HomeMy WebLinkAbout8607RESOLUTION NO. 8607
A RESOLUTION ACCEPTING ESTRADA FOODS, INC. PLAN
OF REORGANIZATION DATED DECEMBER 22, 1998
WHEREAS, Estrada Foods, Inc. ( "Company ") and Barshop /Estrada Acquisition Partners
have jointly proposed a pre - packaged Plan of Reorganization dated December 22, 1998 for Estrada
Foods, Inc. under Chapter 11 of the Bankruptcy(the "Plan "), and
WHEREAS, if the Plan is confirmed and the undertakings of BVI Investments, Ltd. and
BEAP Management LLC described in the Plan are fulfilled, the reorganized Company most likely
will continue in business with accompaniment employment, and
WHEREAS, if the Plan is not approved or confirmed, the Company will not likely file a
Chapter 11 bankruptcy case and in such event the Company's real property will be lost through
pending foreclosure sale and Company's personal property most likely will be liquidated by the
secured creditors who hold liens on such property, and
WHEREAS, the City of Pueblo has or will have claims against Company arising out of the
Agreement between Company and the City of Pueblo dated November 13, 1995 ( "Agreement ") for
repayment of funds advanced by the City to Company based upon the number of employees
employed by Company, and
WHEREAS, the claims against the Company are guaranteed by Caroline A. Fresquez,
Anthony J. Estrada and Candelario J. Estrada ( "Guarantors ") pursuant to their Continuing Guaranty
executed January 22, 1996, and
WHEREAS, under the Plan, the City claims are classified as Class 6 and upon the Plan's
effective date the City would receive the sum of $5,000.00 and all other Company's obligations to
the City under the Agreement would cease and terminate, and
WHEREAS, it would be in the best interest of the City to accept the Plan without however
releasing or discharging the Guarantors from their obligations under the Continuing Guaranty.
NOW, THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that:
SECTION 1
The Estrada Foods, Inc. (the "Company ") and Barshop /Estrada Acquisition Partners' jointly
proposed pre - packaged Plan of Reorganization dated December 22, 1998 for Estrada Foods, Inc.
under Chapter 11 of the Bankruptcy Act (the "Plan ") is hereby approved and accepted subject to and
contingent upon:
(a) The Guarantors executing and delivering to the City an agreement in form and
content approved by the City Attorney ratifying their Continuing Guaranty and providing that their
obligations thereunder shall not be released or discharged by the City's acceptance of the Plan or the
bankruptcy of Company.
(b) The reorganized Company agrees to provide City with quarterly employee reports
in the manner and content described in the Agreement.
SECTION 2
The President of the City Council is authorized to sign and deliver in the name of the City
any and all agreements and documents necessary to consummate subsections (a) and (b) of Section
1 and to evidence the City's acceptance of the Plan, including without limitation, the attached Ballot
For Accepting or Rejecting Plan of Reorganization.
ATTEST:
City C k
INTRODUCED: January 11, 1999
By Cathy A. Garcia
Councilperson
APP ED:
L
President of the City Council
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D O
E
City of Pueblo
OFFICE OF THE CITY ATTORNEY
127 Thatcher Building
PUEBLO, COLORADO 81003
MEMORANDUM
TO: Gina Dutcher, City Clerk
FROM: City Attorney
RE: Resolution No. 8607
DATE: January 19, 1999
We enclose the following documents to be included in your file relating to Resolution No. 8607:
(a) copy of my letter to Joel Laufer, Esq. forwarding the City's Class 6 Ballot For
Accepting the Plan of Reorganization regarding Estrada Foods, Inc.
(b) Three copies of the January 11, 1999 Agreement between the City and Estrada Foods,
Inc. signed by Estrada Foods, Inc. Please have the President of the City Council sign all three copies
and return one fully executed copy to Anthony J. Estrada and one to me.
(c) 3 copies of the Agreement And Ratification dated January 11, 1999 between the City
and the Guarantors named therein who have signed the Agreement And Ratification. Please sign
and have the President of the City Council sign, with your signatures being acknowledged. Return
one fully executed copy to Anthony J. Estrada and one to me.
If you have any questions, please call me.
Thomas E. Jagg r -j
/JP
Enclosures
9 0
City of Pueblo
OFFICE OF THE CITY ATTORNEY
127 Thatcher Building
January 15, 1999 PUEBLO, COLORADO 81003
Joel Laufer, Esq.
Attorney at Law
303 E. 17th Avenue, Suite 660
Denver, CO 80203
Re: Estrada Foods, Inc.
Dear Mr. Laufer:
Enclosed please find the City of Pueblo's Class 6 Ballot For Accepting Or Rejecting Plan Of
Reorganization regarding Estrada Foods, Inc.
Very truly yours,
Thomas E. Jagger
sm
enc.
• •
[BANKRUPTCY CASE HAS NOT BEEN FILED AS OF DATE OF THIS MAILING]
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLORADO
In re: )
ESTRADA FOODS, INC. ) Case No.
a Colorado corporation, )
EIN No. 84- 1306133, ) (Chapter 11)
Debtor. )
CLASS 6
BALLOT FOR ACCEPTING OR REJECTING PLAN OF REORGANIZATION
The above Debtor and Barshop/Estrada Acquisition Partners LP ( "Joint Proponents ") have
prepared a Plan of Reorganization dated December 22, 1998 for the Debtor ( "Plan ") and Disclosure
Statement dated December 22, 1998 describing the Plan. The Plan and Disclosure Statement have
been transmitted to the Debtor's creditors, shareholders and other interested parties. The Debtor
has not filed a Chapter 11 case with the Bankruptcy Court as of the date of the transmittal of this
ballot, and the Bankruptcy Court has not approved the adequacy of the Disclosure Statement. If
the Requisite Approval is satisfied, as defined in the Plan, a Chapter 11 bankruptcy case will be filed
with the Court.
You should review the Disclosure Statement and the Plan before you vote. You may wish
to seek legal advice concerning the Plan and your classification and treatment under the Plan. Your
Claim has been placed in class 6 under the Plan. If you hold claims or equity interests in more than
one class, you will receive a ballot for each class in which you are entitled to vote.
The Plan referred to in this ballot can be confirmed by the Bankruptcy Court and thereby -
made binding on you if it is accepted by (a) at least two-thirds in dollar amount and a majority in
number of the Allowed- Claims in each impaired creditor class who cast a vote to accept or reject
the Plan, and (b) at least two-thirds of the allowed interests in each impaired interest holder class
who cast a vote to accept or reject the Plan. In the event the requisite acceptances are not obtained,
the Court may nevertheless confirm the Plan if the Court finds that the Plan accords fair and
equitable treatment to the class or classes rejecting it and otherwise satisfies the requirements of the
Bankruptcy Code.
To have your vote count, you must complete and return this ballot to Joel Laufer, Esq.,
attorney for Debtor, 303 East 17th Avenue, Suite 660, Denver, Colorado, 80203 so that the ballot
is received on or before 5:00 p.m. on January 19, 1999. If your ballot is not received by Mr. Laufer
on or before the foregoing deadline, your vote will not count as either an acceptance or a rejection -�
of the Plan. If the Plan is confirmed by the Bankruptcy Court, it will be binding on you whether or
not you vote. If an executed ballot is returned without a designation of an acceptance or rejection
of the Plan, it will be tabulated as an acceptance of the Plan.
Continued on the Reverse Side
•
The undersigned, the holder of a class 6 Allowed Claim in the amount of $ 5,000.00
(Check one box only)
F x - xl Accepts the Plan ❑ Rejects the Plan
Print or Type Name of Creditor
or Equity Interest Holder: Ci W of Pueblo
Signed: A 0 l,.C_- 1 /6..1
[If appropriate] By: Corinne Koehler
Title: President of City Council
Address: #1 City Hall Place
Pueblo, CO 81003
Dated: 1 -11 -99
Telephone: 719- 584 -0800
AGREEMENT
THIS AGREEMENT entered into as of January 11, 1999 between the City of Pueblo, a
municipal corporation ( "City ") and Estrada Foods, Inc., a Colorado corporation ( "Company "),
WITNESSETH:
Recitals
A. Company and Barshop/Estrada Acquisition Partners, LP have jointly proposed a pre-
packaged Plan of Reorganization dated December 22, 1998 for Company under Chapter 11 of the
Bankruptcy Act, ( "Plan").
B. Company has requested City to vote in favor of and to accept the Plan.
Agreement
1. In consideration of the foregoing Recitals and to induce the City to accept and City's
acceptance of the Plan, Company, as presently existing and as may be reorganized under the Plan, will
within 15 days after the end of each Quarter during the Repayment Period and for one calendar month
thereafter, submit or cause to be submitted to City's Director of Finance Company's Statement
showing the Quarterly Employees for the preceding Quarter and the basis upon which Quarterly
Employees were computed certified by an officer of the Company to be true and correct. For
purposes of verifying employment, City shall have access to Company's books and records including
payroll records. City will, however, respect the right of employees and Company as to confidentiality
of personnel records. All capitalized terms used in this paragraph 1 shall have the same meaning as
given in the November 13, 1995 Agreement between the City and Company and as same may be
modified by the January 11, 1999 Agreement and Ratification between City and the Guarantors.
2. In consideration of Company's covenants and agreements set forth in paragraph
hereof, City will vote in favor of and accept the Plan.
3. In the event of any litigation arising out of this Agreement, the Court shall award the
prevailing party its costs and attorney fees. Company agrees that the provisions of paragraph 1 may
be specifically enforced.
4. This Agreement shall be interpreted and construed in accordance with Colorado law
and shall be binding upon and inure to the benefit of the parties hereto and their respective successors
and assigns.
5. No delay or failure by the City to exercise its right to enforce this Agreement, and no
partial exercise of that right, shall constitute a waiver of that rights.
6. Within thirty (30) days after the Effective Date under the Plan, Company shall submit
this Agreement to the reconstituted board of directors of Company for ratification and approval and
immediately notify City in writing of the action taken by the reconstituted board of directors of
Company. This Agreement shall not become effective until so ratified and approved by the
reconstituted board of directors of Company.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the day and year first
above written.
PUEBLO, a Municipal Corporation
By j jj
President of the City Council
ESTRADA FOODS, INC.
B
Y
Title: President
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AGREEMENT AND RATIFICATION
This Agreement and Ratification ("Agreement") entered into as of January 11, 1999 between
the City of Pueblo, a Municipal Corporation (the "City ") and Caroline A. Fresquez, Anthony J.
Estrada and Candelario J. Estrada (the "Guarantors "), Witnesseth:
RECITALS
A. City and Estrada Foods, Inc. (the "Company ") entered into an Agreement dated
November 13, 1995 and Addendum No. 1 dated January 5, 1996, Addendum No. 2 dated June 18,
1996, Addendum No. 3 dated October 15, 1996 and Addendum No. 4 dated April 10, 1997
(collectively the "November 13, 1995 Agreement ") whereby the City advanced $1,250,000 to
Company for the purpose of renovating and completing its facilities within the City.
B. As inducement to City to enter into the November 13, 1995 Agreement, Guarantors
executed and delivered to City their Continuing Guaranty dated January 22, 1996, a copy of which
is attached as Exhibit "A" (the "Continuing Guaranty ").
C. Company and Barshop/Estrada Acquisition Partners, LP propose to jointly file a pre-
packaged Plan or Reorganization (the "Plan ") under Chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court For The District of Colorado.
D. City and Guarantors have received and acknowledge receipt of a copy of the Plan and
Disclosure Statement and Ballot with respect thereto.
E. Company and Guarantors have requested the City to vote in favor of and to accept
the Plan.
DEFINITIONS
The capitalized terms used in this Agreement shall have the same meaning given in the above
Recitals and in the November 13, 1995 Agreement unless the context clearly indicates otherwise,
provided, however, that after the Effective Date and performance of the undertaking of BEAP, BVI
and Redemptors under the Plan, the following terms used in this Agreement shall have the following
meaning unless the context clearly indicates otherwise:
"Company" shall mean Estrada Foods, Inc. as reorganized under the Plan.
"Repayment Period" means the six (6) year period starting June 1, 1999 and ending May 31,
2005.
"Quarterly Payments" means the amount computed in accordance with paragraph 2(a) below.
AGREEMENT
1. In consideration of the foregoing Recitals and to induce the City to accept and City's
acceptance of the Plan, Guarantors individually and jointly agree that neither the Plan, City's
acceptance thereof, the confirmation of the Plan by the Bankruptcy Court, nor the satisfaction and
discharge of City's claims against Company under the November 13, 1995 Agreement, or the
Company's rejection of the November 13, 1995 Agreement under the Plan, nor any other Company
bankruptcy filings or proceedings (herein collectively the "Company's Bankruptcy "), shall relieve,
release or discharge Guarantors from or modify their several and joint obligations under the
Continuing Guaranty except as herein provided. Guarantors confirm and ratify the Continuing
Guaranty and agree that notwithstanding Company's Bankruptcy the Continuing Guaranty and, as
between the City and Guarantors, the November 13, 1995 Agreement shall remain in force and effect
enforceable against the Guarantors according to their terms as modified by this Agreement.
2. After (i) the Effective Date and the performance of the undertakings of BEAP, BVI
and Redemptors under the Plan, and (ii) the ratification and approval of the January 11, 1999
Agreement between the City and Company by the reconstituted board of directors of Company,
Guarantors and City agree that Guarantors' obligations and liabilities under the Continuing Guaranty
and under this Agreement to the City shall be:
(a) If Company does not employ the Quarterly Employees hereinafter specified
during any Quarter of the Repayment Period, Guarantors jointly and severally unconditionally
promise to the pay to City an amount equal to $184.51 multiplied by the difference between the
Quarterly Employees actually employed by Company and the Quarterly Employees specified for that
Quarter as follows (the "Quarterly Payment "):
QUARTER
FULL -TIME
QUARTER
FULL -TIME
BEGINNING
EMPLOYEES
BEGINNING
EMPLOYEES
June 1, 1999
70
Sept. 1, 2000
170
Sept. 1, 1999
90
Dec. 1, 2000
190
Dec. 1, 1999
110
March 1, 2001
220
March 1, 2000
130
and thereafter
June 1, 2000
150
(b) Quarterly Payments, if any, are due and shall be paid to City by Guarantors
without notice, demand, deduction or setoff on or before the fifteenth (15) day of the calendar month
after the end of each Quarter during the Repayment Period and for one month thereafter at the office
of the Director of Finance of City, 1 City Hall Place, Pueblo, Colorado, 81003. Timely Quarterly
Payments shall not bear interest. All past due Quarterly Payments shall bear interest at the rate of ten
(10) percent per annum until paid.
(c) The Repayment Obligation shall be reduced at the end of each Quarter during
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the Repayment Period by an amount equal to $40,592.01 less any Quarterly Payment owed to City
for that Quarter.
(d) If any Quarterly Payment is not paid when due ( "Unpaid Quarterly Payment "),
the full amount of the then balance of the Repayment Obligation may at the option of the City become
immediately due and payable by the Guarantors. For purposes hereof, "full amount of the then
balance of the Repayment Obligation" shall be computed by multiplying the product of 220 times
$184.51 by the number of Quarters of the Repayment Period remaining after the Quarter for which
an Unpaid Quarterly Payment is owed, and adding thereto any Unpaid Quarterly Payments plus
interest.
(e) Paragraph 5 of the November 13, 1995 Agreement is hereby canceled and shall
no longer be binding upon City, Company or Guarantors and each party is released and discharged
from all rights, remedies, or obligations thereunder.
(f) As security for the performance of Guarantors' obligations under the
Continuing Guaranty and payment of the Repayment Obligation and Quarterly Payments, City shall
have and is hereby granted a security interest in the New Common Stock, 1999 Series A Preferred
Stock and 1999 Series B Preferred Stock, if any, to be issued or issued to Guarantors under the Plan
or pursuant to any stock options granted to Guarantors with respect to New Common Stock (the
"Securities "). Immediately upon issuance of the Securities to Guarantors, Guarantors shall deliver
to City the certificates evidencing the Securities endorsed in blank by Guarantors or accompanied by
duly executed stock powers. All rights in connection with or incident to the ownership of such
Securities shall be vested solely in the Guarantors, subject to the rights of the City as pledgee and
secured party.
(g) If at any time the full amount of the then balance of the Repayment Obligation
becomes due and payable, the City shall have the right to sell the Securities or any part thereof, at
public or private sale, at which the City may bid and purchase, on thirty (30) days notice in writing
to Guarantors. City shall apply the proceeds of such sale to the expenses incident thereto, including
attorney fees, and to the payment of the then balance of the Repayment Obligation. The surplus, if
any, resulting from the sale of the Securities shall be paid over to Guarantors.
(h) If the Securities are valued by a competent appraiser at any time hereafter, and
such valuation shows the value of Guarantors' Securities delivered to City to be 125% or more of the
then balance of the Repayment Obligation, City may upon request of Guarantors and approval of such
valuation, release Securities from the pledge and security interest granted by (e) above which have
a value over 150% of the then balance of the Repayment Obligation.
(1) In the event the Company is sold, acquired, reorganized or merged into
another entity and the acquiring or successor entity assumes Guarantors' obligations and liabilities
under this Agreement and the Continuing Guaranty, upon request by Guarantors and approval by the
City of such assumption and the financial ability of the acquiring or successor entity to perform
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Guarantors' obligations and liabilities, the City may release and discharge Guarantors from this
Agreement and Continuing Guaranty.
3. In consideration of the foregoing Recitals and the covenants and agreements of the
Guarantors set forth in paragraphs I and 2 hereof, City will vote in favor of and accept the Plan.
4. This Agreement shall not become effective until signed personally by each Guarantor.
5. Time is of the essence hereof. This Agreement shall be binding upon and inure to the
benefit of the City and Guarantors and their respective heirs, personal representatives, successors and
assigns.
6. The singular includes the plural and the plural includes the singular, and the word
"Guarantors" shall mean any one or more of the Guarantors where the context and construction so
require.
7. This Agreement may not be modified or amended except by written instrument signed
by all the parties.
8. This Agreement shall be interpreted and construed in accordance with Colorado law.
The parties agree that the District Court for the County of Pueblo shall have jurisdiction over any suit
or action which involves this Agreement or the Continuing Guaranty and venue in Pueblo County,
Colorado shall be proper. The parties consent to the jurisdiction of that court and agree that service
of process may be made upon Guarantors either within or without the State of Colorado.
9. In the event of any litigation arising out of this Agreement or the Continuing Guaranty,
or both, the Court shall award to the prevailing party its costs and attorney fees. Guarantors agree
that the provisions of paragraph 2(f) may be specifically enforced.
10. Any notice herender shall be sufficiently given if given personally or mailed by certified
mail, postage prepaid, addressed
(a) if to City, City Manager, City of Pueblo, 1 City Hall Place, Pueblo, Colorado,
81003, or
(b) if to Guarantors, at the addresses shown after their respective signatures
hereon, or to such other addresses as any party hereto shall specify in written notices to the other
parties.
11. Guarantors acknowledge and agree that the Guarantors' obligations and liabilities
under the Continuing Guaranty and this Agreement are joint and several and may extend beyond six
(6) years from the date of this Agreement and of the Continuing Guaranty. Guarantors hereby waive
any defense to the enforcement of the Continuing Guaranty or this Agreement based upon laches or
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any statutory or other period of limitation. Guarantors agree that any such statutory or other period
of limitation shall be extended to January 1, 2007.
12. No delay or failure by the City to exercise its right to enforce the Continuing Guaranty
or this Agreement, and no partial or single exercise of that right, shall constitute a waiver of that
right.
In witness whereof, the undersigned Guarantors and City of Pueblo have executed this
Agreement as of the day and year first above written.
City r� blo, a Munici 'al Corporation ATTEST:
� '
"'1 By
resident of the City Council City rk
COUNTY OF PUEBLO )
STATE OF COLORADO ss.
The foregoing instrument was acknowledged before this day of January >
1999 by Corinne Koehler as President of City Council and Gina Dutcher as the
City Clerk of the City of Pueblo, a Municipal Corporation.
Witness my hand and official seal.
My commission expires: 8 -21 -99
SEAL]
Notary Public
Name: Carolin A. Fresquez
Address: 1628 20th Lane
Pueblo, Colorado 81006
Social Security No. 521 -96 -3067
Name: Antho J. Estrada /
Signatur l �G
Address: 1655 Cliffd e
Pueblo, Colorado 81006
Social Security No. 524 -94 -0671
-5-
Name: Candelario J. Estrada
Signature:
A
Address: 1214 Holly
Pueblo, Colorado 81006
Social Security No. 523 -68 -17/7
9 r
STATE OF COLORADO
COUNTY OF PUEBLO ss.
r ,A
The foregoing was acknowledged before me this day of January, 1999 by Caroline
A. Fresquez, Anthony J. Estrada and Candelario J. Estrada.
My commission expires:
Tom;
[SEAL]
Notary Public
IN
CONTINUING GUARANTY
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby
acknowledged, and as inducement to the City of Pueblo, a municipal corporation (the "City ") to
enter into the attached Agreement dated November 13, 1995 between City and Estrada Foods, Inc.,
a Colorado corporation (the "Company ") and Addendum No. 1 dated January 5, 1996 (collectively
the "Agreement ") and to advance to Company the sum of $1,150,000 pursuant to the terms and
covenants of the Agreement, the undersigned Caroline A. Fresques, Anthony J. Estrada and
Candelario J. Estrada (the "Guarantors ") jointly and severally unconditionally guarantee and promise
to pay to City, or order, on demand, in lawful money of the United States, the full amount of
Company's Repayment Obligation described in and in accordance with the terms and provisions of
paragraph 4 of the Agreement (the "Indebtedness ").
The liability of Guarantors under this Guaranty shall not exceed at any one time the principal
sum of $1,150,000. This is a continuing irrevocable guaranty relating to the Indebtedness, including
successive transactions which shall either continue the Indebtedness or from time to time modify
or renew it. Any payment by Guarantors shall reduce their maximum obligation hereunder.
The obligations of Guarantors hereunder are joint and several, and independent of the obliga-
tions of Company, and a separate action or actions may be brought and prosecuted against
Guarantors, jointly and severally, whether action is brought against Company or whether Company
be joined in an) such action or actions. Guarantors acknowledge that the payment of the Indebted-
ness may extend beyond six (6) years from the date of this Agreement, Guarantors hereby waive any
defense to the enforcement of this Guaranty based upon any statutory or other period of limitation.
Guarantors authorize the City, without notice or demand and without affecting their liability
hereunder, from time to time to (a) renew, compromise, extend, accelerate or otherwise change the
time for payment of, or otherwise change or modify the terms of the Indebtedness or any part there-
of, (b) fake and hold security for the payment of this Guaranty or the Indebtedness guaranteed, and
exchange, enforce, waive and release any such security; (c) apply such security and direct the order
or manner of sale thereof as City in its discretion may determine; and (d) release or substitute any
one or more of the Guarantors. City may without notice assign this Guaranty in whole or in part.
Guarantors waive any right to require City to (a) proceed against Company; (b) proceed
against or exhaust any security held from Company; or (c) pursue any other remedy in City's power
whatsoever. Guarantors waive any defense arising by reason of any disability or other defense of
Company or by reason of the cessation from any cause whatsoever of the liability of Company. --
Until the Indebtedness of Company to City shall have been paid in full, Guarantors shall have no
right of subrogation, and waive any right to enforce any remedy which City now has or may
hereafter have against Company, and waive any benefit of, and any right to participate in any
security now or hereafter held by City. Guarantors waive all presentn;ents, demands for
performance, notices of non - performance, protests, notices of protest, notice of dishonor, and
notices of acceptance of this Guaranty.
Any debts or other financial obligations of Company now or hereafter held by Guarantors
are hereby subordinated to the Indebtedness of Company to City and such debts or other financial
obligations of Company to Guarantors, if City so requests, shall be collected, enforced and received
by Guarantors as trustees for City and be p?i over to City on account of the Indebtedness of
Company to City but without reducing or affecting in any manner the liability of Guarantors under
the other provisions of this Guaranty.
Guarantors agree that it is not necessary for City to inquire into the powers of Company or
the officers, directors, or agents acting or purporting to act on its behalf, and the Indebtedness made
or created in reliance upon the professed exercise of such powers is guaranteed hereunder.
Guarantors agree to pay a reasonable attorneys' fee and all other costs and expenses which
may be incurred by City in the enforcement of this Guaranty.
Guarantors agree that this Guaranty is a contract entered into in Pueblo County, Colorado.
The District Court for the County of Pueblo, State of Colorado shall have jurisdiction over any suit
or action which involves this Guaranty and venue in Pueblo County, Colorado shall be proper.
Guarantors consent to the personal jurisdiction of that Court and agree that service of process may
be made upon Guarantors either within or without the State of Colorado.
Any notice hereunder shall be sufficiently given if given personally or mailed by certified
mail, postage prepaid, addressed:
(a) if to City, City Manager, City of Pueblo, I City Hall Place, Pueblo, Colorado,
81003, or
(b) if to Guarantors, at the addresses shown after their respective signatures
hereon,
or to such other addresses as any party hereto shall specify in written notice to the other parties.
Time is of the essence hereof. This Guaranty shall be binding upon and inure to the benefit
of City and Guarantors and their respective heirs, personal representatives, successors and assigns.
The word "Guarantors" shall mean any one or more of them where the context and
construction so require.
IN WITNESS WHEREOF the undersigned Guarantors have executed this Guaranty in
Pueblo, Colorado this �;, day of January, 1996.
Name:
Signatui
Address: 1628 20th Lane
Pueblo, Colorado 81006
Social Security No. 521 -96 -3067
Name: Anth �} ?J. Estrada
l` ; , \,
Signatur .i'�� �
Address: 1655 Cliff e
Pueblo, Colorado 81006
Social Security No. 524 -94 -0671
Name: Candelario J. Estrada
Signature:
Address: 1214 Holly
Pueblo, Colorado 81006
Social Security No. 523 -68 -1787
STATE OF COLORADO )
ss.
COUNTY OF PUEBLO )
The foregoing was acknowledged before me this O t 9 2y 9 4 ,� day of January, 1996 by Caroline
A. Fresques, Anthony J. Estrada and Candelario J. Estrada.
My commission expires
[SEAL]
MY COMMISSION aPTAE obl01 /1998
Notary Pub is
-3-
1 4 -U D D
D
January 5, 1999 City of Pueblo
OFFICE OF THE CITY ATTORNEY
127 Thatcher Building
PUEBLO, COLORADO 81003
Ms. Gina Dutcher, City Clerk
1 City Hall Place
Pueblo, CO 81003
Re: Estrada Foods, Inc.
Dear Gina:
Enclosed please find Plan of Reorganization and Disclosure Statement dated December 22, 1998
regarding Estrada Foods, Inc. This document should be kept with your official file.
Very truly yours,
Thomas E. Ja �!!
sm
enc.
ESTRADA FOODS, INC.
PLAN OF REORGANIZATION AND DISCLOSURE STATEMENT
DECEMBER 22, 1998
To: The Creditors and Shareholders of Estrada Foods, Inc.
Enclosed please find the Disclosure Statement and Plan of
Reorganization proposed for Estrada Foods, Inc. If your records do
not reflect that you are a creditor or shareholder of Estrada
Foods, Inc., please disregard the enclosed materials.
If you have any questions regarding the enclosed materials,
please contact Mr. Hiram Lewis at (719) 542 - 3400.
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLORADO
In re:
ESTRADA FOODS, INC.
a Colorado corporation,
EIN 84- 1306133,
Case No.
Chapter 11
Debtor.
PLAN OF REORGANIZATION
Dated: December 22, 1998.
The Debtor and Barshop /Estrada Acquisition Partners LP, Joint
Proponents, propose the following Plan of Reorganization pursuant
to 11 U.S.C. §1121 (a) .
ARTICLE I.
Definitions
"Allowed Administrative Expense" shall mean those expenses
incurred after the Filing Date which are allowed by order of the
Court and entitled to priority pursuant to Sections 503 and
507(a)(1) of the Code.
"Allowed Claim" shall mean (1) an unsecured Claim against the
Debtor which is set forth in Debtor's schedules other than an
unsecured Claim against the Debtor scheduled by the Debtor as
disputed, contested, contingent or unliquidated, or (2) an
unsecured Claim against the Debtor which has been timely filed
pursuant to 11 U.S.C. §501 prior to the Bar Date, and with respect
to which no objection to the allowance thereof has been timely
interposed, or as to which any objection has been determined by
Final Order; provided however that interest accrued after the
Filing Date shall not be a part of any Allowed Claim unless
otherwise provided in the Plan. Allowed Claims may include (a)
Claims arising from the rejection of executory contracts, and (b)
deficiency Claims (if any) of the holders of Allowed Secured
Claims.
!'Allowed Priority Claim" shall mean that portion, if any, of
an Allowed Claim entitled to priority in payment under Section
507(a)(2) et seq of the Code. Allowed Priority Claims shall not
include Allowed Administrative Expenses.
EXHIBIT
1
"Allowed Secured Claim" shall mean an Allowed Claim secured by
assets of the Debtor.
"Bar Date" shall mean the date fixed by the Court for filing
proofs of Claim in the Case.
"Case" shall mean the Chapter 11 case to be filed in the Court
by the Debtor if the Debtor receives the Requisite Approval.
"Common Stock" shall mean the Debtor's common stock, no par
value, issued and outstanding at the Filing Date.
"Chapter 11" shall mean Chapter 11 of the Code.
"Claim" shall mean a claim against the Debtor existing at the
Filing Date as defined in Section 101(5) of the Code.
"Code" shall mean Title I of the Bankruptcy Reform Act of
1978, 11 U.S.C. Sections 101 et seq., as amended, also known as the
Federal Bankruptcy Code.
"Confirmation" shall mean the entry of an order by the Court
confirming and approving the Plan in accordance with Chapter 11 of
the Code.
"Confirmation Date" shall mean the date of Confirmation.
"Confirmation Order" shall mean the order of the Court
confirming the Plan.
"Court" shall mean the United States Bankruptcy Court for the
District of Colorado.
"Debtor" shall mean Estrada Foods, Inc., a Colorado
corporation.
"D.I.P. Loan" shall mean a revolving line -of- credit loan not
to exceed the sum of one million four hundred fifty thousand
dollars and no cents ($1,450,000.00) to be made by BVI Investments,
Ltd., and any participants with BVI Investments, Ltd. in such loan,
to the Debtor after the Filing Date subject to Court approval after
notice to creditors, shareholders and interested parties. It is
anticipated that the D.I.P. Loan (a) shall accrue interest at the
Chase Bank of Texas, N.A. prime rate plus three percent (3%) per
annum, provided that the minimum rate shall not be less than ten
percent (10 per annum, (b) shall be an Allowed Administrative
Expense with priority over all other Allowed Administrative
Expenses (except fees owing to the United States Trustee pursuant
to 28 U.S.C. Section 1930) as provided in Section 364(c)(1) of the
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Code, and (c) shall be secured by property of the Debtor pursuant
to Section 364(d) of the Code as specifically described in Exhibit
B attached hereto and incorporated herein by reference.
"Disclosure Statement" shall mean the disclosure document, as
amended, describing the Plan as required to be filed by the Debtor
and distributed to the various classes under the Plan as provided
in Section 1125 of the Code.
"Disputed Claim" shall mean any Claim which has been scheduled
by the Debtor as disputed, contested, contingent, or unliquidated
or any proof of Claim as to which an objection to the allowance
thereof has been interposed and allowance or disallowance of such
Claim has not been determined by a Final order.
"Effective Date" shall mean the first business day which is
eleven (11) calendar days after the Confirmation Date.
"Filing Date" shall mean the date a Chapter 11 Case is filed
by the Debtor in the Court.
"Final Decree" shall mean the final decree entered by the
Court pursuant to Section 350 of the Code closing the Case.
"Final Order" shall mean an order or a judgment as to which
the time to appeal or seek review or rehearing has expired and as
to which no appeal or petition for review or rehearing is pending.
"Foreclosure Sale" shall mean the October 14, 1998
foreclosure sale (no. 6773) held by the Public Trustee for the
County of Pueblo, State of Colorado at which sale a Certificate of
Purchase for the Real Property was issued by the Public Trustee to
Peak National Bank.
"Joint Proponents" shall mean the Debtor and Barshop /Estrada
Acquisition Partners LP, a Texas limited partnership.
"Plan" shall mean this plan of reorganization filed by the
Joint Proponents, as it may be amended from time to time.
"Preferred Stock" shall mean the Debtor's 1996 Series A
preferred stock issued and outstanding at the Filing Date.
"Pro Rata" shall mean, with respect to the holder of a class
3 Allowed Claim, the percentage which the amount of such class 3
Allowed Claim bears to the aggregate amount of all class 3 Allowed
Claims.
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"New Common Stock" shall mean the Debtor's common stock with
a par value of one cent ($.01) per share to be issued under the
Plan on the Effective Date which: (a) shall be voting stock [one
vote per share]; and (b) shall be junior to the 1999 Series A
Preferred Stock and the 1999 Series B Preferred Stock in
liquidation and dividend preferences.
11 1999 Series A Preferred Stock" shall mean the Debtor's series
A preferred stock with a par value of one cent ($.01) per share to
be issued under the Plan which: (a) shall have an issue price per
share equal to the amount of the class 11 Allowed Claim divided by
the sum of four million (4,000,000); (b) shall accrue dividends
from the date of issuance at the rate of eight percent (8 %) of the
issue price per share per annum; (c) shall at the election of the
holder(s) be convertible at any time and from time to time after
the Effective Date into an aggregate of four million (4,000,000)
shares of New Common Stock (subject to appropriate adjustments in
the event of any sub - divisions or combinations of New Common Stock
into a greater or lesser number of shares, stock dividends and
certain other distributions on account of New Common Stock and the
like); (d) shall be voting stock [one vote for each share of New
Common Stock into which such shares of 1999 Series A Preferred
Stock is then convertible] and (e) shall be senior to the 1999
Series B Preferred Stock and the New Common Stock in liquidation
and dividend preferences.
11 1999 Series B Preferred Stock" shall mean the Debtor's series
B preferred stock with a par value of one cent ($.01) per share to
be issued under the Plan which: (a) shall have an issue price of
one hundred dollars ($100.00) per share; (b) shall accrue no
dividends for the first twenty -four months after issuance and
thereafter shall accrue dividends at the rate of six dollars
($6.00) per share per annum; (c) shall be subject to redemption, in
whole or part, at the option of the Debtor (i) at any time during
the first twelve months after issuance for a redemption price equal
to seventy -five percent (75 %) of the issue price, (ii) at any time
during the second twelve months after issuance for a redemption
price equal to eighty -seven and one -half percent (87.5 %) of the
issue price, and (iii) at any time after the second twelve months
for a redemption price equal to the issue price; (d) shall be
voting stock (one vote per share]; (e) shall be junior to the 1999
Series A Preferred Stock in liquidation and dividend preferences;
(f) shall be senior to the New Common Stock in liquidation and
dividend preferences; (g) may at the election of the holder(s) be
convertible into shares of New Common Stock at any time after the
Effective Date in an amount equal to four percent (4%) of the New
Common Stock issued and outstanding on the Effective Date treating
all outstanding 1999 Series A Preferred Stock as if it had been
converted to New Common Stock (subject to appropriate adjustments
- 4 -
in the event of any sub- divisions or combinations of New Common
Stock into a greater or lesser number of shares, stock dividends
and certain other distributions on account of New Common Stock and
the like) ; (h) shall be subject to mandatory redemption at the
issue price after four (4) years from issuance if and when the fair
market value of the Debtor is equal to or exceeds thirty million
dollars ($30,000,000); and (i) may at the election of the holders
be converted into shares of New Common Stock based upon the formula
described in (g) above at any time the Debtor seeks to redeem the
1999 Series B Preferred Stock.
"Real Property" shall mean the real property (a) previously
owned by the Debtor, (b) subject to the equitable right of
redemption by the Debtor and junior lienholders, and (c) described
in Exhibit A attached hereto and incorporated herein by reference.
The Real Property was sold by the Public Trustee for the County of
Pueblo, State of Colorado at a Foreclosure Sale held on October 14,
1998. Peak National Bank was the successful bidder at the sale and
was issued a Certificate of Purchase by the Public Trustee.
"Requisite Approval" shall mean that the Plan has been
accepted by classes 2, 6, 7, and 11 pursuant to Sections 1125 and
1126 of the Code and Rule 3018 of the Federal Rules of Bankruptcy
Procedure. The Case will be filed with the Court if the Debtor
obtains the Requisite Approval.
"Small Claim" shall mean an Allowed Claim in an amount not
exceeding $500.00, including an Allowed Claim greater than $500.00
which has been reduced to $500.00 at the election of the holder of
such Allowed Claim.
"Stock Options" shall mean options issued and outstanding at
the Filing Date to purchase Common Stock or Preferred Stock.
"Voting Deadline" means the last date for impaired classes to
vote on the Plan. The Voting Deadline is set forth in the ballot
and Disclosure Statement which accompanies the Plan.
"Warrants" shall mean warrants issued and outstanding at the
Filing Date to purchase Common Stock or Preferred Stock.
ARTICLE II.
Unclassified Allowed Administrative Expenses
2.1 On the Effective Date, the Debtor shall pay Allowed
Administrative Expenses in cash in full or upon such other terms as
any agreement so provides or as may be agreed upon by the Debtor
and the respective holder of an Allowed Administrative Expense,
provided however that holders of Allowed Administrative Expenses
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.M YAW
arising under Section 330 of the Bankruptcy Code shall be paid only
after the Court has entered its order approving the Allowed
Administrative Expense and such order has become a Final Order, and
provided however that the D.I.P. Loan shall be paid according its
terms, a general description of which is set forth in Exhibit B
attached hereto and incorporated herein by reference.
2.2 All unpaid fees owing to the Office of the United States
Trustee pursuant to 28 U.S.C. Section 1930 shall be paid in full on
the later of the Effective Date or when due. The Debtor shall
continue to pay such fees until the Court enters its Final Decree
closing the Case or enters an order dismissing the Case or
converting the Case to Chapter 7.
ARTICLE III.
Classification Of Claims And Interests
3.1 Claims
Class 1 Allowed Priority Claims
Class 2 Small Claims
Class 3
Allowed Claims not otherwise classified
Class 4
Allowed Claim of W.K. Capital Advisors,
Inc. /Estrada International Foods, Inc.
Class 5
Allowed Claim of the County of Pueblo, State
of Colorado
Class 6
Allowed Claim of the City of Pueblo, State
of Colorado
Class 7
Allowed Claims of Anthony Estrada, Candelario
"Jess" Estrada, Caroline Fresquez, Rocky
Mountain Cold Storage, Food Equipment
Refabricators of Colorado, E. T.
Construction, Fresquez Enterprises, and Casa
de Oro, LLC
Class 8
Allowed Secured Claim of Peak National Bank
Class 9
Allowed Secured Claim of BVI Investments,
Ltd.
Class 10
Allowed Secured Claim of National Business
Finance, Inc.
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Class
11
Allowed
Secured Claims of Barshop /Estrada
Acquisition Partners LP
3.2 Interests
Class
12
Holders
of Common Stock
Class
13
Holders
of Preferred Stock
Class
14
Holders
of Stock Options
Class
15
Holders
of Warrants
ARTICLE IV.
Treatment Of Allowed Priority Claims Impaired Under The Plan
Class l
(Allowed Priority Claims)
4.1 Class 1 consists of the holders of Allowed Priority
Claims.
4.2 On the Effective Date, each holder of an Allowed Priority
Claim shall be paid in cash in full, or upon such other terms as
any agreement with Debtor so provides or as may be agreed upon by
the Debtor and the respective holder of the Allowed Priority Claim,
provided however that any government unit holding an Allowed
Priority Claim shall be paid as follows: 20% of the Allowed
Priority Claim shall be paid in cash at the Effective Date with the
balance payable in twenty -four (24) equal monthly installments of
principal and interest commencing thirty (30) days after the
Effective Date and continuing on the same day of each month
thereafter with interest accruing after the Effective Date at the
rate of 7% per annum.
4.3 Class 1 i impaired under the Plan.
ARTICLE V.
Treatment Of Allowed Claims Impaired Under The Plan
Class 2
(Small Claims)
5.1 Class 2 consists of the holders of Small Claims.
5.2 On the Effective Date, each holder of Class 2 Small Claim
shall receive a cash distribution equal to 100% of its Small Claim
in full satisfaction and discharge of the Class 2 Small Claim.
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5.3 Class 2 is impaired under the Plan.
Class 3
(Allowed Claims)
5.4 Class 3 consists of all Allowed Claims not otherwise
separately classified under the Plan.
5.5 On the later of the Effective Date or the date that all
class 3 Disputed Claims are allowed by Final Order, each holder of
a Class 3 Allowed Claim shall receive a cash distribution equal to
his /her /its Pro Rata share of Five Hundred Thousand Dollars and No
Cents ($500,000.00) in full satisfaction of the class 3 Allowed
Claim, provided however that after the Effective Date, the Debtor,
in its sole and absolute discretion, may make interim distributions
to the holders of class 3 Allowed Claims.
5.6 Class 3 is impaired under the Plan.
Class 4
(W.K. Capital Advisors, Inc. /Estrada International Foods, Inc.)
5.7 Class 4 consists of the Allowed Claim of W.K. Capital
Advisors, Inc. /Estrada International Foods, Inc.
5.8 On the Effective Date, the class 4 creditor shall have
the option to either (a) exchange such class 4 Allowed Claim for
1999 Series B Preferred Stock at the ratio of one (1) share of 1999
Series B Preferred Stock for each one hundred dollars ($100.00) of
class 4 Allowed Claim, or (b) exchange such class 4 Allowed Claim
for shares of New Common Stock such that the class 4 creditor will
own, as of the Effective Date, six percent (6%) of the New Common
Stock issued and outstanding on the Effective Date treating all
outstanding 1999 Series A Preferred Stock as having been fully
converted to New Common Stock. The distribution of securities to
class 4 shall be in full satisfaction of all Claims against and /or
interests in the Debtor held by class 4 prior to the Effective
Date.
5.9 If class 4 rejects the Plan, (a) the Plan provisions
respecting class 4 shall be deemed of no force and effect and no
Plan distributions shall be made to class 4; and (b) the class 4
Allowed Claim shall be subject to treatment as a class 3 Allowed
Claim; and (c) the class 4 creditor shall be entitled to vote as a
member of class 3.
5.10 Class 4 is impaired under the Plan.
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Class 5
(County of Pueblo)
5.11 Class 5 consists of the Allowed Claim of the County of
Pueblo, State of Colorado.
5.12 On the Effective Date, class 5 shall receive the sum of
Five Thousand Dollars and No Cents ($5,000.00) in full satisfaction
and discharge of the class 5 Allowed Claim.
5.13 If class 5 rejects the Plan, (a) the Plan provisions
respecting class 5 shall be deemed of no force and effect and no
Plan distributions shall be made to class 5; and (b) the class 5
Allowed Claim shall be subject to treatment as a class 3 Allowed
Claim; and (c) the class 5 creditor shall be entitled to vote as a
member of class 3.
5.14 Class 5 is impaired under the Plan.
Class 6
(City of Pueblo)
5.15 Class 6 consists of the Allowed Claim of the City of
Pueblo, State of Colorado.
5.16 On the Effective Date, class 6 shall receive the sum of
Five Thousand Dollars and No Cents ($5,000.00) in full satisfaction
and discharge of the class 5 Allowed Claim.
5.17 Class 6 is impaired under the Plan.
Class 7
(Anthony Estrada, et al)
5.18 Class 7 consists of the Allowed Claims held by Anthony
Estrada, Candelario "Jess" Estrada, Caroline Fresquez, Rocky
Mountain Cold Storage, Food Equipment Refabricators of Colorado, E.
T. Construction, Fresquez Enterprises, and Casa de Oro, LLC.
5.19 On the Effective Date, each holder of a class 7 Allowed
Claim shall receive a cash distribution equal to twelve percent
(12 %) of its Allowed Claim in full satisfaction and discharge of
the class 7 Allowed Claim.
5.20 Class 7 is impaired under the Plan.
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ARTICLE VI.
Treatment Of Allowed Secured Claims Impaired
And Not Impaired Under The Plan
Class 8
(Peak National Bank)
6.1 Class 8 consists of the Allowed Secured Claim held by
Peak National Bank.
6.2 Class 8 holds a Certificate of Purchase issued by the
Public Trustee for the County of Pueblo, State of Colorado, in
Public Trustee's Foreclosure Sale (no. 6773) held on October 14,
1998 respecting the Debtor's Real Property and improvements
thereon.
6.3 Class 8 shall retain unaltered all of its legal,
equitable and contractual rights as they existed as of the Filing
Date.
6.4 Class 8 is not impaired under the Plan.
Class 9
(BVI Investments, Ltd.)
6.5 Class 9 consists of the Allowed Secured Claim held by BVI
Investments, Ltd.
6.6 Class 9 holds a lien on the Debtor's Real Property,
improvements thereon and certain personal property.
6.7 The Class 9 creditor shall retain its existing lien on
the Debtor's Real Property, improvements and personal property.
6.8 Class 9 shall retain unaltered all of its legal,
equitable and contractual rights as they existed as of the Filing
Date.
6.9 Class 9 is not impaired under the Plan.
Class 10
(National Business Finance, Inc.)
6.10 Class 10 consists of the Allowed Secured Claim held by
National Business Finance, Inc.
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6.11 Class 10 holds a security interest in the Debtor's
accounts receivable, inventory and other personal property.
6.12 Class 10 shall retain unaltered all of its legal,
equitable and contractual rights as they existed as of the Filing
Date.
6.13 Class 10 is not impaired under the Plan.
Class 11
(Barshop /Estrada Acquisition Partners LP)
6.14 Class 11 consists of the Allowed Secured Claims held by
Barshop /Estrada Acquisition Partners LP.
6.15 Class 11 holds a security interest in the Debtor's
accounts receivable, inventory and substantially all other personal
property.
6.16 On the Effective Date and in full satisfaction and
discharge of its Allowed Secured Claims, the class 11 creditor
shall exchange its Allowed Secured Claim for (a) four million
(4,000,000) shares of 1999 Series A Preferred Stock, and (b) if
there is no distribution to class 12 and 13 interest holders under
the Plan, one hundred (100) shares of New Common Stock.
6.17 On the Effective Date, the class 11 creditor shall
release any lien or security interest encumbering property of the
Debtor.
6.18 Class 11 is impaired under the Plan.
ARTICLE VII.
Treatment of Interests Impaired Under the Plan
Class 12
(Common Stock)
7.1 Class 12 consists of the holders of the Debtor's Common
Stock.
7.2 On the Effective Date, the holders of the Debtor's Common
Stock shall exchange such Common Stock for shares of New Common
Stock at the ratio of twenty (20) shares of Common Stock for one
(1) share of New Common Stock, and the Common Stock so exchanged
shall be cancelled.
7.3 Notwithstanding the foregoing, if class 3 or class 12 or
class 13 rejects the Plan, then (a) classes 12 and 13 shall receive
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nothing under the Plan; (b) the class 12 interests shall be
cancelled and terminated at the Effective Date; and (c) the class
12 shares of Common Stock shall be cancelled.
7.4 Class 12 is impaired under the Plan.
Class 13
(Preferred Stock)
7.5 Class 13 consists of the holders of the Debtor's
Preferred Stock.
7.6 On the Effective Date, the holders of Preferred Stock
shall either (a) exchange such Preferred Stock for New Common Stock
at the ratio of (twenty) 20 shares of Preferred Stock for one (1)
share of New Common Stock, and the Preferred Stock so exchanged
shall be cancelled, or (b) receive a cash distribution equal to
fifteen percent (15 %) of the issue price of the Preferred Stock
held by the class 13 interest holder in complete redemption and
full discharge and satisfaction of such interest holder's Preferred
Stock, which shares shall thereupon be cancelled. The class 13
holders of Preferred Stock shall make the foregoing election on the
ballot which accompanies the Plan and Statement. Any member of
class 13 who fails to timely tender a ballot or tenders a ballot,
but fails to make an election, shall be deemed to have elected to
receive the cash distribution as described above.
7.7 Notwithstanding the foregoing, if class 3 or class 12 or
class 13 rejects the Plan, then (a) classes 12 and 13 shall receive
nothing under the Plan; (b) the class 13 interests shall be
cancelled and terminated at the Effective Date; and (c) the class
13 shares of Preferred Stock shall be cancelled.
7.8 Class 13 is impaired under the Plan.
Class 14
(Stock Options)
7.9 Class 14 consists of the holders of the Debtor's Stock
Options.
7.10 On the Effective Date, the Debtor's Stock Options shall
be cancelled and the holders of such Stock Options shall receive
nothing under the Plan.
7.11 Notwithstanding the foregoing and notwithstanding any
restriction contained in the Stock Option, the holders of class 14
Stock Options may exercise their rights under their Stock Options
on or before the Voting Deadline. If the holder of a Stock Option
- 12 -
timely exercises his /her /its rights thereunder, then such holder
shall be entitled to vote on the Plan as the holder of the
securities so acquired (class 12 Common Stock and /or class 13
Preferred Stock) , and shall receive the Plan treatment with respect
to the securities so acquired (class 12 Common Stock and /or class
13 Preferred Stock).
7.12 Class 14 is deemed to have rejected the Plan and is not
entitled to vote on the Plan.
Class 15
(Warrants)
. 7.13 Class 15 consists of the holders of the Debtor's
Warrants.
7.14 On the Effective Date, the Debtor's Warrants shall be
cancelled and the holders of such Warrants shall receive nothing
under the Plan.
7.15 Notwithstanding the foregoing and notwithstanding any
restriction contained in the Warrant, the holders of class 15
Warrants may exercise their rights under their Warrants on or
before the Voting Deadline. If the holder of a Warrant timely
exercises his /her /its rights thereunder, then such holder shall be
entitled to vote on the Plan as the holder of the securities so
acquired (class 12 Common Stock and /or class 13 Preferred Stock),
and shall receive the Plan treatment with respect to the securities
so acquired (class 12 Common Stock and /or class 13 Preferred
Stock) .
7.16 Class 15 is deemed to have rejected the Plan and is not
entitled to vote on the Plan.
ARTICLE VIII.
Means for Execution of the Plan
8.1 Immediately after the Filing Date, the Debtor shall file
a motion with the Court seeking approval of the D.I.P. Loan.
Notice of the motion shall be given to all creditors, shareholders
and interested parties.
8.2 The proceeds from the D.I.P. Loan shall be employed by
the Debtor to (a) fund business operations, and (b) make the cash
distributions required under the Plan on and after the Effective
Date.
- 13 -
8.3 All Plan distributions of cash and securities shall be
made on and after the Effective Date unless otherwise provided for
in the Plan.
8.4 All securities issued under the Plan shall be issued
pursuant to Section 1145 of the Code.
8.5 Prior to the Effective Date, BVI Investments, Ltd.
( "BVI") or its assignee (hereafter collectively, the "Redemptor ")
shall redeem the Real Property from the Foreclosure Sale free and
clear of all liens as provided under applicable Colorado law. On
the Effective Date, Redemptor shall transfer the Real Property to
the Debtor in consideration for (a) a cash payment on the Effective
Date equal to BVI's costs and expenses incurred in connection with
negotiation and implementation of the Plan, including consultant
and legal fees, and (b) a purchase money promissory note and first
lien Deed of Trust encumbering the Real Property to be held by BVI
and any participants in an amount equal to (i) the cost of
Redemptor's redemption of the Real Property from the Foreclosure
Sale plus (ii) an amount equivalent to the payoff on the Effective
Date of the promissory note held by BVI which was secured by the
Real Property with such payoff calculated as if there had been no
Foreclosure Sale respecting the Real Property. Redemptor shall be
under no obligation to convey the Real Property to the Debtor
unless the Court enters the Confirmation Order. If the Plan is not
confirmed by the Court, Barshop /Estrada Acquisition Partners LP
and /or BVI Investments, Ltd. may, in their sole and absolute
discretion, withdraw from further discussions with the Debtor
incident to reorganization of the Debtor under Chapter 11.
8.6 After the redemption of the Real Property from the
Foreclosure Sale by Redemptor and prior to the Effective Date of
the Plan, Redemptor has agreed that the Debtor shall be entitled to
maintain possession of the Real Property, provided however that
Redemptor, in its sole and absolute discretion, may terminate
without cause the Debtor's right to possession of the Real
Property.
ARTICLE IX.
General Provisions
9.1 Pursuant to Sections 524 and 1141(d) of the Code and
unless otherwise provided in the Plan, the Confirmation of the Plan
and the distribution of cash and securities thereunder shall: (a)
constitute a discharge of all pre - Confirmation debt, all Claims
against the Debtor and all interests in the Debtor of every kind
and nature, and (b) operate as an injunction against the initiation
or continuation of any action to collect or recover Claims against
or interests in the Debtor.
- 14 -
9.2 On the Effective Date, all property of the Chapter 11
estate shall vest in the Debtor free and clear of any and all
mortgages, liens, security interests, claims and /or interests of
any kind or nature unless otherwise provided for in the Plan, the
Confirmation Order or other order of the Court.
9.3 The automatic stay of actions against the Debtor which
became effective on the Filing Date shall terminate upon the
Effective Date.
9.4 The Joint Proponents reserve the right to modify the Plan
prior to Confirmation, and thereafter to modify the Plan in
accordance with Section 1127(b) of the Code, provided however that
the Plan may not be amended without the written approval of both
Joint Proponents.
9.5 Debtor reserves the right to reopen this Chapter 11 case
for any or all of the purposes set forth in Article XII of this
Plan.
9.6 Notwithstanding any other provision of the Plan, a
Disputed Claim will be paid in accordance with the Plan only after
and to the extent that the Court enters its order allowing all or
some portion of the Disputed Claim as an Allowed Claim and such
order has become a Final Order.
9.7 All parties bound by this Plan shall execute all
documents, releases, assignments or other agreements necessary to
implement the Plan. Subject to the terms of the Plan, if any
necessary party refuses or fails to execute, deliver or join in the
execution or delivery of any instrument required to effect a
transfer of property dealt with by the Plan or perform any other
act, including the satisfaction of a lien necessary to consummation
of the Plan, or execution of an assignment pursuant to the Plan,
the Court may order the same or order the Clerk of the Court to so
execute the document, release, assignment or other agreement.
9.8 On the Effective Date, the Debtor's Articles of
Incorporation shall be amended to prohibit the issuance of non-
voting stock. The Debtor's Articles of Incorporation and By -Laws
also shall be amended to the extent necessary to authorize,
effectuate and facilitate the provisions of the Plan, including
without limitation, the authorization and issuance of the New
Common Stock, the 1999 Series A Preferred Stock and the 1999 Series
B Preferred Stock.
9.9 Upon Confirmation, the initial Board of Directors for the
Debtor shall consist of (a) Anthony J. Estrada, (b) Bruce B.
Barshop, (c) Hiram W. Lewis III, and (d) Robert C. Pate. Upon
- 15 -
Confirmation, the following persons shall serve as the officers of
the Debtor: (a) Chief Executive Officer - Hiram W. Lewis III, (b)
President - Anthony Estrada, and (c) Vice President of Operations -
Steve Castanedo. The foregoing directors shall serve until the
next annual shareholders meeting, and until their successors are
duly elected and qualified. The foregoing officers shall serve for
the terms specified in the By -Laws of the Debtor.
9.10 The Joint Proponents, in their sole discretion, may
withdraw the Plan and not seek Confirmation of the Plan at any time
prior to Confirmation.
9.11 Securities issued under the Plan shall not be issued in
partial shares with partial shares rounded up to the next whole
share.
9.12 Any and all causes of action held by the Debtor and
existing at the Confirmation Date, shall vest in the Debtor upon
the Effective Date.
ARTICLE X.
Provision For Assumption Or Rejection Of Executory
Contracts and unexpired Leases
10.1 As of the Effective Date, the Debtor assumes the
executory contracts and unexpired leases set forth in Exhibit C
attached hereto and incorporated herein by reference. On the
Effective Date, the Debtor shall cure any monetary defaults under
assumed executory contracts and unexpired leases unless otherwise
agreed by the other party to the contract. The amounts (if any)
necessary to cure monetary defaults under executory contracts and
unexpired leases to be assumed under the Plan are set forth in
Exhibit C.
10.2 The Debtor rejects all executory contracts and unexpired
leases except as provided in Section 10.1. Any party to a rejected
executory contract or unexpired lease must file a proof of claim
for damages arising from such rejection not less than 15 days after
the Effective Date, failing which such Claim shall be forever
barred and the holder thereof shall receive nothing on account of
such Claim.
10.3 Claims arising from the rejection of executory contracts
and unexpired leases shall be subject to treatment under class 3 of
the Plan.
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ARTICLE XI.
Claims Administration
11.1 The Debtor shall review all proofs of Claim filed in the
Chapter 11 Case and file objections thereto not later than sixty
(60) days after the Effective Date, unless such date is extended by
order of the Court.
11.2 If the Debtor does not file an objection to a proof of
Claim on or before sixty (60) days after the Effective Date or such
other date as established by order of the Court, the proof of Claim
automatically shall be deemed allowed.
11.3 The Debtor shall make reasonable efforts to locate all
creditors entitled to receive distributions under the Plan. If the
Debtor is unable to locate a creditor within nine (9) months after
the Effective Date, the creditor shall receive no distribution
under the Plan.
ARTICLE XII.
Retention Of Jurisdiction
12.1 The Court shall retain exclusive jurisdiction for the
following purposes:
a. To determine any and all objections to the allowance of
Claims, and
b. To insure the purposes and intent of the Plan are carried
out, and
C. To correct any defect, cure any omission, or reconcile
any inconsistency in the Plan or the order of the Court confirming
the Plan as may be necessary to carry out the purposes and intent
of the Plan, and
d. To enforce and interpret the terms and conditions of the
Plan, and
e. To enter orders modifying the Plan, and
f. To determine disputes raised before or after the
Confirmation Date by adversary proceedings or contested hearings,
and
g. To hear any action or proceeding, including pending
actions and proceedings, brought by the Debtor under the provisions
of the Code or other applicable law, whether initiated by adversary
proceeding or contested matter, and
- 17 -
h. To enter a Final Decree concluding and closing this Case.
ARTICLE XIII
Cram Down
13.1 If any impaired class of Claims or interests rejects the
Plan, the Joint Proponents request the Court confirm the Plan
pursuant to the cram down provisions of Section 1129(b) of the
Code.
- 18 -
12/22/98 TUE 12:10 FAX 7195839585 ESTRADA FOODS
DEC -22-98 TUE 12:19 ESTRADA FOODS FAX N0, 719 542 5472
12/22/1955 16:41 383e831189 ►MD IFADJEHI "I R
i
i
1
BSTRMA FOODS, 1=. ,
a Colorado cozporation,
and Jo proponent
J
Anthony trada, ident
2001
P. 02
PAGE WtVie
- 19 -
12/22/98 18:54 FAX 2102268395 COR & SMITH 01835 Z002
Barshop/Estrada Acquisition
Par ncrs LP, a Tom limited
partnership, Joint Proponent,
By: BEAP Management LLC,
general partner
-�r—
Bruce B. Barshop, President
.o
Holden ,P,4j en
Joel Laufer #7728
Attorneys for Debtor
303 East 17th Avenue
Suite - 660
Denver, Colorado 80203
Telephone (303) 863 -1100
Facsimile (303) 863 -1109
Cox & Smith Incorporated
Teresa Ereon Giltner
Texas State Bar #06639800
Patrick L. Huffstickler
Texas State Bar #10199250
Attorneys for Barshop /Estrada
Acquisition Partners LP
112 East Pecan Street
Suite 1800
San Antonio, Texas 78205 -1521
Telephone (210) 554 -5500
Facsimile (210) 226 -8395
- 21 -
�! "!'-�
Book: 3044 Page: 878 Chris C. Munoz
Page: 10 of 14 Pueblo CO.Clk.6$ec.
LEGAL DESCRIPTION
M= fullowing rat propectp situate in tba Ccm=y of Pueblo and State of Colorado, to wit
• w •�• r • • 1• • • -•.w• • -•
.'_�
All that portion of the Sourhmst Quarter (SE 114) of the Southwest
Quart= (SW 114) of Section Twenty -five (25) Township Twenty =
South of Range =ty -five (65), West of thr 6' Priucigal Meridian
des�� as follam:
Commencing at the point wh= the North Line of 7 Street in the City
of Pueblo in the East line in the Southwest Quarter (SW 114) of
=aid section; the=ca West along the North line of said 7 StcGt if
pro&med to the Fast ime of the right -of- -way of the D?e=cr & Santa Fe
Railway Company; therttx m a Northwestedy dutcdon on the Northem
Iiae of said r4#-of -way North 37 degrees and 58 N West to the
South I ne of S` Su= in tic City of Pueblo if produced; thence Fist
along the Soutar liaa of said e.Sa va if prod=ed to the Fast Jigs of tho
Sothwest Quarts (SW 114) of raid secaaa; dc= South akmg the Fast
H= of the Southwest Quarter (SW 114) of said section to tfL- Point of
Beoaoing. EXCEPT that parcel of land C=Yeyed to West= PacSdng
Company, Inc, by deed recorded is Book 1229 at Page 474 of the
Pueblo County records, County of Pueblo, State of Colorado,
with all its apt Irm==cs
EXHIBIT
A
D.I.P. LOAN TERM SHEET
Lender: BVI Investments, Ltd. and any participants
(collectively, "BVI" or "Lender ").
Principal Amount: Not to exceed One Million Four Hundred Fifty
Thousand and No /100 Dollars ($1,450,000.00).
Interest Rate on Unpaid
Principal From Date: Greater of (i) Chase Bank of Texas, N.A.'s variable
Prime Rate of Interest plus three percent (3 %) or (ii)
ten percent (10 %) per annum.
Interest Rate on Matured,
Unpaid Amounts: Highest rate allowed by law.
Commitment Fee: One percent (1 %).
Collateral: First, prior and automatically perfected lien on all of
Debtor's real and personal property, including, but
not limited to, equipment, inventory, accounts
receivable, trademarks and patents, provided,
however, that the purchase money mortgage of BVI
on the Real Property, upon conveyance of such Real
Property to Debtor pursuant to the provisions of the
Joint Plan of Reorganization proposed by Debtor
and Barshop/Estrada Acquisition Partners LP, shall
be superior to the liens hereunder; further provided,
however, that the lien granted to BVI shall be
inferior to any lien in favor of any factorer who is
factoring specific receivables of Debtor as to those
specific receivables only and further provided,
however, that the lien granted to BVI shall be
inferior to the existing lien, if any, of National
Business Finance, Inc.
Priority: Super- priority administrative expense claim
subordinate only to payment of the U.S. Trustee
fees pursuant to Title 28, Section 1930 of the United
States Code.
Advances: Advances by Lender shall be made in the Lender's
sole and absolute discretion, in such amounts and at
such times as Lender determines in Lender's sole
EXHIBIT
B
and absolute discretion. Lender shall have no
obligation or commitment to make any advance and
to the extent Lender agrees to make any advance,
Lender shall have no obligation or commitment to
make any additional advance and no commitment or
obligation shall be implied therefrom. However, if
the Plan is confirmed by the Court and becomes
effective, Lender will advance funds so that Debtor
may make the disbursements provided for in the
Plan.
Customary loan covenants, representations
and warranties by Debtor
Events of Default: To include, but not be limited to, (i) Debtor fails to
pay when due and payable or when declared due
and payable any portion of the D.I.P. Loan (whether
of principal, interest, fees and charges due Lender
or reimbursement of Lender's expenses or any other
amounts constituting part of the D.I.P. Loan), (ii) if
Debtor fails or neglects to perform, keep or observe
any term, provision, covenant or agreement
contained within the Loan Agreement, (iii) if there
is a "material adverse change" in Debtor, (iv) if the
Interim Bankruptcy Court Order or the Final
Bankruptcy Court Order approving the D.I.P. Loan
is revoked, reversed, modified, amended or stayed
pending an appeal, or if an event of default occurs
under either of such orders, (v) if Debtor is
enjoined, restrained or in any way prevented by
court order from continuing to conduct all or any
material part of its business affairs, (vi) if a notice
of lien, levy or assessment is filed of record with
respect to any of Debtor's properties or assets by the
United States government, or any department,
agency or instrumentality thereof, or by any state,
county, municipal, or governmental agency, or if
any taxes or debts owing at any time thereafter to
any one or more such entities becomes a lien,
whether choate or otherwise, upon any of Debtor's
properties or assets if the same is not paid on the
repayment date thereof, (vii) if a judgment or other
claim becomes a lien upon any material portion of
Debtor's assets and such judgment is not stayed,
satisfied or released within thirty (30) days from the
date thereof, (viii) any party obtain(s) relief from
230819.04 12.21 98 5:24 PM
the automatic stay under Section 362 of the United
States Bankruptcy Code which might have a
material adverse affect on the D.I.P. Collateral or
Debtor's business, (ix) if Debtor makes any
payment on account of any indebtedness that has
been contractually subordinated in right to the
payment in respect of the D.I.P. Loan, except to the
extent such payment is permitted by the terms of
any subordination provisions applicable to such
indebtedness, (x) if any material misstatement or
material misrepresentation exists now or hereafter
in any warranty, representation, statement or report
made to Lender by Debtor or any officer, employee,
agent, or director thereof, or if any such warranty or
representation is withdrawn, (xi) if Debtor exceeds
any Approved Budget during any reporting period
without the prior written approval by Lender, (xii)
any payments of unbudgeted expenditures are made
without notice to and written consent of Lender,
(xiii) failure to provide prior notice of any
termination by Debtor of Debtor's senior
management, (xiv) failure to pay administrative
claims when due, (xv) filing a motion to reject any
executory contracts without the prior written
consent of Lender, (xvi) the breach of any of the
agreements, stipulations, or covenants contained
within the Loan Agreement, including, but not
limited to, failure by the Debtor to comply with the
Approved Budget, (xvii) the election or
appointment of a trustee or examiner with enlarged
powers in Debtor's Chapter 11 bankruptcy case,
(xviii) the conversion of Debtor's Chapter 11
bankruptcy case to a case under Chapter 7 of the
United States Bankruptcy Code, (xix) the dismissal
of Debtor's Chapter 11 bankruptcy case without
prior or immediate payment of all of the D.I.P.
Loan, (xx) the filing of any motion or plan of
reorganization by the Debtor or plan of
reorganization by any party in interest at the
expiration of any applicable exclusivity period
proposing to sell substantially all of Debtor's assets
or any interest in Debtor to any person or entity
other than Lender, (xxi) if Debtor, prior to final
order or any other party in interest after the final
order, contests or attempts to invalidate, subordinate
or avoid Lender's lien on or security interest in the
3
230819.04 12.'21;98 5:24 PM
D.I.P. Loan collateral or to reduce or diminish,
except as a result of payments, the D.I.P. Loan, by
reason of avoidance, invalidation, offset or
otherwise, (xxii) if the United States Bankruptcy
Court enters any order priming Lender's lien or
security interest in the D.I.P. Loan collateral, under
any applicable section of the United States
Bankruptcy Code or otherwise granting relief in
respect of the D.I.P. Loan collateral except as
specifically contemplated in the Loan Agreement or
similar document, (xxiii) the sale, transfer,
abandonment, or other disposition by Debtor of any
material portion of the D.I.P. Loan collateral
without Lender's prior written consent, (xxiv) use of
D.I.P. Loan proceeds and/or cash collateral for any
purpose other than the payment of an Approved
Budget item, (xxv) Debtor's failure to comply with
any duty or obligation required by the D.I.P. Loan
documents or the United States Bankruptcy Code,
(xxvi) the failure to confirm the Plan on or before
March 31, 1999 and (xxvii) Confirmation of a plan
of reorganization that contains provisions regarding
repayment of the D.I.P. Loan that are not acceptable
to Lender.
Fees: One -half of one percent (.5 %) per annum on the
average unused D.I.P.Loan balance, payable quarter
annually on the last day of each calendar quarter.
Maturity Date: March 31, 1999, unless the Plan is confirmed by
March 31, 1999, in which event the maturity date
shall be March 31, 2002, unless sooner accelerated
by an Event of Default.
Repayment Schedule: All unpaid principal and all accrued but unpaid
interest shall be due and payable in full on March
31, 1999; provided, however, in the event the
Maturity Date of the D.I.P. Loan is extended to
March 31, 2002, interest only shall be due and
payable monthly on the last day of each calendar
month, commencing on the last day of the calendar
month in which the Effective Date occurs and
continuing regularly and monthly thereafter on the
last day of each calendar month until March 31,
2002, on which date all unpaid principal and all
accrued but unpaid interest shall be due and payable
2
230819.04 12,2158 5:24 I'M
in full. Additionally, Debtor shall apply all funds in
excess of its reasonable working capital reserves to
the D.I.P. Loan, any such funds being applied by
Lender first to accrued but unpaid interest and the
balance to unpaid principal.
Approved Budget: Debtor and Lender to agree upon an Approved
Budget, provided, however, that Lender shall not be
required to make any advances under such
Approved Budget as advances are at Lender's sole
and absolute discretion as provided above.
Expenses: Debtor to pay all expenses of Lender relating to the
D.I.P. Loan, including, but not limited to, Lender's
attorney's fees and expenses.
Pre - Petition Debt and Liens of Barshop/
Estrada Acquisition Partners LP:
Debtor shall stipulate to the pre - petition debt to
Barshop/Estrada Acquisition Partners LP (which is
anticipated to be approximately $700,000.00) and
that the liens securing such debt are valid,
enforceable and unavoidable in exchange for
subordination by Barshop/Estrada Acquisition
Partners LP of its liens to those of BVI.
Notwithstanding anything in this D.I.P. Loan Term Sheet to the contrary, the principal amount of
the D.I.P. Loan is subject to reduction if the Collateral is insufficient to support the proposed
D.I.P. Loan amount.
Additionally, this D.I.P. Loan Term Sheet is subject to additional changes and modifications in
connection with approval of the D.I.P. Loan by the Court, this D.I.P. Loan Term Sheet
representing Debtor and BVI's most current D.I.P. Loan proposal.
5
130819 04 1171 98 5:24 P`1
EXHIBIT
Executory Contracts and
Unexpired Leases to be Assumed
Taman.
M
X
n =_
Type Name
Date
Description
Leasing /Rental Agreements
Praxair
January 28, 1997
Lease Agreement- Re:Nitrogen /CO2 Tank
Praxair
April 2, 1997
Lease Agreement Re: Freeze Tunnel
Praxair
April 2, 1997
Purchase Agreement Re:Gases
Refco Leasing
December 1, 1996
Lease Agreemnt - Re:2 -All Fill Equip.
Refco Leasing
August 15, 1997
Lease Agreemnt - ReA -All Fill Equip.
NEC Leasing
October 6, 1998
Lease Agreement -Telephone System
Contract to Purchase Agreement
Reiser & Co. Inc.
November 23, 1998
Contract to purchase V -Mag
'this euipment is on a trial basis with all rights
reserved to return equipment if it does not meet the
needs of Estrada Foods
Consulting Agreements
Stephen L. Castanedo
September 10, 1997
Consulting Agreement
"contract assumed subject to modification by new
employment agreement.
Ben Rodriquez
Consulting Agreement
'Mr. Rodriquez's agreement will be assumed provided
an agreement of modification of Mr. Rodriquez's agreement
is reached. If no agreement is reached on the
modification of the terms of the agreement of Mr.
Rodriquez with Debtor, the agreement shall be rejected.
insJHealth/We/fare
Hartford Insurance
April 10, 1998
General Liability Insurance
RTW Compensation
May 4, 1998
Workmen's Comp.insurance
Right of Inspection Agreement
(United State Dept. of Agriculture
April 7, 1998
USDA Inspection Agreement
Factoring Agreements
I Business Resources
December 1, 1998
A/R Factoring Agreement
Co- Packing A reements
Anchor Foods
October 26, 1998
Co- Packing Agreement
D.I.P. LOAN TERM SHEET
Lender: BVI Investments, Ltd. and any participants
(collectively, "BVI" or "Lender ").
Principal Amount: Not to exceed One Million Four Hundred Fifty
Thousand and No /100 Dollars ($1,450,000.00).
Interest Rate on Unpaid
Principal From Date: Greater of (i) Chase Bank of Texas, N.A.'s variable
Prime Rate of Interest plus three percent (3 %) or (ii)
ten percent (10 %) per annum.
Interest Rate on Matured,
Unpaid Amounts: Highest rate allowed by law.
Commitment Fee: One percent (1 %).
Collateral: First, prior and automatically perfected lien on all of
Debtor's real and personal property, including, but
not limited to, equipment, inventory, accounts
receivable, trademarks and patents, provided,
however, that the purchase money mortgage of BVI
on the Real Property, upon conveyance of such Real
Property to Debtor pursuant to the provisions of the
Joint Plan of Reorganization proposed by Debtor
and Barshop/Estrada Acquisition Partners LP, shall
be superior to the liens hereunder; further provided,
however, that the lien granted to BVI shall be
inferior to any lien in favor of any factorer who is
factoring specific receivables of Debtor as to those
specific receivables only and further provided,
however, that the lien granted to BVI shall be
inferior to the existing lien, if any, of National
Business Finance, Inc.
Priority Super- priority administrative expense claim
subordinate only to payment of the U.S. Trustee
fees pursuant to Title 28, Section 1930 of the United
States Code.
Advances Advances by Lender shall be made in the Lender's
sole and absolute discretion, in such amounts and at
such times as Lender determines in Lender's sole
EXHIBIT
2
and absolute discretion. Lender shall have no
obligation or commitment to make any advance and
to the extent Lender agrees to make any advance,
Lender shall have no obligation or commitment to
make any additional advance and no commitment or
obligation shall be implied therefrom. However, if
the Plan is confirmed by the Court and becomes
effective, Lender will advance funds so that Debtor
may make the disbursements provided for in the
Plan.
Customary loan covenants, representations
and warranties by Debtor
Events -of Default: To include, but not be limited to, (i) Debtor fails to
pay when due and payable or when declared due
and payable any portion of the D.I.P. Loan (whether
of principal, interest, fees and charges due Lender
or reimbursement of Lender's expenses or any other
amounts constituting part of the D.I.P. Loan), (ii) if
Debtor fails or neglects to perform, keep or observe
any term, provision, covenant or agreement
contained within the Loan Agreement, (iii) if there
is a "material adverse change" in Debtor, (iv) if the
Interim Bankruptcy Court Order or the Final
Bankruptcy Court Order approving the D.I.P. Loan
is revoked, reversed, modified, amended or stayed
pending an appeal, or if an event of default occurs
under either of such orders, (v) if Debtor is
enjoined, restrained or in any way prevented by
court order from continuing to conduct all or any
material part of its business affairs, (vi) if a notice
of lien, levy or assessment is filed of record with
respect to any of Debtor's properties or assets by the
United States government, or any department,
agency or instrumentality thereof, or by any state,
county, municipal, or governmental agency, or if
any taxes or debts owing at any time thereafter to
any one or more such entities becomes a lien,
whether choate or otherwise, upon any of Debtor's
properties or assets if the same is not paid on the
repayment date thereof, (vii) if a judgment or other
claim becomes a lien upon any material portion of
Debtor's assets and such judgment is not stayed,
satisfied or released within thirty (30) days from the
date thereof, (viii) any party obtain(s) relief from
2
230819 04 1 : :1 98 5.24 PM
the automatic stay under Section 362 of the United
States Bankruptcy Code which might have a
material adverse affect on the D.I.P. Collateral or
Debtor's business, (ix) if Debtor makes any
payment on account of any indebtedness that has
been contractually subordinated in right to the
payment in respect of the D.I.P. Loan, except to the
extent such payment is permitted by the terms of
any subordination provisions applicable to such
indebtedness, (x) if any material misstatement or
material misrepresentation exists now or hereafter
in any warranty, representation, statement or report
made to Lender by Debtor or any officer, employee,
agent, or director thereof, or if any such warranty or
representation is withdrawn, (xi) if Debtor exceeds
any Approved Budget during any reporting period
without the prior written approval by Lender, (xii)
any payments of unbudgeted expenditures are made
without notice to and written consent of Lender,
(xiii) failure to provide prior notice of any
termination by Debtor of Debtor's senior
management, (xiv) failure to pay administrative
claims when due, (xv) filing a motion to reject anv
executory contracts without the prior written
consent of Lender, (xvi) the breach of any of the
agreements, stipulations, or covenants contained
within the Loan Agreement, including, but not
limited to, failure by the Debtor to comply with the
Approved Budget, (xvii) the election or
appointment of a trustee or examiner with enlarged
powers in Debtor's Chapter 11 bankruptcy case,
(xviii) the conversion of Debtor's Chapter 11
bankruptcy case to a case under Chapter 7 of the
United States Bankruptcy Code, (xix) the dismissal
of Debtor's Chapter 11 bankruptcy case without
prior or immediate payment of all of the D.I.P.
Loan, (xx) the filing of any motion or plan of
reorganization by the Debtor or plan of
reorganization by any party in interest at the
expiration of any applicable exclusivity period
proposing to sell substantially all of Debtor's assets
or any interest in Debtor to any person or entity
other than Lender, (xxi) if Debtor, prior to final
order or any other party in interest after the final
order, contests or attempts to invalidate, subordinate
or avoid Lender's lien on or security interest in the
13
230819.04 12 21 98 5:24 P \f
IBM
D.I.P. Loan collateral or to reduce or diminish,
except as a result of payments, the D.I.P. Loan, by
reason of avoidance, invalidation, offset or
otherwise, (xxii) if the United States Bankruptcy
Court enters any order priming Lender's lien or
security interest in the D.I.P. Loan collateral, under
any applicable section of the United States
Bankruptcy Code or otherwise granting relief in
respect of the D.I.P. Loan collateral except as
specifically contemplated in the Loan Agreement or
similar document, (xxiii) the sale, transfer,
abandonment, or other disposition by Debtor of any
material portion of the D.I.P. Loan collateral
without Lender's prior written consent, (xxiv) use of
D.I.P. Loan proceeds and/or cash collateral for any
purpose other than the payment of an Approved
Budget item, (xxv) Debtor's failure to comply with
any duty or obligation required by the D.I.P. Loan
documents or the United States Bankruptcy Code,
(xxvi) the failure to confirm the Plan on or before
March 31, 1999 and (xxvii) Confirmation of a plan
of reorganization that contains provisions regarding
repayment of the D.I.P. Loan that are not acceptable
to Lender.
Fees: One -half of one percent (.5 %) per annum on the
average unused D.I.P.Loan balance, payable quarter
annually on the last day of each calendar quarter.
Maturity Date: March 31, 1999, unless the Plan is confirmed by
March 31, 1999, in which event the maturity date
shall be March 31, 2002, unless sooner accelerated
by an Event of Default.
Repayment Schedule: All unpaid principal and all accrued but unpaid
interest shall be due and payable in full on March
31, 1999; provided, however, in the event the
Maturity Date of the D.I.P. Loan is extended to
March 31, 2002, interest only shall be due and
payable monthly on the last day of each calendar
month, commencing on the last day of the calendar
month in which the Effective Date occurs and
continuing regularly and monthly thereafter on the
last day of each calendar month until March 31,
2002, on which date all unpaid principal and all
accrued but unpaid interest shall be due and payable
0
230819 04 12 21 98 524 P \1
in full. Additionally, Debtor shall apply all funds in
excess of its reasonable working capital reserves to
the D.I.P. Loan, any such funds being applied by
Lender first to accrued but unpaid interest and the
balance to unpaid principal.
Approved Budget: Debtor and Lender to agree upon an Approved
Budget, provided, however, that Lender shall not be
required to make any advances under such
Approved Budget as advances are at Lender's sole
and absolute discretion as provided above.
Expenses: Debtor to pay all expenses of Lender relating to the
D.I.P. Loan, including, but not limited to, Lender's
attorney's fees and expenses.
Pre - Petition Debt and Liens of Barshop/
Estrada Acquisition Partners LP:
Debtor shall stipulate to the pre - petition debt to
Barshop/Estrada Acquisition Partners LP (which is
anticipated to be approximately $700,000.00) and
that the liens securing such debt are valid,
enforceable and unavoidable in exchange for
subordination by Barshop/Estrada Acquisition
Partners LP of its liens to those of BVI.
Notwithstanding anything in this D.I.P. Loan Term Sheet to the contrary, the principal amount of
the D.I.P. Loan is subject to reduction if the Collateral is insufficient to support the proposed
D. I. P. Loan amount.
Additionally, this D.I.P. Loan Term Sheet is subject to additional changes and modifications in
connection with approval of the D.I.P. Loan by the Court, this D.I.P. Loan Term Sheet
representing Debtor and BVI's most current D.I.P. Loan proposal.
5
230819 04 12 2199 5 24 PM
NAMES OF COMMON STOCK SHARE HOLDERS
EXHIBIT
INVESTORS NAME
ADDRESS CITY STATE ZIP NO. OF SHARES
Anthony Estrada
1655 Cliffdale
Pueblo
CO
81006
3,499,794
Jess Estrada
1214 Holly Street
1268 20th Lane
Pueblo
Pueblo
CO
CO
81006
81006
7 99,953
799 ,953
Caroline Fres uez
Howard Klemmer
1503 Watts Place
Pueblo
CO
81008
229,500
WK Cap
7900 Union Ave. Ste. 1100
Denver
CO
80237
125,000
Jeff Valdez
8322 Beverly Blvd. Suite 304
Los Angeles
CA
90048
20,000
Edmund C. Decker
13023 Nicholas
Omaha
NE
68154
1,200
Jacqueline Cables
11040 E. Blue Groma Dr.
Tuscon
AZ
85748
5,000
BVI Investments, Ltd
1112 E. Pecan St. Suite 1440
San Antonio
TX
78205
3
TOTAL 1 8,480,400
W �
ao
I.
i BIT
INVESTORS NAMES
NAMES OF PERFERRED SHARE HOLDERS
ADDRESS CITY STATE ZIP NO. OF SHARES
Brett Kelley
PO BOX 4316
Pueblo
CO
81003
20,000
Victor & Margaret Moss
311 W. 24th Street
Pueblo
CO
81004
20,000
Benjamin Martinez
135 Kingsley Ave.
Pueblo
CO
81003
10,000
Charles Murphy
2245 Broadway
Colorado Springs
CO
80904
10,000
Darla K. Incerto
416 Clarks Street
Pueblo
CO
81003
10,000
Alfredo Vargas
459 W. 17th Street
Pueblo
CO
81003
20,000
Lee Johnson
5555 Erindale Dr.
Co Springs
CO
80918
20,000
James F. Pool
119 W. 8th Street
Pueblo
CO
81003
10,000
Dr. Edward Dainko
3231 Valencia Ave
San Bernardino
CA
92404
25,000
Roy J. Walker
8673 Cremona Dr.
Las Vegas
NV
89117
10,000
Steve Mullens
2003 Pine Grove
Co Springs
CO
80906
10,000
Marie Dowd Decker
725 N. 98th Street
Omaha
NE
68114
5,000
D & D Builders Inc.
1803 Humphrey Rd.
Garden City
KS
67846
10,000
Elizabeth Zawadowski
One New York Plaza
New York
NY
10892
20,000
Terrance D. Urbanek
9853 Royal Valley Rd.
North Royalton
OH
44133
10,000
Barry P. Druzin
1650 Mayfair
Mayfeild Heights
OH
44124
12,500
Michael A. Occhiato
11 Herrogate Terrace
Pueblo
CO
81001
10,000
J.M. Occhiato Trust
62 Country Club Villag
Pueblo
CO
81008
50,000
Michael C. Giarratano
6995 Mariposa
Denver
CO
80221
10,000
Greg L. Smith
121 SanCarlos Rd.
Pueblo
CO
81005
20,000
Susan W. Foerster
14 Berthe Circle
Co Springs
CO
80906
20,000
Edmund Decker
13023 Nicholas
Omaha
NE
68154
15,000
Martin E. Ziesman Trust
4199 Eagle Watch Blv
Palm Harbor
FL
34684
50,000
Carolyn K. Zeisman Trust
4199 Eagle Watch Blv
Palm Harbor
FL 1
346841
50,000
NAMES OF PERFERRED SHARE HOLDERS
EXHIBIT
INVESTORS NAMES
ADDRESS CITY STATE ZIP NO. OF SHARES
Dr. Gary Wofford
4117 N. Elizabeth
Pueblo
CO
81008
10,000
Donald R. Groth
8730 La Sundora Circi
Las Vegas
NV
89129
20,000
Gene & Joan Meek
1410 Golden Hills Rd.
Co Springs
CO
80919
20,000
Craig S. Shaddy
9123 E. Mississippi
Aurora
CO
80231
20,000
Rick Guy
421 N. Tejon
Co Springs
CO
80903
30,000
Desert Snow Partners
1343 W. 133rd Way
Westminister
CO
80234
10,000
Carl Bon'irno
169 Fordham Circle
Pueblo
CO
81005
50,000
Gerald C.Perito
8849 Winona Ct.
Westminister
CO
80030
2,500
Carol A. Perito
8849 Winona Ct.
Westminister
CO
80030
2,500
Rosemary Tur
34 Oak Ridge Drive
Castle Rock
CO
80104
2,500
Richar D. Turelli
34 Oak Ridge Drive
Castle Rock
CO
80104
2,500
Eugene P. Maffeo
8609 E. Kenyon Ave.
Denver
CO
80237
2,500
Jun A. Ma ffeo
8609 E. Kenyon Ave.
Denver
CO
80237
2,500
Steven E. Maffeo
2155 Cloverdale Dr.
Co Springs
CO
80920
2,500
Mat hew P. As beq
8849 Winona Ct.
Westminister
CO
80030
3,000
Marcelo G & Rose T. Tara
300 So. Logan
Denver
CO
80209
2,500
Marcelo G Tara
300 So. Logan
Denver
CO
80209
5,000
Marcella C. Wain
14284 E. Baltic Cr.
Aurora
CO
80014
2,500
Dr. Ronald Daurio
3969 Redwood Ln.
Pueblo
CO
81005
25,000
Lola / Dale Spradley
920 N. Main
Pueblo
CO
81003
20,000
Joyce Kelle
53 Briar ate Terrace
Pueblo
CO
81001
20,000
Todd Pas uin
11 Temple Drive
Pueblo
CO
81005
20,000
Pamela Robbinson
67 MacArthur Rd.
Pueblo
CO
81001
2,000
Karen Robbinson
67 MacArthur Rd.
Pueblo
CO
81001
2,000
NAMES OF PERFERRED SHARE HOLDERS
EXHIBIT
INVESTORS NAMES
ADDRESS CITY STATE ZIP NO. OF SHARES
Frank Molinaro, Sr.
1113 Grant
Trinidad
CO
81082
5,000
Frank Molinaro, Jr.
27907 Cumbres
Pueblo
CO
81006
5,000
Dr. Harold Robbinson
67 MacArthur Rd.
Pueblo
CO
81001
16,000
L nelle Lee Spradley
920 N. Main
Pueblo
CO
81003
8,000
Larry D. Spradley
920 N. Main
Pueblo
CO
81003
12,000
Kenda Rippley Ripple
2008 Walden Blvd.
FlowerMound
TX
75028
20,000
Dr. David Robbinson
1560 Bonforte Blvd.
Pueblo
CO
81001
30,000
Blake Carere / Anna Prosser
4 Carefree Court
Pueblo
CO
81001
15,000
Hazardous Waste Tech.
2545 Platte Place
Co Springs
CO
80909
20,000
Gerald E. & Kim K. Ferch
18027 Rock Branch Dr
Dallas
TX
75287
20,000
Fugate Family Partners
1909 Kipling Dr.
Flowermound
TX
75028
20,000
Marrion C. Rutowsky
4600 Great Oak Drive
Rockville
MD
20853
5,000
David J. Rutowsky
18018 Wa onwheel Ct
Olney
MD
20832
5,000
Laura Blair
3828 Valley View Ln.
FlowerMound
TX
75028
10,000
Robert A. Rippley Ripple
4433 W. 49th Street
Tulsa
OK
74107
20,000
G. Bousselaire / R. Snowling
PO BOX 1476
Baltimore
MD
21203
5,000
Steven E. Berge
2998 So. Steele Street
Denver
CO
80210
10,000
Joel N. Struble
8638 Warner Rd
Saline
MI
48176
10,000
Louis H. Brown
222 Monarch Bay
Dana Point
CA
92629
5,000
Pamela Rut owsk Potur
4600 Great Oak Rd.
Rockville
MD
20853
5,000
Laura Rutkowsky Pullen
4600 Great Oak Rd.
Rockville
MD
20853
5,000
D &D Builders
1803 Humphrey Rd.
Garden City
KS
67846
10,000
SSE Inc.
115 W. College Dr.
Marshall
MN
56258
100,000
Lyle & Donna Johnson
4100 E. Hwy. 50 lGarden
City
KS
67846
20,000
NAMES OF PERFERRED SHARE HOLDERS
EXHIBIT
INVESTORS NAMES
ADDRESS CITY STATE ZIP NO. OF SHARES
Anthony Estrada
1655 Cliffdale
Pueblo
CO
81006
19,319
Caroline Fres uez
1 1503
1268 20th Ln.
Pueblo
CO
81006
672,217
Jess Estrada
1214 Holly Street
Pueblo
CO
81006
205,047
Howard Klemmer
Watts Place
Pueblo
CO
81008
14,939
TOTAL 2,019,522
NAMES OF STOCK OPTION HOLDERS
EXHIBIT
INVESTORS NAME ADDRESS CITY STATE
C
ZIP NO.SHARES
Anthony Estrada
1655 Cliffdale
Pueblo
CO
81006
558,000
Caroline Fres uez
1268 20th Ln.
Pueblo
CO
81006
100,000
Howard Klemmer
1503 Watts Place
Pueblo
CO
81008
204,000
Scott Swenson
5060 W. Quarles Dr.
Pueblo
CO
80123
25,000
Paul Turner
234 E. Auburn
Pueblo West
CO
81007
25,000
Steve Castanedo
720 W. 8th Street
Pueblo
CO
81003
200,000
Glenn Van Blaricom
PO BOX 1842
Berthoud
CO
80513
40,000
Matt Dunn
110 Kingsley Ave.
Pueblo
CO
81005
40,000
Jim Watts
2082 Michelson Dr. Suite 100
Irvine
CA
92612
24
George Mottle
600 -B Clubhouse Ave.
Newport Beach
CA
92663
5,000
Bill Lundy
3400 Ave. of the Arts #F -210
Costa Mesa
CA
92626
45,500
BVI Investments, Ltd
1 112 E. Pecan Suite 1440
San Antonio
ITX
782051
1,416,667
Finders Fees Stock Options
TIWf,
m
X
Ln 2
TOTAL 1 2,683,292
TYW3
m
= BIT
o�
INVESTORS NAMES
NAMES OF WARRANT HOLDERS
ADDRESS
CITY STATE ZIP NO. OF SHARES
Brett Kelley
PO BOX 4316
Pueblo
CO
81003
10,000
Victor & Margaret Moss
311 W. 24th Street
Pueblo
CO
81004
10 000
Benjamin Martinez
135 Kingsley Ave.
Pueblo
CO
81003
5
Charles Murphy
2245 Broadway
Co Springs
CO
80904
5,000
Darla K. Incerto
416 Clarks Street
Pueblo
CO
81003
5,000
Alfred Vargas
459 W. 17th Street
Pueblo
CO
81003
10 000
Lee Johns
5555 Erindale Dr.
Co Springs
CO
80918
10
James F. Pool
119 W. 8th Street
Pueblo
CO
81003
5
Dr. Edward Dainko
3231 Valencia Ave.
San Bernardino
CA
92404
12
Roy J. Walker
8673 Cremona Dr.
Las Ve as '
NV
89117
5,000
Steve Mullens
2003 Pine Grove
Co S rin s
CO
80906
5
Marie Dowd Decker
725 N. 98th Street
Omaha
NE
68114
2 500
D & D Builders Inc.
1803 Hum phrey Rd.
Garden City
KS
67846
5 000
Elizabeth Zawadowski
One New York Plaza
New York
NY
10892
10,000
Terrance D. Urbanek
9853 Royal Valley Rd.
North Royalton
OH
44133
5,000
Barry P. Druzin
1650 Mayfair
Mayfeild Heights
OH
44124
6,250
Michael A. Occhiato
11 Herro ate Terrace
Pueblo
CO
81001
5,000
J.M. Occhiato Trust
62 Country Club Village
Pueblo
CO
81008
25
Michael C. Giarratano
6995 Mariposa
Denver
CO
80221
5,000
Greg L. Smith
121 SanCarlos Rd.
Pueblo
CO
81005
10,000
Susan W. Foerster
14 Berthe Circle
Co Springs
CO
80906
10
Edmund Decker
13023 Nicholas
Omaha
NE
68154
7,500
Martin E. Ziesman Trust
4199 Eagle Watch Blvd.
Palm Harbor
FL
34684
25,000
Carol n K. Zeisman Trust
4199 E agle Watch Blvd.
Palm Harbor
FL
34684
25,000
Dr. Gary Wofford
4117 N. Eliz abeth
Pueblo
CO
81008
5
Donald R. Groth
8730 La Sundora Circle
Las Vegas
NV
89129
10,000
Gene & Joan Meek
1410 Golden Hills Rd.
Co S rin s
CO
809191
10 000
NAMES OF WARRANT HOLDERS
EXHIBIT
INVESTORS NAMES
ADDRESS CITY STATE ZIP NO. OF SHARES
Craig S. Shaddy
9123 E. Mississippi
Aurora
CO
80231
10 000
Rick Guy
421 N. Tejon
Co Springs
CO
80903
15 000
Desert Snow Partners
1343 W. 133rd Way
Westminister
CO
80234
5 000
Carl Bon'irno
169 Fordham Circle
Pueblo
CO
81005
25 000
Gerald C.Perito
8849 Winona Ct.
Westminister
CO
80030
1 250
Carol A. Perito
8849 Winona Ct.
Westminister
CO
80030
1 250
Rosemary Turelli
34 Oak Ridge Drive
Castle Rock
CO
80104
1 250
Richard D. Turelli
34 Oak Ridge Drive
Castle Rock
CO
80104
1 250
Eugene P. Maffeo
8609 E. Kenyon Ave.
Denver
CO
80237
1,250
June A. Maffeo
8609 E. Kenyon Ave.
Denver
CO
80237
1 250
Steven E. Maffeo
2155 Cloverdale Dr.
Co Spring s
CO
80920
1 250
Mathew P. Asbery
8849 Winona Ct.
Westminister
CO
80030
1 500
Marcelo G & Rose T. Tara
300 So. Logan
Denver
CO
80209
1 250
Marcelo G Tara
300 So. Logan
Denver
CO
80209
2 P 500
Marcella C. Wain
14284 E. Baltic Cr.
Aurora
CO
80014
1,250
Dr. Ronald Daurio
3969 Redwood Ln.
Pueblo
CO
81005
12 500
Lola / Dale Spradley
N. Main
Pueblo
CO
81003
10
Joyce Kelley
riar ate Terrace
Pueblo
CO
81001
10,000
Todd Pas uin
em le Drive
r67
Pueblo
CO
81005
10
Pamela Robbinson
acArthur Rd.
Pueblo
CO
81001
1 000
Karen Robbinson
67 MacArthur Rd.
Pueblo
CO
81001
1 000
Frank Molinaro Sr.
1113 Grant
Trinidad
CO
81082
2 P 500
Frank Molinaro Jr.
27907 Cumbres
Pueblo
CO
81006
2
Dr. Harold Robbinson
67 MacArthur Rd.
Pueblo
CO
81001
8,000
L nelle Lee Spradley
920 N. Main
Pueblo
CO
81003
4,000
Larry D. Spradley
920 N. Main
Pueblo
CO
81003
6,000
Kenda Rippley Ripple
2008 Walden Blvd.
FlowerMound
TX
75028
10 000
NAMES OF WARRANT HOLDERS
EXHIBIT
INVESTORS NAMES
ADDRESS CITY STATE ZIP NO. OF SHARES
Dr. David Robbinson
1560 Bonforte Blvd.
Pueblo
CO
81001
15
Blake Carere I Anna Prosser
4 Carefre Court
Pueblo
CO
81001
7 500
Hazardous Waste Tech.
2545 Platte Place
Co Springs
CO
80909
10,000
Gerald E. & Kim K. Ferch
18027 Rock Branch Drive
Dallas
TX
75287
10
Fugate Family Partners
1909 Kippling Drive
Flowermound
TX
75028
10
Marrion C. Rutowsky
4600 Great Oak Drive
Rockville
MD
20853
2,500
David J. Rutowsky
18018 Wa onwheel Ct.
Olney
MD
20832
2,500
Laura Blair
3828 Valley View Ln.
FlowerMound
TX
75028
5,000
Robert A. Rippley Ripple
4433 W. 49th Street
Tulsa
OK
74107
10,000
G. Bousselaire I R. Snowling
PO BOX 147
Baltimore
MD
21203
2
Steven E. Berge
2998 So. Steele Stree
Denver
CO
80210
5,000
Joel N. Struble
8638 Warner Rd
Saline
MI
48176
5,000
Louis H. Brown
222 Monarch Bay
Dana Point
CA
92629
2,500
Pamela Rutowsk Potur
4600 Great Oak Rd.
Rockville
MD
20853
2,500
Laura Rutkowsky Pullen
4600 Great Oak Rd.
Rockville
MD
20853
2,500
D&D Builders
1803 Humphrey Rd.
Garden City
KS
67846
5,000
SSE Inc.
115 W. College Dr.
Marshall
MN
56258
50 000
Lyle & Donna Johnson
4100 E. Hwy. 50
Garden City
KS
67846
10
Anthon Estrada
1655 Cliffdale
Pueblo
CO
81006
9 660
Caroline Fres uez
1268 20th Ln.
Pueblo
CO
81006
336,109
Jess Estrada
1214 Holly Street
Pueblo
CO
81006
102,524
Howard Klemmer
1503 Watts Place
Pueblo
CO
81008
7,470
Jim Watts
2082 Michelson Dr. Suit 100
Irvine
CA
92612
12 063
Bill Lundy
3400 Ave.of the Arts #F - 210
Costa Mesa
CA
92626
22,750
Chuck Murphy
2245 Broadway
Co S rings
CO
80904
3
Carl Bon'irno
169 Fordham Circle
Pueblo
CO
81005
1 500
Ron Himstreet
13950 E. Oxford Pl. Suite B303
Aurora
CO
80014
5
NAMES OF WARRANT HOLDERS
EXHIBIT
INVESTORS NAMES
ADDRESS CITY STATE ZIP NO. OF SHARES
R. Turelli
34 Oak Ridge Drive
Castle Rock
CO
80104
600
G. Perito
8849 Winona Ct.
Westminister
CO
80030
820
D. Flores
209 Starlite Dr.
Pueblo
Co
81005
400
BVI Investments LTD
112 E. Pecan St. Suite 1440
San Antonio
TX
782051
591 174
TOTAL
1 1
Finaers Fee warrants -
Book: 3044 Page: 878 Chris C. Munoz
Page: 10 of 14 Pueblo Co.Clk. &Rec.
JO ,g:II
LEGAL DESCRIPTION
The following real property situate in the County of Pueblo and State of Colorado, to wic:
Lots 3 and 4, Block 55, County Addition Amwdai,
ALSO
All that portion of the Southeast Quarter (SE 1/4) of the Southwest
Quarter (SW 1/4) of Section Twenty -five (`L5) Township Twenty (20)
South of Range Slaty -t3vc (65), west of the 6* Prkcipal Meridian
descrdted as follows:
Commencing at the point whets tha North line of 7 Street in the City
of Pueblo intersects the Fast line in dte Soathweat Quarter (SW 1/4) of
acid section; thence West along the North line of said 7 Sheet If
produced to the East lire of the rigk -wry of the Deaver & Saata Fe
RaRwaay Cotapany; tree in a Northwesterly direr on the Northeast
Ibm of said right- of-way North 37 degrees and 58 West to the
South Iine of 9* Strict in the City of Pueblo if produced; thence East
along the South lira of said a Street if Vroduced to dw Eat lire of the
Southwest Quarter (SW 114) of said se�euoa; mace South along the Fast
Iiae of the Southwest Quarter (SW I/4) of said section to the Point of
Beginning- EXCM that parcel of land caaveyed to West= Pacidng
Company, Ync, by dad recorded in Book 1229 at Page 424 of the
Pueblo County rccords, County of Pueblo, State of Colorado,
with all its
EXHIBIT
DEBTORS SCHEDULE OF PERSONAL PROPERTY
EXHIBIT OF THE DISCLOSURE DOCUMENT
Value shown reflects 10/31/98 Financial Statements
CATEGORY DESCRIPTION BOOK VALUE LIQUIDATION VALUE
OFFICE EQUIPMENT
Craftsman Double Pedestal Desk
$590
$510
Executive Chair
154
133
3 Stacker Burgundy Chairs
96
83
Credenza
571
494
Epson Stylus Printer
305
264
2 Task Chairs
247
214
4 Drawer lateral Files
572
495
Workstation 1
364
315
Workstation 2
293
254
Gateway 2000 Pentium Computer
1,261
1,091
Deskjet 693C Printer
180
156
Hewlett Packard Printer
482
417
4 Drawer lateral Files
292
253
Task chair
70
61
Sharp Copier
1,225
1,059
CSR File Server
3,968
3,432
CSR Pentium 200MHz Computer
1,984
1,716
CSR Pentium 200 MHz Computer
1,984
1,716
4 CSR Pentium 166MHz Computer
7,142
6,178
Novell Software
1,927
1,667
Telephone system
6,047
5,231
Sub - Total: Office Equipment
29,754
25,737
MACHINERY & EQUIPMENT
500 Gal. Hamilton Kettle
6,002
5,500
500 Gal. Hamilton Kettle
6,002
5,500
500 Gal. Hamilton Kettle
6,002
5,500
Control Panel - Hamilton
2,453
500
Conveyors - Fullerton
2,980
2,500
Cooler /Freezer Equip.
14,244
9,000
Forklift/manlif /pallet
3,944
2,000
Lab equipment/furniture
3,777
500
Lockers
1,938
500
Piping, stainless steel
8,620
1,000
Piston fillers - Fullerton
2,405
2,000
Pumps, 5 maddox, 2 Waukesau
9,535
5,000
Sinks, Wash w /foot pedals
475
400
Test Kitchen Equipment
2,389
2,000
Tradeshow Booth /Artwork
16,086
14,000
L- Sealer
1,415
800
EXHIBIT
Page 1
H
Racks & Pans
833
700
Scales, digital w /program
654
600
Gas Range
340
300
Tables, stainless steel
4,539
4,000
Racks, shelf & pans
1,068
900
Maddox Extruder
15,733
8,000
All Fills (Qty.6)"
110,162
0
Madison Kettle, 80 gal.
6,633
4,000
CO2 Injector Nozzles
2,711
0
Hamilton Kettle Parts
1,160
0
Glue System
3,580
300
Freezer Tunner & Discharge'
2,960
0
All Fill Assembly, frame
9,297
0
Cadye compressor, 15H
816
700
Meat Cutting Table
1,998
1,700
Burrito cut-off Heads
726
0
Doboy Hand Sealer
1,667
1,400
Conveyor, 19" x 24" Stainless Steel
9,757
4,500
Wash Sink, 60" long. Stainless Steel
1,344
800
Volumetric Sanitizing
1,575
650
Corn Tubs, 1000#
4,463
3,000
Scale, floor, 10,000
3,606
1,500
Maddox Extruder reconditioned
3,878
0
Bean Soak Tank
5,075
2,500
Cooler Repair
6,458
0
Guar Gum Applicator
6,615
900
Column dumper Installation
15,852
0
compressor rebuilds
9,780
0
Air Compressor
2,139
1,000
Bandrite 600 Sealer
7,640
2,500
3 Bay Stainless Steel Sinks
2,063
850
Hydroflaker MOD FS -100
6,666
2,500
Ribbon Blender & Column
64,856
7,500
Cooler Compressor
7,513
2,500
Key Metal Detector
3,310
0
Box Taping Machine
1,316
600
Metal Detector
3,035
2,000
100# Eclipse Scale
618
500
Ribbon Blender
1,078
0
Lightening Mixer /Kettle
2,528
0
Burrito Conveyor
9,995
4,500
Air compressor
2,056
1,000
Temporary Conveyor
1,451
500
Tray Washer
10,770
4,000
Fryer oil Tank
7,122
3,000
Casa Herrera Sheeter
5,504
4,800
Ammonia System Design
17,006
0
Bean Washer
4,000
1,600
Chili Roaster
7,707
6,700
Compactor, Depster
3,436
1,500
Condesor Units
20,596
18,000
MCC Equipment
10,022
10,022
Page 2
F11111 11 11 jJ II I1Ij
Spiral Freezer
111,105
111,105
Wrapping Machine
5,082
2,500
Cutter Assembly
5,500
0
Deep Fryer
12,472
6,000
Tamale Extruder
3,500
3,000
Grinder Feeder 8 Conveyor
10,000
8,650
Sub - Total: Machinery & Equipment
671,629
299,977
VEHICLES
$931,731
$384,918
1988 International Tractor Trailer
2,669
2,309
1981 International Refrig. Truck
2,408
2,083
Ottawa Yard Goat
963
833
Sub - Total: Vehicles
6,041
5,225
INVENTORY
Raw Material
31,076
6,215
Work -in- Process
3,199
0
Finished Goods
88,934
17,787
Sub - Total: Inventory
123,209
24,002
DEPOSITS
Deposits
50,799
0
Sub - Total: Deposits
50,799
0
PREPAIDS
Prepaid Insurance
540
0
Prepaid Contracts
422
0
Prepaid Workmen's Compensation
12,195
0
Sub - Total: Prepaids
13,158
0
ACCOUNTS RECEIVABLE
Accounts Receivable
37,141
29,977
Sub - Total: Accounts Receivable
37,141
29,977
Grand Total: Personal Property
$931,731
$384,918
'Leased or rented equipment -no value.
Page 3
ILiI ll!IIIIIIIIIINLVIII� Ili
ESTRADA FOODS, INC.
Payments to Related Entities
Exhibit
Name I Date I Amount I Description
Anthony Estrada
1/23/98
1,000.00
Reimbursement of expense report
3/2/98
2,884.62
Gross Wages
3116/98
2,884.62
Gross Wages
3/30/98
2,884.62
Gross Wages
4/13/98
2,884.62
Gross Wages
4/27/98
2,884.62
Gross Wages
5/11/98
2,884.62
Gross Wages
5/15/98
650.00
Reimbursement of expense report
5/20/98
500.00
Reimbursement of expense report
6/2/98
500.00
Reimbursement of expense report
6/15/98
500.00
Reimbursement of expense report
7/3/98
500.00
Reimbursement of expense report
7/20/98
2,884.62
Gross Wages
8/17/98
2,884.62
Gross Wages
10/13/98
1,000.00
Reimbursement of expense report
Total Paid
$ 27,726.96
Caroline Fres uez
3/2/98
1,538.46
Gross Wages
8/17/98
1,538.46
Gross Wages
Total Paid
$ 3,076.92
Rocky Mtn. Cold Storage
1/20/98
3,500.00
Payment on accounts payable bal.
1/30/98
2,000.00
Payment on accounts payable bal.
2/2/98
23,000.00
Payment on accounts payable bal.
2/26/98
16,500.00
Payment on accounts payable bal.
3/13/98
3,000.00
Payment on accounts payable bal.
3/13/98
5,500.00
Payment on accounts payable bal.
4/27/98
2,000.00
Payment on accounts payable bal.
4/29/98
2,000.00
Payment on accounts payable bal.
6/18/981
3,600.00
Payment on accounts payable bal.
9/3/981
2,000.00
Payment on accounts payable bat.
9/25/98
5,020.80
Payment on accounts payable bat.
11/6/98
1.798.03
Payment on payable bal.
11/10/98
6.921.65
Payment on accounts payable bal.
11/20/98
4.000.00
Payment on accounts payable bar
11/23/98
1,000.00
Payment on accounts payable bal.
Total Paid
$ 81,840.48
E.T. Construction
1/20/98
4,000.00
Payment on accounts payable
1/30/98
2,000.00
IP a ment on accounts payable bal.
2/13/98
5,500.00
jPayment on accounts payable bal.
2/26/98
3,000.00
jPayment on accounts payable bal.
LBIT
Page 1
Page 2
6/10/98
2,000.00
Payment on accounts
payable bal.
Total Paid
$
16,500.00
Payment on accounts payable bal.
Jess Estrada
5/22/98
200.00
Reimbursement of expense report
7/1/98
56.00
Payment for services COD
9/1/98
50.00
Payment for services COD
9/4/98
50.00
Payment for services COO
Total Paid
$
356.00
Fres uez Enterprises
1112198
2,497.13
Payment on accounts
payable bal.
Total Paid
$
2,497.13
Food Equipment Refabricators
1/22/98
3,000.00
Payment on accounts
payable bal.
1/30/98
7,000.00
Payment on accounts
payable bal.
2/2/98
6,000.00
Pa ment on accounts
payable bal.
2/17/98
6,000.00
Payment on accounts
payable bal.
2/26/98
5,000.00
Payment on accounts
payable bal.
3/2/98
2,500.00
Payment on accounts
payable bal.
3/26/98
3,000.00
Payment on accounts
payable bal.
3/31/98
2,000.00
Payment on accounts
payable bal.
4/10/98
2,500.00
Payment on accounts
payable bal.
4120/98
2,000.00
Payment on accounts
payable bal.
4/27/98
2,500.00
Payment on accounts
payable bal.
4128/98
3,200.00
Payment on accounts
payable bal.
5/1/98
1,000.00
Payment on accounts
payable bal.
5/21/98
2,000.00
Payment on accounts
payabie bal.
7/3/98
2,000.00
Payment on accounts
payable bal.
7/6/98
1,500.00
Payment on accounts
payable bal.
9/3/98
1,000.00
Payment on accounts
payable bal.
9/25/98
5,623.54
Payment on accounts
payable bal.
11/10/98
1,567.87
Payment on accounts
payable bal.
11/20/98
1,176.52
Payment on accounts
payable bal.
11/23/98
2,000.00
Payment on accounts
payable bal.
Total Paid
S
62,567.93
Howard Klemmer
1/5/98
4,992.32
Gross Wages
1/19/98
4,992.32
Gross Wages
Total Paid
$
9,984.64
Page 2
Estrada Foods, Inc.
Personal Guaranties
EXHIBIT
NAME OF COMPANY I GUARANTEED BY AMT. OF GUARANTEE
Barshop Ventures, Inc. /BVI Investments, Ltd
3 Principles
1,400,000
City of Pueblo
3 Principles
1,200,000
Peak National Bank
3 Principles
1,000,000
SSE Foods
Anthony Estrada
354,400
Marty Ziesman
Anthony Estrada
200,000
County of Pueblo
3 Principles
183,327
Mission Foods
Anthony Estrada
139,674
Mission Foods
Caroline Fres uez
139,674
Refco Leasing
Anthony Estrada
128,576
Beck Foods
Anthony Estrada
66,608
Westco Products
Anthony Estrada
43,224
R & R Heating
Anthony Estrada
32,824
Waste Mana meet
Anthony Estrada
11,412
Dawn Foods
Anthon Estrada
10,675
Norwest Business Finance
Anthony Estrada
7,954
NEC Leasing
Anthony Estrada
6,195
Napa Auto Parts
Howard Klemmer
319
A -1 Rental
Caroline Fres uez
Account Balance
Colorado Container
Anthony Estrada
Account Balance
Custom Blending
Caroline Fres uez
Account Balance
DeTello Family Trust
Anthony Estrada
Account Balance
Express Personnel
Caroline Fres uez
Account Balance
H Genius Compliance Control
Anthony Estrada
Account Balance
J.M. Swank
Howard Klemmer
Account Balance
Monfort Food Dist.
Anthony Estrada
Account Balance
Monfort Food Dist.
Howard Klemmer
Account Balance
Multi Foods
Anthony Estrada
Account Balance
Shamrock Foods Co.
Anthony Estrada
Account Balance
3 Principles:
Anthony J. Estrada
Caroline Fresquez
Candelario J. Estrada
EXHIBIT
10
I!I� I X111 I� II�I�'IAVIII��I
INFORMATION SHEET
ORDER NO: 98 -592 -
Please direct correspondence to:
Valley Title Company
1104 North Main
Pueblo, Colorado 81003
TO: CAROLINE FRESQUEZ
DATE: October 19,1998 at 7:00 A.M.
LEGAL DESCRIPTION: SEE ATTACHED DEED
Grantee in last instrument apparently transferring ownership:
ESTRADA FOODS, INC.
Trust Deeds, Mortgages and Lien Documents which apparently are
unreleased and appear to affect the subject property since the above
date:
1. Financing Statement from ESTRADA FOODS, INC., debtor to
JOHN L. RAINALDI, secured party as shown in instrument recorded
November 27, 1996 in Book 2950 at page 101 and Assignment
recorded October 10, 1997 in Book 3044 at page 911.
2. Deed of Trust from: ESTRADA FOODS, INC
to the Public Trustee of Pueblo County
for the use of: JOHN L. RAINALDI
to secure: $400,000.00
dated: November 21, 1996
recorded: November 27, 1996 in Book 2950 at page 103
NOTE Assignment, in connection with above Deed of Trust, to
BARSHOP VENTURES, INC. recorded October 10, 1997 in
Book 3044 at page 866, Modification and Extension
of above Deed of Trust recorded October 10, 1997 in
Book 3044 at page 869 and First Amendment to Second
Lien Deed of Trust recorded October 10, 1997 in Book
3044 at page 893, Assignment to BVI INVESTMENTS, LTD
recorded May 7, 1998 in Book 3120 at page 735 and
Second Amendment to Deed of Trust recorded May 7,
1998 in book 3120 at page 756.
3. Deed of Trust from: ESTRADA FOODS, INC
to the Public Trustee of Pueblo County
for the use of: PEAK NATIONAL BANK
to secure: $750,000.00
dated: June 19, 1997
recorded: June 20, 1997 in Book 3008 at page 552
(Continued)
E HIBIT
11
Information Sheet (continued)
NOTE: Subordination Agreement in connection with above -
Deed of Trust recorded June 20, 1997 in Book 3008 at
page 562.
NOTE: Notice of Election and Demand for Sale by Public
Trustee in connection with above Deed of Trust
recorded August 21, 1998 at Reception No. 1235344.
Public Trustee's Certificate of Purchase recorded
October 16, 1998 at Reception No. 1243999.
4. Financing Statements from ESTRADA FOODS, INC., debtor to
BARSHOP VENTURES, INC., secured party as shown in
instrument recorded November 21, 1997 in Book 3058 at page
749 and to PEAK NATIONAL BANK recorded June 20, 1997 in
Book 3008 at page 560.
5. Deed of Trust from: ESTRADA FOODS, INC.
to the Public Trustee of Pueblo County
for the use of: PUEBLO COUNTY
to secure: $183,326,76
dated: June 26, 1997
recorded: July 10, 1997 in book 3014 at page 852
6. Transcript of judgment in favor of AIR TECH INC against
ESTRADA FOODS, INC.; ET CONSTRUCTION /PROPERTY MANAGEMENT,
in the amount of $7,757.32 plus court costs, Civil Action•
98c- 000100, Division 4, County Court, recorded January 28,
1998 in Book 3079 at page 316.
7. Notice of Intent to File Lien Statement recorded February
17, 1998 in Book 3085 at page 817 and Lien Statement
recorded February 17, 1998 in Book 3085 at page 818
(FERGUSON). .
8. Notice of Intent to File Lien Statement recorded March 17,
1998 in Book 3098 at page 125 and Lien Statement recorded
March 17, 1998 in Book 3098 at page 126. (ROYAL)
9. Statement of Lien recorded March 30, 1998 in Book 3103 at
page 266. (Atlas Appliance)
10. Financing Statement from ESTRADA FOODS, INC., debtor to
BARSHOP VENTURES, INC., secured party as shown in
instrument recorded May 7, 1998 in Book 3120 at page 778.
11. Deed of Trust from: ESTRADA FOODS, INC.
to the Public Trustee of Pueblo County
for the use of: MARTIN ZIESMAN
to secure: $200,000.00
dated: March 19, 1998
recorded: June 17, 1998 at Reception No. 1224178.
(Continued)
Information Sheet (continued)
12. Financing Statement from ESTRADA FOODS, INC., debtor to
MARTIN ZIESMAN, secured party as shown in instrument '
recorded June 17, 1998 at Reception No. 1224181..
13. Transcript of judgment in favor of DAWN FOOD PROD INC.
against ESTRADA FOODS INC.;ANTHONY ESTRADA,in the amount of
$12,725.36 plus court costs, Civil Action No. 98CV- 002468
District Court, recorded July 2,1 998 at Reception No.
1226926.
14. Transcript of judgment in favor of R&R HEATING AND AIR
CONDITIONING, INC. against ESTRADA FOODS, INC.,, in the
amount of $32,823.77 plus court costs, Civil Action
No.98CV000287,
District Court, recorded July 13, 1998 at Reception No.
1228630.
15. Deed of Trust from: ESTRADA FOODS, INC.
to the Public Trustee of Pueblo County
for the use of: ESTRADA INTERNATIONAL FOODS, INC.
to secure: $950,000.00
dated: February 1, 1998
recorded: July 20, 1998 at Reception No. 1229757.
16. Financing Statement from ESTRADA FOODS, INC., debtor to
ESTRADA INTERNATIONAL FOODS, INC., secured party as shown
instrument recorded July 20, 1998 at Reception No.
1229758.
17. Federal Tax Lien by United States Internal Revenue Service
against ESTRADA FOODS INC, in the amount of $121,778.21,
Dated July 17, 1998 and recorded July 24, 1998 at
Reception No. 1230518.
18. Transcript of judgment in favor of MIDWEST EXPRESS, INC.,
dba MIDWEST FREIGHT SERVICES, INC. against,ESTRADA FOODS,
INC., in the amount of $7,668.23 plus court costs, Civil
Action No. 98C3629, County Court, recorded August 20, 1998
Reception No. 1235113.
This information is for your use and benefit only. The
information has been taken from our tract indices and the
instruments referred herein have not been examined to determine
their legality or valid legal description. This information is
neither guaranteed nor certified and is not an Abstract of Title,
Title Opinion nor a Guaranty of Title and our liability is
limited to the amount of the fees charged. No Name or Judgment
Search has been made nor have the records of the County Treasurer
been researched.
VALL 1 TLE OMP P BLO,INC
BY
E
t~
r
ESTRADA FOODS, INC.
=
Schedule of Pending Litigation
_
N
Pending
Case
Court
Total
Action Filed
Litigation
Number
Jud ment
A -1 Rental vs. Estrada Foods, Inc. & Caroline Fresquez
County Court
599
Judgment/Writ of Garnishment with notice of exemption and pending levy
(supplier of rented equipment)
Pueblo, CO
Beck Foods vs. Estrada Foods, Inc., RMCS, A. Estrada
98 -CV -375 Div. E
District Court
66,608
Civil Action, Trial scheduled for Feb.16,1999
(raw material supplier)
Pueblo, CO
Brucepac, Inc. vs. Estrada Foods, Inc.
98C -16756
Circuit Court
30,827
Summons has been issued and received
(raw material supplier)
of Maryland
Consul -Tech vs. Estrada Foods, Inc.
98SC076358
Circuit Court
2,844
Judgment has been entered against Estrada Foods
(computer equipment)
of Missouri
Dawn Foods vs. Estrada Foods, Inc. and A. Estrada
98 CV 2468.Ci. 9
Dist. Court
10,675
Judgment /Writ of Garnishment with notice of exemption and pending levy
(raw material supplier)
Denver, CO
Federal Express vs. Estrada Foods, Inc.
County Court
10,000
Summons has been received
(shipments of freight)
Pueblo, CO
Howard Klemmer vs. Estrada Foods, Inc.,RMCS, and A. Estrada
98 CV 607, Div E
District Court
32,270
Complaint and summons has been received
(former CEO and director and shareholder - wages and expenses owed)
Pueblo, CO
Midwest Express vs. Estrada Foods, Inc.
9BC3629
County Court
7,437
Judgment /Writ of Garnishment with notice of exemption and pending levy
(freight company)
Pueblo, CO
Merchants Publishing Co. vs. Estrada Foods, Inc.
98CV959A
District Court
4,295
Motion for default judgment received
(supplier of printed material)
Pueblo, CO
Norwest Business Credit, Inc. vs. Estrada Foods, Inc. and A. Estrada
County Court
7,954
Summons received
(factoring company)
Denver, CO
R &R Heatting vs. Estrada Foods, Inc. and A. Estrada
98 CV 287 Div. A
District Court
32,824
Judgment/Order to answer interrogatories or to show cause
(supplier of building materials)
Pueblo, CO
E
t~
r
EXHIBIT
Pending
Case
Court
Total
Action Filed
Litigation
Number
Jud ment
Stone Container Corp. vs. Estrada Foods, Inc.
98 C 5531
County Court
8,581
Summons received
(supplier of raw materials)
Pueblo, CO
Ticos Mexican Foods, Inc. vs. Estrada Foods, Inc.
3- N46603
County Court
7,056
Summons received and Motion for approval for interogatories
(supplier of co- packed goods)
Denver, CO
U.S. Waste Industries, Inc, vs. Estrada Foods, Inc.
98C5491
County Court
7,283
Complaint and summons received
(service company - waste disposal)
Pueblo, CO
Glenn Van Blancom vs. Estrada Foods, Inc.,C. Fresquez and A. Estrada
98CV702 Div. C
District Court
7,538
Motion for default judgement received
(former General Manager of Company - wages owed)
Pueblo, CO
Waste Management of Cob. vs. Estrada Foods, Inc, and A. Estrada
(service company - waste disposal)
98-CV -981 Div.D
District Court
Pueblo, CO
9,963
Motion for entry of default and for entry of default judgment
Westco Products, Inc. vs. Estrada Foods, Inc.
98CV259 Div. D.
District Court
43,224
Judgment/Order to answer interrogatories or to show cause
(raw material supplier)
Pueblo, CO
ESTRADA FOODS, INC.
Exhibit
Schedule of Settled Litigation
Number
Total
Air Tech vs. Estrada Foods and E.T. Construction
(refrigeration repair company)
980100 Div. 4
County Court
Pueblo, CO
7,357
Settled via payment from garnishment
Ferguson vs. Estrada Foods and E.T. Construction
(supplier of bldg. materials)
Lien Filed In
3,204
Paid in full from loan transaction due to lien
Pueblo County
Singleton Sheet Metal
(supplier of bldg. materials)
Lien Filed In
1,814
Paid in full from loan transaction due to lien
Pueblo County
t-
m_
ESTRADA FOODS, INC.
Schedule 10 To The Disclosure Statement
Class 2 Small Claims
Exhibit
VENDOR
Allowed Claim
La Tolteca Foods, Inc.
496.34
Northstar Engineering & S
490.00
Transportation Services
480.00
Kirkpatrick Brokerage Co.
479.55
Hilvitz- Hansen
466.52
J. Scott Swenson
456.63
Melby & Anderson LLP
450.00
Kraft
449.20
Southwest Supply
439.33
Parkview Employee Assists
420.00
Ed Decker
385.87
Fairbanks Scales Inc.
384.00
Dan Fres uez
354.72
Porta Power
348.73
H.V. Covillo & Co.
342.88
Napa Auto Parts
319.47
Nobel /S sco Food Svcs.
297.63
W.W. Grainger, Inc.
284.86
John Martino Produce
282.12
Publishers Choice Reprint
280.00
TelWest Communications
269.92
Southern Colorado Wastewater
264.00
Harding Glass
251.68
Vidmar Motors
235.26
Eugenia Gallegos
232.80
Lyons Safety
215.86
M I R, Inc.
214.57
Honeyville Grain, Inc.
206.29
Clark Spring Water Com an
206.08
Perma Graphics
202.80
All Seasons Catering
200.00
City of Pueblo
200.00
G & M Transportation
200.00
Consolidated Plastics
199.61
W estern Mobile
196.32
Employers Council Service
190.56
Polar Services, Inc.
184.00
CHOICE Program Dept. of S
175.89
Ryder Transportation Sery
168.10
Communication Solutions
159.80
Vance Distributing
159.24
Automatic Data Processing
157.37
A.B.C. Plumbing
157.27
Industrial Gas Products
155.15
EXHIBIT
Page 1
1d
Totally Confused Tras ort
150.00
Paul Maes
145.90
Blumberg / Excelsior
145.74
CiRiZa Food Sales
144.72
Chem -Prof Door Co., Inc.
126.54
Sherril LaRocque
122.88
Grand Rental Center, Inc.
103.20
Abel Engeering Prof., Inc
102.00
Joseph Ruiz
100.00
TCI Cable
98.44
Clerk of the Court
97.17
Lucia Montoya
92.75
Cub Foods
87.02
Cherie Hefty
84.36
Royal Electrical Services
81.21
Stadia
75.00
Ronald Himstreet
72.13
Antique Rose Flower Shopp
72.05
Current Inc.
70.04
Venture Packaging
67.22
Food Markekting S ecialis
66.05
Norwest Bank
62.27
Goring Kerr
59.00
Ray's Rubber Stamps
55.90
Washington Label
55.00
Blueflame Gas, Inc.
51.60
Pikes Peak Scale Service
48.00
Mexican Foods Specialist
40.38
Joseph L. Hastings
40.00
Meinster & Franc y, Atty a
40.00
R & R Heating
40.00
James V. Hurson Associate
34.32
Flash Refrigeration
30.15
U S West The Directory So
27.56
Colorado Dept. of A ricul
26.00
Blazer Electric •
21.78
Candelario (Sonny) Estrad
17.39
MG Walbaum
15.82
My Friend The Printer, In
15.05
Beggs Safe & Lock Co, Inc
13.39
All Star Gas
12.00
Tharco
11.99
BatchMaster Software Corp
0.00
Cryogenic
0.00
Atlas Appliance
0.00
TOTAL
S 15,532.44
Page 2
ESTRADA FOODS, INC.
Schedule 11 To The Disclosure Statement
Class 3 Allowed Claims In Excess of $500.00
Exhibit
VENDOR
Allowed Claim
A -1 Rental, Inc.
665.70
Aardvark Box & Recycling
1,536.31
Advance Design Center, In
6,057.59
Advanced Burglar Alarm
670.90
Advanced Food System, Inc
1,314.21
All Fill, Inc.
13,972.78
American Portable Bld s.
924.98
Am cor Diagnostics, Inc.
2,422.50
Ashby Trans. -
650.00
AT & T Capital Corp.
2,281.39
AT &T
4,048.31
B.D. Associates
6,350.75
Barr Equipment
1,600.00
BatchMaster Software Corp
0.00
Beck Foods, Inc.
58,200.00
Benchmark Foods
10,338.80
Biggs, Kofford & Co.,P.C.
20,434.02
Bio Control Systems
865.59
Blakeman Transportation,
600.00
Board of Water Works
991.74
Bou hton's Precast, Inc.
659.81
Braden Frindt & Stinar LLC
1,006.50
BrucePac
30,826.70
Bun a Foods
536.21
Bush Boake Allen Inc.
24,229.89
Business Card
14,858.76
Carbonic Reserves
21,124.13
Cargill Inc.
10,472.03
CEI Supply, Inc.
1,953.18
Cellular One - Pueblo
2,790.09
Central Bag and Burlap Co
1,931.62
Charles E. Gallegos
2,564.40
Chem-Aqua
5,588.85
Cliff Brice
7,640.36
CO2 Services
3,308.95
Colorado Frozen Foods, In
1,326.50
Computer Resources
2,538.42
Consul Tech Management, t
3,441.87
Cope Office Supply
1,688.08
Corporate Express
1,899.49
Cryogenic
0.00
Dawn Food Products, Inc.
10,674.61
Define Box Co.
11,556.77
Deloss Industries
1,015.25
EIBIT
Page 1
Doboy Packing Machinery
611.30
Dubois Chemicals
1,475.67
Eggering Truck & Auto Rep
5,369.20
Elsie Lopez
1,444.15
Emer icare corporate Offi
2,705.00
Environmental Safety Grou
1,652.41
Fedex
8,789.04
Ferguson Enterprises, Inc
534.74
FFE Transportation Servic
11,032.96
Fiesta Canning Co., Inc.
17,926.34
Fisher Scientific
1,406.73
G & C Packing
6,314.67
G & I Industries
514.48
Gaetano's Restaurant
532.72
Glenn Van Blaircom
7,560.00
Great West Life
40,411.87
Gurule Trucking, Inc.
700.00
Hartford
42,199.05
Harvest Distribution
1,593.84
Harvest Meat
5,927.02
Highland Marketing Group
4,363.28
Howard Klemmer
32,270.00
Hugh Clum, Architect
1,109.85
IBT
1,148.29
Industrial Laboratories C
4,021.00
Interwest
1,041.13
J. R. Simplot Company
1,206.00
Jacqueline H. Cables
5,362.70
Jess Valdez
1,300.00
John Remesnik
776.00
Kaman Industries
881.89
Kelly Temporary Services,
513.58
Kentec, Inc.
1,950.00
Koch Supplies, Inc.
6,523.52
Lab Safety Supply Inc.
9,300.72
Latino Chamber of Commdre
2,327.00
LeMasters Janitorial Supp
2,423.96
Lewan
754.51
Logigroup
950.00
Loma International
1,942.00
Machlica Creative
15,699.83
Mama's Mexican Foods and
14,911.76
Marbur er
730.75
Marty Zeisman
210,210.67
Matt Dunn
9,350.00
McMaster -Carr Supply Comp
4,458.70
Merchants Publishing Co.
3,917.98
Mettler Toledo
639.30
Micro Technologies
1,036.59
Midwest Freight Services
7,437.43
Milwaukee Seasoning
1,178.87
Mission Foods Pueblo
116,889.61
Page 2
Mountain States Employer'
5,191.44
Nature Quality
5,403.55
Neo en Corporation
6,414.90
Nick Martinez
21,260.91
Northem Beef Products, 1
1,719.00
NTA Investor & Media Rela
1,423.27
Oneida Cold Storage
774.00
OTD Trans. & Storage
500.00
Packaging Film Sales, Inc
850.00
Peak National Bank
551.25
Penny Garcia
702.00
Peppers Unlimited, Inc.
4,343.00
Praxair
44,399.41
Protein Technologies Int.
3,882.98
Public Service Co. of Col
4,509.00
Pueblo Disposal
5,973.65
Pueblo Hotel Supply
14,293.21
R &R Heating
32,824.00
Rheon U.S.A.
1,089.70
Roth erber Johnson &Lon
30,244.98
Sangre de Cristo Arts & C
6,000.00
Sav On Office Supplies
2,330.05
Schwans Food Service
217,019.18
Seatle Fish
3,852.75
Silliker Laboratories Gro
5,557.25
Sinton's Dairy
146,542.10
Sno -White Linen & Uniform
1,254.81
Special Fab & Machine, In
1,822.00
Sprint Press Denver
10,029.16
SSE Foods -2
64,117.27
Steel City Agencies, Inc.
21,987.00
Stone Container Corporati
8,581.34
Stonehand Industries
866.90
Sunland Sanitary Supply
8,084.16
Sunny Fresh
4,759.50
Sunrise Foods, Inc.
23,211.44
Ted Detello
16,068.11
Tem tee Brand Steak, Inc.
3,078.00
Tenneco Packaging
4,014.89
Terminex Intemational
1,965.00
The Hartford
7,578.60
Tico's Foods of Mexico
1.760.00
Travel Planners, Inc.
1,317.00
Trinidad Benham
22,726.50
U.S. Dept of Agriculture
12,159.17
U.S. West Communications
3,935.05
United Parcel Service
4,978.50
Vicki Estrada
599.09
Vigil's Heating & Air Con
2,374.73
Wagner Packaging Machiner
4,432.50
Waste Management of Puebl
11,412.21
Weber Trucking
734.20
Page 3
Westco Products, Inc.
43,224.31
WestPlains Energy
30,464.16
William K. Lundy
11,250.00
WLN Associates
592.14
Zee Service, Inc.
1,067.66
Sub -Total
1,820,317.43
Pueblo County
183,326.76
WK Capital-Estrada International Foods, Inc.
1,005,000.00
Grand Total
$ 3,008,644.19
Page 4
ESTRADA FOODS, INC.
Estrada Family Payable & Loans
Schedule 2C Class 7 Allowed Claims
Exhibit
Vendor I Balance
Food Equipment Refab. of Colo.
233,259.0
Casa de Oro, LLC
208,289.0
Caroline Fres uez
83,949.0
E.T. Construction
62,265.0
Jess Estrada
33,099.0
Fres uez Enterprises
20,787.0
Rocky Mountain Cold Storage
22,582.0
Anthony Estrada
1,790.0
Total Estrada Pa ables
$ 666,020.00
EXHIBIT
16
DESCRIPTION OF EMPLOYMENT AGREEMENTS POST - EFFECTIVE DATE
The following is a description of the post- Effective Date terms of
employment of key employees of the Debtor and consultants to the Debtor. It is
anticipated that employment or consulting agreements will be executed on the
terms described below with other usual and customary employment agreement
or consulting agreement provisions.
(1) Hiram W. Lewis, III
(a) Hiram W. Lewis, III will be the Chief Executive Officer of the
Debtor. Mr. Lewis will report directly to the Board of
Directors of the Debtor.
(b) Mr. Lewis' salary will be $100,000.00 per annum.
(c) Mr. Lewis will receive all of the regular benefits of executives
of the Debtor including reimbursement of out -of- pocket
expenses incurred on behalf of the Debtor, including travel
expenses.
(d) Mr. Lewis has agreed to an eighteen (18) month
commitment with the Debtor and it is anticipated that Mr.
Lewis, who lives in Wichita, Kansas, will be available on a
full time basis with the Debtor and it is anticipated that he will
be spending not less than four (4) days per week in Pueblo,
Colorado for at least the first six months after the Effective
Date.
(e) Mr. Lewis will not, in his role as Chief Executive Officer of
the Company, be provided with any stock options or
warrants with respect to the Debtor's New Common Stock.
(2) Anthony J. Estrada
(a) Anthony J. Estrada will be the President of the Debtor post -
Effective Date. Mr. Estrada will report to and be subject to
the supervision of Mr. Lewis and the Board of Directors.
(b) Mr. Estrada's salary will be $75,000.00 per year and
Mr. Estrada will receive the regular benefits provided to
executives of Debtor, including reimbursement of expenses
incurred on behalf of the Debtor.
EXHIBIT
17
(c) Mr. Estrada will be entitled to participate in a performance
bonus program implemented by the Debtor which will enable
Mr. Estrada to potentially earn up to one times his annual
salary as a bonus. The performance bonus program will be
established by the Debtor with bonuses determined on a
sliding /gradiated scale tied to the performance of the Debtor.
It is anticipated that the performance criteria will be based on
the Debtor's quarterly gross revenues and quarterly profits
on an EBITDA basis.
(d) As part of Mr. Estrada's employment agreement, Mr. Estrada
will agree to a non - competition agreement pursuant to the
applicable provisions of Colorado law.
(e) Mr. Estrada will be granted stock options with respect to the
Debtor's New Common Stock such that Mr. Estrada will have
the ability, over a five (5) year period, to purchase shares of
Debtor's New Common Stock equivalent to 15% of the
issued and outstanding New Common Stock as of the
Effective Date treating all 1999 Series A preferred stock as if
it had been converted into New Common Stock. The stock
options shall be granted so that Mr. Estrada is able to
exercise such stock options and purchase 3% (up to the total
potential 15 %) at the end of each of the first five years after
the Effective Date. The stock option exercise price shall be
determined and established by the Debtor's Board of
Directors on or after the Effective Date.
(f) The stock options shall be also subject to full, immediate
vesting in the event of certain changes of control of Debtor.
(g) Mr. Estrada's employment contract will be for an initial term
of five (5) years.
(3) Steve Castanedo
(a) Mr. Castanedo will be Vice President of Operations.
Mr. Castanedo will report to and be subject to the
supervision of Mr. Lewis.
(b) Mr. Castanedo's salary will be $75,000.00 per year and
Mr. Castanedo will receive the regular benefits provided to
executives of Debtor, including reimbursement of expenses
incurred on behalf of the Debtor.
(c) Mr. Castanedo will be entitled to participate in a performance
bonus program implemented by the Debtor which will enable
Mr. Castanedo to potentially earn up to one times his annual
2
230761 01 12119198 11 34 AM
salary as a bonus. The performance bonus program will be
established by the Debtor with bonuses determined on a
sliding /gradiated scale tied to the performance of the Debtor.
It is anticipated that the performance criteria will be based on
the Debtor's quarterly gross revenues and quarterly profits
on an EBITDA basis.
(d) As part of Mr. Castanedo's employment agreement,
Mr. Castanedo will agree to a non - competition agreement
pursuant to the applicable provisions of Colorado law.
(e) Mr. Castanedo will be granted stock options with respect to
the Debtor's New Common Stock such that Mr. Castanedo
will have the ability, over a five (5) year period, to purchase
shares of Debtor's New Common Stock equivalent to 3% of
the issued and outstanding New Common Stock as of the
Effective Date treating all 1999 Series A preferred stock as if
it had been converted into New Common Stock. The stock
options shall be granted so that Mr. Castanedo is able to
exercise such stock options and purchase 0.6% (up to the
total potential 3 %) at the end of each of the first five years
after the Effective Date. The stock option price shall be
determined and established by the Debtor's Board of
Directors on or after the Effective Date.
(f) The stock options shall also be subject to full, immediate
vestment in the event of certain changes of control of
Debtor.
(g) Mr. Castanedo's employment contract will be for an initial
term of five years.
(h) Mr. Castanedo currently has an agreement with the Debtor.
The agreement will be assumed by Debtor pursuant to the
applicable provisions of the Plan of Reorganization and
modified as described above post- Effective Date. The
outstanding obligations under the existing agreement will be
satisfied by Debtor paying 20% of the outstanding
obligations on the Effective Date and satisfying the
remaining balance by making equal monthly payments over
a 24 month period with seven percent (7 %) interest.
Debtor's obligation to Mr. Castanedo under the existing
agreement is $61,800.00.
230761.01 12/19/98 11 34 AM
(4) Caroline Fresquez
(a) Ms. Fresquez will be employed as Assistant Controller of the
Debtor. Ms. Fresquez shall report to and be subject to the
supervision of Mr. Lewis.
(b) Ms. Fresquez's salary will be $40,000.00 per year and
Ms. Fresquez will receive the regular benefits provided to
employees of Debtor, including reimbursement of expenses
incurred on behalf of the Debtor.
(c) Ms. Fresquez will be entitled to participate in a performance
bonus program implemented by the Debtor which will enable
Ms. Fresquez to potentially earn up to one -half (1/2) times
her annual salary as a bonus. The performance bonus
program will be established by the Debtor with bonuses
determined on a sliding /gradiated scale tied to the
performance of the Debtor. It is anticipated that the
performance criteria will be based on the Debtor's quarterly
gross revenues and quarterly profits on an EBITDA basis.
(5) Paul Turner
(a) Mr. Turner will be employed as Plant Engineer of the Debtor.
Mr. Turner shall report and be subject to the supervision of
Mr. Lewis.
(b) Mr. Turner's salary will be $65,000.00 per year and
Mr. Turner will receive the regular benefits provided to
executives of Debtor, including reimbursement of expenses
incurred on behalf of the Debtor.
(c) As part of Mr. Turner's employment agreement, Mr. Turner
will agree to a non - competition agreement pursuant to the
applicable provisions of Colorado law.
(d) Mr. Turner will be granted stock options with respect to the
Debtor's New Common Stock such that Mr. Turner will have
the ability, over a five (5) year period, to purchase shares of
Debtor's New Common Stock equivalent to 1 % of the issued
and outstanding New Common Stock as of the Effective
Date treating all 1999 Series A preferred stock as if it had
been converted into New Common Stock. The stock options
shall be granted so that Mr. Turner is able to exercise such
stock options and purchase 0.2% (up to the total potential
1 %) at the end of each of the first five years after the
Effective Date. The stock option price shall be determined
4
230761.01 12/19/98 11:34 AM
and established by the Debtor's Board of Directors on or
after the Effective Date.
(f) The stock options shall also be subject to full, immediate
vestment in the event of certain changes of control of
Debtor.
(g) Mr. Turner's employment contract will be for an initial term of
five years.
(h) Mr. Turner will be entitled to participate in a performance
bonus program implemented by the Debtor which will enable
Mr. Turner to potentially earn up to one half (1/2) times his
annual salary as a bonus. The performance bonus program
will be established by the Debtor with bonuses determined
on a sliding /gradiated scale tied to the performance of the
Debtor. It is anticipated that the performance criteria will be
based on the Debtor's quarterly gross revenues and
quarterly profits on an EBITDA basis.
(5) Robert C. Pate, Director of Debtor
(a) Mr. Pate will be retained by the Debtor post- Effective Date.
Mr. Pate will assist Mr. Lewis and the Debtor's Board of
Directors in a variety of projects related to the Debtor's
business post - confirmation. Mr. Pate will report directly to
the Board of Directors and/or Mr. Lewis, depending upon the
assigned project. Mr. Pate is a principal in Compadres
Ventures, Inc. and is an attorney and certified public
accountant. Mr. Pate was previously a State District Judge
serving on the appointment of Governor George W. Bush.
Also, Mr. Pate has represented Barshop related entities for
over ten (10) years. Mr, Pate lives in Corpus Christi, Texas.
(b) Mr. Pate's fee will be $75,000.00 per year payable monthly
in the amount of $6,250.00. Mr. Pate will be entitled to
reimbursement of out -of- pocket expenses incurred on behalf
of the Debtor, including travel expenses.
(c) Mr. Pate's contract will be for an initial 18 month term.
(d) Mr. Pate will be available by phone and fax on a full time
basis and it is anticipated that he will travel to Pueblo,
Colorado on an as needed basis which likely will be at least
two (2) days per month or more.
5
230761.01 12/19/98 11:34 AM
Exhibit 18
Estrada Foods, Inc.
Chapter 7 Liquidation Analysis
Prepared by Debtor
(Effective Date of the Plan assumed to be March 15, 1999)
Liquidation value of
assets other than
causes of action
(See Exhibit 18-A)
Less: Class 10 Allowed
Secured Claim
Less: Class 9 Allowed
Secured Claim
Less: Class 11 Allowed
Secured Claim (1)
Net Liquidation Value
of assets other than
Causes of Action
Net Liquidation Value of
Causes of Action
(See Exhibit 18 -13)
Less:
Chapter 7 trustee fee (est.)
Chapter 7 professional fees (est.)
Net Liquidation Value
in Chapter 7
Less: Class 1 Allowed
Priority Claims (IRSICDR)
Net Liquidation Value for
unsecured creditors in Chapter 7
(1) Projected class 11 allowed claim at
03/15/99
Page 1 of 2
$543,571
- $7,954
4272,000
4700,000
$0
$129,456
- $4,000
- $10,000
$115,456
- 5193,057
$0
EXHIBIT
1 18
Exhibit 18
Estrada Foods, Inc.
Chapter 7 Liquidation Analysis
Prepared by Debtor
(Effective Dabs of the Plan assumed to be March 16, 1999)
Estimated return under Chapter 11 Plan:
Administrative Claimants:
$30,000
Class 1:
$193,058
Class 2:
$15,532
Class 3:
$500,000
Class 4:
$0
Class 5:
$5,000
Class 6:
$5,000
Class 7:
$79,922
Class 8:
$0
Class 9:
$0
Class 10:
$0
Class 11:
$0
Class 12:
$0
Class 13:
$302,928 (assumes cash election for entire class)
Class 14:
$0
Class 15:
$0
Amounts to cure assumed
$0
Executory Contracts
$107,000
Estimated return under Chapter 7:
Chapter 7 Trustee:
$4,000
Chapter 7 Administrative:
$10,000
Chapter 11 Administrative:
$20,000
Class 1:
$95,456
Class 2:
$0
Class 3:
$0
Class 4:
$0
Class 5:
$0
Class 6:
$0
Class 7:
$0
Class 8:
(repaid to the extent of value of collateral in liquidation)
Class 9:
(repaid to the extent of value of collateral in liquidation)
Class 10:
(repaid to the extent of value of collateral in Nquidation)
Class 11:
(repaid to the extent of value of collateral in liquidation)
Class 12:
$0
Class 13:
$0
Class 14:
$0
Class 15:
$0
Amount to cure Assumed
Executory Contracts
$0
Page 2 of 2
Exhibit 18 -A
Estrada Foods, Inc.
Chapter 7 Liquidation Analysis
Prepared by Debtor
(Effective Date of the Plan assured to be March 16, 1999)
Estimated Value
Current Assets
03!15199
Cash in Bank (1)
$10,000
Deposits (2)
$0
Accounts Receivable
$38,361
Employee Advances
$17,774
Inventory
$123,209
Prepaids
$23,288
Total Current Assets
$212,632
Fixed Assets
Land, Buildings & Improvements (3) $0
Machinery & Equipment (4) $299,977
Office Equipment (4) $25,737
Vehicles (4) $5,225
Accumulated Depreciation $0
Total Fixed Assets $330,939
:�it�TTI_TTr?
Reorganization Costs (5)
$0
Start Up Costs (5)
$0
Loan Costs (5)
$0
Factory Equip. — Inactive (6)
$0
Total Other Assets
$0
TOTAL ASSETS $543,571
(1) Estimated cash balance in liquidation (assume cessation of operations)
(2) Assumed deposits do not result in realizable balance in liquidation
(3) Assumed no real estate owned due to pre -filing foreclosure and junior Yen holder redemption
(4) Scheduled values, attached (see Exhibit 8 to Disclosure statement)
(5) No value realizable in liquidation
(6) All equipment owned by Debtor is included in Machinery & Equipment, above
Exhibit 18 -B
Estrada Foods, Inc.
Causes of Action
The following payments may be subject to avoidance and
recovery in a bankruptcy case pursuant to applicable bankruptcy
law. The Debtor neither admits nor denies that the following
payments would be recoverable,in a bankruptcy case.
$204,456 Represents the total payments to related
entities in calendar year 1998. These payments
may be recoverable as preferences under 11
U.S.C. Section 547. Defenses exist to the
recovery of these payments.
25,000 Represents the Debtor's estimate of total
(estimated) payments to unrelated vendors and creditors
during the 90 days prior to the anticipated
bankruptcy filing date of January 21, 1999,
which may not be in the ordinary course of
business and thereby are possibly recoverable
as preferences under 11 U.S.C. Section 547.
Defenses exist to the recovery of these
payments.
00 The Debtor is unaware of any payment or
transfer of property during calendar year 1998
which could be recoverable as fraudulent
conveyance pursuant to applicable bankruptcy
law.
$229,456 Sub -Total
100,000 Less: costs, attorney fees and adjustments for
the risk of recovery. (This is an estimate).
$129,456* Total estimated proceeds realized from
causes of actions
*There can be no assurance that these payments
are recoverable and the recipients of these
payments hold defenses to the causes of action.
ASSETS
CURRENT ASSETS:
11 75tra('a FJO:'.�,. Inc.
BALANCE SI:EET
DEC-'IBEER 31. 199b
Checkinz account
S
48,280.80
Construction Checking
account
6.531.24
Health Benefits
Account
405.49
Deposits
19,123.42
Petty cash
250.00
Accounts receivable
29.45
Expense account
receivable L MM
1
Expense account
receivable CF
1,000.00
Employee Payroll
Advance
4,435.35
Loan Rec'vble -
Casa de Oro
1,139.59
Loan Receivable
- ET Construct
836.30
Loan Receivable
- Food Equip.
33,937.46
Loan Receivable
- RMCS
25.25S.99
PREPAID EXPENSES
6.451.65
TOTAL CURRENT ASSETS S
PROPERTY AND EQUIPMENT:
Land 5 90.000.00
Buildings 15,909.00
Building improvements 291.251.09
Construction Phase - Clearing 1.054,213.93
Equipment 517,754.56
Furniture and fixtures 4.782.75
Vehicles 29.299.63
TOT PROPERTY AND EQUIPMENT S
OTHER A SSETS:
Utility deposits S 1.396.00
Orzanization costs 1.602.66
Start Up Costs 9:.109.5"
TOTAL OTTER ASSETS 5
TOTAL ASSETS
14S.9S ".S3
2.036.211.29
98.008.23
Final
EXHIBIT
19
111-aw-L ins
04/' 9 at U l .3 "P`l
LIABILITIES AND EQUITY
---------------- - - - - --
1990 Estrada Fcods. Inc.
BALANCE SHEET
DECEMBER 31. 1996
CURRENT LIABILITIES:
Accounts payable S
Insurance Benefits Payable
Notes payable - Short term
Payroll Payable
Deferred Compensation Payable
Use taxes payable
PAYROLL TAXES PAYABLE
ACCRUED TAXES
TOTAL CURRENT LIABILITIES
NON- CURRENT LIABILITIES:
LONG -TERM DEBT NET OF CURRENT $
NOTE PAYABLE - OFFICER
TOTAL NON - CURRENT LIABILITIES
EQUITY:
405.714.13
8.544.43
29.500.0.0
10.743.03
23.533.37
56.63
8.025.52
8.914.42
S
763,034.53
958,835.56
663.975.11
S 1,622.300-67
Common stock S 794,970.06
Retained earnings ( 235,949.33)
NET INCOME (LOSS) ( 661.643.03)
TOTAL EQUITY S( 102.627.90)
TOTAL LIABILITIES AND EQUITY-
S 2.253.20 - .3;
Final
J4 /04 /0 at 01 :46P�l
SALES
Sales
Payment discount
TOTAL SALES
COST OF SALES:
DIRECT MATERIALS
FACTORY OVERHEAD
TOTAL COST OF SALES
GROSS PROFIT
SELLING EXPENSES:
1990 Estrada Focus. inc.
I NCO`IE STATE.',1E T
FOR THE PERIOD(S )
Salaries - Sales
Broker's Commisions
Advertising
Promotions
Focus Groups
Sales Samples /Promotions
Training & Employee Developmnt
Travel
Uniforms Expense
Payroll taxes - Sales
TOTAL SELLING EXPENSES
GENERAL & A D M I N I S T R A T I V E : ,
Salaries & stages
Vacation /Holiday Pay
Deferred Compensation Expense
Moving expenses
Salaries & Wages - Research &
PrnFessional Services
Human Res. Dues & Subscription
Adv: sore Board Fees
Auto expense
Auto Repair /'Maintenance
BanK service charges
Dues S subscriptions
Funlraising Expenses
ut l ; l :les
Insurance - Employee group
:nsvranse - General
Workmens Compensat :on
12/01/96 - 12/31/96 01/01/96 - 12/31/'96
ACTUAL S ACTUAL S
-------------- - - - - -- -------------- - - - - --
S 133.13 S .19.526.94
( 7.68) ( 33.40)
------- - - - - -- ------- - - - - --
175.50 19,433.54
10.555.56
23.263.20
1,174.26
70,629.53
------- - - - - --
11,729.82
------- - - - - --
------- - - - - --
93.892.73
------- - - - - --
( 11,554.32)
( 74,404.19)
0.00
95.00
53.22
158.58
4,065.92
21.070.SS
0.00
1,288.42
0.00
6,625.00
2.599.33
25,272.78
675.49
4,154.37
17.73
303.79
0.00
204.25
0.00
7.53
7.414.74 59. 214.10
17.91.76
193.529.46
60.00
1.755.36
l 1.3 - 5.00)
11.033.3
0. 00
1,2S6.93
2.491.66
10.13y.i5
2.623.25
13.439.20
48'.:0
1.0
0.00
4.200.00
0.00
1.50
0.00
2.423.49
0.00
235.92
73.6:
1.
t 64.600.23)
0.00
5.124.95
11.152.
1.:62.00
12.61
556.92
6.633.04
bS .14
1.3_U.o;
Final
0 9 at 01:4-SP.'d 1996 - 7 straca Foods. Inc.
FOR THE PERIODS)
Interest expense
Interest Expense - Auto Loan
Leasing Expense
Legal & accounting
Miscellaneous expense
Office expense
Outside services
Postage expense
Process Equip. Install /Trainin
Production Equipment - Small
Racks & Trays
Rent expense
Repairs & maintenance
Taxes - Real estate
Taxes - Payroll
Taxes - Use (State & Local)
Telephone
Travel & Related
,Heals & Entertainment
Financing Costs
TOTAL GENERAL & ADMINISTRATI
NET OPERATING INCOME (LOSS)
12/01/96 - 12/31/96
ACTUAL S
48.665.45
89.49
( 3S,625.00)
6.712.32
0.00
3,476.35
0.00
29.20
1,738.48
19,125.74
2,774.75
491.75
0.00
8,914.42
860.55
313.03
2,78.5.60
( 9,955.99)
( 496.71)
0.00
14,653.56
33,652.63)
OTHER (INCOME) AND EXPENSES:
Other income
Temporary distrib.
TOTAL OTHER (INCOME) AND EXP
NET INCOME (LOSS) BEFORE TAY
NET INCOME (LOSS)
l 1
0.00
( 1
(
32..602.62)
5( 32.602.62)
01/01/96 - 1= /31/9u
ACTUAL S
5 87. 76-.38
90
13,140.50
25,341.34
1,127.00
13,090.73
3,075. 14
160.63
1,738.48
27,736.06
2,774.75
5,901.00
261.99
8,914.42
,12,136.23
313.03
21,100.13
27,262.85
4,614.69
450.00
532,560.54
666,173.83)
( 4,530.75)
0.00
f 4,530.75)
( 661,64S.08)
S( 661,64S.08)
0
Fina;
Estrada Foods, Inc.
BALANCE SHEET
DECEMBER 31, 1997
ASSETS
CURRENT ASSETS
CIB Operating Account
CIB Payroll
CIB Construction Account
CIB Health Benefits
Escrow Account
Deposits
Petty Cash
Accounts Receivable - Trade
Employee Advance
Employee Advance VB
Employee Advance GVB
Employee Advance EG
Employee Advance - JR
Inventory - Raw Material
Inventory Finished Goods
Prepaid Insurance
Prepaid Contracts
Prepaid workmans Comp
Prepaid Advertising
TOTAL CURRENT ASSETS
FIXED ASSETS
$(50,042.82)
(7,075.11)
75.19
(8,000.53)
16,690.89
55,021.36
250.00
34,813.51
610.71
2,651.38
1,000.00
500.00
400.00
78,382.68
204,698.57
3,211.79
422.30
4,240.70
12,227.78
--------- - - - - --
Buildings
1,643,548.45
Accum. Depr. Bldg. & Imp.
(29,118.21)
Building Improvements
376,563.85
Accum. Dep. Building Imp.
(6,782.32)
Factory Equipment
410,919.11
Accum. Dep. Factory Equipment
(45,656.91)
Office Equipment
40,594.08
Accum. Dep. Office Equipment
(5,825.87)
Vehicles
29,299.63
Accum. Dep. Vehicles
(5,194.78)
Lard
90,000.00
Computer Resources Computers
1,556.51
All -Fills (4 New)
89,731.96
3 Bay Sink
2,320.96
Groen SS Cook Kettle Med 200SP
8,700.00
Jaybird Foods Equipment
10,421.08
Hydroflaker (Maja)
7,500.00
Ribbon Blender Installation
72,970.01
Peerless Mixer
5,012.97
TOTAL FIXED ASSETS
OTHER ASSETS
350,078.40
2,696,560.52
Organizational Cost 1,602.66
Estrada Foods, Inc.
BALANCE SHEET
DECEMBER 31, 1997
ASSETS (Continued)
OTHER ASSETS (Continued)
Start Up Cost $76,598.63
Loan Cost 65,238.04
Factory Equipment - Inactive 309,090.93
--------- - - - - --
TOTAL OTHER ASSETS
TOTAL ASSETS
452,530.26
---------------
$3,499,169.18
--------- - - - - --
---------------
Estrada Foods, Inc.
BALANCE SHEET
DECEMBER 31, 1997
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts Payable - Trade
$1,314,346.30
Accounts Payable Accrual
107,300.97
Unearned Revenue
212,766.87
Garnishment Payables
490.96
Federal Withholdings
4,073.99
FICA Payable - Employer
2,951.50
FICA Payable - Employee
2,869.12
State Withholding Payable
1,398.85
FUTA Payable
152.27
SUTA Payable
606.66
Accrued Payroll
44,335.14
Accrued Payroll Taxes
16,460.74
Accrued Workmen Comp
22,106.29
Accrued Medical Insurance
3,962.67
Deferred Compensation Payable
3,133.37
Accrued - Taxes Other
14,804.58
Accrued Property Tax
8,171.57
Accrued Interest Expense
14,568.49
Short Term Lease - All Fills
18,126.43
Short Term Lease - Jeep
4,400.04
Short Term Lease - Refco 2
19,387.81
Short Term Lease - BCL
15,468.80
Short Term City Pueblo Grant
178,569.60
Short Term Peak National Loan
65,054.28
Notes Payable - Short Term
43,944.98
Notes Payable - Short Term -02
364,583.64
Notes Payable - Short Term EIF
225,585.56
TOTAL CURRENT LIABILITIES
LONG -TERM LIABILITIES
Long
Term
Lease
All Fills
6,572.32
Long
Term
Lease
Jeep
2,471.54
Long
Term
Lease
Refco 2
57,833.61
Long
Term
Lease
BCL
38,277.08
Notes
Payable Peak National
917,309.26
Long
Term
City
of Pueblo Grant
937,173.84
TOTAL LONG -TERM LIABILITIES
TOTAL LIABILITIES
EQUITY
Ccmmon Stock 815,370.06
Preferred Stock 1997 Series A 1,914,521.65
Retained Earnings - Prior (897,242.00)
RETAINED EARNINGS- CURRENT YEAR (3,002,739.66)
r, e.rw..,.y Mi 14
2,709,621.48
1,959,637.65
---------------
4,669,259.13
Estrada Foods, Inc.
BALANCE SHEET
DECEMBER 31, 1997
LIABILITIES AND EQUITY (Continued)
EQUITY (Continued)
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
$(1,170,089.95)
---------------
$3,499,169.18
Estrada Foods, Inc.
INCOME STATEMENT
FOR THE 12 PERIODS ENDED DECEMBER 31, 1997
+ - -- PERIOD TO DATE - -+ + - - -- YEAR TO DATE - - -+
ACTUAL PERCENT ACTUAL PERCENT
REVENUE
Sales
- Contracts
$197,421.72
82.9 %
904,026.15
93.3
Sales
- Food Service
39,878.22
16.7
65,132.40
6.7
Sales
Return - Food Service
909.00
.4
(140.09)
.0
TOTAL
REVENUE
--------- - - - - --
238,208.94
- - - - - -- ---------
100.0
- - - - --
969,018.46
- - - - - --
100.0
COST OF SALES:
COST OF SALES
Tortilla
64,824.41
27.2
202,444.26
20.9
Meats
66,244.25
27.8
297,754.18
30.7
Cheese
38,346.75
16.1
79,647.87
8.2
Beans
11,821.94
5.0
26,423.73
2.7
Fruit
6,447.53
2.7
35,113.13
3.6
Seasonings
25,806.35
10.8
80,669.65
8.3
Other Ingredients
10,994.36
4.6
139,509.16
14.4
Corn Flour /Maseca
925.69
.4
19,736.87
2.0
Inventory Adjustment - WIP
615.00
.3
5,519.14
.6
Inventory Adjustment - F.G.
(11,855.08)
(5.0)
(192,267.52)
(19.8)
Inventory Adjustment - Outdate
.00
.0
6,989.22
.7
Packaging
(293.15)
(.1)
2,045.05
.2
Packaging - Prod. Liners
1,113.98
.5
4,264.20
.4
Packaging - Corrugated
11,441.42
4.8
30,709.06
3.2
Packaging - Paper Liners
427.49
.2
359.31
.0
Packaging - Label Typical
3,171.21
1.3
8,990.47
.9
Packaging - Quick Loks
323.40
.1
582.60
.1
Packaging - Stretch Wrap
575.48
.2
1,285.59
.1
Packaging - Tape
268.68
.1
1,054.85
1
Labor - D.C. Processing
5,016.06
2.1
169,950.54
17.5
Overtime - D.C. Processing
.00
.0
3,460.04
.4
Vac & Hol - D.C. Processing
248.80
.1
644.39
.1
Labor - D.C. Packaging
58,785.28
24.7
311,497.17
32.1
Overtime - D.C. Packaging
6,240.75
2.6
19,693.02
2.0
Vac & Hol - D.C. Packaging
1,443.80
.6
4,002.22
.4
Ins. Health Ben. - D.C.
1,146.55
.5
5,009.98
.5
Ins. Worker Comp - D.C.
4,845.26
2.0
30,609.93
3.2
Payroll Taxes - D.C.
7,916.03
3.3
44,351.29
4.6
---------
TOTAL COST OF SALES
- - - - --
316,842.24
- - - - - --
133.0
--------- - - - - --
1,340,049.40
- - - - - --
138.3
---------
TOTAL COST OF SALES
- - - - --
316,842.24
- - - - - --
133.0
--------- - - - - --
1,340,049.40
- - - - - --
138.3
---------
GROSS PROFIT
- - - - --
(78,633.30)
- - - - - --
(33.0)
--------- - - - - --
(371,030.94)
- - - - - --
(38.3)
OPERATING EXPENSES
Salaries Mgmt. - Prod
20,900.43
8.8
98,525.81
10.2
Salaries Staff - Prod
2,427.90
1.0
11,458.96
1.2
Overtime - Prod
473.09
.2
3,839.14
.4
Vac'& Hcl - Prod
812.75
.3
1,136.75
.1
Auto Expense
.00
.0
967.94
.1
1 , 1 1MIM11MEHEI I it .
Estrada Foods, Inc.
INCOME STATEMENT
FOR THE 12 PERIODS ENDED DECEMBER 31, 1997
OPERATING EXPENSES
Auto Repair & Maint.
Depreciation Building
Depreciation Equipment
Depreciation Office Equip.
Depreciation - Vehicles
Dues & Subscriptions
Fuel - Equipment
Ins. Health Ben. - Prod
Ins. Worker Comp - Prod
Interest Expense - Prod
Laundry & Uniforms
Laundry & Uniform Tortilla Pro
Lease Expense
Miscellaneous Expense
Operating Supplies
Operating Supplies - Office
Operating Supplies Tort. Prod
Outside Service
Outside Serv.- Pre - Employ Exp
Outside Services Tort Prod.
Postage Expense
Payroll Taxes - Prod
Rent Building
Rent - Equipment
Repair & Main - Building
Repairs & Main Bldg. Tort.
Repair & Main - Equip.
Repair Main. Equip - Motors
Repair & Main. Equip - Service
Repair & Main Equip - Refrig.
Repair & Main Equip. - Tort.
Storage Exp. - Production
Taxes - Prod. - Real Estate
Taxes - Prod. - Other
Telephone Expense
Training & Seminars
Travel & Related
Travel - Meals & Enter. Prod
Travel - Mileage
Utilities - N2 Gas
Utilities - CO2
Utilities - Electric
Utilities - Natural Gas
Utilities - Water & Sewer
Utilities - Waste Water
Utilities - Electric Tort
Utilities - Natural Gas Tort
Utilities - Water /Sewer Tort
Utilities - Waste Water Tort
Salaries Mgmt. - R & D
Salaries Staff - R & D
+ - -- PERIOD TO DATE - -+ + - - -- YEAR TO DATE - - -+
ACTUAL PERCENT ACTUAL PERCENT
(Continued)
$1,097.47
.5
1,311.37
.1
18,500.53
7.8
35,900.53
3.7
(48,943.09)
(20.5)
45,656.91
4.7
4,271.20
1.8
4,271.20
.4
2,892.04
1.2
2,892.04
.3
.00
.0
187.50
.0
509.36
.2
4,689.03
.5
368.42
.2
432.19
.0
95.26
.0
509.82
.1
7,828.67
3.3
9,679.43
1.0
2,696.95
1.1
16,728.83
1.7
101.36
.0
704.03
.1
1,637.46
.7
8,598.59
.9
40.00
.0
14,356.46
1.5
11,707.49
4.9
89,488.40
9.2
5.57
.0
2,774.97
.3
.00
.0
85.63
.0
3,691.09
1.5
58,897.62
6.1
.00
.0
4,998.80
.5
.00
.0
753.26
.1
.00
.0
87.07
.0
2,177.92
.9
23,418.23
2.4
7,000.00
2.9
81,841.09
8.4
3,793.29
1.6
29,631.69
3.1
2,219.74
.9
16,806.64
1.7
1,970.68
.8
11,740.60
1.2
523.45
.2
153,399.18
15.8
578.25
.2
5,716.92
.6
13,831.29
5.8
93,590.56
9.7
110.00
.0
14,919.21
1.5
.00
.0
1,305.66
.1
10,947.81
4.6
51,688.23
5.3
742.87
.3
7,428.70
.8
(524.14)
(.2)
17,572.18
1.8
1,664.45
.7
9,512.73
1.0
913.79
.4
5,596.04
.6
757.00
.3
2,989.85
.3
249.83
.1
1,036.15
.1
40.00
.0
40.00
.0
5,261.43
2.2
48,712.56
5.0
48,762.85
20.5
140,875.09
14.5
5,139.70
2.2
35,346.34
3.6
8,349.67
3.5
34,565.51
3.6
1,353.98
.6
5,870.86
.6
(640.00)
(.3)
(640.00)
(.1)
1,780.46
.7
12,784.71
1.3
947.53
.4
3,489.73
.4
37.81
.0
1,031.01
.1
.00
.0
568.35
.1
2,530.00
1.1
27,972.67
2.9
3,072.79
1.3
25,066.86
2.6
Estrada Foods, Inc.
INCOME STATEMENT
FOR THE 12 PERIODS ENDED DECEMBER 31, 1997
+ - -- PERIOD TO DATE - -+ + - - -- YEAR TO DATE - - -+
ACTUAL PERCENT ACTUAL PERCENT
OPERATING EXPENSES
Overtime Wages - R & D
Vac & Hol - R & D
Ins. Health Ben. - R & D
Ins. Worker Comp - R & D
Operating Supplies
Payroll Taxes - R & D
Travel - Mileage
Salaries Mgmt. - Maint
Salaries Staff - Maint
Overtime - Maint
Vac & Hol -.Maint.
Ins. Health Ben. - Maint
Ins. Worker Comp. Maint
Payroll Taxes - Maint.
Labor - Sani.
Overtime - Sani.
Vac & Hol - Sani.
Ins. Health Ben. - Sani.
Ins. Worker Comp - Sani.
Operating Supplies - Sani.
Outside Services - Sani.
Payroll Taxes - Sani.
Salaries Mgmt. - Q.C.
Salaries Staff - Q.C.
Overtime - Q.C.
Vac & Hol - Q.C.
Ins. Health Ben. - Q.C.
Ins. Worker Comp - Q.C.
Operating Supplies - Q.C.
Outside Services - Q
Payroll Taxes - Q.C.
Travel - Meals & Enter. Q.C.
Travel - Mileage - Q.C.
Salaries Mgmt. - HR
Vac & Hol - HR
Ins. Health Ben. - HR
Operating Supplies HR
Outside Services - HR
Payroll Taxes - HR
Training & Seminars HR
Travel & Related HR
Travel - Meals & Enter. HR
Operating Supplies Commom Car
Common Carrier Exp.
Case Allowances
Artwork & Plates
Food Shows
Fccus Groups
Promctions
Advercisina
Salaries Mamt. - Sales
(Continued)
$447.16
.2
2,103.84
.2
163.80
.1
473.54
.0
440.55
.2
1,876.93
.2
394.68
.2
3,200.61
.3
124.83
.1
1,064.45
.1
612.67
.3
3,704.02
.4
.00
.0
964.44
.1
3,414.27
1.4
11,174.07
1.2
1,683.48
.7
1,683.48
.2
287.64
.1
287.64
.0
64.00
.0
839.60
.1
274.81
.1
1,284.26
.1
115.34
.0
115.34
.0
620.52
.3
1,240.58
.1
4,017.90
1.7
14,304.59
1.5
901.30
.4
1,063.22
.1
413.60
.2
657.20
.1
65.54
.0
451.43
.0
315.86
.1
1,225.52
.1
2,051.43
.9
20,665.02
2.1
11,628.74
4.9
83,605.16
8.6
575.51
.2
1,650.48
.2
1,938.49
.8
14,073.28
1.5
2,132.17
.9
11,606.37
1.2
497.22
.2
2,344.53
.2
647.27
.3
808.87
.1
131.25
.1
546.84
.1
331.25
.1
2,342.96
.2
3,164.37
1.3
29,434.97
3.0
19,315.89
8.1
43,244.20
4.5
499.32
.2
2,595.31
.3
.00
.0
118.48
.0
76.00
.0
76.00
.0
2,724.63
1.1
13,870.77
1.4
123.85
.1
123.85
.0
49.72
.0
196.71
.0
45.00
.0
45.00
.0
(111.76)
.0
2,648.66
.3
365.92
.2
1,240.43
.1
.00
.0
485.00
.1
.00
.0
1,279.95
.1
.00
.0
30.50
.0
5.35
.0
(134.65)
.0
3,170.01
1.3
20,682.41
2.1
425.51
.2
612.12
.1
65.75
.0
3,749.95
.4
.00
.0
463.40
.0
113.95
.0
6,177.95
.6
6.99
.0
7,138.26
.7
644.06
.3
11,048.96
1.1
4,247.73
1.8
48,216.99
5.0
Estrada Foods, Inc.
INCOME STATEMENT
FOR THE 12 PERIODS ENDED DECEMBER 31, 1997
+ - -- PERIOD TO DATE - -+ + - - -- YEAR TO DATE - - -+
ACTUAL PERCENT ACTUAL PERCENT
OPERATING EXPENSES
(Continued)
Vac & Hol - Sales
$193.08
.1
193.08
.0
Auto Expense - Sales
.00
.0
118.00
.0
Brokers Fees - Sales
.00
.0
34,794.76
3.6
Ins. Health Ben. - Sales
290.00
.1
792.10
.1
Ins. Worker Comp - Sales
17.63
.0
119.21
.0
Operating Supplies - Sales
1,421.75
.6
3,377.09
.3
Outside Services - Sales
.00
.0
20,254.32
2.1
Payroll Taxes - Sales
339.73
.1
5,566.22
.6
Telephone Expense - Sales
.00
.0
78.48
.0
Travel & Related Sales
.00
.0
3,771.12
.4
Travel - Meals & Enter. Sales
.00
.0
237.85
.0
Travel - Mileage - Sales
.00
.0
424.90
.0
Samples - Sales
148.71
.1
7,347.56
.8
Samples /Freight - Sales
993.75
.4
7,279.71
.8
Salaries Mgmt. - G&A
20,225.83
8.5
228,254.77
23.6
Salaries Staff G&A
1,422.30
.6
34,735.26
3.6
Overtime - G&A
224.28
.1
1,096.20
.1
Vac & Hol - G&A
884.39
.4
948.39
.1
Auto Expense - G&A
1,004.25
.4
8,069.46
.8
Auto Repair & Main. G&A
677.46
.3
4,490.75
.5
Bank Charges - G&A
1,732.20
.7
17,434.45
1.8
Finance Charges - G&A
415.00
.2
3,508.49
.4
Depreciation - Autos
2,302.74
1.0
2,302.74
.2
Deprec. Furn. & Fix. G&A
1,554.67
.7
1,554.67
.2
Amortization Start up
1,418.49
.6
8,510.94
.9
Donations - G&A
.00
.0
6,360.00
.7
Dues & Subscriptions G&A
.00
.0
1,863.76
.2
Fundraising Expense G&A
11,728.64
4.9
199,238.90
20.6
Insurance - General G&A
2,076.50
.9
20,954.83
2.2
Ins. Health Ben. - G&A
1,824.88
.8
18,505.71
1.9
Ins. Worker Comp - G&A
101.90
.0
3,470.38
.4
Interest Expense G&A
30,849.75
13.0
212,778.57
22.0
Lease Expense - G&A
(4,571.85)
(1.9)
3,017.13
.3
Loan Expense
10,123.92
4.3
30,264.02
3.1
Miscellaneous Expense - G&A
(5,382.67)
(2.3)
9,910.34
1.0
Office Expense G&A
578.78
.2
3,142.56
.3
Operating Supplies G&A
.00
.0
15,802.23
1.6
Outside Services G&A
(90.00)
.0
31,658.20
3.3
Outside Serv. - Pre- Employ.Exp.
.00
.0
120.00
.0
Postage Expense G&A
912.00
.4
3,609.23
.4
Payroll Taxes - G&A
1,488.95
.6
18,448.34
1.9
Prof. Services -Adv. Board G&A
.00
.0
161.54
.0
Prof Services- Consulting G&A
4,639.00
1.9
17,225.94
1.8
Prof Services -Legal & Acct G&A
8,250.00
3.5
39,251.43
4.1
Renc- Building G&A
2,950.50
1.2
2,950.50
.3
Rent -Other G&A
752.49
.3
6,722.51
.7
Repair & Main - Equip G&A
.00
.0
710.55
.1
Taxes - Real Estate G&A
.00
.0
742.87
.1
Taxes Other G&A
350.58
.1
693.38
.1
Taxes - Use G&A
.00
.0
1,201.15
.1
Telephone Expense G&A
3,378.60
1.4
30,045.64
3.1
DEC -12 -98 SAT 11;29
ESTRADA FOODS
FAX NO, 719 542 5472
Estrada Foods, Inc.
BALANCE SHEET
OCTOBER 31, 1998
ASSETS
CURRENT ASSETS
CIB Operating Account
CIB Payroll
CIB Health Benefits
CIB Canon Bank
Deposits
Petty Cash
Accounts Receivable - Trade
Employee Advance
Employee Advance VB
Employee Advance - EL
Loan Receivable FEROC
Loan Receivable RMCS
Inventory - Raw Material
Inventory WIP
Inventory Finished Goods
Prepaid Insurance
Prepaid Contracts
Prepaid Workmans Comp
Prepaid Advertising
TOTAL CURRENT ASSETS
FIXED ASSETS
Buildings
Accum. Depr. Bldg. & Imp.
Building Improvements
Accum. Dep, Building Imp.
Factory Equipment
Accum. Dep. Factory Equipment
Office Equipment
Accum. Dep. Office Equipment
Vehicles
Accum. Dep. Vehicles
Land
Computer Resources Computers
CO2 Equipment
Pro50o Laptop Computer
TOTAL FIXED ASSETS
OTHER ASSETS
$ (107.97)
(18.81)
(25.00)
(9,374.35)
50,799.27
206.55
38,361.47
997.36
1,276.38
500.00
2,791.32
1,276.16
31,076.00
3,199.00
88,933.78
540.37
422.30
12,195.27
10,130.07
1,643,546.45
(64,050.38)
377,497.85
(14,827.22)
615,893.69
(158,795.42)
46,789.08
(17,034.92)
13,948.00
(7,907.72)
90,000.00
1,556.51
41,807.90
2,406.73
Start Up Cost 62,413.73
Loan Cost 54,384.75
Factory Equipment - Inactive 273,035.76
TOTAL OTHER ASSETS EXHIBIT
1 20
P. 13
233,179.17
2,570,832.55
389,834.24
Estrada Foods, Inc.
INCOME STATEMENT
FOR THE 12 PERIODS ENDED DECEMBER 31, 1997
+ - -- PERIOD TO DATE - -+ + - - -- YEAR TO DATE
ACTUAL PERCENT ACTUAL PE
OPERATING EXPENSES
(Continued)
Training & Seminars G&A
$.00
.0
2,546.97
Travel & Related G&A
5,107.79
2.1
45,630.89
Travel - Meals & Enter. G&A
77.24
.0
5,632.73
Utilities G&A
.00
.0
2,284.56
Interest Income
(72.96)
.0
(1,554.32)
Other Income
.00
.0
(138,581.25)
Misc. Income - Jobs Program
(1,859.16)
(.8)
(17,424.21)
Gain or Loss on Sale of Asset
.00
.0
(2,450.00)
TOTAL OPERATING EXPENSES
--------- - - - - --
332,411.11
- - - - - -- ---------------
139.5
2,631,708.72
NET INCOME FROM OPERATIONS
--------- - - - - --
(411,044.41)
- - - - - -- ---------------
(172.6)
(3,002,739.66)
EARNINGS BEFORE INCOME TAX
--------- - - - - --
(411,044.41)
- - - - - -- ---------------
(172.6)
(3,002,739.66)
NET INCOME (LOSS)
--------- - - - - --
$(411,044.41)
- - - - - -- ---------------
(172.6)%
(3,002,739.66)
.3
4.7
.6
.2
(.2)
(14.3)
(1.8)
(.3)
271.6
(309.9)
(309.9)
(309.9)
DEC -12 -98 SAT 11:30
ESTRADA FOODS
FAX N0, 719 542 5472
Estrada Foods, Inc.
BALANCE SHEET
OCTOBER 31, 1998
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts Payable - Trade
$2,002,103.26
Accounts Payable Accrual
11,150.89
Unearned Revenue
7,710.60
Garnishment Payables
638.21
Federal Withholdings
61,195.99
FICA Payable - Employer
41,403.03
FICA Payable - Employee
41,403.03
Medicare Payable - Employer
9,683.58
Medicare Payable - Employee
9,683.58
State Withholding Payable
24,672.74
FUTA Payable
301.62
SUTA Payable
59.05
Accrued Payroll
19,322.58
Accrued Workmen Comp
44,413.29
Accrued Medical Insurance
33,395.97
Deferred Compensation Payable
3,133.37
Accrued - Taxes Other
15,561.70
Accrued Property Tax
15,347.60
Accrued Interest Expense
64,020.41
Accrued Fundraising Expense
40,000.00
Short Term Lease - All Fills
9,762.93
Short Term Lease - Refco 2
19,387.81
Short Term L/P NEC America
841.68
Short Term City Pueblo Grant
178,569.60
Short Term Peak National Loan
65,054.28
Short Term - Nick Martinez
21,260.91
Short term NP SSE Foods
64,117.27
Notes Pay -Short Term CDO
215,911.81
N/P Short Term BVI - $50,000R
77,247.32
Notes Pay -S /Term Barshop -G /S
47,395.97
N/P Short Term BVI $100,000R
139,855.69
Notes Payable - Short Term EIF
754,109.37
Notes Payable- Norwest Finance
7,954.43
TOTAL CURRENT LIABILITIES
LONG -TERM LIABILITIES
Long
Term Lease
Refco 2
35,745.02
Long
Term Lease
- NEC America
4,736.29
Notes
Payable -
CF
19,123.06
Notes
Payable AJE
14,423.10
Notes
Payable -
HWK
9,984.62
Notes
Payable -
M. Dunn
9,350.00
Notes
Payable -
D. Fresquez
2,400.00
Notes
Payable -
G Van Blaricom
7,560.00
Notes
Payable Peak
National
804,713.04
Long
Term City
of Pueblo Grant
836,449.04
Long
term note
payable - BVI
630,027.36
P. 15
4,046,669.57
DEC -12 -98 SAT 11:30 ESTRADA FOODS FAX NO. 719 542 5472 P.14
Estrada Foods, Inc.
BALANCE SHEET
OCTOBER 31, 1998
TOTAL ASSETS $3,193,845.96
DEC -12 -98 SAT 11 31
ESTRADA FOODS
Estrada
INCOME
FOR THE 10 PERIODS
FAX NO. 719 542 5472
Foods, Inc.
STATEMENT
ENDED OCTOBER 31, 1998
P. 17
+ - -- PERIOD TO DATE - -+ + - - -- YEAR TO DATE - - -+
ACTUAL PERCENT ACTUAL PERCENT
REVENUE
Sales
- Contracts
$3,183.41
6.2 $
1,652,178.17
86.1
Sales
- Food Service
47,751.68
93.8
216,779.77
11.3
Sales
- Deli
.00
.0
2,109.60
.1
Sales
- Other
.00
.0
48,468.62
2.5
Sales
Returns - Contract
.00
.0
(768.24)
10
Sales
Return - Food Service
.00
.0
(504.45)
.0
TOTAL
REVENUE
50,935.09
100.0
1,918,263.47
100.0
COST OF SALES:
COST OF SALES
Unclassified Direct
.00
.0
16,504.12
.9
Tortilla
6,156.59
12.1
377,477.97
19.7
Meats
4,957.70
9.7
232,324.58
12.1
Cheese
4,194.75
8.2
352,489.66
18.4
Beans
3,339.95
6.6
64,693.17
3.4
Fruit
1,444.16
2.8
12,103.35
.6
Seasonings
1,648.08
3.2
69,191.52
3.6
Other Ingredients
5,479.57
10.8
128,709.90
6.7
Corn Flour /Maseca
.00
.0
4,981.61
.3
inventory Adjustment - WIP
.00
.0
(3
(.2)
Inventory Adjustment - F.G.
62,156.13
122.0
335,802.91
17.5
Packaging
(410.40)
(.8)
996.87
.1
Packaging - Prod. Liners
.00
.0
1,806.44
.1
Packaging - Corrugated
113.11
.2
45,553.36
2.4
Packaging - Paper Liners
.00
.0
46.49
.0
Packaging - Label Typical
783.64
1.5
1,548.02
.1
Packaging - Quick Loks
.00
.0
(170.27)
.0
Packaging - Stretch Wrap
(34.50)
(.1)
1,687.77
.1
Packaging - Tape
133.80
.3
1,749.11
.1
Purchased Products
.00
.0
6,757.81
.4
Labor - D.C. Processing
3,517.39
6.9
61,370.67
3.2
Overtime - D.C. Processing
244.97
.5
6,995.85
.4
Vac & Hol - D.C. Processing
.00
.0
1,930.00
11
Gainsharing -D.C. Processing
376.41
.7
5,020.95
,3
Other Earnings - D.C.Processing
.00
.0
233.59
10
Labor - D.C. Packaging
11,268.63
22.1
247,592.99
12.9
Overtime - D.C. Packaging
.81
.0
8,824.80
.5
Vac & Hol - D.C. Packaging
.00
.0
4,259.40
.2
Gainsharing - D.C. Packaging
1,332.18
2.6
25,849.36
1.3
Other Earnings - D.C. Packagin
.00
.0
1,652.56
.1
Ins. Health Ben. - D.C.
.00
.0
6,634.42
.3
Ins. Worker Comp - D.C.
939.73
1.8
22,661.56
1.2
Payroll Taxes - D.C.
1,551.09
3.0
31,658.62
1.7
TOTAL COST OF SALES
109,195.79
214.4
2,075,740.16
108.2
TOTAL COST OF SALES
109,195.79
214.4
2,075,740.16
108.2
GROSS PROFIT
(58,260 70)
(114.4)
(157,476.69)
(8.2)
DEC -12 -98 SAT 11;31 ESTRADA FOODS FAX NO, 719 542 5472 P,16
Estrada Foods, Inc,
BALANCE SHEET
OCTOBER 31, 1998
LIABILITIES AND EQUITY (Continued)
LONG -TERM LIABILITIES (Continued)
Notes Payable M. ziesman
$210,210.67
TOTAL LONG -TERM LIABILITIES
2,584,722.20
TOTAL LIABILITIES
6,631,391.77
EQUITY
Common Stock
815,370.06
Preferred Stock 1997 Series A
1,929,521.65
Retained Earnings - Prior
(3
RETAINED EARNINGS- CURRENT YEAR
(2,282,455.86)
TOTAL EQUITY
(3,437,545.81)
TOTAL LIABILITIES AND EQUITY
$3,193,845.96
DEC -12 -98 SAT 11:32 ESTRADA FOODS FAX N0, 719 542 5472 P119
EsLrada Foods, Inc.
INCOME STATEMENT
FOR THE 10 PERIODS ENDED OCTOBER 31, 1998
+ - -- PERIOD TO DATE - -+ + - - -- YEAR TO DATE - - -+
ACTUAL PERCENT ACTUAL PERCENT
OPERATING EXPENSES (Continued)
Salaries Mgmt. - R & D
$.00
.0
690.00
.0
Salaries Staff - R & D
.00
.0
1,685.52
11
Overtime rages - R & D
.00
.0
156.15
.0
Vac & Hol - R & D
.00
.0
163.80
.0
Gainsharing - R & D
.00
.0
96.36
.0
Ins, Health Ben. - R & D
.00
.0
1,537.88
.1
Ins. Worker Comp - R & D
.00
.0
23.58
.0
Operating Supplies
188.45
.4
808.83
.0
outside Services
.00
.0
81.25
.0
Payroll Taxes - R & D
.00
.0
232.10
.0
Travel - Mileage
.00
.0
424.40
.0
Salaries Mgmt. - Maint
.00
.0
28,261.41
1.5
Salaries Staff - Maint
(378.00)
(.7)
9,452.91
.5
Overtime - Maint
(59.54)
(.1)
3,284.22
.2
Vac & Hol - Maint.
.00
.0
1,472.40
.1
Other Earnings - Maint.
.00
.0
86.50
.0
Gainsharing - Maint.
(11.05)
.0
1,011.66
.1
Ins. Health Ben. - Maint
.00
.0
4,993.40
.3
Ins. Worker Comp. Maint
(39.38)
(.1)
3,258.70
.2
Payroll Taxes - Main.
(34.67)
(.1)
1,353.05
.1
Payroll Taxes - Maint.
.00
.0
1,278.64
.1
Salaries - Mgt. Sanitation
.00
.0
12,960.00
.7
Labor - Sani.
4,453.31
8.7
54,482.14
2.8
Overtime - Sani.
105.73
.2
2,306.90
.1
Vac & Hol - Sani.
.00
.0
1,260.00
.1
Other Earnings - Sani.
.00
.0
61.88
.0
Gainsharing - Sani.
463.96
.9
4,702.24
.2
Ins. Health Ben. - Sani.
.00
.0
570.57
.0
Ins. Worker Comp - Sani.
364.72
.7
4,419.89
.2
Operating Supplies - Sani.
40.48
.1
3,590.47
.2
Outside Services - Sani.
.00
10
534.56
.0
Payroll Taxes - Sani.
398.20
.8
5,640.82
.3
Salaries Mgmt. - Q.C.
.00
.0
538.48
.0
Salaries Staff - Q.C.
3,803.58
7.5
56,924.75
3.0
Overtime - Q.C.
52.52
.1
2,141.42
.1
Vac & Hol - Q.C.
.00
.0
2,307.24
.1
Other Earnings - Q.C.
9.88
.0
65.88
.0
Gainsharing - Q.C.
146.00
.3
1,239.08
.1
Ins. Health Ben. - Q.C.
.00
.0
3,854.27
.2
Ins. Worker Comp - Q.C.
124.13
.2
1,948.14
.1
Operating Supplies - Q.C.
59.00
.1
3,208.64
.2
Outside Services - Q.C.
.00
.0
39,671.56
2.1
Payroll Taxes - Q.C.
377.82
.7
4,986.98
.3
Salaries Staff - WHS
1,328.58
2.6
13,801.43
7
Overtime - WHS
160.69
.3
1,772.81
.1
Vac & Hol - WHS
.00
.0
188.00
.0
Other Earnings - WHS
.00
.0
176.01
.0
Gainsharing - WHS
142.18
.3
1,470.15
.1
Ins. Worker Comp - WHS
119.14
.2
1,348.07
.1
Payroll Taxes - WHS
125.68
.2
1,459.45
.1
Travel - Mileage - WHS
.00
.0
10.00
.0
DEC -12 -98 SAT 11;32 ESTRADA FOODS FAX NO. 719 542 5472 P118
Estrada Foods, Inc.
INCOME STATEMENT
FOR THE 10 PERIODS ENDED OCTOBER 31, 1998
+ - -- PERIOD TO DATE - -+ + - - -- YEAR TO DATE - - -+
ACTUAL PERCENT ACTUAL PERCENT
OPERATING EXPENSES
Salaries Mgmt. - Prod
$8,984.60
17.6 ?6
91,480.78
4.8
Salaries Staff - Prod
3,714.82
7.3
21,061.65
1.1
Overtime - Prod
509.94
1.0
1,888.61
.1
Vac & Hol - Prod
261.54
.5
4,975.00
.3
Gainsharing - Prod.
113.32
.2
984.88
.1
Auto Expense
327.00
.6
680.00
.0
Auto Repair & Maint.
.00
.0
178.71.
.0
Depreciation Building
4,401.30
8.6
42,977.07
2.2
Depreciation Equipment
12,504.35
24.5
113,138.51
5.9
Depreciation Office Equip.
824.24
1.6
8,082.87
.4
Depreciation - Vehicles
511.47
1.0
5,015.68
.3
Dues & Subscriptions
.00
.0
4,331.44
.2
Fuel - Equipment
30.00
.1
1,387.07
.1
Ins. Health Ben. - Prod
.00
.0
10,986.97
.6
Ins. Worker Comp - Prod
86.17
.2
526.80
.0
Interest Expense - Prod
630.06
1.2
8,370.60
.4
Laundry & Uniforms
1,749.17
3.4
12,511.52
.7
Lease Expense
1,215.16
2.4
14,920.88
.8
Miscellaneous Expense
.00
.0
(1,743.00)
(.1)
Operating Supplies
3,018.04
5.9
21,045.65
1.1
Operating Supplies - Office
4.56
.0
3,987.80
.2
Outside Service
5,198.69
10.2
22,002.32
1.1
Outside Serv.- Pre - Employ Exp
.00
.0
125.00
.0
Postage Expense
.00
.0
689.70
.0
Payroll Taxes - Prod
1,347.30
2.6
9,433.62
.5
Prof Services - Consulting Pro
8,250.00
16.2
82,975.00
4.3
Rent Building
9,500.00
18.7
54,500.00
2.8
Rent - Equipment
.00
.0
4,055.75
.2
Repair & Main - Building
63.25
.1
3,909.94
.2
Repairs & Main Bldg. Tort.
.00
.0
20.00
.0
Repair & Main - Equip.
740.28
1.5
26,103.09
1.4
Repair Main. Equip - Motors
2,014.64
4.0
2,014.64
.1
Repair & Main. Equip - Service
(2,436.64)
(4.8)
29,184.96
1.5
Repair & Main Equip - Refrig.
1,963.55
3.9
6,538.34
.3
Repair & Main Equip. - Tort.
.00
.0
619.00
.0
Storage Exp. - Production
5,323.72
10.5
71,534.63
3.7
Taxes - Prod. - Real Estate
1,534.76
3.0
13,616.25
.7
Taxes - Prod. - Other
1,567.94
3.1
16,796.25
.9
Telephone Expense
907.83
1.8
13,969.86
.7
Travel & Related
30.00
.1
815.73
.0
Travel - Meals & Enter. Prod
.00
10
986.40
.1
Travel - Mileage
30.00
.1
118.60
.0
Utilities - N2 Gas
3,117.59
6.1
36,059.54
1.9
Utilities - CO2
3,590.74
7.0
148,850.94
7.8
Utilities - Electric
3,158.46
6.2
28,289.19
1.5
Utilities - Natural Gas
1,341.29
2.6
17,411.53
.9
Utilities - Water & Sewer
1,512.97
3.0
10,738.94
.6
Utilities - Electric Tort
.00
.0
12,893.42
.7
Utilities - Natural Gas Tort
.00
.0
2,088.55
.1
Utilities - Water /Sewer Tort
.00
.0
223.05
.0
Utilities - Waste Water Tort
.00
.0
(568.35)
.0
DEC -12-98 SAT 11:33 ESTRADA FOODS FAX NO. 719 542 5472 P -21
Estrada Foods, Inc.
INCOME STATEMENT
FOR THE 10 PERIODS ENDED OCTOBER 31, 1998
+ - -- PERIOD TO DATE - -+ + - - -- YEAR TO DATE - - -+
ACTUAL PERCENT ACTUAL PERCENT
OPERATING EXPENSES (Continued)
Miscellaneous Expense - G&A
$279.98
.5
(3,724.74)
(.2)
Office Expense G&A
53.48
.1
3,299.50
.2
Operating Supplies G&A
.00
.0
489.50
.0
Outside Services G&A
.00
.0
956.62
10
Postage Expense G&A
2.77
.0
1,607.40
.1
Payroll Taxes - G&A
345.22
.7
3,071.32
.2
Prof Services - Consulting G&A
10,000.00
19.6
71,271.03
3.7
Prof Services -Legal & Acct G&A
(619.87)
(1.2)
33,305.74
1.7
Rent - Building G&A
491.75
1.0
4,425.75
.2
Rent -Other G&A
799.56
1.6
7,945.62
.4
Repair & Main - Equip G&A
.00
.0
664.51
.0
Taxes Other G&A
.00
.0
599.66
.0
Telephone Expense G&A
1,911.21
3.8
13,151.51
.7
Training & Seminars G&A
.00
.0
786.52
.0
Travel & Related G&A
2,386.98
4.7
22,645.98
1.2
Travel - Meals & Enter. G&A
6.45
.0
1,787.08
.1
Travel - Mileage G&A
27.16
.1
47.25
.0
Interest Income
.00
.0
(34.68)
.0
Other Income
(1,220.00)
(2.4)
(68,191.24)
(3.6)
Misc. Income - Jobs Program
.00
.0
(59,559.45)
(3.1)
Gain or Loss on Sale of Asset
.00
.0
7,099.98
.4
TOTAL OPERATING EXPENSES
162,473.43
319.0
2,124,979.17
110.8
NET INCOME FROM OPERATIONS
(220,734.13)
(433.4)
(2,282,455.86)
(119.0)
EARNINGS BEFORE INCOME TAX
(220,734.13)
(433.4)
(2,282,455.86)
(119.0)
NET INCOME (LOSS)
$(220,734.13)
(433.4)$
(2,282,455.86)
(119.0)
DEC -12-98 SAT 11:33 ESTRADA FOODS FAX NO. 719 542 5472 p,20
Estrada Foods, Inc.
INCOME STATEMENT
FOR THE 10 PESRIODS ENDED OCTOBER 31, 1998
+ - -- PERIOD TO DATE - -+ + - - -- YEAR TO DATE - - -+
ACTUAL PERCENT ACTUAL PERCENT
OPERATING EXPENSES
(Continued)
Salaries Mgmt. - HR
$2,724.61
5.3
26,379.22
1.4
Vac & Hol - HR
.00
.0
495.40
.0
ins. Health Ben. - HR
.00
.0
1,535.65
.1
Ins. Worker Comp - HR
18.57
.0
131.04
.0
Operating Supplies HR
.00
.0
626.53
.0
Outside Services - HR
.00
.0
1,881.58
.1
Payroll Taxes - HR
284.22
.6
2,047.39
.1
Professional Services /Consult
.00
.0
1,450.00
.1
Training & Seminars HR
.00
.0
159.00
.0
Common Carrier Exp.
2,318.14
4.6
24,044.42
1.3
Case Allowances
(375.61)
(.7)
4,788.64
.2
Demos
.00
.0
87.02
.0
Artwork & Plates
,00
.0
42.47
.0
Food Shows
.00
10
927.59
.0
Advertising
1,512.63
3.0
12,645.59
.7
Salaries Mgmt. - Sales
.00
.0
49,585.41
216
Vac & Hol - Sales
.00
.0
2,933.85
.2
Brokers Fees - Sales
.00
10
1,944.72
.1
Ins. Health Ben. - Sales
.00
.0
2,405.85
.1
Ins. Worker Comp - Sales
(10.80)
.0
211.23
.0
Operating Supplies - Sales
28.39
.1
462.53
.0
Outside Services - Sales
.00
.0
1,918.43
.1
Payroll Taxes - Sales
(165.24)
(.3)
3,495.63
.2
Telephone Expense - Sales
.00
.0
5.86
.0
Travel & Related Sales
.00
.0
2,983.39
.2
Travel - Meals & Enter. Sales
20.00
.0
142.53
.0
Travel - Mileage - Sales
.00
.0
349.37
.0
Samples - Sales
.00
.0
468.62
10
Samples /Freight - Sales
2,486.03
4.9
10,183.55
,5
Salaries Mgmt. - G&A
2,990.17
5.9
124,955.93
6,5
Salaries Staff G&A
2,971.20
5.8
22,339.59
1.2
Overtime - G&A
135.07
.3
11590.59
,1
Vac & Hol - G&A
68.00
.1
11,246.16
.6
Other Earnings - G & A
.00
.0
509.85
.0
Gainsharing - G & A
61.87
.1
61.87
.0
Auto Expense - G&A
39.29
.1
11546.37
,1
Auto Repair & Main. G&A
.00
.0
55.10
.0
Bad Debt Expense - G&A
.00
.0
21,701.08
1.1
Bank Charges - G&A
570.92
1.1
17,107.52
.9
Finance Charges - G&A
.00
.0
5,328.92
.3
Depreciation - Autos
.00
.0
443.31
.0
Deprec, Furn. & Fix. G&A
378.89
.7
3,126.18
.2
Amortization Start up
1,418.49
2.8
14,184.90
.7
Dues & Subscriptions G&A
.00
.0
300,00
.0
Fundraising Expense G&A
.00
.0
41,051.55
2.1
Insurance - General G&A
2,633.40
5.2
24,108.06
1.3
Ins. Health Ben. - G&A
288.94
.6
13,353.33
.7
Ins. Worker Comp - G&A
40.16
.1
463.44
.0
Interest Expense G&A
26,448.80
51.9
281,124.33
14.7
Lease Expense - G&A
.00
.0
2,412.87
.1
Loan Expense
1,539.08
3.0
71,210.88
3.7
ESTRADA FOODS, INC.
Estrada Foods, Inc. Exhibit 21
Debtor -in- Possession
Case No.
Pro -Forma Plan Effective Date Balance Sheet (Unaudited)
Liabilities and Shareholder's Equity
Current Liabilities
Accounts Payable (pro- forma) $ 100,000
Accrued Taxes -Other $ 15,562
Accrued Property Tax $ 15,348
Total Current Liabilities
Long -Term Liabilities
Leases
BVI Investments, Ltd.
BVI Investments, Ltd.
IRS Payable
Colorado Dept. Rev. Payable
Total Long -Term Liabilities
Shareholder's Equity
Common (beginning/old)
Preferred 1997 Series A
Preferred 1999 Series A
Preferred 1999 Series B
New Common
Gain on Reorganization
Prior Period Retained Earnings
Total Equity
Total Liabilites and Shareholder's Equity
$ 130,909
$ 62,319
$ 1,600,000
$ 1,250,000
$ 130,400
$ 20,000
$ 3,062,719
$ 815,370
$ 700,000
$ 1,005,000
$ 1,959,552
$ 2,064,554
$ (6,182,438)
$ 362,038
$ 3,555,667
The accompanying notes are an integral part of this unaudited pro -forma balance sheet.
Page 2 12/20/98
ESTRADA FOODS, INC.
Estrada Foods, Inc. Exhibit 21
Debtor -in- Possession
Case No.
Pro -Forma Plan Effective Date Balance Sheet (Unaudited)
Assets
Current Assets
Cash
Deposits
Accounts Recievable
Employees Advances
Inventory
Prepaids
Total Current Assets
Fixed Assets
Land, Buildings & Improvements
Factory Equipment
Office Equipment
Vehicles
Computers
CO2 Equipment
Accumulated Depreciation
Total Fixed Assets
Other Assets
Reorganization Costs
Start Up Costs
Loan Costs
Factory Equipment/Inactive
Total Other Assets
Total Assets
$
340,000
$
50,799
$
38,361
$
17,774
$
123,209
$
23,288
$ 593,431
$ 1,600,000
$ 615,894
$ 46,789
$ 13,948
$ 3,963
$ 41,808
$ 2,322,402
$
250,000
$
62,414
$
54,385
$
273,036
$ 639,834
$ 3,555,667
The accompanying notes are an integral part of this unaudited pro -forma balance sheet.
EXHIBIT
Page I
ExWbit 22 ESTRADA FOODS, INC.
SUMMARY OF PROJECTED RESULTS
DRAFT DATE: 12 /20/98
PERIOD ENDING
Mar -00
Mar -01
Mar -02
Mar -00
Mar -01
Mar-02
CASH
38,266
369,888
658,787
4.42%
4.08%
3.66%
NET PROFIT AFTER TAX
89,024
199,842
331,495
1.31%
2.80%
4.42%
NET WORTH
395,063
538,905
724,400
TOTAL ASSETS
3,571,158
3,476,058
3,600,111
TOTAL DEBT
3,176,095
2,937,153
2,875,711
REVENUE & EXPENSE
SUMMARY
SALES:
Burritos
1,020,000
1,071,000
1,124,550
15.00%
15.00%
15.00%
Restaurants
2,788,000
2,927,400
3,073,770
41.00%
41.00%
41.00%
Co -pack
2,992,000
3,141,600
3,298,680
44.00%
44.00%
44.00%
TOTAL SALES
6,800,000
7,140,000
7,497,000
100.00%
100.00%
100.00%
COST OF SALES:
Burritos -COS
826,200
867,510
910,886
81.00%
81.00%
81.00%
Rest -COS
2,007,360
2,107,728
2,213,114
72.00%
72.00%
72.00%
Co -pack
987,360
1,036,728
1,088,564
33.00%
33.00%
33.00%
TOTAL COST OF SALES
3,820,920
4,011,966
4,212,564
56.19%
56.19%
56.19%
(GROSS PROFITS:
Burritos
193,800
203,490
213,665
2.85%
2.85%
2.85%
Restaurants
780,640
819,672
860,656
11.48%
11.48%
11.4 -3%
Co -pack
2,004,640
2,104,872
2,210,116
29.48%
29.48%
29.48%
TOTAL GROSS PROFIT
2,979,080
3,128,034
3,284,436
43.81%
43.81%
43.81%
OPERATING EXPENSES
2,890,056
2,928,192
2,952,940
42.50%
41.01%
39.39%
DEPRECIATION
221,886
210,052
189,046
3.26%
2.94%
2.52%
NETPROFIT(OPER) 89,024 199,842 331,495 1.31% 2.80% 4.4
EBITDA
611,139
701,204
794,714
0.00%
9.82%
10.60%
INTEREST EXPENSE
300,229
291,311
274,172
4.42%
4.08%
3.66%
PROFIT AFTER TAX
89,024
199,842
331,495
1.31%
2.80%
4.42%
EXHIBIT
22
PAGE 1 ACCO',fPA.';YrNG NOTES ARE AN rNTEGRAL PART OF THESE UNAUDITED PROJECTED STATEN ENTS
,�. uilt�lae ®iii�u m��i E � u a �I
ESTRADA FOODS, INC.
Notes to Pro -Forma Plan Effective Date Balance Sheet
Estrada Foods, Inc.
Debtor -in- Possession
Case No.
1. This pro -forma balance sheet was prepared in anticipation of presentation to creditors, equity
holders and other interested parties as part of a "pre- packaged" bankruptcy plan of
reorganization and disclosure statement. This pro -forma is based upon the most current
unaudited internal balance sheet of the Debtor, dated October 31, 1998, with adjustments to
accounts pursuant to the proposed plan of reorganization.
2. Cash is an assumed number based upon the DIP loan drawn to the $1,250,000 balance on the
Effective Date.
3. Reorganization costs are projected costs and fees incident to this reorganization to be paid by
the Debtor.
4. Trade accounts payable are an assumed value based upon Debtor's estimated operations post
petition and prior to Plan effective date.
5. It is assumed that W.K. Capital elects to covert its claims into the Debtor's proposed 1999
Series B Preferred Stock. It is assumed that its approved, allowed claim is in the amount of
$1,005,000.
6. The value shown as Debtor's 1999 Series A preferred Stock investment is the estimated cash
investment required to fund the Plan of Reorganization. This amount will probably increase
depending upon the ultimate reorganization costs and expenses.
7. This pro -forma is unaudited and has not been prepared in compliance with generally
accepted accounting principles.
8. This pro -forma assumes that the real property inclusive of land, buildings and improvements
is reconveyed to the Debtor pursuant to the Plan in partial exchange for a secured real estate
lien note in the original principle sum of $1,600,000; 15 year amortization 3 year term
interest at 10 %.
9. This pro -forma assumes a Debtor -in- Possession loan in the unpaid balance of $1,250,000 on
the Effective date.
Exhibit 22 ESTRADA FOODS, INC. DRAFT DATE: 12 /20/98
PROJECTED BALANCE SHEET FIRST 3 YEARS
Mar -00 Mar -01 Mar -02 Mar -00 Mar -01 Mar -02
(PERCENT OF TOTAL ASSETS)
ASSETS
CASH & EQUIVALENTS
38,266
369,888
658,787
1.1%
10.6%
183%
ACCT & NOTES RECEIVABLE
509,734
352,110
369,715
14.3%
10.1%
103%
INVENTORY
190,946
131,900
138,495
5.3%
3.8%
3.8%
ALL OTHER CURRENT
91,862
91,862
91,862
2.6%
2.6%
2.6%
TOTAL CURRENT
830,808
945,759
1,258,859
23.3%
27.2%
35.0%
FIXED ASSETS
2,322,402
2,322,402
2,322,402
65.0%
66.8%
64.5%
ACCUM. DEPRECIATION
221,886
431,938
620,984
6.2%
12.4%
17.2%
TOTAL FIXED ASSETS
2,100,516
1,890,464
1,701,418
58.8%
54.4%
47.3%
OTHER NON - CURRENT
639,834
639,834
639,834
17.9%
18.4%
17.8%
TOTAL ASSETS
3,571,158
3,476,058
3,600,111
100.0%
100.0%
100.0%
LIABILITIES:
NOTES PAYABLE -SHT TERM
111,959
5,330
0
3.1%
0.2%
0.0%
CURRENT MATURING L/I'/D
55,456
58,506
64,356
1.6%
1.7%
1.8%
ACCTS & NOTES PAY -TRADE
238,683
164,875
173,119
6.7%
4.7%
4.8%
ACCRUED EXPENSES
30,909
30,909
30,909
0.9%
0.9%
0.9%
ALL OTHER CURRENT
0
0
0
0.0%
0.0%
0.0%
TOTAL CURRENT
437,007
259,620
268,384
12.2%
7.5%
7.5%
LONG TERM DEBT
2,739,088
2,677,533
2,607,326
76.7%
77.0%
72.4%
ALL OTHER NON - CURRENT
0
0
0
0.0%
0.0%
0.0%
TOTAL LONG TERM LIABILITIES
2,739,088
2,677,533
2,607,326
76.7%
77.0%
72.4%
TOTAL LIABILITIES
3,176,095
2,937,153
2,875,711
88.9%
84.5%
79.9%
NET WORTH
395,063
538,905
724,400
11.1%
15.5%
20.1%
TOTAL LIA. & NET WORTH
3,571,158
3,476,058
3,600,111
100.0%
100.0%
100.0%
PAGE 3 ACCOI4PANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PROJECTED STATEMENTS
Exhibit 22 ESTRADA FOODS, INC. DRAFT DATE: 12 /20/98
Profitability Ratios
RETURN ON SALES
RETURN ON EQUITY
Leverage Ratios
TOTAL ASSET/NEW WORTH
Turnover Ratios
SALES/TOTAL ASSETS
Indicators of Solvency
DEBTNW
TIMES INTEREST EARNED
Indicators of Liquidity
CURRENT RATIO
Funds Managment Ratios
RECEIVABLE /SALES (ANNUAL)
DAYS SALES IN RECEIVABLES
PAYABLES /COST OF GOODS SOL
DAYS COGS IN PAYABLE
INVENTORY TURNOVER(ANNUA
DAYS COGS IN INVENTORY
SALES/NET FIXED ASSETS
PAGE Z ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PROJECTED STATEMENTS
PROJECTED RATIOS
1.31%
2.80%
4.42
22.53%
37.08%
45.76
903.95%
645.02%
496.98
190.41%
205.41%
208.24
803.95%
545.02%
396.98
2.04
2.41
2.90
190.11%
364.29%
469.05
7.50%
4.93%
4.93
27
18
18
1.65%
0.07%
0.00
23
15
15
2.81%
1.85%
1.85
18
12
12
323.73%
377.68%
440.63
PAGE Z ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PROJECTED STATEMENTS
Exhibit 22 ESTRADA FOODS, INC. DRAFT DATE: 12/20/9Q,
PROJECTED NOTES PAYABLE SCHEDULE FIRST 3 YEARS
PERCENT OF TOTAL LOANS
Mar -00
Mar -01
Mar -02
Mar -00
Mar -01
Mar -02
1 BALANCE
78,941
3,553
0
2.72%
0.13%
0.00%
2 BALANCE
33,018
1,777
0
1.14%
0.06%
0.00%
3 BALANCE
0
0
0
0.00%
0.00%
0.00%
4 BALANCE
0
0
0
0.00%
0.00%
0.00%
5 BALANCE
0
0
0
0.00%
0.00%
0.00%
6 BALANCE
0
0
0
0.00%
0.00%
0.00%
TOTAL SHORT TERM LOANS
111,959
5,330
0
3.85%
0.19%
0.00%
1 BALANCE
1,551,493
1,500,318
1,444,025
53.38%
54.73%
54.05%
2 BALANCE
1,243,052
1,235,721
1,227,657
42.77%
45.08%
45.95%
3 BALANCE
0
0
0
0.00%
0.00%
0.00%
4 BALANCE
0
0
0
0.00%
0.00%
0.00%
5 BALANCE
0
0
0
0.00%
0.00%
0.00%
6 BALANCE
0
0
0
0.00%
0.00%
0.00%
NEW LOAN BALANCE
0
0
0
0.00%
0.00%
0.00%
TOTAL LONG TERM BALANCES
2,794,544
2,736,039
2,671,682
96.15%
99.81%
100.00%
CURRENT PORTION LTD
55,456
58,506
64,356
1.91%
2.13%
2.41%
LONG TERM DEBT
2,739,088
2,677,533
2,607,326
94.24%
97.67%
97.59%
67,906
1 PRINCIPLE -SHORT TERM
71,459
75,388
3,553
2 PRINCIPLE -SHORT TERM
29,301
31,241
1,777
3 PRINCIPLE -SHORT TERM
0
0
0
4 PRINCIPLE -SHORT TERM
0
0
0
5 PRINCIPLE -SHORT TERM
0
0
0
6 PRINCIPLE -SHORT TERM
0
0
0
SHT TERM PRIM REDUCTN
100,760
106,629
5,330
1 PRINCIPLE - LONG TERM
48,507
51,175
56,292
2 PRINCIPLE- LONG TERM
6,948
7,331
8,064
3 PRINCIPLE - LONG TERM
0
0
0
4 PRINCIPLE - LONG TERM
0
0
0
5 PRINCIPLE - LONG TERM
0
0
0
6 PRINCIPLE- LONG TERM
0
0
0
NEW PRINCIPAL
0
0
0
LNG TERM PRIN REDUCTN
55,456
58,506
64,356
TOTAL LOAN REDUCTIONS
156,216
165,134
69,686
PAGE 5 ACCO\fPANYI\G NOTES ARE .4k INTEGRAL PART OF THESE U\AUDITED PROJECTED STATEMENTS
WIl 1111!1 T 1111 !I1I!IIIM1111
Exhibit 22
ESTRADA FOODS, INC.
DRAFT DATE: 12 /20/98
PROJECTED STATEMENT OF REVENUES AND EXPENSES FIRST 3 YEARS
OPERATING EXPENSES
Prod'n Salaries & Benefits
Mar -00
Mar -01
Mar -02
Mar -00
Mar -01
Mar -02
Burritos
1,020,000
130,900
1,124,550
15.0%
15.0%
15.0%
1,071,000
Restaurants
2,788,000
2,927,400
3,073,770
41.0%
41.0%
41.0%
Co -pack
2,992,000
3,141,600
3,298,680
44.0%
44.0%
44.0%
NET SALES
6,800,000
7,140,000
7,497,000
100.0%
100.0%
100.0%
Burritos -COS
826,200
867,510
910,886
12.2%
12.2%
12.2%
Rest -COS
2,007,360
2,107,728
2,213,114
29.5%
29.5%
29.5%
Co -pack
987,360
1,036,728
1,088,564
14.5%
14.5%
14.5%
COST OF SALES
3,820,920
4,011,966
4,212,564
56.2%
56.2%
56.2%
GROSS PROFIT
2,979,080
3,128,034
3,284,436
43.8%
43.8%
43.8%
OPERATING EXPENSES
Prod'n Salaries & Benefits
226,667
238,000
249,900
3.3%
3.3%
3.3%
Repairs
124,667
130,900
137,445
1.8%
1.8%
1.8%
Supplies & Services
136,000
142,800
149,940
2.0%
2.0%
2.0%
Rents/leases /taxes
100,000
100,000
100,000
1.5%
1.4%
1.3%
Cold Storage
34,000
35,700
37,485
0.5%
0.5%
0.5%
Utilities
96,000
96,000
96,000
1.4%
1.3%
1.3%
R&D
78,000
78,000
78,000
1.1%
1.1%
1.0%
Maintenance & Sanitation
248,867
248,000
248,000
3.7%
3.5%
3.3%
QualityControl
139,400
146,370
153,689
2.1%
2.1%
2.1%
Human Resources
40,000
40,000
40,000
0.6%
0.6%
0.5%
Advertising & Promotions
113,333
119,000
124,950
1.7%
1.7%
1.7%
Sales Salaries & Benefits
95,000
95,000
95,000
1.4%
1.3%
1.3%
Brokers & other sales exp.
170,000
178,500
187,425
2.5%
2.5%
2.5%
G &A Salaries & Benefits
450,000
450,000
450,000
6.6%
6.3%
6.0%
Fundraising
12,000
12,000
12,000
0.2%
0.2%
0.2%
Outside sevices
170,000
178,500
187,425
2.5%
2.5%
2.5%
Rents/leases /taxes
34,000
35,700
37,485
0.5%
0.5%
0.5%
Warehouse /traffic /frieght
50,140
50,000
50,000
0.7%
0.7%
0.7%
INTEREST
300,229
291,311
274,172
4.4%
4.1%
3.7%
DEPRECIATION
221,886
210,052
189,046
3.3%
2.9%
2.5%
MISC. EXPENSES
49,867
52,360
54,978
0.7%
0.7%
0.7%
TOTAL OPER'G EXPENSES
2,890,056
2,928,192
2,952,940
42.5%
41.0%
39.4%
NET PROFIT(OPER NS)
89,024
199,842
331,495
1.3%
2.8%
4.4%
INCOME ON EXCESS CASH
0
0
0
0.0%
0.0%
0.0%
OTHER INCOME
0
0
0
0.0%
0.0%
0.0%
OTHER EXPENSES
0
0
0
0.0%
0.0%
0.0%
PROFIT BEFORE TAX
89,024
199,842
331,495
1.3%
2.8%
4.4%
INCOME TAXES
0
0
0
0.0%
0.0%
0.0%
PROFIT AFTER TAX
89,024
199,842
331,495
13%
2.8%
4.4%
PAGE 4 ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PROJECTED STATEMENTS
Exhibit 22 ESTRADA FOODS, INC.
PROJECTED SOURCES & USES OF CASH FIRST 3 YEARS
Mar -00 Mar-01 Mar-02
BEGINING CASH
CASH REQUIREMENTS
FROM CHANGES IN:
ACCOUNTS RECEIVABLE
INVENTORY
OTHER CURRENT ASSETS
NOTES PAYABLE
CURR LONG TERM DEBT
ACCOUNTS PAYABLE
ACCRUED EXPENSES
OTHER CURRENT LIAB.
OTHER NON - CURRENT LIAB
TOTAL CASH CHANGES
ADD:DEPRECIATION
ADD:PROFIT AFTER TAX
OPERATING CASH
USES:
NEW CAPITAL INVESTMENTS
L.T.D. REDUCTIONS
DIVIDEND/WITHDRAWALS
TOTAL USES
SOURCES:
PROCEEDS FROM EQUIP SALE
NEW EQUITY INVESTMENTS
NEW LOAN PROCEEDS
TOTAL SOURCES
ENDING CASH
340,000 38,266 369,888
(471,374)
157,624
(17,605)
(67,737)
59,046
(6,595)
0
0
0
111,959
(106,629)
(5,330)
55,456
3050
5851
138,683
(73,808)
8,244
0
0
0
0
0
0
0
0
0
(233,014)
39,283
(15,436)
221,886
210,052
189,046
89,024
199,842
331,495
77,897 449,177 505,106
0 0 0
323,631 61,555 70,207
56,000 56,000 146,000
379631 117,555 216,207
0 0 0
0 0 0
0 0 0
0 0 0
38,266 369,888 658,787
DRAFT DATE: 12 /20/98
PAGE 7 ACC0lAPANYJNG NOTES ARE AN rNTEGRAL PART OF THESE UNAUDITED PROJECTED STATEMENTS
Exhibit 22
INTEREST
INTEREST
INTEREST
INTEREST
INTEREST
INTEREST
INTEREST
INTEREST
INTEREST
INTEREST
INTEREST
INTEREST
NEW INTEREST
TOTAL INTEREST
DRAFT DATE: 12 /20/98
PAGE 6 ACCO.NTANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PROJECTED STATE\,MNTS
ESTRADA FOODS, INC.
11,824
7,894
355
5,901
3,962
213
0
0
0
0
0
0
0
0
0
0
0
0
1 57,817
155,149
150,032
124,687
124,305
123,572
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
300,229
291,311
274,172
DRAFT DATE: 12 /20/98
PAGE 6 ACCO.NTANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PROJECTED STATE\,MNTS
12/15/1998 18:55 04040404040404040404: < i < i,,,g, PAGE 03 Y-
Maintenance & Sanitation: EFI reviewed historical costs during the Schwann's
production period and assumed a similar cost structure going forward.
Quality Control: EFI has prepared a list of staff required to go forward plus
concurrent operating costs based on a historical review to arrive at these estimates.
Human Resources: EFI has prepared a list of staff required to go forward plus
concurrent operating costs based on a historical review to arrive at these estimates.
SALES & MARKETING
Advertising & Promotions: EFI has estimated costs in this category based upon
the currently anticipated customer requirement. As the customer mix changes, this
category could increase significantly.
Sales Salaries & Benefits: EFI has prepared a list of staff required to go forward
plus concurrent operating costs based on a historical review to arrive at these
estimates.
Brokers & other sales exp.: EFI has estimated costs in this category based upon
the currently anticipated customer requirement. As the customer mix changes, this
category could increase significantly.
GENERAL & ADMINISTRATIVE
G &A Salaries & Benefits: EFI has prepared a complete list of all G&A support
staff needed to produce low volume and higher volume activities, the result is
found in this estimate.
Fundraising: minimal fundraising expenses are anticipated.
Outside & professional services: EFI reviewed historical costs during the
Schwann's production period and assumed a similar cost structure going forward.
G &A ReatsAcases/taxes: EFI scheduled all current costs in this category and added a
few key leases based on equipment needs anticipated to complete the proposed
projected sales.
Warehouse /traffic /freight: EFI reviewed historical costs during the Schwann's
production period and assumed a similar cost structure going forward.
INTEREST: is calculated based upon the terms in the proposed loan agreements.
DEPRECIATION: is based on a 10 year average life of all fixed assets.
MISC. EXPENSES: EFI reviewed historical repair costs during the Schwann's
production period and assumed a similar repair cost structure going forward.
12/15/98 TUE 17:55 (TTiRT NO 63081 0 003
12/15/1998 18:55 04040404040404040404 ;; PAGE e2
ESTRADA FOODS, INC. FINANCIAL ASSUMPTIONS
Sales Revenues: Sales have been projected based upon compiling a list of current or high
potential customers and estimating potential sales by month based upon volume and
pricing discussions with each customers. Actual projection could vary substantially up or
down due to the absence of steady historical revenues.
Cost of Sales: Since most of the sales projections do not have a historical basis, costs of
Wes have been estimated based upon preliminary discussions with potential customers,
and estimates based on management's experience of the cost of producing the proposed
products utilizing detailed costing models.
Operating Expenses: Generally, operating expenses have been based upon
management's judgement of likely future operating costs. These judgements were made
by reviewing historical operating costs from December of 1997 through March of 1998
when the company was producing substantial burritos for Schwann's. Some adjustments
were made based upon recent changes in staffing or other operating costs.
The specific operating expense assumptions are outlined below:
MANUFACTURING OVERHEAD
Production Salaries & Benefits: EFI has prepared a complete list of all
manufacturing production support staff needed to produce low volume and higher
volume activities, the percentage of sales and the minimum operating expense
summarizes this analysis.
Repairs: EFI reviewed historical repair costs during the Schwann's production
period and assumed a similar repair cost structure going forward.
Supplies & Services: EFI reviewed historical Supplies & Services costs during
the Schwann's production period and assumed a similar Supplies & Services cost
structure going forward.
Rents/leases /taxes: EFI scheduled all current costs in this category and added a
few key leases based on equipment needs anticipated to complete the proposed
projected sales.
Cold Storage: EFI has calculated the average proposed account will require the
stated amount cold storage cost covered by EFI, any additional costs are expected
to be born by the customer.
Utilities: EFI reviewed historical costs during the Schwann's production period
and assumed a similar cost structure going forward.
R & D: EFI has prepared a list of R&D staff required to go forward plus
concurrent operating costs based on a historical review to arrive at these estimates.
12/15/98 TUE 17:55 (TX /R1 NO 63081 Z002
12/15/1998 18:55 04040404040404040404 PAGE 04
Days Receivable: EFI has assumed 50% of its clients paying in 30 days and 50% paying
in 6Qiays.
The financial projections developed by management represents their current best
estimate of expected performance. It should be clearly understood that actual
results will vary from these projections and the variance could be very significant
up or down. No one can accurately predict the future, this is especially true with
such little operating history.
1?i1Si0A Ti ?F 1 7.55 r'rV'nV X•n a 'knot rah— ,
or
written notice of the date and time of said hearing. The
Confirmation hearing will be held at the United States Bankruptcy
Court, U.S. Custom House, Fifth Floor, 721 19th Street, Denver,
Colorado 80202 -2508. At the Confirmation hearing, the Court will
consider whether to approve the Plan. You are not required to
attend the Confirmation hearing.
Plan Definitions
The Plan contains certain defined terms. These defined terms
are capitalized in this Statement. It is essential to an
understanding of the Plan and this Statement that all interested
parties familiarize themselves with the defined terms.
Joint Proponents
The Plan is being jointly proposed by the Debtor and BEAP.
BEAP is the holder of an Allowed Secured Claim against the Debtor.
The Debtor and BEAP are defined in the Plan as the "Joint
Proponents ".
BVI Investments, Ltd. and BEAD
BVI Investments, Ltd. ( "BVI") is a Texas limited partnership,
the general partner of which is Barshop Ventures L.L.C., a Texas
limited liability company. BEAP is a Texas limited partnership,
the general partner of which is BEAP Management LLC, a Texas
limited liability company. BVI and BEAP are the holders of Allowed
Secured Claims against the Debtor. In addition, BVI is the holder
of 3,000,000 shares of the Debtor's Common Stock. BVI and BEAP are
affiliates. The Debtor and its current officers and directors hold
no interests in BEAP or BVI. In August of 1998, the Debtor
concluded that it was unable to pay its outstanding debts. As a
result, the Debtor and BVI commenced discussions relating to the
possible reorganization of the Debtor under Chapter 11. The Plan
which is described in this Statement is the result of such
negotiations.
BVI
The Debtor was the owner of certain Real Property as defined
in the Plan. On October 14, 1998, the Debtor's Real Property was
sold at a public trustee's Foreclosure Sale. The successful bidder
at the sale was Peak National Bank, which held a first lien Deed of
Trust on the Real Property. BVI, as a junior lienholder on the
Real Property or its assignee (hereafter collectively, the
"Redemptor ") anticipates redeeming the Real Property from the
Foreclosure Sale thereby obtaining title to the Real Property free
and clear of all other liens, claims and interests, subject to the
rights of redemption of junior lienholders. Pursuant to the Plan,
Redemptor will convey the Real Property to the Debtor on the
Effective Date in consideration for (a) a cash payment to Redemptor
- 2 -
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLORADO
In re:
ESTRADA FOODS, INC.,
a Colorado corporation,
EIN 84- 1306133,
Case No.
(Chapter 11)
Debtor.
DISCLOSURE STATEMENT
REGARDING PLAN OF REORGANIZATION
FOR ESTRADA FOODS, INC.
Dated: December 22, 1998
Filed by: Debtor and Barshop /Estrada Acquisition Partners LP
Joint Proponents
I. INTRODUCTION AND PLAN SUMMARY
Joint Plan
Estrada Foods, Inc. ( "Debtor ") and Barshop /Estrada Acquisition
Partners LP ("BEAP") have jointly proposed a Plan of Reorganization
for the Debtor ( "Plan ") . A copy of the Plan is attached hereto as
Exhibit 1. This Disclosure Statement ( "Statement ") describes the
Plan and its treatment of creditors and shareholders of the Debtor.
Brief Explanation of Chapter 11
Chapter 11 is the principal reorganization Chapter of the
Bankruptcy Code ( "Code" or "Bankruptcy Code ") . Pursuant to Chapter
11, the Debtor's business affairs may be reorganized for the
benefit of its creditors and shareholders. The Plan is the legal
document which accomplishes the reorganization. In particular, the
Plan places creditors and shareholders in separate classes and
provides for the treatment of the creditor Claims and shareholder
interests in these classes. If the Plan is approved by the Court,
(a) the Plan becomes binding upon all creditors and shareholders,
and (b) the Debtor shall be discharged from all pre- Confirmation
debts and Claims against and interests in the Debtor, except as
otherwise provided in the Plan.
After the filing of the Chapter 11 case, attempts at
collection of pre- bankruptcy Claims against the Debtor, and any
attempts to foreclose upon the property of the Debtor, are stayed
during the pendency of the Chapter 11 case.
After the filing of the Chapter 11 case, the Court will
schedule a hearing on Confirmation of the Plan. You will be sent
and Warrants to purchase stock of the Debtor) . To the extent there
is an inconsistency between the Plan and the Statement, the Plan
shall control.
Pre - Packaged Plan
The typical sequence of events for a debtor to obtain approval
of a Chapter 11 plan is as follows. First, the Debtor files its
Chapter 11 case. Second, the debtor files its plan and disclosure
statement describing the plan. Third, after notice to creditors,
the Court holds a hearing to consider whether the disclosure
statement contains adequate information to permit creditors and
shareholders to make a reasonably informed decision when voting on
the plan. Fourth, after the Court approves the adequacy of the
disclosure statement, the plan, disclosure statement and a ballot
are transmitted to creditors and shareholders. Fifth, a date is
fixed by the Court for creditors to object and vote on the plan.
Sixth, after notice to creditors, the Court holds a hearing to
consider approval of the plan.
A pre - packaged plan changes the order of events described
above. First, before the filing of the Chapter 11 case, the debtor
prepares and transmits to creditors and shareholders the debtor's
plan, disclosure statement and ballot. Second, the debtor fixes a
date for creditors and shareholders to vote on the plan. Third,
the plan provides that if various creditor and /or shareholder
classes vote in favor of the plan, then the debtor will file a
Chapter 11 bankruptcy case. Fourth, if the required plan
acceptances are received by the debtor, the debtor files its
Chapter 11 case. Fifth, after notice to creditors, the Court holds
a hearing to: (a) determine retroactively whether the pre -
bankruptcy disclosure statement sent to creditors and shareholders
contains adequate information, and (b) whether to approve the plan.
If the Court determines the pre- bankruptcy disclosure statement
contains insufficient information, the Court could direct the
debtor to amend the disclosure statement, transmit the plan and the
amended disclosure statement to creditors and shareholders, and
permit creditors and shareholders to again vote on the plan.
Pre - packaged plans are contemplated by the Bankruptcy Code.
See Section 1126(b) of the Bankruptcy Code and Rule 3018 of the
Federal Rules of Bankruptcy Procedure. Pre - packaged plans are
employed by debtors for several reasons. First, a pre - packaged
plan significantly reduces the costs and attorney fees incurred by
the debtor to reorganize its business affairs under Chapter 11.
Second, a pre - packaged plan significantly reduces the duration of
the Chapter 11 case and the associated negative publicity.
Finally, a pre - packaged plan permits the debtor to know whether its
creditors will accept a proposed plan before filing a bankruptcy
case. The Debtor has elected to proceed with a pre - packaged plan
in this case for all of the foregoing reasons.
- 4 -
on the Effective Date equal to BVI 's costs and expenses incurred in
connection with negotiation and implementation of the Plan,
including consultant and legal fees, (estimated to total
approximately $200,000), and (b) a purchase money promissory note
and first lien Deed of Trust encumbering the Real Property to be
held by BVI and any participants in an amount equal to (i) the
costs of Redemptor's redemption of the Real Property (estimated to
be $832,111 plus interest, fees and costs) plus (ii) an amount
equivalent to the payoff on the Effective Date of the promissory
note held by BVI which was secured by the Real Property (estimated
to be approximately $641,000 plus interest, fees and costs) with
such payoff calculated as if there had been no Foreclosure Sale
respecting the Real Property. Redemptor will not convey the Real
Property to the Debtor unless the Plan is confirmed by the Court.
In addition, BVI (with any participants) has agreed to fund the
payments provided for under the Plan on and after the Effective
Date pursuant to the D.I.P. Loan . The D.I.P. Loan and the purchase
money loan described above shall survive confirmation of the Plan
and will be repaid from future income of the Debtor.
BEAP
BEAP has agreed to exchange its Allowed Secured Claims and
release its lien on the Debtor's personal property for securities
of the Debtor to be issued under the Plan.
Non - binding Undertak of BEAP, BVI and Redemptor
The undertakings of BEAP, BVI and Redemptor described above
are contingent upon, inter alia, Confirmation of the Plan as
jointly proposed by the Debtor and BEAP. BVI and BEAP may
determine not to proceed with such undertakings in their sole and
absolute discretion for any reason, including but not limited to,
the rejection of the Plan by any class of Claims or interests.
Solicitation
This Statement and the accompanying ballot are being furnished
by the Joint Proponents prior to the filing of a Chapter 11
bankruptcy case by the Debtor. This Statement and the accompanying
ballot are being furnished by the Joint Proponents to all of the
Debtor's creditors and shareholders in connection with a
solicitation by the Joint Proponents of the approval of the Plan,
a copy of which is attached hereto as Exhibit 1. The Statement and
Plan have been prepared by the Debtor. The Statement has not been
approved as to adequacy by the United States Bankruptcy Court for
the District of Colorado ( "Court "). The purpose of the Statement
is to provide information sufficient to permit creditors and
shareholders of the Debtor to make a reasonably informed decision
in exercising their right to vote upon the Plan. The Statement,
the Plan and the ballot are being mailed to all known creditors and
shareholders of the Debtor (including the holders of Stock Options
- 3 -
Class 10 Allowed Secured Claim of Not Impaired
National Business Finance,
Inc.
Class 11 Allowed Secured Claims of Impaired
Barshop /Estrada Acquisition
Partners LP
INTEREST HOLDER CLASSES
Class 12 Holders of Common Stock Impaired
Class 13 Holders of Preferred Stock Impaired
Class 14 Holders of Stock Options Impaired
Class 15 Holders of Warrants Impaired
Plan Summary
The following summary sets forth the Plan treatment for the
classes of creditor Claims and shareholder interests.
Unclassified Allowed Administrative Expenses
Allowed Administrative Expenses are not separately classified
under the Plan and consist of certain debts incurred by the Debtor
after the Chapter 11 case is filed, including the D.I.P. Loan,
post- Filing Date vendor debt, attorney fees and accounting fees.
Allowed Administrative Expenses shall be paid in cash in full on
the Effective Date unless the holder agrees to, or any agreement
with the Debtor provides for, different treatment, provided however
that the D.I.P. Loan shall be paid in accordance with its terms, a
general description of which is set forth in Exhibit B attached to
the Plan and Exhibit 2 attached hereto. The holders of Allowed
Administrative Expenses are not impaired under the Plan and are not
entitled to vote on the Plan.
Class 1
(Allowed Priority Claims)
Class 1 Allowed Priority Claims consist of certain pre -
bankruptcy unsecured Claims which are entitled to priority in
payment by the Bankruptcy Code, including but not limited to
certain unsecured tax Claims. The Debtor believes that two
creditors hold Allowed Priority Claims consisting of the Internal
Revenue Service and the Colorado State Department of Revenue. On
the Effective Date, all class 1 Allowed Priority Claims shall be
paid in cash in full, unless otherwise agreed by the holder of an
Allowed Priority Claim, provided however that government units
holding Allowed Priority Claims shall be paid as follows: 20% of
the Allowed Priority Claim shall be paid in cash at the Effective
404
Effective Date of the Plan
The Effective Date of the Plan is the first business day which
is eleven calendar days after the Confirmation Date. The
Confirmation Date is the date the Court enters its order approving
the Plan. The Debtor estimates that the Effective Date will occur
on or about March 15, 1999. Plan distributions and other events
will occur on or after the Effective Date.
Plan Classes
The Plan provides for eleven classes of creditors and four
classes of interest holders, e.g. shareholders. Only impaired
classes are entitled to vote on the Plan. The Plan classes are
described below.
CREDITOR CLASSES
Class 1 Allowed Priority Claims Impaired
Class 2 Small Claims Impaired
Class 3 Allowed Claims not
otherwise classified Impaired
Class 4 Allowed Claim of W.K. Impaired
Capital Advisors, Inc./
Estrada International
Foods, Inc.
Class 5 Allowed Claim of the Impaired
County of Pueblo, State
of Colorado
Class 6 Allowed Claim of the Impaired
City of Pueblo, State
of Colorado
Class 7 Allowed Claims of Anthony Impaired
Estrada, Candelario "Jess"
Estrada Caroline Fresquez,
Rocky Mountain Cold Storage,
Food Equipment Refabricators,
E. T. Construction and Casa
de Oro, LLC
Class 8 Allowed Secured Claim of Not Impaired
Peak National Bank
Class 9 Allowed Secured Claim of Not Impaired
BVI Investments, Ltd.
- 5 -
PA
$1,820,000.00, exclusive of the Allowed Claims held by the class 4
and class 5 creditors which are separately classified under the
Plan. The class 4 Allowed Claim will be subject to treatment as a
class 3 Allowed Claim if class 4 rejects the Plan. Similarly, the
class 5 Allowed Claim will be subject to treatment as a class 3
Allowed Claim if class 5 rejects the Plan. See the discussion of
classes 4 and 5 below. If classes 4 and 5 reject the Plan, the
class 3 Allowed Claims would total approximately $3,008,000.00. On
the later of the Effective Date or the date that all class 3
Disputed Claims are allowed by Final Order, each holder of a class
3 Allowed Claim shall receive a cash distribution equal to
his /her /its Pro Rata share of $500,000.00 in full satisfaction and
discharge of the class 3 Allowed Claim, provided however that after
the Effective Date, the Debtor, in its sole and absolute
discretion, may make interim distributions to the holders of class
3 Allowed Claims. Pro Rata means the percentage which the amount
of the creditor's class 3 Allowed Claim bears to the aggregate
amount of all class 3 Allowed Claims. The Debtor estimates that
the distribution to the holders of class 3 Allowed claims will be
in the range of 16.6 to 27.4 cents on the dollar depending upon the
total amount of class 3 Allowed Claims. Class 3 is impaired under
the Plan and is entitled to vote on the Plan.
Class 4
(Allowed Claim of W.K. Capital Advisors, Inc. /Estrada
International Foods, Inc.)
Class 4 consists of the Allowed Claim of W.K. Capital
Advisors, Inc. /Estrada International Foods, Inc. in the amount of
$1,005,000.00. The class 4 creditor holds a pre- bankruptcy,
Allowed Claim which is unsecured and not entitled to priority in
payment under the Bankruptcy Code. On the Effective Date, the
class 4 creditor shall have the option to either (a) exchange the
class 4 Allowed Claim for 1999 Series B Preferred Stock at the
ratio of one (1) share of 1999 Series B Preferred Stock for each
one hundred dollars ($100.00) of class 4 Allowed Claim, or (b)
exchange the class 4 Allowed Claim for shares of New Common Stock
such that class 4 will own, as of the Effective Date, six percent
(6%) of the New Common Stock issued and outstanding on the
Effective Date treating all outstanding 1999 Series A Preferred
Stock as having been fully converted to New Common Stock. Class 4
is impaired under the Plan and is entitled to vote on the Plan.
If class 4 rejects the Plan, (a) the Plan provisions
respecting class 4 shall be deemed of no force and effect and no
Plan distributions shall be made to class 4; and (b) the class 4
Allowed Claim shall be subject to treatment as a class 3 Allowed
Claim; and (c) the class 4 creditor shall be entitled to vote as a
member of class 3.
- 8 -
Date with the balance payable in twenty -four (24) equal monthly
installments of principal and interest commencing thirty (30) days
after the Effective Date and continuing on the same day of each
month thereafter with interest accruing after the Effective Date at
the rate of 7% per annum. Class 1 is impaired under the Plan and
is entitled to vote on the Plan.
Class 2
(Small Claims)
Class 2 Small Claims consist of Allowed Claims where the
amount of the Allowed Claim does not exceed five hundred dollars
and no cents ($500.00), including Allowed Claims where the holder
thereof has voluntarily elected to reduce the Allowed Claim to
$500.00. An election to reduce an Allowed Claim to $500.00 can be
made on the ballot which accompanies this Statement. Class 2 Small
Claims represent pre- bankruptcy, unsecured Claims which are not
entitled to priority in payment under the Bankruptcy Code,
including (a) Claims arising from the rejection of executory
contracts and unexpired leases, (b) deficiency Claims of the
holders of Allowed Secured Claims, and (c) Claims of creditors who
assert mechanics liens and judgment liens against the Debtor's Real
Property. The Debtor estimates that approximately 89 creditors
hold Small Claims against the Debtor totaling approximately $15,532
(exclusive of any class 3 creditors who may voluntarily reduce
their Allowed Claims to $500.00). on the Effective Date, class 2
creditors shall be paid cash equal to one hundred percent (100 %) of
their Small Claims in full satisfaction and discharge of such Small
Claims. Class 2 is impaired under the Plan and is entitled to vote
on the Plan.
Class 3
(Allowed Claims not otherwise classified)
Class 3 consists of Allowed Claims not otherwise classified
under the Plan. Class 3 Allowed Claims represent pre- bankruptcy,
unsecured Claims in excess of five hundred dollars and no cents
($500.00) which are not entitled to priority in payment under the
Bankruptcy Code, including (a) Claims arising from the rejection of
executory contracts and unexpired leases, (b) deficiency Claims of
the holders of Allowed Secured Claims, and (c) Claims of creditors
who assert mechanics liens and judgment liens against the Debtor's
Real Property. The Plan permits a class 3 creditor to voluntarily
reduce his /her /its class 3 Allowed Claim to a class 2 Small Claim
in the amount of $500.00. This election is made on the ballot
which accompanies this Statement. If a class 3 creditor makes this
election, the class 3 creditor is deemed to have accepted the Plan
as a member of class 2. See class 2 above for the treatment of
class 2 Small Claims.
The Debtor estimates that approximately 151 creditors hold
class 3 Allowed Claims against the Debtor totaling approximately
- 7 -
of the Debtor. The class 7 creditors hold pre- bankruptcy, Allowed
Claims which are unsecured and not entitled to priority in payment
under the Bankruptcy Code. On the Effective Date, class 7
creditors shall receive cash equal to twelve percent (12 %) of their
Allowed Claims in full satisfaction and discharge of such Allowed
Claims. Class 7 is impaired under the Plan and is entitled to vote
on the Plan.
Class 8
(Peak National Bank)
Class 8 consists of the Allowed Secured Claim held by Peak
National Bank. Class 8 holds a Certificate of Purchase issued by
the Public Trustee for the County of Pueblo, State of Colorado
respecting a public trustee's Foreclosure Sale of the Debtor's Real
Property held on October 14, 1998. Class 8 shall retain its legal,
equitable and contractual rights as they existed at the Filing
Date. Class 8 is not impaired under the Plan and is not entitled
to vote on the Plan.
Class 9
(BVI Investments, Ltd.)
Class 9 consists of the Allowed Secured Claims held by BVI
Investments, Ltd. Class 9 holds a lien on the Debtor's Real
Property and personal property, including inventory, equipment and
accounts receivable. Class 9 shall retain its existing liens on
the Debtor's Real Property and personal property, including
inventory, equipment and accounts receivable; and shall retain its
legal, equitable and contractual rights as they existed at the
Filing Date. Class 9 is not impaired under the Plan and is not
entitled to vote on the Plan.
Class 10
(National Business Finance, Inc.)
Class 10 consists of the Allowed Secured Claim held by
National Business Finance, Inc. Class 10 holds a lien on the
Debtor's personal property, including equipment, inventory and
accounts receivable. Class 10 shall retain its existing lien on
the Debtor's personal property; and shall retain its legal,
equitable and contractual rights as they existed at the Filing
Date. Class 10 is not impaired under the Plan and is not entitled
to vote on the Plan.
Class 11
(Barshop /Estrada Acquisition Partners LP)
Class 11 consists of the Allowed Secured Claims held by
Barshop /Estrada Acquisition Partners LP ( "HEAP"). Class 11 holds
a lien on the Debtor's personal property, including inventory,
equipment and accounts receivable. On the Effective Date, Class 11
- 10 -
The ballot sent to class 4 permits the class 4 creditor to (a)
vote as a member of class 4, and (b) if class 4 rejects the Plan,
vote as a member of class 3.
Class 5
(County of Pueblo)
Class 5 consists of the Allowed Claim of the County of Pueblo,
State of Colorado. The class 5 Allowed Claim represents the
deficiency Claim held by the class 5 creditor which arises because
the value of the collateral securing the class 5 lien is
insufficient to pay liens which are senior to the class 5 creditor.
As a result, the class 5 creditor holds a pre- bankruptcy, Allowed
Claim which is unsecured and not entitled to priority in payment
under the Bankruptcy Code. On the Effective Date, the class 5
creditor shall receive the sum of $5,000 in full satisfaction and
discharge of the class 5 Allowed Claim. Class 5 is impaired under
the Plan and is entitled to vote on the Plan.
If class 5 rejects the Plan, (a) the Plan provisions
respecting class 5 shall be deemed of no force and effect and no
Plan distributions shall be made to class 5; and (b) the class 5
Allowed Claim shall be subject to treatment as a class 3 Allowed
Claim; and (c) the class 5 creditor shall be entitled to vote as a
member of class 3.
The ballot sent to class 5 permits the class 5 creditor to (a)
vote as a member of class 5, and (b) if class 5 rejects the Plan,
vote as a member of class 3.
Class 6
(City of Pueblo)
Class 6 consists of the Allowed Claim of the City of Pueblo,
State of Colorado. The class 6 creditor holds a pre- bankruptcy,
Allowed Claim which is unsecured and not entitled to priority in
payment under the Bankruptcy Code. On the Effective Date, the
class 6 creditor shall receive the sum of $5,000.00 in full
satisfaction and discharge of the class 6 Allowed Claim. Class 6
is impaired under the Plan and is entitled to vote on the Plan.
Class 7
(Anthony Estrada, et al)
Class 7 consists of the Allowed Claims of Anthony Estrada,
Candelario "Jess" Estrada, Caroline Fresquez, Rocky Mountain Cold
Storage, Food Equipment Refabricators of Colorado, E. T.
Construction, Fresquez Enterprises and Casa de Oro, LLC. The class
7 creditors are (a) officers, directors or shareholders of the
Debtor, (b) entities which are owned in whole or part by officers,
directors or shareholders of the Debtor, or (c) entities owned in
whole or party by relatives of officers, directors or shareholders
nothing under the Plan. Class 14 is impaired under the Plan.
Class 14 is deemed to have rejected the Plan and is not entitled to
vote on the Plan. Notwithstanding the foregoing and
notwithstanding any restriction contained in the Stock Option, the
holders of class 14 Stock Options may exercise their rights under
their Stock Options on or before the Voting Deadline. If the
holder of a Stock Option timely exercises his /her /its rights
thereunder, then such holder shall be entitled to vote on the Plan
as the holder of the securities so acquired (class 12 Common Stock
and /or class 13 Preferred Stock) , and shall receive the Plan
treatment with respect to the securities so acquired (class 12
Common Stock and /or class 13 Preferred Stock).
Class 15
(Warrants)
Class 15 consists of the holders of the Debtor's Warrants. On
the Effective Date, the Debtor's Warrants shall be cancelled and
the holders of such Warrants shall receive nothing under the Plan.
Class 15 is impaired under the Plan. Class 15 is deemed to have
rejected the Plan and is not entitled to vote on the Plan.
Notwithstanding the foregoing and notwithstanding any restriction
contained in the Warrant, the holders of class 15 Warrants may
exercise their rights under their Warrants on or before the Voting
Deadline. If the holder of a Warrant timely exercises his /her /its
rights thereunder, then such holder shall be entitled to vote on
the Plan as the holder of the securities so acquired (class 12
Common Stock and /or class 13 Preferred Stock), and shall receive
the Plan treatment with respect to the securities so acquired
(class 12 Common Stock and /or class 13 Preferred Stock).
Voting Deadline and Confirmation of Plan
Only creditors and interest holders in impaired classes are
entitled to vote on the Plan. Classes which are not impaired under
the Plan are deemed to have accepted the Plan and are not entitled
to vote on the Plan. Classes which neither retain nor receive any
property under the Plan are deemed to have rejected the Plan and
are not entitled to vote on the Plan. A summary of the Plan
classes and their entitlement to vote on the Plan follows:
Classes 14 and 15 impaired (a) Neither receiving nor
retaining any property
under the Plan
(b) Deemed to have rejected the
Plan
(c) Not entitled to vote
Classes 8, 9 and 10 not (a) Deemed to have accepted the
impaired Plan
- 12 -
W IC 9111 H VIII I I IIIMIR
shall exchange its Allowed Secured Claims and release its lien on
the Debtor's personal property for (a) four million (4,000,000)
shares of 1999 Series A Preferred Stock, and (b) if there is no
distribution to class 12 and 13 interest holders under the Plan,
one hundred (100) shares of New Common Stock. Class 11 is impaired
under the Plan and is entitled to vote on the Plan.
Class 12
(Common Stock)
Class 12 consists of the holders of the Debtor's Common Stock.
On the Effective Date, class 12 shall exchange such Common Stock
for New Common Stock at the ratio of twenty (20) shares of Common
Stock for one (1) share of New Common Stock, and such shares of
Common Stock so exchanged shall be cancelled. Class 12 is impaired
under the Plan and is entitled to vote on the Plan.
Notwithstanding the foregoing, if class 2 or class 3 or class 12 or
class 13 rejects the Plan, then classes 12 and 13 shall neither
receive nor retain any property under the plan, and the class 12
interests shall be cancelled and terminated at the Effective Date.
Class 13
(Preferred Stock)
Class 13 consists of the holders of the Debtor's Preferred
Stock. On the Effective Date, class 13 shall either (a) exchange
such Preferred Stock for New Common Stock at the ratio of twenty
(20) shares of Preferred Stock for one (1) share of New Common
Stock, and such shares of Common Stock so exchanged shall be
cancelled, or (b) receive a cash distribution equal to fifteen
percent (15`x) of the issue price of the Preferred Stock held by
the class 13 interest holder in complete redemption and full
discharge and satisfaction of such interest holder's Preferred
Stock, and such shares of Preferred Stock so exchanged shall be
cancelled. The class 13 holders of Preferred Stock shall make the
foregoing election on the ballot which accompanies the Plan and
Statement. Any member of class 13 who fails to timely tender a
ballot, or tenders a ballot, but fails to make an election, shall
be deemed to have elected to receive the cash distribution as
described above. Class 13 is impaired under the Plan and is
entitled to vote on the Plan. Notwithstanding the foregoing, if
class 2 or class 3 or class 12 or class 13 rejects the Plan, then
classes 12 and 13 shall neither receive nor retain any property
under the plan, and the class 13 interests shall be cancelled and
terminated at the Effective Date.
Class 14
(Stock Options)
Class 14 consists of the holders of the Debtor's Stock
Options. On the Effective Date, the Debtor's Stock Options shall
be cancelled and the holders of such Stock Options shall receive
- 11 -
En
Joel Laufer, Esq.
Holden Padjen and Laufer LLC
Attorneys for Debtor
303 East 17th Avenue
Suite 660
Denver, Colorado 80203
Telephone (303) 863 -1100
Facsimile (303) 863 -1109
Mr. Laufer will tabulate the votes. If an improperly executed
or unexecuted ballot is returned or if no ballot is returned at
all, it will not be counted as a vote to accept or reject the Plan.
Ballots must be received by Mr. Laufer on or before 5:00 p.m. on
January 19, 1999. You will be sent a copy of the voting tabulation
for all classes.
Chapter 11 Case To Be Filed
The Debtor is not currently a debtor in a Chapter 11 case. If
the Debtor obtains the Requisite Approval as defined above, the
Debtor immediately intends to (a) file a Chapter 11 bankruptcy case
in the United States Bankruptcy Court for the District of Colorado,
and (b) seek as promptly as practicable Confirmation and approval
of the Plan described herein by the Court pursuant to Section 1129
of the Bankruptcy Code. You will receive subsequent notice of the
filing of the Chapter 11 case. You will also receive notice if for
any reason the Debtor does not file a Chapter 11 case. The Debtor
anticipates filing its Chapter 11 case on or about January 22,
1999.
The Debtor will be under no obligation to file a Chapter 11
case nor will the Joint Proponents be under any obligation to seek
Confirmation of the Plan if, at any time prior to such filing or
Confirmation hearing, there shall have occurred any event that, in
the sole judgment of the Joint Proponents, regardless of the
circumstances giving rise to such event, would or might prohibit,
restrict or delay the Confirmation or consummation of the Plan or
have a material adverse effect on the contemplated benefits of the
Plan to the Joint Proponents. If the Debtor does not receive the
Requisite Approval, the Debtor will explore all options available
to it, and will take such action as the Debtor deems is in the best
interest of its creditors and shareholders. Such action may
include the commencement of a Chapter 11 bankruptcy case, including
the use of any acceptances received pursuant to this solicitation
to seek Confirmation of the Plan or any modification of the Plan
that does not adversely change the treatment of the creditor Claims
or shareholder interests who have accepted the Plan.
- 14 -
(b) Not entitled to vote on
the Plan
Classes 1, 2, 3, 4, impaired
5, 6, 7, 11,
12 and 13
(a) Entitled to vote on the
Plan
Each impaired class constitutes a separate class for voting
and distribution under the Plan. The Plan can be confirmed by the
Court and therefore become binding on all creditors and
shareholders if the Plan is accepted by (a) at least two - thirds
(2/3) in dollar amount and a majority in number of the Allowed
Claims in each impaired creditor class who cast a vote to accept or
reject the Plan, and (b) at least two - thirds of the interests in
each impaired interest holder class who cast a vote to accept or
reject the Plan. In addition, the Plan only can be confirmed by
the Court if the Court finds that the Plan meets the standards for
Confirmation as set forth in Section 1129(a) of the Bankruptcy
Code.
One of these requirements provides that the Plan must be
accepted by at least one impaired class of creditors without
including the acceptance of the Plan by any "insider" as defined in
the Code. Without admitting that any entity is an "insider ", the
Joint Proponents will not rely on the acceptance of the Plan by
class 7 to satisfy this requirement.
If a class of impaired creditors or interest holders rejects
the Plan, the Court can nevertheless confirm the Plan by invoking
the "cram down" provisions of Section 1129(b) of the Code with
respect to such dissenting class(es) . In this case, the Joint
Proponents will seek to obtain Confirmation of the Plan pursuant to
Section 1129(b) : (a) if classes 1, 3, 4, 5, 12 and /or 13 reject the
Plan, and (b) notwithstanding the "deemed" rejection of the Plan by
classes 14 and 15.
The Plan provides that the Debtor will file a Chapter 11
bankruptcy case if the following classes accept the Plan pursuant
to the provisions of Sections 1125(a) and 1126(b) of the Bankruptcy
Code: 2, 6, 7 and 11. Acceptance of the Plan by the foregoing
classes is defined under the Plan as the "Requisite Approval ". You
are urged to study the Statement and Plan in full and to consult
your counsel about the Plan and its impact, including possible tax
consequences, upon your legal rights. Please read the Statement
and Plan carefully before voting on the Plan. Creditors and
interest holders entitled to vote on the Plan should complete the
enclosed ballot and return it to counsel for the Debtor at the
following address:
- 13 -
HOLDERS AND OTHER PARTIES IN INTEREST SHOULD CONSULT WITH THEIR OWN
TAX AND LEGAL ADVISORS TO DETERMINE THE EFFECT OF THE PLAN ON THEM.
CERTAIN OF THE FINANCIAL INFORMATION CONTAINED IN THIS
STATEMENT HAS NOT BEEN SUBJECT TO AN INDEPENDENT AUDIT, AND THE
DEBTOR IS UNABLE TO WARRANT THAT THE INFORMATION IS WITHOUT
INACCURACY. HOWEVER, EVERY EFFORT HAS BEEN MADE TO PROVIDE
ACCURATE INFORMATION.
ANY REPRESENTATION OR INFORMATION NOT HEREIN CONTAINED, IF
MADE OR GIVEN, MUST NOT BE RELIED UPON WHEN VOTING ON THE PLAN.
THE RESPECTIVE COUNSEL FOR THE JOINT PROPONENTS OF THE PLAN
MAKE NO REPRESENTATIONS CONCERNING THE ACCURACY OF THE INFORMATION
CONTAINED IN THIS STATEMENT.
THE STATEMENT, BY ITS NATURE, IS FORWARD LOOKING AND CONTAINS
ESTIMATES AND ASSUMPTIONS WHICH MAY BE MATERIALLY DIFFERENT FROM
ACTUAL FUTURE RESULTS.
THE INFORMATION CONTAINED IN THIS STATEMENT IS AS OF THE DATE
SET FORTH BELOW.
The date of this Statement is December 22, 1998.
- 16 -
Bar Date for Filing Claims
After the Chapter 11 case is filed, the Court will set a Bar
Date for creditors to file proofs of claim with the Court. You
will be sent written notice of the Claims Bar Date.
Confirmation and Discharge
If the Court orders Confirmation of the Plan, the Debtor will
be discharged pursuant to Section 1141(d) of the Bankruptcy Code
from all pre- Confirmation debts and Claims, unless otherwise
provided in the Plan. Confirmation of the Plan makes the Plan
binding upon the Debtor, its creditors and shareholders. If the
Court approves the Plan, the Plan will be binding upon you even if
you did not vote on the Plan or you voted against the Plan.
THE OFFER OF SECURITIES AS PROVIDED IN THE PLAN SHALL
CONSTITUTE A PUBLIC OFFERING AS PROVIDED IN SECTION 1145(c) OF THE
BANKRUPTCY CODE. A REGISTRATION STATEMENT RELATING TO THE
SECURITIES TO BE ISSUED UNDER THE PLAN WILL NOT BE FILED WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION. THE ISSUANCE OF
SECURITIES UNDER THE PLAN IS EXEMPT FROM REGISTRATION WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION AS PROVIDED IN
SECTION 1145(a) OF THE BANKRUPTCY CODE. THIS STATEMENT HAS NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION, ANY COURT OR GOVERNMENT AUTHORITY NOR HAS THE
COMMISSION, ANY COURT OR GOVERNMENT AUTHORITY PASSED UPON THE
ACCURACY OR ADEQUACY OF THE STATEMENTS AND INFORMATION CONTAINED
HEREIN.
PURSUANT TO SECTION 1125 (e) OF THE BANKRUPTCY CODE, ANY PERSON
(INCLUDING THE JOINT PROPONENTS AND THEIR ATTORNEYS, ACCOUNTANTS,
EMPLOYEES, OFFICERS AND DIRECTORS) THAT SOLICITS OR PARTICIPATES IN
GOOD FAITH AND IN COMPLIANCE WITH THE APPLICABLE PROVISIONS OF THE
BANKRUPTCY CODE IN THE OFFER OF SECURITIES UNDER THE PLAN OF
REORGANIZATION DESCRIBED IN THIS STATEMENT SHALL NOT BE LIABLE ON
ACCOUNT OF SUCH SOLICITATION OR PARTICIPATION FOR VIOLATION OF ANY
APPLICABLE LAW, RULE, OR REGULATION ENACTED BY THE UNITED STATES OR
ONE OF ITS STATES GOVERNING THE OFFER, ISSUANCE, SALE, OR PURCHASE
OF SECURITIES.
THIS STATEMENT AND THE PLAN MAY NOT BE RELIED ON FOR ANY
PURPOSE OTHER THAN TO DETERMINE HOW TO VOTE ON THE PLAN, AND
NOTHING CONTAINED IN THEM SHALL CONSTITUTE AN ADMISSION OF ANY FACT
OR LIABILITY BY ANY PARTY.
NOTHING CONTAINED HEREIN SHALL BE ADMISSIBLE IN ANY
PROCEEDING, CASE OR CONTROVERSY INVOLVING THE JOINT PROPONENTS OR
ANY OTHER PARTY.
THIS STATEMENT SHALL NOT BE DEEMED CONCLUSIVE ADVICE ON THE
TAX OR OTHER LEGAL EFFECTS OF THE PLAN, AND ALL CREDITORS, INTEREST
- 15 -
. Al N
II. THE DEBTOR
A. Structure of the Debtor
The Debtor is a privately held Colorado corporation formed in
1995. There are two classes of issued and outstanding stock
consisting of the Common Stock and the Preferred Stock. Warrants
and Stock Options also have been issued by the Debtor. A schedule
of Common Stock holders is attached hereto as Exhibit 3. A
schedule of Preferred Stock holders is attached hereto as Exhibit
4. A schedule of Stock Option holders is attached hereto as
Exhibit 5. A schedule of Warrant holders is attached hereto as
Exhibit 6. The Common Stock, the Preferred Stock, the Stock
Options and the Warrants are not registered securities.
The current officers and directors are set forth below,
together with their current annual salaries:
Directors
Anthony Estrada
Candelario "Jess" Estrada
Caroline Fresquez
James Watts
Randy Earhart
Officers
Anthony Estrada
President and CEO
Caroline Fresquez
Secretary and
Treasurer
Compensation
None
None
None
None
None
Salary: $150,000 - 1998
Amount Paid: $ 23,076 - 1998
Salary: $ 40,000 - 1998
Amount Paid: $ 3,076 - 1998
B. General Information About the Debtor's Business
The Debtor operates a USDA - approved food manufacturing
facility in Pueblo, Colorado. The Debtor produces or plans to
produce frozen Mexican food products such as burritos, tacquitos,
quesadillas, mini -chimichangas and enchiladas at its manufacturing
facility. The Debtor was formed in 1995 by Anthony Estrada,
Caroline Fresquez and Candelario ( "Jess ") Estrada. The Debtor's
business headquarters are located at 602 W. Sixth Street, Pueblo,
Colorado 81003. The Debtor leases its business headquarters from
Anthony Estrada pursuant to a month -to -month unwritten lease. The
Debtor's manufacturing facility is located at the Real Property
described below.
- 18 -
„� d 'I III ®1111111; IIIIf i I I _!
Exhibits
1. Plan of Reorganization
2. D.I.P. Loan Term Sheet
3. Schedule of the holders of Common Stock
4. Schedule of the holders of Preferred Stock
5. Schedule of the holders of Stock Options
6. Schedule of the holders of Warrants
7. Legal description of Real Property
8. Schedule of Personal Property
9. Schedule of Payments to Related Entities
10. Schedule of Guaranties
11. Ownership and Encumbrance Report re: Real Property
12. Schedule of Pending Litigation
13. Schedule of Settled Litigation
14. Schedule of class 2 Small Claims
15. Schedule of class 3 Allowed Claims
16. Schedule of class 7 Allowed Claims
17. Description of Employment Agreements Post - Effective Date
18. Liquidation Analysis
19. Debtor's Unaudited Financial Statements for the years ended
12/31/96 and 12/31/97
20. Debtor's Unaudited Financial Statements for the ten months
ended 10/31/98
21. Debtor's Pro -forma Balance Sheet for the Reorganized Debtor
as of the Effective Date
22. Debtor's three year Post - Effective Date Financial Projections
- 17 -
Robert E. Sutton director of Estrada International
Foods, Inc.
Howard Klemmer former CEO of the Debtor,
shareholder of the Debtor and
president of Estrada International
Foods, Inc.
Estrada International owned in part by Anthony Estrada
Foods, Inc. and W.K. Capital Advisors, Inc., and
Anthony Estrada is a former director
W.K. Capital part owner of Estrada International
Advisors, Inc. Foods, Inc.
Rocky Mountain corporation owned by Loretta Estrada,
Cold Storage and Anthony Estrada is vice - president
Food Equipment owned by various members of the
Fabricators of Estrada Family
Colorado Inc.
E.T. Construction owned by Anthony Estrada and /or
Paul Turner
Fresquez Enterprises owned by Dan Fresquez
Casa de Oro, LLC owned by Anthony Estrada, Caroline A.
Fresquez and Candelario "Jess"
Estrada
Holders of Common See Exhibit 3 attached hereto
Stock
Holders of Preferred See Exhibit 4 attached hereto
Stock
Holders of Stock See Exhibit 5 attached hereto
Options
Holders of Warrants See Exhibit 6 attached hereto
E. Payments to Related Entities
Attached hereto as Exhibit 9 is a schedule of payments made by
the Debtor to related entities during 1998.
F. Guaranties
Various individuals have guaranteed certain of the Debtor's
obligations. Attached hereto as Exhibit 10 is a schedule which
- 20 -
The Debtor's business primarily involves co- packing products
for large food industry corporations which supply the exact
recipes, processes and procedures under contracts to produce these
products for a specific price per unit. These "co- pack" agreements
generally require the Debtor to purchase raw materials and process
the food to contract specifications after which the Debtor is paid
for the finished product after it is shipped. While long -term
relationships are common in the industry, these contracts are
typically written with 30 to 90 day cancellation provisions.
In addition to co- packing, the Debtor from time -to -time makes
burritos and other products for customers who are in need of small
volumes of product on a specific, limited purchase order. In these
cases, the Debtor makes the product using its own recipes and
processing methods and bills the customer for the finished goods
when shipped.
C. Debtor's Assets
The Debtor was the owner of the Real Property and improvements
thereon located at 720 West 8th Street, Pueblo, Colorado. The
Debtor's manufacturing facility is located at the Real Property.
A legal description of the Debtor's Real Property is attached to
the Plan as Exhibit A and attached to this Statement as Exhibit 7.
The Debtor owns no other real property. The Real Property was sold
at a public trustee's Foreclosure Sale held on October 14, 1998.
The Debtor's right to redeem the Real Property from the sale will
expire 75 days after the sale date at which time the Debtor will
lose its interest in the Real Property. All tangible property
owned by the Debtor is located at the Debtor's business
headquarters. A schedule of the Debtor's personal property,
including equipment, furniture and fixtures, inventory and accounts
receivable is attached hereto as Exhibit 8.
D. Related Entities
The following persons and entities are, or may be, related or
in some manner affiliated with the Debtor.
Anthony Estrada officer, director and shareholder
of the Debtor
Caroline Fresquez officer, director and shareholder
of the Debtor
Randy Earhart director of the Debtor
Candelario "Jess" director and shareholder of the
Estrada Debtor
James L. Watts director and shareholder of the
Debtor
- 19 -
to terminate its second shift operations, terminate personnel,
reduce management and curtail operations.
Simultaneously with these events, the Debtor was losing
approximately $300,000 per month. At the end of March, 1998, the
Debtor's current assets totaled $332,000 compared to current debts
of $3,100,000. At March 31, 1998, total liabilities were
$6,000,000.
After the termination of the SSE contract, the Debtor closed
its manufacturing facility. Revenues decreased from approximately
$365,000 per month in April, 1998 to approximately $46,000 in June,
1998. In June, 1998, the Debtor incurred an operating loss of
$276,000. At June 30, 1998, current assets totaled $138,000 and
current liabilities had increased to $3,300,000. At June 30, 1998,
the Debtor had a negative net worth of $2,800,000.
In August 1998, the Debtor was able to reopen its
manufacturing facility on a limited basis due to loans made to the
Debtor by BVI Investments, Ltd. to fill a limited number of orders
from August to October, 1998. In late October, 1998, the Debtor
entered into "co- pack" agreement with a large distribution company
to manufacture two products. As of the date of this Statement, the
Debtor's manufacturing facility is operating at approximately one -
third capacity to fulfill the Debtor's obligations under the
foregoing co -pack agreement.
In October, 1998, the Debtor had sales of approximately
$51,000 and incurred a net loss of approximately $221,000. At
October 31, 1998, current assets were $223,000 and current
liabilities were slightly in excess of $4,000,000. At October 31,
1998, the Debtor had a negative net worth of approximately
$3,200,000.
The Debtor currently obtains raw materials on a C.O.D. basis
with its trade creditors. As described later in this Statement,
numerous civil actions have been filed against the Debtor to
collect monies due and owing. Judgments have been entered against
the Debtor and several suits are pending. Mechanics liens and
judgment liens have been filed against the Debtor's Real Property.
Ah a restructuring of its debt, the Debtor's business will
fE.i, particularly given the potential loss of its manufacturing
facility as described below.
B. Foreclosure of Debtor's Real Property
The Debtor's Real Property located at 720 W. 8th Street,
Pueblo, Colorado is subject to several Deeds of Trust and other
liens. See the Ownership and Encumbrance Report attached hereto as
Exhibit 11 and incorporated herein by reference. The holder of the
first lien Deed of Trust on the Real Property is Peak National Bank
( "Bank "). Due to its financial problems, the Debtor defaulted in
- 22 -
identifies the guarantor, the debt guaranteed and the amount of the
debt.
III. SIGNIFICANT PRE - BANKRUPTCY EVENTS
A. Cause of Bankruptcy To Be Filed by the Debtor
In July of 1997, the Debtor entered into an agreement with
Schwan's Sales Enterprises, Inc. ( "SSE ") located in Marshall,
Minnesota. The agreement provided that the Debtor would produce
burritos for the Coyote Grill division of SSE which services
approximately 75,000 schools across the United States. This
contract was a bulk burrito program for distribution into central
school district commissaries for preparation and further
distribution. The SSE contract represented a large commitment of
the Debtor's time, capital and personnel, and required a
substantial expansion of the Debtor's production facilities.
The Debtor commenced production under the SSE contract in
August, 1997 for the 1997/1998 school year. The startup of
production for this contract was neither smooth nor easy as the
Debtor incurred an additional two million dollars in startup and
equipment costs. By the end of October 1997, the Debtor was
running a double shift and producing over 500 cases per day.
In early November, 1997, problems arose respecting the SSE
contract. The Debtor was notified that its burrito product may
have been related to an outbreak of illnesses reported by children
in Kansas as the burrito produced by the Debtor was one of the
items on the menu. As a result, an extensive investigation was
conducted in conjunction with the local health department, SSE and
the USDA -FSIS. The investigation resulted in a "no causal"
determination meaning that no connection could be made between the
Debtor's burrito and the illnesses. After a brief interruption,
production resumed on November 10, 1997 with the endorsement of
SSE. Thereafter, additional equipment was purchased and production
reached a high of 1,381 cases per day.
On March 25, 1998, the Debtor suffered a second problem with
the SSE contract. The Debtor was advised that its burrito was
implicated in an outbreak of illnesses reported by school children
after eating lunch. As a result, a sixteen day investigation was
implemented by the USDA -FSIS Compliance Division. The
investigation occurred in the field and at the Debtor's business
headquarters. As in the previous incident, the results of the
investigation resulted in a "no causal" determination meaning that
no connection could be made between the Debtor's burrito and the
illnesses.
The events described above resulted in the termination of the
SSE contract. As a result, in April, 1998, the Debtor was required
- 21 -
Potential Litigation
The Debtor remains in default with respect to various trade
creditors and lenders. It is possible that additional civil
actions will be filed against the Debtor after the date of this
Statement and prior to the Filing Date of the Chapter 11 case.
Except as described above, the Debtor has not within the last
year entered into any settlement agreements respecting pending or
potential litigation. After the date of this Statement, the Debtor
will not enter into or fund any new settlement agreements with any
of its creditors or shareholders.
D. Communication with Creditors
The Debtor has had ongoing communication with its creditors
and interest holders regarding its financial problems, including
discussions regarding a possible restructuring of its debt and
equity. By correspondence dated August 19, 1998 and September 23,
1998, the Debtor advised its creditors and interest holders of the
Debtor's financial difficulties and notified them that a Chapter 11
reorganization was under consideration.
IV. OVERVIEW OF THE PLAN
A. The Plan
The Plan is being proposed by the Joint Proponents who are the
Debtor and BEAP. The Plan generally provides as follows:
a. After the Filing Date and subject to prior Court
approval, BVI and any participants, will make the D.I.P. Loan to
the Debtor which will permit the Debtor to make all Plan payments
on and after the Effective Date. The terms of the D.I.P. Loan are
set forth in Exhibit 2 attached hereto. The D.I.P. Loan shall
survive confirmation of the Plan and will be paid by the Debtor
according to its terms from future income.
b. Prior to the Effective Date, Redemptor will redeem
the Real Property from the October 14, 1998 public trustee's
Foreclosure Sale initiated by Peak National Bank. The redemption
will vest title to the Real Property in the Redemptor free and
clear of all other liens and Claims of any kind or nature, subject
to the redemption rights of lienholders junior to Redemptor.
C. On the Effective Date, Redemptor will convey the
Real Property to the Debtor in consideration for (a) a cash payment
to Redemptor on the Effective Date equal to BVI's costs and
expenses incurred in connection with negotiation and implementation
of the Plan, including consultant and legal fees, (estimated to
total approximately $200,000), and (b) a purchase money promissory
note and first lien Deed of Trust encumbering the Real Property to
- 24 -
its obligations to the Bank. As a result, the Bank initiated a
public trustee's Foreclosure Sale of the Real Property which
occurred on October 14, 1998. The Bank was the successful bidder
at the sale bidding in the entire balance due ($832,111.39) under
its promissory note and first lien Deed of Trust, including certain
fees, interest and other charges. The bid made by Peak National
Bank at the Foreclosure Sale represents a credit bid equal to the
amount owing to Peak National Bank after application of a payment
made to the Peak National Bank by the County of Pueblo pursuant to
a written guarantee executed by the County of Pueblo in favor of
Peak National Bank. The Debtor is entitled to redeem the Real
Property from the Foreclosure Sale by paying the entire balance due
to the Bank on the later of (a) 75 days from the date of the
Foreclosure Sale pursuant to Colorado law, or (b) 60 days after the
Filing Date pursuant to bankruptcy law if the redemption period has
not expired prior to the bankruptcy Filing Date. The Debtor's
redemption period will expire on or about December 27, 1998. BVI's
redemption period will expire on or about January 7, 1999.
Notwithstanding a possible Chapter 11 bankruptcy filing by the
Debtor, if the Debtor fails to redeem as described above, the
Debtor will lose its interest in the Real Property and improvements
thereon. The Debtor is without sufficient funds to redeem the Real
Property from the Foreclosure Sale. The Plan contemplates that
Redemptor will redeem the Real Property from the Foreclosure Sale
and convey the Real Property to the Debtor on the Effective Date of
the Plan. It is possible that the Internal Revenue Service and the
Colorado Department of Revenue may assert that they hold tax liens
encumbering the Real Property which are senior to all Deeds of
Trust, consensual liens and non - consensual liens. Similarly, the
holders of any valid mechanics liens also may assert that their
liens encumbering the Real Property are senior to all Deeds of
Trust, consensual liens and non - consensual liens.
C. Pending and Settled Litigation
Due to its financial problems, the Debtor has been unable to
pay various creditors. Some of these creditors have filed civil
actions against the Debtor seeking to collect monies owing to them.
A summary of the Debtor's pending, settled and potential litigation
follows.
Pending Litigation
Attached hereto as Exhibit 12 is
litigation.
Settled Litigation
Attached hereto as Exhibit 13 is
litigation.
a schedule of pending
a schedule of settled
- 23 -
If the Plan is not confirmed for any reason, BEAD and BVI may
elect not to pursue further reorganization efforts with the Debtor.
In this event, Redemptor, as the prospective owner of the Real
Property by way of redemption, could evict the Debtor from the Real
Property resulting in the immediate cessation of the Debtor's
business operations. Should eviction occur, it is likely that the
Debtor would be liquidated as no reorganization would be feasible
without the Real Property.
B. Definitions
Article I of the Plan contains certain defined terms. These
defined terms are capitalized in this Statement. It is essential
to an understanding of the Plan and this Statement that all
interested parties familiarize themselves with the defined terms.
C. Effective Date of the Plan
The Effective Date of the Plan is the first business day which
is eleven calendar days after the Confirmation Date. The
Confirmation Date is the date the Court enters its order approving
the Plan. The Debtor estimates that the Effective Date shall occur
on or about March 15, 1999. Certain Plan distributions and other
events occur on or after the Effective Date.
D. Classification and Allowance of Claims and Interests
The Debtor's creditors and shareholders are divided by the
Plan into classes. The Plan classes are set forth in the
introduction to this Statement. The Plan provides separately for
each class. Distributions on account of Allowed Claims and
shareholder interests in each impaired class will be in full
settlement, satisfaction and discharge of all such Allowed Claims
and shareholder interests, unless otherwise provided in the Plan.
Upon Confirmation of the Plan, the Debtor will be discharged from
all Claims and debt that arose prior to Confirmation of the Plan,
except as otherwise provided in the Plan.
A Claim is generally defined by the Plan to be a right to
payment from the Debtor. An Allowed Secured Claim is defined as an
Allowed Claim which is secured by property of the Debtor. An
Allowed Priority Claim is defined as an Allowed Claim which is
entitled to priority in payment under Section 507(a) (2) et. seq. of
the Bankruptcy Code. The Plan defines an Allowed Claim to mean:
(a) an unsecured Claim against the Debtor which is set forth in the
Debtor's bankruptcy schedules other than an unsecured Claim
scheduled by the Debtor as disputed, contested, contingent or
unliquidated, or (b) an unsecured Claim against the Debtor which
has been timely filed with the Court prior to the Bar Date, and
with respect to which no objection to the allowance thereof is
timely filed by the Debtor, or as to which any such objection has
been determined by Final Order. A holder of a Claim or interest
- 26 -
be held by BVI and any participants in an amount equal to (i) the
costs of Redemptor's redemption of the Real Property (estimated to
be $832,111 plus interest, fees and costs) plus (ii) an amount
equivalent to the payoff on the Effective Date of the promissory
note held by BVI which was secured by the Real Property (estimated
to be approximately $641,000 plus interest, fees and costs) with
such payoff calculated as if there had been no Foreclosure Sale
respecting the Real Property. The purchase money promissory note
and first lien Deed of Trust on the Real Property shall survive
Confirmation of the Plan and will be paid by the Debtor according
to their terms from future income. Redemptor shall be under no
obligation to transfer the Real Property to the Debtor unless the
Court enters the Confirmation Order.
d. On the Effective Date, all pre- Confirmation debt and
all Claims against the Debtor and all interests in the Debtor will
be discharged unless otherwise provided in the Plan.
e. On the Effective Date, all property of the Debtor
shall vest in the reorganized Debtor free and clear of liens,
claims and interests except as otherwise provided in the Plan.
f. On the Effective Date, securities shall be issued
under the Plan to various creditor and interest holder classes
pursuant to Section 1145 of the Code.
g. After the redemption of the Real Property from the
Foreclosure Sale by Redemptor and prior to the Effective Date of
the Plan, Redemptor has agreed that the Debtor shall be entitled to
maintain possession of the Real Property, provided however that
Redemptor, in its sole and absolute discretion, may terminate
without cause, the Debtor's right to possession of the Real
Property.
The Plan is attached here to as Exhibit 1. The Plan is a
"pre- packaged" plan meaning that the Joint Proponents are seeking
acceptance of the Plan from the Debtor's creditors and shareholders
prior to the filing of a Chapter 11 bankruptcy case. If the
Requisite Approval is obtained, then the Debtor intends to file a
Chapter 11 bankruptcy case to obtain Court approval of the Plan.
This Statement is a summary of the Plan. Creditors and
shareholders are urged to read the Plan in full before voting on
the Plan. Creditors and shareholders also are urged to consult
with their counsel or other business adviser in order to understand
the Plan fully. The Plan represents a proposed legally binding
agreement. An intelligent judgment concerning the Plan cannot be
made without fully understanding the Plan. In the event of a
conflict between the Statement and the Plan, the Plan shall
control.
- 25 -
shall file an application with the Court seeking authority to
retain Mr. Laufer as bankruptcy counsel in the Chapter 11 case.
Prior to the filing of the Chapter 11 case, the Debtor will pay in
full all fees and costs incurred by Mr. Laufer prior to the filing
of the Chapter 11 case.
The Debtor estimates that after the filing of the Chapter 11
case and through the Confirmation Date, Mr. Laufer will incur fees
and expenses totaling approximately $20,000.00. The foregoing
estimate assumes that a Confirmation hearing to consider approval
of the Plan will occur within 45 days after the filing of the
Chapter 11 case. The foregoing is only an estimate and the fees
may far exceed those estimated by the Debtor.
Prior to the filing of the Chapter 11 case, Mr. Laufer will be
paid a retainer in an amount not to exceed $30,000.00. The
retainer is intended to secure payment of fees and expenses
incurred by Mr. Laufer after the filing of the Chapter 11 case.
The retainer may be applied to such fees and expenses only after
prior Court approval.
Mr. Laufer shall file a final fee application seeking Court
approval of all fees and expenses to be paid to Mr. Laufer from the
Filing Date of the Chapter 11 case through the Confirmation Date.
The Debtor shall pay fees and expenses incurred by Mr. Laufer after
the Confirmation Date in the ordinary course of business without
Court approval. Mr. Laufer also may file interim fee applications.
Unless otherwise agreed, attorney fees and expenses owing to
Mr. Laufer after the Filing Date and through the Confirmation Date
shall be paid in cash in full on the Effective Date unless the
Court has not entered its order approving payment of such fees and
expenses prior to the Effective Date in which event payment shall
be made upon entry of an order approving such fees.
Trustee Fees
All unpaid fees owing to the Office of the United States
Trustee pursuant to 28 U.S.C. Section 1930 shall be paid in full on
the later of the Effective Date or when due. The Debtor shall
continue to pay such fees until the Court enters its Final Decree
closing the Chapter 11 case, or enters an order dismissing the
Chapter 11 Case or converting the Chapter 11 Case to Chapter 7.
Post - Filing Date Vendor Debt
Vendor debt incurred after the Filing Date shall be paid in
full in the ordinary course of business, or pursuant to any
agreement with the respective vendor.
- 28 -
will receive distributions under the Plan only if the Claim is an
Allowed Claim or the interest is an allowed interest.
E. Claims Bar Date
Immediately upon filing of the Chapter 11 case, the Debtor
shall file a motion with the Court requesting that the Court set a
Bar Date for creditors to file proofs of Claim in the Chapter 11
case, provided however that pursuant to the terms of the Plan,
Claims arising on account of the rejection of executory contracts
must be filed not later than 15 days after the Effective Date of
the Plan. Notice of the Bar Date will be sent to creditors
immediately after the Court fixes the Bar Date.
F. Plan Treatment of Allowed Claims
Unclassified Allowed Administrative Expenses
Allowed Administrative Expenses consist of debts incurred by
the Debtor after the Filing Date, including but not limited to the
D.I.P. Loan, attorneys fees, accounting fees and post - Filing Date
vendor debt. The Plan provides that the holders of Allowed
Administrative Expenses shall be paid in cash in full on the
Effective Date, or upon such other terms as any agreement with the
Debtor so provides or as may be agreed upon by the Debtor and
respective holder of the Allowed Administrative Expense, provided
however that the D.I.P. Loan shall be paid according to its terms,
a general description of which is set forth in Exhibit B attached
to the Plan and in Exhibit 2 attached hereto. The holders of
Allowed Administrative Expenses are not impaired under the Plan and
are not entitled to vote on the Plan.
D.I.P. Loan
The D.I.P. Loan is a revolving line -of- credit loan in an
amount not to exceed $1,450,000.00 which will be made by BVI
Investments, Ltd. and any participants to the Debtor after the
Filing Date. After the Filing Date, the Debtor will file a motion
with the Court seeking approval of the D.I.P. Loan. All creditors,
interest holders and interested parties will receive notice of the
motion. The general terms of the D.I.P. Loan are set forth in
Exhibit 2 attached hereto. The proceeds of the D.I.P. Loan shall
be employed to fund the Debtor's business operations and to make
payments required under the Plan on and after the Effective Date of
the Plan.
Debtor's Bankruptcy Counsel
Joel Laufer, Esq., of the law firm of Holden Padjen and
Laufer LLC, 303 East 17th Avenue, Suite 660, Denver, Colorado
80203 has been retained as bankruptcy counsel for the Debtor.
Immediately upon the filing of the Chapter 11 case, the Debtor
- 27 -
Colorado Department of Revenue
As of December 22, 1998, the Debtor and the Colorado
Department of Revenue agree that the Debtor is indebted to the
Colorado Department of Revenue in the amount of $23,120.43
representing unpaid withholding taxes, interest and penalties for
the period January through October of 1998. The Allowed Priority
Claim held by the Colorado Department of Revenue will continue to
accrue interest through the Filing Date at which time interest will
cease to accrue. On the Effective Date, the Debtor will pay to the
Colorado Department of Revenue a sum equal to 20% of the Allowed
Priority Claim held by the Colorado Department of Revenue at the
Filing Date. The balance of the Allowed Priority Claim will be
paid in twenty -four (24) equal monthly installments of principal
and interest commencing thirty (30) days after the Effective Date
and continuing on the same day of each month thereafter with
interest accruing after the Effective Date at the rate of 7% per
annum. The Debtor estimates that the monthly payment to the
Colorado Department of Revenue will be approximately $828.00.
Class 1 is impaired under the Plan and is entitled to vote on
the Plan. A ballot has been sent to all class 1 creditors for this
purpose. Acceptance of the Plan by class 1 is not a prerequisite
to the Debtor filing a Chapter 11 case. See Requisite Approval
discussed in the Introduction to this Statement. The Debtor
intends to file a Chapter 11 bankruptcy case if the Debtor receives
the Requisite Approval. If the Requisite Approval is not obtained,
then the Debtor may not file a Chapter 11 case and no assurance can
be made that any distribution ever will be made to class 1
creditors.
Class 2
(Small Claims of $500.00 or less)
Class 2 consists of the holders of Small Claims. Small Claims
consist of the Debtor's prepetition, nonpriority, unsecured
creditors holding Allowed Claims which do not exceed $500.00,
including any Allowed Claim greater than $500.00 where the holder
of the Allowed Claim has elected to reduce the Allowed Claim to
$500.00. An election to reduce an Allowed Claim to $500.00 can be
made on the ballot which accompanies this Statement. Class 2 Small
Claims include prepetition vendors, lenders and trade creditors,
including (a) Allowed Claims arising from the rejection of
executory contracts and unexpired leases, (b) Allowed Claims
representing the deficiency Claims of secured creditors, and (c)
the holders of Small Claims who assert mechanics liens and judgment
liens against the Debtor's Real Property. A schedule of all class
2 Small Claims is attached hereto as Exhibit 14. If you agree with
the amount of the Small Claim set forth in Exhibit 14, then your
Claim is not disputed and you need not file a proof of claim with
the Court. You hold a class 2 Disputed Claim if: (a) your Claim is
not listed in Exhibit 14, or (b) you disagree with the amount of
- 30 -
Class 1 Allowed Priority Claims
Class 1 Allowed Priority Claims are entitled to priority in
payment under the bankruptcy laws meaning that they are entitled to
payment in full before general, unsecured creditors. See Section
507 (a) (2) et. seq. of the Bankruptcy Code. Allowed Priority Claims
include, but are not limited to: (a) wages, salaries or
commissions, including vacation pay, earned within ninety (90) days
prior to the filing date of the Chapter 11 case not to exceed
$4,000 per claimant; (b) Claims for contributions to employee
benefits plans; (c) consumer deposits for goods or services; and
(d) certain unsecured tax Claims held by government units.
The Plan provides that all class 1 Allowed Priority Claims
shall be paid in full on the Effective Date of the Plan, or upon
such other terms as any agreement with the Debtor so provides or as
may be agreed upon by the Debtor and the respective holder of the
Allowed Priority Claim, provided however that any government unit
holding an Allowed Priority Claim shall be paid as follows: 20% of
the Allowed Priority Claim shall be paid in cash at the Effective
Date with the balance payable in twenty -four (24) equal monthly
installments of principal and interest commencing thirty (30) days
after the Effective Date and continuing on the same day of each
month thereafter with interest accruing after the Effective Date at
the rate of 7% per annum.
The Debtor believes that two creditors hold Allowed Priority
Claims consisting of the United States of America, Internal Revenue
Service and the Colorado Department of Revenue.
Internal Revenue Service
The IRS has asserted that it is owed $169,937.80 for unpaid
withholding taxes, plus interest for the first and second quarters
of 1998. The Debtor's records reflect that the Debtor is indebted
to the IRS in a lesser amount. The Debtor anticipates that the
amount of the Allowed Priority Claim held by the IRS for the tax
period described above will be agreed upon by the Debtor and IRS
prior to the Effective Date. The Allowed Priority Claim held by
the IRS will continue to accrue interest through the Filing Date at
which time interest will cease to accrue. On the Effective Date,
the Debtor will pay to the IRS a sum equal to 20% of the Allowed
Priority Claim held by the IRS at the Filing Date. The balance of
the Allowed Priority Claim will be paid in twenty -four (24) equal
monthly installments of principal and interest commencing thirty
(30) days after the Effective Date and continuing on the same day
of each month thereafter with interest accruing after the Effective
Date at the rate of 7% per annum. The Debtor estimates that the
monthly payment to the IRS will be approximately $6,100.00.
- 29 -
purpose. The Plan cannot be confirmed if class 2 fails to accept
the Plan. Acceptance of the Plan by class 2 is a prerequisite to
the Debtor filing a Chapter 11 case. See Requisite Approval
discussed in the Introduction to this Statement. The Debtor
intends to file a Chapter 11 bankruptcy case if the Debtor receives
the Requisite Approval. If the Requisite Approval is not obtained,
then the Debtor may not file a Chapter 11 case and no assurance can
be made that any distribution ever will be made to class 2
creditors.
Class 3
(Allowed Claims in excess of $500.00)
Class 3 consists of the holders of Allowed Claims not
otherwise classified under the Plan. Allowed Claims consist of the
Debtor's prepetition, nonpriority, unsecured creditors holding
Allowed Claims which exceed $500.00. Class 3 Allowed Claims
include prepetition vendors, lenders and trade creditors, including
(a) Allowed Claims arising from the rejection of executory
contracts and unexpired leases, (b) Allowed Claims representing the
deficiency Claims of secured creditors, and (c) the holders of
Allowed Claims who assert mechanics liens and judgment liens
against the Debtor's Real Property. A schedule of all class 3
Allowed Claims is attached hereto as Exhibit 15. If you agree with
the amount of the Allowed Claim set forth in Exhibit 15, then your
Claim is not disputed and you need not file a proof of claim with
the Court. You hold a class 3 Disputed Claim if: (a) your Claim is
not listed in Exhibit 15, or (b) you disagree with the amount of
your Claim as set forth in Exhibit 15. Exhibit 15 reflects all
known class 3 Allowed Claims, including (a) the class 4 Allowed
Claim which will be subject to treatment as a class 3 Allowed Claim
if class 4 rejects the Plan, and (b) the class 5 Allowed Claim
which will be subject to treatment as a class 3 Allowed Claim if
class 5 rejects the Plan. See the discussion of classes 4 and 5
below.
The Plan permits a class 3 creditor to voluntarily reduce
his /her /its class 3 Allowed Claim to a class 2 Small Claim in the
amount of $500.00. This election is made on the ballot which
accompanies this Statement. If a class 3 creditor makes this
election, the class 3 creditor is deemed to have accepted the Plan
as a member of class 2. See class 2 above for the treatment of
class 2 Small Claims.
IF YOU AGREE WITH THE AMOUNT OF THE ALLOWED CLAIM SET FORTH IN
Exhibit 15, YOU NEED NOT FILE A PROOF OF CLAIM WITH THE COURT.
IF YOU ARE NOT LISTED ON Exhibit 15, YOU MUST FILE A PROOF OF
CLAIM WITH THE COURT ON OR BEFORE THE BAR DATE FIXED BY THE COURT.
IF YOU FAIL TO TIMELY FILE A PROOF OF CLAIM, YOU WILL RECEIVE NO
DISTRIBUTION UNDER THE PLAN AND ANY CLAIMS YOU HOLD WILL BE
DISCHARGED. AFTER THE FILING OF THE CHAPTER 11 BANKRUPTCY CASE,
- 32 -
your Claim as set forth in Exhibit 14. Exhibit 14 reflects all
known class 2 Small Claims.
IF YOU AGREE WITH THE AMOUNT OF THE SMALL CLAIM SET FORTH IN
Exhibit 14, YOU NEED NOT FILE A PROOF OF CLAIM WITH THE COURT.
IF YOU ARE NOT LISTED ON Exhibit 14, YOU MUST FILE A PROOF OF
CLAIM WITH THE COURT ON OR BEFORE THE BAR DATE FIXED BY THE COURT.
IF YOU FAIL TO TIMELY FILE A PROOF OF CLAIM, YOU WILL RECEIVE NO
DISTRIBUTION UNDER THE PLAN AND ANY CLAIMS YOU HOLD WILL BE
DISCHARGED. AFTER THE FILING OF THE CHAPTER 11 BANKRUPTCY CASE,
YOU WILL BE SENT NOTICE OF THE BAR DATE FIXED BY THE COURT TO FILE
PROOFS OF CLAIM.
IF YOU DISAGREE WITH THE AMOUNT OF YOUR SMALL CLAIM AS SET
FORTH IN Exhibit 14, YOU MUST FILE A PROOF OF CLAIM WITH THE COURT
ON OR BEFORE THE BAR DATE FIXED BY THE COURT. IF YOU FAIL TO
TIMELY FILE A PROOF OF CLAIM, YOU WILL RECEIVE A DISTRIBUTION UNDER
THE PLAN BASED UPON THE AMOUNT OF THE SMALL CLAIM SET FORTH IN
Exhibit 14. AFTER THE FILING OF THE CHAPTER 11 BANKRUPTCY CASE,
YOU WILL BE SENT NOTICE OF THE BAR DATE FIXED BY THE COURT TO FILE
PROOFS OF CLAIM.
The Plan provides that the Debtor shall review all proofs of
Claim filed with the Court and file objections thereto (if any) not
later than sixty (60) days after the Effective Date of the Plan.
If the Debtor does not file an objection to a proof of Claim within
sixty (60) days after the Effective Date, or such other date as
established by the Court, then the proof of Claim automatically
shall be deemed allowed. The Court may extend the time for the
Debtor to object to proofs of claim upon motion of the Debtor.
On the Effective Date, the Plan provides that each holder of
a class 2 Small Claim shall receive a cash distribution equal to
100% of the amount of the Small Claim. The Plan distribution to
the holder of a class 2 Small Claim shall be in full satisfaction
and discharge of all Claims held by the class 2 creditor against
the Debtor. If a class 2 Claim is disputed by the Debtor, no
distribution shall be made on account of the class 2 Disputed Claim
until the dispute is resolved and the Disputed Claim is allowed by
Final Order of the Court.
Based upon its records, the Debtor estimates that
approximately 89 class 2 creditors hold Small Claims which total
approximately $15,532. See Exhibit 14. Accordingly, on the
Effective Date, the Debtor shall make a distribution to the holders
of class 2 Small Claims in the total aggregate amount of
approximately $15,532, plus amounts to be paid to any class 3
creditor electing to be treated as a member of class 2.
Class 2 is impaired under the Plan and is entitled to vote on
the Plan. A ballot has been sent to all class 2 creditors for this
- 31 -
Class 3 is impaired under the Plan and is entitled to vote on
the Plan. A ballot has been sent to all class 3 creditors for this
purpose. Acceptance of the Plan by class 3 is not a prerequisite
to the Debtor filing a Chapter 11 case. See Requisite Approval
discussed in the Introduction to this Statement. The Debtor
intends to file a Chapter 11 bankruptcy case if the Debtor receives
the Requisite Approval. If the Requisite Approval is not obtained,
then the Debtor may not file a Chapter 11 case and no assurance can
be made that any distribution ever will be made to class 3
creditors.
Class 4
(W.K. Capital Advisors, Inc. /Estrada International Foods, Inc.)
Class 4 consists of the Allowed Claim jointly held by W.K.
Capital Advisors, Inc. /Estrada International Foods, Inc. in the
amount of $1,005,000.00. In June of 1997, the Debtor entered into
a consulting agreement with W.K. Capital Advisors, Inc. ( "WK") of
Denver, Colorado whereby WK agreed to provide investment banking
and corporate financing services to the Debtor. The Debtor and WK
formulated a business plan to acquire a number of food processing
companies such as the Debtor though an acquisition vehicle, namely
Estrada International Foods, Inc. Pursuant to the business plan,
WK proposed to obtain funds for the Debtor via a new form of
security to be offered to investors by Estrada International Foods,
Inc. Estrada International Foods, Inc. raised approximately one
million dollars pursuant to its offering which was in turn loaned
to the Debtor net of offering costs. The Debtor employed the funds
for operating capital and /or to purchase equipment. The consulting
agreement by and between the Debtor and WK was terminated in 1998.
The business plan has been abandoned and no food processing
companies have been acquired by Estrada International Foods, Inc.,
WK or the Debtor. The funds loaned to the Debtor as described
above constitute the class 4 Allowed Claim held by W.K. Capital
Advisors, Inc. /Estrada International Foods, Inc.
The class 4 creditor holds a pre- bankruptcy, Allowed Claim
which is unsecured and not entitled to priority in payment under
the Bankruptcy Code. The class 4 creditor asserts a junior lien on
the Debtor's personal property by reason of a purported security
agreement dated December 31, 1997 and a financing statement filed
on July 24, 1998 with the Clerk and Recorders Office, County of
Pueblo, State of Colorado, at Reception No. 1229758. The Debtor
disputes that class 4 holds a valid and duly perfected lien on the
Debtor's personal property. However, assuming arguendo that class
4 holds a valid lien, the class 4 lien is of no value because it is
junior to the liens held by the class 9 creditor (BVI), the class
10 creditor (National Business Finance) and the class 11 creditor
(BEAP) .
On the Effective Date, the class 4 creditor shall have the
option to either (a) exchange the class 4 Allowed Claim for 1999
- 34 -
YOU WILL BE SENT NOTICE OF THE BAR DATE FIXED BY THE COURT TO FILE
PROOFS OF CLAIM.
IF YOU DISAGREE WITH THE AMOUNT OF YOUR ALLOWED CLAIM AS SET
FORTH IN Exhibit 15, YOU MUST FILE A PROOF OF CLAIM WITH THE COURT
ON OR BEFORE THE BAR DATE FIXED BY THE COURT. IF YOU FAIL TO
TIMELY FILE A PROOF OF CLAIM, YOU WILL RECEIVE A DISTRIBUTION UNDER
THE PLAN BASED UPON THE AMOUNT OF THE ALLOWED CLAIM SET FORTH IN
Exhibit 15. AFTER THE FILING OF THE CHAPTER 11 BANKRUPTCY CASE,
YOU WILL BE SENT NOTICE OF THE BAR DATE FIXED BY THE COURT TO FILE
PROOFS OF CLAIM.
The Plan provides that the Debtor shall review all proofs of
Claim filed with the Court and file objections thereto (if any) not
later than sixty (60) days after the Effective Date of the Plan.
If the Debtor does not file an objection to a proof of Claim within
sixty (60) days after the Effective Date, or such other date as
established by the Court, then the proof of Claim automatically
shall be deemed allowed. The Court may extend the time for the
Debtor to object to proofs of claim upon motion of the Debtor.
On the later of the Effective Date or the date that all class
3 Disputed Claims are allowed by Final Order, the Plan provides
that each holder of a class 3 Allowed Claim shall receive a cash
distribution equal to his /her /its Pro Rata share of $500,000.00 in
full satisfaction and discharge of the class 3 Allowed Claim,
provided however that after the Effective Date, the Debtor, in its
sole and absolute discretion, may make interim distributions to the
holders of class 3 Allowed Claims. In the event that the Debtor
elects to make interim distributions to the holders of class 3
Allowed Claims, such distributions shall be calculated as if all
class 3 Disputed Claims were class 3 Allowed Claims. The Debtor
anticipates making an interim distribution on or shortly after the
Effective Date. Pro Rata is defined by the Plan to mean the
percentage which the amount of the creditor's class 3 Allowed Claim
bears to the aggregate amount of all class 3 Allowed Claims. If a
class 3 Claim is disputed by the Debtor, no distribution shall be
made on account of the class 3 Disputed Claim until the dispute is
resolved and the Disputed Claim is allowed by Final Order of the
Court.
Based upon its records, the Debtor estimates that
approximately 151 class 3 creditors hold Allowed Claims which total
approximately $1,820,000, exclusive of the class 4 and class 5
Allowed Claims. See Exhibit 15. If classes 4 and 5 reject the
Plan, then the class 3 Allowed Claims are estimated to total
approximately $3,008,000. See Exhibit 15. Accordingly, the Debtor
estimates that the Pro Rata distribution to the holder of a class
3 Allowed Claim will range from 16.6 to 27.4 cents on the dollar
depending upon the total amount of class 3 Allowed Claims.
- 33 -
The County's Allowed Claim represents a deficiency Claim
because the value of the Real Property securing the County's
Allowed Claim is insufficient to pay the liens which are senior to
the lien held by the County. In addition, the Real Property has
been sold at a Foreclosure Sale held on October 14, 1998. Unless
the County redeems the Real Property from the Foreclosure Sale, the
County's third lien Deed of Trust will be extinguished by the
Foreclosure Sale and the County shall receive nothing on account of
its third lien Deed of Trust. See the discussion of class 8 below.
The Plan provides that the County will receive on the
Effective Date a one -time cash payment of $5,000.00 in full
satisfaction of its Allowed Claim arising under the Guaranty. The
Plan treatment of class 5 is less favorable than the treatment of
other similar Allowed Claims which are subject to treatment under
class 3 of the Plan. Class 3 Allowed Claims are estimated to
receive a distribution in the range of 16.6 to 27.4 cents on the
dollar in full satisfaction of such class 3 Allowed Claims.
If class 5 rejects the Plan, (a) the Plan provisions
respecting class 5 shall be deemed of no force and effect and no
Plan distributions shall be made to class 5; and (b) the class 5
Allowed Claim shall be subject to treatment as a class 3 Allowed
Claim; and (c) the class 5 creditor shall be entitled to vote as a
member of class 3.
Class 5 is impaired under the Plan and is entitled to vote on
the Plan. A ballot has been sent to class 5 for this purpose.
Acceptance of the Plan by class 5 is not a prerequisite to the
Debtor filing a Chapter 11 case. See Requisite Approval discussed
in the Introduction to this Statement. The Debtor intends to file
a Chapter 11 bankruptcy case if the Debtor receives the Requisite
Approval. If the Requisite Approval is not obtained, then the
Debtor may not file a Chapter 11 case and no assurance can be made
that any distribution ever will be made to the class 5 creditor.
The ballot sent to class 5 permits the class 5 creditor to (a)
vote as a member of class 5, and (b) if class 5 rejects the Plan,
vote as a member of class 3.
Class 6
(City of Pueblo)
Class 6 consists of the Allowed Claim held by the City of
Pueblo ( "City ") , State of Colorado. In November of 1995, the
Debtor entered into an agreement with the City whereby the City
provided $1,250,000 in financing to complete the renovation of the
Debtor's Real Property (frozen food processing facility) . The
proceeds of the financing were conveyed to the Debtor as a grant
that will be free from repayment if the Debtor creates 220 jobs
within two years and maintains those jobs for a five year period
thereafter. If these employment levels are not reached and /or not
- 36 -
Series B Preferred Stock at the ratio of one (1) share of 1999
Series B Preferred Stock for each one hundred dollars ($100.00) of
class 4 Allowed Claim, or (b) exchange the class 4 Allowed Claim
for shares of New Common Stock such that class 4 will own, as of
the Effective Date, six percent (6%) of the New Common Stock issued
and outstanding on the Effective Date treating all outstanding 1999
Series A Preferred Stock as having been fully converted to New
Common Stock.
The Plan treatment of class 4 is less favorable than the
treatment of other similar Allowed Claims which are subject to
treatment under class 3 of the Plan. Class 3 Allowed Claims are
estimated to receive a distribution in the range of 16.6 to 27.4
cents on the dollar in full satisfaction of such class 3 Allowed
Claims.
If class 4 rejects the Plan, (a) the Plan provisions
respecting class 4 shall be deemed of no force and effect and no
Plan distributions shall be made to class 4; and (b) the class 4
Allowed Claim shall be subject to treatment as a class 3 Allowed
Claim; and (c) the class 4 creditor shall be entitled to vote as a
member of class 3.
Class 4 is impaired under the Plan and is entitled to vote on
the Plan. A ballot has been sent to class 4 for this purpose.
Acceptance of the Plan by class 4 is not a prerequisite to the
Debtor filing a Chapter 11 case. See Requisite Approval discussed
in the Introduction to this Statement. The Debtor intends to file
a Chapter 11 bankruptcy case if the Debtor receives the Requisite
Approval. If the Requisite Approval is not obtained, then the
Debtor may not file a Chapter 11 case and no assurance can be made
that any distribution ever will be made to the class 4 creditor.
The ballot sent to class 4 permits the class 4 creditor to (a)
vote as a member of class 4, and (b) if class 4 rejects the Plan,
vote as a member of class 3.
Class 5
(County of Pueblo)
Class 5 consists of the Allowed Claim of the County of Pueblo,
State of Colorado ( "County ") . On or about July 10, 1997, the
County executed a written guaranty ( "Guaranty ") of the Debtor's
obligation owing to Peak National Bank (class 8 creditor) not to
exceed the sum of $183,326.76. The Debtor secured the Guaranty by
granting a third lien Deed of Trust to the County on the Real
Property which was recorded in the Clerk and Recorders office,
County of Pueblo, State of Colorado on July 10, 1997, at Book 3014,
Page 852. Upon the Debtor's information and belief, the County
paid to Peak National Bank a sum not exceeding $183,326.76 pursuant
to the Guaranty. Accordingly, the County holds an Allowed Claim
against the Debtor for amounts paid to the Bank under the Guaranty.
- 35 -
of 16.6 to 27.4 cents on the dollar in full satisfaction of such
class 3 Allowed Claims. Because class 7 is receiving less
favorable treatment on account of its Allowed Claim, the Bankruptcy
Code provides that the Plan cannot be confirmed unless class 7
unanimously accepts the Plan.
Class 7 is impaired under the Plan and is entitled to vote on
the Plan. A ballot has been sent to all class 7 creditors for this
purpose. Unanimous acceptance of the Plan by all class 7 creditors
is a prerequisite to the Debtor filing a Chapter 11 case. See
Requisite Approval discussed in the Introduction to this Statement.
The Debtor intends to file a Chapter 11 bankruptcy case if the
Debtor receives the Requisite Approval. If the Requisite Approval
is not obtained, then the Debtor may not file a Chapter 11 case and
no assurance can be made that any distribution ever will be made to
the class 7 creditors.
Class 8
(Peak National Bank)
Class 8 consists of the Allowed Secured Claim held by Peak
National Bank ( "Bank ") . Funds borrowed from the Bank were employed
by the Debtor for operating capital and /or the purchase of
equipment. The obligation owing to the Bank was represented by a
promissory note executed by the Debtor in the original face amount
of $750,000 dated June 19, 1997, with a maturity date of June 19,
2007, as modified on November 5, 1997 to reflect additional funds
advanced and a new face value of $1,000,000.
The promissory note held by the Bank was secured by a first
lien Deed of Trust encumbering the Real Property owned by the
Debtor and recorded in the Clerk and Recorders Office, County of
Pueblo, State of Colorado on June 20, 1997, at Book 3008, Page 553.
The Bank's promissory note was also secured by a lien on the
Debtor's inventory, equipment, accounts receivable and general
intangibles as evidenced by a Security Agreement executed by the
Debtor dated June 19, 1997, and a financing statement executed by
the Debtor and filed with the Clerk and Recorders Office, County of
Pueblo, State of Colorado on June 20, 1997, at Book 3008, Page 560.
In 1998, the Debtor defaulted under the terms of the Bank's
promissory note and Deed of Trust. Accordingly, the Bank elected
to foreclose on its Deed of Trust encumbering the Real Property.
On October 14, 1998, the Public Trustee for the County of Pueblo,
State of Colorado, held a public trustee's Foreclosure Sale of the
Real Property. The Bank was the successful bidder at the
Foreclosure Sale bidding in the entire amount ($832,111) of its
indebtedness represented by the promissory note. At the conclusion
of the Foreclosure Sale, a Certificate of Purchase was issued to
the Bank by the Public Trustee. Accordingly, the Bank's Allowed
Secured Claim will be satisfied in full by the issuance of a Public
Trustee's Deed to the Bank at the conclusion of all redemption
- 38 -
maintained, then the Debtor will be required to repay part of the
grant based on the shortfall in actual employment levels.
The grant funds were used to remove unneeded walls, doors and
structure; to purchase materials; and to remodel the building
interior with utilities, new plumbing and cleaning facilities that
meet USDA requirements. In addition, upgraded production equipment
was installed, including a nitrogen freezing system.
The Plan provides that the City will receive on the Effective
Date a one -time cash payment of $5,000.00 in full satisfaction of
its Allowed Claim arising under the above described agreement. The
Plan treatment of class 6 is less favorable than the treatment of
other similar Allowed Claims which are subject to treatment under
class 3 of the Plan. Class 3 Allowed Claims are estimated to
receive a distribution in the range of 16.6 to 27.4 cents on the
dollar in full satisfaction of such class 3 Allowed Claims.
Because class 6 is receiving less favorable treatment on account of
its Allowed Claim, the Bankruptcy Code provides that the Plan
cannot be confirmed unless class 6 accepts the Plan.
Class 6 is impaired under the Plan and is entitled to vote on
the Plan. A ballot has been sent to class 6 for this purpose.
Acceptance of the Plan by class 6 is a prerequisite to the Debtor
filing a Chapter 11 case. See Requisite Approval discussed in the
Introduction to this Statement. The Debtor intends to file a
Chapter 11 bankruptcy case if the Debtor receives the Requisite
Approval. If the Requisite Approval is not obtained, then the
Debtor may not file a Chapter 11 case and no assurance can be made
that any distribution ever will be made to the class 6 creditor.
Class 7
(Anthony Estrada, et al)
Class 7 consists of persons or entities which are affiliated
in some manner with the Debtor and which hold prepetition,
nonpriority, unsecured Allowed Claims. Exhibit 16 attached hereto
identifies the class 7 creditors and the amounts owing to each
creditor. The affiliation of each of the class 7 creditors is set
forth earlier in this Statement. See the Section entitled Related
Entities. Each class 7 creditor holds an Allowed Claim for monies
loaned to the Debtor in the amounts set forth in Exhibit 16.
On the Effective Date, the Plan provides that each holder of
a class 7 Allowed Claim shall receive a cash distribution equal to
twelve percent (12 %) of the amount of the Allowed Claim. The Plan
distribution to the holder of a class 7 Allowed Claim shall be in
full satisfaction and discharge of all Claims held by the class 7
creditor against the Debtor. The Plan treatment of class 7 is less
favorable than the treatment of other similar Allowed Claims which
are subject to treatment under class 3 of the Plan. Class 3
Allowed Claims are estimated to receive a distribution in the range
- 37 -
In October of 1997, Barshop Ventures, Inc. ( "Ventures
acquired from John L. Rainaldi a promissory note and related Deeds
of Trust each dated November 21, 1996 executed by the Debtor in
favor of Mr. Rainaldi in the face amount of $400,000 ( "Rainaldi
Note "). The Deed of Trust held by Mr. Rainaldi and encumbering the
Real Property was recorded with the Clerk and Recorders Office,
County of Pueblo, State of Colorado on November 27, 1996, at Book
2950, Page 103. The assignment of the Rainaldi Note and related
Deeds of Trust from Mr. Rainaldi to Ventures was recorded with the
Clerk and Recorders Office, County of Pueblo, State of Colorado on
October 10, 1997, at Book 3044, Page 866. In addition, an
amendment to the second lien Deed of Trust which encumbers the Real
Property was filed with the Clerk and Recorders Office, County of
Pueblo, State of Colorado at Book 3044, Page 869. The Rainaldi
Note was secured by a second lien Deed of Trust on the Real
Property, a second lien Deed of Trust on certain real property
owned by Anthony Estrada and a first lien (subject to the prior and
senior lien of the class 10 creditor) on all of the Debtor's
personal property, including furniture and fixtures, inventory,
accounts receivable and equipment. The lien on the Debtor's
personal property was properly perfected by the filing of a
financing statement with (a) the County of Pueblo, State of
Colorado, U.C.C. Records, on October 10, 1997 (Filing No. 2878421,
(b) the Clerk and Recorders Office, County of Pueblo, State of
Colorado on November 21, 1997, at Book 3058, Page 749, and (c) the
Colorado Secretary of States Office on October 21, 1997 (Reception
No. 199720912651. The real property owned by Anthony Estrada which
is subject to the above referenced second lien Deed of Trust was
sold at a foreclosure sale held by the Public Trustee for the
County of Pueblo, State of Colorado on November 4, 1998. The
foreclosure sale was initiated by the holder of the first lien Deed
of Trust.
On October 8, 1997, the Rainaldi Note was modified and
restated to reflect a prior loan of $50,000 made by Ventures to the
Debtor. The face value of the modified and restated Rainaldi Note
was $350,000 ( "First Amended Rainaldi Note "). The First Amended
Rainaldi Note continued to be secured by a second lien Deed of
Trust on the Real Property, a second lien Deed of Trust on certain
real property owned by Anthony Estrada, and a lien on all of the
Debtor's personal property.
On December 30, 1997, BVI acquired the First Amended Rainaldi
Note and related Deeds of Trust from Ventures. The assignment of
the First Amended Rainaldi Note and related Deeds of Trust from
Ventures to BVI was recorded with the Clerk and Recorders Office,
County of Pueblo, State of Colorado on May 7, 1998, at Book 3120,
Page 735. In addition, on May 7, 1998, an amendment to the second
lien Deed of Trust encumbering the Real Property was filed with the
Clerk and Recorders Office, County of Pueblo, State of Colorado at
Book 3120, Page 756.
- 40 -
periods or by the payment to the Bank of all sums due to it by way
of redemption by the Debtor or a junior lienholder on the Real
Property. Upon redemption or issuance of the Trustee's Deed, the
Bank's lien on the Debtor's personal property, including furniture
and fixtures, inventory, equipment, accounts receivable and general
intangibles will be extinguished and released.
The Debtor has 75 days from the date of the sale to redeem the
Real Property from the Foreclosure Sale. Redemption requires the
Debtor to pay the Bank all sums owing to the Bank under the Bank's
promissory note. The Debtor is without sufficient funds to redeem
the Real Property from the Foreclosure Sale. The Plan contemplates
the Redemptor will redeem the Real Property from the Foreclosure
Sale and convey the Real Property to the Debtor on the Effective
Date in consideration for (a) a cash payment to BVI on the
Effective Date equal to BVI's costs and expenses incurred in
connection with negotiation and implementation of the Plan,
including consultant and legal fees, (estimated to total
approximately $200,000), and (b) a purchase money promissory note
and first lien Deed of Trust encumbering the Real Property to be
held by BVI and any participants in an amount equal to (i) the
costs of Redemptor's redemption of the Real Property (estimated to
be $832,111 plus interest, fees and costs) plus (ii) an amount
equivalent to the payoff on the Effective Date of the promissory
note held by BVI which was secured by the Real Property (estimated
to be approximately $641,000 plus interest, fees and costs) with
such payoff calculated as if there had been no Foreclosure Sale
respecting the Real Property.
The Plan provides that the class 8 creditor shall retain
unaltered all of its legal, equitable and contractual rights as
they existed on the Filing Date of the Chapter 11 case.
Accordingly, the class 8 creditor is not impaired under the Plan
and is not entitled to vote on the Plan. Class 8 is deemed to have
accepted the Plan.
Class 9
(BVI Investments, Ltd.)
Class 9 consists of the Allowed Secured Claim held by BVI
Investments, Ltd. ( "BVI"). The obligation owing to BVI is
represented by the promissory note executed by the Debtor as
described below. Funds borrowed pursuant to the following
promissory note were used for operating capital and /or the purchase
of equipment.
note 12/02/98
face amount date balance due interest rate maturity
600,000 3/17/98 $640,383 10% 12/31/00
MIM
representing the difference between the estimated value of the Real
Property and the amount paid by Redemptor to redeem the Real
Property).
b. The reduced Allowed Secured Claim held by BVI
(approximately $272,000) shall remain secured by a first lien
(subject only to the prior and senior lien of the class 10
creditor) on all of the Debtor's personal property, including
furniture and fixtures, inventory, accounts receivable and
equipment. On the Effective Date and subject to Confirmation of
the Plan, BVI voluntarily will waive the balance due under its
promissory note dated March 17, 1998.
The Plan provides that the class 9 creditor shall retain
unaltered all of its legal, equitable and contractual rights as
they existed on the Filing Date of the Chapter 11 case.
Accordingly, the class 9 creditor is not impaired under the Plan
and is not entitled to vote on the Plan. Class 9 is deemed to have
accepted the Plan.
Class 10
(National Business Finance, Inc.)
Class 10 consists of the Allowed Secured Claim held by
National Business Finance, Inc. ( "NBF"). The Debtor and NBF
entered into a Combined Account Purchase And Security Agreement
dated March 13, 1997 ("NBF Agreement ") . Pursuant to the NBF
Agreement, the Debtor sold certain accounts to NBF, and NBF
established a credit line for the Debtor. Funds advanced to the
Debtor under the credit line were employed by the Debtor for
operating capital and /or the purchase of equipment.
Amounts due under the NBF Agreement are secured by a first
lien on the Debtor's inventory, equipment, accounts receivable,
documents, contract rights, chattel paper, and general intangibles.
The first lien held by NBF on the above described personal property
is a valid and perfected first lien as evidenced by the recording
of a financing statement with the Colorado Secretary of State on
April 1, 1997 (Filing No. 19972025079). The balance owing to NBF
under the NBF Agreement is approximately $7,954 as of December 22,
1998. On or after the Effective Date, the Debtor anticipates
paying in full the class 10 Allowed Secured Claim.
The Plan provides that the class 10 creditor shall retain
unaltered all of its legal, equitable and contractual rights as
they existed on the Filing Date of the Chapter 11 case.
Accordingly, the class 10 creditor is not impaired under the Plan
and is not entitled to vote on the Plan. Class 10 is deemed to
have accepted the Plan.
- 42 -
On March 17, 1998, the First Amended Rainaldi Note was
modified to reflect additional advances made by BVI to the Debtor.
The face value of the modified and restated First Amended Rainaldi
Note was $600,000 ( "Second Amended Rainaldi Note ") . The Second
Amended Rainaldi Note continued to be secured by a second lien Deed
of Trust on the Real Property, a second lien Deed of Trust on
certain real property owned by Anthony Estrada, and a lien on all
of the Debtor's personal property. The Second Amended Rainaldi
Note, the second lien Deed of Trust on the Real Property, and the
lien on all of the Debtor's personal property constitute the
Allowed Secured Claim held by BVI.
The Real Property which secures the Second Amended Rainaldi
Note has been sold at a public trustee's Foreclosure Sale. See the
discussion of Peak National Bank (class 8) above. Under Colorado
law, Redemptor may exercise its right of redemption if the Debtor
does not redeem the Real Property from the Foreclosure Sale. The
Debtor is without sufficient funds to redeem the Real Property. It
is anticipated that Redemptor will redeem the Real Property from
the Foreclosure Sale and convey the Real Property to the Debtor on
the Effective Date in consideration for (a) a cash payment to
Redemptor on the Effective Date equal to BVI's costs and expenses
incurred in connection with negotiation and implementation of the
Plan, including consultant and legal fees, (estimated to total
approximately $200,000), and (b) a purchase money promissory note
and first lien Deed of Trust encumbering the Real Property to be
held by BVI and any participants in an amount equal to (i) the
costs of Redemptor's redemption of the Real Property (estimated to
be $832,111 plus interest, fees and costs) plus (ii) an amount
equivalent to the payoff on the Effective Date of the promissory
note held by BVI which was secured by the Real Property (estimated
to be approximately $641,000 plus interest, fees and costs) with
such payoff calculated as if there had been no Foreclosure Sale
respecting the Real Property. Redemptor's obligation to convey the
Real Property to the Debtor is conditioned upon the Court
confirming the Plan.
The effect of the redemption on BVI's Allowed Secured Claim is
as follows:
a. The Allowed Secured Claim will be reduced by an amount
equal to the difference between the value of the Real Property and
the amount paid by Redemptor to redeem the Real Property from the
Foreclosure Sale. The Debtor believes the value of the Real
Property to be approximately $1,200,000 based upon an October 8,
1998 appraisal obtained by Peak National Bank, the class 8
creditor. The Debtor estimates that the amount necessary to redeem
the Real Property from the Foreclosure Sale to be approximately
$832,111.39, plus interest, costs and fees. Accordingly, upon
redemption by Redemptor, the Allowed Secured Claim held by BVI
(approximately $640,000) will be reduced to approximately $272,000
($640,000 representing BVI's Allowed Secured Claim less $368,000
- 41 -
on the Effective Date, 13EAP shall release its lien on property of
the Debtor.
Class 11 is impaired under the Plan and is entitled to vote on
the Plan. A ballot has been sent to class 11 for this purpose.
Acceptance of the Plan by class 11 is a prerequisite to the Debtor
filing a Chapter 11 case. See Requisite Approval discussed in the
Introduction to this Statement. The Debtor intends to file a
Chapter 11 bankruptcy case if the Debtor receives the Requisite
Approval. If the Requisite Approval is not obtained, then the
Debtor may not file a Chapter 11 case and no assurance can be made
that any distribution ever will be made to the class 11 creditor.
G. Plan Treatment of Shareholder Interests
Class 12
(Common Stock)
Class 12 consists of the holders of the Debtor's Common Stock
issued and outstanding at the Filing Date. A schedule of class 12
interest holders is attached hereto as Exhibit 3. The Plan
provides that on the Effective Date, class 12 interest holders
shall exchange their Common Stock for shares of New Common Stock at
the ratio of twenty shares of Common Stock for one share of New
Common Stock, and the shares so exchanged shall be cancelled. The
securities issued pursuant to the Plan will dilute the equity
position held by the class 12 Common Stock holders at the Filing
Date. The Debtor estimates the dilution to class 12 will be from
59.98% ownership at the Filing Date to 9.16% ownership immediately
after the Effective Date.
Notwithstanding the foregoing, if class 2 or class 3 or class
12 or class 13 reject the Plan, then classes 12 and 13 will neither
retain nor receive any property under the Plan. In the event that
any of these classes rejects the Plan, (a) the class 12 interests
shall be cancelled and terminated at the Effective Date; (b) class
12 shall receive nothing under the Plan; and (c) the class 12
shares of Common Stock shall be cancelled.
Class 12 is impaired under the Plan and is entitled to vote on
the Plan. A ballot has been sent to all class 12 interest holders
for this purpose. Acceptance of the Plan by class 12 is not a
prerequisite to the Debtor filing a Chapter 11 case. See Requisite
Approval discussed in the Introduction to this Statement. The
Debtor intends to file a Chapter 11 bankruptcy case if the Debtor
receives the Requisite Approval. If the Requisite Approval is not
obtained, then the Debtor may not file a Chapter 11 case and no
assurance can be made that any distribution ever will be made to
the class 12 interest holders.
- 44 -
Class 11
(BEAP)
Class 11 consists of the Allowed Secured Claims held by
Barshop /Estrada Acquisition Partners LP ("BEAP"). In December of
1998, BEAP acquired the following promissory notes and related
security documents from BVI Investments, Ltd. The following
promissory notes represent the Allowed Secured Claims held by BEAP.
Funds borrowed pursuant to the following promissory notes were used
by the Debtor for operating capital and /or the purchase of
equipment.
note 11/30/98
face amount date balance due interest rate maturity
$ 200,000.00 9/30/98 $ 77,811.84 10% 3/31/99
$ 500,000.00 9/30/98 $389,885.92 10% 3/31/99
The two promissory notes held by BEAP are secured by a lien
encumbering all of the Debtor's accounts receivable and inventory.
The lien held by BEAP on the Debtor's accounts receivable and
inventory is junior to the lien held by the class 9 creditor and
junior to the lien held by the class 10 creditor. The lien held by
BEAP is a perfected and valid lien as evidenced by two security
agreements executed by the Debtor dated August 27, 1998, and UCC
financing statements filed with the Colorado Secretary of State and
the County of Pueblo, State of Colorado, U.C.C. Records:
The Plan provides that BEAP shall exchange its Allowed Secured
Claims for (a) four million (4,000,000) shares of the Debtor's 1999
Series A Preferred Stock, and (b) if there is no distribution to
class 12 and 13 interest holders under the Plan, one hundred (100)
shares of the Debtor's New Common Stock. The distribution of
securities to BEAP shall be in full satisfaction and discharge of
the class 11 Allowed Secured Claims. The Plan also provides that
- 43 -
Reception or
Filing
Date Filing Number
Place of Recording
[$500,000 promissory
note]
9/1/98
19982055912
Secretary
of State
9/1/98
288788
County of
Pueblo
[$200,000 promissory
note]
9/1/98
19982055874
Secretary
of State
9/1/98
288787
County of
Pueblo
The Plan provides that BEAP shall exchange its Allowed Secured
Claims for (a) four million (4,000,000) shares of the Debtor's 1999
Series A Preferred Stock, and (b) if there is no distribution to
class 12 and 13 interest holders under the Plan, one hundred (100)
shares of the Debtor's New Common Stock. The distribution of
securities to BEAP shall be in full satisfaction and discharge of
the class 11 Allowed Secured Claims. The Plan also provides that
- 43 -
Date, the Stock Options shall be cancelled and the holders thereof
will receive nothing under the Plan.
Notwithstanding the foregoing and notwithstanding any
restriction contained in the Stock Option, the holders of class 14
Stock Options may exercise their rights under their Stock Options
on or before the Voting Deadline. The Voting Deadline is the last
date for creditors and interest holders to vote on the Plan. The
Voting Deadline is set forth in the Introduction to this Statement.
If the holder of a Stock Option exercises his /her /its rights
thereunder, then such holder shall be entitled to vote on the Plan
as the holder of the securities so acquired (class 12 Common Stock
and /or class 13 Preferred stock) , and shall receive the Plan
treatment with respect to the securities so acquired (class 12
Common Stock and /or class 13 Preferred stock).
The Debtor believes that the Stock Options have no value as of
the date of this Statement and will have no value at the Filing
Date. The Debtor believes that its Common Stock and Preferred
Stock have no value as of the date of this Statement and will have
no value at the Filing Date. If the Plan is confirmed, the holders
of Common Stock and Preferred Stock will be subject to treatment as
provided in classes 12 or 13 above. The holders of Stock Options
should be aware that (a) the holders of Common Stock and Preferred
Stock will be substantially diluted by the issuance of securities
under the Plan, and (b) it is possible that the holders of Common
Stock and Preferred Stock will neither retain nor receive any
property under the Plan, and the Common Stock and Preferred Stock
may be cancelled and terminated under the Plan. Any holder of a
Stock Option contemplating the exercise of the rights thereunder
should take these risks into consideration. See the discussion in
classes 12 and 13 above.
Class 14 is impaired under the Plan. Because class 14 is
neither receiving nor retaining any property under the Plan, class
14 is deemed to have rejected the Plan and is not entitled to vote
on the Plan. Acceptance of the Plan by class 14 is not a
prerequisite to the Debtor filing a Chapter 11 case. See Requisite
Approval discussed in the Introduction to this Statement. The
Debtor intends to file a Chapter 11 bankruptcy case if the Debtor
receives the Requisite Approval. If the Requisite Approval is not
obtained, then the Debtor may not file a Chapter 11 case and no
assurance can be made that any distribution ever will be made to
the class 14 interest holders.
Class 15
(Warrants)
Class 15 consists of the holders of Warrants to purchase
Common Stock and /or Preferred Stock. A schedule of the holders of
Warrants is attached here to as Exhibit 6. On the Effective Date,
- 46 -
Class 13
(Preferred Stock)
Class 13 consists of the holders of the Debtor's Preferred
Stock issued and outstanding at the Filing Date. A schedule of
class 13 interest holders is attached hereto as Exhibit 4. The
Plan provides that on the Effective Date, class 13 interest holders
shall either (a) exchange their Preferred Stock for shares of New
Common Stock at the ratio of twenty shares of Preferred Stock for
one share of New Common Stock, and the shares so exchanged shall be
cancelled, or (b) receive a cash distribution equal to fifteen
percent of the issue price of the Preferred Stock held by the class
13 interest holder in complete redemption and full discharge and
satisfaction of such interest holder's Preferred Stock, which
shares shall thereupon be cancelled. The class 13 holders of
Preferred Stock shall make the foregoing election on the ballot
which accompanies the Plan and Statement. Any member of class 13
who fails to timely tender a ballot, or tenders a ballot, but fails
to make an election, shall be deemed to have elected to receive the
cash distribution as described above. For those class 13 interest
holders who elect to receive New Common Stock under the Plan, the
securities issued pursuant to the Plan will dilute the equity
position held by the class 13 Preferred Stock holders at the Filing
Date. The Debtor estimates the dilution to class 13 will be from
14.28% ownership at the Filing Date to 2.18% immediately after the
Effective Date.
Notwithstanding the foregoing, If class 2 or class 3 or class
12 or class 13 reject the Plan, then classes 12 and 13 will neither
retain nor receive any property under the Plan. In the event that
any of these classes rejects the Plan, (a) the class 13 interests
shall be cancelled and terminated at the Effective Date; (b) class
13 shall receive nothing under the Plan; and (c) the class 13
shares of Preferred Stock shall be cancelled.
Class 13 is impaired under the Plan and is entitled to vote on
the Plan. A ballot has been sent to all class 13 interest holders
for this purpose. Acceptance of the Plan by class 13 is not a
prerequisite to the Debtor filing a Chapter 11 case. See Requisite
Approval discussed in the Introduction to this Statement. The
Debtor intends to file a Chapter 11 bankruptcy case if the Debtor
receives the Requisite Approval. If the Requisite Approval is not
obtained, then the Debtor may not file a Chapter 11 case and no
assurance can be made that any distribution ever will be made to
the class 13 interest holders.
Class 14
(Stock Options)
Class 14 consists of the holders of Stock Options to purchase
Common Stock and /or Preferred Stock. A schedule of the holders of
Stock Options is attached here to as Exhibit 5. On the Effective
- 45 -
Effective Date shall be made by the Debtor from future income
and /or the proceeds of the D.I.P. Loan. The following chart sets
forth the estimated Plan payments due on the Effective Date.
Allowed Administrative Expenses*
Cash Payment To Acquire Real Property ++
Class 1 (Allowed Priority Claims) + ++
Class 2 (Small Claims)
Class 3 (Allowed Claims)
Class 4 (W.K. Capital Advisors, Inc. /+
Estrada International Foods)
Class 5 (County of Pueblo)+
Class 6 (City of Pueblo)
Class 7 (Anthony Estrada et al)
Class 8 (Peak National Bank)
Class 9 (BVI Investments, Ltd.)
Class 10 (National Business Finance)
Class 11 (BEAP)
Class 12 (Common Stock)
Class 13 (Preferred Stock) **
Class 14 (Stock Options)
Class 15 (Warrants)
Amounts to cure executory contracts + ++
and unexpired leases to be assumed
TOTAL
$ 30,000.00
$ 200,000.00
$ 39,000.00
$ 15,000.00
$ 500,000.00
$ .00
$ 5,000.00
$ 5,000.00
$ 80,000.00
$ .00
$ .00
$ 8,000.00
$ .00
$ .00
$ 303,000.00
$ .00
$ .00
$ 21,600.00
$1,206,600.00
+ Assumes that classes 4 and 5 accept the Plan
and the class 4 and 5 Plan treatment
++ Funds required by the Plan to purchase the Real
Property on.the Effective Date
+ ++ 20% due at the Effective Date with the balance
paid in deferred installments
* Estimated fees for Debtor's attorney
** Assumes the Plan is accepted by classes 2, 3, 12 and
13 and assumes all class 13 interest holders elect to
receive a cash distribution
The following chart sets forth the distribution of shares of
stock to occur on the Effective Date. Column C represents shares
of New Common Stock. Column A represents shares of 1999 Series A
Preferred Stock. Column B represents shares of 1999 Series B
Preferred Stock.
- 48 -
the Warrants shall be cancelled and the holders thereof will
receive nothing under the Plan.
Notwithstanding the foregoing and notwithstanding any
restriction contained in the Warrants, the holders of class 15
Warrants may exercise their rights under their Warrants on or
before the Voting Deadline. The Voting Deadline is the last date
for creditors and interest holders to vote on the Plan. The Voting
Deadline is set forth in the Introduction to this Statement. If
the holder of a Warrant exercises his /her /its rights thereunder,
then such holder shall be entitled to vote on the Plan as the
holder of the securities so acquired (class 12 Common Stock and /or
class 13 Preferred stock), and shall receive the Plan treatment
with respect to the securities so acquired (class 12 Common Stock
and /or class 13 Preferred stock).
The Debtor believes that the Warrants have no value as of the
date of this Statement and will have no value at the Filing Date.
The Debtor believes that its Common Stock and Preferred Stock have
no value as of the date of this Statement and will have no value at
the Filing Date. If the Plan is confirmed, the holders of Common
Stock and Preferred Stock will be subject to treatment as provided
in classes 12 or 13 above. The holders of Warrants should be aware
that (a) the holders of Common Stock and Preferred Stock will be
substantially diluted by the issuance of securities under the Plan,
and (b) it is possible that the holders of Common Stock and
Preferred Stock will neither retain nor receive any property under
the Plan, and the Common Stock and Preferred Stock may be cancelled
and terminated under the Plan. Any holder of a Warrant
contemplating the exercise of the rights thereunder should take
these risks into consideration. See the discussion in classes 12
and 13 above.
Class 15 is impaired under the Plan. Because class 15 is
neither receiving nor retaining any property under the Plan, class
15 is deemed to have rejected the Plan and is not entitled to vote
on the Plan. Acceptance of the Plan by class 15 is not a
prerequisite to the Debtor filing a Chapter 11 case. See Requisite
Approval discussed in the Introduction to this Statement. The
Debtor intends to file a Chapter 11 bankruptcy case if the Debtor
receives the Requisite Approval. If the Requisite Approval is not
obtained, then the Debtor may not file a Chapter 11 case and no
assurance can be made that any distribution ever will be made to
the class 15 interest holders.
H. Means for Execution of the Plan
Plan Distributions
All Plan payments on the Effective Date shall be made from the
proceeds of the D.I.P. Loan which provides funding to the Debtor in
an amount not to exceed $1,450,000.00. Plan payments due after the
- 47 -
(b) a purchase money promissory note and first lien Deed of Trust
encumbering the Real Property to be held by BVI and any
participants in an amount equal to (i) the costs of Redemptor's
redemption of the Real Property (estimated to be $832,111 plus
interest, fees and costs) plus (ii) an amount equivalent to the
payoff on the Effective Date of the promissory note held by BVI
which was secured by the Real Property (estimated to be
approximately $641,000 plus interest, fees and costs) with such
payoff calculated as if there had been no Foreclosure Sale
respecting the Real Property. In addition, on the Effective Date,
BVI shall waive any Claim remaining under its promissory note
secured by the Real Property. Redemptor's obligation to convey the
Real Property to the Debtor and BVI' s waiver of its Claim under the
foregoing promissory note is conditioned upon the Court confirming
the Plan.
I. Other Plan Provisions
Executory Contracts and Unexpired Leases
The Debtor is assuming those executory contracts and
unexpired leases described in Exhibit C attached to the Plan.
Assumption of an executory contract or unexpired lease means the
Debtor intends to be bound by and shall comply with the terms of
such contract or lease after Confirmation of the Plan. To the
extent that the Debtor is in default under an executory contract
or unexpired lease to be assumed, the Debtor shall cure such
defaults on the Effective Date of the Plan, unless otherwise
agreed by the other party to the contract or lease. Amounts
necessary to cure such defaults (if any) are set forth in Exhibit
C to the Plan.
Any executory contract or unexpired lease which is not set
forth in Exhibit C attached to the Plan shall be rejected upon the
Effective Date of the Plan. Any party to a rejected executory
contract or unexpired lease must file a proof of Claim for damages
arising from such rejection within 15 days after the Effective Date
of the Plan failing which such Claim shall be forever barred and
the holder thereof shall receive nothing on account of such Claim.
Allowed Claims arising on account of rejected executory contracts
or unexpired leases shall be subject to Plan treatment as class 3
creditors.
Discharge
Except as otherwise provided in the Plan, the distributions
under the Plan on account of Allowed Claims and shareholder
interests shall be in full satisfaction and discharge of any Claims
or shareholder interests held by the recipients of such
distributions as provided in Section 1141 of the Bankruptcy Code.
In addition, except as otherwise provided in the Plan, the
Confirmation of the Plan shall operate as an injunction against the
- 50 -
Allowed
Class 1
Class 2
Class 3
Class 4
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
5
6
7
8
9
1 0
1 1
1 2
1 3
1 4
1
5 Administrative Expenses
(Allowed Priority Claims)
(Small Claims)
(Allowed Claims)
(W.K. Capital Advisors, Inc./
Estrada International Foods)*
(County of Pueblo)
(City of Pueblo)
(Anthony Estrada et al)
(Peak National Bank)
(BVI Investments, Ltd.)
(National Business Finance)
(BEAP) **
(Common Stock holders) * **
(Preferred Stock holders) * **
(Stock Option holders) * **
(Warrant holders) * **
TOTALS
C
A
B
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
None
None
100,500
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
100
4,000,000
None
424,000
None
None
100,976
None
None
None
None
None
None
None
None
525,076 4,000,000 100,500
* Assumes class 4 accepts the Plan and elects to receive
1999 Series B Preferred Stock
** Shares of 1999 Series A Preferred stock are convertible
to four million shares of New Common Stock (100 shares
of New Common Stock reflected in the chart only will be
issued if classes 12 and 13 receive no distribution
under the Plan)
** *Assumes (i) classes 2, 3, 12 and 13 have accepted the
Plan, (ii) all class 13 interest holders elect to
receive New Common Stock rather than cash, and (iii) no
class 14 or 15 interest holders elect to exercise their
Stock Options and /or Warrants prior to the Voting
Deadline
Conveyance of Real Prcperty to the Debtor
The Debtor's Real Property was the subject of a public
trustee's Foreclosure Sale held on October 14, 1998 by the Public
Trustee for the County of Pueblo, State of Colorado. The Real
Property is essential to the Debtor's business operations as it
houses the Debtor's plant, equipment and facilities. The Plan
anticipates that Redemptor will redeem the Real Property from the
Foreclosure Sale (subject to the right of redemption of junior
lienholders) and convey the Real Property to the Debtor in
consideration for (a) a cash payment to Redemptor on the Effective
Date equal to BVI's costs and expenses incurred in connection with
negotiation and implementation of the Plan, including consultant
and legal fees, (estimated to total approximately $200,000), and
- 49 -
Officers
Hiram W. Lewis III
Anthony Estrada
Steve Castanedo
CEO
President
V. P. of
Operations
Officers compen-
sation is set
forth in Exhibit
17 attached
hereto
Anthony Estrada Mr. Estrada is a founding shareholder,
officer and director of the Debtor. He was formerly the president
and CEO of Candy's Tortilla Factory, Inc., building the tortilla
manufacturer into a forty million dollar regional company in the
food service and retail markets. Mr. Estrada is a member of the
Board of Directors of several charitable organizations, and is
active in various food industry associations.
Steve Castanedo Mr. Castanedo has more than 20 years of
experience in USDA facilities and possesses a multi- faceted
background, including human resources management, sales management
and plant operations /product development. He has been employed by
various food industry companies, including Wilson Foods, Toppers
Meat Company, H&M Food Systems, Design Foods (a Division of Sara
Lee Meat Group), Harry's Farmers Market and Circle K Corporation.
Mr. Castanedo has experience as a general manager, national account
sales manager, vice - president of operations, director of food
service and as a consultant in the industry.
Bruce B. Barshop Mr. Barshop is the president of Barshop
Ventures, L.L.C., a venture capital investment firm located in San
Antonio, Texas. He oversees the daily operations of the firm. Mr.
Barshop also serves as a director for various real estate and
banking companies. His education includes an undergraduate degree,
magna cum laude, from Princeton University and a J.D. with honors
from the University of Texas.
Hiram W. Lewis III Mr. Lewis graduated from Stanford
University in 1969. He received his MBA from Stanford Graduate
School of Business in 1972. Mr. Lewis has worked in various
executive capacities for a number of small and medium -sized
companies in the oil & gas exploration business from 1972 to 1992.
Since 1992, Mr. Lewis has invested in oil and gas ventures and has
served as a financial consultant for financially distressed
companies. Mr. Lewis and Mr. Robert C. Pate are the co- owners of
Compadres Ventures, Inc., an investment firm. Through Compadres
Ventures, Inc. and a related partnership, Mr. Lewis, Mr. Pate,
Compadres Ventures and trusts for the benefit of Mr. Lewis' and Mr.
Pate's children, own an interest in BEAP. BEAP is the class 11
creditor under the Plan. Mr. Lewis owns no interest in BVI
Investments, Ltd. or BEAP Management.
- 52 -
initiation or continuation of any action to collect or recover a
pre- Confirmation debt or Claim against the Debtor or interest in
the Debtor, or foreclose upon property of the Debtor.
Vesting of Property of the Estate
On the Effective Date of the Plan, and except as otherwise
provided in the Plan, all property of the Chapter 11 bankruptcy
estate shall vest in the Debtor free and clear of all liens and
Claims of any kind or nature.
Plan Modification
The Joint Proponents may modify the Plan consistent with the
provisions of the Bankruptcy Code.
Retention of Jurisdiction by the Court
The Court shall retain exclusive jurisdiction for the purposes
set forth in Article XII of the Plan.
Officers and Directors of the Reorganized Debtor
Upon the Effective Date of the Plan, the following persons
shall serve as the directors of the Debtor until the next annual
shareholders meeting at the levels of compensation described below
and until their successors are duly elected and qualified. Upon
the Effective Date, the following persons shall serve as the
officers of the Debtor at the levels of compensation described
below for the terms specified in the By -Laws of the Debtor. A
short biography of each of the officers and directors is set forth
below. In addition, a description of the employment agreements
which the Debtor will enter into at or after the Effective Date of
the Plan is attached hereto as Exhibit 17.
Board of Directors Office Compensation
Anthony J. Estrada N/A Directors will
receive expense
Bruce B. Barshop N/A reimbursements
only
Hiram W. Lewis III N/A
Robert C. Pate N/A
- 51 -
A. Confirmation
Confirmation of the Plan means that the Court has approved the
Plan. Upon Confirmation, the Plan becomes binding upon the Debtor,
the Debtor's creditors and the Debtor's shareholders. If the Court
confirms the Plan, it will be binding upon you even if you did not
vote on the Plan or you voted against the Plan.
B. Voting
Each impaired class under the Plan constitutes a separate
class for voting and distribution under the Plan. Ballots have
been mailed with this Statement to the members of all impaired
classes entitled to vote on the Plan. For a discussion of the
classes entitled to vote on the Plan and the method of determining
whether a class of impaired creditors or impaired interest holders
has accepted or rejected the Plan, see the Introduction to this
Statement.
The Plan provides that the Debtor will file its Chapter 11
case and seek Court approval of the Plan if the Requisite Approval
is satisfied. The Requisite Approval requires the following
classes to accept the Plan: 2, 6, 7 and 11. If the Requisite
Approval is satisfied, the Debtor will file its Chapter 11 case and
immediately seek confirmation of the Plan.
If the Requisite Approval is satisfied, the remaining impaired
classes which are entitled to vote on the Plan, or will have been
deemed to have rejected the Plan, are as follows:
Class 1 Allowed Priority Impaired and
Claims entitled to
vote on Plan
Class 3 Allowed Claims Impaired and
entitled to
vote on Plan
Class 4 Allowed Claim Impaired and
of W.K. Capital entitled to
Advisors, Inc./ vote on Plan
Estrada Interna-
tional Foods
Class 5 Allowed Claim of Impaired and
County of Pueblo entitled to
vote on Plan
- 54 -
Robert C. Pate Mr. Pate graduated from the University of
Texas with honors in 1972 and the University of Texas Graduate
School of Business in 1974. He received his law degree from
Southern Methodist University in 1978. Mr. Pate is a certified
public accountant as well as an attorney. He has represented Mr.
Bruce Barshop and Mr. Barshop's related businesses since 1988. Mr.
Pate has twice served as a Texas State District Court Judge by
appointment of Governor George W. Bush. Mr. Pate practices law in
Corpus Christi, Texas. Mr. Pate and Mr. Hiram W. Lewis III are the
co- owners of Compadres Ventures, Inc., an investment firm. Through
Compadres Ventures, Inc. and a related partnership, Mr. Lewis, Mr.
Pate, Compadres Ventures and trusts for the benefit of Mr. Pate's
and Mr. Lewis' children, own an interest in BEAP. BEAP is the
class 11 creditor under the Plan. Mr. Pate owns no interest in BVI
Investments, Ltd. or BEAP Management.
Miscellaneous Plan Provisions
The Plan contains various other miscellaneous provisions.
Creditors and shareholders are urged to read the Plan in its
entirety.
V. ASSETS AND CAUSES OF ACTION
The Debtor's assets and causes of action are described in the
Liquidation Analysis attached hereto as Exhibit 18.
VI. FINANCIAL INFORMATION
Attached hereto as Exhibit 19 are the Debtor's unaudited
Financial Statements for the years ended December 31, 1996 and
December 31, 1997.
Attached hereto as Exhibit 20 are the Debtor's unaudited
Financial Statements for the ten months ended October 31, 1998.
Attached hereto as Exhibit 21 is a pro forma balance sheet for
the reorganized Debtor as of the Effective Date of the Plan. THE
PRO FORMA BALANCE SHEET IS BASED ON PROJECTIONS AND ACTUAL RESULTS
WILL VARY. The pro forma balance sheet was prepared by the Debtor.
The pro forma balance sheet assumes, inter alia, the following: (a)
the Plan is confirmed resulting in the discharge of all pre -
Confirmation debts and Claims except as otherwise provided in the
Plan, (b) all Plan payments and distributions required on the
Effective Date are made, and (c) the Effective Date of the Plan is
March 15, 1999.
VII. CONFIRMATION OF THE PLAN
- 53 -
under the plan equal to the value of the shareholder interests. If
the class of interests is "under water ", then such interests are
valueless and the plan may be confirmed notwithstanding the dissent
of the class even if the plan provides that class of interests will
neither retain nor receive any property under the plan on account
of such interests. In the present case, the shareholders interests
in classes 12, 13, 14 and 15 are valueless. Therefore, the Plan
can be confirmed over the dissent of these classes even if the Plan
provides that such classes shall neither retain nor receive any
property under the Plan.
D. Confirmation Standards
Assuming that the Requisite Approval has been satisfied and
that the Court has found that the Plan can be confirmed
notwithstanding a dissenting class or classes, the Plan only can be
confirmed if the Court finds the standards for Confirmation have
been satisfied as set forth in Section 1129(a) of the Bankruptcy
Code. Pursuant to these Confirmation standards, the Court must
find, among other things, that unless every member of an "impaired"
class has voted to accept the Plan, the amount to be received under
the Plan by each member of an impaired class is not less than the
amount such class member would receive in liquidation under Chapter
7 of the Bankruptcy Code on the Effective Date of the Plan. Also,
the Court must find that the Plan is feasible, that is, the Plan
payments can be made and that Confirmation of the Plan is not
likely to be followed by liquidation or the need for further
financial reorganization of the Debtor.
Feasibility
Feasibility requires a showing that the Debtor can make the
Plan distributions and can continue with successful business
operations such that Confirmation of the Plan will not be
followed by further financial problems.
Real Property
Debtor's business operations are conducted at the Real
Property. Accordingly, the Real Property is necessary for the
successful reorganization of the Debtor's business. The Debtor
lost its interest in the Real Property at the public trustee's
Foreclosure Sale which occurred on October 14, 1998. The Plan
provides that Redemptor shall redeem the Real Property from the
Foreclosure Sale and convey the Real Property to the Debtor on the
Effective Date in consideration for (a) a cash payment to Redemptor
on the Effective Date equal to BVI's costs and expenses incurred in
connection with negotiation and implementation of the Plan,
including consultant and legal fees, (estimated to total
approximately $200,000), and (b) a purchase money promissory note
and first lien Deed of Trust encumbering the Real Property to be
held by BVI and any participants in an amount equal to (i) the
- 56 -
Classes 12 and 13 Holders of Common Impaired and
Stock and Preferred entitled to
Stock vote on Plan
Classes 14 and 15 Warrant holders Deemed to
and Stock Option have rejected
holders Plan
The Joint Proponents intend to seek confirmation of the Plan
pursuant to Section 1129(b) of the Code notwithstanding the deemed
rejection of the Plan by classes 14 and 15 and the possible
rejection of the Plan by classes 1, 3, 4, 5, 12 and /or 13.
C. Cram Down
The cram down provisions of the Code permit the Court to
confirm a plan of reorganization notwithstanding that an impaired
class or classes has rejected the plan. A discussion of the cram
down provisions contained in Section 1129(b) of the Code follows.
Holders of Allowed Secured Claims
With respect to a class of dissenting, impaired, secured
creditors, the Code provides several means by which a plan may be
confirmed notwithstanding such a dissenting class. Section
1129(b). In the present case, the Joint Proponents will not seek
to obtain Confirmation over the dissent of any secured creditor
class.
Holders of class 3 Allowed Claims
With respect to a class of dissenting, unsecured creditors,
Section 1129(b) provides that the Plan can be made binding on such
a dissenting class if the Plan does not unfairly discriminate
against the dissenting class and any junior class of Claims or
interests is not receiving or retaining any property under the
plan. In the present case, the Joint Proponents believe that the
Plan does not discriminate in any manner with respect to the class
3 Allowed Claims. In addition, there are four interest holder
classes (classes 12, 13, 14 and 15) which are junior to class 3.
Classes 14 and 15 are neither retaining nor receiving any property
under the Plan. Classes 12 and 13 will not retain or receive any
property under the Plan if class 3 rejects the Plan. Therefore,
the Joint Proponents believe that the Plan can be confirmed
notwithstanding a dissenting vote by class 3.
Holders of Interests
With respect to a class of dissenting, impaired shareholder
interests, Section 1129(b) provides that a plan can be made binding
on a dissenting class of interests if the class receives property
- 55 -
after the Effective Date. Accordingly, class 1 is not receiving
less under the Plan than what it would receive in liquidation under
Chapter 7 on the Effective Date.
Class 2
(Small Claims of $500.00 or less)
Class 2 consists of Small Claims. Small Claims are to be paid
in cash in full on the Effective Date. Accordingly, class 2 is not
receiving less under the Plan than what it would receive in
liquidation under Chapter 7 on the Effective Date.
Class 3
(Allowed Claims greater than $500.00)
The Debtor has completed a liquidation analysis, a copy of
which is attached hereto as Exhibit 18. The liquidation analysis
compares the distribution to the holders of class 3 Allowed Claims
under the Plan versus the anticipated distribution to class 3
creditors if the Debtor were liquidated on the Effective Date
pursuant to Chapter 7 of the Bankruptcy Code. The Plan provides
that each holder of a class 3 Allowed Claim shall receive a cash
distribution equal to his /her /its Pro Rata Share of $500,000.00.
The Debtor estimates that such a Pro Rata distribution shall
provide class 3 creditors with a distribution in the range of 16.6
to 27.4 cents on the dollar depending upon the total class 3
Allowed Claims. The liquidation analysis reflects that the holders
of class 3 Allowed Claims are estimated to receive no distribution
on account of their class 3 Allowed Claims if the Debtor were
liquidated under Chapter 7 on the Effective Date. Therefore, class
3 creditors are not receiving less under the Plan than what they
would receive in liquidation under Chapter 7 on the Effective Date.
Classes 4 and 5
(County of Pueblo and W.K. Capital Advisors et al)
The liquidation analysis
because if class 4 or class 5
Allowed Claim and /or the class
treatment as a member of class
pursuant to class 4 and /or clas
of class 3 above.
does not apply to these classes
reject the Plan, then the class 4
5 Allowed Claim will be subject to
3 and nc distribution will be made
s 5 of the Plan. See the discussion
Classes 6 and 7
(City of Pueblo and Anthony Estrada et al)
The liquidation analysis does not apply to these classes
because the Joint Proponents believe that all members of each of
these classes will have accepted the Plan.
- 58 -
costs of Redemptor's redemption of the Real Property (estimated to
be $832,111 plus interest, fees and costs) plus (ii) an amount
equivalent to the payoff on the Effective Date of the promissory
note held by BVI which was secured by the Real Property (estimated
to be approximately $641,000 plus interest, fees and costs) with
such payoff calculated as if there had been no Foreclosure Sale
respecting the Real Property. Redemptor has no obligation to
convey the Real Property to the Debtor unless the Plan is confirmed
and becomes effective.
Plan Distributions
On the Effective Date, the Plan requires the Debtor to make
payments to various classes totaling approximately $1,206,600. See
the section of this Statement entitled "Means for the Execution of
the Plan ". The foregoing payments will be made from the proceeds
of the D.I.P. Loan. The D.I.P. loan provides financing to the
Debtor in an amount not to exceed $1,450,000.00.
Financial Projections
Attached hereto as Exhibit 22 are financial projections for
the Debtor for the 3 years after the Effective Date of the Plan.
The projections were prepared by the Debtor. FINANCIAL PROJECTIONS
ARE BY NATURE FORWARD LOOKING AND BASED UPON ASSUMPTIONS AND
THEREFORE ACTUAL RESULTS WILL VARY. The financial projections
contained in Exhibit 22 assume, inter alia, the following: (a) the
Plan is confirmed resulting in the discharge of all pre -
Confirmation debts and Claims except as otherwise provided in the
Plan, (b) all Plan payments required on the Effective Date are
made, and (c) the Effective Date of the Plan is March 15, 1999.
The financial projections indicate that the Debtor will not likely
incur further financial problems after Confirmation of the Plan and
the discharge of its debts as provided for in the Plan.
Comparison to Chapter 7 Liquidation
As described above, unless all members of an impaired class
accept the Plan, such "impaired" classes must receive under the
Plan not less than they would have received if the Debtor were
liquidated under Chapter 7 of the Bankruptcy Code on the Effective
Date. Accordingly, the following discussion relates only to the
Plan treatment of impaired classes where all members of the class
do not accept the Plan.
Class 1
(Allowed Priority Claims)
Class 1 consists of Allowed Priority Claims. Class 1 Allowed
Priority Claims are to be paid in cash in full on the Effective
Date or are to be paid in full in deferred payments with interest
- 57 -
securities under the Plan raises several legal issues under the
Code and Securities Act which are discussed below.
Section 1145 Exemption from Securities Act Registration
Section 1145 of the Code provides that state and federal
registration requirements do not apply to the issuance of
securities by the Debtor under the Plan to holders of (a) Claims
against or interests in the Debtor, or (b) principally in exchange
for such Claims or interests and property. With certain exceptions
discussed below, recipients of securities issued under the Plan may
resell them without restriction.
Issuance Section 1145 exempts the original issuance of
securities under the Plan from registration under the Securities
Act and applicable state law. For the original issuance to be
exempt, three principal requirements must be satisfied (a) the
securities must be issued by the Debtor under the Plan, (b) the
recipients of the securities must hold a Claim against the Debtor,
and interest in the Debtor, or an Allowed Administrative Expense,
and (c) the securities must be issued entirely in exchange for the
recipient's Claim against or interest in the Debtor, or principally
in such exchange and partly for cash or property.
The Debtor believes the issuance of securities under the Plan
will satisfy all three conditions because (a) the securities are
being issued by the Debtor under the Plan, (b) the recipients of
the securities hold Claims against or interests in the Debtor, and
(c) the securities are being issued entirely in exchange for Claims
against or interests in the Debtor.
Resale Although the Debtor believes the resale of the
securities issued under the Plan would be exempt from registration
in most circumstances, certain recipients of the securities (those
recipients who may be deemed underwriters as defined in Section
1145(b)) may be unable to resell them absent registration of those
securities under the Securities Act or other exemptions available
under applicable federal and state law. All recipients of
securities issued under the Plan should consult with their legal
advisors regarding this risk.
Section 1145(b) defines four types of underwriters (a) a
person who purchases a Claim against, interest in, or Allowed
Administrative Expense against the Debtor with a view to
distributing any security received in exchange therefor, (b) a
person who offers to sell securities offered under the Plan for the
holders of such securities, (c) a person who offers to buy such
securities from the holders of them, if the offer is (i) with a
view to distributing them, or (ii) made under a distribution
agreement, and (d) a person who is an issuer with respect to the
securities, as the term issuer is defined in Section 2(11) of the
Securities Act. Under Section 2(11), an issuer includes any person
- 60 -
Classes 8, 9 and 10
(Peak National Bank, BVI and NBF)
The liquidation analysis does not apply to these classes
because these classes are not impaired under the Plan.
Class 12, 13, 14 and 15
(interest holders)
In liquidation, these classes would receive no distribution on
account of their interests. See the liquidation analysis attached
hereto as Exhibit 18. Accordingly, these classes are not receiving
less under the Plan than what they would receive in liquidation
under Chapter 7 on the Effective Date.
VIII. POST - EFFECTIVE DATE BUSINESS OPERATIONS
Upon the Effective Date, the reorganized Debtor's business
operations will be governed by its new officers and new Board of
Directors. The reorganized Debtor will continue with, and seek to
substantially expand, its "co- pack" operations and will continue to
manufacture and sell its frozen Mexican line of food products. The
successful reorganization coupled with new management will permit
the reorganized Debtor to establish trade credit and other business
and financial relationships necessary to normalize its business
operations. Once its business operations are stabilized, the
Debtor believes that it can attract new business from a variety of
sources. Finally, the reorganized Debtor will institute new and
improved financial controls and other measures to assure margins
sufficient to cover general and administrative costs, debt service
and provide a return to its equity holders.
IX. TAX CONSEQUENCES
All creditors are advised to consult with their tax advisors
respecting the tax consequences to them of the Confirmation and
consummation of the Plan, including federal, state and local tax
consequences.
X. EFFECT OF SECURITIES LAWS
The Plan provides for the issuance of securities consisting of
New Common Stock, 1999 Series A Preferred Stock and 1999 Series B
Preferred Stock in exchange for Claims against and interests in the
Debtor. RECIPIENTS OF SECURITIES ISSUED UNDER THE PLAN SHOULD BE
AWARE THAT THE JOINT PROPONENTS BELIEVE THE SECURITIES ISSUED UNDER
THE PLAN SHALL HAVE NO VALUE AT THE EFFECTIVE DATE OF THE PLAN.
Section 1145 of the Code exempts this issuance from the
registration requirements of (a) the Securities Act of 1933
( "Securities Act "), and (b) applicable state law. The issuance of
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directly or indirectly controlling or controlled by the issuer, or
any person under direct or indirect common control with it.
Whether a person is an issuer, and therefore an underwriter,
for purposes of Section 1145(b) depends upon a number of facts.
These include: the person's equity interest in the Debtor; the
distribution and concentration of other equity interests in the
Debtor; whether the person is an officer or director of the Debtor;
whether the person, either alone or acting in concert with others,
has contractual or other relationships giving that person power
over management policies and decisions of the Debtor; and whether
the person actually has such power notwithstanding the absence of
formal indicia of control. An officer or director of the Debtor
may be deemed a controlling person, particularly if his /her
position is coupled with ownership of a significant percentage of
the Debtor's securities. In addition, a holder of 10% of the
Debtor's securities could be deemed a controlling person.
To the extent persons deemed underwriters receive securities
pursuant to the Plan, resales by them would not be exempted by
Section 1145 from registration under the Securities Act. Given the
complex, subjective nature of the question of whether a particular
holder may be an underwriter, the Debtor makes no representation
concerning the right of any person to trade the securities issued
under the Plan. The Debtor recommends that potential recipients of
securities under the Plan consult with their legal advisors
concerning whether they may freely trade the securities.
XI. ALTERNATIVES TO CONFIRMATION OF THE PLAN
If Confirmation of the Plan is denied by the Court, the Court
may, in its discretion: (1) permit the Joint Proponents, if both
agree, to modify the Plan and again seek acceptance and
Confirmation of the amended Plan, (2) convert the Chapter 11 case
to a Chapter 7 case wherein a trustee would be appointed to
liquidate the Debtor's assets, or (3) dismiss the Chapter 11 case.
XII. CONCLUSION
If the Requisite Approval is not satisfied, the Debtor likely
will not file a Chapter 11 bankruptcy case. In this event or in
the event that the Plan is not approved by the Court, the
Debtor's Real Property will be lost through the pending
Foreclosure Sale and the Debtor's personal property most likely
will be liquidated by the secured creditors who hold liens on
such property. Accordingly, the Joint Proponents believe the
Plan provides the only means for making a distribution to the
Debtor's unsecured creditors and shareholders, and urges you to
cast a vote accepting the Plan.
- 61 -
Holden Padj ep--ajld LLC
Joey' Laufer #77/28 ( \
Att eys for the ebtor
303 East 17th Avenue
Suite 660
Denver, Colorado 80203
Telephone (303) 863 -1100
Facsimile (303) 863 -1109
Cox & Smith Incorporated
Teresa Ereon Giltner
Texas State Bar #06639800
Patrick L. Huffstickler
Texas State Bar #10199250
Attorneys for Barshop /Estrada
Acquisition Partners LP
112 East Pecan Street
Suite 1800
San Antonio, Texas 78205
Telephone (210) 554 -5500
Facsimile (210) 226 -8395
- 64 -
12/22/98 18:54 FAX 2102288395 COX & SMITH #1835
BARSHOP/ESTRADA ACQUISITION
PARTNERS LP, a Texas limited
partnership, Joint Proponent,
By: BEAD Management LLC,
general partaer
By: Zs===::--
Bruce B. Barshop, President
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