding
<PAGE>
such other LLC Interests as shall be required by the Operating Agreement, these
By-laws or applicable law).
6.2 Incorporation by Reference of By-laws into Operating Agreement.
These By-laws and any amendments hereto shall be deemed incorporated by
reference in the Operating Agreement.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification of Managers, Officers, Employees and Agents.
(a) Each Person who was or is made a party or is threatened to be made
a party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter, a "proceeding")
by reason of the fact that he or she is or was a Manager or an officer of the
Company, or is or was serving at the request of the Company as a manager,
director, officer, employee or agent of another limited liability company or of
a corporation, partnership, joint venture, trust or other enterprise, including
a service with respect to an employee benefit plan (hereinafter an
"indemnitee"), whether the basis of such a proceeding is alleged action in an
official capacity as a Manager, officer, employee or agent or in any other
capacity while serving as a Manager, officer, employee or agent, shall be
indemnified and held harmless by the Company to the fullest extent authorized by
the Delaware Act (including indemnification for negligence or gross negligence
but excluding indemnification (i) for acts or omissions involving actual fraud
or willful misconduct or (ii) with respect to any transaction from which the
indemnitee derived an improper personal benefit), against all expense, liability
and loss (including attorneys' fees, judgments, fines, excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith.
(b) The right to indemnification conferred in paragraph (a) shall
include the right to be paid by the Company the expenses (including attorneys'
fees) incurred in defending any proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"). The rights to indemnification and to
the advancement of expenses conferred in paragraph (a) and this paragraph (b)
shall be contract rights and such rights shall continue as to an indemnitee who
has ceased to be a Manager, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
(c) The rights to indemnification and to the advancement of expenses
conferred in this Section 7.1 shall not be exclusive of any other right that any
Person may have or hereafter acquire under any statute, agreement, vote of the
Managers or otherwise.
(d) The Company may maintain insurance, at its expense, to protect
itself and any Manager, officer, employee or agent of the Company or another
limited liability company, consultant, corporation, partnership, joint venture,
trust or other enterprise against any expense, liability or loss, whether or not
the Company would have the power to indemnify such Person against such expense,
liability or loss under the Delaware Act.
<PAGE>
(e) The Company may, to the extent authorized from time to time by the
Board of Managers, grant rights to indemnification and to advancement of
expenses to any employee or agent of the Company to the fullest extent of the
provisions of this Section 7.1 with respect to the indemnification and
advancement of expenses of Managers and officers of the Company.
Exhibit 4.1
CFP HOLDINGS, INC.,
Issuer,
CFP GROUP, INC.
CUSTOM FOOD PRODUCTS, INC.
and
QFAC, LLC
Guarantors
and
United States
Trust Company of new york
Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of ______ __, 1999
______________________________
$115,000,000
11 5/8% Senior Guaranteed Notes Due 2004
11 5/8% Series B Senior Guaranteed Notes Due 2004
This First Supplemental Indenture supplements an Indenture dated as of January
28, 1997.
<PAGE>
FIRST SUPPLEMENTAL INDENTURE
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of _______ __, 1999 (the
"First Supplemental Indenture"), is by and among CFP HOLDINGS, INC., a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Company"), QFAC, LLC, a limited liability company duly
organized and existing under the laws of the State of Delaware, and UNITED
STATES TRUST COMPANY OF NEW YORK, a bank and trust company duly organized and
existing under the laws of the State of New York (herein called the "Trustee").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein but not otherwise defined herein
will be deemed to have the respective meanings given to such terms in the
Indenture, dated as of January 28, 1997 (the "Indenture"), among the Company, as
issuer, the Parent Guarantor, the Subsidiary Guarantors and the Trustee, as
trustee, regarding the issuance of the Company's 11 5/8% Senior Guaranteed Notes
Due 2004 and 11 5/8% Series B Senior Guaranteed Notes Due 2004;
WHEREAS, the Company desired to change the organization of Quality
Foods, a Subsidiary Guarantor, from a corporation incorporated under the General
Corporation Law of the State of Delaware to a limited liability company formed
under the Limited Liability Company Act of the State of Delaware (the "Delaware
LLC Act");
WHEREAS, in order to effectuate such organizational change, the Company
caused to be formed QFAC, LLC under the Delaware LLC Act and, after designating
QFAC, LLC as a "Restricted Subsidiary" (as such term is defined in the
Indenture) by resolution duly adopted by written consent of the Board of
Directors of the Company, Quality Foods was merged with and into QFAC, LLC, with
QFAC, LLC as the surviving Subsidiary having the same assets and liabilities
that Quality Foods had prior to the merger;
WHEREAS, pursuant to Section 1308 of the Indenture, the Company is
obligated to cause each Person that becomes a Subsidiary to become a Subsidiary
Guarantor with respect to the Indenture Obligations;
WHEREAS, Section 9.01(h) of the Indenture provides that the Company and
the Trustee may enter into a Supplemental Indenture without the consent of any
Holders to add a Subsidiary Guarantor pursuant to Section 1308 of the Indenture;
and
WHEREAS, in order to effectuate the addition of QFAC, LLC as a
Subsidiary Guarantor in compliance with the terms and provisions of the
Indenture, the Company and the Trustee have agreed to supplement the Indenture
as provided by this First Supplemental Indenture;
<PAGE>
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, THIS FIRST SUPPLEMENTAL
INDENTURE WITNESSETH:
For and in consideration of the mutual covenants herein
exchanged, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the Company,
QFAC, LLC and the Trustee hereby agree as follows:
Section 1. Additional Subsidiary Guarantor. Pursuant to Section 1308 of
the Indenture and upon the merger of Quality Foods with and into QFAC, LLC,
QFAC, LLC hereby succeeds to, and shall be substituted for, and may exercise
every right and power, and shall be bound by the obligations, of Quality Foods,
under the Indenture with the same effect as if QFAC, LLC had been originally
named as a Subsidiary Guarantor in the Indenture.
Section 2. Miscellaneous.
(a) The Trustee accepts the trusts created by the Indenture,
as supplemented hereby, and agrees to perform the same upon the terms and
conditions of the Indenture.
(b) In case any provision in this First Supplemental Indenture
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
(c) Nothing in this First Supplemental Indenture, express or
implied, shall give to any Person, other than the parties hereto and their
successors under the Indenture and the Holders of the Securities, any benefit or
any legal or equitable right, remedy or claim under the Indenture.
(d) If any provision of this First Supplemental Indenture
limits, qualifies or conflicts with a provision of the TIA that is required
under the TIA to be part of and govern this First Supplemental Indenture, the
statutorily mandated provision shall control.
(e) This First Supplemental Indenture shall be governed by and
construed in accordance with the domestic laws of the State of New York without
giving effect to any choice or conflict of law provision or rule (whether in the
State of New York or any other jurisdiction) that would cause the application of
laws of any jurisdiction other than the State of New York.
(f) All provisions of this First Supplemental Indenture shall
be deemed to be incorporated in, and made a part of, the Indenture; and the
Indenture, as supplemented by this First Supplemental Indenture, shall be read,
taken and construed as one and the same instrument.
(g) The Trustee makes no representation as to the validity or
sufficiency of this First Supplemental Indenture.
This First Supplemental Indenture may be executed in any
number of counterparts, each of which when so executed shall be an original, but
all such counterparts shall together constitute but one and the same instrument.
* * * *
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this First
Supplemental Indenture as of the date first written above.
CFP HOLDINGS, INC.
By: ________________________________
Name:
Title:
QFAC, LLC
By: ________________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By: ________________________________
Name:
Title:
Exhibit 10.1
AMENDMENT AND ASSUMPTION AGREEMENT
AMENDMENT AND ASSUMPTION AGREEMENT ("Agreement") dated as of June __,
1999 by and between QF ACQUISITION CORP., a corporation organized under the laws
of the State of Delaware ("QFAC"), QFAC, LLC, a limited liability company
organized under the laws of the State of Delaware ("LLC"), CFP HOLDINGS, INC., a
corporation organized under the laws of the State of Delaware ("Holdings"),
Custom Food Products, Inc., a corporation organized under the laws of the State
of California ("Custom") and FLEET CAPITAL CORPORATION, with an office at 200
Glastonbury Boulevard, Glastonbury, Connecticut 06033 ("Lender").
BACKGROUND
Holdings, Custom, QFAC and Lender are parties to a Loan and Security
Agreement dated as of May 5, 1998 (as same has been amended, supplemented or
otherwise modified from time to time, the "Loan Agreement") pursuant to which
Lender provides Holdings, Custom and QFAC with certain financial accommodations.
Pursuant to the terms of a Merger Agreement ("Merger Agreement") dated
as of the date hereof between QFAC and LLC, QFAC shall merge with LLC and LLC
shall be the surviving company and LLC shall assume all of QFAC's obligations to
Lender under the Loan Documents (as amended, restated, modified and supplemented
from time to time, the "Assigned Documents").
In connection with the transactions contemplated by the Merger
Agreement, all of QFAC's rights and obligations under the Assigned Documents
shall automatically become the rights and obligations of LLC and LLC shall have
the benefit of all rights of QFAC and be bound by all obligations of QFAC to
Lender under the Assigned Documents, in each case on the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, QFAC, LLC, Holdings, Custom and Lender hereto agree as follows:
1. All capitalized terms used herein which are not defined shall have
the meanings given to them in the Loan Agreement.
2. LLC hereby assumes in full, the payment, discharge, satisfaction and
performance of all obligations of QFAC under the Loan Agreement and all
obligations, indebtedness and liabilities of QFAC to Lender under the Loan
Documents. LLC hereby adopts all of the provisions, terms and conditions
contained in the Loan Agreement as if the Loan Agreement and the Loan Documents
had been entered into by and between LLC and Lender.
3. QFAC and LLC hereby acknowledge that each will from time to time
after the execution hereof, upon request of Lender, execute and deliver to
Lender such further
<PAGE>
instruments, agreements and documents, and take such further action as Lender
may request in connection with the transactions herein contemplated.
4. Subject to satisfaction of the conditions precedent set forth in
Section 6 below, Lender hereby consents to the formation of LLC and the
execution of the Merger Agreement by the parties thereto and the transactions
contemplated therein and waives any Event of Default arising out of the
formation of LLC or the execution of or consummation of the transactions
contemplated by the Merger Agreement.
5. The Loan Agreement is hereby amended as follows:
(a) Section 1 is amended as follows:
(i) the following defined terms are hereby amended in their
entirety as follows:
"Borrower"- individually or collectively, any or all
of Holdings, Custom and/or LLC, as the context requires.
"Pledge Agreements" collectively, (a) the Pledge
Agreements dated the Closing Date and executed and delivered
to Lender by (i) Group with respect to stock of Holdings and
(ii) Holdings with respect to the stock of Custom and (b) the
Pledge Agreement dated as of June __, 1999 by Holdings with
respect to membership interests of LLC.
"Voting Stock"-Securities or membership interests of
any class or classes of a corporation or limited liability
company, as the case may be, the holders of which are
ordinarily, in the absence of contingencies, entitled to elect
a majority of the corporate or company directors (or Persons
performing similar functions).
(ii) the following defined term is hereby added in its
appropriate alphabetical order:
"LLC" - QFAC, LLC, a Delaware limited liability
company.
(b) Section 8.1(A) is amended in its entirety as follows:
(A) Organization and Qualification. Each
Borrower is a corporation or limited liability company duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, as the case may be,
listed on Exhibit 8.1(A) attached hereto and made a part hereof. Each
Borrower has duly qualified and is authorized to do business and is in
good standing in each state or jurisdiction listed on Exhibit 8.1(A)
which includes all states and jurisdictions where the character of its
Properties or the nature of its
<PAGE>
activities make such qualification necessary, except where the failure
to so qualify would not have a Material Adverse Effect.
(c) Section 8.1(C) is amended in its entirety as follows:
(C) Power and Authority. Each Borrower is duly
authorized and empowered to enter into, execute, deliver and perform
this Agreement and each of the other Loan Documents to which it is a
party. The execution, delivery and performance of this Agreement and
each of the other Loan Documents have been duly authorized by all
necessary action and do not and will not (i) require any consent or
approval of its shareholders or members, as the case may be; (ii)
contravene its charter, articles or certificate of incorporation or
certificate of formation, as applicable, or its operating agreement or
by-laws, as applicable; (iii) violate, or cause any Borrower to be in
default under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect having
applicability to any Borrower; (iv) result in a breach of or constitute
a default under any indenture or loan or credit agreement or any other
agreement, lease or instrument to which such Borrower is a party or by
which it or its Properties may be bound or affected; or (v) result in,
or require, the creation or imposition of any Lien (other than
Permitted Liens) upon or with respect to any of the Properties now
owned or hereafter acquired by any Borrower.
(d) Section 8.1(E) is amended in its entirety as follows:
(E) Use of Proceeds. Borrowers' uses of the proceeds
of any Loans pursuant to this Agreement are, and will continue to be,
legal and proper uses, duly authorized by its respective Board of
Directors or Board of Managers, as the case may be, and such uses will
not violate in any material respect any applicable laws including,
without limitation, the Foreign Assets Control Regulations, the Foreign
Funds Control Regulations and the Transaction Control Regulations of
the United States Treasury Department (31 CFR, Subtitle B, Chapter V,
as amended).
(e) Section 8.1(I) is amended in its entirety as follows:
(I) Capital Structure. Exhibit 8.1(I) attached hereto
and made a part hereof states (a) the correct name of each of the
Subsidiaries of each Borrower, the jurisdiction of incorporation or
formation, as the case may be, and the percentage of its Voting Stock
owned by such Borrower, (b) the name of each Borrower's Affiliates and
the nature of the affiliation, (c) the number, nature and holder of all
outstanding Securities of Borrowers, and (d) the number of authorized,
issued and treasury shares of each Borrower. Holdings has good title to
all of the shares of stock and membership interests, as the case may
be, it purports to own of Custom and LLC and each Borrower has good
title to all of the shares of stock or membership interests, as the
case may be, it purports to own of each of its respective Subsidiaries,
free and clear in each case of any Lien other than Permitted Liens. All
such shares of stock and membership interests have been duly issued
and, in the case
<PAGE>
of shares of stock, are fully paid and non-assessable. Except as set
forth on Exhibit 8.1(I), there are not outstanding any options to
purchase, or any rights or warrants to subscribe for, or any
commitments or agreements to issue or sell, or any capital stock,
Securities, membership interests or obligations convertible into, or
any powers of attorney relating to, shares of the capital stock of any
Borrower. Except as set forth on Exhibit 8.1(I), there are not
outstanding any agreements or instruments binding upon any of any
Borrower's shareholders or members relating to the ownership of its
shares of capital stock or membership interests, as the case may be.
(f) Section 8.1(DD) is hereby amended in its entirety as follows:
(B) True Copies of Charter and Other Documents. Each
Borrower has furnished or caused to be furnished to Lender true and
complete copies of (a) all charter and other incorporation or formation
documents (together with any amendments thereto), with respect to each
Borrower and (b) their respective by-laws or operating agreements
(together with any amendments thereto).
(g) Section 9.1(S) is amended by replacing subsection (a) and (b) with
the following:
(S) Notice of Amendment to Certain Documents. If (and
on each occasion that): (a) any Borrower's Certificate of
Incorporation, Certificate of Formation or any of the charter or other
incorporation or formation documents of any Borrower shall at any time
be modified or amended in any material respect or if any new filing of
such documents shall at any time take place; or (b) any Borrower's
by-laws or operating agreement shall at any time be modified or amended
in any material respect.
(h) Section 9.2(U) is amended by adding the words "or membership
interest" after the words "capital stock."
(i) Exhibits 4.6,8.1(A), 8.1(B), 8.1(H), 8.1(I), 8.1(P), 8.1(Q),
8.1(EE), 8.1(FF), 9.2(H), 9.2(P) to the Loan Agreement are replaced
with the corresponding schedules and exhibits to this Agreement.
(j) All references in the Loan Agreement to QFAC are hereby amended to
read LLC.
6. This Agreement shall become effective upon satisfaction of the
following conditions precedent:
(i) Lender shall have received in form and substance
satisfactory to Lender four (4) copies of this Agreement duly executed
by QFAC, Custom, Holdings and LLC;
<PAGE>
(ii) Lender shall have received in form and substance
satisfactory to Lender executed copies of the Merger Agreement, the
Operating Agreement of LLC and the Certificate of Formation of LLC;
(iii) Each document (including, without limitation,
any Uniform Commercial Code financing statements) required by this
Agreement or under law or reasonably requested by Lender to be filed,
registered or recorded in order to create, in favor of Lender, a
perfected security interest in or lien upon the Collateral owned by LLC
shall have been properly filed, registered or recorded in each
jurisdiction in which the filing, registration or recordation thereof
is so required or requested, and Lender shall have received an
acknowledgment copy, or other evidence satisfactory to it, of each such
filing, registration or recordation and satisfactory evidence of the
payment of any necessary fee, tax or expense relating thereto;
(iv) Lender shall have received a copy of the
resolutions in form and substance reasonably satisfactory to Lender, of
the Board of Directors of LLC authorizing (x) the execution, delivery
and performance of the Agreement, and (y) the granting by LLC of the
Liens upon the Collateral certified by the Secretary or an Assistant
Secretary of LLC as of the date of this Agreement; and, such
certificate shall state that the resolutions thereby certified have not
been amended, modified, revoked or rescinded as of the date of such
certificate;
(v) Lender shall have received a copy of the Articles
or Certificate of Formation of LLC, and all amendments thereto,
certified by the Secretary of State or other appropriate official of
its jurisdiction of incorporation together with copies of the by-laws
or operating agreement of LLC certified as accurate and complete by the
Secretary or an Assistant Secretary of LLC;
(vi) Lender shall have received the executed legal
opinion of O'Sullivan Graev & Karabell, LLP in form and substance
satisfactory to Lender regarding the due authorization, enforceability
and validity of this Agreement and the transactions contemplated
herein;
(vii) Lender shall have received in form and
substance satisfactory to Lender, certified copies of LLC' casualty
insurance policies, together with loss payable endorsements on Lender's
standard form of loss payee endorsement naming Lender as loss payee,
and certified copies of LLC' liability insurance policies, together
with endorsements naming Lender as a co-insured;
(viii) Lender shall have received a duly executed
agreement establishing a Dominion Account for LLC with financial
institutions reasonably acceptable to Lender for the collection or
servicing of the Accounts and proceeds of the Collateral of LLC;
<PAGE>
(ix) Lender shall have received such other
certificates, instruments, documents and agreements as may reasonably
be required by Lender in connection with this Agreement or its counsel,
each of which shall be in form and substance satisfactory to Lender and
its counsel.
7. Except as expressly provided herein, all of the representations,
warranties, terms, covenants and conditions contained in the Loan Agreement, the
Loan Documents and the Mortgage shall remain unamended and shall continue to be
and shall remain in full force and effect in accordance with their respective
terms. The amendment to the Loan Agreement set forth herein shall be limited
precisely as provided for herein and shall not be deemed a waiver or
modification of, or an amendment to, any other term or provision of the Loan
Agreement.
8. This Agreement shall be governed and construed in accordance with
the laws of the State of New York.
9. This Agreement may be executed in one or more counterparts each of
which taken together shall constitute one and the same instrument. Any signature
delivered by a party via facsimile shall be deemed an original signature hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year specified at the beginning hereof.
QF ACQUISITION CORP
By: ________________________________
Its: _______________________________
QFAC, LLC
By: ________________________________
Its: _______________________________
CFP HOLDINGS, INC.
By: ________________________________
Its: _______________________________
CUSTOM FOOD PRODUCTS, INC.
By: ________________________________
Its: _______________________________
FLEET CAPITAL CORPORATION
By: ________________________________
Its: _______________________________
Exhibit 10.2
PLEDGE AND SECURITY AGREEMENT
(Membership Interest)
This PLEDGE AND SECURITY AGREEMENT, made this ___ day of June, 1999
between CFP HOLDINGS, INC., a Delaware corporation, ("Pledgor") and FLEET
CAPITAL CORPORATION ("Lender").
BACKGROUND
Pledgor, Custom Food Products, Inc., QFAC, LLC (as successor by merger
to QF Acquisition Corp.) (each a "Borrower" and collectively, "Borrowers") and
Lender are parties to a Loan and Security Agreement dated as of May 5, 1998 (as
amended, modified and supplemented from time to time, the "Loan Agreement")
pursuant to which Lender provides certain financial accommodations to Borrowers.
In order to induce Lender to enter into the Loan Agreement, Pledgor previously
agreed to pledge and grant to Lender a security interest in the shares of stock
of QF Acquisition Corp. owned by Pledgor.
Pledgor as sole stockholder of QF Acquisition Corp. has formed QFAC,
LLC ("LLC") pursuant to a Certificate of Formation dated as of April 15, 1999
and has merged QF Acquisition Corp. into LLC pursuant to an Agreement of Merger
dated as of June __, 1999. Pledgor has entered into that certain Operating
Agreement of LLC ("Operating Agreement") dated as of June __, 1999.
In order to induce Lender to enter into the Loan Agreement, Pledgor has
agreed to pledge and grant to Lender a security interest in the Collateral (as
hereafter defined) of Pledgor on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. Definitions. All capitalized terms used herein which are not defined
shall have the meanings given to them in the Loan Agreement.
2. Pledge and Grant of Security Interest.
To secure the full and punctual payment and performance of the
(a) Obligations (except PMSI Loans which are secured by the Equipment financed
thereby) and (b) all other indebtedness, obligations and liabilities of Pledgor
or any Borrower to Lender, whether now existing or hereafter arising, direct or
indirect, liquidated or unliquidated, absolute or contingent, due or not due and
whether under, pursuant to or evidenced by a note, agreement, guaranty,
instrument or otherwise ((a) and (b) collectively, the "Indebtedness"), Pledgor
hereby assigns, transfers, pledges, hypothecates and grants to Lender a security
interest in the assets of Pledgor described on Schedule A annexed hereto and all
distributions, interest, dividends, options, warrants, increases, profits and
income received therefrom, in all substitutions therefor and in all proceeds
thereof in any form (collectively, the "Collateral").
<PAGE>
All certificates, if any, representing or evidencing the
Collateral shall be delivered to and held by or on behalf of Lender pursuant
hereto and shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Lender. Pledgor
hereby authorizes LLC upon demand by Lender to deliver any certificates,
instruments or other distributions issued in connection with the Collateral
directly to Lender, in each case to be held by Lender, subject to the terms
hereof. Lender shall have the right, at any time in its discretion and without
notice to the Pledgor, to transfer to or to register in the name of Lender or
any of its nominees any or all of the Collateral. In addition, Lender shall have
the right at any time to exchange certificates or instruments, if any,
representing or evidencing Collateral for certificates or instruments of smaller
or larger denominations.
3. Representations and Warranties of Pledgors.
(a) Pledgor represents and warrants to Lender (which
representations and warranties shall be deemed to continue to be made until all
of the Indebtedness has been paid in full and the Loan Agreement has been
irrevocably terminated) that:
(i) The execution, delivery and performance by
Pledgor of this Agreement and the pledge of the Collateral hereunder does not
and will not result in any violation of any agreement, indenture, instrument,
license, judgment, decree, order, law, statute, ordinance or other governmental
rule or regulation applicable to Pledgor.
(ii) This Agreement constitutes the legal, valid, and
binding obligation of Pledgor enforceable against Pledgor in accordance with its
terms.
(iii) No consent or approval of any person,
corporation, limited liability company, governmental body, regulatory authority
or other entity is necessary for the execution, delivery and performance of this
Agreement by Pledgor or the exercise by Lender of any rights provided for in
this Agreement with respect to the Collateral or for the pledge and assignment
of, and the grant of a security interest in, the Collateral hereunder.
(iv) Pledgor is not a party to any pending or, to the
best of Pledgor's knowledge, threatened actions or proceedings before any court,
judicial body, administrative agency or arbitrator which, if adversely
determined, could materially adversely affect the Collateral.
(v) The Operating Agreement contains no restriction
with respect to the pledge of collateral being made pursuant to this Agreement.
(vi) Pledgor owns each item of the Collateral and,
except for the pledge and security interest granted hereunder to Lender, the
Collateral of Pledgor is subject to no prior Lien or to any agreement purporting
to grant to any Person a Lien upon the Collateral.
(vii) The pledge and assignment of the Collateral and
the grant of a security interest under this Agreement vest in Lender all rights
of Pledgor in the Collateral as contemplated by this Agreement.
<PAGE>
(b) Pledgor hereby represents and warrants to Lender (which
representations and warranties shall be deemed to continue to be made until all
of the Indebtedness has been paid in full and the Loan Agreement has been
irrevocably terminated), in addition to the representations and warranties set
forth in Section 3.(a) above that:
(i) Pledgor has the requisite power and authority to
enter into this Agreement, to pledge the Collateral for the purposes described
herein and to carry out the transactions contemplated by this Agreement.
(ii) The execution, delivery and performance by
Pledgor of this Agreement have been duly and properly authorized.
4. Affirmative Covenants. Until such time as all of the Indebtedness
has been paid in full and the Loan Agreement has been irrevocably terminated,
Pledgor shall:
(a) Defend the Collateral against the claims and demands of
all other parties and keep the Collateral free from all security interests and
other encumbrances, except for the security interest granted hereunder to
Lender.
(b) In the event Pledgor comes into possession of any portion
of the Collateral in violation of the terms and provisions of this Agreement,
hold the same in trust for Lender and deliver to Lender such Collateral in the
form so received no later than one (1) Business Day following Pledgor's receipt
thereof.
(c) In the event any portion of the Collateral is held by a
third party, take all action that Lender may reasonably request so as to
maintain the validity, enforceability, perfection and priority of Lender's
security interest in the Collateral.
(d) Pledgor will promptly deliver or cause to be delivered to
Lender all (i) notices and statements relating to the Collateral received by
Pledgor and (ii) all notices received by Pledgor relating to the Operating
Agreement.
(e) Notify Lender promptly of any material adverse event
relating to the Collateral or any material adverse change in the value of the
Collateral.
(f) At the written request of Lender at any time and from time
to time, at Pledgor's sole expense, promptly take such action and execute and
deliver such financing statements and further instruments and documents as
Lender may reasonably request in order to more fully perfect, evidence or
effectuate the pledge and assignment hereunder and the security interest granted
hereby and to enable Lender to exercise and enforce its rights and remedies
hereunder. Pledgor authorizes Lender to file without the signature of Pledgor
one or more financing or continuation statements under the Uniform Commercial
Code (the "UCC") relating to Pledgor's Collateral, naming Lender as "secured
party". In the event Lender files a financing statement without Pledgor's
signature, Lender shall promptly deliver copies thereof to Pledgor.
<PAGE>
(g) Furnish to Lender such other information relating to the
Collateral as Lender may from time to time reasonably request.
(h) Promptly furnish Lender, all notices delivered by Pledgor
to any third party under the terms and provisions of the Operating Agreement.
5. Negative Covenants. Until such time as the Indebtedness has been
paid in full and the Loan Agreement has been irrevocably terminated, Pledgor
shall not:
(a) Sell, convey, or otherwise dispose of any of the
Collateral or any interest therein or incur or permit to exist any pledge,
mortgage, lien, charge, encumbrance or any security interest whatsoever with
respect to the Collateral or the proceeds thereof other than that created
hereby.
(b) Enter into any amendment of or modification to the
Operating Agreement without Lender's prior written consent which consent shall
not be unreasonably withheld.
6. Events of Default.
The term "Event of Default" wherever used herein shall mean
the occurrence of any one of the following events:
(a) An "Event of Default" as such term is defined in the Loan
Agreement shall have occurred;
(b) Pledgor's shall default in its performance of any of its
obligations under any agreement between Pledgor and Lender, including, without
limitation, this Agreement;
(c) Any representation, warranty, statement or covenant made
or furnished to Lender by or on behalf of Pledgor in connection with this
Agreement proves to have been false in any material respect when made or
furnished or is breached, violated or not complied with;
(d) Pledgor shall (i) apply for, consent to, or suffer to
exist the appointment of, or the taking of possession by, a receiver, custodian,
trustee, liquidator or similar fiduciary of itself or of all or a substantial
part of his property, (ii) make a general assignment for the benefit of
creditors, (iii) commence a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or
insolvent, (v) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vi) acquiesce to, or fail to have
dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (vii) take any action for the
purpose of effecting any of the foregoing; or
7. Remedies.
Upon the occurrence of an Event of Default and so long as such
Event of Default is continuing Lender may:
<PAGE>
(i) Demand, collect, receipt for, settle, compromise,
adjust, sue for, foreclose or realize upon the Collateral (or any part thereof),
as Lender may determine in its sole discretion;
(ii) Require that all distributions and other amounts
payable with respect to the Collateral be delivered to Lender as additional
collateral security for the Indebtedness; and
(iii) Subject to the requirements of applicable law,
sell, assign and deliver the whole or, from time to time any part of the
Collateral for such price or prices and on such terms as Lender in its sole
discretion may determine.
Pledgor acknowledges that ten (10) days' prior written notice
of the time and place of any sale of any of the Collateral or any other intended
disposition thereof shall be reasonable and sufficient notice to Pledgor within
the meaning of the UCC. Pledgor hereby waives and releases any and all right or
equity of redemption, whether before or after sale hereunder. In addition to the
foregoing, Lender shall have all of the rights and remedies of a secured party
under applicable law and the UCC.
8. Proceeds of Collateral Agreement. The proceeds of any disposition
under this Agreement of the Collateral pledged to Lender by Pledgor shall be
applied as follows:
(a) First, to the payment of all costs, expenses and charges
of Lender incurred in connection with the care and safekeeping of the Collateral
(including, without limitation, the expenses of any sale or any other
disposition of any of the Collateral), the expenses of any taking, reasonable
attorneys' fees and expenses, court costs, any other expenses incurred or
expenditures or advances made by Lender in connection with the protection,
enforcement or exercise of its rights, powers or remedies hereunder, with
interest on any such reimbursement at the rate prescribed in the Loan Agreement
as the Default Rate for Base Rate Loans from the date of payment;
(b) Second, to the payment of the Indebtedness, in whole or in
part, in such order as Lender may elect, whether or not such Indebtedness is
then due;
(c) Third, to such persons, firms corporations or other
entities as required by applicable law including, without limitation, Section
9-504(1)(c) of the UCC; and
(d) Fourth, to the extent of any surplus to the Pledgor or as
a court of competent jurisdiction may direct.
9. No Waiver. Any and all of Lender's rights with respect to the
pledge, assignment and security interest granted hereunder shall continue
unimpaired, and Pledgor shall be and remain obligated in accordance with the
terms hereof, notwithstanding (a) the bankruptcy, insolvency or reorganization
of Pledgor, (b) the release or substitution of any item of Collateral at any
time, or of any rights or interests therein, or (c) any delay, extension of
time, renewal, compromise or other indulgence granted by Lender in reference to
any of the Obligations. Pledgor hereby waives all notice of any such delay,
extension, release, substitution, renewal, compromise or other indulgence, and
hereby consents to be bound hereby as fully and effectively as if Pledgor had
expressly agreed
<PAGE>
thereto in advance. No delay or extension of time by Lender in exercising any
power of sale, option or other right or remedy hereunder, and no failure by
Lender to give notice or make demand, shall constitute a waiver thereof, or
limit, impair or prejudice Lender's right to take any action against Pledgor or
to exercise any other power of sale, option or any other right or remedy.
10. Expenses. The Collateral shall secure, and Pledgor shall be liable
for and shall pay to Lender on demand, from time to time, all expenses
(including but not limited to, attorneys' fees and costs, taxes, and all
transfer, recording, filing and other charges) of, or incidental to, the
custody, care, transfer and administration of the Collateral, or in any way
relating to the enforcement, protection or preservation of the rights or
remedies of Lender under this Agreement.
11. Lender Appointed Attorney-In-Fact and Performance by Lender.
Pledgor hereby irrevocably constitutes and appoints Lender as Pledgor's true and
lawful attorney-in-fact, with full power of substitution, to execute,
acknowledge and deliver any instruments and to do in Pledgor's name, place and
stead, all such acts, things and deeds for and on behalf of and in the name of
Pledgor, which Pledgor could or might do or which Lender may deem necessary,
desirable or convenient solely to accomplish the purposes of this Agreement,
including, without limitation, to execute such instruments of assignment or
transfer or orders and to register, convey or otherwise transfer title to the
Collateral into Lender's name; provided that such power of attorney may only be
exercised by Lender following the occurrence and during the continuance of an
Event of Default. Pledgor hereby ratifies and confirms all that said
attorney-in-fact may so do and hereby declares this power of attorney to be
coupled with an interest and irrevocable. If Pledgor fails to perform any
agreement herein contained, Lender may itself perform or cause performance
thereof, and any expenses of Lender incurred in connection therewith shall be
paid by Pledgor as provided in Section 10 hereof.
12. Distributions. Unless an Event of Default shall have occurred and
be continuing, Pledgor shall be entitled to collect and receive for Pledgor's
own use distributions and other amounts paid with respect to the Collateral.
13. Captions. All captions in this Agreement are included herein for
convenience of reference only and shall not constitute part of this Agreement
for any other purpose.
14. Termination. Upon payment in full of all the Obligations and the
irrevocable termination of the Loan Agreement, this Agreement shall terminate
and Lender shall execute and deliver to Pledgor all such releases, deeds,
assignments and other instruments as may be necessary or proper to re-vest in
Pledgor full title to the Collateral, subject to any disposition thereof which
may have been made by Lender pursuant hereto.
15. Miscellaneous.
(a) This Agreement constitutes the entire and final agreement
among the parties with respect to the subject matter hereof and may not be
changed, terminated or otherwise varied except by a writing duly executed by the
parties.
<PAGE>
(b) No waiver of any term or condition of this Agreement,
whether by delay, omission or otherwise, shall be effective unless in writing
and signed by the party sought to be charged, and then such waiver shall be
effective only in the specific instance and for the purpose for which given.
(c) In the event that any provision of this Agreement or the
application thereof to Pledgor or any circumstance in any jurisdiction governing
this Agreement shall, to any extent, be invalid or unenforceable under any
applicable statute, regulation, or rule of law, such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform to such statute, regulation or rule of law, and the
remainder of this Agreement and the application of any such invalid or
unenforceable provision to parties, jurisdictions, or circumstances other than
to whom or to which it is held invalid or unenforceable, shall not be affected
thereby nor shall same affect the validity or enforceability of any other
provision of this Agreement.
(d) This Agreement shall be binding upon Pledgor and its
administrators, successors and assigns, and shall inure to the benefit of Lender
and its successors and assigns.
(e) Any notice or request hereunder may be given to Pledgor or
to Lender at their respective addresses set forth below or at such other address
as may hereafter be specified in a notice designated as a notice of change of
address under this Section. Any notice or request hereunder shall be given by
(a) hand delivery, (b) registered or certified mail, return receipt requested,
or (c) telecopy to the number set out below (or such other number as may
hereafter be specified in a notice designated as a notice of change of address)
with electronic confirmation of receipt. Any notice or other communication
required or permitted pursuant to this Agreement shall be deemed given (a) when
personally delivered to any officer of the party to whom it is addressed, (b) on
the earlier of actual receipt thereof or three (3) days following posting
thereof by certified or registered mail, postage prepaid, or (c) upon actual
receipt thereof when sent by a recognized overnight delivery service or (d) upon
actual receipt thereof when sent by telecopier or the number set forth below
with telephone communication confirming receipt and subsequently confirmed by
registered, certified or overnight mail to the address set forth below, in each
case addressed to each party at its address set forth below or at such other
address as has been furnished in writing by a party to the other by like notice:
(A) If to Lender: Fleet Capital Corporation
200 Glastonbury Boulevard
Glastonbury, Connecticut
Telephone: 860-659-3200
Telecopy: 860-657-7759
Attention: Northeast Loan Administration
Manager
<PAGE>
with a copy to: Hahn & Hessen LLP
350 Fifth Avenue, Suite 3700
New York, New York 10118
Attention: Daniel J. Krauss, Esq.
Telephone: 212-736-1000
Telecopy: 212-594-7167
(B) If to Pledgor: CFP Holdings, Inc.
117 West Olympia Boulevard
Montebello, California 90640
Attention: Chief Financial Officer
Telephone: (213) 727-0900
Telecopy: (213) 727-0412
with a copy to: O'Sullivan Graev & Karabell
30 Rockefeller Plaza
New York, New York 10112
Attention: Stewart Kagan, Esq.
Telephone: (212) 408-2400
Telecopier:(212) 408-2420
(f) This Agreement shall be governed by and construed and
enforced in all respects in accordance with the laws of the State of New York
applied to contracts to be performed wholly within the State of New York.
(g) PLEDGOR AND LENDER EACH HEREBY EXPRESSLY WAIVE ANY AND ALL
RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS
AGREEMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO OR ANY OTHER AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE; AND PLEDGOR AND LENDER EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH
ACTIONS OR PROCEEDINGS SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT
EITHER PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY TO THE WAIVER OF ITS
RIGHT BY TRIAL BY JURY.
(h) PLEDGOR EXPRESSLY CONSENTS TO THE JURISDICTION AND VENUE
OF THE SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK, AND OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR ALL
PURPOSES IN CONNECTION WITH THIS AGREEMENT. ANY JUDICIAL PROCEEDING BY PLEDGOR
AGAINST LENDER INVOLVING, DIRECTLY OR INDIRECTLY ANY MATTER OR CLAIM IN ANY WAY
ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT SHALL BE
<PAGE>
BROUGHT ONLY IN THE SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK
OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK.
PLEDGOR FURTHER CONSENTS THAT ANY SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS
(INCLUDING, WITHOUT LIMITATION, ANY NOTICE OR MOTION OR OTHER APPLICATION TO
EITHER OF THE AFOREMENTIONED COURTS OR A JUDGE THEREOF) OR ANY NOTICE IN
CONNECTION WITH ANY PROCEEDINGS HEREUNDER, MAY BE SERVED INSIDE OR OUTSIDE OF
THE STATE OF NEW YORK OR THE SOUTHERN DISTRICT OF NEW YORK BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY PERSONAL SERVICE PROVIDED A
REASONABLE TIME FOR APPEARANCE IS PERMITTED, OR IN SUCH OTHER MANNER AS MAY BE
PERMISSIBLE UNDER THE RULES OF SAID COURTS. PLEDGOR WAIVES ANY OBJECTION TO
JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON AND SHALL NOT ASSERT ANY
DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON
CONVENIENS.
(i) This Agreement may be executed in one or more
counterparts, each of which taken together shall constitute one and the same
agreement. Any signature delivered by telecopy shall be deemed to be an original
signature hereunder.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
CFP HOLDINGS, INC.
By: ________________________________
Name:
Its:
FLEET CAPITAL CORPORATION
By: ________________________________
Name:
Its:
<PAGE>
STATE OF _________________ )
: ss.:
COUNTY OF ________________ )
On the _______ day of May, 1999, before me personally came ___________,
to me known, who being by me duly sworn, did depose and say that he is the
___________________________ of CFP HOLDINGS, INC., the corporation described in
and which executed the above instrument and that he signed his name thereto by
like order of the board of directors of said corporation.
_______________________________
Notary Public
<PAGE>
SCHEDULE A
Description of Collateral
All of Pledgor's now owned and hereafter acquired rights and interests
in QFAC, LLC and its successors (the "Company"), including, without limitation,
all distributions, interest, dividends, options, warrants, increases, profits
and income from the Company.
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of June, 1999 before me personally came
__________________, to me known, who, being by me duly sworn, did depose and say
that he is the_____________ of FLEET CAPITAL CORPORATION, the corporation
described in and which executed the above instrument; and that he was authorized
to sign his name thereto on behalf of said corporation.
_______________________________
Notary Public
<PAGE>
June __, 1999
QFAC, LLC
Re: Security Interest in Membership Interests
Gentlemen:
The undersigned has pledged and granted a security interest (the
"Lien") to Fleet Capital Corporation, ("Lender"), in all of its respective
right, title and interest in and to the assets described on Schedule A annexed
hereto, together with all distributions, interest, dividends, options, warrants,
increases, profits and income received therefrom, all substitutions therefor and
all proceeds thereof (the "Collateral").
QFAC, LLC (the "Company") is hereby authorized and directed, upon
notice to the Company by Lender, to remit to Lender all distributions under the
Operating Agreement dated as of June __, 1999 entered into by Pledgor as sole
member of the Company and all other amounts payable from time to time by the
Company to the undersigned. Lender is hereby irrevocably authorized and
empowered to ask, demand, receive and give acquittance for any and all amounts
which may be or become due or payable, or remain unpaid at any time and times to
the undersigned by the Company, and to endorse any checks, drafts or other
orders for the payment of money payable to the undersigned in payment thereof,
and in Lender's discretion to file any claims or take any action or institute
any proceeding, either in its own name or in the name of any of the undersigned
or otherwise, which Lender may deem necessary or advisable in order to collect
all distributions and all other amounts payable from time to time by the Company
to the undersigned. The Company is hereby authorized to recognize Lender's
claims to rights hereunder without investigating any reason for any action taken
by Lender or the application to be made by Lender of any of the amounts to be
paid to Lender hereunder and the undersigned releases the Company from all
liability in connection therewith. Checks for all or any part of the sums
payable under this letter agreement shall be drawn to the sole and exclusive
order of Lender.
<PAGE>
The foregoing instructions, being coupled with an interest, shall be
irrevocable.
Very truly yours,
CFP HOLDINGS, INC.
By: ________________________________
Name:
Its:
ACCEPTED AND AGREED TO:
QFAC, LCC
By: ________________________
Its: _______________________
<PAGE>
SCHEDULE A
Description of Collateral
All of CFP Holdings, Inc.'s now owned and hereafter acquired rights and
interests in QFAC, LLC and its successors (the "Company"), including, without
limitation, all distributions, interest, dividends, options, warrants,
increases, profits and income from the Company.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001030776
<NAME> CFP Holdings, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,140
<SECURITIES> 0
<RECEIVABLES> 14,789
<ALLOWANCES> 374
<INVENTORY> 18,942
<CURRENT-ASSETS> 36,808
<PP&E> 39,970
<DEPRECIATION> 10,627
<TOTAL-ASSETS> 137,413
<CURRENT-LIABILITIES> 15,686
<BONDS> 115,000
0
0
<COMMON> 6,023
<OTHER-SE> (34,311)
<TOTAL-LIABILITY-AND-EQUITY> 137,413
<SALES> 47,473
<TOTAL-REVENUES> 47,473
<CGS> 38,303
<TOTAL-COSTS> 38,303
<OTHER-EXPENSES> 4,595
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,338
<INCOME-PRETAX> 238
<INCOME-TAX> 22
<INCOME-CONTINUING> 216
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 216
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
