Exhibit 10(o)
PERSONAL & CONFIDENTIAL
-----------------------
July 22, 2002
Xx. Xxxxx X. Xxxxxxx
c/o Canal Capital Corp.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: CS LIVESTOCK COMMISSIONS CO. LLC AND
CS AUCTION PRODUCTION CO. LLC (COLLECTIVELY, THE "COMPANY")
Dear Xx. Xxxxxxx:
Reference is made to the Letter of Intent dated April 23, 2002 (the "Letter of
Intent"), between AEI Environmental, Inc. (the "Seller") and Canal Capital
Corporation ("Canal"). This will confirm our mutual understanding and agreement
to amend the Letter of Intent on the following terms and conditions:
(i) Capitalized terms used herein but not herein defined shall
have the meanings ascribed to such terms in the Letter of
Intent.
(ii) Paragraph 2 of the Letter of Intent is hereby deleted in its
entirety and the following is substituted therefor:
"2. PURCHASE OF INTERESTS. Canal shall form a wholly-owned
subsidiary (the "Buyer") to acquire the Interests, free and clear of
all liens, claims and encumbrances. The parties anticipate that the
closing (the "Closing") shall occur on or before August 30, 2002."
(iii) Paragraph 3 of the Letter of Intent is hereby deleted in its
entirety and the following is substituted therefor:
"3. PURCHASE PRICE. The purchase price to be paid by the Buyer
at Closing for the Interests shall consist of (a) Two Million Dollars
($2,000,000) cash payable from the proceeds of the Private Placement
(as hereinafter defined), (b) 950,000 shares of a series of
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July 22, 2002
Page -2-
preferred stock of the Buyer (the "Preferred Stock") having such terms
as Seller shall determine appropriate in connection with the Private
Placement, and (C)) shares of common stock, par value $.01 per share
(the "Common Stock"), of the Buyer representing eighty-five percent
(85%) of the outstanding Common Stock of the Buyer at Closing (giving
effect to shares of Common Stock issuable upon conversion of the
Preferred Stock to be issued in the Private Placement)."
(iv) Paragraph 4 of the Letter of Intent is hereby deleted in its
entirety and the following is substituted therefor.
"4. PREFERRED STOCK. The Preferred Stock shall have such terms
as the Seller shall determine appropriate in connection with the
Private Placement."
(v) Paragraph 5 of the Letter of Intent is hereby deleted in its
entirety and the following is substituted therefor:
"5. RELATED TRANSACTIONS.
(a) Concurrent with the Closing of the sale of the Interests
to the Buyer, Canal, Buyer and the Seller shall effect the following
transactions: (i) Canal shall lease to Buyer Canal's livestock
operations and real property utilized in connection with the livestock
operations (the "Lease") on the terms set forth on Schedule A annexed
hereto, (ii) Seller shall arrange a private placement (the "Private
Placement") of not less than 350,000 shares of Preferred Stock and
common stock purchase warrants (the "Common Stock Purchase Warrants"
having such terms as the Seller shall determine appropriate in
connection with the Private Placement; provided that the Buyer shall
realize gross proceeds in the Private Placement of not less than $3.5
million, (iii) the Buyer and Canal shall enter into an agreement
providing anti-dilution protection so that the Common Stock owed by
Canal at Closing shall represent not less than fifteen percent (15) of
the Common Stock outstanding at Closing (inclusive of Common Stock
issuable upon conversion of Preferred Stock to be issued in the Private
Placement) and the Preferred Stock owned by Canal at Closing shall
represent not less than fifteen percent (15%) of the Preferred Stock
outstanding at Closing, (iv) subject to receipt of all necessary third
party consents, Canal shall assign to Buyer the name "Canal Capital
Corp." and the trading symbols "COWP" and "COWPP", (v) certain
significant stockholders of Canal (the "Significant Canal
Stockholders") shall enter into an agreement with the Buyer and certain
significant stockholders of the Buyer (the "Significant Buyer
Stockholders") providing that the Significant Buyer Stockholders shall
have a right of first refusal with respect to the private or public
disposition by the Significant Canal Stockholder of shares of Common
Stock or Preferred Stock representing not less than five percent (5%)
of the outstanding shares of Common Stock or Preferred Stock,
respectively, provided that such right of first refusal shall be
conditioned on the Significant Buyer Stockholders entering into
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July 22, 2002
Page -3-
a binding agreement with respect to the purchase of such shares within
three (3) business days and closing the purchase of such shares within
forty-five (45) days, in each case after receipt by the Significant
Buyer Stockholders of notice from the Significant Canal Stockholders of
their intention to dispose of such shares, (vi) the Buyer shall provide
customary indemnities to Canal and all persons serving as directors
and/or officers of Canal (collectively, the "Indemnified Persons") in
connection with the Private Placement, the sale of the Interests and
the Spin-Off and the Buyer shall provide in its charter and by-laws
provisions with respect to indemnification of its officers and
directors to the fullest extent allowed by law and shall maintain in
effect directors' and officers' liability insurance covering acts or
omissions of such persons, and (vii) the Seller shall indemnify the
Indemnified Persons in connection with the Private Placement. Each of
the transactions described in this paragraph 5(a) shall be a condition
to the parties obligation to close the purchase and sale of the
Interests and the purchase and sale of the Interests shall be a
condition to the parties obligations to consummate each of the
transactions described in this paragraph 5(a).
(b) Promptly following the Closing, the Buyer shall prepare
and file a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), covering the spin-off (the "Spin-Off")
to the Canal stockholders of all the shares of Common Stock and
Preferred Stock owned by Canal at Closing. At Closing, Canal will own
167,647 shares of Preferred Stock and that number of shares of Common
Stock such that the shares of Common Stock distributed to Canal
stockholders in the Spin-Off shall represent not less than fifteen
percent (15%) of the Common Stock outstanding at Closing (giving effect
to conversion of the Preferred Stock to be issued in the Private
Placement)."
(vi) Paragraph 7 of the Letter of Intent is hereby deleted in its
entirety and the following is substituted therefor:
"7. NON-COMPETITION AGREEMENT. In connection with the closing
of the sale of the Interests and other transactions described herein,
Canal and each of Xxxxx Xxxxxxx and the other members of senior
management of Canal prior to the Closing shall enter into
non-competition agreements prohibiting such persons from engaging in
any internet related businesses competitive with the business of the
Buyer as it exists on the date of the closing of the transactions. Xx.
Xxxxxxx shall serve as Vice Chairman and director of the Buyer. As long
as Xx. Xxxxxxx or entities affiliated with Xx. Xxxxxxx own more than
five percent (5%) of the Common Stock, Xx. Xxxxxxx shall have the right
to serve as a director of the Buyer or designate another person to
serve as a director of the Buyer in his place."
(vii) Paragraph 8 of the Letter of Intent is hereby deleted in its
entirety and the following is substituted therefor:
Xx. Xxxxx Xxxxxxx
July 22, 2002
Page -4-
"8. CONFIDENTIALITY. Canal shall at all times maintain the
confidentiality of all confidential and/or proprietary information of
the Company and will not disclose such information, or use it for any
purpose other than its evaluation of the proposed transaction, without
the prior consent of the Seller, or as otherwise required by law.
Notwithstanding the foregoing, following execution of this letter,
Canal may disclose such information to its professional advisors in the
course of negotiating the proposed transactions, but only if the Seller
has agreed in writing to such disclosure."
(viii) Paragraph 9 of the Letter of Intent is hereby deleted in its
entirety and the following is substituted therefor:
"9. EXPENSES. The Seller and Canal shall each be responsible
for their own respective legal, due diligence, accounting and/or
financing fees or expenses; provided that (I) the Seller shall prepare
all documentation required in connection with the formation of the
Buyer, the Private Placement, the purchase of the Interests, the
Spin-Off and compliance by the Buyer with the Securities Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
(ii) Canal shall prepare all documentation required in connection with
the Lease and compliance by Canal with the Securities Act and the
Exchange Act; and further provided that at closing of the transactions
contemplated hereunder Seller shall reimburse Canal from the proceeds
of the Private Placement for Canal's legal and other professional
expenses and costs in connection with the transactions in an amount not
exceeding $35,000. In consideration of such reimbursement by Seller,
the number of shares of Preferred Stock allocable to Canal at Closing
shall be reduced by that number of shares of Preferred Stock having a
face amount of $35,000."
(ix) Paragraph 10 of the Letter of Intent is hereby deleted in its
entirety and the following is substituted therefor:
"10. EXCLUSIVITY PERIOD. In connection with the proposed
transactions, you understand that the Seller will require a brief
period of cooperation to complete its due diligence investigation.
Accordingly, Canal and its agents agree to negotiate exclusively with
the Seller until August 30, 2002 with respect to any transactions
relating to Canal of the kind described in this letter (the
"Exclusivity Period"). During the Exclusivity Period, Canal and Seller
shall use their commercially reasonable best efforts to negotiate and
execute a definitive Agreement, in form and substance satisfactory to
the respective parties and their attorneys."
Xx. Xxxxx Xxxxxxx
July 22, 2002
Page -5-
(x) Except as expressly amended hereby, all the provisions of the
Letter of Intent shall remain in full force and effect and
shall be binding upon all of the parties hereto; provided,
however, that in the event of any conflicts or inconsistencies
between the provisions of this amendment and the provisions of
the Letter of Intent, the provisions of this amendment shall
govern and be controlling.
(xi) This amendment may be executed in one or more counterparts,
and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the
same agreement.
If you agree to the foregoing, please so signify by executing the enclosed copy
of this letter in the space provided and delivering it to us. This proposal will
be terminated unless fully signed and delivered to us prior to 5:00 p.m. Eastern
Standard Time on July 22, 2002.
Very truly yours,
AEI ENVIRONMENTAL, INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Xxxxx X. Xxxxxx
Director
AGREED TO AND ACCEPTED:
On this 22nd day of July 2002
CANAL CAPITAL CORPORATION
By: /s/Xxxxx X. Xxxxxxx
---------------------------
Xxxxx Xxxxxxx
Chairman
SCHEDULE A TO AMENDMENT TO LETTER OF INTENT DATED JULY 18, 2002
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Buyer shall lease the stockyard operations from Canal for a five year
term for a monthly amount payable in arrears equal to $____________ (the
"Monthly Payment"); provided that the Monthly Payment shall be adjusted every
April 15, July 15, October 15 and January 15 based on the monthly calculation of
earnings before interest, taxes and depreciation ("EBITDA") attributable to the
stockyard operations during the ninety (90) day period ending March 30, June 30,
September 30 and December 30, respectively.
Each year during the lease term, Buyer shall prepare and cause to be
audited by a firm of independent accountants financial statements with respect
to the stockyard operations during such year and a calculation of the EBITDA of
the stockyard operations for such year ("EBITDA Calculation"). In the event the
EBITDA Calculation with respect to any year during the lease term is greater
than the aggregate Monthly Payments actually made by Buyer during such year,
Buyer shall pay to Canal within ten (10) days after the EBITDA Calculation is
delivered to Buyer by the independent accounting firm, the amount of such
excess. In the event the EBITDA Calculation with respect to any year during the
lease term is less than the aggregate Monthly Payments actually made by Buyer
during such year, Canal shall pay to Buyer within ten (10) days after the EBITDA
Calculation is delivered to Canal by the independent accounting firm, the amount
of such deficiency.
Canal's share of the profits from any new lines of business
attributable to the stockyard operations shall be fifty percent (50%).
The lease may be terminated by either party on ninety (90) days' prior
notice and shall be automatically terminated in the event of the Buyer's
bankruptcy or insolvency.
