EXHIBIT 10.7
AMENDED AND RESTATED JOINT VENTURE AGREEMENT
DELTA BEVERAGE GROUP, INC.
AND
POYDRAS STREET INVESTORS L.L.C.
EFFECTIVE DATE: SEPTEMBER 3, 1992
Page 1 Exhibit 10.7
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Formation. . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Principal Office . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Purposes and Powers. . . . . . . . . . . . . . . . . . . . . 5
2.5 Limitation on Business Activities. . . . . . . . . . . . . . 5
2.6 Term of Joint Venture. . . . . . . . . . . . . . . . . . . . 5
ARTICLE 3 JOINT VENTURE CAPITAL AND DISTRIBUTIONS. . . . . . . . . . . 6
3.1 Contributions; Mandatory Loans; Priority Profit Interest . . 6
3.2 Additional Funds . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Failure to Make Mandatory Loans. . . . . . . . . . . . . . . 7
3.4 Expenses Incurred and Services Performed Not Contribution. . 9
3.5 No Interest, Withdrawal or Return of
Contributions. . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 Loans to the Joint Venture by the Venturers. . . . . . . . . 9
3.7 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . 9
3.8 Allocation of Items of Joint Venture Income, Gain, Loss,
Deduction and Credit . . . . . . . . . . . . . . . . . . . . 9
3.9 Distributions. . . . . . . . . . . . . . . . . . . . . . . . 11
3.10 Priority Profit Interest . . . . . . . . . . . . . . . . . . 11
ARTICLE 4 MANAGEMENT OF THE JOINT VENTURE. . . . . . . . . . . . . . . 12
4.1 Management Committee and Powers. . . . . . . . . . . . . . . 12
4.2 Action by Management Committee . . . . . . . . . . . . . . . 13
4.3 Authority of Managing Venturer . . . . . . . . . . . . . . . 13
4.4 Limitations on Authority of Managing Venturer and the
Management Committee . . . . . . . . . . . . . . . . . . . . 14
4.5 Nominee Names. . . . . . . . . . . . . . . . . . . . . . . . 15
4.6 Liability and Indemnity of Management Committee and
Managing Venturer. . . . . . . . . . . . . . . . . . . . . . 15
4.7 Authority to Bind Other Venturers. . . . . . . . . . . . . . 16
4.8 Procedure for Asserting Right to Indemnification . . . . . . 16
4.9 Venturers or Affiliates Dealing with Joint Venture . . . . . 17
4.10 Devotion of Time and Other Activities Not Restricted . . . . 17
4.11 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 5 JOINT VENTURE EXPENSES; REIMBURSEMENT. . . . . . . . . . . . 17
5.1 Joint Venture Expenses . . . . . . . . . . . . . . . . . . . 17
5.2 Managing Venturer's Fees and Expenses. . . . . . . . . . . . 18
5.3 Reimbursement to Venturers . . . . . . . . . . . . . . . . . 19
Exhibit 10.7
ARTICLE 6 BOOKS AND RECORDS; REPORTS TO PARTNERS . . . . . . . . . . . 19
6.1 Books and Records. . . . . . . . . . . . . . . . . . . . . . 19
6.2 Financial Statements . . . . . . . . . . . . . . . . . . . . 19
6.3 Tax Returns and Information. . . . . . . . . . . . . . . . . 20
6.4 Other Reports. . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 7 PLEDGES, TRANSFERS, WITHDRAWALS. . . . . . . . . . . . . . . 21
7.1 Pledges; Security Interest in Favor of Venturers . . . . . . 21
7.2 Transfer by Venturers. . . . . . . . . . . . . . . . . . . . 21
7.3 Sale of Interest to Other Venturer(s). . . . . . . . . . . . 22
7.4 Effect of Attempted Transfer; Withdrawals Generally. . . . . 23
7.5 Tax Allocation Adjustments; Distribution After Transfer. . . 23
7.6 Section 754 Election . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 8 DURATION AND TERMINATION OF THE JOINT VENTURE. . . . . . . . 24
8.1 Event of Termination . . . . . . . . . . . . . . . . . . . . 24
8.2 Winding-Up . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.3 Events of Default. . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 9 REPRESENTATIONS AND WARRANTIES OF SEVEN-UP . . . . . . . . . 28
9.1 Good Standing; Power . . . . . . . . . . . . . . . . . . . . 28
9.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . 28
9.3 No Breach. . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.4 Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.5 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.6 No Violations. . . . . . . . . . . . . . . . . . . . . . . . 29
9.7 No Litigation. . . . . . . . . . . . . . . . . . . . . . . . 29
9.8 Representations and Warranties . . . . . . . . . . . . . . . 29
ARTICLE 10 REPRESENTATIONS AND WARRANTIES OF DELTA. . . . . . . . . . . 30
10.1 Good Standing; Powers; Capital Stock . . . . . . . . . . . . 30
10.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . 30
10.3 No Breach. . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.4 Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.5 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.6 No Violations. . . . . . . . . . . . . . . . . . . . . . . . 31
10.7 No Litigation. . . . . . . . . . . . . . . . . . . . . . . . 31
10.8 Representations and Warranties . . . . . . . . . . . . . . . 32
ARTICLE 11 COVENANTS OF THE VENTURERS . . . . . . . . . . . . . . . . . 32
11.1 Offer of Re-employment . . . . . . . . . . . . . . . . . . . 32
11.2 Bottling and Canning Requirements. . . . . . . . . . . . . . 32
11.3 Opinions of Counsel. . . . . . . . . . . . . . . . . . . . . 33
11.4 Required Consents. . . . . . . . . . . . . . . . . . . . . . 33
11.5 Right of First Refusal . . . . . . . . . . . . . . . . . . . 33
Page ii Exhibit 10.7
11.6 Consent of the Joint Venture for Certain Actions of Delta. . 34
11.7 Payment of Transfer Fees and Taxes . . . . . . . . . . . . . 34
11.8 Effort; Cooperation. . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 12 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 34
12.1 Waiver of Partition. . . . . . . . . . . . . . . . . . . . . 34
12.2 Modification; Waivers. . . . . . . . . . . . . . . . . . . . 34
12.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 35
12.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . 35
12.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.6 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 37
12.8 Successors and Assigns . . . . . . . . . . . . . . . . . . . 37
12.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 37
12.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.11 Construction . . . . . . . . . . . . . . . . . . . . . . . . 37
12.12 Property Rights. . . . . . . . . . . . . . . . . . . . . . . 37
12.13 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . 37
12.14 Further Actions. . . . . . . . . . . . . . . . . . . . . . . 38
12.15 Trademarks and Trade Names . . . . . . . . . . . . . . . . . 38
12.16 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . 38
12.17 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . 38
LIST OF EXHIBITS
Exhibit A. . . . . . . . . . . . . . . . . . . . . .24 Parish Geographic Area
Exhibit B. . . . . . . . . . . . . . . . . . . . . . . . . .Excluded Products
LIST OF SCHEDULES
Schedule A . . . . . . . . . . . . . . Delta Contributed Assets and Liabilities
Schedule A1. . . . . . . . . . . . . . .Assets and Liabilities Retained by DBGI
Schedule B . . . . . . . . . . . . .Seven-Up Contributed Assets and Liabilities
Schedule B1. . . . . . . . . . . . .Assets and Liabilities Retained by Seven-Up
Schedule C . . . . . . . . . . . . . Exceptions to Marketable Title of Seven-UP
Schedule D . . . . . . . . . . . . . . .Exceptions to Marketable Title of Delta
Schedule E . . . . . . . . . . . . . . . . . . . . . . . .Contracts of Seven-UP
Schedule F . . . . . . . . . . . . . . . . . . . . . . . . . Contracts of Delta
Schedule G . . . . . . . . . . . . . . . . . . . . . . . .Employees of Seven-Up
Schedule H . . . . . . . . . . . . . . . . . . . . . . . . . Employees of Delta
Page iii Exhibit 10.7
AMENDED AND RESTATED JOINT VENTURE AGREEMENT
THIS AMENDED AND RESTATED JOINT VENTURE AGREEMENT (the
"Agreement"), effective as of September 3, 1992 (the "Effective Date") and
entered into on February 1, 1995, is entered into by and between Delta
Beverage Group, Inc., a Delaware corporation ("DBGI") and Poydras Street
Investors L.L.C., a Louisiana limited liability company ("Poydras").
W I T N E S S E T H :
WHEREAS, Delta Beverage of Louisiana, Inc., a Delaware corporation
("Delta") was a subsidiary of DBGI and was merged into and with DBGI on or
about December 31, 1994; and
WHEREAS, The Seven-Up/Royal Crown Bottling Company of Louisiana,
Inc., a Delaware corporation ("Seven-Up"), changed its name to Poydras Street
Investors, Inc., and then was merged into and with Poydras on or about
December 27, 1993; and
WHEREAS, Delta and Seven-Up have, pursuant to certain beverage
franchise or distribution agreements covering all or substantially all of the
twenty-four (24) parish geographic area around New Orleans and Baton Rouge,
Louisiana as set forth on EXHIBIT A hereto (the "Area"), engaged in the
business of bottling, manufacturing and distributing various beverage
products in the Area; and
WHEREAS, prior to the Effective Date, DBGI transferred to Delta all
leases for real estate servicing the Area; all owned or leased distribution
or marketing related personal property servicing the Area, including related
equipment in DBGI's distribution centers located in the Area; all beverage
franchise and distribution agreements relating to the bottling,
manufacturing, marketing, sale and distribution of Initial Products (as such
term is hereinafter defined) in the Area; cash in the amount of $10,000; and
any and all other assets which DBGI has utilized to bottle and/or distribute
Initial Products in the Area, all as set forth on SCHEDULE A hereto; except
those assets being retained by DBGI which are set forth on SCHEDULE A1 hereto
(all such transferred assets being sometimes referred to hereinafter as the
"Delta Assets"); and
WHEREAS, Delta and Seven-Up entered into an agreement on the
Effective Date, subject to the provisions of an unwind agreement (the "Unwind
Agreement") dated the same date, thereby forming a joint venture (the "Joint
Venture") for the purpose of conducting the business of bottling,
manufacturing and distributing the products bottled and/or distributed by
each in the Area as of the Effective Date, other than those products set
forth on EXHIBIT B hereto (the "Initial Products"), and further for the
purpose of engaging in the business of bottling, manufacturing and/or
distributing such other products as the Joint Venture may, from time to time,
decide to bottle, manufacture and/or distribute (the "Additional Products")
(the Initial Products and the Additional Products being sometimes referred to
hereinafter as the "Products"), and Delta and Seven-Up on the Effective Date
agreed to modify the terms of the Joint Venture pursuant to the terms of a
restated joint venture agreement and further agree to waive the conditions of
the Unwind Agreement; and
Exhibit 10.7
WHEREAS, DBGI and Poydras desire to enter into this amended and
restated joint venture agreement (the "Agreement"); and
WHEREAS, DBGI and Poydras believe that a joint business effort
between them dedicated to the bottling, manufacture and/or distribution of
the Products in the Area will be of mutual benefit and that substantial
economic returns may be gained by each through their cooperative efforts and
undertakings herein.
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises, agreements and covenants of the parties contained herein, and of
other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged by each of the parties, it is agreed as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms have the meanings
assigned to them in this Article 1 (except as otherwise expressly provided)
and include the plural as well as the singular. All accounting terms not
otherwise defined herein have the meanings assigned to them in accordance
with generally accepted accounting principles ("GAAP"):
AFFILIATE: With respect to any Person, (a) any Person directly or
indirectly controlling, controlled by or under common control with, such
Person; (b) any officer, director, employee or partner of such Person or its
Affiliates; and (c) if such Affiliate is an officer, director or partner of a
company or partnership, any company or partnership for which such person acts
in any such capacity. As used herein, "control" shall mean the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
AFFILIATED CORPORATION: With respect to DBGI and its Affiliates,
any corporation more than fifty percent (50%) of the voting stock of which is
owned, directly or indirectly, by DBGI; with respect to Poydras and its
Affiliates, any corporation more than fifty percent (50%) of the voting stock
of which is owned, directly or indirectly by Poydras.
AREA: The twenty-four (24) parish geographic area around New
Orleans and Baton Rouge, Louisiana, as set forth on EXHIBIT A hereto;
provided, however that the Venturers intend to either surrender all
territories in all franchise agreements contributed to the Joint Venture
which are outside of the twenty-two (22) parishes covered by the Pepsi-Cola
and Seven-Up franchises or to have such additional parishes serviced by other
distributors.
BANKRUPTCY: The "Bankruptcy" of a Venturer shall be deemed to have
occurred upon the happening of any of the following:
(a) The valid appointment of a receiver or trustee to administer all
or a substantial portion of a Venturer's assets or a Venturer's Interest in the
Joint Venture;
Page 2 Exhibit 10.7
(b) The filing by a Venturer of a voluntary petition for relief
under the Bankruptcy Code or of a pleading in any court of record admitting
in writing its inability to pay its debts as they become due;
(c) The making by a Venturer of a general assignment for the
benefit of creditors;
(d) The filing by a Venturer of an answer admitting the material
allegations of, or its consenting to or defaulting in answering, a petition
for relief filed against it in any proceeding under the Bankruptcy Code; or
(e) The entry of an order, judgment or decree by any court of
competent jurisdiction granting relief against a Venturer in a proceeding
under the Bankruptcy Code or appointing a receiver or a trustee for all or a
substantial portion of the assets of a Venturer, and such order, judgment or
decree continuing unstayed and in effect for a period of ninety (90) days
after such entry.
COMPLYING VENTURER: As defined in Section 3.3.
DEFAULT LOAN RATE: As defined in Section 3.3(b).
FAIR MARKET VALUE: As to any property, the price at which a
willing seller would sell and a willing buyer would buy such property having
full knowledge of the facts, in an arm's-length transaction without time
constraints, and without being under any compulsion to buy or sell. Fair
Market Value with respect to any property shall, without duplication of
deduction, be reduced by the amount of all liabilities relating to such
property and which the buyer will assume or subject to which the buyer will
take the property. Any determination of Fair Market Value hereunder shall be
agreed to by all Venturers, provided that if any Venturer so elects, such
determination shall be conclusively established by independent appraisal in
the manner specified in Section 7.3.
INTEREST: As to each Venturer, such Venturer's equity interest in
the Joint Venture as specified in this Agreement.
IRS CODE: The Internal Revenue Code of 1986, as amended from time
to time, or any successor statute or statutes to the Internal Revenue Code of
1986.
MANAGEMENT COMMITTEE: As defined in Section 4.1.
MANAGING VENTURER: DBGI, unless and until replaced by the
unanimous vote of the Management Committee, and except as set forth in
Section 3.3(d) of this Agreement.
MANDATORY LOAN: As defined in Section 3.2.
MANDATORY LOAN RATE: As defined in Section 3.2.
PERSON: An individual, corporation, association, partnership,
trust or other entity.
Page 3 Exhibit 10.7
PRIORITY PROFIT INTEREST: As defined in Section 3.10.
PRODUCTS: The products to be bottled, manufactured and/or
distributed by the Joint Venture.
REFUSING VENTURER: As defined in Section 3.3.
REFUSING VENTURER LOAN: As defined in Section 3.3(b).
RESERVE PLANT: The plant owned by DBGI and located in Reserve,
Louisiana, which plant shall not be subject to the Joint Venture's option to
purchase or lease certain owned real estate of the Venturers pursuant to
Section 3.1(c); provided, however, that DBGI and Delta entered into a supply
contract (the "Supply Contract") pursuant to which Delta was entitled to
require DBGI to supply the Joint Venture with its bottling and canning
requirements on a net cost basis as more fully set forth in Section 11.2 of
this Agreement.
SHARING PERCENTAGE: The Sharing Percentage of DBGI shall be fifty
percent (50%) and the Sharing Percentage of Poydras shall be fifty percent
(50%).
VENTURER: Poydras and DBGI and any other Person hereafter admitted
to the Joint Venture in accordance with the terms hereof, but excluding any
Person that ceases to be a Venturer in accordance with the terms hereof.
VENTURER LOAN RATE: As defined in Section 3.6.
ARTICLE 2
ORGANIZATION
2.1 FORMATION. The Joint Venture shall constitute a general
partnership pursuant to the Louisiana Uniform Partnership Law, La. Rev. Stat.
Section Section 2801 - 48 (the "Act"), for the purposes and on the terms set
forth herein.
2.2 NAME. The business of the Joint Venture shall be conducted
under the name "The Pepsi-Cola/Seven-Up Beverage Group of Louisiana" and
under such name and/or other names and variations thereof as the Managing
Venturer may deem necessary or appropriate to comply with the requirements of
any jurisdiction in which the Joint Venture may elect to do business. The
Venturers will use their best efforts to take the actions required to comply
with the partnership laws, assumed name acts, fictitious name acts or similar
statutes in effect in each jurisdiction or political subdivision in which the
Joint Venture proposes to do business, and the Venturers agree to execute
appropriate documents requested by the Managing Venturer in connection with
said actions.
2.3 PRINCIPAL OFFICE. The principal place of business of the
Joint Venture shall be located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, or at such other place as the Managing Venturer may from time to time
designate.
Page 4 Exhibit 10.7
2.4 PURPOSES AND POWERS. The purpose and business of the Joint
Venture shall be to bottle, manufacture, market, sell and/or distribute the
Products in the Area. In furtherance of its purposes, the Joint Venture
shall have the power to borrow funds for such purposes and to mortgage or
otherwise encumber any or all of the Joint Venture's assets; to undertake and
carry on all activities necessary or advisable in connection with or in
furtherance of its business; and to have and exercise all of the powers now
or hereafter conferred by the laws of the State of Louisiana on partnerships
formed under the laws of that state; provided, however, that no such power
shall be exercised if it would result in a breach of any provision of this
Agreement.
2.5 LIMITATION ON BUSINESS ACTIVITIES. Except as set forth in
Section 2.4, or as may be otherwise authorized by the Venturers, the Joint
Venture shall engage in no other business.
2.6 TERM OF JOINT VENTURE. The term of the Joint Venture
commenced upon the Effective Date, and shall continue until its dissolution
in accordance with the provisions of Article 8.
ARTICLE 3
JOINT VENTURE CAPITAL AND DISTRIBUTIONS
3.1 CONTRIBUTIONS; MANDATORY LOANS; PRIORITY PROFIT INTEREST.
Each Venturer has made the following contributions to the Joint Venture:
(a) On or prior to the Effective Date, Delta contributed to the
Joint Venture the Delta Assets except that (i) to the extent that such assets
were not transferable to the Joint Venture, Delta contributed instead the
entire economic benefits of such assets to the Joint Venture (the "Delta
Beverage Rights"), and such assets were held in trust by Delta for the sole
benefit of the Joint Venture; and (ii) the assets retained by DBGI as set
forth on SCHEDULE A1 hereto were not being contributed by Delta (all such
Delta Assets contributed by Delta shall sometimes be referred to hereinafter
as the "Delta Contributed Assets"). Upon the contribution of the Delta
Contributed Assets, the Joint Venture assumed and agreed to pay, perform and
discharge the obligations and liabilities of Delta (i) which are set forth on
SCHEDULE A hereto; and (ii) which accrue from and after the Effective Date
hereof under those contracts set forth on SCHEDULE F hereto. No other
obligations or liabilities of Delta or DBGI were assumed by the Joint Venture.
(b) On or prior to the Effective Date, Seven-Up contributed to
the Joint Venture all leases for real estate servicing the Area; all owned or
leased distribution or marketing related personal property servicing the
Area, including related equipment in Seven-Up's distribution centers located
in the Area; all beverage franchise and distribution agreements relating to
the bottling, manufacturing, marketing, sale and distribution of Initial
Products in the Area, provided that to the extent that such assets were not
transferable to the Joint Venture, Seven-Up contributed instead the entire
economic benefits of such assets to the Joint Venture (the "Seven-Up Beverage
Rights"), and such assets were held in trust by Seven-Up for the sole benefit
of the Joint Venture; cash in the amount of $10,000; and
Page 5 Exhibit 10.7
any and all other assets which Seven-Up had utilized to bottle and/or
distribute Initial Products in the Area, all as set forth on SCHEDULE B
hereto; except those assets retained by Seven-Up as set forth on SCHEDULE B1
hereto, which excluded assets shall include, without limitation, the RC Cola
franchise agreement (all such assets contributed by Seven-Up shall sometimes
be referred to hereinafter as the "Seven-Up Contributed Assets"). Upon the
contribution of the Seven-Up Contributed Assets, the Joint Venture assumed
and agreed to pay, perform and discharge the obligations and liabilities of
Seven-Up (i) which are set forth on SCHEDULE B hereto; and (ii) which accrue
from and after the Effective Date hereof under those contracts set forth on
SCHEDULE E hereto. No other obligations or liabilities of Seven-Up were
assumed by the Joint Venture.
(c) [intentionally omitted]
(d) The parties acknowledge and agree that each Venturer has
reserved to itself and has not transferred to the Joint Venture the assets
set forth on SCHEDULE A1 and SCHEDULE B1, respectively; its product or raw
materials inventory; its receivables; or its cash or like items and, except
for the liabilities expressly assumed by the Joint Venture, each Venturer
shall be solely responsible for its respective liabilities. Further, the
Venturers have agreed that each Venturer shall be entitled to retain, for its
sole account, the proceeds of the disposition of any assets of such Venturer
which have not been transferred to the Joint Venture, including,
specifically, the proceeds of the disposition by Seven-Up of its RC Cola
franchise and the proceeds of any assets sold or leased by a Venturer to the
Joint Venture.
3.2 ADDITIONAL FUNDS. If, subject to the limitations set forth
in Sections 4.1 and 4.3 hereof, the Managing Venturer determines that
additional funds are needed by the Joint Venture from time to time to meet
the requirements of the Joint Venture, then the Managing Venturer shall,
subject to the borrowing limitations applicable to the Joint Venture, cause
the Joint Venture to borrow such funds from commercial lenders to the extent
reasonably feasible. To the extent that all additional funds needed by the
Joint Venture are not obtainable from commercial lenders or may not be
borrowed by the Joint Venture under applicable restrictions, the Managing
Venturer shall call upon the Venturers to make, and the Venturers hereby
agree to make, loans to the Joint Venture ("Mandatory Loans"), in proportion
to their respective Sharing Percentages, in such amounts and payable at such
times, in such manner and on such terms as may be reasonably determined by
the Managing Venturer; provided, however, that unless and until determined
otherwise by the Management Committee, Mandatory Loans shall bear interest,
payable quarterly from the date made until paid in full, at a rate per annum
equal to one percent (1%) over the rate announced from time to time by
Citibank, N.A. as its prime or reference rate (which rate shall change when
and as said rate changes and shall hereinafter be referred to as the "Prime
Rate"), but in no event more than the maximum rate of interest permitted to
be charged under applicable usury laws (the "Mandatory Loan Rate"). The
Joint Venture shall have no right to require any additional contributions or
loans from the Venturers.
3.3 FAILURE TO MAKE MANDATORY LOANS. In the event that any Venturer
(the "Refusing Venturer") fails to make a Mandatory Loan required of it pursuant
to Section 3.2 prior to the expiration of any applicable grace period (the "Loan
Default"), then the other Venturer (the "Complying Venturer") may, at its sole
election, exercised by notice given to
Page 6 Exhibit 10.7
the Refusing Venturer within ten (10) days after the expiration of any
applicable grace period:
(a) In lieu of making the Mandatory Loan required of the
Complying Venturer in response to the call for Mandatory Loans, pursue the
remedies available to a non-defaulting Venturer under Section 8.3(b); or
(b) Make a loan to the Refusing Venturer (the "Refusing Venturer
Loan") for the amount of the Refusing Venturer's Mandatory Loan, the proceeds
of which shall be used by the Refusing Venturer to make its Mandatory Loan to
the Joint Venture. Such Refusing Venturer Loan shall bear interest, payable
monthly from the date made until paid in full, at a rate per annum equal to
five percent (5%) plus the Prime Rate, but in no event more than the maximum
rate of interest permitted to be charged under applicable usury laws (the
"Default Loan Rate"), shall be evidenced by a promissory note of the Refusing
Venturer and shall be secured by the Refusing Venturer's Interest in the
Joint Venture as provided in Section 7.1 hereof.
In the event that the Refusing Venturer has not cured the Loan Default by
repaying the Refusing Venturer Loan within ninety (90) days of the making by
the Complying Venturer of a Refusing Venturer Loan pursuant to Section
3.3(b), then the Complying Venturer may, by notice given to the Refusing
Venturer within five (5) days after the expiration of such ninety (90) day
period, elect to pursue the remedies specified under Section 8.3(b).
Further, unless and until the Loan Default of such Refusing Venturer is cured
in full, the Complying Venturer shall have the right, at its election, to
require the Refusing Venturer to remove its representative(s) from the
Management Committee, in which event, the provisions of Section 4.2 hereof
notwithstanding, all Management Committee decisions shall thereafter be made
by the vote of a majority of the remaining members present at a meeting or by
the written consent of a majority of all remaining members. At such time as
the Loan Default of the Refusing Venturer is cured in full, but not prior
thereto, the Refusing Venturer shall be entitled to replace the
representative(s) removed pursuant hereto and the procedures set forth in
Section 4.2 shall be reinstated. Further, if DBGI is the Refusing Venturer,
then Poydras may, at its election, become the Managing Venturer until DBGI
cures its Loan Default hereunder in full. During the period of any such Loan
Default, any distributions otherwise payable to the Refusing Venturer shall
be applied (i) first, to the payment of interest and second, to the repayment
of principal of the Refusing Venturer Loan; or (ii) in the event that a
Refusing Venturer has failed to make a Mandatory Loan, but the Complying
Venturer has elected not to make a Refusing Venturer Loan to such Refusing
Venturer, then all distributions otherwise payable to the Refusing Venturer
shall be retained by the Joint Venture and treated as a Mandatory Loan of the
Refusing Venturer to the Joint Venture and such distributions shall continue
to be so applied until the aggregate principal amount of all outstanding
Mandatory Loans made by the Refusing Venturer are equal to the aggregate
principal amount of all outstanding Mandatory Loans made by the Complying
Venturer.
3.4 EXPENSES INCURRED AND SERVICES PERFORMED NOT CONTRIBUTION.
No expense incurred or service performed by any Venturer prior to the
formation of the Joint Venture
Page 7 Exhibit 10.7
shall be considered to be a contribution to or a loan made on behalf of the
Joint Venture, unless the Venturers shall otherwise agree.
3.5 NO INTEREST, WITHDRAWAL OR RETURN OF CONTRIBUTIONS. No
interest shall be paid to any Venturer on any part of such Venturer's
contributions. No interest shall accrue on any contribution to the Joint
Venture. Except as provided in this Agreement, no Venturer shall be entitled
to withdraw any part of its contributions to the Joint Venture or to receive
any distribution from the Joint Venture.
3.6 LOANS TO THE JOINT VENTURE BY THE VENTURERS. The Venturers
may make loans, other than the Mandatory Loans (the "Venturer Loans"), to the
Joint Venture from time to time for Joint Venture operations or other needs;
provided, however that (i) such Venturer Loans are authorized by the
Management Committee; (ii) such Venturer Loans shall not increase the lending
Venturer's Interest or otherwise be treated as a contribution to the Joint
Venture; and (iii) the terms and conditions of such Venturer Loans are no
more favorable to the lending Venturer than would be available to the Joint
Venture from unrelated lenders. Venturer Loans may be secured or unsecured.
Notwithstanding the foregoing, if the Venturer making a Venturer Loan has to
finance such Venturer Loan with funds borrowed from an unrelated lender, it
shall be entitled to charge a rate of interest and other finance costs equal
to the rate of interest and finance costs charged by such unrelated lender
(the "Venturer Loan Rate"). In such event, at any time while such Venturer
Loan is outstanding, the other Venturer(s) shall, at their election, be
entitled to charge the same rate of interest and other finance costs as
charged with respect to such Venturer Loan or any Venturer Loans they have
made and which are still outstanding or which they make to the Joint Venturer
while such Venturer Loan is outstanding.
3.7 CAPITAL ACCOUNTS. A capital account shall be maintained for
each Venturer which shall reflect (i) all contributions made pursuant to this
Agreement by such Venturer to the Joint Venture; (ii) all items of Joint
Venture profit and loss allocated pursuant to this Agreement to such
Venturer; and (iii) all distributions made pursuant to this Agreement to or
on behalf of such Venturer. Each capital account shall be maintained in
accordance with GAAP. In addition, the Joint Venture shall maintain a
separate set of capital accounts in accordance with the applicable provisions
of the IRS Code and the regulations thereunder.
3.8 ALLOCATION OF ITEMS OF JOINT VENTURE INCOME, GAIN, LOSS,
DEDUCTION AND CREDIT. For purposes of this Agreement, the terms "profits"
and "losses" shall mean, respectively, the net profits and net losses of the
Joint Venture determined in accordance with GAAP, except that for purposes of
the separate set of capital accounts and separate set of records required to
be maintained pursuant to Sections 3.7 and 6.1(a) hereof, the terms "profits"
and "losses" shall mean, respectively, the net profits and net losses of the
Joint Venture for federal income tax purposes. All Joint Venture profits,
losses and credits shall be allocated to the Venturers as follows:
(a) Profits, including net gains from sales or exchanges of capital
assets or property described in Section 1231 of the IRS Code, shall be allocated
among the Venturers as follows: (i) first, to DBGI until cumulative allocations
pursuant to this Section 3.8(a) equal the amount of cumulative Priority Profit
Interest distributions made to DBGI pursuant
Page 8 Exhibit 10.7
to Section 3.10; and (ii) second, any excess profits shall be allocated among
the Venturers in accordance with their respective Sharing Percentages.
(b) Losses, including net losses from sales or exchanges of
capital assets or property described in Section 1231 of the IRS Code, shall
be allocated among the Venturers in accordance with their respective Sharing
Percentages.
(c) All other items of income, gain, deduction or credit which
require separate computation under Section 702 of the IRS Code and which are
not specifically allocated above shall be allocated among the Venturers in
accordance with their respective Sharing Percentages. The recapture of a
federal income tax deduction or credit shall be allocated to the Venturer to
which the deduction or credit giving rise to such recapture was originally
allocated.
(d) For income tax purposes, any item of income, gain, loss,
deduction or credit with respect to any property (other than money) that has
been contributed by a Venturer to the Joint Venture and which is required to
be allocated to the Venturers for income tax purposes under IRS Code Section
704(c), or the corresponding provisions of subsequent law, so as to take into
account any variation between the adjusted basis of such property to the
Joint Venture for federal income tax purposes and its fair market value at
the time of its contribution, shall be allocated to the Venturers for income
tax purposes in the manner required by IRS Code Section 704(c) and the
regulations promulgated thereunder, or the corresponding provisions of
subsequent regulation or law. If and when the capital accounts of the
Venturers are required to be adjusted pursuant to regulation Section
1.704-1(b)(2)(iv)(f) or (g), or the corresponding provisions of subsequent
regulation or law, with respect to a revaluation of any asset of the Joint
Venture, subsequent allocations of income, gain, loss, deduction and credit,
including without limitation depreciation or deductions for cost recovery
with respect to such asset, shall take account of any variation between the
then existing adjusted basis of such asset for federal income tax purposes
and the fair market value as adjusted of such asset, as such computations may
be required under IRS Code Section 704(b) and Section 704(c), or the
corresponding provisions of subsequent law, and principles thereof.
3.9 DISTRIBUTIONS.
(a) No Venturer shall have the right to withdraw any amount from
its capital account or to receive any distribution (other than a distribution
made pursuant to this Agreement), without the approval of the Management
Committee. No Venturer shall have the right to demand or, except as otherwise
provided in Article 8, receive a distribution of property other than cash
from the Joint Venture, unless otherwise agreed to by the Venturers.
(b) The Managing Venturer shall cause the Joint Venture, on a
quarterly basis, to distribute cash to the Venturers in amounts that it
determines are in excess of the amounts reasonably necessary for the
continued efficient operation of the business of the Joint Venture,
including, without limitation, the payment of interest by the Joint Venture
on the outstanding balance of any and all Mandatory Loans, and the
establishment of any
Page 9 Exhibit 10.7
reserves reasonably necessary for working capital needs and capital
expenditure purposes (the "Available Cash"). All distributions shall be made
in accordance with the Venturers' Sharing Percentages; provided, however,
that DBGI shall be entitled to receive the Priority Profit Interest
(including all Carryover Amounts, plus interest accrued thereon) set forth in
Section 3.10 hereof.
3.10 PRIORITY PROFIT INTEREST. DBGI shall receive a special
allocation of distributions (the "Priority Profit Interest") made during the
period commencing with the Effective Date and ending on the last day of the
sixtieth (60th) quarter subsequent to the Effective Date (the "Priority
Period").
(a) During the first five (5) years of the Priority Period, the
Priority Profit Interest shall be that amount which, when added to the
aggregate amount of all prior Priority Profit Interests, will equal the
greater of (i) thirty percent (30%) of the aggregate amount of all Available
Cash since the Effective Date (including the Available Cash for the current
quarter); or (ii) $500,000 multiplied by the number of quarters since the
Effective Date; provided, however, that in no event shall the amount actually
paid to DBGI in any quarter with respect to its Priority Profit Interest and
accrued interest on any Carryover Amount, exceed fifty percent (50%) of the
Available Cash for such quarter. For purposes of Sections 3.9 and 3.10, a
quarter shall be successive three month periods from the Effective Date, and
the first quarter shall begin on the first day of the month following the
Effective Date and shall include the days of the preceding month if the
Effective Date is other than the first day of a month. Beginning with the
first anniversary of the Effective Date, interest shall accrue at a rate
equal to the Mandatory Loan Rate on the amount by which (i) $500,000
multiplied by the number of quarters which have occurred since the Effective
Date (but not more than twenty) exceeds (ii) the aggregate amount of all
prior Priority Profit Interests actually paid to DBGI (the "Carryover
Amount"), until the Carryover Amount (and all accrued interest thereon) has
been paid in full. Subject to the above, interest on the Carryover Amount
shall be paid quarterly.
(b) Beginning with the twenty-first (21st) quarter of the Priority
Period, the Priority Profit Interest for each quarter shall equal thirty
percent (30%) of the Available Cash for such quarter, plus the amount of any
Carryover Amount (and all accrued interest thereon); provided, however, that
in no event shall the amount of DBGI's Priority Profit Interest (including
the Carryover Amount and accrued interest thereon) paid for any such quarter
exceed fifty percent (50%) of the Available Cash for such quarter.
ARTICLE 4
MANAGEMENT OF THE JOINT VENTURE
4.1 MANAGEMENT COMMITTEE AND POWERS. Except as otherwise
provided in this Agreement, the powers of the Joint Venture shall be vested
in, and the business and affairs of the Joint Venture shall be subject to the
governance of a Management Committee representing the Venturers consisting of
four (4) members, two (2) of whom shall be designated by Poydras, and two (2)
of whom shall be designated by DBGI. Each Venturer may at any time remove
its representative(s) and, upon such removal, or the death or
Page 10 Exhibit 10.7
resignation of a member of the Management Committee, the Venturer which
appointed the Management Committee member being replaced shall, by notice
given to the Management Committee, designate a successor. Each member of the
Management Committee shall have one vote. Each Venturer shall cause its
representatives on the Management Committee to comply with the terms of this
Agreement. The Joint Venture shall reimburse those reasonable expenses of
the Management Committee members that are directly related to the Joint
Venturer's business, including travel expenses at commercial airline rates.
The Management Committee may delegate any of its powers, except the
following:
(a) the sale, transfer or other disposition, pledge or
encumbrance of any assets of the Joint Venture, except in the ordinary course
of business;
(b) the determination of the timing and amount of Mandatory Loans
in excess of the amounts the Managing Venturer is authorized to require under
Section 4.3 of this Agreement, and the making of distributions to the
Venturers (other than distributions made pursuant to Sections 3.9(b) and 3.10
hereof);
(c) the borrowing of funds in excess of $500,000 from the
Venturers or other Persons (except under an established working capital line
of credit with commercial lenders as provided in Section 3.2 hereof, and
except for Mandatory Loans as provided in Section 4.3 hereof) and the pledge
of Joint Venture properties to secure the repayment of such loans (except
under an established working capital line of credit);
(d) the making of any material contract, other than in the
ordinary and regular course of business, to which the Joint Venture is a
party and the election to terminate any such contract;
(e) the deletion of a product which individually represents more
than ten percent (10%) of the prior year's case volume of sales, or the
deletion of an entire line of related products which, in the aggregate,
represent more than ten percent (10%) of the prior year's case volume of
sales;
(f) the engagement of the Joint Venture in any activities or
transactions other than in the ordinary and regular course of the business of
the Joint Venture;
(g) the incurring of any material liability or obligation, or the
payment, discharge or satisfaction of any material claim, liability or
obligation, any of which obligations were not incurred within the authority
of the Managing Venturer;
(h) the cancellation of any material debts or the waiver of any
claim or right of substantial value other than in the ordinary and regular
course of business;
(i) the adoption or making of any changes in any benefit plans or
benefit arrangements, except the adoption of or changes made from time to
time by the Managing Venturer to adopt or conform the Joint Venture's benefit
plans or benefit arrangements to those of DBGI; and
Page 11 Exhibit 10.7
(j) the loan or gift of any funds or other assets other than in
the ordinary and regular course of business.
4.2 ACTION BY MANAGEMENT COMMITTEE. The Management Committee
shall meet at least quarterly and may exercise its powers through action
taken at meetings (held in person or telephonically) and also by action in
writing. Three (3) members of the Management Committee shall constitute a
quorum, and the vote or signature of three (3) of the four (4) members of the
Management Committee shall be required for all decisions of the Management
Committee, whether taken at meetings or in writing.
4.3 AUTHORITY OF MANAGING VENTURER. Except as otherwise reserved
to the Management Committee pursuant to Section 4.1 of this Agreement, the
Managing Venturer shall have the authority to conduct the day-to-day
operations and affairs of the Joint Venture. DBGI is hereby designated as
the Managing Venturer. Prior to the beginning of each calendar or fiscal
year, the Managing Venturer shall submit to the Management Committee an
annual Operating and Capital Expenditure Budget (the "Budget") for the
following such year. Actual performance of the Joint Venture to said budget
shall be reviewed by the Management Committee on a quarterly basis. The
Managing Venturer shall have the authority to make capital expenditures for
each calendar or fiscal year in an amount which is necessary to meet the
commitments of DBGI to Pepsi Cola Company relating to marketing equipment for
the Area and in such amounts as are necessary for replacement and maintenance
of fleet and facilities in relation to the anticipated needs of the Joint
Venture. Subject to and in accordance with the provisions of Sections 3.2
and 3.9 hereof, the Managing Venturer shall have the authority to require
Mandatory Loans for purposes of: (i) meeting the capital expenditure
requirements set forth above and any additional capital expenditures approved
by the Management Committee in the Budget or otherwise approved by the
Management Committee; and (ii) funding the working capital requirements of
the Joint Venture; provided, however that to the extent that the aggregate
amount of the Mandatory Loans previously made by the Venturers for the
purpose of meeting working capital requirements (other than Mandatory Loans
for capital expenditures) exceeds the aggregate of $5,000,000 plus any
additional allowance for working capital provided in the approved Budget or
otherwise authorized by the Management Committee and less any outstanding
amount borrowed for working capital purposes from commercial lenders pursuant
to Section 3.2 hereof, the Managing Venturer shall obtain the approval of the
Management Committee prior to calling upon the Venturers for additional
Mandatory Loans for working capital purposes.
4.4 LIMITATIONS ON AUTHORITY OF MANAGING VENTURER AND THE
MANAGEMENT COMMITTEE. Notwithstanding anything to the contrary contained in
this Agreement, neither the Managing Venturer nor the Management Committee
shall have the power, without the prior written consent of each Venturer:
(a) to change the primary business of the Joint Venture or
otherwise act other than in accordance with the purposes and powers of the
Joint Venture as set forth in Section 2.4;
(b) to admit a new Venturer;
Page 12 Exhibit 10.7
(c) to change or reorganize the Joint Venture into any other
legal form;
(d) to require any nonconsenting Venturer to make any
contribution to the capital of the Joint Venture not provided for herein, or
to require any nonconsenting Venturer to make Mandatory Loans in a principal
amount exceeding $2,500,000;
(e) to sell, transfer or otherwise dispose of, pledge or encumber
all or substantially all of the assets of the Joint Venture;
(f) to file a voluntary petition for relief under the Bankruptcy
Code or a pleading in any court of record admitting in writing the Joint
Venture's inability to pay its debts as they become due;
(g) to make a general assignment for the benefit of creditors;
(h) to file an answer admitting the material allegations of, or
to consent to or default in answering, a petition for relief filed against
the Joint Venture in any proceeding under the Bankruptcy Code;
(i) to amend this Agreement; or
(j) to merge, consolidate or exchange assets with any other
Person.
4.5 NOMINEE NAMES. The Joint Venture's fee title or leasehold
interests in any real or personal property may be held in the names of
nominees or in the names of the Venturers to facilitate the acquisition of
such interests in real or personal property and for similar valid purposes.
On a permanent basis, the Joint Venture's interests in such property shall be
held in the name of the Joint Venture or of a special nominee entity
organized by the Management Committee, provided that such entity's sole
purpose is the holding of record title to such interests and it engages in no
other business and incurs no liabilities.
4.6 LIABILITY AND INDEMNITY OF MANAGEMENT COMMITTEE AND MANAGING
VENTURER.
(a) Neither the individuals comprising the Management Committee
nor the Managing Venturer shall be liable, responsible or accountable, in
damages or otherwise, to the Joint Venture or any Venturer for any act or
failure to act on behalf of the Joint Venture, which act was within the scope
of the authority conferred by this Agreement on the Management Committee or
the Managing Venturer, as applicable, unless such act or omission constituted
fraudulent or willful misconduct, was performed or omitted in bad faith or
constituted gross negligence. Neither the individuals comprising the
Management Committee nor the Managing Venturer shall be liable for any loss
or damage to Joint Venture property caused by strikes, labor disputes, riots,
fires, acts of a public enemy, insurrections, acts of God, unforeseeable
breakdowns of plant or equipment, inability to carry out the provisions of
this Agreement due to provisions of law or rules or regulations promulgated
by any governmental agency or from any other cause beyond the control of the
members of the Management Committee or the Managing Venturer, as applicable.
Page 13 Exhibit 10.7
(b) The Joint Venture (but not any Venturer) shall indemnify,
defend and hold the members of the Management Committee, and the Managing
Venturer, its Affiliates, parent companies, subsidiaries, officers,
directors, employees and agents harmless from and against any loss, damage,
liability, cost or expense (including reasonable attorneys' fees, expenses
and court costs) arising out of any act or failure to act by the members of
the Management Committee or the Managing Venturer, as applicable, including a
negligent act or failure to act, if such act or failure to act is either (i)
in good faith within the scope of this Agreement and is not attributable to
willful misconduct, gross negligence or fraud; or (ii) covered by Joint
Venture insurance, but only to the extent insurance proceeds are received by
the Joint Venture.
4.7 AUTHORITY TO BIND OTHER VENTURERS. No Venturer shall have
any authority to act for or to assume any obligation or responsibility on
behalf of another Venturer or the Joint Venture, except as expressly provided
in this Agreement, or by further express written agreement among the
Venturers. In addition to the other remedies specified in this Agreement,
each Venturer agrees to indemnify and hold the other Venturer(s) harmless
from and against any claim, demand, loss, damage, liability or expense,
including reasonable attorneys' fees, incurred by or against such other
Venturer(s) and arising out of or resulting from any action taken by the
indemnifying Venturer in violation of this Section 4.7.
4.8 PROCEDURE FOR ASSERTING RIGHT TO INDEMNIFICATION. Any Person
asserting a right to indemnification under Section 4.6 or 4.7 of this
Agreement shall so notify the Joint Venture or the other Venturer(s), as the
case may be, in writing. If the facts giving rise to such indemnification
shall involve any actual or threatened claim or demand by or against a third
party, the indemnifying Person shall be entitled to control the defense or
prosecution of such claim or demand in the name of the indemnified Person,
with counsel satisfactory to the indemnified Person, if the indemnifying
Person notifies the indemnified Person in writing of its intention to do so
within twenty (20) days of its receipt of such notice, unless the
indemnifying Person shall fail vigorously to defend or prosecute such claim
or demand within a reasonable time. The indemnified Person shall have the
right to participate in any such proceeding through counsel of its own
choosing, which participation shall be at the indemnified Person's expense.
Whether or not the indemnifying Person chooses to defend or prosecute such
claim, the parties hereto shall cooperate in the prosecution or defense of
such claim and shall furnish such records, information and testimony and
attend such conferences, discovery proceedings, hearings, trials and appeals
as may be requested in connection therewith. The indemnifying Person shall
not settle or permit the settlement of any such third party claim or action
without the prior written consent of the indemnified Person. If the third
party claim involves a potential liability of the indemnified Person to the
third party and the indemnified Person does not consent to a bona fide
settlement offer of the indemnifying Person which the third party claimant
would accept and which would provide a full release in favor of the
indemnified Person, then, the indemnifying Person's liability to the
indemnified Person hereunder with respect to such claim shall not exceed the
amount of such settlement offer and the indemnified Person shall thereafter
be responsible for the expenses of counsel and court costs incurred in such
proceeding.
Page 14 Exhibit 10.7
4.9 VENTURERS OR AFFILIATES DEALING WITH JOINT VENTURE. Subject
to the limitations set forth in this Agreement, the Venturers or any
Affiliate of the Venturers shall have the right to contract or otherwise deal
with the Joint Venture for the sale of goods or services or the lending of
funds without the consent of the other Venturer(s) to the terms and
conditions of such transaction, but only if (i) the compensation paid or
promised for such goods or services or funds is reasonable and is paid only
for goods or services or funds actually furnished; (ii) the goods or services
or funds to be furnished shall be reasonable and necessary; and (iii) the
terms for the furnishing of such goods or services or funds shall be at least
as favorable as would be obtainable in an arm's-length transaction with an
unrelated third party. At such time the Managing Venturer provides the other
Venturer(s) with quarterly or annual information relating to the Joint
Venture's operations, it shall also provide to the other Venturer(s) a
summary description of the transactions engaged in by the Joint Venture with
the Venturers and any of their Affiliates for the previous fiscal period.
4.10 DEVOTION OF TIME AND OTHER ACTIVITIES NOT RESTRICTED. The
Managing Venturer shall devote such of its time to the Joint Venture's
business as it deems necessary to accomplish its responsibilities and the
Joint Venture's purpose. The Managing Venturer shall not be obligated to
devote its full time to the Joint Venture's business. Furthermore, subject
to Section 11.5 hereof, any Venturer or an Affiliate of any Venturer may
engage in or possess an interest in other business ventures of any nature or
description independently or with others, including, but not limited to, the
bottling and distribution business, including businesses which are in
competition with the Joint Venture, and neither the Joint Venture nor any
Venturer shall have any rights in or to such independent ventures or the
income or profits derived therefrom.
4.11 ACCESS. Each member of the Management Committee, as well as
his or her representatives, shall at all reasonable times have access to the
properties, personnel, books and records of the Joint Venture.
ARTICLE 5
JOINT VENTURE EXPENSES; REIMBURSEMENT
5.1 JOINT VENTURE EXPENSES. Except as otherwise specifically
provided, the Joint Venture shall be responsible for paying all direct costs
and expenses of acquiring, bottling, marketing, selling and distributing the
Products and operating the Joint Venture, including without limitation:
(a) costs incurred for organizing the Joint Venture;
(b) costs incurred in obtaining Joint Venture loans, if any;
(c) all costs of personnel employed by the Joint Venture or
directly involved in the business of the Joint Venture, including a
proportionate share of the costs of persons who may also be employees of the
Managing Venturer or its Affiliates; provided, however, that a proportionate
share of the costs of persons employed by the Joint Venture who
Page 15 Exhibit 10.7
provided services to DBGI or any of its Affiliates outside the Area shall be
paid by DBGI or such Affiliate, or DBGI or such Affiliate shall reimburse the
Joint Venture with respect thereto;
(d) legal, accounting, audit and other similar or related fees
and costs;
(e) costs relating to the preparation of budgets, preparing and
mailing reports required to be furnished to the Venturers or deemed by the
Venturers to be of significance to the Venturers, cash flow projections, and
Joint Venture status and federal tax returns and other required reports; and
(f) costs incurred in connection with income tax audits of the
Joint Venture (but not a Venturer).
5.2 MANAGING VENTURER'S FEES AND EXPENSES. The Managing Venturer
shall receive no management fee for its services as the Managing Venturer
hereunder; provided, however, that to the extent management and support
functions are provided by the Managing Venturer from its Memphis, Tennessee
office, the Joint Venture shall reimburse the Managing Venture for such
services, including a proportionate share of (i) the reasonable overhead and
administrative costs associated with DBGI's Memphis office; and (ii) the
management fee (but not travel and other expenses) paid by DBGI pursuant to
the management agreement between DBGI and Pohlad Companies. The Joint
Venture's obligation to pay the costs and fees set forth above is subject to
the following limitations: (x) the management fee shall not exceed $500,000,
as adjusted annually from the Effective Date for changes in the Consumer
Price Index, as provided in such management agreement; (y) the Memphis office
costs and the management fee described above shall be allocated to the Joint
Venture according to the proportion that the number of cases distributed by
the Joint Venture bears to the total number of cases distributed by the Joint
Venture, DBGI and the other Persons provided management and/or support
services by the Memphis office; and (z) only costs attributable to services
being provided to the Joint Venture shall be allocated to the Joint Venture.
5.3 REIMBURSEMENT TO VENTURERS. Except as set forth in Section
5.2 above, the Joint Venture shall not reimburse the Venturers for items
generally constituting direct overhead or administrative expenses of the
business of a Venturer. The Joint Venture, however, shall pay all costs and
expenses associated with its business and administration, including all
accounting, documentation, professional and reporting expenses, except to the
extent the Venturer is obligated to provide (and is compensated for
providing) such services under any separate agreement with the Joint Venture.
To the extent that it is reasonable and possible to do so, all Joint Venture
expenditures shall be billed directly to and paid by the Joint Venture, but
the Venturers shall be reimbursed for any such expenses paid by them.
Page 16 Exhibit 10.7
ARTICLE 6
BOOKS AND RECORDS; REPORTS TO PARTNERS
6.1 BOOKS AND RECORDS.
(a) The Managing Venturer shall keep or cause to be kept proper
and complete records and books of account which shall reflect fully and
accurately all transactions and other matters relative to the Joint Venture's
business as are usually entered into records and books of account. The Joint
Venture books and records shall be kept in accordance with GAAP, consistently
applied and, unless otherwise determined by the Management Committee, shall
be maintained on an accrual basis. The Joint Venture shall also maintain a
separate set of records in accordance with the applicable provisions of the
IRS Code and the regulations thereunder. Joint Venture books shall be
audited annually by the firm of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. or such other firm of
independent certified public accountants as may be selected from time to time
by the Management Committee. The costs of such audit shall be borne by the
Joint Venture.
(b) The books and records shall be maintained at the principal
office of the Joint Venture or such other place as the Management Committee
may determine, and all such books and records shall be available for
inspection and copying by the Venturers or their duly authorized
representatives during normal business hours. Accounts, books and other
relevant Joint Venture documents shall be maintained and preserved during the
term of the Joint Venture and for two (2) years thereafter, unless otherwise
determined by the Management Committee. Accounting and funds of the Joint
Venture shall be kept separate from those of the Venturers.
6.2 FINANCIAL STATEMENTS. The Managing Venturer shall cause to
be delivered to each Venturer the financial statements listed in clauses (a)
through (c) below, prepared, in each case, in accordance with GAAP,
consistently applied (and subject, in the case of the financial statements
referred to in clauses (a) and (b) below, to normal year-end adjustments) and
such other reports as any Venturer may reasonably request:
(a) promptly upon availability, and in any event within thirty
(30) days after the end of each calendar month: (i) an unaudited balance
sheet as of the end of such month; (ii) an unaudited statement of income or
loss for the interim period through such month and the monthly period then
ended; and (iii) a comparison of actual to budgeted income or loss and actual
to budgeted capital expenditures for such month, all in reasonable detail;
(b) promptly upon availability, and in any event within
forty-five (45) days after the end of each of the first three (3) quarterly
periods of each fiscal year: (i) an unaudited statement of Venturers' equity;
and (ii) an unaudited statement of sources and uses of funds for the
quarterly period then ended, such statement to include, in reasonable detail,
a comparison of the interim and quarterly periods then ended with the
corresponding interim and quarterly periods of the fiscal year immediately
preceding; and
Page 17 Exhibit 10.7
(c) promptly upon availability and in any event within one
hundred twenty (120) days after the end of each fiscal year: (i) a balance
sheet of the Joint Venture as of the end of such fiscal year; and (ii) a
statement of Venturers' equity, a statement of income or loss and a statement
of sources and uses of funds for such fiscal year, all in reasonable detail,
including supporting schedules, and accompanied by an opinion thereon of the
Joint Venture's independent certified public accountants, such balance sheet,
statement of Venturers' equity, statement of income and loss and statement of
sources and uses of funds to include a comparison of the current fiscal year
with the fiscal year immediately preceding, as applicable.
6.3 TAX RETURNS AND INFORMATION.
(a) DBGI is hereby designated "Tax Matters Partner" for the Joint
Venture. DBGI shall not be liable to the Joint Venture or any other Venturer
for any act or omission taken or suffered by it in such capacity in good
faith and in the belief that such act or omission is in or is not opposed to
the best interests of the Joint Venture, provided that such act or omission
is not in violation of this Agreement and does not constitute gross
negligence, fraud or a willful violation of law.
(b) The Managing Venturer shall cause income and other required
federal, state and local tax returns for the Joint Venture to be prepared and
to be timely filed with the appropriate authorities, making such elections as
it shall deem to be in the best interests of the Joint Venture and the
Venturers. The cost of preparation of such returns by outside preparers, if
any, shall be borne by the Joint Venture.
(c) The Managing Venturer shall cause to be provided to each
Venturer, information concerning the Joint Venture's taxable income or loss
and each class of income, gain, loss, deduction or credit which is relevant
to reporting a Venturer's share of Joint Venture income, gain, loss,
deduction or credit for purposes of federal or state income tax. Information
required for the preparation of a Venturer's income tax returns shall be
furnished to the Venturers as soon as possible after the close of the Joint
Venture's fiscal year and, in any event, no later than ninety (90) days after
the close of the Joint Venture's fiscal year. Information required for the
filing of estimated income tax returns for the Venturers and their
shareholders shall be furnished to the Venturers no later than December 1 of
each year.
6.4 OTHER REPORTS. The Managing Venturer shall cause to be
delivered to each Venturer reports of such other types as are typically
provided to its management, by its own staff accountants and/or independent
certified public accountants relating to its bottling and distribution
business, at such times as such types of reports are typically provided to
such management.
6.5 FISCAL YEAR. Except for the Joint Venture's initial fiscal
year, which commenced on the Effective Date and end on December 31, 1992 and,
unless and until otherwise determined by the Managing Venturer, the fiscal
year of the Joint Venture shall commence on the first day of January of each
year and shall end on the last day of
Page 18 Exhibit 10.7
December of such year. The Joint Venture shall have the same fiscal year for
income tax purposes and for financial accounting purposes.
ARTICLE 7
PLEDGES, TRANSFERS, WITHDRAWALS
7.1 PLEDGES; SECURITY INTEREST IN FAVOR OF VENTURERS. Except
with the prior written consent of all of the Venturers, which consent may not
be unreasonably withheld, no Venturer shall have the right to pledge,
mortgage or encumber in any manner its Interest in the Joint Venture, in
whole or in part, and any such transaction shall be void and of no force or
effect; provided, however, that each Venturer hereby grants to the other
Venturer a first security interest in its Interest in the Joint Venture to
secure such Venturer's obligation to make all present and future Mandatory
Loans to the Joint Venture. This Agreement shall be deemed to be a security
agreement creating such security interests and the Managing Venturer, on
behalf of each such Venturer, may cause to be filed appropriate financing
statements reflecting the creation of such security interest.
7.2 TRANSFER BY VENTURERS. No Venturer shall have the right to
sell, assign, transfer or otherwise dispose of all or any part of its
Interest other than (a) to an Affiliated Corporation made with the prior
consent of the other Venturers, which consent shall not be unreasonably
withheld; (b) as provided in Section 7.3; or (c) with the consent of the
other Venturers, which consent may be unreasonably withheld. After any
transfer pursuant to clause (a) or (c), the transferred Interest shall
continue to be subject to all the provisions of this Agreement including,
without limitation, the provisions of this Article 7. In the event of a
partial transfer of an Interest made in accordance with this Section 7.2,
appropriate amendments to this Agreement shall be made so that the rights and
obligations of the transferor Venturer and the transferee Venturer, on the
one hand, and the rights and obligations of the non-transferring Venturer, on
the other hand, after giving effect to the transfer, are the same as the
relative rights and obligations of the transferring Venturer and the
non-transferring Venturer hereunder immediately prior to such transfer. In
the event that any transfer of an Interest occurs or is deemed to have
occurred as a result of a merger or consolidation of, or a sale of all or
substantially all of the assets of any Venturer, then (i) if such merger,
consolidation, sale, transfer or other disposition is with or to an
Affiliated Corporation of such Venturer made in compliance with Section
7.2(a), the transferred Interest shall continue to be subject to all the
provisions of this Agreement and each transferee, if any, shall in writing
assume and agree to perform all of its duties and obligations as a Venturer
under this Agreement, including, without limitation, the obligations imposed
by this Article 7; and (ii) if such merger, consolidation, sale, transfer or
other disposition is not made in compliance with Section 7.2(a) or is with or
to any Person that is not an Affiliated Corporation of such Venturer, then
the other Venturer shall thereupon be entitled to exercise its Put right (in
the case of Poydras) or its Call right (in the case of DBGI) pursuant to
Section 7.3 of this Agreement, irrespective of the time periods specified
therein. Consent to an assignment or transfer of an Interest to an
Affiliated Corporation shall not be deemed to have been unreasonably withheld
if, among other things, such assignment or transfer would terminate the Joint
Venture for the purpose of Section 708 of the IRS Code or would result in the
violation of any applicable law.
Page 19 Exhibit 10.7
7.3 SALE OF INTEREST TO OTHER VENTURER(S). Commencing on
September 3, 1997 (the "Purchase Date"), DBGI shall have and is hereby
granted the right, privilege and option to purchase (the "Call") the Interest
of Poydras, including all Seven-Up Beverage Rights, for the Fair Market Value
of such Interest (as determined below). DBGI shall exercise its Call by
giving written notice (the "Notice") to Poydras of its intent to exercise
such option. Commencing on the Purchase Date, Poydras shall have and is
hereby granted the right to present to DBGI a written demand (the "Put")
requiring DBGI to purchase the Interest of Poydras, including all Seven-Up
Beverage Rights, for the Fair Market Value of such Interest (as determined
below). The Fair Market Value of Poydras' Interest shall be determined by
the following formula: (A-B)/2; where "A" shall equal the sum of the value
that would have been obtained from a sale of the entire Joint Venture,
including all tangible and intangible assets, the Joint Venture's right to
obtain inventories at cost from the Reserve Plant, the Joint Venture's
business and other rights, including the Beverage Rights of both parties
dedicated to the Joint Venture, and taking into account the liabilities of
the Joint Venture; and "B" shall equal the sum of the discounted present
value of all future Priority Profit Interests to which DBGI would be entitled
pursuant to Section 3.10 hereof and any Carryover Amounts, plus interest
accrued thereon, to which DBGI is entitled. In the event that DBGI and
Poydras are unable to agree as to the Fair Market Value of Poydras' Interest
to be sold pursuant to this Section 7.3 within thirty (30) days after receipt
of the Notice or the Put, as applicable, DBGI and Poydras shall, within ten
(10) days after the expiration of such thirty (30) day period, attempt to
select one reasonably acceptable, nationally recognized independent
investment or merchant bank to determine the Fair Market Value of Poydras'
Interest as provided in this Section 7.3, which determination shall be
binding on all Venturers. In the event that DBGI and Poydras are unable to
agree upon a mutually acceptable investment or merchant bank, each of DBGI
and Poydras shall have ten (10) days to select one nationally recognized
investment or merchant bank to determine the Fair Market Value of Poydras'
Interest. Each such investment or merchant bank shall, subject to the
provisions of this Section 7.3 and within thirty (30) days of being requested
to do so, determine the Fair Market Value of Poydras' Interest; provided,
however that the Fair Market Value of Poydras' Interest shall be the average
of such determinations if and only if the lower of the two determinations is
at least ninety percent (90%) of the higher of the two determinations. If it
is not, then such two investment or merchant banks shall select a third
nationally recognized investment or merchant bank to determine the Fair
Market Value of Poydras' Interest, and the Fair Market Value of Poydras'
Interest (i) shall be such third determination if such third determination is
a figure between the two previous determinations; (ii) shall be the lower of
the two previous determinations if the third determination is lower than both
the two previous determinations; and (iii) shall be the higher of the two
previous determinations if the third determination is higher than both the
two previous determinations. DBGI and Poydras shall each pay (50%) of the
costs of the services and expenses of the investment or merchant bank(s). At
the time of any purchase of Poydras' Interest by DBGI, DBGI shall pay
Poydras, in full, the principal balance and all accrued interest on any and
all loans made by Poydras to the Joint Venture.
7.4 EFFECT OF ATTEMPTED TRANSFER; WITHDRAWALS GENERALLY. An
attempted transfer of any Interest in violation of any provision of this
Agreement shall be void. No Venturer shall withdraw from the Joint Venture,
except with the written consent of the other Venturers.
Page 20 Exhibit 10.7
7.5 TAX ALLOCATION ADJUSTMENTS; DISTRIBUTION AFTER TRANSFER. In
the event of a transfer of any Interest, regardless of whether the transferee
becomes a substitute Venturer, all items of income, gain, loss, deduction and
credit for the fiscal period in which the transfer occurs shall be allocated
for federal income tax purposes between the transferor and the transferee on
the basis of the ownership of the Interest at the time the particular item is
taken into account by the Joint Venture for federal income tax purposes.
Distributions made on or after the effective date of transfer shall be made
to the transferee, regardless of when such distributions accrued on the books
of the Joint Venture.
7.6 SECTION 754 ELECTION. In the event of a transfer of all or
part of the Interest of a Venturer in the Joint Venture, the transferee may
request the Joint Venture to elect, pursuant to Section 754 of the IRS Code,
or the corresponding provision of subsequent law, to adjust the basis of the
Joint Venture property as provided by Sections 734 and 743 of the IRS Code.
Upon such request, the Managing Venturer shall be obligated to cause the
Joint Venture to elect, pursuant to Section 754 of the Code, or the
corresponding provision of subsequent law, to adjust the basis of the Joint
Venture property as provided by Sections 734 and 743 of the IRS Code, or the
corresponding provision of subsequent law. The transferee and the Managing
Venturer shall be, and hereby are, absolutely and completely exonerated from
any and all liability of any kind to the remaining Venturers with respect to
any decision to cause or not to cause the Joint Venture to make any such
election.
ARTICLE 8
DURATION AND TERMINATION OF THE JOINT VENTURE
8.1 EVENT OF TERMINATION. The Joint Venture shall be dissolved
and its affairs wound up pursuant to Section 8.2 upon the first to occur of
any of the following events (an "Event of Termination"):
(a) upon the withdrawal, dissolution or Bankruptcy of any
Venturer;
(b) upon the unanimous written consent of the Venturers to
dissolve the Joint Venture;
(c) upon the sale or other disposition of all or substantially
all of the assets of the Joint Venture;
(d) upon the occurrence of an Event of Default, unless the
non-defaulting Venturer makes an election pursuant to Section 8.3(b); or
(e) upon the occurrence of any other event or circumstance
requiring dissolution under the Act.
Each Venturer agrees that it will not, without the unanimous
consent of the Venturers, voluntarily withdraw as a Venturer, and if it
withdraws in violation of this Agreement, the Joint Venture or the other
Venturers may recover damages for breach of this Agreement.
Page 21 Exhibit 10.7
8.2 WINDING-UP. Upon the occurrence of an Event of Termination,
if the Joint Venture is not continued as provided herein, the Joint Venture
affairs shall be wound up as set forth below.
Upon dissolution of the Joint Venture, the Joint Venture shall
continue solely for purposes of winding up its affairs in an orderly manner,
liquidating its assets and satisfying the claims of its creditors and
Venturers, and no Venturer shall take any action inconsistent with, or not
necessary to or appropriate for, the winding up of the Joint Venture's
business and affairs; provided that all covenants contained in this Agreement
and obligations provided for in this Agreement shall continue to be fully
binding upon the Venturers until such time as the property of the Joint
Venture or proceeds from the sale thereof have been distributed pursuant to
this Section 8.2 and the Joint Venture has been terminated. The Managing
Venturer shall act as the liquidator of the Joint Venture, unless the
dissolution resulted from action of the Managing Venturer without the consent
of the other Venturer, in which case Poydras shall act as the liquidator.
(a) The Management Committee shall cause to be prepared a
statement of the assets (including Delta and Seven-Up Beverage Rights) and
liabilities of the Joint Venture as of the date of dissolution.
(b) The assets and properties of the Joint Venture shall be
liquidated as promptly as possible, and receivables collected, all in an
orderly and businesslike manner so as not to involve undue sacrifice.
Notwithstanding the foregoing, the Management Committee may determine not to
sell all or any portion of the assets and properties of the Joint Venture, in
which event such assets and properties shall be distributed in kind pursuant
to Section 8.2(c).
(c) The proceeds of liquidation under Section 8.2(b) and all
other assets and properties of the Joint Venture shall be applied and
distributed as follows in the following order of priority, unless otherwise
required by mandatory provisions of applicable law:
(i) to the payment of the debts and liabilities of the
Joint Venture (except for amounts which may be owed to any
Venturer) and the expenses of liquidation;
(ii) to the establishment of any reserves that the Management
Committee, in accordance with sound business judgment, deems
reasonably necessary for any contingent or unforeseen liabilities
or obligations of the Joint Venture, which reserves may be paid
over by the Management Committee to an escrow agent selected by it
to be held by such agent for the purpose of (x) distributing such
reserves in payment of the aforementioned contingencies; and (y)
upon the expiration of such period as the Management Committee may
deem advisable, distributing the balance thereof in the manner
provided in this Section 8.2(c);
(iii) to the payment of all amounts owed to any Venturer for
expense reimbursement as provided in or contemplated by this
Agreement, other than Loans (as defined below); then to the payment
of any accrued but unpaid Carryover
Page 22 Exhibit 10.7
Amounts, plus interest accrued thereon, to which DBGI is entitled
(including any Priority Profit Interest which has accrued during
the period commencing on the date of the last quarterly calculation
and ending on the date of liquidation); then to the payment of all
Mandatory Loans and Venturer Loans (collectively, the "Loans") to
the Joint Venture made by the Venturers in proportion to each
Venturer's Sharing Percentage, provided that if the aggregate
amount of each Venturer's outstanding Loans, including accrued
interest, shall not be in the same proportion to the total of all
outstanding Loans of the Venturers as each Venturer's Sharing
Percentage, then payments hereunder shall be first applied to
reduce the Loan balance of the Venturer whose proportion of the
outstanding Loans is in excess of its Sharing Percentage until the
outstanding Loans of each Venturer are in proportion to their
respective Sharing Percentages; and then to the payment to DBGI of
the discounted present value of any unaccrued and unpaid Priority
Profit Interest (for the balance of the Priority Period) to which
DBGI is entitled, which amount shall be as agreed by the Venturers,
provided, that if the Venturers cannot agree within thirty (30)
days of a written notice from the liquidator, then such amount
shall be determined in accordance with the procedure set forth in
Section 7.3 with reference to the determination of the Fair Market
Value of Poydras' Interest;
(iv) to those Venturers who have positive balances in their
respective capital accounts (which capital accounts have been
maintained in compliance with the applicable provisions of the IRS
Code and the regulations thereunder) in accordance with the
positive capital account balances of such Venturers, as determined
in compliance with Section 1.704-1(b)(2)(ii)(b)(2) of such
regulations, or the corresponding provision of subsequent
regulation or law. If the capital account of any Venturer has a
deficit balance after the distribution set forth in this Section
8.2(c)(iv), such Venturer shall contribute to the Joint Venture
such amount as shall be necessary to restore its capital account to
zero, as provided in regulation Section 1.704-1(b)(2)(ii)(b)(3), or
the corresponding provision of subsequent regulation or law.
(d) If any assets are to be distributed in kind, they will be valued
at Market Values before distribution. This adjustment up (or down) to t
Value will be reflected in an adjustment to the Venturers' capital n an equal
basis immediately prior to any liquidating distribution.
(e) If the value of the Joint Venture assets, including profits from
any of, are insufficient to pay the liabilities of the Joint Venture, then
ional liabilities and reserve needs shall be funded by the Venturers nce with
their respective Sharing Percentages.
(f) The Venturers shall comply with all requirements of the Act or
other law pertaining to the winding up of the Joint Venture.
Page 23 Exhibit 10.7
8.3 EVENTS OF DEFAULT.
(a) An "Event of Default" with respect to any Venturer means:
(i) The failure to perform or a violation by such Venturer
of any of the terms or conditions of this Agreement, and the
continuation of such failure or violation for twenty (20) days
after such Venturer has been given written notice by the
non-defaulting Venturer; if the failure or violation is not a
failure to pay money and is of such a nature that it cannot
reasonably be cured within such twenty (20) day period, but if it
is curable and the defaulting Venturer in good faith begins efforts
to cure it within such twenty (20) day period and continues
diligently to do so, the defaulting Venturer shall have a
reasonable additional period thereafter to effect the cure;
(ii) The Bankruptcy of such Venturer;
(iii) Such Venturer sells, or otherwise disposes or encumbers in
any way, its Interest, except as permitted in this Agreement, or
suffers such sale, disposition or encumbrance; or
(iv) Such Venturer otherwise causes the dissolution of the
Joint Venture in contravention of the terms and provisions of this
Agreement.
(b) Upon the occurrence of an Event of Default, the
non-defaulting Venturer and/or the Joint Venture shall have the right to
pursue any and all legal remedies, in damages or in equity, against the
defaulting Venturer and shall be entitled to recover from the defaulting
Venturer all costs and expenses (including reasonable attorneys' fees)
incurred by the non-defaulting Venturer in connection with the pursuit of
such remedy.
(c) In the event that the non-defaulting Venturer does not make
an election pursuant to Section 8.3(b), the affairs of the Joint Venture
shall be wound up as provided in Section 8.2, except that all references to
the Management Committee therein shall be deemed to be references to the
non-defaulting Venturer for purposes of applying such Section, and the
non-defaulting Venturer shall be entitled to deduct from any amounts to be
paid to the defaulting Venturer under Section 8.2 the amount of damages
proximately resulting to the non-defaulting Venturer from the Event of
Default.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES OF SEVEN-UP
The following were representations and warranties made by Seven-Up to Delta
as of the Effective Date.
9.1 GOOD STANDING; POWER. Seven-Up is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority to own the Seven-Up Assets, to
lawfully carry on its business as now
Page 24 Exhibit 10.7
being conducted and to make, execute, deliver and perform this Agreement and
all contracts and documents to be executed in connection herewith.
9.2 AUTHORIZATION. This Agreement has been duly authorized by all
necessary corporate action of Seven-Up and will be a valid and legally binding
obligation of Seven-Up, enforceable in accordance with its terms.
9.3 NO BREACH. Neither the execution or delivery of this
Agreement, including the contracts and instruments to be executed in
connection herewith, nor its performance by Seven-Up will conflict with,
violate or result in a breach of any term, condition or provision of, nor
constitute a material default under, or result in the acceleration of any
material obligation under, or permit the termination of any indenture,
material contract or other material agreement to which Seven-Up is a party or
by which Seven-Up or its properties is subject or bound; nor will such
execution, delivery or performance by Seven-Up either conflict with or
violate the provisions of any judgment, decree or order to which Seven-Up is
subject or Seven-Up's Articles of Incorporation or Bylaws, or to the best of
its knowledge, any law or regulation.
9.4 TITLE. Seven-Up owns and has good and marketable title to
the Seven-Up Contributed Assets, and such Seven-Up Contributed Assets have
been contributed to the Joint Venture free and clear of all liens,
encumbrances, assessments, obligations, charges and options of any kind,
except as set forth on SCHEDULE C hereto.
9.5 CONTRACTS. Set forth on SCHEDULE E hereto is a list of all
contracts, agreements and commitments (whether written or oral) to which
Seven-Up is a party and which are being transferred to and assumed by the
Joint Venture pursuant to this Agreement, including but not limited to the
following types of contracts: (i) contracts not made in the ordinary course
of business; (ii) employment contracts which are not terminable by Seven-Up
without cost or other liability to Seven-Up upon notice of thirty (30) days
or less; (iii) bonus, pension, profit sharing, retirement, deferred
compensation, stock purchase, hospitalization, insurance or other plans
providing employee benefits; (iv) leases with respect to real or personal
property, whether as lessee or lessor; (v) contracts for the use, purchase or
sale of goods, materials, supplies, equipment, products or services involving
payments in excess of $50,000 under any such contract, which contract is not
terminable by Seven-Up without cost or other liability to Seven-Up upon
notice of thirty (30) days or less; (vi) promissory notes, loan agreements,
installment sales contracts or other documents evidencing or securing an
indebtedness or obligation of Seven-Up as debtor or to Seven-Up as creditor,
other than trade accounts payable or accrued taxes; (vii) agreements
providing for the payment of fees or other compensation, other than
compensation to Seven-Up's regular employees and officers; (viii) licenses or
royalty agreements under which Seven-Up is entitled to use or has authorized
the use of any right, image, trademark, trade name, service ▇▇▇▇, patent,
know-how or other intangible asset; (ix) contracts involving barter or the
exchange of property or goods of Seven-Up for the property or goods of any
third party; (x) contracts or agreements establishing joint venture or
partnership agreements or which otherwise involve a sharing of profits or
revenues; (xi) franchise agreements or related agreements and marketing
letters (whether written or oral) to which Seven-Up is a party or by which
Seven-Up is bound; (xii) agreements to provide discounts, rebates and
promotional
Page 25 Exhibit 10.7
allowances; and (xiii) offers, bids or commitments obligating Seven-Up to
enter into any of the above. Except as set forth on SCHEDULE E hereto, no
other contract, agreement or commitment of Seven-Up is being transferred to
or assumed by the Joint Venture.
9.6 NO VIOLATIONS. Seven-Up is not in violation of any
applicable ordinance or statute or, to the best of its knowledge, any law or
regulation with respect to its use of the Seven-Up Assets.
9.7 NO LITIGATION. Seven-Up is not a party to any pending or
threatened suit, action or legal, administrative, arbitration or other
proceeding which might materially and adversely affect the business of the
Joint Venture, the Seven-Up Assets or the transactions contemplated by this
Agreement, nor does Seven-Up know of any facts which are likely, with the
passage of time, to give rise to such a suit, action or proceeding.
9.8 REPRESENTATIONS AND WARRANTIES. No representation or
warranty of Seven-Up contained herein or in any exhibit, document,
certificate or schedule furnished to Delta, either pursuant hereto or in
connection with the transactions contemplated hereby, contains any untrue
statement of a material fact, or omits state a material fact necessary to
make statements or facts contained therein not misleading.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES OF DELTA
The following were representations and warranties made by Delta to Seven-Up
as of the Effective Date.
10.1 GOOD STANDING; POWERS; CAPITAL STOCK. Delta is a corporation
duly organized and validly existing and in good standing under the laws of
the State of Delaware and has all requisite power and authority to own the
Delta Assets, to lawfully carry on its business as now being conducted and to
make, execute, deliver and perform this Agreement and all instruments and
documents to be executed in connection herewith. Delta has authorized
capital stock consisting of one thousand (1,000) shares of common stock, no
par value, and one (1) share of preferred stock, par value of $100. All the
shares of common stock authorized have been issued to, and are owned by,
DBGI. All the shares of preferred stock authorized are being issued to the
Joint Venture contemporaneously herewith. Under the Certificate of
Incorporation of Delta, the following actions require the consent and
approval of the preferred stockholders: any action connected with the
Bankruptcy of Delta; the amendment of the Certificate of Incorporation; the
sale, transfer or other disposition, pledge or encumbrance of any significant
assets of Delta, except in the ordinary course of business; the sale,
transfer or other disposition, pledge or encumbrance of all or any portion of
Delta's Interest in the Joint Venture; the liquidation or dissolution of
Delta; and any merger, consolidation or exchange of assets to which Delta is
a party.
10.2 AUTHORIZATION. This Agreement has been duly authorized by
all necessary corporate action of Delta and will be a valid and legally
binding obligation of Delta, enforceable in accordance with its terms.
Page 26 Exhibit 10.7
10.3 NO BREACH. Neither the execution or delivery of this
Agreement, including the contracts and instruments to be executed in
connection herewith, nor its performance by Delta will conflict with, violate
or result in a breach of any term, condition or provision of, nor constitute
a material default under, or result in the acceleration of any material
obligation under, or permit the termination of any indenture, material
contract or other material agreement to which Delta is a party or by which
Delta or its properties is subject or bound; nor will such execution,
delivery or performance by Delta either conflict with or violate the
provisions of any judgment, decree or order to which Delta is subject or
Delta's Articles of Incorporation or Bylaws, or to the best of its knowledge,
any law or regulation.
10.4 TITLE. DBGI has transferred to Delta any and all assets
which DBGI has utilized to bottle and/or distribute Initial Products in the
Area, except those assets set forth on SCHEDULE A1 hereto. Delta owns and
has good and marketable title to the Delta Contributed Assets, and such Delta
Contributed Assets have been contributed to the Joint Venture free and clear
of all liens, encumbrances, assessments, obligations, charges and options of
any kind, except as set forth on SCHEDULE D hereto.
10.5 CONTRACTS. Set forth on SCHEDULE F hereto is a list of all
contracts, agreements and commitments (whether written or oral) to which
Delta is a party and which are being transferred to and assumed by the Joint
Venture pursuant to this Agreement, including but not limited to the
following types of contracts: (i) contracts not made in the ordinary course
of business; (ii) employment contracts which are not terminable by Delta
without cost or other liability to Delta upon notice of thirty (30) days or
less; (iii) bonus, pension, profit sharing, retirement, deferred
compensation, stock purchase, hospitalization, insurance or other plans
providing employee benefits; (iv) leases with respect to real or personal
property, whether as lessee or lessor; (v) contracts for the use, purchase or
sale of goods, materials, supplies, equipment, products or services involving
payments in excess of $50,000 under any such contract, which contract is not
terminable by Delta without cost or other liability to Delta upon notice of
thirty (30) days or less; (vi) promissory notes, loan agreements, installment
sales contracts or other documents evidencing or securing an indebtedness or
obligation of Delta as debtor or to Delta as creditor, other than trade
accounts payable or accrued taxes; (vii) agreements providing for the payment
of fees or other compensation, other than compensation to Delta's regular
employees and officers; (viii) licenses or royalty agreements under which
Delta is entitled to use or has authorized the use of any right, image,
trademark, trade name, service ▇▇▇▇, patent, know-how or other intangible
asset; (ix) contracts involving barter or the exchange of property or goods
of Delta for the property or goods of any third party; (x) contracts or
agreements establishing joint venture or partnership arrangements or which
otherwise involve a sharing of profits or revenues; (xi) franchise agreements
or related agreements and marketing letters (whether written or oral) to
which Delta is a party or by which Delta is bound; (xii) agreements to
provide discounts, rebates and promotional allowances; and (xiii) offers,
bids or commitments obligating Delta to enter into any of the above. Except
as set forth on SCHEDULE F hereto, no other contract, agreement or commitment
of Delta is being transferred to or assumed by the Joint Venture.
Page 27 Exhibit 10.7
10.6 NO VIOLATIONS. Delta is not in violation of any applicable
ordinance or statute or, to the best of its knowledge, any law or regulation
with respect to its use of the Delta Assets.
10.7 NO LITIGATION. Delta is not a party to any pending or
threatened suit, action or legal, administrative, arbitration or other
proceeding which might materially and adversely affect the business of the
Joint Venture, the Delta Assets or transactions contemplated by this
Agreement, nor does Delta know of any facts which are likely, with the
passage of time, to give rise to such a suit, action or proceeding.
10.8 REPRESENTATIONS AND WARRANTIES. No representation or
warranty of Delta contained herein or in any exhibit, document, certificate
or schedule furnished to Seven-Up, either pursuant hereto or in connection
with the transactions contemplated hereby, contains any untrue statement of a
material fact, or omits to state a material fact necessary to make statements
or facts contained therein not misleading.
ARTICLE 11
COVENANTS OF THE VENTURERS
11.1 OFFER OF RE-EMPLOYMENT. As of the Effective Date, the Joint
Venture was to offer new employment to all of the employees of Seven-Up and
Delta set forth on SCHEDULE G and SCHEDULE H, respectively, on terms and
conditions comparable to those under which such employees were employed by
Delta and Seven-Up, and all severance costs for the contemplated staff
reduction resulting from the creation of the Joint Venture were to be
expenses of the Joint Venture.
11.2 BOTTLING AND CANNING REQUIREMENTS. DBGI shall supply the
Joint Venture with its bottling and canning requirements (the "JV
Requirements") from the Reserve Plant at the Reserve Plant's Net Cost (as
defined below). The transfer charges shall be paid by the Joint Venture in
cash promptly upon delivery of the JV Requirements, which transfer charges
shall be based on the Net Cost to the Reserve Plant of supplying such bottled
and canned goods. For purposes of this Agreement, the term "Net Cost" shall
mean the actual cost to the Reserve Plant of supplying the JV Requirements,
including a proportionate charge for depreciation and amortization and a
proportionate charge for return on invested capital at a rate per annum equal
to the Mandatory Loan Rate, but excluding any cost of debt. The Joint
Venture shall share in the profits (or losses) of the Reserve Plant, which
share shall equal the total profits (or losses) of the Reserve Plant
multiplied by a fraction, the numerator of which shall be the total case
volume of the JV Requirements supplied by the Reserve Plant and the
denominator of which shall be the total case volume of all bottling and
canning requirements supplied by the Reserve Plant to all Persons. A
determination of the allocation of profits (or losses) of the Reserve Plant
shall be made on an annual basis and shall be delivered to the Venturers
within fifteen (15) days after the delivery of the financial statements
pursuant to Section 6.2(c) hereof. For informational purposes only, the
amount of DBGI's invested capital in the Reserve Plant as of December 31,
1991 was $2,934,000. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., or another accounting firm
designated by the Management Committee, shall verify the accuracy of the
transfer charges, the Net Costs and
Page 28 Exhibit 10.7
the profits (or losses) of the Reserve Plant, which verification shall be
made in accordance with GAAP, consistently applied, and which verification
shall be final and binding on the Venturers. If DBGI should breach the
covenants set forth in this Section 11.2 for any reason whatsoever, then DBGI
shall use its best efforts immediately to cure such breach and shall be
obligated to the Joint Venture for the amount of any and all monetary damages
resulting from such breach, including any costs incurred by the Joint Venture
to supply its bottling and canning requirements which are in excess of the
costs of such supplies had such breach not occurred, and the other provisions
of Section 12.6 shall apply. The obligations set forth in this Section 11.2
shall be binding upon any successor(s) to DBGI. The Supply Contract shall be
binding upon any Person to which DBGI transfers or assigns the Reserve Plant
and on any successor(s) to DBGI.
11.3 OPINIONS OF COUNSEL. Delta provided Seven-Up with a
favorable opinion of its counsel, ▇▇▇▇▇▇ and ▇▇▇▇▇▇, P.A., dated the
Effective Date of this Agreement, in form reasonably satisfactory to Seven-Up
and its counsel. Seven-Up provided Delta with a favorable opinion of its
counsel, Jones, Walker, Waechter, Poitevent, Carrere & ▇▇▇▇▇▇▇, dated the
Effective Date of this Agreement, in form reasonably satisfactory to Delta
and its counsel.
11.4 REQUIRED CONSENTS. Delta was to use commercially reasonable
efforts to obtain the consent of Pepsi-Cola to the transfer of the Pepsi-Cola
franchise and distribution agreements and other Delta Beverage Rights to be
transferred to the Joint Venture pursuant to this Agreement.
11.5 RIGHT OF FIRST REFUSAL.
(a) Each Venturer, on behalf of itself and its Affiliated
Corporations, agrees that it and its Affiliated Corporations will make
available to the Joint Venture any opportunity and any information about any
opportunity that becomes available to it or any of its Affiliated
Corporations to engage in the bottling, manufacture and/or distribution of
beverages or the vending of food and/or beverages within all or any
portion(s) of the Area and will not pursue any such opportunity or encourage
others to pursue such opportunity whether or not the Joint Venture elects to
pursue such opportunity; provided, however, that this Section 11.5 shall not
be construed to prohibit Poydras from entering into any bona fide third party
bottling and/or canning contract either within or outside the Area.
(b) The parties agree that all rights to the "Agreements in
Process," as set forth on SCHEDULE E hereto (other than Quickick), which
relate to the territories included within the Area, were contributed by
Seven-Up to the Joint Venture.
11.6 CONSENT OF THE JOINT VENTURE FOR CERTAIN ACTIONS OF DELTA.
Delta agreed that it will not take any of the actions set forth in Section
10.1 as requiring the consent and approval of the preferred stockholder
without the consent and approval of the Management Committee.
11.7 PAYMENT OF TRANSFER FEES AND TAXES. The Joint Venture agreed
to pay any and all transfer taxes, sales and use taxes or other fees or
charges imposed by any
Page 29 Exhibit 10.7
governmental body for the assumption, assignment or transfer arising from or
in connection with the contribution to the Joint Venture by Delta and
Seven-Up of the Delta Contributed Assets and the Seven-Up Contributed Assets,
respectively.
11.8 EFFORT; COOPERATION. Delta and Seven-Up used all
commercially reasonable efforts, and cooperated with each other and the Joint
Venture, to secure all appropriate consents, approvals, authorizations,
exemptions and waivers to effect this Agreement, to make and effect all
necessary filings and to fulfill all covenants of this Agreement.
ARTICLE 12
MISCELLANEOUS
12.1 WAIVER OF PARTITION. The parties hereby agree that no
Venturer, nor any successor-in-interest to any Venturer shall have the right
while this Agreement remains in effect to have the property of the Joint
Venture partitioned, or to file a complaint or institute any proceeding at
law or in equity to have the property of the Joint Venture partitioned, and
each Venturer, on behalf of itself, its successors, representatives, heirs
and assigns, hereby waives any such right. It is the intention of the
Venturers that during the term of this Agreement, the rights of the Venturers
and their successors-in-interest, as among themselves, shall be governed by
the terms of this Agreement, and that the right of any Venturer or its
successor-in-interest to assign, transfer, sell or otherwise dispose of its
Interest in the Joint Venture shall be subject to the limitations and
restrictions of this Agreement.
12.2 MODIFICATION; WAIVERS. This Agreement may be modified or
amended only with the written consent of all Venturers. The observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) by the Venturer or
Venturers entitled to enforce such term, but any such waiver shall be
effective only if in writing, signed by the Venturer or Venturers against
which such waiver is to be asserted. Except as otherwise specifically
provided herein, no delay on the part of any Venturer in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any Venturer of any right, power or privilege
hereunder operate as a waiver of any other right, power or privilege
hereunder nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.
12.3 ENTIRE AGREEMENT. This Agreement and the documents expressly
referred to herein constitute the entire agreement between the Venturers with
respect to the subject matter hereof and supersede any prior agreement or
understanding among them, whether written or oral.
12.4 SEVERABILITY. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid, illegal or unenforceable, the remainder of this Agreement or the
application of such provision to other Persons or circumstances shall not be
affected thereby, provided that the parties shall negotiate in good
Page 30 Exhibit 10.7
faith with respect to an equitable modification of the provision or
application thereof held to be invalid.
12.5 NOTICES. All notices, requests, demands, consents and other
communications required or permitted hereunder shall be in writing and shall
be deemed to have been duly given if (i) personally delivered to an officer
of each Venturer; (ii) sent by facsimile; or (iii) mailed by first class
registered or certified mail, return receipt requested, postage paid,
addressed as follows:
IF TO DBGI:
Delta Beverage Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
ATTENTION: President
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Pohlad Companies
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
-and-
▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
ATTENTION: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
IF TO POYDRAS:
Poydras Street Investors L.L.C.
▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
ATTENTION: President
Page 31 Exhibit 10.7
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
22nd Floor
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
IF TO THE JOINT VENTURE:
The Pepsi-Cola/Seven-Up Beverage Group of Louisiana
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
ATTENTION: Managing Venturer
With a copy to the other Venturers at their address set forth above.
or to such other address as any Venturer or the Joint Venture shall have last
designated by notice to the Joint Venture and the other Venturers, as the
case may be. Notices mailed in accordance with the foregoing shall be deemed
to have been given and made five (5) business days following the date so
mailed.
12.6 REMEDIES. In the event a Venturer breaches its respective
representations, warranties or covenants contained in Articles 9, 10 and 11
of this Agreement (the "Breaching Venturer"), such Breaching Venturer shall
use its best efforts immediately to cure such breach and shall be obligated
to the Joint Venture for the amount of any and all monetary damages resulting
from such breach, which obligation shall be evidenced by a promissory note of
the Breaching Venturer in favor of the Joint Venture (the "Default Note"),
which Default Note shall bear interest, payable monthly from the date of the
breach until paid in full, at a rate per annum equal to the Default Loan
Rate. The Joint Venture shall offset any and all amounts due and payable by
the Defaulting Venturer under the Default Note directly against any and all
distributions to which the Defaulting Venturer would otherwise be entitled to
receive pursuant to this Agreement. No remedy conferred in this Agreement is
intended to be exclusive, and each shall be cumulative and shall be in
addition to every other remedy. The election of any one or more remedies
shall not constitute a waiver of any other remedy, in damages or equity.
12.7 GOVERNING LAW. This Agreement shall be governed by the
internal laws of the State of Louisiana without regard to principles of
conflict of laws.
12.8 SUCCESSORS AND ASSIGNS. Except as otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of
the Venturers, and their legal representatives, successors and permitted
assigns. This Agreement may not be assigned in whole or in part by any party
without the prior written consent of the other parties.
Page 32 Exhibit 10.7
12.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall constitute one and the same instrument.
12.10 HEADINGS. The Article and Section headings in this Agreement
are for convenience of reference only, and shall not be deemed to alter or
affect the meaning or interpretation of any provisions hereof.
12.11 CONSTRUCTION. None of the provisions of this Agreement shall
be for the benefit of or enforceable by any creditors of the Joint Venture.
No one, including but not limited to the Venturers or any creditor of the
Joint Venture or any of its Venturers, shall have any rights under this
Agreement against any Affiliate of any Venturer.
12.12 PROPERTY RIGHTS. All books, records and accounts maintained
for the Joint Venture (including, without limitation, customer lists,
supplier lists, inventory records and statistics, marketing reports and all
other data whether stored on paper or in electronic or other form) and any
contracts or agreements entered into by or on behalf of the Joint Venture
shall at all times be the exclusive property of the Joint Venture. All
inventory purchased by the Joint Venture and all returns thereof, all
property (real or personal or mixed) purchased with Joint Venture funds, and
all moneys held or collected for or on behalf of the Joint Venture shall at
all times be the exclusive property of the Joint Venture.
12.13 CONFIDENTIALITY. No Venturer nor any of its Affiliates shall
disclose any confidential and proprietary information or trade secrets with
respect to the Joint Venture to any Person, except (i) with the prior written
consent of the other Venturers; (ii) to the extent necessary to comply with
law or the valid order of a court of competent jurisdiction, in which event
the party making such disclosure shall so notify the other as promptly as
practicable (and, if possible, prior to making such disclosure) and shall
seek confidential treatment of such information; (iii) as part of its normal
reporting or review procedure to its parent company, its auditors and its
attorneys; provided, however, that such parent company, auditors and
attorneys agree to be bound by the provisions of this Section 12.13; (iv) in
connection with the enforcement of such Venturer's rights hereunder; or (v)
disclosures to an Affiliate of, or professional advisor to, such Venturer in
connection with the performance by such Venturer of its obligations
hereunder; provided, however, that such Affiliate or professional advisor
agrees to be bound by the provisions of this Section 12.13. No Venturer, nor
any of its Affiliates, shall use any confidential and proprietary information
or trade secrets with respect to the Joint Venture other than for the benefit
of the Joint Venture. The obligations of confidentiality imposed by this
Section 12.13 shall survive the termination of this Agreement.
12.14 FURTHER ACTIONS. Each Venturer shall execute and deliver
such other certificates, agreements and documents, and take such other
actions, as may reasonably be required in connection with the formation of
the Joint Venture, the achievement of its purposes and the carrying out of
the intent and purpose of this Agreement.
12.15 TRADEMARKS AND TRADE NAMES. Except as provided in this
Agreement, no Venturer grants any rights under this Agreement to any other
party in any trademarks or trade names of such party, or of any of their
respective subsidiaries or Affiliates.
Page 33 Exhibit 10.7
12.16 FORCE MAJEURE. It is agreed that each of the parties hereto
is excused from performing such acts as are required hereunder as may be
prevented by or whose purpose is frustrated by Force Majeure. The Venturer
so affected shall give notice to the Joint Venture and the other Venturer in
writing promptly and thereupon shall be excused from such of its obligations
as it is unable to perform on account of the Force Majeure throughout the
duration thereof plus a period of thirty (30) days.
12.17 ARBITRATION.
(a) All disputes arising among the Venturers under this Agreement,
including all disputes relating to matters requiring the approval of the
Management Committee (whether related to legal, contractual, business,
management, financial, technical, operational or other issues) shall be
resolved by arbitration under this Section 12.17. The parties do not intend
that any matters relating to fraud or misrepresentation be subject to
arbitration hereunder. Any Venturer desiring arbitration shall deliver
notice to the other Venturers and in such notice shall (i) specify in detail
those matters (the "Disputed Matters") as to which such Venturer disagrees,
such Venturer's position with respect to the Disputed Matters and the basis
for such Venturer's disagreement; and (ii) appoint as an arbitrator a
disinterested person of recognized competence in the area at issue. Within
15 days thereafter, each other Venturer shall, by notice to the originating
Venturer, (i) specify in detail such Venturer's position with respect to the
Disputed Matters and the basis for such Venturer's disagreement; and (ii)
appoint another person similarly qualified as the additional arbitrator.
Within 15 days thereafter, the arbitrators thus appointed shall appoint
another person similarly qualified as an additional arbitrator, and all such
arbitrators shall be directed to resolve such Disputed Matters within 30
days, unless the arbitrators in good faith determine that such deadline is
impracticable.
(b) Notwithstanding the provisions of Section 12.17(a), (i) if
the additional arbitrators shall not have been appointed as aforesaid, the
first arbitrator shall determine such matter; and (ii) if the arbitrators
appointed by the Venturers shall be unable to agree upon the appointment of
another arbitrator within 15 days after the appointment of the lastly
appointed arbitrator, they shall give written notice of such failure to agree
to the Venturers, and, if the Venturers fail to agree upon the selection to
such other arbitrator within 15 days thereafter, then within 10 days
thereafter, any of the Venturers upon written notice to other Venturers may
apply for such appointment to the Louisiana trial court.
(c) Any such arbitration shall be conducted in accordance with
the commercial Arbitration Rules (the "Rules") of the American Arbitration
Association ("AAA") to the fullest extent such Rules are permitted by, and to
the fullest extent not inconsistent with, applicable law (including without
limitation, law in Louisiana regarding arbitration) and the rules set forth
below, which shall be controlling to the extent they differ from the AAA
Rules.
(d) The arbitrators shall resolve any Disputed Matters by
adopting the position with respect thereto of one of the Venturers, and
unless otherwise agreed by the Venturers, the arbitrators shall have no
authority to adopt any other resolution of such Disputed Matters. The
determination of the majority of the arbitrators or the sole arbitrator, as
the
Page 34 Exhibit 10.7
case may be, shall, to the extent permitted by law, be conclusive and binding
upon the Venturers. The arbitrator or arbitrators shall give notice to the
Venturers stating their determination, and shall furnish to each a copy of
such determination signed by them. In the event of the failure, refusal or
inability of any arbitrator to act, a new arbitrator shall be appointed in
his or her stead, which appointment shall be made in the same manner as
hereinbefore provided for the appointment of the arbitrator so failing,
refusing or unable to act.
(e) Venturers shall be entitled to present evidence and arguments
to the arbitrators. Each Venturer hereby authorizes the arbitrators (i) to
order such discovery (including third-party discovery) as the arbitrators
determine to be reasonable under the circumstances; (ii) to impose reasonable
schedules and deadlines to ensure that discovery is conducted and concluded
on a timely basis; (iii) to impose sanctions on any Venturer for abuse or
delay of discovery; and (iv) to apply such rules of evidence as the
arbitrators in their discretion may determine.
(f) Any Venturer may elect, by notice to the other Venturers and
the arbitrators, to have the arbitration conducted on an expedited basis. In
such event, the Venturers hereby agree that the arbitrators shall be
authorized to expedite the proceedings by all reasonable means consistent
with a fair hearing of the dispute. Such means may include the imposition of
accelerated discovery and hearing schedules, requiring submissions within
abbreviated time periods and imposing limits on numbers of witnesses and the
length of hearings.
(g) Each Venturer agrees to comply with any order or request of
the arbitrators delivered pursuant to this Section 12.17.
(h) Each Venturer will compensate the arbitrator selected by it,
and the fees of the arbitrator appointed by the other arbitrators and the
expenses of the proceeding will be shared equally by the Venturers.
(i) Subject to Section 12.17(h), each Venturer shall bear its own
expenses, including attorneys' fees, in connection with any arbitration
proceedings hereunder. No Venturer in any such arbitration, or in any
action, trial or appeal thereon, shall be entitled to attorneys' fees or
court, arbitration or other costs incurred, unless otherwise decreed by the
court or arbitrators in the same or a separate suit.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first above written.
DELTA BEVERAGE GROUP, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Its: Vice President
-----------------------------------
Page 35 Exhibit 10.7
POYDRAS STREET INVESTORS L.L.C.
By: /s/ illegible
---------------------------------------
Its: Vice President, Secretary, Treasurer
-------------------------------------
Page 36 Exhibit 10.7
EXHIBIT A
24 PARISH GEOGRAPHIC AREA AROUND
NEW ORLEANS AND BATON ROUGE, LOUISIANA
1. ASCENSION
2. ASSUMPTION
3. EAST BATON ROUGE
4. EAST ▇▇▇▇▇▇▇▇▇
5. IBERVILLE
6. JEFFERSON
7. LAFOURCHE
8. ▇▇▇▇▇▇▇▇▇▇
9. ORLEANS
10. PLAQUEMINES
11. POINT COUPEE
12. ST. ▇▇▇▇▇▇▇
13. ▇▇. ▇▇▇▇▇▇▇
▇▇. ▇▇. ▇▇▇▇▇▇
15. ST. ▇▇▇▇▇
16. ST. ▇▇▇▇ THE BAPTIST
17. ST. ▇▇▇▇▇▇
18. ST. ▇▇▇▇
19. ST. TAMMANY
20. TANGIPAHOA
21. TERREBONNE
22. WASHINGTON
23. WEST BATON ROUGE
24. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Exhibit 10.7
EXHIBIT B
EXCLUDED PRODUCTS
SEVEN-UP
1. Products of Royal Crown Cola Co.:
RC Cola
Diet RC Cola
Diet Rite
2. Products of Tetley, Inc.
Tetley Tea
3. Products of Premium Beverages, a Division of The Seagram Beverage Company
▇▇▇▇▇▇▇'▇ ▇▇▇▇▇▇ Ale
Club Soda
Tonic Water
▇▇▇▇▇▇▇ Water
4. Products of Snapple Beverage Corporation
Snapple Natural Soda
Snapple Natural Drink
Snapple Ice Teas
Snapple Isotonic Beverages
5. Products of QK Corporation
Quickick
DELTA
1. Certain Product of Pepsi-Cola Company
Mug Root Beer
Exhibit 10.7
SCHEDULE A
DELTA CONTRIBUTED ASSETS AND LIABILITIES
ASSETS
Property, Plant and Equipment:
Warehouse Equipment
Pallets
Bottles and Shells
CO2 Cylinders
Forklifts
Transfer Tanks
Machinery and Equipment
Autos and Trucks
Marketing Equipment
Vending Machines
Fountain Equipment
Visa Coolers
Signage
Racks and Shelving
Office Equipment
Computer Equipment
Copy Machines
Typewriters, Adding Machines, Etc.
Communication Equipment
Office Furniture and Fixtures
Utility Deposit
Franchises/Distribution Agreements With:
Pepsi Cola (except Mug Rootbeer)1
Canada Dry
Del Monte (Hawaiian Punch)
▇▇. ▇▇▇▇▇▇ (Nautilus)
Monarch (Nugrape, ▇▇▇▇▇▇▇'▇)
Squirt (Squirt)
Yoo Hoo (Yoo Hoo)
LIABILITIES
Current liabilities:
----------------------
1 Non-transferable asset to be held in trust by Delta for the benefit of
the Joint Venture.
Exhibit 10.7
Capitalized Ford Motor Lease Payments2
----------------------
2 To be contributed to and assumed by the Joint Venture only to the
extent that such liability relates to the vehicles in the Area which have
been contributed to the Joint Venture.
Exhibit 10.7
SCHEDULE A1
ASSETS AND LIABILITIES RETAINED BY DBGI
ASSETS
Current Assets:
Cash
Trade Accounts Receivable
Receivables - CMA's, Radio, Other DBGI
Inter-Company Receivables
Raw Material Inventories (CO2)
Finished Goods Inventories/Full Service Inventories
Other Inventories
Fuel
Prepaid Expenses
Property, Plant and Equipment:
Thibodaux Facility - Land and Buildings
Reserve Plant - Land, Buildings and Equipment
Franchises/Distribution Agreement With:
Pepsi-Cola (For Mug Rootbeer Only)
LIABILITIES
Current Liabilities:
Trade Accounts Payable
CMA's Payable, TV, Radio
Full Service Payable
Accrued Payroll and Payroll Taxes
Accrued Retirement Plan
Reserves for Insurance Claims
Accrued Property Taxes
Accrued Franchise Taxes
Accrued Crown Taxes
Accrued Other Taxes
Exhibit 10.7
SCHEDULE B
SEVEN-UP CONTRIBUTED ASSETS AND LIABILITIES
ASSETS
Current Assets:
Accounts Receivable From Franchisors For Audubon
Contract
Other Inventories:
Fleet Parts and Supplies
Vending Parts and Supplies
Marketing/Promotional Supplies
Property, Plant and Equipment:
Warehouse and Production Equipment
Forklifts
2 Liter Castle Crates
Pallets
Transfer Tanks - 5 Gallon
CO2 Cylinders
Autos and Trucks
Tractors and Trailers
Marketing Equipment
Vending Machines
Fountain Equipment
Visa Coolers/Product Storage Units
Signage, Menu Boards, Etc.
Point of Sale Materials For Contributed
Products
Product Racks, Barrels, Etc.
Office Equipment
Copy Machines
Typewriters, Adding Machines, Etc.
Office Furniture and Fixtures
Franchise/Distribution Agreements With:
A&W Beverages, Inc..
Big Red, Inc.
Crush U.S.A. (Cadbury Beverages, Inc.)
Delaware Punch Company
Pure Beverage Partners (Clearly Canadian)
The Seven-Up Company
----------------
* The Joint Venture has entered into a new distribution agreement with
Pure Beverage Parnters, therefore, the existing agreement with Seven-Up will
be cancelled and will not be assigned to the Joint Venture.
Exhibit 10.7
LIABILITIES
Current Liabilities:
Customer CO2 Cylinder Deposits
Payable to the Audubon Institute
Exhibit 10.7
SCHEDULE B1
ASSETS AND LIABILITIES RETAINED BY SEVEN-UP
ASSETS
Current Assets:
Cash
Trade Accounts Receivable
Accounts Receivable - Franchisors - Except Audubon
Receivable from Beverage Coop
Raw Material Inventories
Full Product/Finished Goods Inventories
Other Inventories
Production Parts and Supplies
Prepaid Insurance and Expenses
Deposits
Property, Plant and Equipment:
New Orleans Facility - Land and Buildings
Baton Rouge Facility - Land and Buildings
Houma Facility - Land and Buildings
▇▇▇▇▇▇▇▇▇ Facility - Land and Buildings
Warehouse and Production Equipment
Plastic Bottling Line
Glass Bottling Line
Premix/Postmix Line
Lab Equipment
Twelve (12) Owned Trucks
Marketing Equipment
Point of Sale Materials For Products Not
Contributed
Office Equipment
Computer Equipment
Communication Equipment
Franchise/Distribution Agreements With:
Royal Crown Cola Co.
Snapple Beverage Corp.
Tetley, Inc.
The Seagram Beverage Company
QK Corporation (Quickick)
LIABILITIES
Current Liabilities:
Trade Accounts Payable
Exhibit 10.7
Accrued Payroll and Payroll Taxes
Reserves for Insurance Claims
Accrued Interest Expense on Debt
Notes Payable to Shareholders
Current Maturities of Long Term Debt
Long Term Debt:
Notes Payable to Whitney Bank
Subordinated Debt to Shareholders
IBM Credit Corporation - Lease Obligation
Page 2 Exhibit 10.7
SCHEDULE C
EXCEPTIONS TO MARKETABLE TITLE OF SEVEN-UP
SEVEN-UP:
The Contributed Seven-Up Assets are subject to the following
encumbrances, liens, charges, liabilities and other obligations:
1. Whitney National Bank holds a security interest in all of
Seven-Up's movable property, including, without limitation:
(a) All of Seven-Up's equipment, motor vehicles, inventory,
accounts, chattel paper, documents, instruments, and
general intangibles;
(b) All property of Seven-Up of every nature or kind whatsoever
owned by Seven-Up, or in which Seven-Up has an interest, that has been
deposited since October 16, 1990 with, in the possession of, under the
control of or held by Whitney National Bank in definitive form, book
entry form, or in safekeeping or custodial accounts, including, without
limitation, deposit accounts, money, funds on deposit in checking,
savings, custodial and other accounts, instruments, negotiable
instruments, certificates of deposit, commercial paper, stocks, bonds,
treasury bills and other securities, documents, documents of title, and
chattel paper; and
(c) All substitutions and replacements for, rents, increases,
profits, proceeds, products and goods acquired with cash proceeds, of
each of the items listed in (a) and (b) above, including, without
limitation, proceeds of insurance policies insuring the items listed in
(a) and (b) above.
This security interest was created pursuant to four separate security
agreements, each dated October 16, 1990, in favor of Whitney National Bank.
The first such agreement was executed by Optique International, Inc. (the
"Optique Security Agreement"), the second was executed by ▇▇▇▇ Seven-Up
Bottling Co., Inc. (the "▇▇▇▇ Security Agreement"), the third was executed by
Beacon Realty & Investment Co., Inc. (the "Beacon Security Agreement"), and
the fourth was executed by Pressmont Realty Corporation (the "Pressmont
Security Agreement").
Seven-Up, as the successor to ▇▇▇▇, Beacon and Pressmont, by way of
merger, and as a continuation of Optique by way of a name change, is
responsible for the obligations of the debtors under each of the above-listed
agreements.
The franchise agreements contributed to the Joint Venture by Seven-Up
are specifically excluded from the security interest of Whitney National
Bank, and Seven-Up
Page 1 Exhibit 10.7
hereby agrees to obtain a release of the security interest of Whitney
National Bank with respect to all Seven-Up Contributed Assets.
2. A review of all vehicle titles covering vehicles owned by
Seven-Up may reveal that one or more of these vehicles is subject to a
recorded lien in favor of some party other than Whitney National Bank. All
vehicles owned by Seven-Up should be subject to a security interest in favor
of Whitney National Bank. Seven-Up hereby agrees to obtain a release of any
and all such liens, including the Whitney security interest with respect to
all vehicles included among the Seven-Up Contributed Assets, other than liens
of the lessor of such vehicles.
3. The various franchise/distribution/license agreements included
among the Seven-Up Contributed Assets are subject to the following
restrictions:
(a) The A & W BEVERAGES, INC. BOTTLING AGREEMENT WITH OPTIQUE
INTERNATIONAL, INC. contains an anti-assignment provision Section 14.1 of the
Agreement provides that it may be terminated by A&W in the event of any
substantial change in the ownership of the bottler (Optique) without A&W's
express written consent. Section 14.2 further states that A&W shall not,
without its express written consent, be bound by any attempted sale,
assignment, transfer, conveyance or encumbrance, by law or otherwise, of any
of the Bottler's rights or interests hereunder. Seven-Up has obtained the
required consent.
(b) The A & W BRANDS, INC. BOTTLER CONTRACT - RETAIL COUNTRY
TIME LEMONADE FLAVOR DRINK also limits Seven-Up's rights to assign the
contract. Section 19.1 provides that the Company (A&W Brands) may terminate
this Contract if it determines in good faith that changes in the ownership of
Bottler or changes in any person or persons having legal or effective control
of Bottler are likely to affect Company or its business adversely. Section
22.1 further provides that Bottler may not assign, transfer or encumber this
contract, or its performance (voluntarily or by operation of law), in whole
or in part, without Company's prior written consent in each particular
instance. Seven-Up has obtained the required consent.
(c) Article IV of the PURE BEVERAGE PARTNERS SUB-DISTRIBUTOR
AGREEMENT provides that title to Products for which payment has not been
received, with a right of repossession for default, shall remain in the
Distributor until the full purchase price for such products shall have been
paid in cash. The Distributor may require the Sub-Distributor to execute and
deliver to the Distributor security agreements, financing statements and such
other documents as may be required by the Distributor, on forms acceptable to
the Distributor, covering Products on which credit has been or will be
extended by Distributor to the Sub-Distributor under this and including
Agreement. A new subdistributor agreement has been entered into by and
between the Joint Venture and Pure Beverage Partners, therefore, this
subdistributor agreement will not be assigned to the Joint Venture and any
obligations of Seven-Up under this subdistributor agreement shall not be
assumed by the Joint Venture, but shall remain the obligations of Seven-Up.
(d) Article XX(2) of the PURE BEVERAGE PARTNERS SUB-DISTRIBUTOR
AGREEMENT provides that the Sub-Distributor shall not, directly or
indirectly, sell, assign,
Page 2 Exhibit 10.7
transfer, convey, pledge, mortgage, charge, grant any security interest or
encumber any other interest in this Agreement or the rights granted to
Sub-Distributor hereunder, without the Distributor's prior written consent,
which consent may be withheld by the Distributor in its sole discretion. If
the Sub-Distributor is a corporation or a partnership, any sale or transfer
of more than 50% of the ownership of the Sub-Distributor shall be deemed a
sale, assignment or transfer of this Agreement. Any such purported action,
whether occurring by operation of law or otherwise, without the Distributor's
prior written consent, shall be deemed a material default hereunder and shall
entitle the Distributor to immediately terminate this Agreement. A new
subdistributor agreement has been entered into by and between the Joint
Venture and Pure Beverage Partners, therefore, this subdistributor agreement
shall not be assigned to the Joint Venture.
(e) Article V of the DELAWARE PUNCH LICENSE AGREEMENT prohibits
Seven-Up from assigning any right or privilege under the Agreement without
the prior written consent of the Delaware Punch Company. Article VI further
states that the Agreement will terminate if Seven-Up attempts to dispose of
the rights and privileges granted under the Agreement without the prior
written consent of the Delaware Punch Company. Seven-Up has obtained the
required consent.
(f) Section 18 of the BIG RED, INC. BOTTLER'S LICENSE AGREEMENT
provides that Licensee shall not assign or encumber this License Agreement,
in whole or in part, without the prior written consent of Licensor. In
addition, Licensor may terminate this Agreement upon ten (10) days written
notice in the event of any sale, transfer or other disposition of more than
10% of the outstanding stock or other evidence of ownership of Licensee or
Licensee's parent corporation in the event Licensee is a subsidiary.
Seven-Up has obtained the required consent.
(g) Article V, Section 2(a) of the CRUSH LICENSE AGREEMENT
provides that Bottler shall not, without the prior written consent of
Company, sell, assign, mortgage, pledge or transfer in any manner whatsoever
the rights and privileges herein granted, and neither this License nor any
interest therein may be transferred by operation of law. Any such transfer
shall be void. Article V, Section 2(b) provides that Bottler shall not,
without the prior written consent of Company, sell, transfer, assign or
otherwise dispose of any part of its interest in the business which at the
time of such disposition as aforesaid is manufacturing, packaging and selling
CRUSH soft drink, whether such business is conducted in the form of a
proprietorship, partnership or corporation. Article V, Section 2(c) provides
that for purposes of this Article, if Bottler is organized in the form of a
corporation, a sale, transfer, assignment or other disposition of an actual
controlling interest in the shares of stock of such corporation shall be
considered a sale, transfer, assignment or other disposition by Bottler of
its interest in the business. Article V, Section 3 provides that if the
Company consents to transfer as provided in that Article, the Company may, in
its sole discretion, require the successor to enter into a new License, which
may differ from the original License. The necessary consents have been
obtained from CRUSH.
(h) Section 6.2 of the CRUSH FOUNTAIN SYRUP PRODUCER AGREEMENT
provides that the Producer shall not transfer or assign this Agreement or any
part hereof or any of
Page 3 Exhibit 10.7
the rights and obligations hereunder without the prior written consent of
Company. The necessary consents have been obtained from CRUSH.
(i) SEVEN-UP FRANCHISE AGREEMENT
(i) Section F(17) provides that Franchisee agrees to not
sell, transfer, assign, license, lease, pledge, mortgage, hypothecate or
otherwise transfer this Agreement, or any portion hereof, or any rights
granted to the Franchisee hereunder, or permit such transfer to be effected
by operation of law when it could be presented by Franchisee, without the
prior written consent of Company. Seven-Up has obtained the required consent.
(ii) Section I(2) provides that if Franchisee is other
than a natural person, any sale, transfer or other disposition of the stock,
shares of interest or other evidence of ownership of Franchisee or
Franchisee's parent, affiliate or other related organization, which results
directly or indirectly in the change of effective control of the Franchisee,
without Franchisee furnishing prior written notice thereof to Company and
obtaining the prior written consent of the Company, gives the Company the
right to terminate this Agreement.
(j) The drafts of Seven-Up's Distributor Agreements with
Mountain Valley and ▇▇▇▇▇▇▇ contain anti-assignment provisions and provisions
granting each company a security interest in goods purchased from such
company.
(k) Seven-Up is currently negotiating distributor agreements
with Mountain Valley Spring Company, ▇▇▇▇▇▇▇ Corporation, California
CoPackers Association, ▇▇▇▇▇▇ Beverage Company, Great Water of France, Inc.
and Naya Canadian Water. All such agreements will probably contain
anti-assignment provisions, and some or all will grant security interests or
rights of repossession to the respective supplier companies, which security
interests and rights of repossession are intended to attach to any units of
Seven-Up's inventory received from such suppliers on credit. It is hereby
agreed and acknowledged by the Venturers that these negotiations will be
continued by the Joint Venture and any such agreements will be entered into
by the Joint Venture, not Seven-Up.
4. Any movable property of Seven-Up located on immovable property
leased from a third party may be subject to a lessor's lien or privilege in
favor of that party. In particular, all movable property of Seven-Up located
on that certain lease by and between ▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇, as
lessors, and ▇▇▇▇ Seven-Up Bottling Co., Inc. dated September 27, 1989 and
registered in COB 973, folio ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, is
potentially subject to a lessor's lien or privilege in favor of ▇▇▇▇ ▇. ▇▇▇▇▇
and ▇▇▇▇ ▇. ▇▇▇▇▇.
5. Seven-Up's leasehold interest in (a) one 1991 Navistar 4900 cab
and chassis delivery truck, (b) forty-nine 1992 Navistar 2900 cab and chassis
delivery trucks, (c) one 1988 IHC 1954 cab and chassis with 20' body and lift
gate, and (d) one 1987 IHC Tandem Axle Tractor are all subject to the terms
of various leases with Ryder Truck Rental, Inc. ("Ryder") and to Ryder's
rights thereunder.
Page 4 Exhibit 10.7
6. Seven-Up's leasehold interests in (a) five 1991 Ford Taurus L4D
automobiles, (b) eight 1992 Ford Taurus L4D automobiles, (c) one 1992 Pontiac
Bonn SE4 automobile and (d) three 1992 Ford Ranger 4X2 automobiles are all
subject to the terms and conditions of applicable leases with Enterprise
Leasing Company ("Enterprise") and to Enterprise's rights thereunder.
7. Seven-Up's rights under its Purchase Contract with Liberty Glass
Co. ("Liberty") are subject to Liberty's rights thereunder.
8. One Savin 7500 copy machine is subject to a security interest in
favor of Mid South National Bank.
9. Seven-Up's rights under that certain Agreement between The
Audubon Institute and Seven-Up dated August 21, 1991 cannot be assigned
without the prior written consent of The Audubon Institute.
10. Seven-Up's rights under that certain Agreement between Cintas and
Seven-Up are subject to Cintas' rights thereunder.
11. Any movable property of Seven-Up which has become permanently
affixed to or a component part of immovable property belonging to another
party may have become subject to the rights of that party or that party's
creditors.
12. To the extent that the Seven-Up Contributed Assets consist of
leased movables, such leased movables shall be subject to the rights of the
lessors under the relevant leases.
Page 5 Exhibit 10.7
SCHEDULE D
EXCEPTIONS TO MARKETABLE TITLE OF DELTA
DELTA:
The Delta Contributed Assets are subject to the following encumbrances,
liens, charges, liabilities and other obligations:
1. The franchise agreements included among the Delta Contributed
Assets are subject to various restrictions as to transfer of ownership and/or
control without prior approval of the franchise company. Delta has obtained
the required consents.
2. The Ford Motor Credit Company has a security interest in seven
(7) cars and thirty-eight (38) light trucks included among the Delta
Contributed Assets. These vehicles were financed through capital leases with
payment amounts that vary by year and type of vehicle and terms expiring from
1993 to 1996.
3. Any movable property of Delta which has become permanently
affixed to or a component part of immovable property belonging to another
party may have become subject to the rights of that party or that party's
creditors.
4. Any movable property of Delta located on immovable property
leased from a third party may be subject to a lessor's lien or privilege in
favor of that party.
5. To the extent that the Delta Contributed Assets consist of leased
movables, such leased movables shall be subject to the rights of the lessors
under the relevant leases.
Exhibit 10.7
SCHEDULE E
CONTRACTS OF SEVEN-UP
1. TRUCK LEASE AND SERVICE AGREEMENT - RYDER TRUCK RENTAL, INC.
Eight Year Term (48 began in June/July 1991 and 2 in June 1992):
One (1) delivery truck - 1991 Navistar 4900 Cab & Chassis
Forty-Nine (49) delivery trucks - 1992 Navistar 4900 Cab & Chassis.
Four and One-half Year Term (May 1991):
One (1) 1988 IHC 1954 Cab & Chassis with 20' Body and Liftgate.
Three Year Term (March 1992):
One (1) 1987 IHC Tandem Axle Tractor
Fixed monthly rate of $40,742
Variable monthly rate based upon established mileage rates
Plus applicable sales taxes.
2. ENTERPRISE LEASING COMPANY
Master Terms and Conditions Agreement dated May 1, 1991
Seventeen (17) Motor Vehicle Equity Lease Agreements for:
Five (5) 1991 Ford Taurus L4D - May, 1991
Eight (8) 1992 Ford Taurus L4D - May, 1992
One (1) 1992 Pontiac Bonn SE4 - April, 1992
Three (3) 1992 Ford Rangers 4X2 - May, 1992
Total monthly lease payment for above is $6,915.08/month
3. LIBERTY GLASS COMPANY
Purchase Commitment on 10 oz., 16 oz., and 20 oz. non-returnable glass -
Single Service Mod. Full Height Tray Delivered
January 1, 1992 to December 31, 1993
4. PROPERTY LEASE - BATON ROUGE - ▇▇▇▇ ▇. ▇▇▇▇▇
Lease for empty lot adjacent to our owned Baton Rouge Facility. Lease
expires on October 1, 1992 and rent is $400/month. There is some question as
to whether this property is even necessary for current operations.
5. CINTAS - EMPLOYEE UNIFORM LEASE
Page 1 Exhibit 10.7
Three year agreement for the lease of employee uniforms for sales and
delivery personnel beginning January, 1992.
6. MID-SOUTH NATIONAL BANK
Financing of Savin 7500 Copy Machine - 36 payments at $436.31/month with next
payment (payment # 15) due October 16, 1992.
7. THE AUDUBON INSTITUTE
Twenty (20) quarterly payments of $56,250.00 for a total commitment of
$1,125,000 over five years for product distribution, advertising and
promotion rights.
Commitments to participate in such payments in the aggregate amount of
$687,500 have been committed by Seven-Up Company ($62,500/year), Crush
($50,000/year), and A & W Brands ($25,000/year).
8. CUSTOMER MARKETING AGREEMENTS
9. CURRENT PROMOTIONAL CALENDAR
10. CURRENT PROMOTIONAL FACT SHEETS
11. FRANCHISE/DISTRIBUTION CONTRACTS CONTRIBUTED
COMPANY AREA PRODUCTS
-------- ---- --------
Big Red, Inc. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ + Big Red
St. ▇▇▇▇
Delaware Punch Company 22 parish area Delaware Punch
Crush U.S.A., A Division of ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ + Crush Orange, Diet Orange,
Beverages Inc. St. ▇▇▇▇ Grape, Pineapple, Strawberry
Peach, and Tropical Punch
A&W Beverages, Inc. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ + A&W Root Beer, Diet A&W
part of St. ▇▇▇▇▇▇ ▇▇▇▇ Beer, A&W Cream Soda,
A&W Diet Cream Soda
A&W Beverages, Inc. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ + Country Time Lemonade
part of St. ▇▇▇▇▇▇ &
St. ▇▇▇▇
The Seven-Up Company 22 parish area Seven-Up, Diet Seven-Up,
Cherry Seven Up, Diet Cherry
Seven-UP
Page 2 Exhibit 10.7
Pure Beverage Partners ▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ + Clearly Canadian flavored
St. ▇▇▇▇ mineral water beverage products
12. AGREEMENTS IN PROCESS CONTRIBUTED
a. Naya Canadian Water (Currently distributing product - since
November 1991)
▇. ▇▇▇▇▇▇▇ Corporation
▇. ▇▇▇▇▇▇ Beverage Company
d. Mountain Valley Spring Company
e. California CoPackers Association
f. Great Water of France, Inc.
Page 3 Exhibit 10.7
SCHEDULE F
CONTRACTS OF DELTA
1. FRANCHISE/DISTRIBUTION CONTRACTS CONTRIBUTED
COMPANY AREA PRODUCTS
------- ---- --------
PEPSI-COLA* 22 PARISHES ALL PEPSI PRODUCTS
EXCEPT MUG ROOT BEER
CANADA DRY 22 PARISHES CANADA DRY
TOTAL LINE
DEL MONTE 22 PARISHES HAWAIIAN PUNCH
▇▇ ▇▇▇▇▇▇ 22 PARISHES NAUTILUS
MONARCH 22 PARISHES NUGRAPE,
▇▇▇▇▇▇▇'▇
SQUIRT 22 PARISHES SQUIRT
YOO-HOO 22 PARISHES YOO-HOO
2. TRUCK AND AUTOMOBILE LEASE AGREEMENT - FORD MOTOR CREDIT
4 year term (Began 6/89) (12) 1989 Ranger
3 year term (Began 5/90) (1) 1990 Taurus, (4) Tempo
3 year term (Began 4/92) (2) 1991 Taurus
4 year term (Began 4/92) (2) 1992 Van, (24) 1992 Ranger
----------------
*Pepsi-Cola Company and DBGI have entered into certain marketing
agreements pursuant to the franchise/distribution agreements. Agreement to be
held in trust by Delta for the benefit of the Joint Venture.
**Consent to transfer required. Delta has obtained requried consents.
Page 1 Exhibit 10.7
3. NEW ORLEANS FACILITY LEASE**
Payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇
Expires 9/30/93
Monthly Rent - $15,000.00
4. BATON ROUGE FACILITY LEASE**
Payable to Nevada Connector Corp.
Expires 6/30/97
Monthly Rent $6873.63 through 2/28/94
$7543.70 3/1/94 - 6/30/97
5. NEW ORLEANS, LOUISIANA SAINTS BOX RENTAL
Payable to New Orleans, Louisiana Saints
Term 7/1/89 through 6/30/94
Escalating annual rent to range between $32,100 and $42,100
6. CUSTOMER MARKETING AGREEMENTS
7. UNION CONTRACT WITH GENERAL TRUCK DRIVERS, CHAUFFEURS, WAREHOUSEMEN AND
HELPERS, LOCAL 270
Page 2 Exhibit 10.7
SCHEDULE G
EMPLOYEES OF SEVEN-UP
Exhibit 10.7
SCHEDULE H
EMPLOYEES OF DELTA
Subject to normal turnover and new hires from August 12, 1992 to the
date hereof.
Exhibit 10.7
POYDRAS STREET INVESTORS L.L.C.
[letterhead]
April 5, 1995
Delta Beverage Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Sixty South Sixth Street
Minneapolis, MN 55402
Gentlemen:
This letter is to set forth our agreements respecting the proposed
acquisition of the ▇▇▇▇▇▇ Brands assets and distributorship ("▇▇▇▇▇▇ Assets")
by the Pepsi-Cola/Seven Up Beverage Group of Louisiana (the "Joint Venture"):
1) The Joint Venture's acquisition of the ▇▇▇▇▇▇ Assets pursuant to the
Purchase Agreement in substantially the form furnished to us is approved.
2) The Joint Venture will finance purchase of the ▇▇▇▇▇▇ Assets pursuant to
a bridge loan from First Chicago to Delta Beverage Group, Inc. ("Delta")
and be reloaned to the Joint Venture; however, the loan terms will be
modified or the loan replaced so that distributions to the Joint
Venturers will be allowed on a reasonable basis. If a satisfactory loan
at the Joint Venture level cannot be obtained and if Poydras Street
Investors L.L.C. ("PSI") requests, the Joint Venturers will loan their
proportionate shares of this financing to the Joint Venture with
repayment made to the Joint Venturers who will satisfy their own
financing requirements.
3) The Joint Venture Agreement will be modified as follows:
a) the right of Delta to a Priority Profit Interest contained in
Section 3.10 is deleted in its entirety except that the Carryover
Amount as of March 31, 1995 shall continue, will not be paid on a
current basis but will be taken into account under Section 7.3 on
any sale;
b) Delta's Call right for PSI's interest in the Joint Venture under
Section 7.3 shall be exercisable only after December 31, 1999
instead of September, 1997; however, PSI will be permitted to defer
closing to January, 2001 for an earlier Call with the values of
PSI's interest established as of the earlier Call time and an
adjustment for interest less distributions for the closing deferral
period;
c) PSI's right to Put its interest in the Joint Venture to Delta
contained in Section 7.3 is eliminated;
Exhibit 10.7
d) the Sharing Percentages of PSI and Delta are modified to be as
follows:
Delta 62%
PSI 38%
e) corresponding changes will be made in the Joint Venture Agreement
to reflect the new Sharing Percentages, including those respecting
Mandatory Loans and the existing loans from Delta and PSI will be
increased and decreased accordingly.
Further, we agree that in the event that Delta should exercise its Call
option and require financing for such purchase, that PSI would consider in
good faith and endeavor to have its lenders approve the purchase on an
installment basis which would depend upon Delta's credit and other factors to
be determined at the time.
Exhibit 10.7
POYDRAS STREET INVESTORS L.L.C.
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
President and Manager
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
ACCEPTED AND AGREED TO
DELTA BEVERAGE GROUP, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Exhibit 10.7