<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 1, 1996
ATLANTIC BEVERAGE COMPANY, INC.
(Exact name of registrant as specified in its
charter)
<TABLE>
<CAPTION>
Delaware 0-22614 36-3761400
<S> <C> <C>
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
1587 Sulphur Spring Road
Baltimore, Maryland
(Address of principal executive offices)
21227
(Zip Code)
(410) 247-5857
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
Exhibit Index is on page 6.
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
GENERALLY
In August of 1996, Atlantic Beverage Company, Inc. (the "Company") and
a newly-formed, wholly-owned subsidiary of the Company acquired certain of the
assets of Richards Cajun Country Food Processors ("Richards"). Richards, based
in Churchpoint, Louisiana, is engaged in the manufacturing, marketing and
distribution of Cajun-style processed meat and specialty food products.
THE RICHARDS ACQUISITION
Under the terms of the Asset Purchase Agreement executed on August 1,
1996, among Richards Cajun Foods Corp. ("Cajun Foods"), the Company, as the
capital stock owner of Cajun Foods and J.L. Richard, the Company acquired all of
the outstanding capital stock of Richards. The purchase price for these assets
was approximately $3.4 million, which included cash paid at closing in the
amount of $2.5 million and a subordinated promissory note in the amount of $0.85
million. In connection with these transactions and the financing thereof, the
Company incurred transaction costs of approximately $0.3 million, which will be
reflected as an asset on the Company's balance sheet.
FUNDING OF THE ACQUISITION
In funding the $2.5 million cash portion of the Richards transaction,
the Company used approximately $0.8 million of existing cash balances and
approximately $0.3 million of additional borrowings under a prior term loan and
revolving line of credit agreement with the LaSalle National Bank, as well as
obtained additional term debt from LaSalle National Bank in the amount of $1.4
million.
-2-
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
The following financial statements are being filed as
part of this report:
(i) Financial Statement of Business Acquired:
(A) Audited Year-End Financial
Statements:
Report of Independent Public
Accountants
Balance Sheets--as of December 31,
1994 and 1995
Statements of Income--for the years
ended December 31, 1993, 1994 and
1995
Statements of Changes in Owner's
Capital--for the years ended
December 31, 1993, 1994 and 1995
Statements of Cash Flows--for the
years ended December 31, 1993, 1994
and 1995
Notes to Financial Statements
December 31, 1994 and 1995
(B) Unaudited Interim Financial
Statements:
Balance Sheets--as of March 31, 1996
Statements of Income--for the years
ended March 31, 1995 and 1996
Statements of Cash Flows--for the
years ended March 31, 1995 and 1996
Notes to Financial Statements March
31, 1995 and 1996
(ii) Financial Statements of Acquiring Business
Pro Forma Consolidated Financial
Data
Atlantic Beverage Company, Inc. Pro
Forma Consolidating Balance Sheets
as of March 31, 1996 (Unaudited)
Atlantic Beverage Company, Inc. Pro
Forma Consolidated Statement of
Operations for the Year Ended
December 31, 1995 (Unaudited)
Atlantic Beverage Company, Inc. Pro
Forma Consolidated Statement of
Operations for the Quarter Ended
March 31, 1996(Unaudited)
-3-
<PAGE>
(b) Exhibits
The following Exhibits are filed herewith
Number Title
2.08 Asset Purchase Agreement dated
August 1, 1996 among Cajun Foods, as
Purchaser, the Company, as owner of
the capital stock of Cajun Foods,
and J.L. Richard, as Seller.
2.09 First Amendment to Loan and Security
Agreement dated as of August 1, 1996
among the Company, Carlton Foods
Corp. and Prefco Corp., as
Borrowers, and LaSalle National
Bank, as the Lender.
2.10 Warranty Bill of Sale and Assignment
dated August 1, 1996 among J.L.
Richard and Donna Marie Richard, as
Seller, and Cajun Foods as,
Purchaser.
2.11 Authorization of Inspection dated
August 1, 1996 among J.L. Richard
and the Company.
2.12 Assignment dated August 1, 1996
among J.L. Richard, as Assignor, and
Cajun Foods, as Assignee.
2.13 Assignment dated August 1, 1996
among Donna Marie Richard, as
Assignor, and Cajun Foods, as
Assignee.
-4-
<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 hereunto duly authorized.
ATLANTIC BEVERAGE COMPANY, INC.
Dated: August 12, 1996 By: /s/ Merrick M. Elfman
--------------------------
Merrick M. Elfman, Chairman of the Board
-5-
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENT DESCRIPTION
<TABLE>
<CAPTION>
PAGE
<S> <C>
Financial Statement of Business Acquired:
(A) Audited Year-End Financial Statements:
Report of Independent Public Accountants F-1
Balance Sheets--as of December 31, 1994 and 1995 F-2
Statements of Income--for the years ended December 31, 1993, 1994
and 1995 F-3
Statements of Changes in Owner's Capital--for the years ended
December 31, 1993, 1994 and 1995 F-4
Statements of Cash Flows--for the years ended December 31, 1993,
1994 and 1995 F-5
Notes to Financial Statements December 31, 1994 and 1995 F-6
(B) Unaudited Interim Financial Statements:
Balance Sheets--as of March 31, 1996 F-8
Statements of Income--for the years ended March 31, 1995
and 1996 F-9
Statements of Cash Flows--for the years ended March 31,
1995 and 1996 F-10
Notes to Financial Statements March 31, 1995 and 1996 F-11
Financial Statements of Acquiring Business
Pro Forma Consolidated Financial Data F-13
Atlantic Beverage Company, Inc. Pro Forma Consolidating Balance Sheets
as of March 31, 1996 (Unaudited) F-14
Atlantic Beverage Company, Inc. Pro Forma Consolidated Statement of
Operations for the Year Ended December 31, 1995 (Unaudited) F-16
Atlantic Beverage Company, Inc. Pro Forma Consolidated Statement of Operations
for the Quarter Ended March 31, 1996 (Unaudited) F-17
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
<S> <C> <C>
2.08 Asset Purchase Agreement dated August 1, 1996 among Cajun Foods, as Purchaser, the
Company, as owner of the capital stock of Cajun Foods, and J.L. Richard, as Seller. 7
2.09 First Amendment to Loan and Security Agreement dated as of August 1, 1996 among the
Company, Carlton Foods Corp. and Prefco Corp., as Borrowers, and LaSalle National Bank,
as the Lender. 55
2.10 Warranty Bill of Sale and Assignment dated August 1, 1996 among J.L. Richard and Donna
Marie Richard, as Seller, and Cajun Foods, as Purchaser. 90
2.11 Authorization of Inspection dated August 1, 1996 among J.L. Richard and the Company.
95
2.12 Assignment dated August 1, 1996 among J.L. Richard, as Assignor, and Cajun Foods, as
Assignee. 96
2.13 Assignment dated August 1, 1996 among Donna Marie Richard, as Assignor, and Cajun Foods,
as Assignee. 99
</TABLE>
-6-
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Owner of
Richard's Cajun Country Food Processors:
We have audited the accompanying balance sheets of Richard's Cajun Country Food
Processors (a Louisiana sole proprietorship) as of December 31, 1994 and 1995,
and the related statements of income, changes in owner's capital and cash flows
for the years ended December 31, 1993, 1994 and 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Richard's Cajun Country Food
Processors as of December 31, 1994 and 1995, and the results of its operations
and its cash flows for the years ended December 31, 1993, 1994 and 1995, in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
Baltimore, Maryland,
May 17, 1996 (except with respect to
the matter discussed in
Note 5, as to which the
date is August 1, 1996)
F-1
<PAGE>
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
BALANCE SHEETS
AS OF DECEMBER 31, 1994 AND 1995
<TABLE>
<CAPTION>
1994 1995
--------------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash (Note 4) $ 543,474 $ 323,856
Accounts receivable 114,373 110,860
Inventory (Notes 1 and 2) 48,968 62,620
-------------- --------------
Total current assets 706,815 497,336
PROPERTY, PLANT AND EQUIPMENT, net (Notes 1 and 2) 327,682 304,173
-------------- --------------
Total Assets $ 1,034,497 $ 801,509
============== ==============
LIABILITIES AND OWNER'S CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 8,653 $ 32,727
Accrued expenses 12,304 12,070
-------------- --------------
Total Liabilities 20,957 44,797
OWNER'S CAPITAL 1,013,540 756,712
-------------- --------------
Total Liabilities and Owner's Capital $ 1,034,497 $ 801,509
============== ==============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-2
<PAGE>
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
--------------- --------------- ----------
<S> <C> <C> <C> <C>
NET SALES (Note 1) $ 3,235,228 $ 3,330,016 $ 3,377,076
COST OF GOODS SOLD, exclusive of depreciation
shown below 2,255,561 2,130,259 2,240,328
-------------- -------------- --------------
Gross profit 979,667 1,199,757 1,136,748
-------------- -------------- --------------
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES:
Salaries and benefits 162,412 161,388 155,698
Other operating expenses 100,154 125,002 123,021
Depreciation (Notes 1 and 2) 89,294 70,367 60,797
-------------- -------------- --------------
Total selling, general and administrative
expenses 351,860 356,757 339,516
-------------- -------------- --------------
Income from operations 627,807 843,000 797,232
INTEREST INCOME 7,669 9,217 10,462
-------------- -------------- --------------
NET INCOME $ 635,476 $ 852,217 $ 807,694
============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
STATEMENTS OF CHANGES IN OWNER'S CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
<S> <C>
BALANCE, December 31, 1992 $ 770,304
Net income 635,476
Distributions to owner (600,736)
--------------
BALANCE, December 31, 1993 805,044
Net income 852,217
Distributions to owner (643,721)
--------------
BALANCE, December 31, 1994 1,013,540
Net income 807,694
Distributions to owner (1,064,522)
--------------
BALANCE, December 31, 1995 $ 756,712
==============
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
--------------- --------------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 635,476 $ 852,217 $ 807,694
Adjustments to reconcile net income to cash
flows provided by operating activities-
Depreciation 89,294 70,367 60,797
(Increase) decrease in accounts receivable (22,470) 4,384 3,513
(Increase) decrease in inventory (8,048) 4,359 (13,652)
(Decrease) increase in accounts payable (7,071) (3,056) 24,074
Increase (decrease) in accrued expenses 3,103 (2,718) (234)
-------------- -------------- --------------
Net cash flows provided by operating activities 690,284 925,553 882,192
-------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment (85,308) (15,393) (37,288)
-------------- -------------- --------------
Net cash flows used in investing activities (85,308) (15,393) (37,288)
-------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to owner (600,736) (643,721) (1,064,522)
-------------- -------------- --------------
Net cash used in financing activities (600,736) (643,721) (1,064,522)
-------------- -------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 4,240 266,439 (219,618)
CASH, beginning of period 272,795 277,035 543,474
-------------- -------------- --------------
CASH, end of period $ 277,035 $ 543,474 $ 323,856
============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1995
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying financial statements present the accounts of Richard's Cajun
Country Food Processors ("Richard's" or "the Company"), a wholesale processor
and distributor of meat products, primarily in Louisiana and the surrounding
area.
Revenue Recognition
The Company records sales when product is delivered to the customers.
Inventory
Inventory is stated at the lower of cost or market and is comprised primarily of
packaged meat products, raw materials to be processed and packaging supplies.
Cost is determined using the first-in, first-out (FIFO) method.
Property, Plant and Equipment
Property, Plant and Equipment consists of land, buildings and building
improvements, office and warehouse equipment and delivery vehicles and is stated
at cost. Depreciation on buildings and building improvements is provided for on
the straight-line method over 15 to 31.5 years. Depreciation on office and
warehouse equipment and delivery vehicles is provided for on the double
declining balance method over five year and seven year estimated useful lives of
the assets.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions.
These estimates and assumptions affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues, expenses, gains
and losses during the reporting periods. Actual results could differ from these
estimates.
Income Taxes
Richard's is a sole proprietorship and, as such, Richard's taxable income or
loss for the periods was included in the individual income tax returns of its
owner for federal and state income tax purposes. As a result, no provision for
income taxes has been included in the accompanying statements of income.
2. INVENTORY:
Inventories consisted of the following as of December 31:
F-6
<PAGE>
<TABLE>
<CAPTION>
1994 1995
---------------- ----------
<S> <C> <C>
Raw materials $ 18,389 $ 30,022
Finished products 12,676 12,290
Supplies 17,903 20,308
-------------- --------------
Total $ 48,968 $ 62,620
============== ==============
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consisted of the following as of December 31:
<TABLE>
<CAPTION>
1994 1995
---------------- ---------------
<S> <C> <C>
Land $ 16,000 $ 16,000
Buildings and improvements 346,683 347,017
Furniture and equipment 427,629 462,719
Vehicles 143,967 145,831
-------------- --------------
934,279 971,567
Less - Accumulated depreciation (606,597) (667,394)
-------------- --------------
Property, plant and equipment, net $ 327,682 $ 304,173
============== ==============
</TABLE>
4. LETTER OF CREDIT:
Richard's maintains a standby letter of credit for one of its suppliers to
provide collateral for inventory purchases. As of December 31, 1995, total funds
committed for this letter of credit amounted to $20,000. No funds were drawn
down at December 31, 1995, on this letter of credit.
5. SUBSEQUENT EVENT:
On August 1, 1996, substantially all of the assets and liabilities of Richard's
were acquired by a wholly-owned subsidiary of Atlantic Beverage Company, Inc. As
a result, a new basis of accounting was established. In connection with this
acquisition, the sole owner of Richard's (the Seller) has entered into a 3-year
employment agreement for $50,000 per year. The Seller will be primarily
responsible for sales and marketing of the operations. The accompanying
statements of income do not include compensation expense of the owner.
F-7
<PAGE>
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
BALANCE SHEET
AS OF MARCH 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS:
Cash $ 398,711
Accounts receivable 97,623
Inventory 112,235
Prepaids 12,460
--------------
Total current assets 621,029
PROPERTY, PLANT AND EQUIPMENT, net 300,008
--------------
Total Assets $ 921,037
==============
LIABILITIES AND OWNER'S CAPITAL
CURRENT LIABILITIES:
Accounts payable 9,897
Accrued expenses 12,633
--------------
Total Liabilities 22,530
OWNER'S CAPITAL 898,507
Total Liabilities and Owner's Capital $ 921,037
==============
</TABLE>
The accompanying notes are an integral part of this balance sheet.
F-8
<PAGE>
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1995 1996
-------------- --------------
<S> <C> <C>
NET SALES $ 838,476 $ 909,177
COST OF GOODS SOLD, exclusive of depreciation
shown below 551,712 553,885
-------------- --------------
Gross profit 286,764 355,292
-------------- --------------
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES:
Salaries 42,645 40,501
Other operating expenses 29,142 25,365
Depreciation 10,095 9,900
-------------- --------------
Total selling, general and administrative
expenses 81,882 75,766
-------------- --------------
Income from operations 204,882 279,526
INTEREST INCOME 3,263 2,405
-------------- --------------
NET INCOME $ 208,145 $ 281,931
============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
F-9
<PAGE>
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1995 1996
------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 208,145 $ 281,931
Adjustments to reconcile net income to cash
flows provided by operating activities-
Depreciation 10,095 9,900
Decrease in accounts receivable, net 17,091 13,237
Decrease (increase) in inventory 22,215 (49,615)
Increase in prepaids (12,526) (12,460)
Increase (decrease) in accounts payable 2,706 (22,830)
Increase in accrued expenses 786 563
-------------- --------------
Net cash flows provided by operating activities 248,512 220,726
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (3,066) (5,735)
-------------- --------------
Net cash flows used in investing activities (3,066) (5,735)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to owner (196,600) (140,136)
-------------- --------------
Net cash flows used in financing activities (196,600) (140,136)
-------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 48,846 74,855
CASH, beginning of period 543,474 323,856
-------------- --------------
CASH, end of period $ 592,320 $ 398,711
============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
F-10
<PAGE>
RICHARD'S CAJUN COUNTRY FOOD PROCESSORS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995 AND 1996
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying financial statements present the accounts of Richard's Cajun
Country Food Processors ("Richard's" or "the Company"), a wholesale processor
and distributor of meat products, primarily in Louisiana and the surrounding
area.
Revenue Recognition
The Company records sales when product is delivered to the customers.
Inventory
Inventory is stated at the lower of cost or market and is comprised primarily of
packaged meat products, raw materials to be processed and packaging supplies.
Cost is determined using the first-in, first-out (FIFO) method.
Property, Plant and Equipment
Property, Plant and Equipment consists of land, buildings and building
improvements, office and warehouse equipment and delivery vehicles and is stated
at cost. Depreciation on buildings and building improvements is provided for on
the straight-line method over 15 to 31.5 years. Depreciation on office and
warehouse equipment and delivery vehicles is provided for on the double
declining balance method over five year and seven year estimated useful lives of
the assets.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions.
These estimates and assumptions affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues, expenses, gains
and losses during the reporting periods. Actual results could differ from these
estimates.
Income Taxes
Richard's is a sole proprietorship and, as such, Richard's taxable income or
loss for the periods was included in the individual income tax returns of its
owner for federal and state income tax purposes. As a result, no provision for
income taxes has been included in the accompanying statements of income.
2. INVENTORY:
Inventories consisted of the following as of December 31, 1995, and March 31,
1996:
F-11
<PAGE>
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
(Unaudited)
<S> <C> <C>
Raw materials $ 30,022 $ 53,873
Finished products 12,290 22,447
Supplies 20,308 35,915
-------------- --------------
Total $ 62,620 $ 112,235
============== ==============
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consisted of the following as of December 31,
1995, and March 31, 1996:
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
(Unaudited)
<S> <C> <C>
Land $ 16,000 $ 16,000
Buildings and improvements 347,017 347,017
Furniture and equipment 462,719 468,454
Vehicles 145,831 155,809
-------------- --------------
971,567 987,280
Less - Accumulated depreciation (667,394) (687,272)
-------------- --------------
Property, plant and equipment, net $ 304,173 $ 300,008
============== ==============
</TABLE>
4. LETTER OF CREDIT:
Richard's maintains a standby letter of credit for one of its suppliers to
provide collateral for inventory purchases. As of March 31, 1996, total funds
committed for this letter of credit amounted to $20,000. No funds were drawn
down at March 31, 1996, on this letter of credit.
5. SUBSEQUENT EVENT:
On August 1, 1996, substantially all of the assets and liabilities of Richard's
were acquired by a wholly-owned subsidiary of Atlantic Beverage Company, Inc. As
a result, a new basis of accounting was established. In connection with this
acquisition, the sole owner of Richard's (the Seller) has entered into a 3-year
employment agreement for $50,000 per year. The Seller will be primarily
responsible for sales and marketing of the operations. The accompanying
statements of income do not include compensation expense of the owner.
F-12
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL DATA
The following Pro Forma Consolidated Financial Data includes
the unaudited Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1995, the unaudited Pro Forma Consolidated Statement of Operations
for the quarter ended March 31, 1996, and the unaudited Pro Forma Consolidated
Balance Sheet as of March 31, 1996. The unaudited Pro Forma Consolidated
Statement of Operations for the year ended December 31, 1995 and the quarter
ended March 31, 1996 and the unaudited Pro Forma Consolidated Balance Sheet as
of March 31, 1996 are adjusted to give effect to (i) the consummation of the
acquisition of the net assets of Richard's Cajun Country Food Processors
(Richard's), (ii) the incurrence of revolver and term debt in amounts sufficient
to complete the transactions described in (i) above, as if such transaction had
occurred on January 1, 1995 for the unaudited Pro Forma Consolidated Statement
of Operations for the year ended December 31, 1995, and for the quarter ended
March 31, 1996; and as of March 31, 1996 for the unaudited Pro Forma
Consolidated Balance Sheet as of March 31, 1996.
The pro forma adjustments are based upon available information
and certain assumptions that the Company believes are reasonable. The Pro Forma
Consolidated Financial Data should be read in conjunction with the Company's
Financial Statements and related notes thereto and the financial statements and
related notes of Richard's Cajun Country Food Processors. The unaudited Pro
Forma Consolidated Financial Data do not purport to represent what the Company's
results of operations or financial position would have been had any of the above
events occurred on January 1, 1995 or January 1, 1996 or to project the
Company's results of operations or financial position for or at any future
period or date.
F-13
<PAGE>
ATLANTIC BEVERAGE COMPANY, INC.
CONSOLIDATING PRO FORMA BALANCE SHEETS
AS OF MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
The Company Richard's Pro Forma Pro Forma
(Historical) (Historical) Adjustments Consolidated
---------------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Cash $ 415,538 $ 398,711 $ (398,711) (a) $ 415,538
Short term invesments 1,120,956 - (820,000) (b) 300,956
Accounts receivable 6,657,167 97,623 6,754,790
Inventory 2,631,166 112,235 2,743,401
Prepaid expenses 353,376 12,460 365,836
---------------- -------------- ---------------- ----------------
Total Current Assets 11,178,203 621,029 (1,218,711) 10,580,521
Property, plant and equipment, net 2,086,369 300,008 699,992 (c) 3,086,369
Noncompete Agreement, net 106,000 - 106,000
Deferred tax asset, net 365,000 - 365,000
Goodwill, net 8,838,089 - 2,390,000 (d) 11,228,089
Cash surrender value of life insurance - - -
Other assets, net 644,228 - 50,000 (e) 694,228
---------------- -------------- ---------------- ----------------
Total Assets 23,217,889 921,037 1,921,281 26,060,207
================ ============== ================ ================
Bank overdraft 2,748,117 - 2,748,117
Line of credit 2,729,992 - 530,000 (f) 3,259,992
Current portion of notes payable 804,776 804,776
Accounts payable 5,556,789 9,897 5,566,686
Accrued expenses 810,570 12,633 823,203
Net current liabilities of discontinued
operations 264,646 - 264,646
Current portion of obligations under capital
lease - - -
---------------- -------------- ---------------- ----------------
Total Current Liabilities 12,914,890 22,530 530,000 13,467,420
Obligations under capital lease, net of current
portion 140,818 - 140,818
Long-term debt, net of current portion 5,443,813 - 2,289,788 (g) 7,733,601
Deferred tax liability 167,000 - 167,000
---------------- -------------- ---------------- ----------------
Total liabilities 18,666,521 22,530 2,819,788 21,508,839
Stockholders' Equity:
Preferred stock - - -
Series A nonvoting preferred stock - - -
Common stock 61,490 - 61,490
Additional paid-in-capital 8,772,701 - 8,772,701
Owner's Capital - 898,507 (898,507) (h) -
Retained earnings (Accumulated
deficit) (3,855,753) - (3,855,753)
Treasury stock (427,070) - (427,070)
---------------- -------------- ---------------- ----------------
Total Equity 4,551,368 898,507 (898,507) 4,551,368
Total Liabilities and Stockholders' Equity $23,217,889 $ 921,037 $1,921,281 $ 26,060,207
================ ============== ================ ================
</TABLE>
F-14
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEETS
(a) To eliminate cash not acquired by Atlantic Beverage Company, Inc.
(b) To reflect cash to be paid to the seller of Richard's from excess cash
of the Company.
(c) To reflect adjustment to record property, plant and equipment at
estimated fair value.
(d) To record goodwill related to the acquisition of Richard's calculated
as follows:
Total Purchase Price $ 3,389,788
Transaction costs related to purchase 200,000
Net assets acquired (1,199,788)
------------
Goodwill $ 2,390,000
(e) Estimated financing costs to be deferred and amortized over the term of
the debt.
(f) To reflect line of credit utilization to fund acquisition.
(g) To record debt borrowed in connection with Richard's acquisition
calculated as follows:
New term debt $1,400,000
Note payable to seller of Richard's 889,788
$2,289,788
(h) Elimination of seller's equity in connection with the acquisition of
Richard's.
F-15
<PAGE>
ATLANTIC BEVERAGE COMPANY, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
The Company Richard's Pro Forma Pro Forma
(Historical) (Historical) Adjustments Consolidated
------------------ --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net Sales $ 34,215,448 $ 909,177 $ 35,124,625
Cost of goods sold 30,208,117 553,885 30,762,002
------------------ --------------- ----------------
Gross Profit 4,007,331 355,292 4,362,623
Selling, general and administrative:
Salaries and benefits 1,791,905 40,501 14,000 (a) 1,846,406
Other operating expense 1,869,787 25,365 1,895,152
Depreciation and amortization 233,207 9,900 14,938 (b) 258,045
Management and consulting fees - - 12,500 (c) 12,500
------------------ --------------- ---------------- ----------------
Total selling, general and
administrative 3,894,899 75,766 41,438 4,012,103
Income(loss) from operations 112,432 279,526 (41,438) 350,520
Other Income (Expenses):
Interest expense (277,464) - (65,945) (d) (343,409)
Interest income - 2,405 2,405
Other 388,387 - 388,387
------------------ --------------- ---------------- ----------------
Income (loss) before income tax
provision 223,355 281,931 (107,383) 397,903
Income tax provision
------------------ --------------- ---------------- ----------------
Net (loss) income from continuing
operations $ 223,355 $ 281,931 $ (107,383) $ 397,903
================== =============== ================ ================
</TABLE>
F-16
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(a) To reflect difference of pre- and post- acquisition salaries and
benefits of the former owner of Richard's in accordance with an employment
agreement.
(b) To reflect amortization expense on acquisition goodwill, as calculated
below:
Acquisition goodwill $2,390,000
Amortization period 40
----------------
Annual amortization 59,750
4
----------------
Quarterly amortization 14,938
(c) To record management fees to be paid to Sterling Capital in accordance
with a management agreement.
(d) To record interest expense on acquisition financing as follows:
Interest expense on new debt $253,781
Amortization of deferred
financing costs of $50,000, to be
amortized over 5 years 10,000
----------------
Annual amortization 263,781
4
----------------
Quarterly amortization 65,945
EXHIBIT 2.08
EXECUTION COPY
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of
the 1st day of August, 1996, by and among RICHARDS CAJUN FOODS CORP., a Delaware
corporation ("Purchaser"), ATLANTIC BEVERAGE COMPANY, INC., a Delaware
corporation and owner of all of the capital stock of Purchaser ("ABEV") and J.L.
RICHARD, a resident of the State of Louisiana, in his individual capacity and
doing business as "Richards Cajun Country Processors" (and along with his
successors and assigns and trusts "Seller").
RECITALS:
WHEREAS, Seller is engaged in the business of manufacturing,
marketing, selling and distributing prepared food products and related products
and services (the "Business"); and
WHEREAS, Purchaser desires to acquire, and Seller desires to
sell, the "Purchased Assets" (as described on Schedule A, attached hereto), and
which, for purposes hereof, shall include the "Intangibles" as defined in
Section 5H hereof) for a purchase price which is established herein, all upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, and in consideration of the mutual premises
and representations, warranties and covenants and other good and valuable
consideration, the receipt and sufficiency of which being acknowledged, the
parties agree as follows:
1. SALE AND PURCHASE. On the Closing Date (as defined in
Section 4 hereof), in reliance on the representations, warranties, covenants and
agreements of the parties, and on the terms and subject to the conditions set
forth herein, Seller shall sell, convey, transfer, assign and deliver to
Purchaser, the Purchased Assets, free and clear of all Encumbrances (as defined
in Section 5B hereof), except as permitted hereby. The Purchased Assets shall
not include those assets identified on Schedule B, attached hereto (the
"Excluded Assets"), which shall be retained by Seller. Purchaser is not assuming
any liability or obligation of Seller of any nature whatsoever, except as
expressly set forth in Schedule C hereto. Seller shall remain liable and
responsible for all obligations and liabilities not expressly assumed by
Purchaser hereunder, and regardless of any agreement relating to indemnification
of the parties pursuant hereto.
2. PURCHASE PRICE. The purchase price (the "Purchase Price")
for the Purchased Assets shall be an amount equal to THREE MILLION THREE HUNDRED
FIFTY THOUSAND AND NO/100THS DOLLARS ($3,350,000.00), plus or minus, as the case
may be, the "Net Asset Adjustment" (as defined in and determined pursuant to
Schedule D, attached hereto), plus, in the event the "Operating Income Bonus" is
earned (as defined in and determined pursuant to Schedule E, attached hereto),
the issuance by Purchaser of the shares of common stock of ABEV set forth in
such Schedule (the "ABEV Stock"). The Purchase Price shall be allocated for
Federal Income Tax purposes among the Purchased Assets as agreed by the parties
on or prior to the Closing Date, and each party agrees that, to the extent
permitted by law, it or he shall account for the sale of the Purchased Assets in
a manner consistent with such allocation.
<PAGE>
3. PAYMENT OF PURCHASE PRICE. On the terms and subject
to the conditions herein, Purchaser shall deliver to Seller on the
Closing Date, the Purchase Price, as follows:
A. CASH. TWO MILLION FIVE HUNDRED THOUSAND
DOLLARS ($2,500,000), minus the Net Asset Adjustment, if and to the
extent such adjustment is negative, all in immediately available funds;
and
B. PROMISSORY NOTE. Purchaser's and ABEV's
subordinated promissory note (the "Sub Note"), in the form of Schedule
F, attached hereto, in the principal amount of EIGHT HUNDRED FIFTY
THOUSAND DOLLARS ($850,000.00), plus the Net Asset Adjustment, if and to
the extent such adjustment is positive.
C. ABEV STOCK. As defined and calculated
pursuant to Schedule E hereto, if the cumulative operating income (i.e.,
earnings before interest and taxes) of Purchaser for the thirty-six (36)
months following the Closing Date is (i) between $2,250,000 and
$2,500,000, then Purchaser shall deliver 25,000 shares of ABEV Stock to
Seller, and (ii) greater than $2,500,000, the Purchaser shall deliver
37,500 shares of ABEV Stock to Seller, all in accordance with the terms
and conditions in Schedule E.
4. CLOSING. The consummation of the transactions
contemplated hereby (the "Closing") shall take place on August 1, 1996,
at 10:00 A.M. (the "Closing Date") at the law offices of the Seller's
counsel, or otherwise, on such other date or place as the parties hereto
may mutually agree.
5. SELLER'S REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Seller hereby represents and warrants to, covenants and
agrees with, Purchaser, now and as of the Closing Date, as follows:
A. ORGANIZATION, STANDING AND POWER. The
federal employer identification number, state identification number for
sales and tax purposes and all similar identification numbers for Seller
are set forth on Exhibit 5A, attached hereto. Seller has all requisite
power and authority to own, lease and operate the Purchased Assets and
to carry on the Business as now being conducted in the manner that, and
in the places in which, the Business is now being conducted. Seller does
not conduct the Business outside of the state of Louisiana. Seller does
not conduct any business or own or lease any asset or property of any
nature outside of the United States. Seller has the full power and
authority and legal capacity to enter into and deliver this Agreement,
sell the Purchased Assets and perform all other acts necessary or
appropriate to consummate all of the transactions contemplated hereby.
B. OWNERSHIP OF PURCHASED ASSETS AND RELATED
MATTERS.
(i) Seller has and will have, at
Closing, good and marketable title to, or a valid and transferable
leasehold interest in, all of the Purchased Assets, except for such
Purchased Assets as may be sold or otherwise disposed of between the
date hereof and the Closing Date in the ordinary course of business. No
other "Person" (as defined in Section 15M hereof) has any fee, leasehold
or equitable interest in and to the Purchased Assets owned by such
party, except as set forth on Exhibit 5B(i). Except as set forth on
Exhibit 5B(i), when delivered to Purchaser, the Purchased Assets will be
free and clear of all the following (hereinafter collectively referred
to as "Encumbrances"): security interests, liens, pledges,
-2-
<PAGE>
claims, charges, escrows, encumbrances, options, rights of first refusal,
mortgages, indentures, security agreements or other agreements,
arrangements, contracts, commitments, understandings or obligations,
whether written or oral, encumbering title in any way, other than the
Encumbrances created hereby and pursuant to the Security Agreement.
(ii) Except as set forth on Exhibit
5B(ii), Seller does not own, and has never owned, any type or manner of
equity in any Person involved in the Business or which owned or owns any
of the assets used in the Business and there are no contracts,
commitments, agreements, understandings or arrangements relating to
such. Seller does not own, and has never owned, any type or manner of
equity in any Person involved in the Business or which owned or owns any
of the assets used in the Business and there are no contracts,
commitments, agreements, understandings or arrangements relating to
such.
(iii) Seller is not liable, contingently
or otherwise, for any of the debts of any other Person. Seller has never
assumed or succeeded to the liabilities of any Person, whether by
operation of law or otherwise. Except as set forth on Exhibit 5B(iii),
Seller's business has never been known by any other name and has or does
not do business under any other name.
(iv) Except as set forth on Exhibit
5B(iv), Seller has no direct or indirect financial stake in any Person which
has an interest in any assets used in conducting the Business, except for
Seller's fee interest in the real estate located at 1325 East Ebey Street,
Church Point, Louisiana.
(v) Except for sales of inventory in
the ordinary course of business and the rights of Purchaser hereunder,
there are no outstanding options, warrants or rights to purchase or
acquire any interest whatsoever in any of the Purchased Assets. Except
for this Agreement, and as set forth in Exhibit 5B(v), there are no
contracts, commitments, agreements, understandings, arrangements or
restrictions relating to the ownership or operation of any of the
Purchased Assets.
(vi) The Purchased Assets constitute all
of the property necessary for the conduct of the Business in the manner
in which and to the extent to which it is currently being conducted.
Other than business risks generally and the general state of the
economy, Seller is not aware of any fact, event or action which could
result in an adverse change in the Business, prospects, financial
condition or results of operations or the operation or ownership of the
Purchased Assets by Purchaser following the Closing.
(vii) The Purchased Assets which are
considered to be machinery and equipment, or fixed assets, to be
acquired, individually and taken as a whole, will be, at the time of
Closing, in a working condition necessary to support the operations of
the Business in a manner consistent with past practices, have been
maintained in good and working condition and, Seller has no knowledge of
any condition which interferes with the economic value thereof or the
use thereof in the manner used in the Business.
(viii) The Purchased Assets do not include
any interest of any nature in any parcel of real property, except for
the fixtures, leasehold improvements and the real estate described on
Part A of Exhibit 5H(i) (collectively, the "Real Estate").
C. AUTHORIZATION. This Agreement and all
writings relating hereto to be executed and delivered by Seller have
been duly authorized by all necessary action and
-3-
<PAGE>
constitute the valid and binding obligations of Seller, enforceable in
accordance with their respective terms. The individuals executing this
Agreement and the other documents executed in connection herewith by or
on behalf of Seller have been duly authorized and have the legal
capacity to execute all of such documents. Neither the execution and
delivery hereof nor any writing relating hereto nor the consummation by
Seller of the transactions contemplated hereby or thereby, nor
compliance with any of the provisions hereof or thereof, will: (i) to
Seller's knowledge, violate in any material respect any statute, law,
rule or regulation or any order, writ, injunction or decree of any court
or governmental authority; or (ii) violate or conflict with or
constitute a default in any material respect under (or give rise to any
right of termination, modification, cancellation or acceleration under),
any agreement or writing of any nature to which Seller is a party or by
which the Purchased Assets may be bound or affected, or result in the
creation of any Encumbrance against or upon any of the Purchased Assets
under any agreement or writing to which Seller is a party or by which it
or its assets may be bound or affected; or (iii) impair or in any way
limit any governmental or official license, approval, permit or
authorization of Seller. Other than as set forth on Exhibit 5C, attached
hereto, no consent or approval of or notification to any Person is
necessary or required in connection with the execution and delivery by
Seller of this Agreement or any writing relating hereto or the
consummation of the transactions contemplated hereby or thereby.
D. FINANCIAL STATEMENTS.
(i) Exhibit 5D hereto consists of the
balance sheets and the related statements of income, and changes in
financial position of Seller, and the notes thereto and the auditor's
report thereon, if applicable, as at and for the fiscal years ended
December 31, 1993, 1994 and 1995 and all interim statements prepared to
date for the fiscal year to end December 31, 1996 (collectively, the
"Historical Financials"). The Historical Financials are true, correct
and complete and present fairly the financial position of Seller and the
results of their operations, retained earnings and changes in financial
positions as at the dates thereof and for the periods covered thereby,
do not include or omit to state any material fact which renders them
misleading, and have been prepared on a consistent basis, except as may
be disclosed therein. At the Closing, Seller shall deliver to Purchaser
a balance sheet dated as of the end of business as of the end of the
month prior to the Closing Date (the "Closing Balance Sheet") based on
the best knowledge and good faith of Seller, which shall be prepared on
a basis consistent with the Historical Financials and in accordance with
the provisions hereof. The Closing Balance Sheet shall be certified by
Seller as showing a good faith estimate of the financial position of the
Business being acquired as of that date.
(ii) Except as disclosed therein or in
Exhibit 5D(ii), the statements of income included in the Historical
Financials do not contain any items of special or nonrecurring income,
and the balance sheets included in the Historical Financials do not, and
the Closing Balance Sheet will not reflect any write-up or revaluation
increasing the book value of any asset, other than adjustments mutually
agreed upon by the parties in the determination of the Purchase Price,
and as disclosed thereon.
E. LIABILITIES.
(i) The liabilities on the Historical
Financials consisted, and the liabilities on the Closing Balance Sheet
will consist, solely of obligations and liabilities incurred in the
ordinary and regular course of Business to Persons which are not
affiliated with Seller, except for payments with respect to the Real
Estate.
-4-
<PAGE>
(ii) As of February 1, 1996, with
respect to the Business, Seller did not, and as of the Closing will not,
have, any liability or obligation of any nature whatsoever, including,
without limitation, known or unknown, fixed or contingent, accrued,
absolute, matured or unmatured, or any "loss contingencies" considered
"probable" or "reasonably possible" within the meaning of the Financial
Accounting Standards Board's Statement of Financial Accounting Standards
No. 5, which were not or will not be recorded on the Historical
Financials or the Closing Balance Sheet, as the case may be, or (in the
case of liabilities not required to be recorded on such financial
statements in accordance with generally accepted accounting principles
applied on a consistent basis) specifically disclosed in the footnotes
to the Closing Balance Sheet or on Exhibit 5E(ii) hereto, it being the
intent of the parties that every liability of every nature be properly
disclosed to Purchaser, and properly accrued on either the Historical
Financials or the Closing Balance Sheet, as the case may be. All
contingent liabilities either not disclosed or disclosed on Exhibit
5B(ii) shall be for the account of Seller for purposes of determining
indemnification hereunder, and, if any such liability is paid by
Purchaser, then, such payment shall be deemed accrued on the books of
Seller for the purpose of retroactively adjusting the Net Asset
Adjustment.
(iii) All reserves and allowances
included or to be included in the Historical Financials and the Closing
Balance Sheet are, and will be, adequate, appropriate and reasonable (in
accordance with generally accepted accounting principles), as may be
required by Purchaser's outside auditors.
(iv) Exhibit 5E(iv) is a complete list
(the "Payables' List"), as sworn to by Seller, of every creditor of
Seller, including taxing authorities (whether the liability to such
creditor is accrued, absolute, contingent or otherwise), listed by name,
address, amount of liability to such creditor, and whether such
liability is disputed. The Payables' List shall be updated as of the
Closing Date.
F. ABSENCE OF CHANGES. Except as otherwise
listed on Exhibit 5F hereto, the Business has been operated only in the
ordinary and regular course and there has not been, since September 1,
1995 and through the Closing Date there will not be, with respect to
Seller and with respect to the Business: (i) any material and adverse
change in Seller's condition, financial or otherwise; (ii) any material
and adverse damage, destruction or loss, whether or not covered by
insurance; (iii) other than for purchases of inventory in the ordinary
course of business, the incurring of any obligation or liability of any
nature (whether absolute, accrued, contingent or otherwise and whether
due or to become due) in excess of $10,000.00; (iv) any transfer or
application of any assets of Seller to the payment of any amount payable
to or for the benefit of either or any of the following Persons
("Seller's Affiliates"): any member of the family of Seller or any
Person which is controlled, directly or indirectly, by Seller or by any
member of the family of Seller; (v) any organized labor negotiations,
strike or work stoppage affecting the Business or any threat of the
foregoing; (vi) any sale, transfer or other disposition of any tangible
or intangible asset of Seller to any Person (except for (a) payments of
third party obligations incurred in the ordinary and regular course of
business, in accordance with the regular payment practice of Seller, and
(b) sales of inventory in the ordinary and regular course of business);
(vii) any termination or waiver of any rights of material value to the
Business; (viii) to Seller' knowledge, the adoption of any statute,
rule, regulation or order which materially and adversely affects the
Business; (ix) any increase in the compensation of, or benefits for,
officers, employees, independent contractors or other Persons performing
services for Seller (including, without limitation, any increase
pursuant to any bonus, pension, profit-sharing or other plan or
-5-
<PAGE>
commitment), having annual remuneration in excess of $40,000, except for
increases in accordance with Seller's normal salary administration
policies; (x) any capital expenditure or commitment in excess of
$20,000.00 for property, plant or equipment of Seller; (xi) any forward
purchase commitments not completed by the Closing Date involving more
than $20,000.00; (xii) any material change in the accounting methods or
practices followed by Seller or any change in depreciation or
amortization policies or rates theretofore adopted; (xiii) any payment
made (or withheld) by Seller not in accordance with its usual or
customary practices; (xiv) any sale of goods or services to any customer
where the payment for such goods or services allows for the payment
therefor more than thirty (30) days after the goods or services have
been provided to such customer; or (xv) any commitment, obligation or
understanding to do any of the foregoing.
G. TAX MATTERS. Seller has filed, and will
file, all tax returns and reports required to be filed and, in respect of any
period ending prior to or which includes the Closing Date, has paid, or has
set up an adequate reserve for the payment of, all taxes required to be paid
or anticipated to be payable. All tax returns of Seller for the last five (5)
years have been delivered to Purchaser. Seller does not have any liability for
any such taxes in excess of the amounts so paid or reserves so established.
Seller has properly withheld and paid, and will properly withhold and pay, all
payroll or similar taxes. Seller is not delinquent in the payment of any tax,
assessment, penalties or interest and neither has requested any extension of
time within which to file any tax returns in respect of any fiscal year which
have not since been filed. All tax returns filed or to be filed are, or will
be, true and correct. No deficiencies for any tax, assessment, penalties or
interest have been proposed, asserted, assessed or, to the knowledge of Seller,
threatened against Seller. No tax return of Seller has been audited by the
appropriate governmental authority since June, 1990, and, to the knowledge of
Seller, none is threatened or contemplated. As of the date hereof, Seller has
not given or been requested to give waivers of any statute of limitations
relating to the assessment or payment of any taxes for any taxable period. For
purposes hereof, the term "tax" shall include all Federal, state, local and
foreign taxes, assessments, and all franchise, sales, use, occupation, property,
excise or other taxes, and governmental charges, including penalties and
interest relating to the foregoing.
H. PROPERTY OWNED, LEASED OR LICENSED.
(i) (a) Part A of Exhibit 5H(i)
contains a list of all real estate owned or leased by Seller with
respect to the Business (collectively, the "Real Estate") and the
termination date or notice requirement with respect to termination,
annual rental and renewal or purchase options). With respect to the
Business, Seller does not have any other interest in any real property
and does not have any understandings, agreements or commitments to
purchase any.
(b) True and complete copies
of all leases relating to the Real Estate have been delivered to
Purchaser. Seller knows of no interior or exterior structural defects or
material non-structural defects in the buildings or improvements thereto
or in the plumbing, electrical, mechanical, heating, ventilating,
air-conditioning, sprinkler or other systems thereof. Except as set
forth in Part B of Exhibit 5H(i), or as set forth in an environmental
assessment or an update thereof to be delivered to Purchaser (along with
the update, the "Environmental Report") with respect to the Real Estate,
there are no known underground or below grade storage tanks, pumps,
piping, dispensers, or any retention pits located on any part of the
Real Estate. Seller shall deliver to Purchaser a list of all documents,
notices, test reports or other information relating thereto including a
description of substances
-6-
<PAGE>
stored therein. In addition, at the Closing, Seller will deliver a
Certificate (the "Environmental Certificate") which details all known or
suspected environmental concerns with respect to the Real Estate and the
operation of the Business not expressly detailed in the Environmental
Report. The Environmental Certificate shall also detail the sources of
information utilized by Seller therein.
(c) With respect to the Real
Estate located at 1325 East Ebey Street, Church Point, Louisiana: Seller
has good and indefeasible title in fee simple thereto and owns all
buildings and other structures thereon; there are no unrecorded leases,
Encumbrances, restrictions or other matters materially affecting title
or the current use thereof and no Person has the right to impose or
claim any interest whatsoever thereon; and, there are no covenants,
conditions, restrictions or other title exceptions applicable thereto
which are presently violated or which adversely affect the marketability
thereof and there are no defects therein or thereon.
(d) The Real Estate is not
subject to or threatened with any requests, applications or proceedings
to condemn, rezone or demolish all or any portion thereof. Seller has
obtained all permits and certificates necessary for the use and
occupancy thereof and the improvements thereon and such use and
occupancy is and has been in compliance in all material respects with
all federal, state and local laws, rules and regulations. All water,
sewer, gas, electric, telephone, drainage and other utility equipment,
air conditioning, heating, ventilation and all other facilities and
services (collectively, the "Services") required by law or necessary for
the operation of the Real Estate as it is now being operated are
installed and connected pursuant to valid permits, are adequate to
service such Real Estate, and are in good operating condition and
repair, and no known material fact or condition exists which would
result in the termination or impairment in the furnishing of any
Service. The Real Estate has no federal licenses and needs none to
operate the Real estate or the Business.
(e) Seller has not received
notice, nor does he have any awareness, of any currently due, pending or
threatened general or special assessments, taxes, litigation or
governmental proceedings against or affecting or which may affect the
Real Estate. Seller does not pay any taxes or assessments with respect
to the Real Estate, except as set forth in Part C of Exhibit 5H(i).
(f) Each parcel of Real Estate
consists of one contiguous parcel, abuts on and has direct vehicular
access to a dedicated thoroughfare; and, except as set forth in the
Commitment (as defined in Section 7A below), none of the Real Estate is
in an area designated as being subject to flood hazards or risks.
(g) With respect to the leases
covering the Real Estate, if any, such leases are in full force and
effect, are valid and binding obligations of the parties thereto, have
not been amended and are enforceable against its parties in accordance
with the terms thereof. There are no defaults (alleged or actual) by
either party to such leases and no event has occurred which with due
notice or lapse of time or both would constitute a default. Seller does
not have any obligation to pay brokerage commissions or other
compensation in connection with such leases.
(ii) Exhibit 5H(ii) contains a list of
each item of machinery, equipment, tooling, office furniture,
automobiles, trucks and other fixed assets (collectively, the "Fixed
Assets") owned or leased by Seller included on the Historical Financials
or to be included
-7-
<PAGE>
on the Closing Balance Sheet and all locations thereof. Exhibit 5H(ii)
also contains a list and brief description of each lease or other
agreement under which Seller pays in excess of $5,000.00 annually to
lease, license, hold or operate any Fixed Asset. Copies of all leases
relating to any Fixed Asset have been delivered to Purchaser. The Fixed
Assets will, individually or in the aggregate, be fit for such assets'
intended use as of the Closing Date.
(iii) Part A of Exhibit 5H(iii) contains
a list of all unexpired non-governmental licenses, franchises,
distribution rights and the like held by Seller (including, as to each,
the names of the parties thereto, a description of the subject matter of
the license, etc., the termination date or notice requirement with
respect to termination, the basis of royalties calculation and renewal
options, if applicable) and all unexpired trademarks, trade names
(including Seller's corporate and trade names), service marks,
copyrights, know-how, patents or any other proprietary rights and
applications for any of the foregoing owned or used by or registered in
the name of Seller (collectively, the "Intangibles") and those
Intangibles expired within the last two (2) years. Seller owns, or has a
valid licensee interest in, all Intangibles, and, except as set forth on
Part B of Exhibit 5H(iii), pays no royalty with respect to any of them,
has the exclusive right to bring actions for the infringement thereof
and has not granted any rights of any nature in any of the Intangibles
to any Person. To Seller's knowledge, no product made or sold by Seller
or for its benefit violates any license, franchise or distribution
agreement or infringes any trademark, trade name, service mark,
copyright, know-how or patent of another Person. Except as set forth on
Part C of Exhibit 5H(iii), all Intangibles are assignable to Purchaser
without the consent of any Person.
I. INSURANCE. Seller has maintained and
presently maintains in effect insurance covering the Purchased Assets
and the Business from reasonably foreseeable losses and any liabilities
or risks relating thereto and such insurance coverage shall be
maintained by Seller through the Closing Date. Exhibit 5I hereto sets
forth a complete list and accurate schedule (including the type of
policy, the policy number, the limits of coverage, the carrier, the
insurance agent or broker and the expiration date) of all insurance
policies or performance bonds held or issued by or on behalf of Seller
and now in force and those contemplated (including, without limitation,
comprehensive general liability, personal liability, comprehensive
general casualty and extended coverage, automobile, machinery, fire and
lightning, title, endowment, life, workers' compensation and fidelity
bond coverage) (collectively, the "Insurance Policies") and insurance
agents and/or brokers providing such insurance coverage. Except as
disclosed on Exhibit 5I, such coverage fully complies with all
contractual requirements of the Business and Seller has not forfeited or
waived any claim under any Insurance Policies and has fully complied
with the terms and conditions thereof. The products liability, personal
injury and property damage insurance maintained has been on an
"occurrence" basis during the five-year period prior to the Closing
Date. Exhibit 5K sets forth all property damage or personal injury
claims asserted against Seller during the past three years, or otherwise
still pending. Except as otherwise set forth on Exhibit 5K, all of such
claims have been and are being defended by insurance carriers or
indemnitors without reservation and are or will be totally covered by
the Insurance Policies. None Seller has not received any notification,
either directly or indirectly, from any insurance carrier, denying or
disputing any claim made by Seller, denying or disputing any coverage
for any such claim, denying or disputing the amount of any claim, or
regarding the possible termination, cancellation or amendment of or
premium increase with respect to any of the Insurance Policies. Seller
does not have any claims pending or anticipated against any of the
insurance carriers under any of such policies and there has been no, to
the knowledge of Seller, actual or alleged, occurrence of any kind which
may give rise to any such claim.
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J. AGREEMENTS, ETC. Exhibit 5J contains a
list of all written and brief description of all oral contracts,
agreements, leases, understandings, commitments, licenses, letters of
credit, instruments and obligations, the open purchase and sales orders
journals as of the beginning of business on the date hereof (which
journals shall be updated as of the Closing Date), and other instruments
and obligations not listed on another Exhibit or schedule hereto (unless
excluded therefrom due to the dollar amount involved) affecting the
Business in any manner whatsoever (collectively, the "Contracts"). With
respect to the Contracts, except as otherwise set forth on such Exhibit
5J: (i) all are in full force and effect, have not been modified or
amended, and constitute legal, valid and binding obligations of the
respective parties thereto; (ii) Seller has, in all material respects,
performed all of the obligations required to be performed by it to date
and is not in default or, to the knowledge of Seller, alleged, to be in
default in any respect thereunder, no party has been released from any
obligation thereto and there exists no event, condition or occurrence
which, with or without notice, lapse of time or the occurrence of any
other event, would constitute a default thereunder by Seller, or to
Seller's knowledge, would constitute a default on the part of any other
party thereto; and (iii) the continuation, validity and effectiveness
under the current terms thereof (including the current rentals under any
leases or licenses) will in no way be affected by the transactions
contemplated hereby, or, if any would be affected without a consent or
waiver, Seller shall cause an appropriate consent or waiver respecting
such transfer to be delivered to Purchaser prior to the Closing Date at
no cost or other adverse consequences to either of Seller or Purchaser;
and (iv) none require the payment or performance of material
considerations by Seller or Purchaser on or after the Closing Date
without the receipt of consideration of commensurate value, within the
meaning of applicable fraudulent conveyance laws or decisions. Seller
has furnished to Purchaser complete copies of all written Contracts and
complete written summaries of all oral Contracts described on any
Exhibit hereto. Seller is not restricted by any agreement to which it is
a party from carrying on the Business anywhere in the world. The
Contracts confer on Seller all rights necessary to enable it to conduct
the Business as now being conducted (as well as any expansion thereof
now contemplated).
K. LITIGATION AND CLAIMS, ETC. Except as set
forth on Exhibit 5K, there are no personal injury, product liability or
other actions, suits, claims, investigations or legal or administrative
or arbitration proceedings of any nature pending or, to the knowledge of
Seller, threatened, against or involving Seller, the Purchased Assets,
the Intangibles, the Business or products, whether at law or in equity,
or before or by any foreign, federal, state, municipal or other
governmental or quasi-governmental instrumentality. Attached to Exhibit
5K are (i) all service bulletins or similar notices to customers,
vendors or the public at-large and other Persons which discusses or
notifies such Persons about problems with Seller's products, and (ii)
all notes from all technical or engineering meetings which relate in any
way to problems or potential problems in the design or manufacturing of
such products. To the knowledge of Seller, there is no basis for any
other such action, suit, claim, investigation or proceeding, and except
as set forth on Exhibit 5K, none of the foregoing has been pending
during the last three years. There are no outstanding orders, decrees or
stipulations issued by any foreign, local, state or federal judicial or
governmental or quasi-governmental authority to which Seller is or was a
party or by which any is or was bound. The insurance coverages in the
Insurance Policies are adequate in character and amount to pay all
liabilities relating to the matters described in Exhibit 5K. Exhibit 5K
also details all "recalls" which occurred on or after January 1, 1992,
and details Seller's system for handling claims, whether under
warranties or otherwise, and also lists all such claims made in the last
three years.
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L. COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS;
OSHA.
(i) To his knowledge, Seller is in
compliance, in all material respects, with all federal, state and local
laws, ordinances, regulations, permits, licenses, decrees, judgments and
orders applicable to the Business, and has all foreign and United
States, federal, state and local governmental licenses and permits
necessary for the conduct of the Business as presently conducted; such
licenses and permits are legally valid and in full force and effect; no
violations are or have been recorded in respect of any thereof; and no
proceeding is pending or, to the knowledge of Seller, threatened, to
revoke or limit any thereof. Exhibit 5L contains a list and description
(including subject matter and termination information) of (a) all such
governmental licenses and permits (none of which will be affected by the
transactions contemplated hereby, unless otherwise indicated on Exhibit
5L, and (b) all consents, orders, decrees and other compliance
agreements under which Seller is operating or bound, copies of all of
which have been furnished to Purchaser.
(ii) Seller has furnished to
Purchaser copies of all written reports in their control or possession
of governmental inspections relating to the Business and the Purchased
Assets from January 1, 1994 through the date hereof under any laws or
regulations that either Seller or the Business is subject. To the
knowledge of Seller, there have been no other similar inspections. The
deficiencies, if any, noted on such reports or any deficiencies noted by
inspection through the Closing Date have been corrected, or will be
corrected by Closing. Seller does not know or have reason to know of any
other violation of any laws or regulations as they may relate to the
Business, Purchased Assets or business practices of Seller.
M. INVENTORIES. The inventories of Seller
included on the Historical Financials and to be included on the Closing
Balance Sheet are and will be valued with respect to each category of
inventory at the lower of cost or market value, net of reserves. Such
inventories are all usable in the ordinary and regular course of the
Business, and are fit and sufficient for the purpose for which they were
purchased. All excess and obsolete items have been written down to net
realizable value, or written off, and the inventories which were in
transit on the date hereof, and the inventories which are in transit on
the Closing Date do not and will not include any items which are
damaged, spoiled or below standard quality (except items for which
Seller will receive credit or replacement from the manufacturer or
shipper thereof). Seller has exercised, and on the Closing Date will
exercise, its best efforts to have, the proper amount of inventories to
conduct the Business consistent with past practices. Exhibit 5M lists
the locations of all inventories. The inventories do not have any
allocation of overhead except as specifically disclosed on Exhibit 5M.
Except as specifically disclosed on Exhibit 5M, the inventory consists
of items of quality and quantity usable in the normal course of the
Business. Seller will provide to Purchaser a list of all inventory (the
"Inventory List") on hand as of the end of the accounting period ending
closest to the Closing Date, which list will comply with all of the
requirements contained in Sections 5D and 5M hereof.
N. EMPLOYEE MATTERS. Seller has generally
enjoyed a good employer-employee relationship with its employees. Only to the
extent that Seller is obligated by law or otherwise, Seller has accrued on the
Historical Financials, and will accrue adequate reserves on the Closing Balance
Sheet, all wages, salaries, contractual bonuses, vacation pay and other direct
and indirect compensation earned by, or accrued for the benefit of, all
employees (whether or not vested or payable by such date), including that
portion of such accruals which may otherwise only be made at year end. The
Closing Balance Sheet will also include accruals for
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year end contractual bonuses, pension and profit sharing contributions,
and any other adjustments which might normally be made only at year end.
Upon termination of the employment of any employee, neither of Seller
nor Purchaser will incur any liability for any severance or termination
pay, pension or profit-sharing benefit or other similar payment under
any practices or policies in effect on or prior to the Closing Date.
Except as set forth on Exhibit 5K, there are no controversies pending
or, to the knowledge of Seller, threatened by any of Seller's employees,
former employees, job applicants or any association, group or other
Person or Persons regarding any of Seller's employment practices or
policies.
Seller is not a party to or bound by any
employment or consulting agreement, any collective bargaining agreement
or any other agreement with a labor union. There is not pending or, to
the knowledge of Seller, threatened any labor dispute, strike or work
stoppage (whether by their own employees or another Person's employees)
which may affect the Business or which may interfere with its continued
operation. Seller has complied with all laws, rules and regulations
relating to the employment of labor, and there are no activities or
proceedings of any labor union to organize any employees of Seller.
During the twelve-month period preceding the date hereof, there have not
been any significant labor troubles involving employees of Seller and
there are no significant threats of work stoppages by employees of
Seller.
Exhibit 5N contains a list of all managers,
employees, consultants, independent contractors and other Persons rendering
any service to Seller who, during either of the 1995 or 1996 fiscal years, are
expected to receive remuneration in excess of $40,000 from Seller, together
with their job title and total remuneration paid to date and expected amount
of remuneration in 1996.
O. EMPLOYEE BENEFIT PLANS. Seller does not
now maintain, nor has he ever maintained at any time in the past, any
"employee pension benefit plan" or "employee welfare benefit plan," as such
terms are defined in Sections 3(1) and 3(2) of the Employee Retirement Income
Security Act of 1974, as amended.
P. TRANSACTIONS WITH RELATED PARTIES. Exhibit
5P lists all amounts directly or indirectly paid (or deemed for accounting
purposes to have been paid) or to be paid by Seller, to, or received by Seller
from any Person which is controlled by, controls, or under common control with,
directly or indirectly, Seller during the current and the last fiscal year for
products or services (including any charge for management, interest, capital
employed, administrative, purchasing, financial or other services) related in
any way to the Business. For purposes of this Section, the term "Seller" shall
include any and all of the "Seller's Affiliates."
Q. ACCOUNTS AND NOTES RECEIVABLE. Exhibit 5Q
contains an aged list of unpaid accounts and notes receivable (collectively,
the "Receivables") owing to Seller as of a date not more than four (4)
business days prior to the date hereof, with the address of each of Seller's
trade debtors. Purchaser shall be furnished with an updated schedule of
Receivables and any other information relating thereto as Purchaser shall
reasonably request on reasonable advance notice. All of the Receivables
reflected on the Historical Financials and to be reflected on the Closing
Balance Sheet constituted and will constitute only valid claims against
third parties not affiliated with Seller. The schedule of Receivables also
highlights trade debtors with principal places of business outside of the
continental United States. The Receivables arose or will arise from bona fide
transactions in the ordinary and regular course of Business and all (subject to
the reserve for bad debt) are collectible within ninety (90) days after they
arose or will arise, and are not subject to any defenses, set-offs or
counterclaims. The Historical Financials
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do, and the Closing Balance Sheet will, include reserves for bad debt
reasonably based on past customer performance. Except as listed on
Exhibit 5Q, Seller does not sell, and does not contemplate selling,
products directly to the United States of America or any branch, agency
or subdivision thereof, or any Person located in the State of New
Jersey. Exhibit 5Q also highlights those customers of Seller whose
accounts have been more than thirty (30) days past due repeatedly over
the past six (6) months, or who Seller has put on a credit hold within
the last ninety (90) days.
R. CUSTOMERS AND SUPPLIERS. Exhibit 5R is a
list of the ten (10) largest customers and suppliers (measured by U.S.
dollar volume in each case) of Seller during the last twelve (12) months
showing, with respect to each, the name, address and dollar volume
involved. Seller is not required to provide any bonding, guaranty or
other financial security arrangements in connection with any
transactions with any of its customers or suppliers. Seller have no
knowledge or reason to believe that as a result of the transactions
contemplated hereby or otherwise, any customer or supplier listed on
Exhibit 5R intends to cease or substantially reduce, the purchase or
sale, respectively, of goods or services from or to Purchaser on terms
and conditions similar to those imposed on purchases and sales from and
to Seller prior to the date hereof. Seller do not know of any claims or
disputes pending, contemplated or threatened with respect to any of the
parties referred to in Exhibit 5R and none are concerned about the
financial viability of any of such parties.
S. MISCELLANEOUS ASSETS. The Purchased Assets
do not and will not include (i) any contracts for future services or
prepaid items or deferred charges, the substantial value or benefit of
which will not be usable by Purchaser after the Closing Date and (ii)
any goodwill, organization expense or other intangible asset (other than
the Intangibles).
T. CREDIT CARDS. With respect to the
Business, there are no credit or debit cards under which Seller has
current or future liability.
U. BUSINESS GENERALLY. Since January 1, 1996,
to the knowledge of Seller, there have been no events, transactions or
information affecting or relating to them or the Business which could be
reasonably expected to have a material and adverse effect on the
Business.
V. REPORTS AND STUDIES. Except for the report
and sales brochure prepared by Geneva Capital Markets, Inc., Exhibit 5V
lists all reports and studies relating to the Business or the sale
thereof in the possession or control of Seller prepared since January 1,
1995 by investment bankers, investment advisors, accountants, engineers,
environmental consultants, management consultants or any other Persons.
W. ENVIRONMENTAL MATTERS.
(i) Seller has not transported, stored,
treated or disposed, and has not allowed or arranged for any other Person to
transport, store, treat or dispose waste to or at: (a) any location other than
a site lawfully permitted to receive such waste for such purposes or (b) any
location designated for remedial action pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), the Resource Conservation and Recovery Act, as amended ("RCRA"),
or any similar federal, state or local statute; nor has it performed, arranged
for or allowed by any method or procedure such transportation or disposal in
contravention of any laws or regulations or in any other manner
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<PAGE>
which may result in liability for contamination of the environment.
Seller has not disposed, and has not allowed or arranged for any other Person to
dispose, of waste upon property owned or leased by Seller.
(ii) (a) No generation, use, handling,
storage, treatment, Release (as defined below), discharge, spillage or
disposal of any Hazardous Waste, Hazardous Substance or Hazardous
Chemical (as defined below) has occurred or is occurring at any site or
Facility (as defined below) at any time owned, leased or operated,
directly or indirectly, by Seller, (b) no Hazardous Waste or waste
containing any Hazardous Substance or Hazardous Chemical generated,
used, handled, stored or treated by Seller has been stored, Released,
discharged, spilled or disposed of at any site or Facility at any time
owned, leased or operated, directly or indirectly, by Seller, and (c) no
site or Facility, at any time, owned, leased or operated, directly or
indirectly, by Seller is or has been the site of any industrial
facility, dump or landfill.
(iii) Except as disclosed in the
Environmental Report or to Seller's knowledge, no soil or water in,
upon, under or adjacent to any site or Facility at any time owned,
leased, or operated, directly or indirectly, by Seller has been
contaminated by any Hazardous Waste, Hazardous Substance or Hazardous
Chemical and no such site constitutes a nuisance of any kind or nature.
(iv) Seller has not received
notification of any past or present failure by Seller to comply with any
laws, regulations, permits, franchises, licenses or orders applicable to
them or the Business, which have not been remedied, cured or complied
with, or, as disclosed on Exhibit 5W(iv), are in the process of being
fully remedied, cured or complied with. Without limiting the generality
of the foregoing, Seller has not received any notification (including
requests for information directed to any) from any governmental or
quasi-governmental agency or Person asserting that Seller is or may be a
"potentially responsible party" for a remedial action at any Facility,
pursuant to the provisions of CERCLA, or any similar federal, state or
local statute assigning responsibility for the costs of investigating or
remediation of Releases of contaminants into the environment.
(v) For purposes of this Agreement, the
terms "Hazardous Waste", "Hazardous Substance", "Hazardous Chemical",
"pollutant", "contaminant", "Release" and "Facility" include any
"hazardous waste", "hazardous substance", "pollutant", "contaminant" and
"facility", respectively, within the meaning of RCRA, CERCLA, the
Emergency Planning and Community Rights to Know Act of 1986, as amended,
or any other federal, state or local law, rule or regulation adopted
pursuant thereto or otherwise relating to the disposal of Hazardous
Wastes or the cleanup of sites at which Hazardous Substances have been
released or the environment in general.
(vi) Exhibit 5W(vi) is a list of (a)
locations (identified by address, owner/operator, type of facility, type
of waste, and period of time the Facility was used) to which Seller, to
his knowledge, has, during the past three (3) years, transported, or
caused to be transported, or allowed or arranged for any other Person to
transport, any type of waste material, generated by Seller or his
customers, for storage, treatment, burning, recycling or disposal and
(b) storage, treatment, burning, recycling or disposal activities which
Seller has undertaken, during the past three (3) years, at locations
then or presently owned or occupied by Seller together with such other
relevant information concerning such locations as would enable Purchaser
to determine whether Seller has any liability for such locations and the
activities thereon, including, but not limited to, property address,
nature of Seller's interest in the
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<PAGE>
property, current owner of the property, nature of the activity
conducted at such location, type and form of waste, estimated volume of
waste disposal on or in ground, and period of time the activity was
conducted.
(vii) All work performed by or on behalf
of Seller in respect of issues raised by, in connection with or pursuant
to the Environmental Report has been completed pursuant to validly
issued permits and/or authorities, where necessary, and such work has
been completed in compliance and according to the terms of such permits
and/or authorities. The Business does not and, to Seller's knowledge,
will not, have any limitation on the amount or level of discharge which
can be placed into any local sewar (or similar) system, and no fees,
taxes, levies or other charges will be incurred by the Business in
connection with such discharge, except as set forth on Exhibit 5W(vii).
No permit or other authority is required for such discharge.
X. ILLEGAL PAYMENTS; OTHER COMPETITORS.
Seller knows of no and has no reason to believe that any agent or
representative of Seller made any illegal payments, gifts or the like in
the procurement of any of the contracts or purchase orders being
assigned hereunder.
Y. BROKERS AND FINDERS. Except for Geneva
Capital Markets, Inc., whose commission shall be borne entirely by
Seller (and not assumed by Purchaser), none of Seller nor any agent,
representative or employee thereof, has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage fees,
commissions or finders' fees, and except as stated above, no broker or
finder has acted directly or indirectly for Seller in connection with
this Agreement and the transactions contemplated hereby.
Z. ABEV STOCK MATTERS.
(i) Seller has a joint net worth with
his spouse, at the date hereof, of over $1,000,000.00, and therefore is
an "accredited investor" within the meaning of Rule 501(a) promulgated
by the Securities and Exchange Commission ("SEC") under the Securities
Act of 1933, as amended (the "1933 Act").
(ii) Seller has such knowledge and
experience in financial matters (either by himself or with his financial
advisors) that he is capable of evaluating the relative risks and merits
of an investment in the ABEV Stock.
(iii) Seller has received all of the SEC
Reports (as defined below). In making his decision to acquire the ABEV
Stock, Seller has relied solely upon independent investigations made by
him or his financial advisors, and he has received no representation or
warranty from ABEV or any of its affiliates, employees or agents, except
as expressly set forth herein.
(iv) Seller understands that the ABEV
Stock has not been registered under the 1933 Act or the securities acts
of any of the states of the United States or other possessions or areas
subject to its jurisdiction, in reliance on exemptions for private
offerings and may be sold or disposed of in the absence of such
registration only pursuant to an exemption from such registration and
only in accordance with the terms, conditions and restrictions contained
in this Agreement. The shares of ABEV Stock being delivered to Seller
shall bear a legend to the following effect:
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"The securities represented by this
certificate have not been registered
under the Securities Act of 1933, as
amended, and may not be sold or
transferred except in compliance
with that Act. The securities
represented by this certificate are
subject to the transfer restrictions,
voting requirements and other
conditions and provisions of an Asset
Purchase Agreement dated as of August
1, 1996 by and between RICHARDS CAJUN
FOODS CORP., ATLANTIC BEVERAGE
COMPANY, INC. and J.L. RICHARD,
copies of which are on file at the
principal executive offices of
Atlantic Beverage Company, Inc."
(v) Seller understands that no federal
or state agency has made any finding or determination as to the fairness
of an investment in, or any recommendation or endorsement of, the ABEV
Stock.
(vi) The ABEV Stock being transferred to
Seller will be held by Seller solely for his own account (and not for
the account of others) for investment and will not be held with a view
to or for the resale, distribution, subdivision, or fractionalization
thereof; Seller has no present intention or plans to enter into any
contract, undertaking, agreement, or arrangement relating thereto.
(vii) Seller acknowledges that: there are
substantial restrictions on the transferability of the ABEV Stock; the
ABEV Stock acquired will not be, and Seller has no right to require that
the ABEV Stock be, registered under the 1933 Act; there may not be any
public market for the ABEV Stock or such market may be limited; and,
accordingly, Seller may not be able to liquidate his investment in the
ABEV Stock in a timely manner.
AA. MATERIAL DISCLOSURES. No representation,
warranty, covenant or agreement by Seller contained herein, and no
statement contained in any certificate, Schedule, Exhibit, list or other
writing furnished to Purchaser in connection with the transactions
contemplated hereby, contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading. All Schedules and Exhibits
hereto and all writings furnished to Purchaser hereunder or in
connection with the transactions contemplated hereby are accurate, true
and complete. All representations, warranties, covenants and agreements
made by Seller herein and all other agreements and instruments delivered
in connection herewith or pursuant hereto and facts and information
contained in the Exhibits and Schedules shall be true and correct as of
the Closing Date with the same effect as if they had been made at and as
of the Closing Date. There are no facts, conditions, or aspects relating
to the past or present operations of the Business which are not set
forth herein which would have a material adverse affect upon the
operation of the Business after the Closing Date or Purchaser's
investment decision in acquiring the Purchased Assets, and none of
Seller know of any fact, event or action not set forth herein or in the
Exhibits hereto which could result in a material adverse change in the
Business, prospects, financial condition or results of operations of the
Business or the operation or ownership of the Purchased Assets by
Purchaser following the Closing. The records of Seller are accurate and
complete in all material respects and there are no matters as to which
appropriate entries have not been made in such records.
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<PAGE>
6. PURCHASER'S AND ABEV'S REPRESENTATIONS, WARRANTIES,
AGREEMENTS AND COVENANTS. Purchaser and ABEV jointly and severally
represent and warrant to, and agree and covenant with, Seller, now and
as of the Closing Date, as follows:
A. ORGANIZATION, STANDING AND POWER.
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Purchaser's federal
employer identification number is 74-2776565. Purchaser has all
requisite power and authority to own, lease and operate the Purchased
Assets and to carry on the Business as now being conducted in the manner
that, and in the places in which, the Business has been conducted in the
past. Purchaser will be, within seven (7) days of the Closing, legally
qualified to transact business as a foreign corporation in Louisiana.
Purchaser has the full power and authority and legal capacity to enter
into and deliver this Agreement, acquire the Purchased Assets owned by
such party and perform all other acts necessary or appropriate to
consummate all of the transactions contemplated hereby.
B. AUTHORIZATION. This Agreement and all
writings relating hereto to be executed and delivered by Purchaser and
ABEV have been duly authorized by all necessary action and constitute
the valid and binding obligations of Purchaser and ABEV, enforceable in
accordance with their respective terms. The individuals executing this
Agreement and the other documents executed in connection herewith on
behalf of Purchaser and ABEV have been duly authorized to execute all of
such documents on behalf thereof. Neither the execution and delivery
hereof nor any writing relating hereto nor the consummation by Purchaser
of the transactions contemplated hereby or thereby, nor compliance with
any of the provisions hereof or thereof, will: (i) conflict with or
result in a material breach of the Certificate of Incorporation or
Bylaws or other formation documents of Purchaser and ABEV; (ii) violate
any statute, law, rule or regulation or any order, writ, injunction or
decree of any court or governmental authority; or (iii) violate or
conflict with or constitute a default under (or give rise to any right
of termination, modification, cancellation or acceleration under), any
agreement or writing of any nature to which Purchaser and ABEV is a
party or by which its assets may be bound or affected, or result, except
as permitted hereby, in the creation of any Encumbrance against or upon
any of the Purchased Assets under any agreement or writing to which it
is a party or by which it or its assets may be bound or affected; or
(iv) impair or in any way limit any governmental or official license,
approval, permit or authorization of Purchaser and ABEV. Other than as
set forth on Exhibit 6B, attached hereto, no consent or approval of or
notification to any Person is necessary or required in connection with
the execution and delivery by Purchaser and ABEV hereof or any writing
relating hereto or the consummation of the transactions contemplated
hereby or thereby.
C. MATERIAL DISCLOSURES. No representation,
warranty, covenant or agreement by Purchaser contained herein, and no
statement contained in any certificate, Schedule, Exhibit, list or other
writing furnished to Seller in connection with the transactions
contemplated hereby, contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading. All Schedules and Exhibits
hereto and all copies of all writings furnished to Seller hereunder or
in connection with the transactions contemplated hereby are accurate,
true and complete. All representations, warranties, covenants and
agreements made by Purchaser herein and facts and information contained
in the Exhibits and Schedules shall be true and correct as of the
Closing Date with the same effect as if they had been made at and as of
the Closing Date.
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D. BROKERS AND FINDERS. Neither Purchaser nor
any officer, director or employee thereof, has employed any broker or
finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finders' fees, and except as stated
above, no broker or finder has acted directly or indirectly for
Purchaser, in connection with this Agreement and the transactions
contemplated hereby.
7. CLOSING TRANSACTIONS. On the Closing Date (or on a
date otherwise indicated herein):
A. Seller shall deliver or cause to be
delivered to Purchaser:
(i) Such bills of sale, deeds,
endorsements, assignments, receipts and other instruments, in such form
as are reasonably satisfactory to Purchaser, as shall be sufficient to
vest in Purchaser good and marketable title to the Purchased Assets,
free and clear of all Encumbrances.
(ii) Such keys, lock and safe
combinations, signature cards and other similar items as Purchaser shall
require to obtain full and exclusive occupation and control of the
Purchased Assets, including the Business' post office box.
(iii) The Certificates required by
Sections 9A and 9B hereof.
(iv) The legal opinion of counsel to
Seller, in substantially the form as Schedule G attached hereto.
(v) Possession of the Real Estate.
(vi) Such estoppel letters as are
reasonably requested by Purchaser, including those to be executed and
delivered by the landlords of the Real Estate, if any, in form and
substance acceptable to Purchaser's counsel.
(vii) Such bailment letters as are
reasonably requested by Purchaser, including those to be executed and
delivered by the owners of real estate or warehouses, if any, where
inventory is located, in form and substance acceptable to Purchaser's
counsel.
(viii) All consents, waivers and releases
necessary, required or appropriate to consummate the transactions
contemplated hereby.
(ix) Uniform Commercial Code Tax, Lien
and Judgement Search results showing all Encumbrances, if any, in the
Purchased Assets, within sixty (60) days of the Closing Date, which
Encumbrances, if any, will be released or terminated at or prior to the
Closing.
(x) An Authorization of Inspection, in
form and substance acceptable to Purchaser.
(xi) Certificates of Title, as
appropriate, evidencing Seller's ownership of such of the Purchased
Assets as have certificates of title.
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(xii) (a) On or before fifteen (15)
days prior to Closing, with respect to the Real Estate located at 1325
East Ebey Street, Church Point, Louisiana, a commitment ("Commitment")
for an ALTA Owners Policy of Chicago Title Insurance Company, Form B (or
other applicable policy) of a current date with extended coverage over
general exceptions, subject only to those exceptions expressly approved
by Purchaser, full survey coverage, no mechanic's lien exceptions and
with those endorsements which Purchaser deems necessary or desirable,
including, but not limited to, non-imputation, location, ALTA Zoning
Endorsement 3.1 (including parking lots and loading docks, if any),
contiguity, and a special endorsement that the bills for real estate
taxes do not include taxes pertaining to any other real estate. Such
title insurance policy shall be issued in the approximate amount of the
fair market value of the real estate as reasonably determined by
Purchaser.
(b) On or before fifteen (15)
days prior to Closing, with respect to such real estate, a current plat
of survey of such parcel, made by a surveyor registered in the state in
which the parcel is located, certified in favor of the party to be
insured and Chicago Title Insurance Company, and made in accordance with
the American Land Title Association Survey Standards (or other customary
state standards) so as to induce the title insurance company to remove
without subsequent addition any exception as to matters which would be
disclosed by an accurate and complete survey or inspection of such real
estate. Each such survey shall, in addition, accurately locate all
improvements, building lines, parking areas, curb cuts, any
encroachments of the improvements on the subject parcel over easements,
setback lines or onto adjoining properties, or encroachments of the
improvements on adjoining properties onto the subject parcel, recorded
easements, lines and rights of way, all roadways, include a metes and
bounds description, shall state the calculation of the square footage
and the acreage thereof, shall state whether the subject real estate is
located in an area designated by an agency of the United States as being
subject to flood hazards or risks, and shall locate all storm sewers,
sanitary sewers, water lines and other utility lines located upon the
subject real estate and the service lines thereof from their respective
main lines.
(c) The Commitment and
survey(s) shall be paid by Purchaser.
(d) If the Commitment or plat
of survey discloses either unpermitted exceptions or survey matters that
adversely affect the marketability of such real estate, Seller shall
have fifteen (15) days from the date of delivery thereof to have such
exceptions removed from the Commitment or to correct such defects or to
have the title insurer commit to insure against loss or damage that may
be occasioned by such exceptions and, in such event, the Closing shall
be extended to the first day of the month following the date when such
defects have been removed. If Seller fails to have the exceptions
removed, or in the alternative, to obtain the Commitment specified above
as to such survey defects within the specified time, Purchaser may
elect, upon notice to Seller within ten (10) days after the expiration
of the foregoing 15-day period, to accept title as it then is with the
right to deduct from the Purchase Price the value of liens or
encumbrances of a definite or ascertainable amount. If Purchaser does
not so elect, this Agreement shall become null and void without further
action of the parties.
(xiii) The Closing Balance Sheet, and, as
updated to the end of the accounting period ended closest to the
Closing, the Inventory List, an updated Payables' List and an updated
Receivables Schedule.
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(xiv) A statement signed by an
appropriate official of Church Point, Louisiana confirming all of the
statements made in Section 5W(vii).
(xv) Results of environmental
assessments evidencing and indicating no environmental risk with respect
to the Real Estate, within sixty (60) days of the Closing Date. If a
phase II environmental assessment is not recommended other than for the
pond at Seller's facility, Seller shall be reimbursed for the phase I
assessment at the Closing. If a phase II environmental assessment is
recommended, Purchaser shall pay that portion of the phase II
investigation which relates to Seller's pond, and Seller shall pay the
balance.
(xvi) Such other documents as the
Purchaser may reasonably request.
B. Purchaser shall deliver or cause to be
delivered to Seller:
(i) The cash portion of the Purchase
Price.
(ii) The Sub Note.
(iii) The Certificates required by
Sections 10A and 10B hereof.
(iv) Certified copies of resolutions
duly adopted by Purchaser's and ABEV's Board of Directors approving the
transactions contemplated by, and authorizing the execution, delivery
and performance by Purchaser and ABEV of, this Agreement, and a
certificate as to the incumbency of the officers of Purchaser and ABEV
executing any instrument or other document delivered in connection with
such transactions.
(v) Certificates of good standing of
Purchaser certified by the Secretaries of State of the States of
Delaware and Louisiana, dated within thirty (30) days of the Closing
Date.
(vi) Certificate of good standing of
ABEV certified by the Secretary of State of Delaware, dated within
thirty (30) days of the Closing Date.
(vii) A copy of the Certificates of
Incorporation of Purchaser and ABEV, certified by the Secretary of State
of the State of Delaware, dated within thirty (30) days of the Closing
Date.
(viii) The legal opinion of Tom D.
Wippman, P.C., counsel to Purchaser, in the form of Schedule H, attached
hereto.
(ix) Such other documents as Seller may
reasonably request.
C. Purchaser and Seller shall each execute and
deliver an Employment Agreement in the form attached hereto as Schedule
I (the "Employment Agreement").
8. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING.
[THIS SECTION INTENTIONALLY LEFT BLANK]
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9. CONDITIONS OF OBLIGATIONS OF PURCHASER. The
obligations of Purchaser to perform this Agreement are subject to the
satisfaction of the following conditions on or prior to the Closing
Date:
A. REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. The representations, warranties, covenants and agreements
of Seller in this Agreement or in any Schedule, Exhibit, certificate or
document delivered in connection herewith shall be true and correct in
all material respects on the Closing Date, and Purchaser shall have
received a Certificate signed by Seller to that effect.
B. PERFORMANCE OF OBLIGATIONS OF SELLER.
Seller shall have performed all agreements and obligations required to
be performed by them on or prior to the Closing Date, and Purchaser
shall have received a Certificate signed by Seller to that effect.
C. CONSENTS, WAIVERS AND RELEASES. Seller
shall have obtained, or to the reasonable satisfaction of Purchaser
obviated the need to obtain, all consents, waivers and releases from
third parties necessary to execute and deliver this Agreement and
consummate the transactions contemplated hereby. Also, Purchaser shall
have obtained the consent of Purchaser's Board of Directors to
consummate the transactions contemplated hereby.
D. NO LITIGATION. No action, suit or other
proceeding shall be pending before any court, tribunal or governmental
authority seeking or threatening to restrain or prohibit the
consummation of the transactions contemplated hereby, or seeking to
obtain damages in respect thereof, or involving a claim that
consummation thereof would result in the violation of any law, decree or
regulation of any governmental authority having appropriate
jurisdiction.
E. ABSENCE OF CHANGES. Except as otherwise
listed on Exhibit 5F hereto, since January 1, 1996, the Business has
been operated only in the ordinary and regular course and there has not
been, and through the Closing Date there will not be, with respect to
Seller, any thing or act described in Section 5F hereof, and there shall
not have been, with respect to the Business, any adverse changes.
F. COMPLETION OF REVIEW BY PURCHASER.
Purchaser shall have completed its business, accounting, financial,
environmental and legal review of the Business and Purchased Assets, and
Purchaser shall, in its sole and absolute discretion, be satisfied with
the results of such investigation or otherwise waive this condition.
G. CLOSING DOCUMENTS. Seller shall have
delivered, or shall have caused the delivery of, all appropriate
documents and instruments described in Section 7 hereof.
10. CONDITIONS OF OBLIGATIONS OF SELLER. The
obligations of Seller to perform this Agreement are subject to the
satisfaction, on or prior to the Closing Date, of the following
conditions:
A. REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. The representations, warranties, covenants and agreements
of Purchaser and ABEV herein or in any Schedule, Exhibit, certificate or
document delivered in connection herewith shall be true and correct in
all material respects on the Closing Date, and Seller shall have
received a Certificate signed by Purchaser and ABEV to that effect.
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B. PERFORMANCE OF OBLIGATIONS OF PURCHASER.
Purchaser and ABEV shall have performed all agreements and obligations
required to be performed by them on or prior to the Closing Date, and
Seller shall have received a Certificate signed by Purchaser and ABEV to
that effect.
C. CONSENTS, WAIVERS AND RELEASES. Purchaser
and ABEV shall have obtained, or to the reasonable satisfaction of
Seller obviated the need to obtain, all consents, waivers and releases
from third parties necessary to execute and deliver this Agreement, buy
the Purchased Assets and consummate the transactions contemplated
hereby.
D. NO LITIGATION. No action, suit or other
proceeding shall be pending before any court, tribunal or governmental
authority seeking or threatening to restrain or prohibit the
consummation of the transactions contemplated hereby, or seeking to
obtain damages in respect thereof, or involving a claim that
consummation thereof would result in the violation of any law, decree or
regulation of any governmental authority having appropriate
jurisdiction.
E. CLOSING DOCUMENTS. Purchaser shall have
delivered, or shall have caused the delivery of, all appropriate
documents and instruments described in Section 7 hereof.
11. CLOSING NOT A WAIVER. The fact that the parties have
chosen to consummate the transactions contemplated hereby shall not act or be
deemed or construed as a waiver of either party or estop either party from
pursuing their respective rights to indemnification hereunder or other remedies
for any reason whatsoever.
12. POST-CLOSING COVENANTS.
A. RESTRICTIVE COVENANTS.
(i) Nondisclosure. Seller acknowledges
that he has been and will be entrusted with trade secrets, marketing,
operating and strategic plans, customer and supplier lists, proprietary
information, recipes and other confidential or specialized data and/or
information relative to the Business, whether now existing or to be
developed or created after the Closing Date (collectively, "Trade
Secrets"). Seller covenants and agrees that he shall at all times after
the date hereof hold in strictest confidence any and all Trade Secrets
that may have come or may come into his possession or within his
knowledge concerning or related to the products, services, processes,
recipes, businesses, suppliers, customers and clients of Seller and also
that the Trade Secrets constitute Assets of Purchaser and not of any
individual. Seller further covenants and agrees that neither he nor any
Person controlled by him will for any reason, directly or indirectly,
for himself or for the benefit of any other Person, use, copy, divulge
or otherwise disseminate or disclose any of the Trade Secrets owned or
used by, or licensed to, Seller or any of his affiliates or otherwise
relating to Seller or the Business, provided that Seller may disclose
Trade Secrets pursuant to an order by a court of competent jurisdiction,
provided, further, that Seller shall give Purchaser notice of such order
and any court pleading requesting such disclosure, in order to provide
Purchaser with an opportunity to prevent such disclosure or procure an
appropriate protective order.
(ii) Customers and Trade Secrets.
Seller acknowledges that customers and customer accounts and the Trade
Secrets of Seller will, after the Closing, at all times be the sole and
separate property of Purchaser, in which Seller has no rights
whatsoever,
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and all activities of or work performed by Seller for or on
behalf of Purchaser in the future will be performed solely for the benefit of
Purchaser and the goodwill resulting from such efforts by either is and at all
times will be the sole and separate property of Purchaser, which goodwill is
intended to be protected, in part, by this Section.
(iii) Non-Solicitation; Non-Hire. Seller
agrees that from the Closing Date and continuing for a period (the
"Non-Compete Period") of three (3) years from the Closing Date, neither
he nor any person or enterprise controlled by him will solicit or hire
or contract with, for employment, consulting or any other reason, any
person who was employed by Purchaser or Seller or any of Purchaser's
affiliates as a manager, sales person, officer, office head, buyer,
accountant/controller or other key employee at any time within one (1)
year prior to the time of the act of solicitation, or hire. The
Non-Compete Period shall be extended for that period of time during
which Seller is in violation of the covenants contained in this Section
12A.
(iv) Non-Competition by Seller. During
the Non-Compete Period, Seller agrees that neither he nor any person or
enterprise controlled by him will become a stockholder, director,
officer, agent, employee or representative of or consultant to a
corporation or member of a partnership, engage as a sole proprietor in
any business, act as a consultant to any of the foregoing or otherwise
engage, directly or indirectly, in any enterprise which competes with
the Business in any geographic area in which Seller does business on the
date hereof, which area Seller acknowledges includes the Parishes in
Louisiana described in Exhibit 12A(iv) hereof; provided, however, that
the foregoing shall not prohibit the ownership of less than two percent
(2%) of the outstanding shares of the stock of any corporation engaged
in any business, which shares are regularly traded on a national
securities exchange or in any over-the-counter market. The Non-Compete
Period shall be extended for that period of time during which Seller is
in violation of the covenants contained in this Section 12A.
(v) Relief, Reformation; Severability.
The parties agree that the covenants contained in this Section 12A are
separate and are reasonable in their scope and duration and may be
enforced by specific performance or otherwise. The parties shall not
raise any issue of reasonableness as a defense in any proceeding to
enforce any of the covenants herein. Notwithstanding the foregoing, in
the event that a covenant included in this Section 12A shall be deemed
by any court to be unreasonably broad in any respect, then, to the
extent permitted by law, the court which makes such finding shall modify
such covenant for the purpose of making such covenant reasonable in
scope and duration. The validity, legality or enforceability of the
remaining provisions of this Agreement shall not be affected by any such
modification.
(vi) Remedies. The parties acknowledge
that any breach of the restrictive covenants herein will cause
irreparable harm to the other, and that such harm will be difficult if
not impossible to ascertain. Therefore, if any action or proceeding is
commenced by or on behalf of any party to enforce the provisions hereof,
such party shall be entitled to equitable relief, including injunction,
against any actual or threatened breach hereof, and any damages arising
therefrom including, without limitation, reasonable fees of its
attorneys and their support staff and all other costs and expenses
incurred by the other party in good faith in connection therewith
without bond should such relief be denied, modified or vacated. Neither
the right to obtain such relief nor the obtaining of such relief shall
be exclusive of or preclude any party from any other remedy. Each party
hereby waives the claim or defense to an action for equitable relief by
the other that the other has an adequate remedy at law or has not been
or is
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not being irreparably injured by such breach. FURTHERMORE, EACH
PARTY HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING
ANY DISPUTE OF ANY NATURE ARISING OUT OF, CONNECTED WITH, RELATED OR
INCIDENTAL TO THE RESTRICTIVE COVENANTS CONTAINED IN SECTION 12A HEREOF.
INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
B. COLLECTION OF RECEIVABLES. From and after
the Closing, Purchaser shall have the right and authority to collect,
for its own account, all of the Receivables and other items intended to
be transferred to it pursuant hereto, and to endorse in Seller's name
any checks or drafts received on account of any such Receivables or such
other items. Seller agrees that he will transfer or deliver to
Purchaser, promptly after the receipt thereof, any cash or other
property which Seller receives after the Closing in respect of any
claims, contracts, licenses, leases, commitments, sales orders, purchase
orders, Receivables of any character or any other items intended to be
transferred to Purchaser pursuant hereto.
C. POWER OF ATTORNEY. Effective as of the
Closing, Seller hereby constitutes and appoints Merrick M. Elfman or his
successors and assigns, with the full power and right of substitution,
as Seller's true and lawful attorney: (i) to institute and prosecute all
proceedings which Purchaser may deem proper in order to collect, assert
or enforce any claim, right or title of any kind in or to the Purchased
Assets; (ii) to defend or compromise any and all actions, suits or
proceedings in respect of any of the Purchased Assets, and to do all
such acts and things in relation thereto as Purchaser shall deem
necessary or advisable; and (iii) to take all action which Purchaser may
reasonably deem proper in order to provide Purchaser with all of the
benefits relating to the Purchased Assets where any required consent of
another party to the sale or assignment thereof to Purchaser shall not
have been obtained. Seller acknowledges that the foregoing powers are
coupled with an interest and shall be irrevocable. Purchaser shall be
entitled to retain for its own account any amounts collected pursuant to
the foregoing powers, including any amounts payable as interest in
respect thereof.
D. SUBROGATION OF PURCHASER. In the event
that Purchaser shall become liable for or suffer any damage with respect
to any matter which was covered by insurance maintained by Seller on or
prior to the Closing, Purchaser shall be and hereby is subrogated to any
rights of Seller under such insurance coverage, and, in addition, Seller
agrees to promptly remit to Purchaser any insurance proceeds which he
may receive on account of any such liability or damage.
E. NO ADVERSE ACTION. Neither Seller nor any
of his agents or representatives shall take any action, directly or
indirectly, that would in any way adversely affect Purchaser's efforts
to obtain all proper permits and authorizations necessary or appropriate
to operate the Business in any manner deemed reasonable by Purchaser.
F. SELLER'S PAYABLES. All trade accounts
payable assumed by Purchaser will be discharged by Purchaser in the
ordinary course of business, subject to off-sets, counterclaims, etc.
13. INDEMNIFICATION.
A. Seller agrees to indemnify and hold
harmless Purchaser, each Person, if any, who "controls" Purchaser within
the meaning of the Securities Act of 1933, as
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amended (the "1933 Act") or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and each of Purchaser's shareholders,
subsidiaries, affiliates, officers, directors, agents and other
representatives against any and all damages, losses, settlement
payments, obligations, liabilities, claims, actions, causes of action,
suits, proceedings, costs of investigations, demands, assessments,
judgments, Encumbrances and costs and expenses (including, without
limitation, attorneys' fees, interest, penalties and all costs
associated therewith incurred by such party in good faith)
(collectively, "Losses") suffered, sustained, incurred or paid by any
indemnified party, to which such indemnified party may become subject
under any federal, state or local law, rule or regulation, at common law
or otherwise (including in settlement of any litigation), insofar as
such Losses (or actions in respect thereof) arise out of or are based
upon (i) any untrue or inaccurate statement or alleged untrue or
inaccurate statement made by Seller herein, including the information
included in any Exhibit hereto, or arise out of or are based upon
Seller's omission or alleged omission to state herein a material fact
required to be stated herein or necessary to make the statements herein
not misleading; (ii) the claims of any broker or finder engaged by
Seller; (iii) the nonfulfillment or breach or alleged nonfulfillment or
breach of any agreement or covenant of Seller; (iv) the assertion
against any indemnified party or any of their assets of any liability or
obligation of Seller either disclosed on Exhibit 5E(ii) hereof or not
accurately disclosed herein for any reason whatsoever (regardless of
whether such liability or obligation is known or unknown, fixed or
contingent, accrued, absolute, matured or unmatured or otherwise), or
relating to Seller, or the Business or Purchased Assets, whether
absolute or contingent, matured or unmatured, known or unknown, and
regardless of any compliance with any applicable bulk sales' laws; (v)
any personal injury, death, property damage or other claim of any nature
(whether covered by warranties or otherwise) attributable to any
services or products manufactured, processed, administrated, serviced or
sold by Seller prior to the Closing Date; and (vi) all items that are or
should have been listed on Exhibit 5K; and will reimburse each
indemnified party for any legal or other cost or expense incurred by
such party in good faith in connection with investigating or defending
any such loss, claim, damage, liability or action. This indemnity
agreement will be in addition to any liability which Seller may
otherwise have and to any remedy which Purchaser may otherwise have. To
the extent that any matter gives rise to indemnification hereunder, such
matter shall be deemed to have been accrued on the books of Seller as of
the date upon which the Net Asset Adjustment is to be made and is to be
included, retroactively, for the purposes of calculating such adjustment
and the Purchase Price. Any such adjustment shall not be included in the
calculations set forth in Schedule E hereto, it being the parties intent
not to have Seller benefit from such Purchase Price adjustment.
Notwithstanding anything to the contrary contained herein, Seller shall
only be responsible for indemnification pursuant to an Environmental
Claim (as defined below) if such Environmental Claim either: (i) arises
out of Seller's conduct of the Business, or (ii) existed during the
pendency of Seller's ownership of any parcel of the Real Estate and
Seller had knowledge or was aware of such condition.
B. Purchaser will indemnify and hold harmless
Seller, each Person, if any, who "controls" Seller within the meaning of
the 1933 Act or the Exchange Act, and Seller's respective shareholders,
subsidiaries, affiliates, officers, directors, agents and other
representatives against any and all Losses suffered, sustained, incurred
or paid by any indemnified party, to which such indemnified party may
become subject under any federal, state or local law, rule or
regulation, at common law or otherwise (including in settlement of any
litigation), insofar as such Losses (or actions in respect thereof)
arise out of or are based upon (i) any untrue or inaccurate statement or
alleged untrue or inaccurate statement of any material fact made by
Purchaser herein, including the information included in any Exhibit
hereto, or arise
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out of or are based upon Purchaser's omission or alleged omission to
state herein a material fact required to be stated herein or necessary
to make the statements herein not misleading; (ii) the claims of any
broker or finder engaged by Purchaser; (iii) the nonfulfillment or
breach or alleged nonfulfillment or breach of any agreement or covenant
of Purchaser; (iv) the assertion against any indemnified party or any of
their assets of any liability or obligation of Purchaser, or relating to
Purchaser's operations or any of its assets, whether absolute or
contingent, matured or unmatured, known or unknown; and (v) any personal
injury, death or property damage attributable to products manufactured
and sold by Purchaser; and will reimburse each indemnified party for any
legal or other expenses reasonably incurred by such party in connection
with investigating or defending any such loss, claim, damage, liability
or action. This indemnity agreement will be in addition to any liability
which Purchaser may otherwise have and to any remedy which Seller may
otherwise have.
C. Promptly after receipt by an indemnified
party under this Section of notice of the commencement of any action,
such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party under this Section, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party except to the extent that the
indemnifying party was prejudiced by such failure to notify or any other
liability. In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in and,
to the extent that it may wish, to assume the defense thereof, with
counsel satisfactory to such indemnified party; provided, however, if
the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, or the indemnified and indemnifying
parties may have conflicting interests which would make it inappropriate
for the same counsel to represent both of them, the indemnified party or
parties shall have the right to select separate counsel to assume such
legal defense and otherwise to participate in the defense of such action
on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so
to assume defense of such action and approval by the indemnified party
of counsel, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof, unless (i) the indemnified party shall have employed
such counsel in connection with the assumption of legal defense in
accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for
the expenses of more than one separate counsel representing all
indemnified parties not having different or additional defenses or
potential conflicting interests among themselves who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action, or
(iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability arising out of such
proceeding.
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Notwithstanding anything contained herein
to the contrary, an indemnified party shall have no obligation to bring
a third party action or an action for indemnification or contribution
simultaneously or in connection with a third party action which may give
rise to rights of indemnification or contribution or similar remedies.
D. Seller acknowledges that Purchaser is
relying on all of the representations, warranties, covenants and
agreements contained herein, without respect to whether Seller had
knowledge of the information contained therein, and agree not to raise
as a defense to a claim by Purchaser for indemnification pursuant to
this Section 13 or otherwise that Purchaser had knowledge or Seller did
not have knowledge of the untruth, inaccuracy, nonfulfillment or breach
of, or Purchaser did not rely upon, the representations, warranties,
covenants or agreements of Seller contained herein. Purchaser
acknowledges that Seller is relying on all of the representations,
warranties, covenants and agreements contained herein without respect to
whether Purchaser had knowledge of the information contained therein and
agrees not to raise as a defense to a claim by Seller for
indemnification pursuant to this Section 13 that Seller had knowledge or
Purchaser did not have knowledge of the untruth, inaccuracy,
nonfulfillment or breach of, or Seller did not rely upon, the
representations, warranties, covenants and agreements of Purchaser
contained herein.
E. All amounts that may become due from Seller
to Purchaser after the determination that such amount has become payable
pursuant to this Agreement, shall be paid by Seller immediately upon
demand by Purchaser, and if not so paid within five (5) business days of
such demand, such amounts may be offset by Purchaser against any amounts
then owing to Seller under any document, instrument, agreement or
understanding, and if the amount to be offset is greater than the amount
which is then currently owing to Seller, then (i) such amounts which are
not then not able to be immediately offset or are not then immediately
paid shall bear interest at the rate of fifteen percent (15%) per annum,
accruing from the date such amount is demanded until paid or later
offset, and (ii) Purchaser may pursue all other remedies available to it
in order to collect such amount. The foregoing remedies shall not be
mutually exclusive.
F. All amounts that may become due from
Purchaser to Seller after the determination that such amount has become
payable pursuant to this Agreement, shall be paid by Purchaser
immediately upon demand by Seller, and if not so paid within five (5)
business days of such demand, such amounts may be offset by Seller
against any amounts then owing to Purchaser under any document,
instrument, agreement or understanding, and if the amount to be offset
is greater than the amount which is then currently owing to Purchaser,
then (i) such amounts which are not then not able to be immediately
offset or are not then immediately paid shall bear interest at the rate
of fifteen percent (15%) per annum, accruing from the date such amount
is demanded until paid or later offset, and (ii) Seller may pursue all
other remedies available to them in order to collect such amount. The
foregoing remedies shall not be mutually exclusive.
14. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
A. All representations, warranties and
covenants made by any party hereto in this Agreement shall survive the
Closing of the transactions hereunder as follows: (i) with respect to
any General Claim (as hereinafter defined), shall thereafter terminate
and expire on the eighteen (18) month anniversary of the Closing Date,
if the party (the "Indemnitee") asserting such General Claim shall have
given no written notice on or prior to such date to the
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party (the "Indemnitor") against whom such General Claim is asserted,
and (ii) with respect to any Tax Claim (as hereinafter defined), shall
thereafter terminate and expire on the date upon which the liability to
which any such Tax Claim may relate is barred by all applicable statutes
of limitation, if the Indemnitee asserting such Tax Claim shall have
given no written notice on or prior to such date to the Indemnitor
against which such Tax Claim is asserted, and (iii) with respect to any
Environmental Claim (as hereinafter defined), shall thereafter terminate
and expire on the date upon which the liability to which any such
Environmental Claim may relate is barred by all applicable statutes of
limitation, if the Indemnitee asserting such Environmental Claim shall
have given no written notice on or prior to such date to the Indemnitor
against which such Environmental Claim is asserted. All notices
described hereunder shall generally describe the claim being asserted.
With respect to General Claims, no Indemnitee shall be entitled to
indemnification hereunder until such time as aggregate Losses for
General Claims exceed Twenty-five Thousand Dollars ($25,000) in the
aggregate, at which time an Indemnitee shall be entitled to
indemnification for all General Claim Losses suffered, sustained,
incurred or paid by the Indemnitee.
B. For purposes hereof, a "General Claim"
shall be a claim (other than a Tax Claim and an Environmental Claim) for
Losses based upon, arising out of or otherwise in respect of any
inaccuracy in or breach of any representation, warranty, covenant or
agreement of Sellers contained in this Agreement, a "Tax Claim" shall be
a claim for Losses based upon, arising out of or otherwise in respect of
any inaccuracy in or breach of any representation, warranty, covenant or
agreement of Sellers or cost or expense of any nature incurred by any
Indemnitee or any of their successors, assigns or affiliates relating in
any way to the payment of or liability for any tax of whatever nature,
and an "Environmental Claim" shall be a claim for Losses based upon,
arising out of or otherwise in respect of any inaccuracy in or breach of
any representation, warranty, covenant or agreement of Sellers or cost
or expense of any nature incurred by any Indemnitee or any of their
successors, assigns or affiliates relating in any way to the generation,
use, handling, storage, treatment, release, discharge, spillage or
disposal of any Hazardous Waste, Hazardous Substance, Hazardous
Chemical, pollutant or asbestos by any Indemnitor or any of its
predecessors, affiliates, successors, assigns, representatives, agents,
employees or otherwise related to such Indemnitor.
C. Notwithstanding the foregoing and anything
contained herein to the contrary, to the extent that a party has made a
representation, warranty, covenant, agreement or commitment which
extends beyond the time limitations described above, the parties agree
that such time limitations, and the indemnities subject thereto, shall
extend beyond such time limitations until the forty-fifth (45th) day
after such representation, warranty, covenant, agreement or commitment
terminates.
D. The definitions above shall only affect the
time after which a representation, warranty, covenant or agreement
survives the Closing Date (as set forth in Section 14A), and shall not
affect or diminish the rights of the parties in Section 13 in any
respect.
E. The representations and warranties
hereunder shall not be affected or diminished by any investigation at
any time by or on behalf of the party for whose benefit such
representations, warranties, covenants and agreements were made, or the
fact that such representations, warranties, covenants and agreements
were made to such party's knowledge.
15. MISCELLANEOUS.
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A. MANNER OF CLOSING. At the Closing, all
transactions shall be conducted substantially concurrently and no
transaction shall be deemed to be completed until all are completed.
B. ACCESS TO RECORDS. Purchaser shall afford
to Seller and his agents, the opportunity, upon reasonable advance
notice, to examine and make copies of the books and records of Seller
having an effect on all periods through the Closing Date, in connection
with tax and financial reporting matters and other bona fide business
purposes, and Purchaser shall use reasonable efforts to retain such
books and records for a period of four (4) years from the date of such
books and records.
C. PARTIES IN INTEREST. This Agreement shall
be binding upon, inure to the benefit of, and be enforceable by the
parties (including ABEV) and their respective executors, successors and
assigns. Notwithstanding the foregoing, should Seller already have, or
in the future create, a trust for his benefit or the benefit of any
family member, such trust will execute such instruments as are necessary
to evidence the trust being jointly and severally liable for Seller's
obligations hereunder, and by his execution hereof, Seller hereby
acknowledges that any trust to which he has transferred assets for the
purpose of estate planning purposes or to avoid liability hereunder or
of which he is the trustee or is a beneficiary shall be jointly and
severally liable for all of Seller's obligations hereunder.
Notwithstanding the foregoing, Seller is prohibited from assigning his
interests hereunder, by operation of law or otherwise. Seller hereby
consents to a collateral assignment of Purchaser's and ABEV's rights
hereunder to a lender, understanding that such lender shall have the
ability to enforce the rights of Purchaser and ABEV granted herein.
D. ENTIRE AGREEMENT; AMENDMENTS. This
Agreement, the Exhibits and Schedules attached hereto, and the other
writings referred to herein or delivered in connection herewith contain
the entire understanding of the parties with respect to its subject
matter, and supersedes all prior understandings and agreements. This
Agreement may be amended only by a written instrument duly executed by
the parties. Any reference herein to this Agreement shall be deemed to
include the Exhibits and Schedules attached hereto. If any provision of
this Agreement is determined to be illegal or unenforceable, such
provision will be deemed amended to the extent necessary to conform to
applicable law or, if it cannot be so amended without materially
altering the intention of the parties, it will be deemed stricken and
the remainder of the Agreement will remain in full force and effect.
E. HEADINGS. The section and subsection
headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement.
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<PAGE>
F. NOTICES. All notices, claims,
certificates, requests, demands and other communications
("communications") hereunder shall be in writing and shall be deemed to
have been duly given when personally delivered, mailed (by registered or
certified mail, postage prepaid) or sent by overnight courier service or
facsimile addressed as follows:
IF TO SELLER:
J.L. Richard
1114 East Ebey Street
Church Point, LA 70525
WITH A COPY TO:
J. Lee Wimberley, Esq.
VIDRINE AND WIMBERLEY
318 South Main Street
Church Point, LA 70525
Facsimile: (318)684-5418
IF TO PURCHASER OR ABEV:
Merrick M. Elfman
650 Dundee Road, Suite 370
Northbrook, Illinois 60062
Facsimile: (847)480-0199
WITH A COPY TO:
Tom D. Wippman, P.C.
650 Dundee Road, Suite 370
Northbrook, Illinois 60062
Facsimile: (847)480-0199
or to such other address as the person to whom a communication is to be given
may have furnished to the others in writing in accordance herewith. A
communication given by any other means shall be deemed duly given on the earlier
of when actually received by the addressee or three (3) days after sending such
communication. Notice hereunder to Representative shall be deemed to be notice
to Seller.
G. PUBLIC ANNOUNCEMENTS. All public
announcements relating to this Agreement or the transactions
contemplated hereby, including announcements to employees, will be made
only as may be agreed upon jointly by the parties hereto, or as
Purchaser considers required or appropriate to comply with applicable
law. Any governmental, public or private inquiries or requests for
information shall be promptly referred to Purchaser.
H. FURTHER ASSURANCES. After the Closing
Date, without further consideration, the parties shall execute and
deliver such further instruments and documents as either party shall
reasonably request to consummate the transactions contemplated hereby
and to perfect Purchaser's title to the Purchased Assets.
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<PAGE>
I. WAIVERS. Any party to this Agreement may,
by written notice to the other party hereto, waive any provision of this
Agreement. The waiver by any party hereto of a breach of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent, same or different breach.
J. MATERIALITY AND KNOWLEDGE. The terms
"material" or "materially" or "materiality" shall mean either (i) the
existence of a fact or condition or facts or conditions which, if a
dollar amount is readily ascertainable with respect to such, has a
value, either individually or in the aggregate, of more than $5,000.00,
or (ii) the determination by a lender, in such lender's sole and
absolute discretion, that such fact or condition is, or, if known to
such lender would be, material for purposes of its making a loan to
Purchaser in order to consummate the transactions hereunder or to avoid
any acceleration of such loan, or (iii) any fact or condition which
gives rise to any right of termination, cancellation, acceleration or
modification of any agreement or understanding to which Seller is a
party and such right has been exercised. The term "knowledge" shall mean
(i) actual knowledge or notice, (ii) that knowledge which a party should
know after having made all reasonable inquiries and (iii) that an
individual or individuals making a statement as to its, his or her
"knowledge" has made all reasonable inquiries regarding the facts and
circumstances relating to such statement.
K. COUNTERPARTS. The Agreement may be
executed in one or more counterparts, but all such counterparts shall
constitute one and the same instrument.
L. CERTIFICATE. A Certificate shall mean a
certificate signed by the individual stating that (i) such individual
who is signing the certificate has made or has caused to be made such
investigations as are necessary in order to permit him to verify the
accuracy of the information set forth in such certificate and (ii) to
the individual's knowledge, after due inquiry, such certificate does not
misstate any material fact and does not omit any fact necessary to make
the certificate not misleading.
M. USE OF CERTAIN TERMS. The term "Seller"
shall also include all predecessors thereof and businesses acquired by
or merged therewith, or businesses whose liabilities (some or all) have
been assumed by Seller. The term "Person" shall mean an individual, a
partnership, a joint venture, a joint stock company, a corporation, a
trust, an unincorporated organization, a limited liability company, any
other legal entity and a government, governmental body or
quasi-governmental body, or any department, agency or political
subdivision thereof.
N. APPLICABLE LAW. The terms and conditions
of this Agreement shall be governed by and construed in accordance with
the laws of the State of Louisiana applicable to agreements between
Louisiana residents entered into and to be performed entirely within
Louisiana.
O. CONSENT TO JURISDICTION. For those matters
or disputes of any nature arising out of, connected with, related or
incidental to the agreements and covenants contained in Section 12
hereof, the parties hereto hereby irrevocably submit themselves to the
exclusive jurisdiction of the courts of the State of Louisiana located
in the City of Baton Rouge and to the jurisdiction of the United States
District Court for the Middle District of Louisiana for the purpose of
bringing any action that may be brought in connection with the
provisions hereof. The parties hereto hereby individually agree that
they shall not assert any claim that they are not subject to the
jurisdiction of such courts, that the venue is improper, that the forum is
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<PAGE>
inconvenient or any similar objection, claim or argument. Service of
process on any of the parties hereto with regard to any such action may
be made by mailing the process to such Persons by regular or certified
mail to the address of such Person set forth herein or to any subsequent
address to which notices shall be sent.
P. AGREEMENT TO ARBITRATE. Except for those
matters described in Section 15O above, in the event of any other
dispute arising out of, connected with, related or incidental to this
Agreement and the documents or instruments delivered in connection
herewith, such dispute shall be submitted to arbitration in accordance
with the terms of this Section. The party who is alleging that a dispute
exists shall send a notice of such dispute to all other parties, which
notice shall set forth in detail the dispute, the parties involved and
the position of such party with respect thereto. Within ten (10)
business days after the delivery of such a notice, counsel for the
parties shall deliver a joint request to James Watson, Esq., Lake
Charles, Louisiana, requesting Mr. Watson to deliver a list of ten (10)
prospective arbitrators, all of whom Mr. Watson believes to be
experienced in commercial arbitration, along with a brief resume of each
such person. The parties shall do all things necessary to reasonably
cooperate in the selection of the ten (10) persons, including holding
Mr. Watson harmless from any and all claims arising out of such
selection and arbitration. If Mr. Watson declines, the list of ten (10)
shall be selected by the party asking for arbitration receiving a list
from any private dispute resolution firm with offices in Louisiana. The
arbitrator shall be selected as follows: within three (3) days after the
list is delivered to each party, each party shall assign rank of
preference to each available arbitrator, with number one being the
highest rank and ten being the lowest (i.e., a different rank must be
assigned to each available arbitrator) and deliver such rankings
confidentially to Mr. Watson or the firm which created the list; in the
event of a tie, Mr. Watson or the firm which created the list shall then
select the arbitrator from the two potential arbitrators which have
tied. The single arbitrator with the lowest total score shall be the
arbitrator for the dispute. The arbitrator so selected shall schedule a
hearing in Baton Rouge on the disputed issues within forty-five (45)
days after his appointment, and the arbitrator shall render his decision
after the hearing, in writing, as expeditiously as is possible, and
shall be delivered to the parties. The arbitrator shall render his
decision based on written materials supplied by the parties to the
arbitration in support of their respective oral presentations at the
hearing, and no party shall be entitled to discovery in such matter,
except for a single document request to be made within fifteen (15) days
after the request for arbitration and if not made within such time
period shall be deemed waived. Each party shall supply a copy of any
written materials to be submitted to the arbitrator at least ten (10)
days prior to the scheduled hearing. The parties agree that the
arbitrator shall not have any power or authority to award punitive
damages. A default judgment may be entered against any party who fails
to appear at the arbitration hearing. Such decision and determination
shall be final and unappealable and shall be filed as a judgment of
record in any jurisdiction designated by the successful party. The
successful party shall be entitled to recover all fees, costs and
expenses incurred in connection with such arbitration. The parties
hereto agree that this paragraph has been included to rapidly and
inexpensively resolve any disputes between them with respect to the
matters described above, and that this paragraph shall be grounds for
dismissal of any court action commenced by any party with respect to a
dispute arising out of such matters.
THE PARTIES AGREE THAT ANY ARBITRATION
SHALL BE GOVERNED BY AND PURSUANT TO THE FEDERAL ARBITRATION ACT, AS
AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.
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<PAGE>
Q. EXCEPTIONS TO EXCLUSIVE JURISDICTION AND
MANDATORY ARBITRATION. Notwithstanding the provisions of Sections 15O
and 15P hereof, in the event that there is a third party action brought
by any of Seller's suppliers, customers or end-users of Seller's
products or any governmental entities which may give rise to rights of
indemnification or contribution from one party(ies) to another, the
parties hereto irrevocably submit themselves to the jurisdiction of the
court in which such third party action is brought, and the party to be
indemnified may, but shall not be obligated to, bring a third party
action or other appropriate proceeding to enforce such rights of
indemnification or contribution. The foregoing is not intended to confer
any rights upon any other party other than the parties hereto.
R. PRONOUNS. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, singular
and plural as the identity of that person referred to requires.
S. EFFECT OF DISPUTES. Notwithstanding the
fact that there may from time to time be disputes among the parties
concerning the terms and conditions hereof, the parties agree not to
under any circumstances, disparage, criticize or denigrate the talents,
skills, prospects, abilities, integrity or character of the other
parties hereto, or such parties' management, directors, employees,
agents or representatives (including those of Purchaser's and ABEV's
affiliates). Seller further agrees that he will not, at any time after
the date hereof and without Purchaser's and ABEV's written consent,
contact any past, present or prospective customer, supplier, employee or
agent or representative of Seller with the intent, purpose or effect of
injuring the reputation, business or business relationships of Purchaser
and/or ABEV. The provisions of this Section shall survive the execution
and termination hereof, irrespective of the reason for such termination.
T. MUTUAL DRAFTING. This Agreement is the
joint product of Purchaser, Seller and their respective counsel, and
each provision hereof has been subject to the mutual consultation,
negotiation and agreement of such parties and counsel, and shall not be
construed for or against any party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
RICHARDS CAJUN FOODS CORP.
By /s/ Merrick M. Elfman
Merrick M. Elfman, Chairman
ATLANTIC BEVERAGE COMPANY, INC.
By /s/ Merrick M. Elfman
Merrick M. Elfman, Vice Chairman
/s/ J. L. Richard
J.L. Richard
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<PAGE>
<PAGE>
EXECUTION COPY
ASSET PURCHASE AGREEMENT
DATED AS OF AUGUST 1, 1996
AMONG
RICHARDS CAJUN FOODS CORP.,
ATLANTIC BEVERAGE COMPANY, INC.
and
J.L. RICHARD
<PAGE>
SCHEDULES
A. Purchased Assets
B. Excluded Assets
C. Assumed Liabilities
D. Form of Sub Note
E. Determination of NAI Cash Flow and Option Consideration
F. Seller's Counsel's Opinion
G. Purchaser's Counsel's Opinion
H. Form of Consulting Agreement
EXHIBITS
5A Part A Seller's and NAI's Identification Numbers
5A Part B Foreign Qualifications of Seller and NAI
5B(I) Part A Capital Structure of NAI and Seller
5B(I) Part B Other Interests in and Encumbrances on Purchased Assets
5B(ii) Options to Acquire Capital Stock of NAI or Seller
5B(iii) Capital Stock/Equity Interests in Persons Owned by Seller
5B(iv) Other Names of Seller
5B(v) Financial Stakes in Persons
5B(vi) Options of Other Persons in Purchased Assets
5B(vii) Facts or Conditions Affecting the Business
5C Selling Parties' Necessary Consents or Approvals, Etc.
5D Historical Financials
5E(ii) Undisclosed/Contingent Liabilities
5E(iv) Payables' List
5F Part A Exceptions to Absence of Changes
5F Part B Schroeder Transaction Documents
5H(I) Part A Description of Fixture, Furniture and Real Estate
5H(I) Part B Environmental Matters
5H(I) Part C Real Estate Taxes and Assessments
5H(ii) Fixed Assets
5H(iii) Part A Intangibles
5H(iii) Part B Royalties and Exceptions to Title of Intangibles
5H(iii) Part C Exceptions to Assignability of Intangibles
5I Insurance Policies
5J Contracts
5K Litigation and Claims, Etc.
5L(I) Governmental Licenses, Permits and Compliance Matters
5L(ii) Other Violations
5M Location of Inventories, Allocations of
Overhead re: Inventory and List of Unusable
or Obsolete Inventory
5N Remuneration in excess of $40,000
5O(I) ERISA Matters
5O(v) Description of Unwritten Employee Plans
5P Transactions with Related Parties
<PAGE>
5Q Accounts and Notes Receivable Aging
5R Customers and Suppliers
5T Bank Accounts, Etc.
5V Reports and Studies
5W(iv) Environmental Compliance Issues
5W(vi) Sites used by Seller and NAI
5Y Contracts with Revenue Guarantees
6B Purchaser's Necessary Consents or Approvals, Etc.
12A(iv) Allowed Territories
<PAGE>
SCHEDULE A
PURCHASED ASSETS
Seller agrees to and will sell, transfer, assign and deliver
to Purchaser, free and clear of all liens, claims and Encumbrances of any nature
whatsoever except those Encumbrances expressly assumed by Purchaser, all of the
assets used in the Business, other than the Excluded Assets (as described on
SCHEDULE B hereof), as they exist at the Closing, which Purchased Assets shall
include (but not be limited to) the following:
A. all machinery, equipment, tools, supplies, leasehold
improvements, construction in progress, furniture and fixtures, trucks,
automobiles, vehicles and other fixed assets owned or leased, including,
without limitation, those identified on Schedule A(i);
B. all inventories including, without limitation,
inventories of raw materials, work in process and finished goods, as
identified on Schedule A(ii);
C. all of Seller's right, title and interest in its
customer accounts, customer account contracts, Contracts and other
rights to provide services to its customers, including, without
limitation, those identified on Schedule A(iii);
D. all permits, licenses, governmental approvals,
contracts, franchise rights, patents, trademarks, trade names, trade
secrets, corporate names, telephone numbers, good will and all other
proprietary rights and intangible assets used in the Business, as
identified on Schedule A(iv);
E. fee title to the real estate located at 1325 East
Ebey Street, Church Point, LA;
F. all prepaid expenses;
G. all receivables of Seller, including, without
limitation, all trade and customer accounts receivable arising from
service or sales of inventory;
H. as they pertain to the Business, all operating data, books,
files, documents and records of Seller, including without limitation, customer
and supplier lists, insurance policies, financial, accounting and credit
records, marketing information, advertising materials, correspondence, budgets
and all other similar documents and records which pertain to the Purchased
Assets;
I. all other known and unknown, liquidated or
unliquidated, contingent or fixed rights, choses in action or causes of
action of every nature and kind which Seller has or may have against any
third party and all rights which may pertain to the Purchased Assets;
J. office supplies and other consumable supplies; and
<PAGE>
K. any and all goodwill related to the foregoing.
Notwithstanding the foregoing, the omission from the foregoing
list of any asset of Seller necessary for or used in connection with the
operation of the Business is hereby deemed a Purchased Asset, and shall be
transferred to Purchaser.
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SCHEDULE B
EXCLUDED ASSETS
Anything to the contrary in SCHEDULE A notwithstanding, the
Purchased Assets shall exclude the following assets:
A. the cash consideration, Note and ABEV Stock to be
paid and/or delivered by the Purchaser hereunder and Seller's other
rights under this Agreement;
B. all cash and cash equivalents and investments,
whether short-term or long-term, of Seller, including bank accounts,
certificates of deposit, treasury bills and securities, but excluding
prepaid expenses;
C. all interests of Seller, in and rights of and
relating to, any real property which Seller owns, leases or has any
other interest, except for the real estate located at 1325 East Ebey
Street, Church Point, Louisiana;
D. all contracts not expressly listed on Schedule
A(iii); and
E. all personal assets of Seller described on Schedule
B(v) hereto.
<PAGE>
SCHEDULE C
ASSUMED LIABILITIES
Purchaser is not assuming or taking responsibility for any
obligation or liability of Seller of any nature whatsoever, except (a) customer
orders pending as of the Closing Date, which orders have been taken in the
ordinary and regular course of business on terms and conditions (including
pricing, delivery and payment) consistent with past business practices, (b) the
trade accounts payable of Seller which have been incurred by Seller in the
ordinary course of business, and (C) those obligations and liabilities expressly
set forth on Schedule C1 hereto. By way of example, and not meant to exhaust
those obligations and liabilities of Seller, whether contingent, fixed,
liquidated or unliquidated, which are not being assumed by Purchaser are the
following:
A. any obligations or liabilities of Seller arising
under or disclosed in this Agreement; or
B. any obligations or liabilities of Seller for
federal, state or local income tax liability arising from the operations
of the Business, arising out of the sale of the Purchased Assets or any
other matter of any nature; or
C. any obligation for any transfer, sales or other taxes,
fees, levies, franchises or impositions of any nature (including interest and
penalties) arising from the operations of the Business or any other matter of
any nature, except for taxes arising strictly out of the transfer of the
Purchased Assets.
Notwithstanding the last sentence on Schedule A, the omission
of any liability of Seller from this Schedule shall be deemed to be a liability
which is not being assumed by Purchaser.
<PAGE>
SCHEDULE C1
ASSUMED LIABILITIES (CONT.)
Obligations for transfer, sales or other taxes, fees, levies,
franchises or impositions arising strictly out of the sale of the Purchased
Assets.
<PAGE>
SCHEDULE D
DETERMINATION OF NET ASSET ADJUSTMENT
Pursuant to the Asset Purchase Agreement to which this
Schedule D is attached (the "Agreement"), the Net Asset Adjustment will be
calculated in accordance with the following:
1. For purposes of the Agreement and this Schedule D thereto, the
following terms shall have the following meanings, all in accordance with GAAP:
===============================================================================
Term Definition
===============================================================================
Cash All cash and cash equivalents, as determined
in accordance with generally accepted
accounting principles, consistently applied
("GAAP").
===============================================================================
Accounts Receivable The gross value of customer's accounts,
bills and notes receivable received from
bona fide transactions in the ordinary course
of business, valued at the amount of such
account, bill or note.
===============================================================================
Inventory Inventories of finished goods, work in
process, supplies and raw materials, that are
saleable or usable in the ordinary course of
business, valued (using material, direct labor
and manufacturing overhead as to finished
goods and work-in-process only and no overhead
of any nature allocated to raw materials) at
amounts not in excess of cost or current
market value, whichever is lower.
================================================================================
Prepaid Items Any items of prepaid expense for rent,
postage or other items, the benefits of
which will accrue to Purchaser, and which were
made in the ordinary course of business, all
prorated to the Closing Date.
================================================================================
Trade Accounts Payable The gross value of Seller's debts to
suppliers and vendors for goods and
services provided or to be provided from bona
fide transactions in the ordinary course of
business.
================================================================================
Accrued Liabilities All Taxes which will be paid by Purchaser,
accrued commissions, wages, bonuses,
401(k) and profit sharing contributions,
prepaid sales and all other liabilities
of any nature whatsoever (including
contingent or unknown liabilities which
mature or become fixed at a later date)
which are or should be accrued by Seller
or were contingent as of the Closing
Date. Accrued Liabilities will also
include, on a pro rated basis, accruals for
year end bonuses, pension and profit
sharing contributions, and any other
adjustments which might normally be made
only at year end, including year-end
bonuses, contributions, etc., only to the
extent that Seller is obligated by law or
otherwise to make such payments.
================================================================================
Net Assets As of any date, the sum of Accounts
Receivable, Inventory, and Prepaid Items, less
the sum of Trade Accounts Payable and Accrued
Liabilities.
================================================================================
<PAGE>
2. As of the Closing Date, in order to determine an estimate
of the Net Asset Adjustment (the "Estimated Net Asset Adjustment"), Seller will
deliver to Purchaser a good faith estimate, determined in accordance with the
definitions above, of the amount of Seller's Net Assets as of July 31, 1996 (the
"Estimated Net Assets"), which has been calculated by the Seller and which has
been certified by Seller as containing, to the best of his knowledge, the Net
Assets as of July 31, 1996. If and to the extent the Estimated Net Assets
exceeds One Hundred Sixty Thousand Dollars ($160,000.00), the principal amount
under the Sub Note shall be increased. If and to the extent the Estimated Net
Assets is less than On Hundred Sixty Thousand Dollars ($160,000.00), Purchaser
shall receive a credit against the cash portion of the Purchase Price to be
delivered at the Closing. As set forth below the parties will reconcile the
amounts paid from one party to another based upon Estimated Net Assets, with
what amounts should have been paid based upon the actual Net Assets.
3. Immediately after the Closing Date, an examination of the
Accounts Receivable, Inventory, Prepaid Items, Fixed Assets, Trade Accounts
Payable and Accrued Liabilities will be conducted by a Purchaser's regularly
employed accountants for the purpose of determining the values of those assets
and items as of the Closing Date in accordance with the definitions above and
the amount of the Net Asset Adjustment (the "Post-Closing Audit") and
determining the actual Net Assets as of the Closing Date. The accounting firm
selected shall be at the sole discretion of Purchaser, and Purchaser shall be
responsible for all costs and expenses incurred in performing the Post-Closing
Audit. The accounting firm which is retained shall make its computations as
quickly as possible and will use its best efforts to complete their computation
of the Net Asset Adjustment within 90 days after the Closing Date. The
computation shall be made in accordance with the terms and provisions of this
Agreement. In the course of calculating the Net Asset Adjustment, such
accountants shall make their records and personnel available to Purchaser and
Seller for the purpose of review and analysis. Promptly after such accountants
have completed their computation, they will deliver copies thereof to Purchaser
and Seller. Such computation shall be binding on all recipients, unless, within
five (5) days after delivery of the computation, any recipient delivers a notice
to all others, specifying in detail all alleged errors in such computation, in
which event such computation shall be binding upon all the parties hereto only
as to matters as to which no errors have been specified in such notice. If all
points in dispute have not been resolved within 20 days following the delivery
of such notice, any recipient of such notice may submit the points remaining in
dispute to the certified accounting firm of DeLoitte & Touche, or in the event
of their refusal or inability to act, then to Price Waterhouse & Co. The costs
of the accounting firm shall be borne by the party contesting such valuation. If
none of the certified accounting firms set forth above is willing or able to act
as arbitrator, the arbitrator shall be a firm of certified public accountants
appointed by Purchaser. The determination of the arbitrator of the points
submitted shall be binding and conclusive on all parties. The arbitrators fees
and expenses shall be paid by, and in such proportions as the arbitrator may
determine. Notwithstanding the binding effect of the computation as set forth
above, such computations may be adjusted subsequently due to a matter giving
rise to indemnification.
4. Within 15 days after the accountants' report becomes
binding on the parties to the Agreement, Purchaser and Seller will reconcile the
Purchase Price with the
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<PAGE>
amounts actually paid by Purchaser to Seller, by the appropriate
payment, in cash or by other immediately available funds, from one party
to the other or an increase in the principal amount outstanding under
the Sub Note, as the case may be.
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<PAGE>
SCHEDULE E
CALCULATION OF OPERATING INCOME BONUS
At the end of the thirty-sixth month following the Closing,
ABEV's independent auditors will determine the cumulative operating income
(i.e., earnings before interest and taxes) of Purchaser as a stand alone entity
for such thirty-six (36) month period. Such calculation shall include reasonable
allocations of overhead and other non-operating expenses. Upon the condition
that Seller is employed as an employee of Purchaser at the end of such
thirty-six (36) month period, or even if Seller's employment with Purchaser has
been terminated pursuant to section 6(d) of his employment agreement prior to
such period, ABEV and/or Purchaser will deliver to Seller that amount of ABEV
Stock opposite the cumulative operating income figures below (the "Operating
Income Bonus"):
Cumulative Operating Income Shares of ABEV Stock
Less than $2,250,000 0
$2,250,000 to $2,500,000 25,000
$2,500,001 and Greater 37,500
Certificates representing the ABEV Stock shall be delivered,
if earned, within five (5) days after Purchaser's cumulative operating income
becomes final per Purchaser's audit(s) for the applicable year.
Purchaser and ABEV shall afford to Seller and his agents, the
opportunity, upon reasonable advance notice, to examine and make copies of (at
Seller's cost) the books and records of Purchaser having an effect on the
calculations provided for in this Schedule.
THE PARTIES AGREE AND ACKNOWLEDGE THAT ANY ADJUSTMENT PURSUANT
HERETO SHALL BE TREATED AS AN ADJUSTMENT TO THE PURCHASE PRICE FOR FEDERAL
INCOME TAX PURPOSES.
<PAGE>
SCHEDULE F
FORM OF SUB NOTE
See attached.
<PAGE>
SCHEDULE G
FORM OF LEGAL OPINION OF SELLER'S COUNSEL
See attached.
<PAGE>
SCHEDULE H
FORM OF LEGAL OPINION OF PURCHASER'S COUNSEL
See attached.
<PAGE>
EXECUTION COPY
SCHEDULE I
FORM OF EMPLOYMENT AGREEMENT
See attached.
<PAGE>
EXHIBIT 2.09
FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (the
"Amendment") is dated as of August 1, 1996 among LASALLE NATIONAL BANK
(the "Lender") and ATLANTIC BEVERAGE COMPANY, INC. ("ABC"), CARLTON
FOODS CORP. ("Carlton"), and PREFCO CORP. (formerly known as ABEV
Acquisition Corp.) ("Prefco," together with Carlton and ABC collectively
referred to herein as the "Borrowers").
RECITALS:
A. Pursuant to and in accordance with the terms of that
certain Loan and Security Agreement, dated as of March 15, 1996, among the
Lender and the Borrowers (the "Original Loan Agreement"), the Lender agreed to
make a term loan and revolving loans to the Borrowers. All initially capitalized
terms not otherwise defined in this Amendment shall have the meaning ascribed to
such terms in the Original Loan Agreement. The Original Loan Agreement as the
same is amended and modified by the terms and conditions of this Amendment is
referred to herein as the "Loan Agreement."
B. The Borrowers have requested that the Lender make
additional term loans and increase the amount of the Revolving Credit
Commitment. The Lender has agreed to make such additional term loans and to
increase the Revolving Credit Commitment on the terms and conditions herein set
forth.
AGREEMENTS:
NOW THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Amendment, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Borrowers and the Lender hereby
agree as follows:
1. DEFINITIONS.
Section 1.1 of the Loan Agreement is amended as follows:
(A) The following definitions are hereby added to Section 1.1
in alphabetical order:
"AFFILIATE PARTY" shall mean any wholly owned
subsidiary of ABC (including, without limitation, Richards and Grogan's)
which becomes a party to this Agreement and the other Loan Documents
after the Closing Date in accordance with and pursuant to the terms of
Section 8.3 hereof.
"AFFILIATE PARTY ACQUISITION" shall mean any
acquisition (including, without limitation, the Grogan's Merger and the
Richards Acquisition) by an Affiliate Party of the business of another
party as a going concern (whether consummated by a purchase of the
business assets of such other party, a merger, a stock purchase or
otherwise) if (a) such acquisition is approved by the Lender, and (b)
the Borrowers and the applicable Affiliate
<PAGE>
Party otherwise comply with the conditions and requirements set forth in
Section 8.3 hereof with respect to such acquisition.
"AFFILIATE PARTY ACQUISITION DOCUMENTS" shall mean
all of the agreements, instruments, and documents evidencing or executed
in connection with any Affiliate Party Acquisition, all of which must be
in form and substance satisfactory to the Lender.
"AFFILIATE PARTY BORROWING BASE" shall mean, with
respect to any Affiliate Party, at any time of determination, an amount
equal to the sum of (i) eighty percent (80%) of the actual amount (after
deduction of such Eligibility Reserves as the Lender deems proper and
necessary) of Eligible Receivables of such Affiliate Party, plus (ii)
fifty percent (50%) in the case of branded food products and sixty
percent (60%) in the case of unbranded food products, of the value
(after the deduction of such Eligibility Reserves as the Lender deems
proper and necessary) of Eligible Inventory of such Affiliate Party
(which Eligible Inventory shall be valued at the lower of cost,
determined on first-in first-out basis, or market value) but not to
exceed $2,500,000 less the amount of Eligible Inventory of all Borrowers
other than such Affiliate Party included in the Total Borrowing Base at
such time; provided; however; that as a condition to the Lender's
approval of any Affiliate Party Acquisition, Lender shall have
discretion to modify the foregoing.
"AMENDMENT FEE" shall have the meaning ascribed to
it in Section 2.11.
"CONSULTING AGREEMENT" shall mean that certain
Consulting Agreement, dated as of March 15, 1996, by and between
Sterling Advisors L.P., ABC and Elfman Venture Partners, Inc., as in
effect on March 15, 1996.
"GROGAN'S" shall mean Grogan's Merger Corp., a
Delaware corporation and a wholly owned subsidiary of ABC. Upon
confirmation of the Grogan's Merger, Grogan's Merger Corp. will change
its name to Grogan's Farm, Inc.
"GROGAN'S INITIAL PAYMENT AMOUNT" shall mean an
amount equal to (a) $170,769.23, divided by (b) the number of whole
calendar months between the Grogan Initial Payment Date and March 1,
1997.
"GROGAN'S INITIAL PAYMENT DATE" shall have the
meaning ascribed to it in Section 2.1(b).
"GROGAN'S MERGER" shall mean (a) the merger of
Grogan's Sausage, Inc. and Grogan's Farm, Inc. into Grogan's Merger
Corp., and (b) the acquisition by Grogan's Merger Corp. of the Grogan's
Property from Bobby and Betty Grogan, if (i) such merger and acquisition
are approved by the Lender, and (ii) the Borrowers and Grogan's
otherwise comply with the conditions and requirements set forth in
Section 8.3 hereof with respect to such merger and acquisition.
"GROGAN'S MERGER NOTE" means the promissory note in
the original principal amount of $500,000 executed by Grogan's and
payable to and for the benefit of Bobby and Betty Grogan, residents of
the Commonwealth of Kentucky, in connection with the Grogan's Merger,
incurred on terms and conditions approved by the Lender and which is
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<PAGE>
subordinated, in a manner approved by the Lender, as to right and time
of payment of principal and interest thereon to any and all of the
Obligations.
"GROGAN'S MORTGAGE" means a mortgage or other
document required by the Commonwealth of Kentucky creating a
first-priority security interest in favor of the Lender with respect to
the Grogan's Property, which shall be in form and substance satisfactory
to Lender and otherwise comply in all respects with any requirements or
regulations imposed by the Commonwealth of Kentucky, as the same has
been or may be amended, modified, extended, and renewed from time to
time.
"GROGAN'S PROPERTY" means that certain real property
located at U.S. Highway 51, Route 2, Arlington, Kentucky 42021.
"GROGAN'S SUBORDINATION" shall mean a subordination
agreement between Bobby and Betty Grogan, residents of the Commonwealth
of Kentucky, as "Junior Creditor," and the Lender, in form and substance
satisfactory to the Lender.
"GROGAN'S TERM LOAN" shall have the meaning ascribed
to it in Section 2.1(a)(iii).
"GROGAN'S TERM NOTE" shall have the meaning ascribed
to it in Section 2.1(b).
"INITIAL TERM LOAN" shall have the meaning ascribed
to it in Section 2.1(a)(i).
"INITIAL TERM NOTE" shall have the meaning ascribed
to it in Section 2.1(b).
"MORTGAGES" shall mean the Richards Mortgage, the
Grogan's Mortgage, and any other Real Property Security Document given
to the Lender from time to time to secure the payment and performance of
the Obligations, as the same have been or may be amended, modified,
extended, and renewed from time to time.
"ORIGINAL TRANSACTION" shall mean, collectively, the
merger of Carlton Foods, Inc. with and into Carlton pursuant to the
terms of that certain Agreement and Plan of Merger dated as of January
25, 1996 among ABC, Carlton and Carlton Foods, Inc. and the acquisition
by Acquisition Corp. of all of the common stock of Prefco, Inc. pursuant
to that certain Stock Purchase Agreement dated as of January 23, 1996
among ABC, Acquisition Corp., Allen Pauly and Franklin Roth.
"ORIGINAL TRANSACTION DOCUMENTS" shall mean all of
the agreements, instruments, and documents evidencing or executed in
connection with the Original Transaction.
"RICHARDS" shall mean Richards Cajun Foods Corp., a
Delaware corporation and a wholly owned subsidiary of ABC.
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<PAGE>
"RICHARDS ACQUISITION" shall mean the acquisition by
Richards of certain of the assets of J.L. Richard, a resident of the
State of Louisiana, in his individual capacity and doing business as
"Richards Cajun Country Processors" if (a) such acquisition is approved
by the Lender, and (b) the Borrowers and Richards otherwise comply with
the conditions and requirements set forth in Section 8.3 hereof with
respect to such acquisition.
"RICHARDS ACQUISITION NOTE" means the promissory
note in the original principal amount of $850,000 executed by Richards
and ABC and payable to and for the benefit of J.L. Richard, a resident
of the State of Louisiana, in connection with the Richards Acquisition,
incurred on terms and conditions approved by the Lender and which is
subordinated, in a manner approved by the Lender, as to right and time
of payment of principal and interest thereon to any and all of the
Obligations.
"RICHARDS INITIAL PAYMENT AMOUNT" shall mean an
amount equal to (a) $129,230.77, divided by (b) the number of whole
calendar months between the Richards Initial Payment Date and March 1,
1997.
"RICHARDS INITIAL PAYMENT DATE" shall have the
meaning ascribed to it in Section 2.1(b).
"RICHARDS MORTGAGE" means a mortgage or other
document required by the State of Louisiana creating a first-priority
security interest in favor of the Lender with respect to the Richards
Property, which shall be in form and substance satisfactory to Lender
and otherwise comply in all respects with any requirements or
regulations imposed by the State of Louisiana, as the same has been or
may be amended, modified, extended, and renewed from time to time.
"RICHARDS TERM LOAN" shall have the meaning ascribed
to it in Section 2.1(a)(ii).
"RICHARDS TERM NOTE" shall have the meaning ascribed
to it in Section 2.1(b).
"RICHARDS PROPERTY" means that certain real property
commonly known as 1325 East Ebey Street, Church Point, Louisiana.
"RICHARDS SUBORDINATION" shall mean a subordination
agreement between J.L. Richard, a resident of the State of Louisiana, in
his individual capacity and doing business as "Richards Cajun Country
Processors," as "Junior Creditor," and the Lender, in form and substance
satisfactory to the Lender.
(B) The definition of the term "ABC Borrowing Base" is hereby
amended by deleting the language "Prefco and Carlton" contained on the last line
thereof and substituting the language "Prefco, Carlton and all Affiliate
Parties" therefor.
(C) The definition of the term "Acquisition" is hereby deleted
in its entirety and the following is substituted therefor:
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<PAGE>
"ACQUISITION" shall mean, collectively, the
Original Transaction and any and
all Affiliate Party Acquisitions.
(D) The definition of the term "Acquisition Documents" is
hereby deleted in its entirety and the following is substituted therefor:
"ACQUISITION DOCUMENTS" shall mean,
collectively, the Original Transaction Documents and
any and all Affiliate Party Acquisition Documents.
(E) Exhibit A attached to the Original Loan Agreement is
hereby deleted in its entirety and Exhibit A attached hereto and made a part
hereof is hereby substituted therefor. As a result, the reference to Exhibit A
contained in the definition of the term "Borrowing Base Certificate" and any
other provision of the Loan Agreement shall be deemed to refer to Exhibit A
attached hereto.
(F) The definition of the term "Business Day" is hereby
amended by deleting the language "and Illinois" contained on the second line
thereof and substituting the language ", Illinois, and any State which is the
principal place of business for any Affiliate Party" therefor.
(G) The definition of the term "Carlton Borrowing Base" is
hereby amended by deleting the language "Prefco and ABC" contained on the
penultimate line thereof and substituting the language "Prefco, ABC and all
Affiliate Parties" therefor.
(H) The definition of the term "Closing Date" is hereby
amended by adding the word "Initial" prior to the word "Term" contained on the
second line thereof.
(I) The definition of the term "Eligible Receivables" is
hereby amended by deleting the language "Prefco or Carlton" contained on the
second line of subparagraph (i) thereof and substituting the language "Prefco,
Carlton, or any Affiliate Party" therefor.
(J) The definition of the term "Funding Date" is hereby
deleted in its entirety and the following is substituted therefor:
"FUNDING DATE" means the date any advance of
a Term Loan or any Revolving Loan is to be made
hereunder.
(K) The definition of the term "Loan" is hereby deleted in its
entirety and the following is substituted therefor:
"LOAN" shall mean any advance of a Term
Loan or a Revolving Loan.
(L) The definition of the term "Loan Documents" is hereby
amended by adding the language ", as the same has been or may be amended,
modified, extended, and renewed from time to time" to the end thereof.
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<PAGE>
(M) The definition of the term "Notes" is hereby amended by
adding the language ", as the same has been or may be amended, modified,
extended, and renewed from time to time" to the end thereof.
(N) The definition of the term "Pledge Agreement" is hereby
amended by adding the language ", as the same has been or may be amended,
modified, extended, and renewed from time to time" to the end thereof.
(O) The definition of the term "Prefco Borrowing Base" is
hereby amended by deleting the language "Carlton and ABC" contained on the
penultimate line thereof and substituting the language "Carlton, ABC and all
Affiliate Parties" therefor.
(P) The definition of the term "Restricted Junior Payment" is
hereby amended by deleting clause (iii) thereof in its entirety and substituting
the language, "(iii) any prepayment of principal of any Subordinated
Indebtedness," therefor.
(Q) The definition of the term "Revolving Credit Commitment"
is hereby deleted in its entirety and the following is substituted therefor:
"REVOLVING CREDIT COMMITMENT" shall mean
$6,500,000, as such amount may be (i) reduced from
time to time pursuant to Section 2.3(b) or Section
9.2 of this Agreement, and (ii) increased by up to a
maximum of $1,000,000.00 as follows:
(a) the Revolving Credit Commitment shall be
increased by $500,000.00 upon consummation of the
Richards Acquisition if the Grogan's Merger has not
theretofore been consummated; provided, however, if
the Richards Acquisition is consummated subsequent to
the consummation of the Grogan's Merger, the
Revolving Credit Commitment shall only be increased
by $250,000.00 upon consummation of the Richards
Acquisition; and
(b) the Revolving Credit Commitment shall be
increased by $750,000.00 upon consummation of the
Grogan's Merger if the Richards Acquisition has not
theretofore been consummated; provided, however, if
the Grogan's Merger is consummated subsequent to the
consummation of the Richards Acquisition, the
Revolving Credit Commitment shall only be increased
by $500,000.00 upon consummation of the Grogan's
Merger.
Notwithstanding the foregoing, if the
Grogan's Merger does not occur by August 30, 1996,
the Lender shall have discretion to modify the amount
of the increase in the Revolving Credit Commitment
described in clause (b) above.
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<PAGE>
(R) The definition of the term "Term Loan" is hereby deleted
in its entirety and the following is substituted therefor:
"TERM LOAN" shall collectively mean the
Initial Term Loan, the Richards Term Loan and the
Grogan's Term Loan.
(S) The definition of the term "Term Note" is hereby deleted
in its entirety and the following is substituted therefor:
"TERM NOTE" shall collectively mean the
Initial Term Note, the Richards Term Note and the
Grogan's Term Note.
(T) The definition of the term "Total Borrowing Base" is
hereby amended by adding the following language to the end thereof "plus (iv)
the Affiliate Party Borrowing Base of each Affiliate Party."
(U) The definition of the term "Trademark Security Agreement"
is hereby amended by adding the language ", as the same has been or may be
amended, modified, extended, and renewed from time to time" to the end thereof.
(V) The definition of the term "UCC" is hereby amended by
deleting the language "or Illinois" contained on the second line thereof and
substituting the language ", Illinois, or any State which is the principal place
of business for any Affiliate Party" therefor.
2. AMOUNT AND FUNDING OF TERM LOAN AND
REVOLVING CREDIT COMMITMENT.
(A) The amount of the Term Loan is hereby increased to
$7,725,000. As a result of and in connection with the foregoing, Section 2.1 of
the Loan Agreement is hereby deleted in its entirety and the following is hereby
substituted therefor:
2.1 THE TERM LOAN.
(A) AMOUNT OF TERM LOAN. Subject to
the terms and conditions of this Agreement and in reliance upon the
representations and warranties of the Borrowers herein set forth, the
Lender hereby agrees to make to the Borrowers a term loan (the "Term
Loan") in an amount equal to $7,725,000, which shall be funded as
follows:
(i) the Lender shall make
$4,500,000 of the proceeds of the Term Loan (the "Initial Term Loan")
available to the Borrowers on the Closing Date upon satisfaction of the
applicable conditions set forth in Sections 8.1 and 8.2 hereof, by
transferring same day funds equal to such amount to an account
designated in writing by the Borrowers;
(ii) the Lender shall make
$1,400,000 of the proceeds of the Term Loan (the "Richards Term Loan")
available to Richards upon satisfaction of the applicable conditions set
forth in Sections 8.2 and 2.1(c) hereof, by transferring same day funds
equal to such amount to an account designated in writing by Richards;
and
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<PAGE>
(iii) the Lender shall make
$1,825,000 of the proceeds of the Term Loan (the "Grogan's Term Loan")
available to Grogan's upon satisfaction of the applicable conditions set
forth in Sections 8.2 and 2.1(c) hereof, by transferring same day funds
equal to such amount to an account designated in writing by Grogan's.
Each advance of the Term Loan shall
initially be made as a Base Rate Loan.
(B) TERM NOTE. The Borrowers shall
execute and deliver to Lender (i) a promissory note, substantially in
the form of Exhibit D attached hereto and made a part hereof (as the
same has been or may be amended, modified, extended, and renewed from
time to time, the "Initial Term Note"), to evidence the Initial Term
Loan, (ii) a promissory note, substantially in the form of Exhibit J
attached hereto and made a part hereof (as the same has been or may be
amended, modified, extended, and renewed from time to time, the
"Richards Term Note"), to evidence the Richards Term Loan, and (iii) a
promissory note, substantially in the form of Exhibit K attached hereto
and made a part hereof (as the same has been or may be amended,
modified, extended, and renewed from time to time, the "Grogan's Term
Note"), to evidence the Grogan's Term Loan. The principal amount of the
Initial Term Note shall be payable in sixty (60) consecutive monthly
installments payable on the last Business Day of each successive
calendar month commencing on March 31, 1996 with installments payable
through and including February 28, 1997 in the amount of $66,666.67,
thereafter installments payable through and including February 28, 1998
in the amount of $70,833.34, thereafter installments payable through and
including February 28, 1999 in the amount of $75,000, thereafter
installments payable through and including February 29, 2000 in the
amount of $83,333.34, thereafter installments through and including
February 1, 2001 in an amount of $79,166.67 with a final installment of
any and all principal remaining on March 15, 2001. The principal amount
of the Richards Term Note shall be payable in consecutive monthly
installments payable on the last Business Day of each successive
calendar month commencing on the last Business Day of the calendar month
in which the Richards Term Loan is advanced (the "Richards Initial
Payment Date") in accordance with the following schedule:
PERIOD MONTHLY PAYMENT
Richards Initial Payment Date through Richards Initial Payment Amount
February 28, 1997
March 1, 1997 through February 28, 1998 $23,333.33
March 1, 1998 through February 28, 1999 $25,128.21
March 1, 1999 through February 28, 2000 $26,923.08
March 1, 2000 through February 28, 2001 $30,512.83
with a final installment of any and all principal remaining on March 15, 2001.
The principal amount of the Grogan's Term Note shall be payable in consecutive
monthly installments payable on the last Business Day of each successive
calendar month commencing on the last Business Day of the calendar month in
which the Grogan's Term Loan is advanced (the "Grogan's Initial Payment Date")
in accordance with the following schedule:
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<PAGE>
PERIOD MONTHLY PAYMENT
Grogan's Initial Payment Date through Grogan's Initial Payment Amount
February 28, 1997
March 1, 1997 through February 28, 1998 $30,833.33
March 1, 1998 through February 28, 1999 $33,205.13
March 1, 1999 through February 28, 2000 $35,576.92
March 1, 2000 through February 28, 2001 $40,320.51
with a final installment of any and all principal remaining on March 15, 2001,
or such other schedule as shall be mutually satisfactory to the Lender and the
Borrowers.
(C) CONDITIONS TO FUNDING OF RICHARDS TERM LOAN
AND GROGAN'S TERM LOAN; RESTRICTIONS ON USE. Notwithstanding any
provision in this Agreement to the contrary:
(i) the Lender shall not be required to
fund any portion of the Richards Term Loan until such time as (A) the
Richards Acquisition is approved by the Lender, (B) the Borrowers and
Richards otherwise comply with the conditions and requirements set forth
in Section 8.3 hereof with respect to the Richards Acquisition, (C) ABC
shall have contributed at least $820,000.00 to the common stock equity
of Richards, Richards has applied the entire amount of such proceeds to
the consummation of the Richards Acquisition, and the Borrowers shall
have provided evidence satisfactory to the Lender of the same, and (D)
the Borrowers shall have paid the applicable portion of the Amendment
Fee due in accordance with the terms of Section 2.11 hereof;
(ii) the Lender shall not be required to
fund any portion of the Grogan's Term Loan until such time as (A) the
Grogan's Merger is approved by the Lender, (B) the Borrowers and
Grogan's otherwise comply with the conditions and requirements set forth
in Section 8.3 hereof with respect to the Grogan's Merger, and (C) the
Borrowers shall have paid the applicable portion of the Amendment Fee
due in accordance with the terms of Section 2.11 hereof;
(iii) the proceeds of the Richards Term
Loan may only be used by Richards to pay amounts due and owing by
Richards (including, without limitation, fees, costs and expenses) in
connection with the Richards Acquisition; and
(iv) the proceeds of the Grogan's Term
Loan may only be used by Grogan's to pay amounts due and owing by
Grogan's (including, without limitation, fees, costs and expenses) in
connection with the Grogan's Merger.
Any request by any Borrower for the Lender
to fund either the Richards Term Loan or the Grogan's Term Loan shall be
deemed a representation, warranty and covenant by the Borrowers that the
proceeds of such requested advance shall solely be used for the purposes
permitted by the terms of this subparagraph (c).
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<PAGE>
(D) OUTSIDE FUNDING DATE FOR RICHARDS TERM LOAN
AND GROGAN'S TERM LOAN. Notwithstanding any provision in this Agreement
or any of the other Loan Documents to the contrary, the Borrowers shall
have no right to receive, and the Lender shall have no obligation to
advance, any portion of the Richards Term Loan or the Grogan's Term Loan
unless all conditions precedent to the applicable Loan are fulfilled and
a request made for the funding thereof no later than August 30, 1996.
(B) Exhibit J and Exhibit K attached hereto and made a part
hereof are hereby added to the Loan Agreement as Exhibit J and Exhibit K,
respectively. As a result, the reference to Exhibits J or K contained in Section
2.1 or any other provision of the Loan Agreement shall be deemed to refer to
Exhibits J or K, as the case may be, attached hereto.
(C) Section 2.2(b)(i) is hereby amended by adding the word
"Initial" prior to the word "Term" contained on the penultimate line thereof.
(D) Section 2.2(c) is hereby amended as follows:
(i) the language ", as the same has been or may
be amended, modified, extended, and renewed from time to time" is hereby
added after the phrase "promissory note" contained on the second line
thereof;
(ii) the reference to "$6,500,000" contained on
the fifth line thereof is hereby deleted and "$7,500,000" is substituted
therefor; and
(iii) the word "Initial" is hereby added prior to
the word "Term" on the sixth line thereof.
(E) Section 2.3(a) is hereby amended by adding the following
language to the end thereof:
If no Event of Default exists at the time of any
prepayment of the Term Loan made by the Borrowers
pursuant to this Section 2.3(a), then such prepayment
shall be applied against each of the Term Notes on a
PRO RATA basis. If any Event of Default exists at the
time of any prepayment of the Term Loan made by the
Borrowers pursuant to this Section 2.3(a), then the
Lender shall apply such prepayment against the Term
Notes in whatever manner as the Lender, in its sole
discretion, shall elect.
(F) Section 2.3(b) is hereby amended by adding the following
language to the end thereof:
Notwithstanding any provision in this Agreement to
the contrary, (i) if no Event of Default exists at
the time any Designated Prepayment is to be made,
then such prepayment shall be applied against each
installment of the Term Notes in the inverse order of
maturity on a PRO RATA basis in proportion to the
amount that the outstanding principal amount of each
such Term Note bears to the total outstanding
principal amount of all the Term Notes; and (ii) if
any Event of Default exists at
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<PAGE>
the time any Designated Prepayment is to be made,
then the Lender shall apply such Designated
Prepayment against the Term Notes in whatever
manner as the Lender, in its sole discretion,
shall elect.
(G) Section 2.3(d) is hereby amended by deleting the language
"`Carlton Borrowing Base' and `Prefco Borrowing Base'" contained on the sixth
and seventh line thereof and substituting the language "`Carlton Borrowing
Base,' `Prefco Borrowing Base' and each `Affiliate Party Borrowing Base'"
therefor.
(H) Section 2.5(b) is hereby deleted in its entirety and
the following is substituted therefor:
(b) If the Borrowers shall repay the
Obligations in full and terminate the Revolving
Credit Commitment prior to March 14, 2000, the
Borrowers shall pay to the Lender an early
termination fee in an amount equal to (i) 1% of the
aggregate amount prepaid and terminated if such
prepayment and termination occurs before March 14,
1998 and (ii) 0.5% of the aggregate amount prepaid
and terminated if such prepayment and termination
occurs on March 14, 1998 or any time thereafter until
March 14, 2000. No amounts will be due under this
subsection (b) if the Borrowers shall repay the
Obligations after March 14, 2000.
(I) Section 2.7(e) is hereby amended as follows:
(i) the language "(which shall be applied
against the interest due on each Term Note on a PRO RATA basis)" is
added after the words "Term Loan" contained on the 18th and 19th lines
thereof; and
(ii) the language "(which shall be applied
against each Term Note on a PRO RATA basis)" is added after the words
"Term Loan" contained on the twenty-fourth line thereof.
(J) Section 2.11 is hereby amended by adding the following
language to the end thereof:
In addition to the Closing Fee, the Borrowers agree
to pay to the Lender an "Amendment Fee" as follows:
(a) if (i) the Richards Term Loan is
advanced in accordance with the terms hereof, the
Borrowers shall pay to the Lender a fee equal to
$14,000.00, such portion of the Amendment Fee being
due and payable prior to or concurrently with the
funding of the Richards Term Loan; or (ii) the
Richards Term Loan is not advanced in accordance with
the terms hereof for any reason (other than a failure
by the Lender to comply with the terms hereof), the
Borrowers shall pay to the Lender a fee equal to
$3,500.00, such portion of the Amendment Fee being
due and payable on September 5, 1996;
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<PAGE>
(b) if (i) the Grogan's Term Loan is
advanced in accordance with the terms hereof, the
Borrowers shall pay to the Lender a fee equal to
$18,250.00, such portion of the Amendment Fee being
due and payable prior to or concurrently with the
funding of the Grogan's Term Loan; or (ii) the
Grogan's Term Loan is not advanced in accordance with
the terms hereof for any reason (other than a failure
by the Lender to comply with the terms hereof), the
Borrowers shall pay to the Lender a fee equal to
$4,625.50, such portion of the Amendment Fee being
due and payable on September 5, 1996; and
(c) if (i) the Revolving Credit Commitment
is increased in accordance with definition of the
term "Revolving Credit Commitment" as a result of the
Grogan's Merger or the Richards Acquisition, the
Borrowers shall pay to the Lender a fee equal to 1.0%
of each such increase, such portion of the Amendment
Fee being due and payable prior to or concurrent with
any such increase; or (ii) the Revolving Credit
Commitment is not so increased by the entire
$1,000,000.00 maximum increase available under the
definition of "Revolving Credit Commitment," for any
reason (other than a failure by the Lender to comply
with the terms hereof), the Borrowers shall pay to
the Lender a fee equal to 0.25% of the difference
between (A) $1,000,000.00 and (B) the amount of any
increase that has occurred in accordance with the
definition of the term "Revolving Credit Commitment",
such portion of the Amendment Fee being due and
payable on September 5, 1996.
Any failure by the Borrowers to timely pay any
portion of the Amendment Fee when the same is due in
accordance with the terms hereof shall constitute an
Event of Default. Notwithstanding any provision in
this Section 2.11 to the contrary, if either the
Richards Acquisition or the Grogan's Merger is
consummated after September 5, 1996, the Borrowers
shall receive a credit in an amount equal to any
Amendment Fee the Borrowers have previously paid to
the Lender pursuant to clause (ii) of paragraphs (a),
(b) and/or (c), as the case may be, against any fee
subsequently required to be paid to Lender in
connection with the applicable transaction. The
Lender acknowledges and agrees that the Borrowers may
pay any portion of the Amendment Fee from the
proceeds of a Revolving or any Term Loan.
3. MODIFICATION OF REPRESENTATIONS AND
WARRANTIES.
The representations and warranties made in Article VI of the
Loan Agreement are hereby modified as follows:
(A) Section 6.2 is hereby amended by adding the language
"recording of the Richards Mortgage (if the Richards Term Loan has been made),
recording of the Grogan's Mortgage (if the Grogan's Term Loan has been made),
recording of any other Mortgages," after the word "upon" contained on the third
line thereof.
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<PAGE>
(B) Section 6.6(b) is hereby amended by deleting the word
"Acquisition" contained on the penultimate line thereof and substituting the
term "Original Transaction" therefor.
4. AMENDMENTS TO COVENANTS.
The covenants of the Borrowers set forth in Article VII of the
Original Loan Agreement are amended as follows:
(A) Section 7.13 is hereby amended by deleting the language
"existing on the Closing Date and reflected in the PRO FORMA" contained on the
penultimate and last line thereof and substituting "shown on Schedule 7.13
attached hereto and made a part hereof" therefor.
(B) Schedule 7.13 attached hereto and made a part hereof is
hereby added to the Loan Agreement as Schedule 7.13. As a result, the reference
to Schedule 7.13 contained in Section 7.13 or any other provision of the Loan
Agreement shall be deemed to refer to Schedule 7.13 attached hereto.
(C) Clause (b) of Section 7.15 is hereby amended by
deleting the semi-colon at the end of such clause and adding the
following: "or would result from the making of such payment;"
(D) Section 7.20 is hereby amended by deleting the language
"acquire the assets of Star Foods Processing, Inc. on terms and conditions
satisfactory to the Lender" contained on the second and third line thereof and
by substituting the language "in connection with any Affiliate Party
Acquisition" therefor.
(E) Section 7.21 is hereby amended by deleting the language
"the acquisition of the assets of Star Foods Processing, Inc. on terms and
conditions satisfactory to the Lender" and substituting the language, "and any
Affiliate Party Acquisition" therefor.
(F) Schedule 7.23 attached to the Original Loan Agreement is
hereby deleted in its entirety and Schedule 7.23 attached hereto and made a part
hereof is hereby substituted therefor. As a result, the reference to Schedule
7.23 contained in Section 7.23 or any other provision of the Loan Agreement
shall be deemed to refer to Schedule 7.23 attached hereto.
(G) The following is hereby added to the end of Article VII as
a new Section 7.31:
7.31 Accounting and MIS System. Each of the
Borrowers shall be required to put in place (and
thereafter maintain in place) an integrated MIS and
accounting system so that the Borrowers' MIS and
accounting services are of a type and quality used by
other businesses comparable in size to the Borrowers.
The Borrowers hereby represent and warrant to the
Lender that, as of August 1, 1996, ABC and Carlton
has such MIS and accounting system in place. With
respect to Prefco and each Affiliate Party, such
system shall be required to be in place no
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<PAGE>
later than (a) November 1, 1996 with
respect to Prefco, and (b) one hundred twenty
(120) days after the consummation of the
applicable Affiliate Party Acquisition with
respect to each Affiliate Party. Lender shall
be entitled to have such consultants or
experts that the Lender deems necessary or
appropriate verify the Borrowers' compliance
with the foregoing terms of this Section 7.31
and the Borrowers hereby agree to permit such
consultants and experts access to the
Borrowers offices for purposes of such
verification.
5. CONDITIONS TO BECOMING AN AFFILIATE PARTY.
Article VIII is amended as follows:
(A) The following is hereby added to the end of Article VIII
as a new Section 8.3:
8.3 Conditions for Becoming an Affiliate
Party. Notwithstanding any provision in this
Agreement or any of the other Loan Documents to the
contrary, a Person shall only constitute an
"Affiliate Party" if the following conditions have
been satisfied:
(a) Such Person shall have executed
a joinder to this Agreement and the other Loan
Documents which shall be in the form of Exhibit L
attached hereto and made a part hereof.
(b) Such Person shall have executed
an endorsement to each of the Notes which shall be in
the form of Exhibit M attached hereto and made a part
hereof.
(c) All proceedings taken in
connection with the execution of the applicable
Affiliate Party Acquisition Documents and all
documents and papers relating thereto shall be
satisfactory to the Lender. The Lender shall have
received copies of such documents and papers as the
Lender may reasonably request in connection
therewith, all in form and substance satisfactory to
the Lender.
(d) The acquisition by such Person
shall have been approved by the Lender and
consummated in compliance with the applicable
Affiliate Party Acquisition Documents and all
applicable state and federal laws
(e) The Borrowers shall provide to
the Lender updated and corrected Schedules in form
and substance satisfactory to the Lender which shall
be substituted for the Schedules attached to this
Agreement.
(f) The Lender shall have received
all items on the list attached hereto and made a part
hereof as Exhibit N, such items to
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<PAGE>
be in form and substance satisfactory to the Lender,
and to be executed by all parties thereto
when the nature of such items so requires.
(g) The Borrowers shall have
executed such other documents or instruments required
by the Lender and complied with any other conditions
or requirements imposed by the Lender in connection
with the applicable transaction.
(h) The Lender shall have received a
Certificate and Agreement in the form of Exhibit O
attached hereto and made a part hereof.
(i) The Lender shall have received a
certificate signed by the chairman, vice chairman, or
chief executive officer and the chief financial
officer or treasurer of each Borrower (i) reaffirming
and remaking each of the representations and
warranties made in Article VI of this Agreement,
which representations and warranties shall be deemed
to be remade as of the date thereof, subject only to
the fact that the same shall be deemed to be modified
by substitute Schedules provided by the Borrowers in
accordance with the terms of subsection (e) hereof,
and (ii) certifying that the conditions specified in
this Section 8.3 have been fulfilled.
Notwithstanding any provision in this Agreement or
any of the other Loan Documents to the contrary, the
Lender shall have sole and absolute discretion to
determine whether to approve the addition of an
Affiliate Party or any Affiliate Party Acquisition
and, consequently, may require the satisfaction of
additional conditions or modify any of the foregoing
conditions as the Lender shall deem necessary or
appropriate, all in the sole and absolute discretion
of the Lender.
(B) Exhibit L, Exhibit M, Exhibit N and Exhibit O attached
hereto and made a part hereof are hereby added to the Loan Agreement as Exhibit
L, Exhibit M, Exhibit N and Exhibit O, respectively. As a result, the reference
to Exhibits L, M, N or O contained in Section 8.3 or any other provision of the
Loan Agreement shall be deemed to refer to Exhibits L, M, N or O, as the case
may be, attached hereto.
6. AMENDMENT TO EVENTS OF DEFAULT.
Section 9.1(e) of the Original Loan Agreement is hereby
amended by deleting the language "and the Seller Note" and substituting the
language "the Seller Note, the Richards Acquisition Note and the Grogan's Merger
Note" therefor.
7. EFFECTIVENESS OF THIS AMENDMENT.
The Lender and the Borrowers agree that the terms of this
Amendment shall not be effective (and the Lender shall have no obligations under
this Amendment) unless and until all of the following conditions have either
been fulfilled in a manner satisfactory to the Lender or waived in writing by
the Lender:
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<PAGE>
(A) The Lender shall have received all items on the List of
Closing Documents attached hereto and made a part hereof as Exhibit P, such
items to be in form and substance satisfactory to the Lender, and to be executed
by all parties thereto when the nature of such items so requires.
(B) The Borrowers shall have paid to the Lender the balance of
the Closing Fee equal to $35,000. The balance of the Closing Fee shall be fully
earned and non-refundable on the date hereof, regardless of whether the Richards
Term Loan or the Grogan's Term Loan is ever funded.
(C) The Borrowers shall have paid to the Lender all costs and
expenses incurred as of the date hereof in connection with this Agreement and
the other documents and instruments executed in connection herewith or
contemplated by the terms hereof (collectively, the "Amendment Documents") or
otherwise in connection with the Loan which the Borrowers are obligated to pay
pursuant to the terms of Section 12.7 of the Loan Agreement.
(D) All proceedings taken in connection with the execution of
this Amendment, all other Amendment Documents, and all documents and papers
relating thereto shall be satisfactory to the Lender. The Lender shall have
received copies of such documents and papers as the Lender may reasonably
request in connection therewith, all in form and substance satisfactory to the
Lender.
(E) The Lender shall have received a certificate dated as of
the date hereof and signed by the chairman, vice chairman or chief executive
officer and the chief financial officer or treasurer of each Borrower certifying
that the conditions specified in this Section 7 have been fulfilled.
8. REPRESENTATIONS AND WARRANTIES.
To induce the Lender to amend the Loan Agreement and to
consider making future Loans thereunder, Borrower represents and warrants to the
Lender that:
(A) There are no Defaults or Events of Default with respect to
any Borrower under the Loan Agreement or any of the other Loan Documents.
(B) Except as otherwise expressly set forth herein or in the
other Amendment Documents, none of the Loan Documents have been heretofore
amended, modified, changed, supplemented, renewed, replaced, or terminated and
none of the Borrowers' obligations under any of the Loan Documents has been
changed, terminated, forgiven or modified in any way.
(C) The PRO FORMA balance sheet provided by the Borrowers in
accordance with the requirements of Exhibit P presents fairly and accurately in
all material respects the Borrowers' financial condition as at such date as if
the transactions contemplated by the Richards Acquisition have occurred on such
date, the Richards Term Loan had been funded as of such date, and the Revolving
Credit Commitment has been increased in accordance with the terms hereof as of
such date.
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<PAGE>
(D) On the date hereof, the representations and warranties set
forth in the Loan Agreement (as modified by this Amendment) and in all other
Loan Documents are true and correct with the same effect as though such
representations and warranties had been made on the date hereof (except to the
extent that the same are specifically made as of an earlier date).
9. INDEMNITY.
The Borrowers agree to reimburse the Lender for any costs and
expenses (including, without limitation, reasonable attorneys' and paralegals'
fees and expenses) incurred by the Lender in defending any suit brought against
it by any Borrower or any other Person in connection with the transactions
contemplated by this Amendment and the other Amendment Documents. All of the
foregoing fees, costs and expenses shall be part of the Obligations, payable
upon demand, and secured by the Collateral.
10. MISCELLANEOUS.
(A) This Amendment may be executed in any number of
counterparts, and by the Lender and each of the Borrowers in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement.
(B) The captions contained in this Amendment are for
convenience only, are without substantive meaning and should not be construed to
modify, enlarge, or restrict any provision.
(C) All obligations of the Borrowers under this Amendment
shall be joint and several obligations of the Borrowers. Each Borrower shall be
liable for the full amount of the Obligations with the rights of contribution
and reimbursement against the other Borrowers under Section 12.13 of the Loan
Agreement.
(D) Any reference in the Loan Agreement to the term
"Agreement," "Note," "Loan Documents," or any other term used to describe any
one or more of the Loan Documents shall be deemed to refer to the applicable
documents as the same are modified by the terms of this Amendment and the other
Amendment Documents. Any provision in any of the Loan Documents which have been
rendered inconsistent with any other provision of Loan Documents as a result of
the amendments and modifications effectuated by this Amendment shall be deemed
amended and modified so as to be consistent with the terms and conditions of
this Amendment.
(E) Except to the extent that the Loan Agreement is expressly
amended and modified by the terms of this Amendment, the Loan Agreement is and
shall remain unmodified and in full force and effect.
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<PAGE>
IN WITNESS WHEREOF, the parties have entered into this
Agreement on the date first above written.
ATLANTIC BEVERAGE COMPANY, INC.
By:
Name:
Title:
PREFCO CORP.
By:
Name:
Title:
CARLTON FOODS CORP.
By:
Name:
Title:
LASALLE NATIONAL BANK
By:
Name:
Title:
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<PAGE>
EXHIBIT A
BORROWING BASE CERTIFICATE
<PAGE>
EXHIBIT J
FORM OF RICHARDS TERM NOTE
US $1,400,000 Dated: August 1, 1996
FOR VALUE RECEIVED, the undersigned, ATLANTIC BEVERAGE
COMPANY, INC., a Delaware corporation, CARLTON FOODS CORP., a Delaware
corporation and PREFCO CORP. (formerly known as ABEV Acquisition Corp.), a
Delaware corporation (collectively referred to herein as the "Borrowers"),
jointly and severally hereby promise to pay to the order of LaSalle National
Bank (the "Lender") the principal amount of One Million Four Hundred Thousand
and 00/100 Dollars ($1,400,000). Capitalized terms used herein have the meanings
specified for such terms in the Loan Agreement (as defined below).
The principal amount of this Richards Term Note ("Term Note")
shall be payable in consecutive monthly installments payable on the last
Business Day of each successive calendar month commencing on the last Business
Day of the calendar month in which the Richards Term Loan is advanced (the
"Richards Initial Payment Date") in accordance with the following schedule:
PERIOD MONTHLY PAYMENT
Richards Initial Payment Date Richards Initial Payment Amount
through February 28, 1997
March 1, 1997 through February 28, 1998 $23,333.33
March 1, 1998 through February 28, 1999 $25,128.21
March 1, 1999 through February 28, 2000 $26,923.08
March 1, 2000 through February 28, 2001 $30,512.83
with a final installment of any and all principal remaining on March 15, 2001.
As used herein, the term "Richards Initial Payment Amount" shall mean an amount
equal to (a) $129,230.77, divided by (b) the number of whole calendar months
between the Richards Initial Payment Date and March 1, 1997.
The Borrowers, jointly and severally, promise to pay interest
on the unpaid principal amount of this Term Note from the Funding Date with
respect hereto until such principal amount is paid in full, at such interest
rates, and payable at such times, as are specified in the Loan Agreement.
Both principal and interest are payable in lawful money of the
United States of America to LaSalle National Bank, at 120 South LaSalle Street,
Chicago, Illinois 60603, in same day funds. All payments made on account of
principal hereof shall be recorded by the
<PAGE>
Lender and, prior to any transfer hereof, endorsed on the grid attached
hereto which is part of this Term Note.
This Term Note is one of the Term Notes referred to in, and is
entitled to the benefits of, the Loan and Security Agreement dated as of March
15, 1996 (as amended by the First Amendment to Loan and Security Agreement,
bearing the date herewith, and all further amendments, modifications, changes,
supplements, renewals or replacements, the "Loan Agreement") by and between the
Borrowers and the Lender. The Loan Agreement, among other things, contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
IN WITNESS WHEREOF, the undersigned have executed this Term
Note.
ATLANTIC BEVERAGE COMPANY, INC.
By:
Merrick M. Elfman
Vice Chairman
CARLTON FOODS CORP.
By:
Merrick M. Elfman
Chairman
PREFCO CORP.
By:
Merrick M. Elfman
Chairman
[ADD SIGNATURE BLOCK FOR EACH ADDITIONAL AFFILIATE PARTY]
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<PAGE>
EXHIBIT K
FORM OF GROGAN'S TERM NOTE
US $1,850,000 Dated:
FOR VALUE RECEIVED, the undersigned, ATLANTIC BEVERAGE
COMPANY, INC., a Delaware corporation, CARLTON FOODS CORP., a Delaware
corporation and PREFCO CORP. (formerly known as ABEV Acquisition Corp.), a
Delaware corporation (collectively referred to herein as the "Borrowers"),
jointly and severally hereby promise to pay to the order of LaSalle National
Bank (the "Lender") the principal amount of One Million Eight Hundred Fifty
Thousand and 00/100 Dollars ($1,850,000). Capitalized terms used herein have the
meanings specified for such terms in the Loan Agreement (as defined below).
The principal amount of this Grogan's Term Note ("Term Note")
shall be payable in consecutive monthly installments payable on the last
Business Day of each successive calendar month commencing on the last Business
Day of the calendar month in which the Grogan's Term Loan is advanced (the
"Grogan's Initial Payment Date") in accordance with the following schedule:
PERIOD MONTHLY PAYMENT
Grogan's Initial Payment Date through Grogan's Initial Payment Amount
February 28, 1997
March 1, 1997 through February 28, 1998 $30,833.33
March 1, 1998 through February 28, 1999 $33,205.13
March 1, 1999 through February 28, 2000 $35,576.92
March 1, 2000 through February 28, 2001 $40,320.51
with a final installment of any and all principal remaining on March 15, 2001.
As used herein the term "Grogan's Initial Payment Amount" shall mean an amount
equal to (a) $170,769.23, divided by (b) the number of whole calendar months
between the Grogan Initial Payment Date and March 1, 1997.
The Borrowers, jointly and severally, promise to pay interest
on the unpaid principal amount of this Term Note from the Funding Date with
respect hereto until such principal amount is paid in full, at such interest
rates, and payable at such times, as are specified in the Loan Agreement.
Both principal and interest are payable in lawful money of the
United States of America to LaSalle National Bank, at 120 South LaSalle Street,
Chicago, Illinois 60603, in same day funds. All payments made on account of
principal hereof shall be recorded by the
<PAGE>
Lender and, prior to any transfer hereof, endorsed on the grid attached
hereto which is part of this Term Note.
This Term Note is one of the Term Notes referred to in, and is
entitled to the benefits of, the Loan and Security Agreement dated as of March
15, 1996 (as amended by the First Amendment to Loan and Security Agreement,
bearing the date herewith, and all further amendments, modifications, changes,
supplements, renewals or replacements, the "Loan Agreement") by and between the
Borrowers and the Lender. The Loan Agreement, among other things, contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
IN WITNESS WHEREOF, the undersigned have executed this Term
Note.
ATLANTIC BEVERAGE COMPANY, INC.
By:
Merrick M. Elfman
Vice Chairman
CARLTON FOODS CORP.
By:
Merrick M. Elfman
Chairman
PREFCO CORP.
By:
Merrick M. Elfman
Chairman
[ADD SIGNATURE BLOCK FOR EACH ADDITIONAL AFFILIATE PARTY]
-2-
<PAGE>
EXHIBIT L
FORM OF JOINDER BY AFFILIATE PARTY
The undersigned hereby joins in that certain Loan and Security
Agreement, dated as of March 15, 1996, among LaSalle National Bank and Atlantic
Beverage Company, Inc., Prefco Corp. (formerly known as ABEV Acquisition Corp.)
and Carlton Foods Corp. (as the same has been or may be amended, modified,
extended, and renewed from time to time, the "Loan Agreement") for purposes of
becoming a party thereto as one of the "Borrowers" therein (including, without
limitation, for purposes of granting a security interest in the Property of the
undersigned in accordance with the terms of Section 4.1 of the Loan Agreement)
and agrees to abide by and comply with the terms and conditions of the Loan
Agreement. All initially capitalized terms not otherwise defined in this
Amendment shall have the meaning ascribed to such terms in the Loan Agreement.
The obligations of the undersigned under the Loan Agreement
shall be the joint and several with the obligations of all of the Borrowers,
regardless of whether such obligations arose or accrued heretofore or shall
arise or accrue hereafter. The undersigned acknowledges and agrees that each
Borrower shall be liable for the full amount of the Obligations with the rights
of contribution and reimbursement against the other Borrowers under Section
12.13 of the Loan Agreement.
Any and all references in the Loan Agreement or any other Loan
Documents to the "Borrowers," whether jointly or severally, shall be deemed to
refer to ABC, Prefco, Carlton, [ADD REFERENCE TO ANY OTHER BORROWERS ADDED
PREVIOUSLY] and/or the undersigned, as the case may be.
IN WITNESS WHEREOF, the undersigned has executed this Joinder
as of this _____ day of ----------------------------, -----.
-------------------------------------,
a Delaware corporation
By:
Name:
Title:
<PAGE>
EXHIBIT M
FORM OF ENDORSEMENT
FOR VALUE RECEIVED, the undersigned Endorser,
_______________________________, a Delaware corporation, hereby unconditionally
promises to pay to Lender, or Lender's order, in lawful money of the United
States of America, all amounts due when the same become due and payable under
this [DESCRIBE NOTE].
The undersigned Endorser may prepay its obligations, in whole
or in part, under this Endorsement at any time, subject to Section 2.5 of the
Loan Agreement. Any such partial prepayment shall be applied to the installments
due under the [DESCRIBE NOTE] in the order set forth in the Loan Agreement.
This Endorsement is subject to the provisions of the Loan
Agreement and any of the other Loan Documents applicable to the Endorser, the
terms of which are incorporated by reference, as fully as if set forth herein.
IN WITNESS WHEREOF, the undersigned Endorser has duly executed
this Endorsement as of the _____ day of __________________________, _____.
-------------------------------------,
a Delaware corporation
By:
Name:
Title:
<PAGE>
EXHIBIT N
LIST OF CLOSING ITEMS FOR AFFILIATE PARTY ACQUISITION
A. LOAN DOCUMENTS
1. [ADDITIONAL PROMISSORY NOTE]
2. Endorsement to each Note executed by [AFFILIATE PARTY]
3. Joinder to Loan Agreement executed by [AFFILIATE PARTY]
4. A Notice of Borrowing and Disbursement Directions with respect to any
additional Term Loan or Revolving Loan to be made on the date
of the related Affiliate Party Acquisition executed by ABC. [IF
APPLICABLE]
5. Applications for and copies of the following Letters of Credit
[IF APPLICABLE]:
[AFFILIATE PARTY CREDITORS]
B. OTHER SECURITY AND GUARANTY DOCUMENTS
1. Vehicle titles covering all owned vehicles of [AFFILIATE PARTY] with
appropriate documentation duly executed in order to have the Lender's
lien notated thereon.
2. Stock certificates relating to the issued and outstanding shares of
[AFFILIATE PARTY], and stock powers relating to those certificates,
undated and duly endorsed in blank.
C. REAL ESTATE COLLATERAL DOCUMENTS
1. Mortgages for all real property owned by [AFFILIATE PARTY].
2. ALTA Surveys of properties in item 8 above certified to the Lender.
3. Title insurance policies for properties in item 8 above.
4. Copies of any structural or engineering reports for properties in item
8 above.
5. Landlord waivers for all properties leased by [AFFILIATE PARTY].
D. CORPORATE DOCUMENTS
1. Certificate or Articles of Incorporation for each Affiliate Party and
the applicable seller under the terms of the related Affiliate
Party Acquisition ("Seller"), as amended, modified or
supplemented to the date such Affiliate Party Acquisition is
consummated (the "Consummation Date"), certified to be true,
correct and complete by the Secretary of State of such entity's state
of incorporation as of a recent date prior to the Consummation Date,
together with a good standing certificate from the
<PAGE>
Secretary of State of such entity's state of incorporation and a good
standing certificate from the Secretaries of State (or the equivalent
thereof) of each other State in which each is qualified to
transact business, each to be dated a recent date prior to the
Consummation Date.
2. A certificate of the Secretary or Assistant Secretary of each Borrower
dated the Consummation Date certifying (a) the names and true
signatures of the incumbent officers of such Borrower
authorized to sign the Loan Documents, (b) the bylaws of each
Borrower as in effect on the date of such certification, (c)
that attached thereto is a true and complete copy of the
resolutions of such Borrower's Board of Directors approving and
authorizing the execution, delivery and performance of the Loan
Documents (and the Affiliate Party Acquisition Documents with
respect to [AFFILIATE PARTY] and any other Borrower that is a
party thereto) executed by such Borrower, (d) in the case of
any Affiliate Party being acquired by merger that attached
thereto is a true and complete copy of the resolutions of such
Borrower's Board of Directors approving and authorizing any
merger which accomplishes the related Affiliate Party
Acquisition and (e) that there have been no changes in the
Certificate of Incorporation of such Borrower since the date of
the most recent certification thereof by the Secretary of State
of such Borrower's state of incorporation.
3. A certificate of the Secretary or Assistant Secretary of Seller dated
the Consummation Date certifying (a) the By-laws of such entity as in
effect on the date of such certification, and (b) that there have been
no changes in the Certificate or Articles of Incorporation of such
entity since the date of the most recent certification thereof by the
Secretary of State of such entity's state of incorporation together
with the resolutions of such entity's Board of Directors approving and
authorizing the execution, delivery and performance of the Affiliate
Party Acquisition Documents executed by such entity and approving and
authorizing the [AFFILIATE PARTY] merger if one is involved in the
transaction.
4. If [AFFILIATE PARTY] is acquired through merger, a copy of the
Certificate of Merger filed with the Secretary of State of [AFFILIATE
PARTY]'s state of incorporation, evidencing the merger in the form
filed with the Secretary of State of [AFFILIATE PARTY]'s state of
incorporation.
5. If [AFFILIATE PARTY] is acquired through merger, a copy of the
Certificate of Merger filed with the Secretary of State of Seller's
state of incorporation, evidencing the merger in the form filed with
the Secretary of State of Seller's state of incorporation.
6. A Certificate of the Secretary or Assistant Secretary of Seller or a
letter from Seller if the Seller is an individual or group of
individuals dated the Consummation Date, certifying that (a)
the applicable Affiliate Party Acquisition Documents (including,
without limitation, the [AFFILIATE PARTY] Acquisition Note) are in
full force and effect and no material term or condition thereof has
been amended, from the form thereof delivered to the Lender, or waived,
except as disclosed to the Lender or its counsel prior to the
Consummation Date, (b) it and, to the best of its knowledge, the
other parties thereto have performed or complied in all material
respects with all agreements and conditions contained in the
applicable Affiliate Party Acquisition
-2-
<PAGE>
Documents and any agreements or documents referred to therein
required to be performed or complied with by each of them on or
before the requested funding on the Consummation Date, and (c)
subject to the foregoing, neither it nor, to the best of its
knowledge, such other parties are in default in the performance
or compliance with any of the material terms or provisions thereof
(except to the extent that performance thereof or compliance
therewith or default has been waived with the prior written consent
of the Lender).
7. A Financial Condition Certificate dated the Consummation Date, signed
by the chief executive officer of each Borrower certifying, among other
things, that such Borrower is Solvent on the Consummation Date after
giving effect to any new funding under the Loan Agreement, any issuance
of any [AFFILIATE PARTY] Acquisition Note and any capital contribution
noted in item 25 below as any of the foregoing are required by the
Affiliate Party Acquisition Documents and consummating the [AFFILIATE
PARTY] Acquisition.
E. SUBORDINATED DEBT DOCUMENTS
1. Subordination Agreement covering the [AFFILIATE PARTY] Acquisition
Note.
F. OPINIONS
1. Opinion of Thomas D. Wippman, counsel to Borrowers addressed to the
Lender.
2. If real property is owned by Affiliate Party, an opinion of local
counsel [IN THE CASE OF RICHARDS, JIM WATSON RE: LOUISIANA
LAW].
G. ENVIRONMENTAL DOCUMENTS
1. [ENVIRONMENTAL DOCUMENTS; IN THE CASE OF RICHARDS, TO INCLUDE EVIDENCE
SATISFACTORY TO LENDER THAT REMEDIATION HAS BEEN COMPLETED AT
RICHARDS SITE.]
H. MISCELLANEOUS
1. Lender Loss Payable Endorsement(s) relating to casualty insurance
policies covering the Collateral obtained in the related Affiliate
Party Acquisition or other satisfactory evidence that such endorsements
are effective (with copies of certificates of insurance attached).
2. If an equity contribution is being made, evidence satisfactory to the
Lender that the shareholders of ABC have contributed at least $[EQUITY
CONTRIBUTION] to Borrowers' common stock equity and the Borrowers have
applied the entire amount of such proceeds to the consummation of the
[AFFILIATE PARTY] Acquisition.
3. Certified copies of the PRO FORMA balance sheets of Borrowers as of the
Consummation Date, after giving effect to the Affiliate Party
Acquisition, together with current projected balance sheets and
forecasts of income, earnings and cash flow through 2000; which will be
attached to financial condition certificates.
-3-
<PAGE>
4. Payoff Letters, [TOGETHER WITH ALL RELEASE AND TERMINATION
DOCUMENTATION CONTEMPLATED THEREIN] from each Person who has or had a
security interest in any of the property being acquired in the
applicable Affiliate Party Acquisition.
5. A Certificate executed and delivered by the president or chief
operating officer and by the chief financial officer or treasurer of
each Borrower, certifying that, after giving effect to new funding
under the Loan Agreement, any issuance of any [AFFILIATE PARTY]
Acquisition Note and any capital contribution referred to in item 25
above as any of the foregoing are required by the Affiliate Party
Acquisition Documents and the consummation of any [AFFILIATE PARTY]
Acquisition, no Event of Default or Default exists or would occur as a
result therefrom.
6. Lock Box and Blocked Account Agreement with the [AFFILIATE PARTY'S]
local bank.
7. [BAILEE LETTER, IF APPLICABLE]
8. A copy of all Employment Agreements for chief executives of
[AFFILIATE PARTY].
I. UCC LIEN, TAX AND JUDGMENT SEARCHES AND FILINGS
1. UCC lien, tax lien and judgment searches in the following offices,
where applicable against [AFFILIATE PARTY] and appropriate
Seller:
a. County Clerk [COUNTIES IN WHICH [AFFILIATE PARTY]
AND SELLER CONDUCT BUSINESS] [ONLY SEARCH ON
COUNTY LEVEL IF FILING AT COUNTY LEVEL IS
REQUIRED BY THE LAWS OF THE APPROPRIATE STATE]
b. Secretary of State [STATES IN WHICH [AFFILIATE PARTY]
AND SELLER CONDUCT BUSINESS]
c. [OTHER OFFICES AS REQUIRED BY STATE LAWS OF THE
STATES IN WHICH [AFFILIATE PARTY] AND SELLER CONDUCT
BUSINESS]
2. UCC-1 Financing Statements filed against [AFFILIATE PARTY] in the
following offices, together with acknowledgement copies or other
evidence of filing:
a. County Clerk [COUNTIES IN WHICH [AFFILIATE PARTY]
WILL CONDUCT BUSINESS] [ONLY FILE ON COUNTY
LEVEL IF REQUIRED BY THE LAWS OF THE
APPROPRIATE STATES]
b. Secretary of State
[STATES IN WHICH [AFFILIATE PARTY] WILL
CONDUCT BUSINESS]
c. [OTHER OFFICES AS REQUIRED BY STATE LAWS OF THE
STATE IN WHICH [AFFILIATE PARTY] WILL CONDUCT
BUSINESS]
3. UCC-1 Financing Statements filed against [AFFILIATE PARTY] and Seller
for the following vehicle license numbers at the appropriate department
of motor vehicles in the state of such entity's place of business if so
required by such state's applicable laws:
-4-
<PAGE>
[LICENSE NUMBERS]
4. Post-Closing UCC Lien Searches against [AFFILIATE PARTY] and Seller in
the jurisdictions listed in item 32 and 33 above.
J. ACQUISITION DOCUMENTS
1. Amendment to Tax Sharing Agreement to take account of Affiliate Party
Acquisition.
K. FURTHER MISCELLANEOUS
1. [POST-CLOSING UNDERTAKING LETTER.]
-5-
<PAGE>
EXHIBIT O
FORM OF CERTIFICATE AND AGREEMENT
In connection with that certain Loan and Security Agreement,
dated as of March 15, 1996, among LaSalle National Bank ("Lender") and Atlantic
Beverage Company, Inc., Prefco Corp. (formerly known as ABEV Acquisition Corp.)
and Carlton Foods Corp. (as the same has been or may be amended, modified,
extended, and renewed from time to time, the "Loan Agreement") and in order to
induce Lender to (i) permit [NAME OF NEW AFFILIATE PARTY] ("New Affiliate
Party") to become an "Affiliate Party" (as such term is defined in the Loan
Agreement), and (ii) consent to [DESCRIBE APPLICABLE AFFILIATE PARTY
ACQUISITION] (the "New Affiliate Party Acquisition"), the undersigned hereby
represents, warrants, covenants and agrees as follows (all initially capitalized
terms not otherwise defined herein shall have the meaning ascribed to such terms
in the Loan Agreement):
1. New Affiliate Party has delivered to the Lender unaudited
balance sheets and the related statements of income and operations, shareholders
equity and cash flow for the fiscal year ended ____________________ and interim
statements prepared to date for the fiscal year to end ____________________ for
[name of acquired operations] (the "Financial Statements"). All of the Financial
Statements have been prepared in accordance with GAAP and present accurately and
fairly in all material respects the financial position of [name of acquired
operations] as at the dates thereof and its results of operations for the
periods then ended. Since ________________, there has been no event or
circumstance which is likely to have a material adverse affect on the financial
condition or operations of the businesses of such entities. The Financial
Statements present fairly and accurately in all material respects the financial
condition of [name of acquired operations] as at such dates. The pro forma
balance sheet provided by the Borrowers in accordance with the requirements of
Exhibit N to the Loan Agreement presents fairly and accurately in all material
respects the Borrowers' financial condition as at such date as if the New
Affiliate Party Acquisition has occurred on such date.
2. As of the date hereof, no shareholder of ABC owns more than
five percent (5%) of the issued and outstanding shares of stock in ABC except as
set forth on Schedule 2 attached hereto and incorporated herein by this
reference. Each of Carlton's, Prefco's and all Affiliate Parties' authorized
capital stock and the number of shares validly issued and outstanding are set
forth on Schedule 2 attached hereto and such issued shares are all fully paid
and non-assessable, and all of the outstanding stock of Carlton, Prefco and each
Affiliate Party are owned beneficially and of record by ABC.
3. Each Borrower and New Affiliate Party is Solvent prior to
and after giving effect to the transactions contemplated by the New Affiliate
Party Acquisition.
4. After giving effect to the transactions contemplated by the
New Affiliate Party Acquisition, New Affiliate Party has no Debt, except (a) the
Obligations, (b) Debt described on Annex 1 attached hereto, and (c) trade
payables and other contractual obligations arising in the ordinary course of
business.
<PAGE>
5. There are no Defaults or Events of Default with
respect to any Borrower under the Loan Agreement or any of the other
Loan Documents.
6. On the date hereof, the representations and warranties set
forth in the Loan Agreement and in all other Loan Documents are true and correct
with the same effect as though such representations and warranties had been made
on the date hereof (except to the extent that the same are specifically made as
of an earlier date), subject only to the fact that the same shall be deemed to
be modified by substitute Schedules provided by the Borrowers in accordance with
the terms of Section 8.3 of the Loan Agreement and in form and substance
satisfactory to the Lender.
7. The Borrowers agree to reimburse the Lender for any costs
and expenses (including, without limitation, reasonable attorneys' and
paralegals' fees and expenses) incurred by the Lender in defending any suit
brought against it by any Borrower or any other Person in connection with the
New Affiliate Party Acquisition or the documents executed by New Affiliate Party
in connection therewith. All of the foregoing fees, costs and expenses shall be
part of the Obligations, payable upon demand, and secured by the Collateral.
IN WITNESS WHEREOF, the undersigned have executed this
Certificate and Agreement as of this _____ day of ________________________,
_____.
ATLANTIC BEVERAGE COMPANY, INC.
By:
Merrick M. Elfman
Vice Chairman
CARLTON FOODS CORP.
By:
Merrick M. Elfman
Chairman
PREFCO CORP.
By:
Merrick M. Elfman
Chairman
[ADD SIGNATURE BLOCK FOR EACH ADDITIONAL AFFILIATE PARTY]
-2-
<PAGE>
EXHIBIT P
LIST OF CLOSING ITEMS FOR AMENDMENT
A. LOAN DOCUMENTS
1. First Amendment to Loan and Security Agreement.
2 Substitute Revolving Credit Note.
B. OTHER SECURITY AND GUARANTY DOCUMENTS
1. Amendment to Stock Pledge Agreement, executed by ABC in favor of the
Lender.
C. OPINIONS
1. Opinion of Thomas D. Wippman, counsel to Borrowers addressed to the
Lender.
D. MISCELLANEOUS
1. A certificate of the Secretary or Assistant Secretary of each Borrower
dated currently certifying (a) the names and true signatures of
the incumbent officers of such Borrower authorized to sign the
Loan Documents, (b) the bylaws of each Borrower as in effect on
the date of such certification, (c) that attached thereto is a
true and complete copy of the resolutions of such Borrower's
Board of Directors approving and authorizing the execution,
delivery and performance of the Loan Documents executed by such
Borrower, and (d) that there have been no changes in the
Certificate of Incorporation of such Borrower since the date of
the most recent certification thereof by the Secretary of State
of such Borrower's state of incorporation.
2. Blocked Account Agreement with Citizens Bank of Maryland and the
related Custody Account Agreement.
3. A revised statement from the Borrowers setting forth the sources and
uses of funds of the Borrowers after taking into account the Richards
Acquisition and the Grogan's Merger.
4. Certified copies of the PRO FORMA balance sheets of Borrowers as of the
date of this Amendment, after giving effect to the Richards Acquisition
and the Grogan Merger, together with current projected balance sheets
and forecasts of income, earnings and cash flow through 2000; which
will be attached to financial condition certificates.
<PAGE>
SCHEDULE 7.13
PERMITTED DEBT
<PAGE>
SCHEDULE 7.23
EXISTING DEPOSIT ACCOUNTS
<PAGE>
<PAGE>
EXHIBIT 2.10
WARRANTY BILL OF SALE AND ASSIGNMENT
KNOW ALL MEN BY THESE PRESENTS, that J.L. RICHARD, a Louisiana
resident, and DONNA MARIE RICHARD, his wife (together, "Seller"), for and in
consideration of the sum of Ten Dollars ($10.00) lawful money of the United
States to them paid by RICHARDS CAJUN FOODS CORP., a Delaware corporation
("Purchaser"), the receipt and sufficiency of which is hereby acknowledged, and
pursuant to the Asset Purchase Agreement (the "Purchase Agreement") dated as of
August 1, 1996 among Seller, Purchaser and Atlantic Beverage Company, Inc., a
Delaware corporation, have granted, bargained, sold, transferred, assigned and
delivered, and by these Presents does grant, bargain, sell, transfer, assign and
deliver unto Purchaser, its successors and assigns, all of Sellers' right, title
and interest in and to all of the Purchased Assets described on SCHEDULE A
attached to the Purchase Agreement and by this reference incorporated herein and
made a part hereto.
To have and to hold the same unto Purchaser, its successors
and assigns forever.
Sellers do, for themselves and their successors and assigns,
represent to and with Purchaser, its successors and assigns, that they are the
lawful owners of the Purchased Assets; that they have good right to sell the
Purchased Assets and that they will warrant and defend the sale of the Purchased
Assets hereby made, unto Purchaser, its successors and assigns against the
lawful claims and demands of all persons whomsoever.
IN WITNESS WHEREOF, Sellers have executed this Warranty Bill
of Sale and Assignment as of the 1st day of August, 1996.
- --------------------------------------
J.L. Richard
- --------------------------------------
Donna Marie Richard
<PAGE>
STATE OF LOUISIANA )
) SS
PARISH OF ACADIA )
I, __________________________, a Notary Public in and for said
Parish, in the State aforesaid, DO HEREBY CERTIFY that J.L. Richard and Donna
Marie Richard, the same persons whose names are subscribed to the foregoing
instrument, appeared before me this day in person, and acknowledged that they
signed and delivered the said instrument as their own free and voluntary act for
the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this 1st day of August,
1996.
---------------------------------------------
Notary Public
My Commission Expires: ____________
<PAGE>
AUTHORIZATION OF INSPECTION
The undersigned hereby authorizes RICHARDS CAJUN FOODS CORP.,
its affiliates, agents and authorized representatives (collectively the
"Company"), to obtain access to, inspect and obtain copies of any documents
relevant or pertaining to the creation, or operation, of the business enterprise
known as RICHARDS, and all predecessors thereto.
This authorization extends to, but is not limited to, such
documents in the possession of attorneys, accountants, financial institutions,
insurance brokers or agents, insurance companies, financial advisors, customers,
engineers or engineering firms, governments or government agencies, credit
agencies, chambers of commerce, better business bureaus, trade associates,
realtors, lessors and lessees, and such persons and entities are hereby directed
to cooperate in all respects with the Company. The undersigned hereby release
such parties from all claims or actions arising out of the foregoing
authorization and delivery of documents.
This authorization expressly extends to such documents whether
they were prepared or obtained or maintained for, or at the instance of, the
undersigned in their individual names, or in the names of the business
enterprises above described.
The undersigned understand that this is a general
authorization relating to the foregoing documents and the undersigned executed
this voluntarily and knowingly and intend to be bound by the same, as of August
1, 1996.
- ----------------------------------
J.L. Richard
STATE OF LOUISIANA )
) SS
PARISH OF ACADIA )
I, __________________________, a Notary Public in and for said
Parish, in the State aforesaid, DO HEREBY CERTIFY that J.L. Richard, the same
person whose name is subscribed to the foregoing instrument, appeared before me
this day in person, and acknowledged that he signed and delivered the said
instrument as his own free and voluntary act for the uses and purposes therein
set forth.
GIVEN under my hand and notarial seal this 1st day of August,
1996.
--------------------------------------------
Notary Public
My Commission Expires: ____________
<PAGE>
CERTIFICATE
I, Merrick M. Elfman, in my capacity as Vice Chairman of
Atlantic Beverage Company, Inc., a Delaware corporation ("ABEV") and as Chairman
of Richards Corp., a Delaware corporation ("Purchaser"), DO HEREBY CERTIFY,
pursuant to Section 10 of that certain Asset Purchase Agreement (the
"Agreement") dated as of August 1, 1996, by and among Purchaser, ABEV and J.L.
Richard, that:
1. The representations, warranties, covenants and agreements
of Purchaser and ABEV in the Agreement or in any Schedule, Exhibit, certificate
or document delivered in connection therewith are true and correct in all
material respects on the date hereof.
2. Each of Purchaser and ABEV has performed all
agreements and obligations required to be performed by it on or prior to
the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 1st day
of August, 1996.
ATLANTIC BEVERAGE COMPANY, INC.RICHARDS CAJUN FOODS CORP.
By By
Merrick M. Elfman, Vice Chairman Merrick M. Elfman, Chairman
<PAGE>
CERTIFICATE
The undersigned, J.L. Richard, in his individual capacity,
("Seller"), DO HEREBY CERTIFY, pursuant to Section 9 of that certain Asset
Purchase Agreement (the "Agreement") dated as of August 1, 1996, by and among
Seller, Atlantic Beverage Company, Inc., a Delaware corporation and Richards
Cajun Foods Corp., a Delaware corporation, that:
1. The representations, warranties, covenants and agreements
of Seller in the Agreement or in any Schedule, Exhibit, certificate or document
delivered in connection therewith are true and correct in all material respects
on the date hereof.
2. The Seller has performed all agreements and
obligations required to be performed by
him on or prior to the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 1st day
of August, 1996.
J.L. Richard
<PAGE>
EXHIBIT 2.11
AUTHORIZATION OF INSPECTION
The undersigned hereby authorize ATLANTIC BEVERAGE COMPANY,
INC., its affiliates and authorized representatives (collectively the
"Company"), to obtain access to, inspect and obtain copies of any documents
relevant or pertaining to the creation or operation of the business enterprise
known as Richard's and all predecessors thereto.
This authorization extends to, but is not limited to, such
documents in the possession of attorneys, accountants, financial institutions,
insurance brokers or agents, insurance companies, financial advisors, customers,
engineers or engineering firms, governments or government agencies, credit
agencies, chambers of commerce, better business bureaus, trade associates,
realtors, lessors and lessees, and such persons and entities are hereby directed
to cooperate in all respects with the business. The undersigned hereby release
such parties from all claims or actions arising out of the foregoing
authorization.
This authorization expressly extends to such documents whether
they were prepared or obtained or maintained for, or at the instance of, the
undersigned in his individual name, or in the name of the business enterprise
above described.
The undersigned understand that this is a general
authorization relating to the foregoing documents and the undersigned executed
this voluntarily and knowingly and intend to be bound by the same.
RICHARD'S
By Date: August 1, 1996
-------------------------------------
J.L. Richard, Sole Proprietor
STATE OF LOUISIANA )
) SS
PARISH OF ACADIA )
I, __________________________, a Notary Public in and for said
County, in the State aforesaid, DO HEREBY CERTIFY that J.L. Richard, the same
person whose name is subscribed to the foregoing instrument, appeared before me
this day in person, and acknowledged that he signed and delivered the said
instrument as his own free and voluntary act for the uses and purposes therein
set forth.
GIVEN under my hand and notarial seal this 1st day of August,
1996.
-----------------------------------------
Notary Public
<PAGE>
My Commission Expires: ____________
<PAGE>
EXHIBIT 2.12
ASSIGNMENT
WHEREAS, J.L. RICHARD, an individual, residing in Louisiana,
during the course of his employment or involvement with the business known as
"Richards", may have acquired intellectual property rights including but not
limited to patents, trademarks, service marks, copyrights, trade dress, trade
secrets, or design rights; and
WHEREAS, RICHARDS CAJUN FOODS CORP., a Delaware corporation,
having its principal offices at 650 Dundee Road, Suite 370, Northbrook, Illinois
60062, is desirous of acquiring said intellectual property rights.
NOW THEREFORE, in consideration of the sum of TEN DOLLARS
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, J.L. RICHARD, hereby irrevocably and formally
sells, grants, conveys and assigns to RICHARDS CAJUN FOODS CORP. all of his
respective right, title, and interest in and to any and all intellectual
property rights, including but not limited to patents, trademarks, service
marks, copyrights, design rights, trade dress and trade secrets acquired or
developed by him during the course of his employment or involvement with
Richards, including, but not limited to, those intellectual property rights
identified on Schedule A, attached hereto.
J.L. RICHARD shall cooperate with RICHARDS CAJUN FOODS CORP.
after execution of this Assignment in further identifying any rights
transferred herein, and in effecting and perfecting the transfer to RICHARDS
CAJUN FOODS CORP. of any and all intangible personal property related to the
business of Richards as referred to in this Assignment.
J.L. RICHARD hereby fully covenants and agrees with RICHARDS
CAJUN FOODS CORP. that he will not execute any writing or do any acts whatsoever
conflicting with the aforesaid grant and assignment, and that he will execute
and deliver such additional assignments, documents or instruments as RICHARDS
CAJUN FOODS CORP. may reasonably request in order to perfect or evidence the
aforesaid grant and assignment.
Signed at Church Point, Louisiana, as of the 1st day of
August, 1996.
J.L. Richard
<PAGE>
STATE OF LOUISIANA )
) SS
PARISH OF ACADIA )
I, __________________________, a Notary Public in and for said
Parish, in the State aforesaid, DO HEREBY CERTIFY that J.L. Richard, the same
person whose name is subscribed to the foregoing instrument, appeared before me
this day in person, and acknowledged that he signed and delivered the said
instrument as his own free and voluntary act for the uses and purposes therein
set forth.
GIVEN under my hand and notarial seal this 1st day of August,
1996.
---------------------------------------------
Notary Public
My Commission Expires:
- -------------------------------
ACCEPTED BY
RICHARDS CAJUN FOODS CORP.
By ----------------------------
Merrick M. Elfman, Chairman
<PAGE>
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, M. Renee Forsyth, a Notary Public in and for said County,
in the State aforesaid, DO HEREBY CERTIFY that Merrick M. Elfman, Chairman of
RICHARDS CAJUN FOODS CORP., the same person whose name is subscribed to the
foregoing instrument, as such Chairman, appeared before me this day in person,
and acknowledged that he signed and delivered the said instrument as his own
free and voluntary act and as the act of said Corporation for the uses and
purposes therein set forth.
GIVEN under my hand and notarial seal this 1st day of August,
1996.
---------------------------------------------
Notary Public
My Commission Expires:
<PAGE>
EXHIBIT 2.13
ASSIGNMENT
WHEREAS, DONNA MARIE RICHARD, an individual, residing in
Louisiana, during the course of his employment or involvement with the business
known as "Richards", may have acquired intellectual property rights including
but not limited to patents, trademarks, service marks, copyrights, trade dress,
trade secrets, or design rights; and
WHEREAS, RICHARDS CAJUN FOODS CORP., a Delaware corporation,
having its principal offices at 650 Dundee Road, Suite 370, Northbrook, Illinois
60062, is desirous of acquiring said intellectual property rights.
NOW THEREFORE, in consideration of the sum of TEN DOLLARS
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, DONNA MARIE RICHARD, hereby irrevocably and
formally sells, grants, conveys and assigns to RICHARDS CAJUN FOODS CORP. all of
his respective right, title, and interest in and to any and all intellectual
property rights, including but not limited to patents, trademarks, service
marks, copyrights, design rights, trade dress and trade secrets acquired or
developed by him during the course of his employment or involvement with
Richards, including, but not limited to, those intellectual property rights
identified on Schedule A, attached hereto.
DONNA MARIE RICHARD shall cooperate with RICHARDS CAJUN FOODS
CORP. after execution of this Assignment in further identifying any rights
transferred herein, and in effecting and perfecting the transfer to RICHARDS
CAJUN FOODS CORP. of any and all intangible personal property related to the
business of Richards as referred to in this Assignment.
DONNA MARIE RICHARD hereby fully covenants and agrees with
RICHARDS CAJUN FOODS CORP. that he will not execute any writing or do any acts
whatsoever conflicting with the aforesaid grant and assignment, and that he will
execute and deliver such additional assignments, documents or instruments as
RICHARDS CAJUN FOODS CORP. may reasonably request in order to perfect or
evidence the aforesaid grant and assignment.
Signed at Church Point, Louisiana, as of the 1st day of
August, 1996.
------------------------------------------------
Donna Marie Richard
<PAGE>
STATE OF LOUISIANA )
) SS
PARISH OF ACADIA )
I, __________________________, a Notary Public in and for said
Parish, in the State aforesaid, DO HEREBY CERTIFY that Donna Marie Richard, the
same person whose name is subscribed to the foregoing instrument, appeared
before me this day in person, and acknowledged that she signed and delivered the
said instrument as her own free and voluntary act for the uses and purposes
therein set forth.
GIVEN under my hand and notarial seal this 1st day of August,
1996.
---------------------------------------------
Notary Public
My Commission Expires:
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ACCEPTED BY
RICHARDS CAJUN FOODS CORP.
By ----------------------------
Merrick M. Elfman, Chairman
<PAGE>
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, M. Renee Forsyth, a Notary Public in and for said County,
in the State aforesaid, DO HEREBY CERTIFY that Merrick M. Elfman, Chairman of
RICHARDS CAJUN FOODS CORP., the same person whose name is subscribed to the
foregoing instrument, as such Chairman, appeared before me this day in person,
and acknowledged that he signed and delivered the said instrument as his own
free and voluntary act and as the act of said Corporation for the uses and
purposes therein set forth.
GIVEN under my hand and notarial seal this 1st day of August,
1996.
---------------------------------------------
Notary Public
My Commission Expires:
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