UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K/A
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended JUNE 30, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____ to _____
Commission File No. 0-7479
INDIANA FINANCIAL INVESTORS, INC.
(Exact name of registrant as specified in its charter)
INDIANA 52-6120603
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 EAST MONROE STREET, SUITE 1600, CHICAGO, IL 60603
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 849-2990
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
Aggregate market value of common stock held by non-affiliates at September 15,
1994: $685,000
Shares of common stock outstanding as of September 15, 1994: 826,895
<PAGE>
PART I.
ITEM 1. BUSINESS
Indiana Financial Investors, Inc. ("IFII") is a corporation organized and
existing under the laws of Indiana pursuant to Articles of Incorporation
dated March 21, 1979. Its principal office is located at 55 E. Monroe
Street, Suite 1600, Chicago, IL 60603. IFII is the successor by merger to
Indiana Mortgage & Realty Investors, a Maryland real estate investment trust
organized in 1972. Hickory Furniture Company ("Hickory") currently owns
directly and indirectly approximately 74.5% of the outstanding shares of
IFII common stock. Hickory is a majority owned subsidiary of Telco Capital
Corporation ("Telco") which is 100% owned by RDIS Corporation ("RDIS").
IFII was established to invest in a diversified portfolio of real property
investments, including long-term first mortgage loans; short-term
development, construction and land acquisition loans; and equity ownerships
of real estate. In recent years, IFII has sold substantially all of its real
estate assets. Upon the sale of the shopping center in Michigan in June,
1993, IFII's only remaining real estate related holding is a mortgage loan
on an apartment complex in Indiana with a carrying value at June 30, 1994 of
$130,750. IFII also sold undeveloped land in Ohio in June, 1992. Currently
the Company is functioning as a holding company that is considering
future business opportunities.
The only other assets that IFII owns are promissory notes from Hickory
which arose from the sale of real estate assets to Hickory in 1987 and 1988,
an interest purchased from Hickory in a Wisconsin Real Estate Investment
Trust ("WREIT") note and investments in the common stock of Sunstates
Corporation ("Sunstates") and WREIT, affiliates of IFII. See Item 13,
Certain Relationships and Related Transactions, and Notes A.1 and D of Notes
to Financial Statements included elsewhere herein for a description of the
Hickory promissory notes, WREIT note and the investments of IFII in
Sunstates and WREIT.
IFII currently has no plans to resume a program of making new real estate
investments. If IFII were to provide short-term development, construction
and land acquisition loans, it would compete on the basis of interest rates
against commercial banks, savings and loan associations, mortgage bankers
and other lenders, including other real estate investment entities. If IFII
were to make long-term mortgage loans, it would compete on the basis of
interest rates against life insurance companies, mutual savings banks,
mortgage bankers, savings and loan associations, pension funds, the Federal
National Mortgage Association and other lenders. In other areas of real
estate investment which might sometimes be available to IFII, there is also
a wide variety of competing lenders and investors. Many factors, including
tax considerations, general business conditions, interest rates and the
desire for protection against inflation, affect the demand and intensity of
the competition for real estate investments.
Responsibility for the management of IFII is vested solely in its Board of
Directors. Effective August 1, 1992, IFII's day-to-day operations have been
conducted in the offices of Telco.
ITEM 3. LEGAL PROCEEDINGS.
The Company is a nominal defendant in a putative class and derivative
action filed in December, 1993 entitled John C. Boland v. Clyde Wm. Engle et
al., Cause No. IP93-1731 C, pending in the Indianapolis Division of the
United States District Court for the Southern District of Indiana. The
complaint alleges that the directors of the Company have breached their
fiduciary obligations to the Company in connection with, among other things,
(i) certain advances to its corporate parent Hickory Furniture Company
aggregating $5,417,981 and (ii) the purchase of a participation in a secured
loan to an affiliate, Wisconsin Real Estate Investment Trust, in the
principal amount of $790,000. Both of these entities have been joined as
defendants in the action. The complaint also alleges breaches of the
Investment Company Act of 1940 by the Company and breaches of common law and
statutory obligations to the Company and its shareholders by the directors
of the Company. The complaint asks that all amounts owing to the Company by
its affiliates be declared immediately due and that they be paid, and asks
for unspecified compensatory and punitive damages from the directors of the
Company.
The Company filed an answer to the complaint in March, 1994 denying all
liability and intends to defend this action vigorously. The defendants other
than the Company either have not yet been served or have not yet been
required to file an answer to the complaint.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.
All references in this discussion to years refer to fiscal years ended June
30 unless otherwise stated.
BASIS OF PRESENTATION AND GOING CONCERN
The consolidated financial statements have been prepared on the basis
of a going concern.
At June 30, 1994, IFII has notes and interest receivable from WREIT and
Hickory Furniture Company of $12,660,768. WREIT's and Hickory's operations
have experienced liquidity problems which have prevented them from making
interest payments to IFII on these notes and, in the case of Hickory, from
repaying the notes when due on September 30, 1992. No schedule for
collection of the amounts due, including interest, has been established and
no significant collections are anticipated within the next year. Because of
the uncertainty as to the period for recovery, the Company has classified
these receivables with the stockholders' equity and, effective July 1, 1992,
suspended recognition of interest income in its financial statements. As of
June 30, 1994, interest earned but not accrued totalled $1,917,254.
IFII's only cash requirements are for ongoing administrative expenses. If
interest on the notes is not received, IFII expects to have a deficiency in
cash flow for the year ending June 30, 1995. Hickory has represented to IFII
that it intends to pay interest to IFII in amounts at least sufficient to
provide for any deficiency in 1995 cash flow. IFII has not taken, nor in the
near future does it propose to take, any additional action to remedy cash
flow deficiencies.
These conditions raise substantial doubts about IFII's ability to
continue as a going concern in the opinion of IFII's independent auditors.
Notwithstanding such opinion, IFII has no doubt about its ability to
continue as a going concern. The consolidated financial statements do not
include any adjustments that would result from IFII's inability to continue
as a going concern.
RESULTS OF OPERATIONS
Net income for 1994 was $741,767, compared to net loss of $889,571 for 1993
and net income of $608,735 for 1992.
IFII records its equity in the earnings and losses of Sunstates. During the
quarter ended March 31, 1993, IFII's cumulative equity in Sunstates' losses
exceeded its original investment in Sunstates and, as a result, IFII did not
record equity in Sunstates' losses during the quarter ended June 30, 1993.
However, in the year ended June 30, 1994, Sunstates had significant net
income due to realizing a gain on the sale of its cable television system
and IFII recorded equity in Sunstates' earnings of $906,000.
In June 1993, IFII sold its shopping center and adjoining land in Flint,
Michigan for a gain of $4,134. During 1993 and 1992 the Company had
increased its allowance for possible investment losses by $445,000 and
$535,000, respectively, due to a decline in the estimated realizable value
of the shopping center. In 1992 IFII sold land held in Ohio for a gain of
$353,355. Income from real estate operations was lower during 1993 and 1992
as compared to 1991 due to the expiration in January, 1992 of a long term
lease for a large portion of the Michigan shopping center.
As described above, IFII did not recognize interest on the notes receivable
from affiliated companies during the years ended June 30, 1993 and 1994
whereas interest income for the year ended June 30, 1992 was $1,386,086.
General and administrative expenses were $202,790, $129,806 and $350,086 in
1994, 1993, and 1992, respectively. The increased costs in 1994 as compared
to 1993 are primarily attributed to legal costs of $108,500, most of which
was incurred related to the shareholder suit described in "Legal
Proceedings". The reduced costs in 1993 as compared to 1992 primarily
reflect the cost savings resulting from closing the Indianapolis office and
conducting IFII's business from the offices of Telco in Chicago. During 1994
and 1993, IFII was invoiced $74,000 and $75,000, respectively, for
accounting, SEC reporting, shareholder communications and other services
provided by Telco and (during the last four months of 1994) Hickory, $77,000
and $31,500 which were paid in cash in 1994 and 1993, respectively. Payable
to affiliates at June 30, 1994 includes approximately $19,000 of unpaid
reimbursement. Other expenses include auditing fees, tax consulting fees and
stock transfer agent charges.
Federal income tax is based on taxable income, which differs from pretax
accounting income for financial statement purposes due to differences in
real estate carrying values (primarily writedowns and depreciation),
affiliate interest income and the equity in income of affiliated companies.
In 1994, IFII had no federal tax provision. The sale of property in l993 and
l992 generated losses for tax purposes of approximately $1,200,000 and
$666,000, respectively. In 1993, IFII's federal tax benefit was $28,167,
which represents the carryback of a portion of the l993 net operating loss
to l992. In 1992, IFII's federal tax provision was $105,000 which was
reduced by $69,300 of extraordinary credit from the utilization of net
operating loss carryforward. At June 30, 1994, IFII has federal net
operating loss carryforwards of approximately $391,000.
During the last three years, inflation has not had a material impact on the
results of operations of IFII.
CAPITAL RESOURCES AND LIQUIDITY
See "Basis of Presentation and Going Concern" above for a description of
the status of the notes and interest receivable from affiliates.
IFII's only potential sources of liquidity are collection of principal and
interest on the Hickory and WREIT notes, the sale of its investment in
Sunstates and collection of interest on, or sale of, the mortgage loan. IFII
currently intends to sell neither its interest in Sunstates nor the mortgage
loan. The Hickory and WREIT notes are all in technical default or due on
demand. IFII has the right to demand immediate payment and has commenced
discussing payment alternatives with Hickory and WREIT. As discussedin Item 13
"Certain Relationships and Related Transactions," the Hickory notes are secured
by 1,095,950 common shares of beneficial interest in WREIT. IFII has no
current business opportunities or other significant liquidity requirements.
NEW ACCOUNTING PRONOUNCEMENTS
IFII prospectively adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes", effective July 1, 1993. This affects
methods of accounting for deferred tax assets and liabilities, recognizing
benefits of existing net operating loss carryforwards, and the accounting
for income tax effects of business combinations accounted for under the
purchase method. The future utilization of net operating loss carryforwards
will no longer be reported as an extraordinary item in the statement of
operations but instead the provision for income tax expense will be
presented net of any benefit recognized from the utilization of existing net
operating loss carryforwards. The Statement also requires the use of the
asset and liability method of accounting for income taxes wherein deferred
income taxes are recognized for the tax consequences of "temporary
differences" by applying enacted statutory tax rates applicable to future
years to differences between the financial statement carrying amounts and
the tax bases of existing assets and liabilities.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Name, Age, Position(s) & PRINCIPAL OCCUPATION,
Period of Service LAST 5 YEARS' BUSINESS
EXPERIENCE AND
AFFILIATIONS
Clyde Wm. Engle, 51 (1)
Chairman (since 1986) Chairman of the Board and
Director (since 1980) Chief Executive Officer
President (since June 30 of Telco; General partner
1992) of Sierra Associates,
itself the general
partner of Sierra Capital
Group, an investment
partnership; Chairman of
the Board and Chief
Executive Officer of GSC
Enterprises, Inc., a one-
bank holding company, and
Chairman of the Board of
its subsidiary, Bank of
Lincolnwood; Chairman of
the Board and President
of RDIS Corporation;
Chairman of the Board and
Chief Executive Officer
(since 1990) of Hickory
Furniture Company;
Director and Chairman of
the Board of NRG
Incorporated; Director of
Wellco Enterprises, Inc.;
Director of Alba-
Waldensian, Inc. and
Chairman of the Board
(since 1991); Chairman of
the Board of Trustees of
Wisconsin Real Estate
Investment Trust;
Chairman of the Board of
Directors (since 1985),
President and Chief
Executive Officer (from
December 1985 to May,
1988) and Chief Executive
Officer (since December
1990) of Acton
Corporation (renamed
Sunstates Corporation in
December, 1993); Director
of Rocky Mountain
Chocolate Factory.
<PAGE>
NAME, AGE, POSITION(S) PRINCIPAL OCCUPATION, LAST 5
& PERIOD OF YEARS' BUSINESS EXPERIENCE AND
SERVICE AFFILIATIONS
Chairman of the Board (since
HAROLD SAMPSON, 75 1981) of Sampson Investments,
Director (since 1986) (a real estate holding
company); Chairman of the
Board of Diginet
Communications, Inc; Director
of Mount Sinai Hospital;
Director of Sunstates
Corporation; Trustee of
Wisconsin Real Estate
Investment Trust.
PHILLIP J. ROBINSON, 38 Chief Financial Officer (since
Vice President and July, 1993) and Controller
Treasurer (since June (from 1989 to July, 1993) of
30, 1993) Telco Capital Corporation;
Vice President and Chief
Financial Officer (since July,
1993) and Controller (from
1990 to July, 1993) of Hickory
Furniture Company; Secretary
and Treasurer (since July,
1993) and Controller (from
1989 to July, 1993) of
Wisconsin Real Estate
Investment Trust; Treasurer
and Secretary (since July,
1993) and Controller (from
1989 to July, 1993) of NRG
Incorporated.
GERALD M. TIERNEY, 47 Senior Vice President and
Vice President and General Counsel of Telco; Vice
Secretary President and Secretary of
(since 1991) Hickory Furniture Company
since September 1991;
Director of NRG, Incorporated;
Director of Rocky Mountain
Chocolate Factory, Inc.
(1) The following information is provided voluntarily by Mr.
Engle although it is not deemed material information as that term
is used in Item 401 of Regulation S-K. Mr. Engle is the subject of a Cease
and Desist Order dated October 7, 1993, issued by the Securities and
Exchange Commission (the Commission) requiring Mr. Engle and certain of his
affiliated companies to permanently cease and desist from committing any
further violations of Section 16(a) of the Securities Exchange Act of 1934
as amended and the rules promulgated thereunder, which requires monthly and
other periodic reports of transactions in certain securities. The Commission
found some of the reports of such transactions to have been filed delinquently
although many of these transactions were between affiliated entities or had
been publicly reported in other reports filed with the Commission or had been
otherwise publicly announced.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 30, 1987, IFII sold a parcel of real estate and a first
mortgage note to Hickory for consideration which included two promissory
notes from Hickory in the total principal amount of $3,586,479. The
principal balance of each promissory note was due September 30, 1992, with
monthly payments of interest at the rate of 10 1/2% per year, increasing by
1/2% each quarter beginning April 1, 1988. IFII recognized a gain of
$2,167,000 on the sale of the parcel of real estate.
On October 19, 1988, in exchange for a one-year promissory note for
$5,417,981 with interest payable quarterly at the rate of 12% interest per
annum, IFII sold to Hickory a first mortgage note with a carrying amount of
$2,082,663 and a hotel property which IFII had acquired through foreclosure
with a carrying value of $ 2,909,578. The first mortgage note was sold for a
purchase price of $1,967,981, an amount calculated to earn a 10% rate of
return on the principal balance of the note. The hotel property was sold for
$3,450,000. The net gain on the sale of these two assets will be deferred
until such time as Hickory has made sufficient principal payments under the
note. As of June 30, 1994, no principal payments have been made.
In February, 1990, IFII and Hickory agreed to an extension and modification
of the $5,417,981 promissory note described above. The modified promissory
note was due on September 30, 1992, with quarterly payments of interest at
the greater of the prime rate of interest plus 2% or 12%. Hickory also
agreed to issue to IFII warrants to purchase 6,000 shares of Hickory common
stock, exercisable at $1.00 per share. The warrants expire October 19, 1999.
Commencing at the maturity date of the modified note, IFII also has the right
to require Hickory to purchase the warrants for $67 per warrant, or $402,000
in the aggregate.
These promissory notes were not formally restructured upon their maturity at
September 30, 1992. Since that date IFII has continued to earn interest on
the notes at a rate of prime plus 2%. The obligations of Hickory under the
promissory notes are secured by a pledge of its 1,095,850 common shares of
beneficial interest in WREIT. The pledged shares represent approximately 75%
of the outstanding beneficial interests of WREIT.
In August 1990, IFII acquired from Hickory a $790,000 interest, due on
demand commencing August 16, 1992, in a demand basis note receivable (the
"WREIT Note"), owed by WREIT to Hickory in exchange for cash of $750,000.
The WREIT Note, which aggregated $16,425,000 at August 31, 1990, bears
interest at the annual rate of prime plus two percent (2%) and is secured by
a pledge of the Sunstates Class B Accumulating Convertible Stock (the "Class
B Stock") held by WREIT (the "Sunstates Collateral"). The Class B Stock
represents approximately 67% of the voting interest in Sunstates. Hickory
has subordinated its rights to receive principal and interest under the WREIT
Note and its rights in the Sunstates Collateral to the interests and rights
of IFII. IFII has agreed, to subordinate its interest and right in the WREIT
Note and Sunstates Collateral in an amount not to exceed $2 million to a
prior creditor of WREIT.
In 1993 and 1992, IFII advanced $633,500 and $35,000, respectively, to
Hickory on an unsecured basis. These advances have been added to the notes
receivable and are bearing interest at prime plus 2%. These advances
represented all excess cash of IFII and were made to Hickory because IFII had
no other prospects for investing the funds that would earn a comparable
return.
WREIT's and Hickory's operations have experienced liquidity problems which
have prevented them from making interest payments to IFII on these notes and,
in the case of Hickory, from repaying the notes when due on September 30,
1992. No schedule for collection of the amounts due, including interest, has
been established and no significant collections are anticipated within the
next year. Because of the uncertainty as to the period for recovery, the
Company has classified these advances with the stockholders' equity and,
effective July 1, 1992, suspended recognition of interest income in its
financial statements.
Following is a summary of the principal and interest earned (not all of
which is accrued) as of June 30, 1994:
PRINCIPAL INTEREST TOTAL
Promissory Notes dated
9/30/87 (A) $ 4,254,979 1,846,823 6,101,802
Promissory Note dated
10/19/89 5,417,981 1,987,784 7,405,765
Interest in WREIT/
Hickory Note 790,000 280,455 1,070,455
---------- --------- ----------
$10,462,960 4,115,062 14,578,022
========== ========= ==========
(A) The advances to Hickory in 1993 and 1992 totalling $668,500 were
combined with these promissory notes for presentation purposes.
During 1994 and 1993, IFII was invoiced $74,000 and $75,000, respectively,
for accounting, SEC reporting, shareholder communications and other services
provided by Telco and (during the last four months of 1994) Hickory, $77,000
and $31,500, respectively, of which was paid to Telco in 1994 and 1993.
It is the Board of Directors' policy that transactions with affiliates be
effected on terms as fair as those that would exist for transactions with
non-affiliates. All transactions discussed herein conform to this policy.
INDIANA FINANCIAL INVESTORS, INC.
FORM 10-K ITEM 14(A)(1) AND (2) AND ITEM 14(C) AND (D)
INDEX OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following financial statements of Indiana Financial Investors, Inc. are
included in Item 8:
Balance Sheets - June 30, 1994 and 1993
Statements of Income and Accumulated Deficit - Years Ended June 30, 1994,
1993 and 1992
Statements of Cash Flows - Years Ended June 30, 1994, 1993 and 1992
Notes to Financial Statements
Independent Certified Public Accountants' Report
The following financial statement schedules of Indiana Financial Investors,
Inc. are included in Item 14(d):
Schedule X - Supplementary Income Statement Information
Schedule XI - Real Estate and Accumulated Depreciation
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
INDIANA FINANCIAL INVESTORS, INC.
JUNE 30, 1994
COL. A COL. B
ITEM Charged to Costs and Expenses
RELATED TO INVESTMENT REAL ESTATE
YEAR ENDED JUNE 30
1994 1993 1992
Maintenance and repairs $ -- $ 30,000 $ 24,185
Taxes, other than payroll
and income taxes:
Real estate -- -- 54,625
RELATED TO FORECLOSED PROPERTY HELD
FOR RESALE
YEAR ENDED JUNE 30
1994 1993 1992
Taxes, other than payroll
and income taxes:
Real estate $ -- $ -- $ 6,633
(A) Amounts for depreciation and amortization of intangible assets,
royalties, advertising costs and maintenance and repairs related to property
held for resale are not disclosed because such amounts are less than 1% of
total revenues.
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION
INDIANA FINANCIAL INVESTORS, INC.
JUNE 30, 1994
The carrying amount of investment real estate represented IFII's aggregate
cost for federal income tax purposes. Prior to the sale of all remaining
investment real estate in June 1993, there was a reserve of $1,260,000 to
adjust investment real estate to net realizable value.
Real estate acquired through foreclosure and held for resale is initially
recorded at the principal balance of the former mortgage loan, plus recognized
but uncollected interest and costs of obtaining title and possession or fair
value. Capital improvements made subsequent to acquisition are added to IFII's
investment. The excess of cost of property over estimated fair value is
provided for in the allowance for possible losses. Prior to the sale of all
foreclosed real estate in June 1992, there was a reserve of $50,000 to adjust
foreclosed real estate to net realizable value.
The changes in the carrying amounts of real estate are summarized as follows:
1994 1993 1992
COST
Balance at beginning of year $ -0- $1,949,984 $3,537,057
Disposition of foreclosed
real estate held for
resale -0- (70,000) (1,587,073)
Disposition of investment
real estate -0- (1,879,984) --
--- --------- ---------
Balance at end of year $ -0- $ -0- $1,949,984
=== === =========
ACCUMULATED DEPRECIATION
Balance at beginning of year $ -0- $ 523,643 $ 489,256
Depreciation -0- 17,192 34,387
Dispositions -0- (540,835) --
--- -------- -------
Balance at end of year $ -0- $ -0- $ 523,643
=== === =======
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements. The list of financial statements included
herein appears on page 15 of this Report.
2. Financial Statement Schedules. The list of financial statement schedules
included herein appears on page 15 of this Report.
3. Exhibit Index. The following exhibits are included as part of this
Report:
(3)i The Articles of Incorporation of Registrant were filed with the
Commission as Exhibit C to the Prospectus included as part of Amendment No. 1
to Registrant's Registration Statement on Form S-14 filed April 25, 1979, and
are incorporated herein by this reference.
(3)ii The Registrant's Code of By-Laws, as amended, through October 17,
1990.
(10) Material Contracts
(10.1) Promissory note from Hickory Furniture Company dated September
30,1987 in the amount of $2,700,000
(10.2) Promissory note from Hickory Furniture Company dated September
30,1987 in the amount of $886,479.22
(10.3) Promissory note from Hickory Furniture Company dated October
19,1988 in the amount of $5,617,981.37
(10.4) Promissory note form Hickory Furniture Comnpany dated October
19,1989 in the amount of $5,417,981.37
(10.5) Amended Stock Pledge Agreement dated October 19, 1989
(10.6) Warrant to Purchase Common Stock of Hickory Furniture Company
(10.7) Letter dated August 13, 1990 setting forth the agreement and
understanding between Hickory Furniture Company and the Company
concerning the purchase of an interest in a demand promissory note
from Wisconsin Real Estate Investment Trust
(b) Reports on Form 8-K. None were filed during the last quarter of the
period covered by this Report.
(c) Exhibits. See (a) 3 above.
(d) Financial Statement Schedules. See (a) 2 above.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this amendment to be signed on its behalf
by the undersigned, thereunto duly authorized, this 6th day of September,
1995.
INDIANA FINANCIAL INVESTORS, INC.
By: /S/ CLYDE WM. ENGLE
Clyde Wm. Engle, Chief Executive Officer
<PAGE>
CODE OF BY-LAWS
OF
INDIANA FINANCIAL INVESTORS, INC.
ARTICLE I
Identification
Section 1. Name. The name of the Corporation is INDIANA FINANCIAL
INVESTORS, INC. (hereinafter referred to as the Corporation).
Section 2. Principal Office and Resident Agent. The post office address of
the principal office of the Corporation is 151 N. Delaware Street, Suite M-
870, Indianapolis, Indiana 46204; and the name and post office address of its
Resident Agent in charge of such office is John H. Fry, 151 North Delaware
Street, Suite M-870, Indianapolis, Indiana 46204.
Section 3. Seal. The Corporation need not use a seal. If one is used, it
shall be circular in form, and about the upper periphery of the seal shall
appear the words "INDIANA FINANCIAL INVESTORS, INC." and about the lower
periphery thereof the word "Indiana". In the center of the seal shall appear
the word "Seal". The seal may be altered by the Board of Directors at its
pleasure and may be used by causing it or a facsimile thereof to be impressed,
affixed, printed or otherwise reproduced.
Section 4. Fiscal Year. The fiscal year of the Corporation shall begin at
the beginning of the first day of July in each year and end at the close of
the last day of June next succeeding.
ARTICLE II
Shareholders
Section 1. Place of Meeting. All meetings of shareholders of the
Corporation shall be held at such place, within or without the State of
Indiana, as may be determined by the Board of Directors and specified in the
notices or waivers of notice thereof or proxies to represent shareholders
thereat.
Section 2. Annual Meeting. The annual meetings of shareholders shall be
held on the second Tuesday in November of each year, if such day is not a
legal holiday, or if a legal holiday, then on the next succeeding business
day not a legal holiday, unless in any year the Board of Directors shall by
resolution establish a different date as the date for the annual meeting.
Section 3. Special Meetings. Special meetings of shareholders may be
called by the Chairman of the Board, the President, the Board of Directors,
or the holders of not less than one-fourth (1/4) of all the shares of
capital stock outstanding and entitled vote at the meeting. At any special
meeting of the shareholders, no business other than that for which the
meeting is called shall be transacted.
Section 4. Notice of Meeting. Written or printed notice stating the place,
day and hour of a meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called shall be delivered or mailed by the
Secretary to each shareholder of record of the Corporation entitled to vote
at the meeting at such address as appears upon the records of the
Corporation,at least ten (10) days before the date of the meeting. Notice of
any shareholders' meeting may be waived in writing by any shareholder if the
waiver sets forth in reasonable detail the purpose or purposes for which the
meeting is called and the time and place thereof. Attendance at any meeting
in person or by proxy shall constitute a waiver of notice of such meeting.
Section 5. Voting at meetings.
(a) Voting Riqhts. Every shareholder of the Corporation shall have the
right at all meetings of the shareholders of the Corporation to one vote for
each share of capital stock standing in his or her name on the books of the
Corporation. The record date for purposes of determining shareholders
entitled to vote at any meeting shall be ten (10) days prior to the date of
such meeting or such different date not more than fifty (50) days prior to
such meeting as may be fixed by the Board of Directors. If any share of
capital stock shall have been transferred on the books of the Corporation
after such record date, the shareholder of record as of the record date shall
still be entitled to vote any such share so transferred; however, any person
acquiring title to a share after the record date shall, upon written request
to the shareholder of record, be entitled to receive from the shareholder of
record a proxy, with power of substitution, to vote that share.
(b) Proxies. A shareholder is entitled to Vote either
in person or by proxy, executed in writing by such shareholder or by his or
her duly authorized attorney-in-fact and delivered to the secretary of the
meeting. No proxy shall be valid after eleven (11) months from the date of
its execution unless a longer time is expressly provided therein.
(c) Quorum. At all meetings of shareholders, a majority of the shares of
the issued and outstanding capital stock entitled to vote at such meeting,
represented in person or by proxy, shall constitute a quorum. The
shareholders present at a duly called and held meeting at which a quorum is
present may continue to transact business until adjournment notwithstanding
the withdrawal of enough shareholders to leave less than a quorum.
(d) Required Vote. Except as otherwise required by the Corporation's
Articles of Incorporation or By-Laws, any action may be approved at a meeting
of shareholders at which a quorum is present by a majority vote of the shares
present in person or by proxy at such meeting.
(e) Adjournments. Any meeting of shareholders, including both annual
and special meetings and any adjournments thereof, may be adjourned from day
to day or from time to time by a vote of a majority of the shares present at
such meeting in person or by proxy even though less than a quorum is present.
(f) Inspectors of Election. In advance of any meeting of shareholders,
the Board of Directors may appoint inspectors of election to act at the
meeting or any adjournment thereof. If inspectors of election are not so
appointed, the chairman of any meeting of shareholders may, and on the
request of any shareholder or his proxy shall, appoint inspectors of election
at the meeting. The number of inspectors shall be either one or three. If
appointed at the meeting on the request of one or more shareholders or
proxies, a majority of the shares present shall determine whether one or
three inspectors are so appointed. In case any person appointed inspector
fails to appear or fails or refuses to act, the vacancy may be filled in
advance of the meeting by appointment made by the Board or at the meeting by
the chairman of the meeting. The inspectors of election shall determine the
number of shares outstanding, the number of shares represented at the
meeting, the existence of a quorum, and the authenticity, validity and effect
of proxies; shall receive votes, ballots or consents; shall hear and
determine all challenges and questions in any way arising in connection with
the right to vote; shall count and tabulate all votes or consents and
determine the results; and shall do such acts as may be proper to conduct the
election or vote with fairness to the shareholders. If there are three
inspectors of election, the decision, act or certificate of a majority shall
be effective in all respects as the,decision, act or certificate of all. On
the request of the chairman of the meeting or any shareholder or his proxy,
the inspectors shall make a report in writing of any challenge or question or
matter determined by them and execute a certificate of any facts found by
them.
Section 6. List of Shareholders. At least five (5) days before each
meeting of shareholders, the Secretary shall prepare or cause to be prepared
a complete list of the shareholders of the Corporation entitled to vote at
such meeting arranged in alphabetical order with the address and number of
shares entitled to vote held by each. Such list shall be on file in the
principal office of the Corporation and shall be subject to inspection by any
record share holder. Such list shall be produced and kept open at the time
and place of the meeting and shall be subject to inspection by any share-
holder during the holding of the meeting. The original or duplicate stock
register or transfer book shall be the only evidence as to the persons who
are entitled as shareholders to examine such list, the stock ledger or
transfer book, or to vote at such meeting.
Section 7. Action by Written Consent. Any action required or permitted to
be taken at any meeting of the shareholders may be taken without a meeting,
if prior to such action, a written consent thereto, setting forth the action
so taken, is signed by all the shareholders entitled to vote with respect to
the subject matter thereof, and such written consent is filed with the
minutes of the proceedings of the shareholders. Such consent shall have the
same effect as a unanimous vote of the shareholders.
ARTICLE III
Directors
Section 1. Number and Term of Office. The Board of Directors shall consist
of six (6) members. The Directors shall be elected by the shareholders at
their annual meeting and shall hold office until the next ensuing annual
meeting of shareholders or until their successors have been duly elected and
qualified. The shareholders may remove any Director, with or without cause,
and elect a successor at a meeting of shareholders called expressly for such
purpose.
Section 2. Vacancies. Vacancies occurring in the membership of the Board
of Directors caused by resignation, death or other incapacity, or increase in
the number of Directors shall be filled by a majority vote of the remaining
members of the Board, and each Director so elected shall serve until the next
meeting of the shareholders, or until a successor shall have been duly
elected and qualified. Notice specifying any increase in the number of
Directors and the name, address and principal occupation of and other
pertinent information about any Director elected to fill any vacancy shall be
given in the next mailing sent to the shareholders after such increase or
election.
Section 3. Annual Meeting. The Board of Directors shall meet annually,
without notice, immediately following, and at the same place as, the annual
meeting of the shareholders.
Section 4. Regular Meetings. Regular meetings shall be held at such times
and places, either within or without the State of Indiana, as may be
determined by the President or the Board of Directors.
Section 5. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board, the President or by two (2) or
more members of the Board of Directors, at any place within or without the
State of Indiana, upon twenty-four (24) hours' notice, specifying the time,
place and general purposes of the meeting, given to each Director personally
by telephone, telegraph, cable or wireless; or notice may be given by mail if
mailed at least three
(3) days before such meeting.
Section 6. Participation in Meetings by Telephone. All or any one or more
of the Directors may participate in any meeting of the Board of Directors or
any committee thereof by conference telephone or other similar means of
communication which permits a general discussion by persons participating in
the meeting. Participation in a meeting in such manner shall constitute
presence in person at such meeting.
Section 7. Waiver of Notice. Any Director may waive notice of any meeting
in writing. Attendance by a Director at any meeting shall constitute a
waiver of notice of such meeting.
Section 8. Quorum. A majority of the entire Board of Directors then
qualified and acting shall constitute a quorum and be sufficient for the
transaction of any business, except for filling of vacancies in the Board of
Directors which shall require action by a majority of the remaining
Directors. Any act of the majority of the Directors present at a meeting at
which a quorum shall be present shall be the act of the Board unless
otherwise provided for by law or by these By-Laws. A majority of the
Directors present may adjourn any meeting from time to time. Notice of an
adjourned meeting need not be given other than by announcement at the time of
adjournment.
Section 9. Committees. The Board of Directors may from time to time, by
resolution adopted by a majority of the actual number of Directors elected
and qualified, designate two (2) or more of its members to constitute an
Executive Committee, Investment Committee, Audit Committee, or such other
committees as it may determine, which committees shall have the powers and
authority and shall perform the duties specified in the resolution. The
designation of such committees and the delegation thereto of authority shall
not operate to relieve the Board of Directors, or any member thereof, of any
responsibility imposed upon it or him by The Indiana General Corporation Act,
as amended.
Section 10. Action by Written Consent. Any action required or permitted to
be taken at any meeting of the Board of Directors or any committee thereof
may be taken without a meeting if, prior to such action, a written consent
thereto is signed by all the members
of the Board or of such committee, as the case may be, and such
written consent is filed with the minutes of the proceedings of the
Board or committee.
ARTICLE IV
Officers
Section 1. Number of Officers. The officers of the Corporation shall
consist of a Chairman of the Board, a President, a Secretary and a Treasurer.
There may also be one or more vice Presidents and such other officers or
assistant officers as the Board shall from time to time create and so elect.
Any two (2) or more offices may be held by the same person, except that the
duties of the President and Secretary shall not be performed by the same
person. The Chairman of the Board and the President shall be chosen from
among the Directors.
Section 2. Election and Terms. Each officer shall be elected by the Board
of Directors at the annual meeting thereof and shall hold office until the
next annual meeting of the Board or until his or her successor shall have
been elected and qualified or until his or her death, resignation or removal.
Any officer may be removed at any time, with or without cause, by vote of a
majority of the whole Board, but such removal shall be without prejudice to
the contract rights, if any, of the person so removed; provided, however,
that election of an officer shall not of itself create contract rights.
Section 3. Vacancies. Whenever any vacancy shall occur in any office by
death, resignation, increase in the number of officers of the Corporation, or
otherwise, the same shall be filled by the Board of Directors, and the
officer so elected shall hold office until the next annual meeting of the
Board or until his or her successor is duly elected or appointed.
Section 4. Chairman of the Board. The Chairman of the Board shall preside
at all meetings of the Board of Directors and shareholders and shall have
such general supervision, direction and control of the business of the
Corporation and its employees and shall exercise such general powers of
management as the Board may from time to time provide.
Section 5. President. The President shall be the chief executive officer
of the Corporation; shall have general and active supervision, control and
management of the affairs and business of the Corporation, subject to the
orders and resolutions of the Board; shall have general supervision and
direction of all officers, agents and employees of the Corporation; shall see
that all orders and resolutions of the Board are carried into effect; and in
general shall exercise all powers and perform all duties incident to such
office and such other powers and duties as may from time to time be assigned
to him by the Board. In the absence or disability of the Chairman of the
Board, the President shall preside at all meetings of the Board and of the
shareholders.
The President shall have full authority to execute proxies on behalf of the
Corporation, to vote shares of the capital stock owned by it in any other
corporation, and to execute, with the Secretary, powers of attorney
appointing other corporations, partnerships, or individuals the agent of the
Corporation, all subject to the provisions of The Indiana General Corporation
Act, as amended, the Articles of Incorporation and this Code of By-Laws.
Section 6. Vice Presidents. The Vice Presidents shall assist the President
and shall perform such duties as may be assigned to them by the Board of
Directors or the President. Unless otherwise provided by the Board, in the
absence or disability of the President, the Vice President (or, if there be
more than one, the Vice President first named as such by the Board of
Directors at its most recent meeting at which Vice Presidents were elected)
shall execute the powers and perform the duties of the President.
Section 7. Secretary. The Secretary shall attend all meetings of the Board
and of the shareholders and shall act as secretary of such meetings; shall
give or cause to be given all notices provided for in these By-Laws or
required by law; shall record all votes and the minutes of all proceedings of
the meetings of shareholders and the Board in a book or books to be kept for
that purpose; shall be custodian of the records and the seal of the
Corporation; shall affix the seal to all documents, the execution of which
under seal is customary or is required by law or is authorized in accordance
with these By-Laws; shall have charge of the stock certificate books of the
Corporation and shall keep or cause to be kept such books, the stock transfer
books and the stock ledgers; and in general shall exercise all powers and
perform all duties as may be from time to time assigned to him or her by the
Board or by the President.
Section 8. Treasurer. The Treasurer shall keep correct and complete
records of account showing accurately at all times the financial condition of
the Corporation; shall be the custodian of the corporate funds and
securities; shall immediately deposit, in the name of and to the credit of
the Corporation, all moneys and other valuable effects of the Corporation in
such depositories as may be designated by the Board of Directors; shall
disburse the funds of the Corporation as may be ordered by the Board or by
the President; and in general shall exercise all powers and perform all
duties customarily incident to such office and such other powers and duties
as mav from time to time be assigned to him or her by the Board or by the
President.
Section 9. Assistant Secretaries. The Assistant Secretaries shall assist
the Secretary in the performance of his or her duties. In the absence of the
Secretary, any Assistant Secretary shall exercise the powers and perform the
duties of the Secretary. The Assistant Secretaries shall exercise such other
powers and perform such other duties as may from time to time be assigned to
them by the Board, the President, or the Secretary.
Section 10. Assistant Treasurers. The Assistant Treasurers shall assist
the Treasurer in the performance of his or her duties. Any Assistant
Treasurer shall, in the absence or disability of the Treasurer, exercise the
powers and perform the duties of the Treasurer. The Assistant Treasurers
shall exercise such other duties as may from time to time be assigned to them
by the Board, the President, or the Treasurer.
Section 11. Delegation of Authority. In case of the absence of any
officer of the Corporation, or for any reason that the Board may deem
sufficient, a majority of the entire Board may transfer or delegate the
powers or duties of any officer to any other officer or officers for such
length of time as the Board may determine.
ARTICLE V
Capital Stock
Section 1. Certificates. Each holder of shares of stock of the Corporation
shall be entitled to a certificate, signed by the President or a Vice
President and the Secretary or an Assistant Secretary, if any, of the
Corporation, specifying the number of shares owned by the holder of shares in
the Corporation. If certificates are signed by a transfer agent, acting on
behalf of the Corporation, and a registrar, the signatures of the officers of
the Corporation may be facsimile. Certificates shall be in such form as the
Board of Directors shall approve from time to time.
Section 2. Legend. In furtherance of the provisions of the Articles of
Incorporation of the Corporation regarding redemption and prohibition against
transfer of shares of the capital stock of the Corporation when necessary to
preserve the Corporation's status as a qualified real estate investment trust
under the provisions of the federal Internal Revenue Code, each certificate
evidencing shares of the capital stock of the Corporation shall contain a
legend imprinted thereon to the following effect:
"Provisions Relating to Redemption and
Prohibition of Transfer of Shares.
If necessary to effect compliance by the Corporation with certain
requirements of the Internal Revenue Code, the shares represented by this
certificate are subject to redemption by the Board of Directors of the
Corporation and the transfer thereof may be prohibited upon the terms and
conditions set forth in the Articles of Incorporation. The Corporation will
furnish a copy of such terms and conditions to the registered holder of this
certificate upon request and without charge."
Section 3. Transfer Agent. The Board of Directors shall have power to
appoint one or more transfer agents and registrars for the transfer and
registration of certificates of stock of the Corporation, and may require
that such certificates shall be countersigned and registered by one or more
of such transfer agents and registrars.
Section 4. Transfer of Shares. Except as otherwise provided by law,
transfers of shares of the capital stock of the Corporation, whether part
paid or fully paid, shall be made only on the books of the Corporation by the
owner thereof in person or by duly authorized attorney, on payment of all
taxes thereon and surrender for cancellation of the certificate or
certificates for such shares (except as hereinafter provided in the case of
loss, destruction or mutilation of certificate) properly endorsed by the
holder thereof or accompanied by the proper evidence of succession,
assignment or authority to transfer, and delivered to the Secretary or an
Assistant Secretary. All such transfers shall be made in accordance with the
relevant provisions of I.C. 1971, 26-1-8-101 et seq.
Section 5. Lost, Destroyed and Mutilated Certificates. The holder of any
of the shares of capital stock of the Corporation shall immediately notify
the Corporation of any loss, destruction or mutilation of the certificate
therefor, and the Board may, in its discretion, cause to be issued to such
holder of shares a new certificate or certificates of shares of capital
stock, upon the surrender of the mutilated certificate, or, in case of loss
or destruction, upon satisfactory proof of such loss or destruction. The
Board may, in its discretion, require the owner of the lost or destroyed
certificate or such owner's legal representative to give the Corporation a
bond in such sum and in such form, and with such surety or sureties as it may
direct, to indemnify the Corporation, its transfer agents and registrars, if
any, against any claim that may be made against them or any of them with
respect to the certificate or certificates alleged to have been lost or
destroyed, but the Board may, in its discretion, refuse to issue a new
certificate or new certificates, save upon the order of a court having
jurisdiction in such matters.
Section 6. Consideration for Shares. The Board of Directors shall cause
the Corporation to issue the shares of stock of the, Corporation for such
consideration as has been fixed by such Board pursuant to the provisions of
the Articles of Incorporation.
Section 7. Payment for Shares. Subject to the provisions of the Articles
of Incorporation, the consideration for the issuance of shares of stock of
the Corporation may be paid, in whole or in part, in money, in other
property, tangible or intangible, or in labor actually performed for, or
services actually rendered to, the Corporation; provided, however, that the
part of the surplus of the Corporation which is transferred to stated capital
upon the issuance of shares as a share dividend shall be deemed to be the
consideration for the issuance of such shares. When the payment of the
consideration for which a share was authorized to be issued shall have been
transferred to stated capital upon the issuance of a share dividend, such
share shall be declared and taken to be fully paid and not liable to any
further call or assessment, and the holder thereof shall not be liable for
any further payments thereon. In the absence of actual fraud in the
transaction, the judgment of the Board of Directors as to the value of such
property, labor or services received as consideration, or the value placed by
the Board of Directors upon the corporate assets in the event of a share
dividend shall be conclusive. Promissory notes, uncertified checks or future
services shall not be accepted in payment or part payment of any shares of
the Corporation.
Section 8. Equitable Interests in Shares Need Not Be Recognized. The
Corporation and its officers shall be entitled to treat the holder of record
of any share or shares of stock of the Corporation as the holder in fact
thereof, and accordingly shall not be required to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person or persons,whether or not express notice thereof shall have been given
the Corporation, save as expressly provided to the contrary by the laws of
Indiana, the Articles of Incorporation of the Corporation and these By-Laws.
In no event shall any transferee of shares of the Corporation become a
shareholder of the Corporation until express notice of such transfer shall
have been received by the Corporation.
ARTICLE VI
Corporate Books
Section 1. Place of Keeping, in General. Except as otherwise provided by
the laws of the State of Indiana, by the Articles of Incorporation of the
Corporation or by these By-Laws, the books and records of the Corporation may
be kept at such place or places, within or without the State of Indiana, as
the Board of Directors may from time to time by resolution determine.
Section 2. Stock Register or Transfer Book. The original or duplicate
stock register or transfer book, or, in case a stock registrar or transfer
agent shall be employed by the Corporation, a complete and accurate
shareholders' list, alphabetically arranged, giving the names and addresses
of all shareholders and the number and classes of shares held by each, shall
be kept at the principal office of the Corporation in the State of Indiana.
ARTICLE VII
Execution of Instruments
Section 1. Checks, Drafts, etc. All checks, drafts, bills of exchange or
other orders for the payment of money, obligations, notes or other evidences
of indebtedness of the Corporation shall be signed or endorsed by such
officer or officers, employee or employees of the Corporation as shall from
time to time be designated by the Board.
Section 2. Contracts. All contracts, agreements, deeds, conveyances,
mortgages and similar instruments authorized by the Board of Directors shall
be signed, unless otherwise directed by the Board or required by law, by the
President or a Vice President and attested by the Secretary or an Assistant
Secretary.
ARTICLE VIII
Amendments
These By-Laws may be altered, amended or repealed from time to time by a
majority vote of the whole Board at any regular or special meeting if the
notice or waiver of notice of said meeting shall have stated that the By-Laws
are to be amended, altered or repealed or if all Directors at the time are
present at said meeting.
ARTICLE IX
The Indiana General Corporation Act
The provisions of The Indiana General Corporation Act, as amended,
applicable to any of the matters not herein specifically covered by these By-
Laws, are hereby incorporated by reference in and made a part of these By-
Laws.
ARTICLE IV-A
Indemnification
Section 1. Indemnification against Underlying Liability. The Corporation
shall, to the fullest extent to which it is empowered to do so by the
Corporation Law, or any other applicable law, as from time to time in effect,
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending, or completed action, suit or proceeding,
whether civil, criminal, administrative, or investigative and whether formal
or informal, by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or Who, while serving as such director,
officer, employee or agent of the Corporation, is or was serving at the
request of the Corporation as a director, officer, partner, trustee, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise (collectively, "Agent") against expenses (including attorneys'
fees), judgments, fines, penalties, court costs and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement (whether with or
without court approval), conviction or upon a plea of nolo contenders or its
equivalent, shall not, of itself, create a presumption that the Agent did not
act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe that
his conduct was unlawful. If several claims, issues or matters are involved,
an Agent may be entitled to indemnification as to some matters even though he
is not entitled as to other matters.
Section 2. Successful Defense. To the extent that an Agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section I of this Article IV, or in
defense of any claim, issue or matter therein, the Corporation shall
indemnify such person against expenses (including attorneys' fees) actually
and reasonably incurred by such person in connection therewith.
Section 3. Determination of Conduct. Subject to any rights under any
contract between the Corporation and any Agent, any indemnification against
underlying liability provided for in Section 1 of this Article IV (unless
ordered by a court) shall be made by the Corporation only as authorized in
the specific case upon a determination that indemnification of the Agent is
proper in the circumstances because he has met the applicable standard of
conduct set forth in said Section. Such determination shall be made (1) by
the Board of Directors by a majority vote of a quorum consisting of directors
not at the time parties to such action, suit or proceeding; (2) if such an
independent quorum cannot be obtained, by majority vote of a committee duly
designated by the full Board of Directors (in which designation directors who
are parties may participate), consisting solely of one or more directors not
at the time parties to the action, suit or proceeding; (3) by special legal
counsel (A) selected by the independent quorum of the Board of Directors (or
the independent committee thereof if no such quorum can be obtained), or (B)
if no such independent quorum or committee thereof can be obtained, selected
by majority vote of the full Board of Directors (in which selection directors
who are parties may participate) ; or (4) by the shareholders, but shares
owned by or voted under the control of directors who are at the time parties
to such action, suit or proceeding may not be voted on the determination.
Notwithstanding the foregoing, an Agent shall be able to contest any
determination that the Agent has not met the applicable standard of conduct
by petitioning a court of appropriate jurisdiction.
Section 4. Definition of Good Faith. For purposes of any determination
under Section 1 of this Article IV, a person shall be deemed to have acted in
good faith and to have otherwise met the applicable standard of conduct set
forth in Section 1 if his action is based on information, opinions, reports,
or statements, including financial statements and other financial data, if
prepared or presented by (1) one or more officers or employees of the
Corporation or another enterprise whom he reasonably believes to be reliable
and competent in the matters presented; (2) legal counsel, public
accountants, appraisers or other persons as to matters he reasonably believes
are within the person's professional or expert competence; or (3) a committee
of the Board of Directors of the Corporation or another enterprise of which
the person is not a member if he reasonably believes the committee merits
confidence. The provisions of this Section 4 shall not be deemed to be
exclusive or to limit in any way the circumstances in which a person may be
deemed to have met the applicable standards of conduct set forth in Section 1
of this Article IV.
Section 5. Payment of Expenses in Advance. Expenses incurred in connection
with any civil, criminal, administrative or investigative action, suit or
proceeding by an Agent who may be entitled to indemnification pursuant to
Section 1 of this Article IV shall be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of a
written affirmation by the Agent of his good faith belief that he has met the
applicable standard of conduct set forth in Section 1 of this Article IV and
upon receipt of a written undertaking by or on behalf of the Agent to repay
such amount if it is ultimately determined that he is not entitled to be
indemnified by the Corporation as authorized in this Article IV.
Notwithstanding the foregoing, such expenses shall not be advanced if the
Corporation conducts the determination of conduct procedure referred to in
Section 3 of this Article IV and it is determined from the facts then known
that the Agent will be precluded from indemnification against underlying
liability because he has failed to meet the applicable standard of conduct
set forth in Section 1 of this Article IV. The full Board of Directors
(including directors who are parties) may authorize the Corporation to
implement the determination of conduct procedure, but such procedure is not
required for the advancement of expenses. The full Board of Directors
(including directors who are parties) may authorize the Corporation to assume
the Agent's defense where appropriate, rather than to advance expenses for
such defense.
Section 6. Indemnity Not Exclusive. The indemnification against underlying
liability, and advancement of expenses provided by, or granted pursuant to,
this Article IV shall not be deemed exclusive of, and shall be subject to,
any other rights to which those seeking indemnification or advancement of
expenses may be entitled under the Corporation's Articles of Incorporation,
these By-Laws, any resolution of the Board of Directors or shareholders, any
other authorization, whenever adopted, after notice, by a majority vote of
all voting shares then outstanding, or any contract, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be an Agent, and
shall inure to the benefit of the heirs, executors and administrators of such
a person.
Section 7. Vested Right to Indemnification. The right of any individual to
indemnification under this Article shall vest at the time of occurrence or
performance of any event, act or omission giving rise to any action, suit or
proceeding of the nature referred to in Section 1 of this Article IV and,
once vested, shall not later be impaired as a result of any amendment,
repeal, alteration or other modification of any or all of these provisions.
Notwithstanding the foregoing, the indemnification afforded under this
Article shall be applicable to all alleged prior acts or omissions of any
individual seeking indemnification hereunder, regardless of the fact that
such alleged acts or omissions may have occurred prior to the adoption of
this Article. To the extent such prior acts or omissions cannot be deemed to
be covered by this Article IV, the right of any individual to indemnification
shall be governed by the indemnification provisions in effect at the time of
such prior acts or omissions.
Section 8. Insurance. The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was an Agent of the
Corporation against any liability asserted against him or incurred by him in
any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability
under the provisons of this Article IV.
Section 9. Additional Definitions. For purposes of this Article IV,
references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person
with respect to any employee benefit plan; and references to "serving at the
request of the Corporation" shall include any service as a director, officer,
employee or agent of the Corporation which imposes duties on, or involves
services by, such director, officer, employee or agent with respect to an
employee benefit plan, its participants or beneficiaries. A person who acted
in good faith and in a manner he reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the
Corporation" as referred to in this Article IV.
Section 10. Payments a Business Expense. Any payments made to any
indemnified party under this Article or under any other right to
indemnification shall be deemed to be an ordinary and necessary business
expense of the Corporation, and payment thereof shall not subject any person
responsible for the payment, or the Board of Directors, to any action for
corporate waste or to any similar action.
PROMISSORY NOTE
Principal Amount: Dated: September 30, 1987
$2,700,000.00 Due Date: September 30, 1992
For value received, the undersigned promises to pay to the order of INDIANA
FINANCIAL INVESTORS, INC., an Indiana corporation the principal sum of Two
million Seven Hundred Thousand Dollars ($2,700,000), at 151 North Delaware
Street, Suite 425, Indianapolis, Indiana 46204, or at such other place as the
holder hereof may direct in writing.
Principal and interest, unless accelerated as provided
below, shall be paid as follows:
1. Interest Rate and Payments. From the date of this Note through March
31, 1988 interest shall accrue on the unpaid principal balance due hereunder
at the rate of ten and one-half percent (10 1/2%) per annum. The annual rate
of interest on the unpaid principal balance shall increase by one-half
percent (1/2%) per annum for each quarter thereafter commencing with the
quarter beginning April 1, 1988. Interest shall be paid monthly, with the
first interest payment due on October 31, 1987, and shall be paid on the last
day of each month thereafter until maturity.
2. Principal Payment. The entire unpaid balance (including principal and
interest) shall be paid in full on September 30, 1992.
All payments on account of the indebtedness evidenced hereby shall be
applied (a) first, to any attorneys' fees, costs, charges and other
indebtedness, if any, then due pursuant to the provisions of this Note,
excluding those amounts set forth in subsections (b) and (c) of this
paragraph, (b) second, to any accrued and unpaid interest, and (c) third, the
balance, if any, to principal.
The Maker reserves the right to prepay at any time or from time to time all
or any part of the principal balance remaining unpaid without premium or
penalty upon any such prepayment; provided, however, that any and each such
prepayment shall be accompanied by the payment of interest at the aforesaid
rate to the date of prepayment.
The entire principal amount outstanding together with
all accrued interest thereon, and other amounts payable hereunder, shall, at
the option of the holder hereof, become immediately due and payable in full
at the place of payment in the event of the occurrence of any one or more of
the following:
(i) any installment payment under this Note is not paid when due and said
default continued for ten (10)calendar days after written notice thereof has
been given by the holder hereof to the Maker; or
(ii) the Maker becomes insolvent or bankrupt or is generally not paying
its debts as such debts become due, or if a receiver is appointed, or
bankruptcy, reorganization or liquidation proceedings are instituted against
or consented to by the Maker; or
(iii) the Maker is in default or breach under the Stock Pledge Agreement of
even date herewith entered into by the Maker and the payee and the Maker has
not cured such default or breach within twenty (20) days after receiving
notice of the default or breach from the holder of this Note.
Failure or delay in any instance to exercise the option granted by this
paragraph shall not constitute a waiver of the right thereafter to exercise
such option in any subsequent instance, whether of the same or a different
character. Upon exercise of the option granted by this paragraph, interest
shall thereupon accrue and be payable on the then unpaid principal balance of
this Note at the rate equal to the greater of (i) eighteen percent (18%) per
annum, or (ii) the then applicable rate of interest as set forth in paragraph
1 above.
The maker hereby waives, on behalf of itself, its legal representatives,
successors, and assigns, presentment for payment, notice of dishonor,
protest, and notice of protest, and further waives on behalf of itself and
such other parties, to the extent permitted by law, the benefit of all
appraisement, valuation, homestead, exemption, and moratorium laws now or
hereafter in force. The Maker agrees that the time of payment of any
installment of principal or interest hereof may be extended without in any
way modifying, altering, releasing, affecting, or limiting Maker's liability
under this Note. This Note shall be the joint and several obligation of all
makers, sureties, guarantors and endorsers, and shall be binding upon them
and their successors and assigns.
Time is of the essence of all provisions of this Note.
This Note shall be subject to, governed by, and
construed according to the laws of the State of Indiana.
Any notice, request or communication that is required
or permitted to be given under this Note shall be in writing
and shall be deemed to have been sufficiently given if delivered in person
or deposited in the United States mail, postage prepaid, for mailing first
class, either certified or registered mail, return receipt requested:
If to Maker, addressed as follows:
HICKORY FURNITURE COMPANY
856 Seventh Avenue, S.E.
Box 998
Hickory, North Carolina 28603
If to the holder of Note, addressed as set forth in
the first page of this Note,
or to such other address or addresses as the parties may from
time to time designate to each other in writing.
HICKORY FURNITURE COMPANY
By: /S/ HOWARD O WALKER
Howard O. Walker
President
ATTEST:
/S/ WILLIAM J. DULIN
William J. Dulin
Assistant Treasurer
5116E
PROMISSORY NOTE
Principal Amount: Dated: September 30, 1987
$886,479.22 Due Date: September 30, 1992
For value received, the undersigned promises to pay to the order of INDIANA
FINANCIAL INVESTORS, INC., an Indiana corporation, the principal sum of Eight
Hundred Eighty-Six Thousand Four Hundred Seventy-Nine and 22/100 Dollars
($886,479.22) at 151 North Delaware Street, Suite 425, Indianapolis, Indiana
46204, or at such other place as the holder hereof may direct in writing.
Principal and interest, unless accelerated as provided
below, shall be paid as follows:
1 . Interest Rate and Payments. From the date of this Note through March
31, 1988 interest shall accrue on the unpaid principal balance due hereunder
at the rate of ten and one-half percent (10 1/2%) per annum. The annual rate
of interest on the unpaid principal balance shall increase by one-half
percent (1/2%) per annum for each quarter thereafter, commencing with the
quarter beginning April 1, 1988. Interest shall be paid monthly, with the
first interest payment due on October 31, 1987, and shall be paid on the last
day of each month thereafter until maturity.
2 . Principal Payment. The entire unpaid balance (including principal and
interest) shall be paid in full on September 30, 1992.
All payments on account of the indebtedness evidenced hereby shall be
applied (a) first, to any attorneys' fees, costs, charges and other
indebtedness, if any, then due pursuant to the provisions of this Note,
excluding those amounts set forth in subsections (b) and (c) of this
paragraph, (b) second, to any accrued and unpaid interest, and (c) third, the
balance, if any, to principal.
The Maker reserves the right to prepay at any time or from time to time all
or any part of the principal balance remaining unpaid without premium or
penalty upon any such prepayment; provided, however, that any and each such
prepayment shall be accompanied by the payment of interest at the aforesaid
rate to the date of prepayment.
The entire principal amount outstanding, together with all accrued
interest thereon, and other amounts payable hereunder, shall, at the option
of the holder hereof, become immediately due and payable in full at the place
of payment in the event of the occurrence of any one or more of the following:
(i) any installment payment under this Note is not paid when due and said
default continued for ten (10) calendar days after written notice thereof has
been given by the holder hereof to the Maker; or
(ii) the Maker becomes insolvent or bankrupt or is generally not paying
its debts as such debts become due, or if a receiver is appointed, or
bankruptcy, reorganization or liquidation proceedings are instituted against
or consented to by the Maker; or
(iii) the Maker is in default or breach under the Stock Pledge Agreement of
even date herewith entered into by the Maker and the payee and the Maker has
not cured such default or breach within twenty (20) days after receiving
notice of the default or breach from the holder of this Note.
Failure or delay in any instance to exercise the option granted by this
paragraph shall not constitute a waiver of the right thereafter to exercise
such option in any subsequent instance, whether of the same or a different
character. Upon exercise of the option granted by this paragraph, interest
shall thereupon accrue and be payable on the then unpaid principal balance of
this Note at the rate equal to the greater of (i) eighteen percent (18%) per
annum, or (ii) the then applicable rate of interest as set forth in paragraph
1 above.
The Maker hereby waives, on behalf of itself, its legal representatives,
successors, and assigns, presentment for payment, notice of dishonor,
protest, and notice of protest, and further waives on behalf of itself and
such other parties, to the extent permitted by law, the benefit of all
appraisement, valuation, homestead, exemption, and moratorium laws now or
hereafter in force. The Maker agrees that the time of payment of any
installment of principal or interest hereof may be extended without in any
way modifying, altering, releasing, affecting, or limiting Maker's liability
under this Note. This Note shall be the joint and several obligation of all
makers, sureties, guarantors and endorsers, and shall be binding upon them
and their successors and assigns.
Time is of the essence of all provisions of this Note.
This Note shall be subject to, governed by, and construed according to the
laws of the State of Indiana.
Any notice, request or communication that is required or permitted to be
given under this Note shall be in writing and shall be deemed to have been
sufficiently given if delivered in person or deposited in the United States
mail, postage prepaid, for mailing first class, either certified or registered
mail, return receipt requested:
If to Maker, addressed as follows:
HICKORY FURNITURE COMPANY
856 Seventh Avenue, S.E.
Box 998
Hickory, North Carolina 28603
If to the holder of Note, addressed as set forth in the first page of this
Note, or to such other address or addresses as the parties may from
time to time designate to each other in writing.
HICKORY FURNITURE COMPANY
By: /S/HOWARD O. WALKER
Howard O. Walker
President
ATTEST:
/S/ WILLIAM J. DULIN
William J. Dulin
Assistant Treasurer
5154E
PROMISSORY NOTE
Principal Amount: Dated: October 19,1988
$5,617,981.37 Due Date: October 19 1989
FOR VALUE RECEIVED, the undersigned promises to pay to the order of INDIANA
FINANCIAL INVESTORS, INC., an Indiana corporation, the principal sum of Five
Million Six Hundred Seventeen Thousand Nine Hundred Eighty-One and
37/Hundredths ($5,617,981.37) Dollars, at 151 North Delaware Street, Suite 425
Indianapolis, Indiana 46204, or at such other place as the holder hereof may
direct in writing.
Principal and interest, unless accelerated as provided below, shall be paid
as follows:
1. Interest Rate and Payments. From the date of this Note interest shall
accrue on the unpaid principal balance due hereunder at the rate of twelve
(12%) percent per annum, payable quarterly commencing December 31, 1988.
2. Principal Payment. The entire unpaid balance (including principal and
interest) shall be paid in full on or before October 19, 1989.
All payments on account of the indebtedness evidenced hereby shall be
applied (a) first, to any attorneys'fees, costs, charges and other
indebtedness, if any, then due pursuant to the provisions of this Note,
excluding those amounts set forth in subsections (b) and (c) of this
paragraph, (b) second, to any accrued and unpaid interest, and (c) third, the
balance, if any, to principal.
The Maker reserves the right to prepay at any time or from time to time all
or any part of the principal balance remaining unpaid without premium or
penalty upon any such prepayment; provided, however, that any and each such
prepayment shall be accompanied by the payment of interest at the aforesaid
rate to the date of prepayment.
The entire principal amount outstanding, together with all accrued interest
thereon, and other amounts payable hereunder, shall, at the option of the
holder hereof, become immediately due and payable in full at the place of
payment in the event of the occurrence of any one or more of the following:
(i) any installment payment under this Note is not paid when due and said
default continued for ten (10) calendar days after written notice thereof has
been given by the holder herof to the Maker; or
(ii) the Maker becomes insolvent or bankrupt or is generally not paying its
debts as such debts become due, or if a receiver is appointed, or bankruptcy,
reorganization or liquidation proceedings are instituted against or consented
to by the Maker.
Failure or delay in any instance to exercise the option granted by this
paragraph shall not constitute a waiver of the right thereafter to exercise
such option in any subsequent instance, whether of the same or a different
character. Upon exercise of the option granted by this paragraph, interest
shall thereupon accrue and be payable on the then unpaid principal balance of
this Note at the rate equal to eighteen percent (18%) per annum.
The Maker hereby waives, on behalf of itself, its legal representatives,
successors, and assigns, presentment for payment, notice of dishonor, protest,
and notice of protest, and further waives on behalf of itself and such other
parties, to the extent permitted by law, the benefit of all appraisement,
valuation, homestead, exemption, and moratorium laws now or
hereafter in force. The Maker agrees that the time of payment of any
installment of principal or interest hereof may be extended without in any way
modifying, altering, releasing, affecting, or limiting Maker's liability under
this Note. This Note shall be the joint and several obligation of all makers,
sureties, guarantors and endorsers, and shall be binding upon them and their
successors and assigns.
This Note is secured by the Stock Pledge Agreement of even date herewith
between Maker and Payee, pursuant to which Maker has pledged to Payee certain
of Maker's legally owned shares of Wisconsin Real Estate Investment Trust, a
Wisconsin common law business trust.
Time is of the essence of all provisions of this Note.
This Note shall be subject to, governed by, and construed according to the
laws of the State of Indiana.
Any notice, request or communication that is required or permitted to be
given under this Note shall be in writing and shall be deemed to have been
sufficiently given if delivered in person or deposited in the United States
mail, postage prepaid, for mailing first class, either certified or registered
mail, return receipt requested:
If to Maker, addressed as follows:
HICKORY FURNITURE COMPANY
856 Seventh Avenue, S.E.
Box 998
Hickory, North Carolina 20603
If to the holder of Note, addressed as set forth in the
first page of this Note,
or to such other address or addresses as the parties may from time to time
designate to each other in writing.
HICKORY FURNITURE COMPANY
By:/S/ RICHARD E. HENKEL
ATTEST:
/S/ MICHAEL A. ROBINSON
<PAGE>
PROMISSORY NOTE
Principal Amount: Dated: October 19, 1989
$5,417,981.37 Due Date: September 30, 1992
FOR VALUE RECEIVED, the undersigned promises to pay to the order of INDIANA
FINANCIAL INVESTORS, INC., an Indiana corporation, the principal sum of Five
Million Four Hundred Seventeen Thousand Nine Hundred Eighty-One and
37/Hundredths Dollars ($5,417,981.37), at 151 North Delaware Street, Suite
425, Indianapolis, Indiana 46204, or at such other place as the holder hereof
may direct in writing. This note is being delivered in satisfaction of a
certain Promissory Note between the undersigned and Indiana Financial
Investors, Inc., dated October 19, 1988.
Principal and interest, unless accelerated as provided below, shall be paid
as follows:
1 . Interest Rate and Payments. Interest shail accrue on the unpaid
principal balance (a) at the rate of twelve percent (12%) per annum or (b) at
a rate per annum equal to two percent (2%) above the prime rate of interest
announced from time to time by INB National Bank, Indianapolis, Indiana,
whichever is higher. Interest shall be paid quarterly, with the first
interest payment due on December 31, 1989, and subsequent payments of interest
shall be paid on the last day of each calendar quarter thereafter until
maturity. The undersigned Maker shall pay interest at the rate of four
percent (4%) per annum above the rate of interest then in effect under this
Note during the period of delinquency on all amounts not paid when due.
Interest shall be computed on the basis of a 360 day year applied to the
actual number of days in each payment period.
2 . Principal Payment. The entire unpaid balance (including principal and
interest) shall be paid in full on or before September 30, 1992.
In addition the Maker shall pay to the holder hereof costs of collection and
reasonable attorneys' fees incurred by the holder in the protection of any
security for this Note or in the collection of the indebtedness evidenced
hereby.
All payments on account of the indebtedness evidenced hereby shall be
applied (a) first, to any attorneys' fees, costs, charges and other
indebtedness, if any, then due pursuant to the provisions of this Note,
excluding those amounts set forth in subsections (b) and (c) of this
paragraph, (b) second, to any accrued and unpaid interest, and (c) third, the
balance, if any, to principal.
The Maker reserves the right to prepay at any time or from time to time all
or any part of the principal balance remaining unpaid without premium or
penalty upon any such prepayment; provided, however, that any and each such
prepayment shall be accompanied by the payment of interest at the Aforesaid
rate to the date of prepayment.
The entire principal amount outstanding, together with all accrued interest
thereon, and other amounts payable hereunder, shall, at the option of the
holder hereof, become immediately due and payable in full at the place of
payment in the event of the occurrence of any one or more of the following:
(I) any installment payment under this Note is not paid when due and said
default continued for ten (10) calendar days after written notice thereof has
been given by the holder hereof to the Maker; or
(ii) the Maker becomes insolvent or bankrupt or is generally not paying its
debts as such debts become due, or if a receiver is appointed, or bankruptcy,
reorganization or liquidation proceedings are instituted against or consented
to by the Maker; or
(iii) The net worth of Hickory Furniture Company,, determined in accordance
with generally accepted accounting principles, shall at any time be less than
Ten Million Dollars ($10,000,000.00).
Failure or delay in any instance to exercise the option granted by this
paragraph shall not constitute a waiver of the right thereafter to exercise
such option in any subsequent instance, whether of the same or a different
character.
The Maker hereby waives, on behalf of itself, its legal representatives,
successors, and assigns, presentment for payment, notice of dishonor,
protest, and notice of protest, and further waives on behalf of itself and
such other parties, to the extent permitted by law, the benefit of all
appraisement, valuation, homestead, exemption, and moratorium laws now or
hereafter in force. The Maker agrees that the time of payment of any
installment of principal or interest hereof may be extended without in any
way modifying, altering, releasing, affecting, or limiting Maker's liability
under this Note. This Note shall be the joint and several obligation of all
makers, sureties, guarantors and endorsers, and shall be binding upon them
and their successors and assigns.
This Note is secured by the Stock Pledge Agreement between Maker and Payee,
pursuant to which Maker has pledged to Payee certain of Maker's legally owned
shares of Wisconsin Real Estate Investment Trust, a Wisconsin common law
business trust.
Time is of the essence of all provisions of this Note.
This Note shall be subject to, governed by, and
construed according to the laws of the State of Indiana.
Any notice, request or communication that is required or permitted to be
given under this Note shall be in writing and shall be deemed to have been
sufficiently given if delivered in person or deposited in the United States
mail, postage prepaid, for mailing first class, either certified or
registered mail, return receipt requested:
If to Maker, addressed as follows:
HICKORY FURNITURE COMPANY
856 Seventh Avenue, S.E.
Box 998
Hickory, North Carolina 28603
If to the holder of Note, addressed as set forth in the first page of this
Note, or to such other address or addresses as the parties may from time to
time designate to each other in writing.
HICKORY FURNITURE COMPANY
By:
ATTEST:
0638X
<PAGE>
AMENDED STOCK PLEDGE AGREEMENT
This Amended Stock Pledge Agreement is made to be
effective the 19th day of October, 1989 by and between HICKORY FURNITURE
COMPANY, a Delaware corporation ("Hickory"), and INDIANA FINANCIAL INVESTORS,
INC., an Indiana corporation ("IFI"). This Agreement amends, restates and
supersedes the Stock Pledge Agreements dated September 30, 1987 and October
19, 1988 by and between Hickory and IFI.
Recitals
A. Hickory previously executed and delivered to IFI two Promissory
Notes dated September 30, 1987 (the "1987 Notes") in connection with the sale
by IFI of certain assets.
B. Hickory previously executed and delivered to IFI a Promissory Note
dated October 19, 1988 (the "Old Note") in connection with the sale by IFI of
certain assets.
C. The 1987 Notes and the Old Note were secured by a pledge of
certain shares owned by Hickory of Wisconsin Real Estate Investment Trust, a
Wisconsin common law business trust ("WREIT"), pursuant to Stock Pledge
Agreements dated September 30, 1987 and October 19, 1988 executed by IFI and
Hickory.
D. Hickory is executing and delivering to IFI a Promissory Note dated
October 19, 1989 (the "New Note") in satisfaction of the Old Note.
E. Hickory desires to secure the New Note and to continue to secure the
1987 Notes with a pledge of certain WREIT shares, and Hickory desire for IFI
to continue to hold such WREIT shares as collateral for payment of all
amounts due from Hickory to IFI.
Agreement
Now, therefore, in consideration of the mutual promises contained herein
and other good and valuable consideration, the parties agree as follows:
1. Pledge. Hickory hereby pledges, assigns and transfers to and
grants to IFI a security interest in 1,095,850 shares of WREIT, as
represented by the certificates described on Exhibit A attached hereto and
made a part hereof. IFI shall hold the pledged shares as security for the
prompt and complete payment when due of the 1987 Notes, the New Note and any
other obligations of Hickory to IFI (collectively, the "Obligations")
and shall not encumber or dispose of such shares except in accordance with
the provisions of Section 8 or 9 of this Agreement.
2 . Dividends. During the term of this Agreement and so long as Hickory is
not in default under any of the Obligations, all dividends and other amounts
paid upon the pledged shares shall be the property of Hickory and if received
by IFI shall be promptly remitted to Hickory.
3. Voting Rights. During the term of this Agreement and so long as Hickory
is not in default under any of the Obligations, Hickory shall have the right
to vote the pledged shares and to give consents, waivers and ratifications in
respect of the pledged shares, and if necessary, IFI shall execute due and
timely proxies in favor of Hickory to this end; provided, however, that no
vote shall be cast or consent, waiver or ratification given, or action taken,
which would impair the pledged shares or be inconsistent with or violate any
provision in this Agreement or the Obligations.
4. Representations. Hickory warrants and represents that: it is the
legal and beneficial owner of and has good and marketable title to the
pledged shares, all of which have been duly and validly issued, are fully
paid and non-assessable; that there are no restrictions upon the transfer of
any of the pledged shares; that it has the right to transfer such shares free
of any encumbrances without the consent or authorization
of any other party; and, that such transfer shall not violate or conflict
with any applicable rule, law or regulation.
5. Adjustments. In the event that, during the term of this Agreement,
any share dividend, reclassification, readjustment, or other change is
declared or made in the capital structure of WREIT, all new, substituted and
additional shares, or other securities, issued by reason of any such change
shall be held by IFI under the terms of this Agreement in the same manner as
the shares originally pledged hereunder.
6. Warrants and Rights. In the event that during the term of this
Agreement, subscription warrants or any other rights or options shall be
issued in connection with the pledged shares, such warrants, rights and
options shall be immediately assigned by Hickory to IFI and if exercised by
Hickory all new shares or other securities so acquired by Hickory shall be
immediately assigned to IFI to be held under the terms of this Agreement in
the same manner as the shares originally pledged hereunder.
7. Covenants. Hickory covenants and agrees that, without the consent
of IFI, during the term of this Agreement it will not dispose of, grant any
option or create any encumbrance with respect to the pledged shares except
for the security interest created herein.
8. Payment of Note. Upon prepayment in full or payment at maturity
of all of the Obligations, IFI shall transfer to Hickory all the pledged
shares and any rights
received by IFI.
9. Default. In the event that Hickory defaults in the performance of
any of the terms of this Agreement, or in the event of default under any of
the Obligations, IFI may apply any payments it receives in connection with
the pledged shares against all or any part of the payments due. Any balance
of such payments remaining after payment in full shall be paid over to
Hickory. In addition, IFI shall have the rights and remedies of a secured
party provided in the Uniform Commercial Code in force in the State of
Indiana at the date of this Agreement. In this connection, IFI may, upon ten
days, notice to Hickory of the time and place of a public sale or of the time
after which a private sale may take place, sent by registered mail, and
without liability for any dimunution in price which may have occurred, sell
or dispose of all the pledged shares in such manner and for such price as IFI
may determine. If IFI is compelled to resort to one or more private sales of
the pledged shares to a restricted group of purchasers who are obliged to
agree, among other things to acquire such securities for their own account
for investment and not with a view to the distribution of resale thereof,
Hickory agrees that any such private sale may result in prices and terms less
favorable than those resulting from a public sale and Hickory agrees any such
private sale shall be deemed to have been made in a commercially reasonable
manner. Hickory agrees to do or cause to be done all such other acts and
things as may be necessary to make such sales valid and binding and in
compliance with all applicable law, regulations or orders. At any bona fide
public sale IFI shall be free to purchase all or any part of the pledged
shares. Out of the proceeds of any sale, IFI may retain an amount equal to
the principal and interest then due on the New Note and the 1987 Notes, plus
the cost of collection, including attorneys' fees, and the expenses of the
sale, and shall pay any balance of such proceeds to Hickory. In the event
that the proceeds of any sale are insufficient to cover the principal and
interest of the New Note and the 1987 Notes plus expenses of the sale,
Hickory shall remain liable to IFI for any deficiency.
10. Waivers, Amendments. None of the terms or provisions of this
Agreement may be waived, modified or amended except by written agreement of
the parties.
11. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the parties hereto.
12. Governing Law. This Agreement shall be governed by, and construed
in accordance with the laws of the State of Indiana.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
HICKORY FURNITURE COMPANY
By:__________________
Printed:__________________
Title:__________________
ATTEST:
INDIANA FINANCIAL INVESTORS, INC.
By: Richard H. Kendall, President
ATTEST:
Eugene L. Henderson, Secretary
5097E
<PAGE>
Exhibit "A"
to
Stock Pledge Agreement
between
Hickory Furniture Company
and
Indiana Financial Investors, Inc.
Certificate No. No. of Shares
CU18130 322,800
CU18131 7,000
CU18140 30,000
CU18163 34,000
CU18166 31,500
CU18190 5,000
CU18194 12,500
CU18202 10,000
CU18225 5,000
CU18240 2,000
CU18282 5,000
CU18284 13,000
CU18474 25,000
CU18487 10,000
CU18872 40,000
CU18866 25,000
CU18875 25,772
CU18880 90,000
CU18991 7,000
CU19180 25,000
CU19095 7,800
CU19192 5,000
CU19183 7,500
CU19184 12,000
CU19305 6,000
CU19288 28,000
CU19320 1,000
CU19326 9,000
CU19333 2,500
CU19342 1,000
CU19358 4,300
CU19388 3,500
CU19407 4,000
CU19414 12,000
Certificate No. No. of Shares
CU19445 5,000
CU19451 8,000
CU19456 2,000
CU19473 6,500
CU19485 7,000
CU19503 7,000
CU19523 7,000
CU19533 10,000
CU19700 20,000
CU19714 3,000
CU19721 10,000
CU19783 20,000
CU19777 40,500
CU19832 10,678
CU19863 6,000
CU19873 14,000
CU19957 7,500
CU19964 32,000
CU20019 8,000
CU20020 8,500
CU20056 5,000
CU20054 16,000
CU20067 8,000
CU20072 5,000
----------
Total 1,095,850
=========
<PAGE>
WARRANT
To Purchase Common Stock of
HICKORY FURNITURE COMPANY
Warrant No. 1
No. of Shares of Common Stock: 6,000
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS 1
SECTION 2. EXERCISE OF WARRANT 4
2.1. Manner of Exercise 4
2.2. Payment of Taxes 5
2.3. Fractional Shares 6
2.4. Continued Validity 6
SECTION 3. TRANSFER, DIVISION AND COMBINATION 6
3.1. Transfer 6
3.2. Division and Combination 7
3.3. Expenses 7
3.4. Maintenance of Books 7
SECTION 4. ADJUSTMENTS 7
4.1. Stock Dividents, Subdivision and
Combinations 7
4.2. Certain Other Distributions 8
4.3. Issuance of Additional Shares of
Common Stock 8
4.4. Issuance of Warrants of Other
Rights 9
4.5. Issuance of Convertible Securities 10
4.6. Superseding Adjustment 11
4.7. Other Provisions Applicable to
Adjustments under this Section 12
4.8. Reorganization, Reclassification,
Merger, Consolidation or
Disposition of Assets 14
SECTION 5. NOTICE TO WARRANT HOLDERS 15
5.1. Notice of Adjustments 15
5.2. Notice of Certain Corporate Action 16
SECTION 6. NO IMPAIRMENT 16
SECTION 7. RESERVATION AND AUTHORIZATION OF COMMON
STOCK; REGISTRATION WITH OR APPROVAL
OF ANY GOVERNMENTAL AUTHORITY 17
SECTION 8. TAKING OF RECORD; STOCK AND WARRANT
TRANSFER BOOKS 17
SECTION 9. RESTRICTION ON TRANSFERABILITY 17
9.1. Restrictive Legend 18
9.2. Notice of Proposed Transfers
Requests for Registration 18
9.3. Termination of Restrictions 19
9.4. Listing on Securities Exchange 20
SECTION 10. SUPPLYING INFORMATION 20
SECTION 11. LOSS OR MUTILATION 20
SECTION 12. OFFICE OF THE COMPANY 20
SECTION 13. FINANCIAL AND BUSINESS INFORMATION 20
13.1. Quarterly Information 20
13.2. Annual Information 21
13.3. Filings 21
SECTION 14. REPURCHASE BY THE COMPANY OF WARRANT 21
14.1. Obligation to Repurchase Warrant
or Warrant Stock 21
14.2. Payment of Repurchase Price 22
SECTION 15. LIMITATION OF LIABILITY 23
SECTION 16. MISCELLANEOUS 23
16.1. Nonwaiver and Expenses 23
16.2. Notice Generally 23
16.3. Successors and Assigns 24
16.4. Amendment 24
16.5. Severability 24
16.6. Headings 25
16.7. Governing Law 25
SIGNATURE 25
EXHIBIT
Exhibit A - Subscription Form
<PAGE>
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH
ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS WARRANT.
Initial No. of Shares of Common Stock: 6,000 Warrant No. 1
To Purchase Common Stock of
HICKORY FURNITURE COMPANY
THIS IS TO CERTIFY THAT INDIANA FINANCIAL INVESTORS, INC., or registered
assigns, is entitled, at any time prior to the Expiration Date (as hereinafter
defined), to purchase from HICKORY FURNITURE COMPANY, a Delaware corporation
(the "Company"), 6,000 shares of Common Stock (as hereinafter defined and
subject to adjustment as provided herein), in whole or in part, at the Current
Warrant Price, all on the terms and conditions and pursuant to the provisions
hereinafter set forth.
I. DEFINITIONS
As used in this Warrant, the following terms have the
respective meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of Common Stock
issued by the Company after the date of this Warrant, other than Warrant
Stock.
"Book Value" shall mean, in respect of any share of Common Stock on any date
herein specified, the consolidated book value applicable to Common Stock of
the Company as of the last day of any month immediately preceding such date,
divided by the number of Fully Diluted Outstanding shares of Common Stock as
determined in accordance with GAAP by a firm of independent certified public
accountants of recognized national standing selected by the Company, and
including in such value the purchase price to be received by the Company upon
the issuance of any such shares which are not yet issued.
"Business Day" shall mean any day that is not a Saturday or Sunday or a day
on which banks are required or permitted to be closed in the State of Indiana.
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency then administering the Securities Act and other federal
securities laws.
"Common Stock" shall mean (except where the context otherwise indicated) the
Common Stock, no par value, of the Company as constituted on the date of this
Warrant, and any capital stock into which such Common Stock may thereafter be
changed, and shall also include (i) capital stock of the Company of any other
class (regardless of how denominated) issued to the holders of shares of
Common Stock upon any reclassification thereof which is also not preferred as
to dividends or assets over any other class of stock of the Company and which
is not subject to redemption and (ii) shares of common stock of any successor
or acquiring corporation (as defined in Section 4.8) received by or
distributed to the holders of Common Stock of the company in the circumstances
contemplated by Section 4.8.
"Convertible Securities" shall mean evidences of indebtedness, shares of
stock, options or other securities which are convertible into or exchangeable,
with or without payment of additional consideration in cash or property, for
Additional Shares of Common Stock, either immediately or upon the occurrence
of a specified date or a specified event.
"Current Market Price" shall mean, in respect of any share of Common Stock
on any date herein specified, the higher of (a) the Book Value per share of
Common Stock at such date, and (b) the daily market price per share of Common
Stock as at such date. The daily market price shall be (i) the last sale
price on such date on the principal stock exchange on which such Common Stock
is then listed or admitted to trading, (ii) if no sale takes place on such day
on any such exchange, the average of the last reported closing bid and asked
prices on such day as officially quoted on any such exchange, (ii) if the
Common Stock is not then listed or admitted to trading on any stock exchange,
the average of the last reported closing bid and asked prices on such day in
the over-the-counter market, as furnished by the National Association of
Securities Dealers Automatic Quotation System or the National Quotation
Bureau, Inc. (iv) if neither such corporation at the time is engaged in the
business of reporting such prices as furnished by any similar firm then
engaged in such business, or (v) if there is no such firm, as furnished by any
member of the NASD selected mutually by the Holder and the Company or, if they
cannot agree upon such selection, as selected by two such members of the NASD,
one of which shall be selected by the Holder and one of which shall be
selected by the Company.
"Current Warrant Price" shall mean, in respect of a share of Common Stock at
any date herein specified, the price at which a share of Common Stock may be
purchased pursuant to this warrant on such date. As of the date of this
warrant, the Current Warrant Price shall be $1.00, subject to adjustment in
accordance with the provisions of Section 4.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect from time to
time.
"Exercise Period" shall mean the period during which
this Warrant is exercisable pursuant to Section 2.1.
"Expiration Date' shall mean October 18, 1999.
"Fully Diluted Outstanding" shall mean, when used with reference to
Common Stock, at any date as of which the number of shares thereof is to
be determined, all shares of Common Stock Outstanding at such date and all
shares of Common Stock issuable in respect of this Warrant and other
options or warrants to purchase, or securities convertible into, shares of
Common Stock outstanding on such date which would be deemed outstanding in
accordance with GAAP for purposes of determining book value or net income
per share.
"GAAP" shall mean generally accepted accounting
principles in the United States of America as from time to time
in effect.
"Holder" shall mean the Person or Persons in whose name the Warrant set
forth herein is registered on the books of the Company maintained for such
purposes.
"IFII" shall mean Indiana Financial Investors, Inc. ,
an Indiana corporation.
"NASD" shall mean the National Association of
Securities Dealers, Inc., or any successor corporation thereto.
"Other Property" shall have the meaning set forth in
Section 4.8.
"Outstanding" shall mean, when used with reference to Common Stock, at
any date as of which the number of shares thereof is to be determined, all
issued shares of Common Stock, except shares then owned or held by or for
the account of the Company or any subsidiary thereof, and shall include
all shares issuable in respect of outstanding scrip or any certificates
representing fractional interests in shares of Common Stock.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, incorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether
federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department
thereof).
"Repurchase Price" shall have the meaning set forth in
Section 14.1.
"Restricted Common Stock" shall mean shares of Common Stock which are,
or which upon their issuance on the exercise of this Warrant would be,
evidenced by a certificate bearing the restrictive legend set forth in
Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Transfer" shall mean any disposition of any Warrant or Warrant Stock or
of any interest in either thereof, which would constitute a sale thereof
within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in
Section 9.2.
"Warrants" shall mean this Warrant and all warrants issued upon
transfer, division or combination thereof, or in substitution therefor.
All Warrants shall at all times be identical as to terms and conditions
and date, except as to the number of shares of Common Stock for which they
may be exercised.
"Warrant Price" shall mean an amount equal to (i) the number of shares
of Common Stock being purchased upon exercise of this Warrant pursuant to
Section 2.1, multiplied by (ii) the Current Warrant Price as of the date
of such exercise.
"Warrant Stock" shall mean the shares of Common Stock purchasable by the
holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1. MANNER OF EXERCISE. From and after the date of this Warrant
and until 5:00 p.m., Eastern Standard Time, on the Expiration Date, Holder
may exercise this Warrant from time to time, on any Business Day, for all
or any part of the number of shares of Common Stock purchasable
hereunder.In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at 856 Seventh Avenue
S.E., Hickory, North Carolina 28603 or at the office or agency designated
by the Company pursuant to Section 12, (i) a written notice of Holder's
election to exercise this Warrant, which notice shall specify the number
of shares of Common Stock to be purchased, (ii) payment of the Warrant
Price and (ii) this Warrant. Such notice shall be substantially in the
form of the subscription form appearing at the end of this Warrant as
Exhibit A, duly executed by Holder or its agent or attorney. Upon receipt
thereof, the Company shall, as promptly as practicable, and in any event
within five (5) Business Days thereafter, execute or cause to be executed
and deliver or cause to be delivered to Holder a certificate or
certificates representing the aggregate number of full shares of Common
Stock issuable upon such exercise, together with cash in lieu of any
fraction of a share, as hereinafter provided. The stock certificate or
certificates so delivered shall be, to the extent possible, in such
denomination or denominations as such Holder shall request in the notice
and shall be registered in the name of Holder or, subject to Section 9,
such other name as shall be designated in the notice. This Warrant shall
be deemed to have been exercised and such certificate or certificates
shall be deemed to have been issued, and Holder or any other Person so
designated to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the notice,
together with the cash or check or checks and this Warrant, is received by
the Company as described above and all taxes required to be paid by
Holder, if any, pursuant to Section 2.2 prior to the issuance of such
shares have been paid. If this Warrant shall have been exercised in part,
the Company shall, at the time of delivery of the certificate or
certificates representing Warrant Stock deliver to Holder a new warrant
evidencing the rights of Holder to purchase the unpurchased shares of
Common Stock called for by this Warrant, which new Warrant shall in all
other respects be identical with this Warrant, or, at the request of
Holder, appropriate notation may be made on this Warrant and the same
returned to Holder. Notwithstanding any provision herein to the contrary,
the Company shall not be required to register shares in the name of any
Person who acquired this Warrant (or part hereof) or any Warrant Stock
otherwise than in accordance with this Warrant.
Payment of the Warrant Price shall be made at the
option of the Holder by certified or cashiers check.
2.2. Payment of Taxes. All shares of Common Stock
issuable upon the exercise of this Warrant pursuant to the terms hereof
shall be validly issued, fully paid and nonassessable. The Company shall
pay all expenses in connection with, and all taxes and other governmental
charges that may be imposed with respect to, the issue or delivery
thereof, unless such tax or charge is imposed by law upon Holder, in which
case such taxes or charges shall be paid by Holder. The Company shall not
be required, however, to pay any tax or other charge imposed in connection
with any transfer involved in the issue of any certificate for shares of
Common Stock issuable upon exercise of this Warrant in any name other than
that of Holder, and in such case the Company shall not be required to
issue or deliver any stock certificate until such tax or other charge has
been paid or it has been established to the satisfaction of the Company
that no such tax or other charge is due.
2.3. FRACTIONAL SHARES. The Company shall not be required to issue
a fractional share of Common Stock upon exercise of any Warrant. As to
any fraction of a share which the Holder of one or more Warrants, the
rights under which are exercised in the same transaction, would otherwise
be entitled to purchase upon such exercise, the Company shall pay a cash
adjustment in respect of such final fraction in an amount equal to the
same fraction of the Current Market Price per share of Common Stock on the
date of exercise.
2.4. CONTINUED VALIDITY. A holder of shares of Common Stock issued
upon the exercise of this Warrant, in whole or in part (other than a
holder who acquires such shares after the same have been publicly sold
pursuant to a Registration Statement under the Securities Act or sold
pursuant to Rule 144 thereunder), shall continue to be entitled with
respect to such shares to all rights to which it would have been entitled
as Holder under Sections 9, 10 and 14 of this Warrant. The Company will,
at the time of each exercise of this Warrant, in whole or in part, upon
the request of the holder of the shares of Common Stock issued upon such
exercise hereof, acknowledge in writing, in form reasonably satisfactory
to such holder, its continuing obligation to afford to such holder all
such rights; PROVIDED, HOWEVER, that if such holder shall fail to make any
such request, such failure shall not affect the continuing obligation of
the Company to afford to such holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1. TRANSFER. Subject to compliance with Section
9,transfer of this Warrant and all rights hereunder, in whole
or in part, shall be registered on the books of the Company to
be maintained for such purpose, upon surrender of this Warrant
at the principal office of the Company referred to in Section
2.1 or the office or agency designated by the Company pursuant
to Section 12, together with a written assignment of this
Warrant in a form acceptable to Company duly executed by Holder or its
agent or attorney and if such transfer is not to be made pursuant to
Section 14, funds sufficient to pay any transfer taxes payable upon the
making of such transfer. Upon such surrender and, if required, such
payment, the Company shall, subject to Section 9, execute and deliver a
new Warrant or Warrants in the name of the assignee or assignees and in
the denomination specified in such instrument of assignment and shall
issue to the assignor a new Warrant evidencing the portion of this Warrant
not so assigned, and this Warrant shall promptly be cancelled. A Warrant,
if properly assigned in compliance with Section 9, may be exercised by a
new Holder for the purchase of shares of Common Stock without having a new
Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9, this Warrant
may be divided or combined with other Warrants upon presentation hereof at
the aforesaid office or agency of the Company, together with a written
notice specifying the names and denominations in which new Warrants are to
be issued, signed by Holder or its agent or attorney. Subject to
compliance with Section 3.1 and with Section 9, as to any transfer which
may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or
Warrants to be divided or combined in accordance with such notice.
3.3. EXPENSES. The Company shall prepare, issue and deliver at its
own expense (other than transfer taxes) the new Warrant or Warrants under
this Section 3.
3.4. MAINTENANCE OF BOOKS. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration and the
registration of transfer of the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this warrant is
exercisable, or the price at which such shares may be purchased upon
exercise of this Warrant, shall be subject to adjustment from time to time
as set forth in this Section 4. The Company shall give each Holder notice
of any event described below which requires an adjustment pursuant to this
Section 4 at the time of such event.
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS.
If at any time the Company shall:
(a) take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend
payable in, or other distribution of, Additional Shares of
Common Stock,
(b) subdivide its outstanding shares of Common Stock
into a larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock, then (i) the number of
shares of Common Stock for which this Warrant is exercisable immediately
after the occurrence of any such event shall be adjusted to equal the
number of shares of Common Stock which a record holder of the same number
of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled
to receive after the happening of such event, and (ii) the Current Warrant
Price shall be adjusted to equal (A) the Current Warrant Price multiplied
by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number
of shares for which this Warrant is exercisable immediately after such
adjustment.
4.2. CERTAIN OTHER DISTRIBUTIONS. If at any time the Company shall
take a record of the holders of its Common Stock for the purpose of
entitling them to receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of
its stock or any other securities or property of any nature
whatsoever (other than cash, Convertible Securities or
Additional Shares of Common Stock), or
(C) any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash,
Convertible Securities or Additional Shares of Common Stock),
then Holder shall be entitled to receive such dividends or distribution as
if Holder had exercised the Warrant.
A reclassification of the Common Stock (other than a change in par
value, or from par value to no par value or from no par value to par
value) into shares of Common Stock and shares of any other class of stock
shall be deemed a distribution by the Company to the holders of its
Cominon Stock of such shares of such other class of stock within the
meaning of this Section 4.2 and, if the outstanding shares of Common Stock
shall be changed into a larger or smaller number of shares of Common Stock
as a part of such reclassification, such change shall be deemed a
subdivision or combination, as the case may be, of the outstanding shares
of Commorr Stock within the meaning of Section 4.1.
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK.
(a) If at any time the Company shall (except as hereinafter provided)
issue or sell any Additional Shares of Common Stock in exchange for
consideration in an amount per Additional Share of Common Stock less than
the Current Warrant Price in effect at the time the Additional Shares of
Common Stock are issued, or without consideration, then (i) the Current
Warrant Price immediately thereafter shall be equal to such lower price
per share determined in accordance with the provisions of Section 4.7(a);
and (ii) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product obtained by multiplying
the Current Warrant Price in effect immediately prior to such issue or
sale by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such issue or sale and dividing the
product thereof by the Current Warrant Price resulting from the adjustment
made pursuant to clause (i) above.
(b) If at any time the Company shall (except as hereinafter provided)
issue or sell any Additional Shares of Common Stock for consideration in
the amount per Additional Share of Common Stock greater than the Current
Warrant Price, but less than the then current Book Value, then the number
of shares of Common Stock for which this Warrant is exercisable shall be
adjusted to equal the product obtained by multiplying the number of shares
of Common Stock for which this Warrant is exercisable immediately prior to
such issue or sale by a fraction (A) the numerator of which shall be the
number of shares of Common Stock Outstanding immediately after such issue
or sale, and (B) the denominator of which shall be the number of shares of
Common Stock Outstanding immediately prior to such issue or sale plus the
number of shares which the aggregate offering price of the total number of
such Additional Shares of Common Stock would purchase at the then current
Book Value.
(c) The provisions of paragraphs (a) and (b) of this Section 4.3 shall
not apply to any issuance of Additional Shares of Common Stock for which
an adjustment is provided under Section 4.1 or which is subject to Section
4.2. No adjustment of the number of shares of Common Stock for which this
Warrant shall be exercisable shall be made under paragraph (a) or (b) of
this Section 4.3. upon the issuance of any Additional Shares of Common
Stock which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights or pursuant to the exercise of any
conversion or exchange rights in any Convertible Securities, if any such
adjustment shall previously have been made upon the issuance of such
warrants or other rights or upon the issuance of such Convertible
Securities (or upon the issuance of any warrant or other rights therefor)
pursuant to Section 4.4 or Section 4.5.
4.4. ISSUANCE OF WARRANTS OR OTHER RIGHTS. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Company is the
surviving corporation) issue or sell, any warrants or other rights to
subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such warrants or other
rights or upon conversion or exchange of such Convertible Securities shall
be less than the current Book Value immediately prior to the time of such
issue or sale, then the number of shares for which this warrant is
exercisable and, if required, the Current Warrant Price shall be adjusted
as provided in Section 4.3 on the basis that the maximum number of
Additional Shares of Common Stock issuable pursuant to all such warrants
or other rights or necessary to effect the conversion or exchange of all
such Convertible Securities shall be deemed to have been issued and
outstanding and the Company shall have received all of the consideration
payable therefor, if any, as of the date of the actual issuance of such
warrants or other rights. No further adjustments of the Current Warrant
Price shall be made upon the actual issue of such Common Stock upon such
conversion or exchange of such Convertible Securities.
4.5. ISSUANCE OF CONVERTIBLE SECURITIES.. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Company is the
surviving corporation) issue or sell, any Convertible Securities, whether
or not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Corrdnon Stock is issuable
upon such conversion or exchange shall be less than the Current Warrant
Price or current Book Value immediately prior to the time of such issue or
sale, then the number of Shares for which this Warrant is exercisable and,
if required, the Current Warrant Price shall be adjusted as provided in
Section 4.3 on the basis that the maximum number of Additional Shares of
Common Stock necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued and outstanding
and the Company shall have received all of the consideration payable
therefor, if any, as of the date of actual issuance of such Convertible
Securities. No adjustment of the number of Shares for which this Warrant
is exercisable and the Current Warrant Price shall be made under this
Section 4.5 upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor, if any such adjustment shall previously have
been made upon the issuance of such warrants or other rights pursuant to
Section 4.4. No further adjustments of the number of Shares for which this
Warrant is exercisable and the Current Warrant Price shall be made upon
the actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities and, if any issue or sale of such Convertible
Securities is made upon exercise of any warrant or other right to
subscribe for or to purchase or any warrant or other right to purchase any
such Convertible Securities for which adjustments of the number of Shares
for which this Warrant is exercisable and the Current Warrant Price have
been or are to be made pursuant to other provisions of this Section 4, no
further adjustments of the number of Shares for which this warrant is
exercisable and the Current Warrant Price shall be made by reason of such
issue or sale.
4.6. SUPERSEDING ADJUSTMENT. If, at any time after any adjustment
of the number of shares of Common Stock for which this Warrant is
exercisable and/or the Current Warrant Price shall have been made pursuant
to Section 4.4 or Section 4.5 as the result of any issuance of warrants,
rights or Convertible Securities,
(a) such warrants or rights, or the right of conversion or exchange in
such other Convertible Securities, shall expire, and all or a portion of
such warrants or rights, or the right of conversion or exchange with
respect to all or a portion of such other Convertible Securities, as the
case may be, shall not have been exercised, or
(b) the consideration per share for which shares of Common Stock are
issuable pursuant to such warrants or rights, or the terms of such other
Convertible Securities, shall be increased solely by virtue of provisions
therein contained for an automatic increase in such consideration per
share upon the occurrence of a specified date or event,
then such previous adjustment shall be rescinded and annulled and the
Additional Shares of Common Stock which were deemed to have been issued by
virtue of the computation made in connection with the adjustment so
rescinded and annulled shall no longer be deemed to have been issued by
virtue of such computation. Thereupon, a recomputation shall be made of
the effect of such rights or options or other Convertible Securities on
the basis of
(c) treating the number of Additional Shares of Common Stock or other
property, if any, theretofore actually issued or issuable pursuant to the
previous exercise of any such warrants or rights or any such right of
conversion or exchange, as having been issued on the date or dates of any
such exercise and for the consideration actually received and receivable
therefor, and
(d) treating any such warrants or rights or any such other Convertible
Securities which then remain outstanding as having been granted or issued
immediately after the time of such increase of the consideration per share
for which shares of Common Stock or other property are issuable under such
warrants or rights or other Convertible Securities; whereupon a new
adjustment of the number of shares of Common Stock for which this Warrant
is exercisable and the Current Warrant Price shall be made, which new
adjustment shall supersede the previous adjustment so rescinded and
annulled.
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENT UNDER THIS SECTION. The
following provisions shall be applicable to
the making of adjustment of the number of shares of Common
Stock for which this Warrant is exercisable and the Current
Warrant Price provided for in this Section 4:
(a) COMPUTATION OF CONSIDERATION. To the extent that any Additional
Shares of Common Stock or any Convertible Securities or any warrants or
other rights to subscribe for or purchase any Additional Shares of Common
Stock or any Convertible Securities shall be issued in cash consideration,
the consideration received by the Company therefor shall be the amount of
the cash received by the Company therefor, or, if such Additional Shares
of Common Stock or Convertible Securities are offered by the Company for
subscription, the subscription price, or, if such Additional Shares of
Common Stock or Convertible Securities are sold to underwriters or dealers
for public offering without a subscription offering, the initial public
offering price (in any such case subtracting any amounts paid or
receivable for accrued interest or accrued dividends and without taking
into account any compensation, discounts or expenses paid or incurred by
the Company for and in the underwriting of, or otherwise in connection
with, the issuance thereof). To the extent that such issuance shall be
for a consideration other than cash, then, except as herein otherwise
expressly provided, the amount of such consideration at the time of such
issuance shall be deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the Company. In
case any Additional Shares of Common Stock or any Convertible Securities
or any warrants or other rights to subscribe for or purchase such
Additional Shares of Common Stock or Convertible Securities shall be
issued in connection with any merger in which the Company issues any
securities, the amount of consideration therefor shall be deemed to be the
fair value, as determined in good faith by the Board of Directors of the
Company, of such portion of the assets and business of the nonsurviving
corporation as such Board in good faith shall determine to be
attributable to such Additional Shares of Common Stock, Convertible
Securities, warrants or other rights, as the case may be. The
consideration for any Additional Shares of Common Stock issuable pursuant
to any warrants or other rights to subscribe for or purchase the same
shall be the consideration received by the Company for issuing such
warrants or other rights plus the additional consideration payable to the
Company upon exercise of such warrants or other rights. The consideration
for any Additional Shares of Common Stock issuable pursuant to the terms
of any Convertible Securities shall be the consideration received by the
Company for issuing warrants or other rights to subscribe for or purchase
such Convertible Securities, plus the consideration paid or payable to the
Company in respect of the subscription for or purchase of such Convertible
Securities, plus the additional consideration, if any, payable to the
Company upon the exercise of the right of conversion or exchange in such
Convertible Securities. In case of the issuance at any time of any
Additional Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividends upon any class of stock other than Common
Stock, the Company shall be deemed to have received for such Additional
Shares of Common Stock or Convertible Securities a consideration equal to
the amount of such dividend so paid or satisfied. Whenever the Board of
Directors of the Company shall be required to make a determination in good
faith of the fair value of any consideration, such determination shall, if
requested by the Holder, be supported by an opinion of an investment
banking firm of recognized national standing selected by the Company and
acceptable to such Holder.
(b) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by this Section
4 shall be made whenever and as often as any specified event requiring an
adjustment shall occur, except that any adjustment of the number of shares of
Common Stock for which this Warrant is exercisable that would otherwise be
required may be postponed (except in the case of a subdivision or combination
of shares of the Common Stock, as provided for in Section 4.1) up to, but not
beyond the date of exercise if such adjustment either by itself or with other
adjustments not previously made adds or subtracts less than 1% of the number
of shares of Common Stock for which this Warrant is exercisable immediately
prior to the making of such adjustment. Any adjustment representing a change
of less than such minimum amount (except as aforesaid) which is postponed
shall be carried forward and made as soon as such adjustment, together with
other adjustment required by this Section 4 and not previously made, would
result in a minimum adjustment or on the date of exercise. For the purpose of
any adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.
(c) FRACTIONAL INTERESTS. in computing adjustments under this Section 4,
fractional interests in Common Stock shall be taken into account to the
nearest 1/10th of a share.
(d) WHEN ADJUSTMENT NOT REGUIRED. If the Company shall take a record of
the holders of its Common Stock for the purpose of entitling them to receive a
dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally
abandon its plan to pay or deliver such dividend, distribution, subscription
or purchase rights then thereafter no adjustment shall be required by reason
of the taking of such record and any such adjustment previously made in
respect thereof shall be rescinded and annulled.
(e) ESCROW OF WARRANT STOCK. If after any property becomes distributable
pursuant to this Section 4 by reason of the taking of any record of the
holders of Common Stock, but prior to the occurrence of the event for which
such record is taken, and Holder exercises this Warrant, any Additional Shares
of Common Stock issuable upon exercise by reason of such adjustment shall be
deemed the last shares of Common Stock for which this Warrant is exercised
(notwithstanding any other provision to the contrary herein) and such shares
or other property shall be held in escrow for Holder by the Company to be
issued to Holder upon and to the extent that the event actually takes place,
upon payment of the then Current Warrant Price. Notwithstanding any other
provision to the contrary herein, if the event for which such record was taken
fails to occur or is rescinded, then such escrowed shares shall be cancelled
by the Company and escrowed property returned.
(f) CHALLENGE TO GOOD FAITH DETERMINATION. Whenever the Board of Directors
of the Company shall be required to make a determination in good faith of the
fair value of any item under this Section 4, such determination may be
challenged in good faith by Holder, and any dispute shall be resolved by an
investment banking firm of recognized national standing selected by the
Company and acceptable to such Holder.
4.8. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the
Company), or sell, transfer or otherwise dispose of all or substantially all
its property, assets or business to another corporation and, pursuant to the
terms of such reorganization, reclassification, merger, consolidation or
disposition of assets, shares of common stock of the successor or acquiring
corporation ("Other Property"), are to be received by or distributed to the
holders of Common Stock of the Company, then each Holder shall have the right
thereafter to receive, upon exercise of such Holder's Warrant, the number of
shares of common stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and Other Property receivable
upon or as a result of such reorganization, reclassification, merger,
consolidation or disposition of assets by a holder of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
event. In case of any such reorganization, reclassification, merger,
consolidation or disposition of assets, the successor or acquiring corporation
(if other than the Company) shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Company and all the obligations
and liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board of Directors of the
Company) in order to provide for adjustments of shares of the Common Stock for
which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 4. For purposes of
this Section 4.8, "common stock of the successor or acquiring corporation"
shall include stock of such corporation of any class which is not preferred as
to dividends or assets over any other class of stock of such corporation and
which is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into
or exchangeable for any such stock, either irmnediately or upon the arrival of
a specified date or the happening of a specified event and any warrants or
other rights to subscribe for or purchase any such stock. The foregoing
provisions of this Section 4.8 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
5. NOTICES TO WARRANT HOLDERS
5.1. NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which a
share of such Common Stock may be purchased upon exercise of the Warrants,
shall be adjusted pursuant to Section 4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company
setting forth, in reasonable detail, the event requiring the adjustment and
the method by which such adjustment was calculated (including a description of
the basis on which the Board of Directors of the Company determined the fair
value of any evidences of indebtedness, shares of stock, other securities or
property or warrants or other subscription or purchase rights referred to in
Section 4.2.), specifying the number of shares of Common Stock for which this
Warrant is exercisable and (if such adjustment was made pursuant to Section
4.8) describing the number and kind of any other shares of stock or Other
Property for which this Warrant is exercisable, and any change in the Current
Warrant Price, after giving effect to such adjustment or change. The Company
shall promptly cause a signed copy of such certificate to be delivered to each
Holder in accordance with Section 16.2. The Company shall keep at its office
or agency designated pursuant to Section 12 copies of all such certificates
and cause the same to be available for inspection at said office during normal
business hours by any Holder or any prospective purchaser of a Warrant
designated by a Holder thereof.
5.2. NOTICE OF CERTAIN CORPORATE ACTION. The Holder shall be entitled
to the same rights to receive notice of corporate action as any holder of
Common Stock.
6. NO IMPAIRMENT
The Company shall not, directly or indirectly, (through a subsidiary) by any
action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such actions as
may be necessary or appropriate to protect the rights of Holder against
impairment. Without limiting the generality of the foregoing, the Company will
(a) not increase the par value of any shares of Common Stock receivable upon
the exercise of this Warrant above the amount payable therefor upon such
exercise immediately prior to such increase in par value, (b) take all such
action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant, and (c) use its best efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to
perform its obligations under this Warrant.
Upon the request of Holder, the Company will at any time during the period
this warrant is outstanding acknowledge in writing, in form satisfactory to
Holder, the continuing validly of this Warrant and the obligations of the
Company hereunder.
7. RESERVATTON AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTRORITY
From and after the date of this Warrant, the Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such number
of its authorized but unissued shares of Common Stock as would be sufficient
at such time to permit the exercise in full of all outstanding Warrants. All
shares of Common Stock which shall be so issuable, when issued upon exercise
of any Warrant and payment therefor in accordance with the terms of such
Warrant, shall be duly and validly issued and fully paid and nonassessable,
and their issuance shall not trigger preemptive rights of others.
Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of
Common Stock issuable upon exercise of the Warrants, the Company shall take
any corporate action which may be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of such Common
Stock at such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the number
of shares of Common Stock for which this Warrant is exercisable or in the
Current Warrant Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance upon
exercise of Warrants require registration or qualification with any
governmental authority under any federal or state law (otherwise than as
provided in Section 9) before such shares may be so issued, the Company will
in good faith and as expeditiously as possible and at its expense endeavor to
cause such shares to be duly registered.
8. TAIKING OF RECORD: STOCK AND WARRAHT TRANSFER BOOKS
In the case of all dividends or other distributions by the Company to the
holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each
such case take such a record and will take such record as of the close of
business on a Business Day. The Company will not at any time, except upon
dissolution, liquidation or winding up of the Company, close its stock
transfer books or Warrant transfer books so as to result in preventing or
delaying the exercise or transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrant and the Warrant Stock shall not be
transferred, hypothecated or assigned before satisfaction of
the conditions specified in this Section 9, which conditions are intended to
ensure compliance with the provisions of the Securities Act with respect to
the Transfer of any Warrant or any Warrant Stock. Holder, by acceptance of
this Warrant, agrees to be bound by the provisions of this Section 9.
9.1. RESTRICTIVE LEGEND.
(a) Except as otherwise provided in this Section 9, each certificate for
Warrant Stock initially issued upon the exercise of this Warrant, and each
certificate for Warrant Stock issued to any subsequent transferee of any such
certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
" The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, or the securities laws of any state or
other jurisdiction and are subject to the conditions specified in a certain
Warrant dated as of February 13, 1990, originally issued by HICKORY FURNITURE
COMPANY. No transfer of the shares represented by this certificate shall be
valid or effective until such conditions have been fulfilled. A copy of the
form of said Warrant is on file with the Secretary of HICKORY FURNITURE
COMPANY. The holder of this certificate, by acceptance of this certificate,
agrees to be bound by the provisions of such Warrant."
(b) Except as otherwise provided in this Section 9, each Warrant shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"This Warrant and the securities represented hereby have not been registered
under the Securities Act of 1933, as amended, or the securities laws of any
state or other jurisdiction and may not be transferred in violation of such
Act, the rules and regulations thereunder or the provisions of this Warrant."
9.2. NOTICE OF PROPOSED TRANSFERS. Prior to any Transfer or attempted
Transfer of any Warrants or any shares of Restricted Common Stock, the holder
of such Warrants or Restricted Common Stock shall give ten days, prior written
notice (a "Transfer Notice") to the Company of such holder's intention to
effect such Transfer, describing the manner and circumstances of the proposed
Transfer, and obtain from counsel to such holder who shall be reasonably
satisfactory to the Company, an opinion reasonably satisfactory to the Company
that the proposed Transfer of such Warrants or such Restricted Common Stock
may be effected without registration under the Securities Act or the
securities laws of any state or other jurisdiction. After receipt of the
Transfer Notice and opinion, the Company shall, within five days thereof,
so notify the holder of such Warrants or such Restricted Common Stock and such
holder shall thereupon be entitled to Transfer such Warrants or such
Restricted Common Stock, in accordance with the terms of the Transfer
Notice. Each certificate, if any, evidencing such shares of Restricted
Common Stock issued upon such Transfer shall bear the restrictive legend
set forth in Section 9.1(a), and each Warrant issued upon such Transfer
shall bear the restrictive legend set forth in Section 9.1(b), unless
in the opinion of such counsel such legend is not required in order to
ensure compliance with the Securities Act. The holder of the Warrants or
the Restricted Common Stock, as the case may be, giving the
Transfer Notice shall not be entitled to transfer such Warrants or such
Restricted Common Stock until receipt of notice from the Company under this
Section 9.2 unless the Company is withholding such notice in bad faith.
9.3. TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing
provisions of Section 9, the restrictions imposed by this Section upon the
transferability of the Warrants, the Warrant Stock and the Restricted Common
Stock (or Common Stock issuable upon the exercise of the Warrants) and the
legend requirements of Section 9.1 shall terminate as to any particular
warrant or share of Warrant Stock or Restricted Common Stock (or Common Stock
issuable upon the exercise of the warrants) (i) when and so long as such
security shall have been effectively registered under the Securities Act and
disposed of pursuant thereto or (ii) when the Company shall have received an
opinion of counsel reasonably satisfactory to it that such shares may be
transferred without registration thereof under the Securities Act. Whenever
the restrictions imposed by Section 9 shall terminate as to this Warrant, as
hereinabove provided, the Holder hereof shall be entitled to receive from the
Company, at the expense of the Company, a new Warrant bearing the following
legend in place of the restrictive legend set forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE
WITHIN WARRANT CONTAINED IN SECTION 9 HEREOF
TERMINATED ON_______________ 19__, AND ARE
OF NO FURTHER FORCE AND EFFECT."
All Warrants issued upon registration of transfer, division or combination of,
or in substitution for, any Warrant or Warrants entitled to bear such legend
shall have a similar legend endorsed therein. Wherever the restrictions
imposed by this Section shall terminate as to any share of Restricted Common
Stock, as hereinabove provided, the holder thereof shall be entitled to
receive from the Company, at the Company's expense, a new certificate
representing such Common Stock not bearing the restrictive legend set forth in
Section 9.1(a).
9.4. LISTING ON SECURITIES EXCHANGE. If the Company shall list any
shares of Common Stock on any securities exchange, it will, at its expense,
list thereon, maintain and, when necessary, increase such listing of, all
shares of Common Stock issued or, to the extent permissible under the
applicable securities exchange rules, issuable upon the exercise of this
Warrant so long as any shares of Common Stock shall be so listed during the
Exercise Period.
10. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of a Warrant and each holder of
Restricted Common Stock in supplying such information as may be reasonably
necessary for such holder to complete and file any information reporting forms
presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any
Warrant or Restricted Common Stock.
11. LOSS OR MUTILATIQN
Upon receipt by the Company from holder of evidence reasonably satisfactory
to it of the ownership of and the loss, theft, destruction or mutilation of
this Warrant and indemnity reasonably satisfactory to it (it being understood
that the written agreement of Holder shall be sufficient indemnity) and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to Holder;
PROVIDED, in the case of mutilation, no indemnity shall be required if this
Warrant in identifiable form is surrendered to the Company for cancellation.
12. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency (which may be the principal executive offices of
the Company) where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this Warrant.
13. FINANCIAL AND BUSINESS INFORMATION
13.1. QUARTERLY INFORMATION. The Company will deliver to each Holder,
as soon as practicable after the end of each of the first three fiscal
quarters of the Company, and in any event within 45 days thereafter, one copy
of an unaudited consolidated balance sheet of the Company and its subsidiaries
as at the close of such quarter, and the related unaudited consolidated
statements of income and cash flow position of the Company for such quarter
and, in the case of the second and third quarters, for the portion of the
fiscal year ending with such quarter, setting forth in each case in
comparative form the figures for the corresponding periods in the previous
fiscal year. Such financial statements shall be prepared by the Company in
accordance with GAAP and accompanied by the certification of the Company's
chief executive officer or chief financial officer that such financial
statements are complete and correct and present fairly the consolidated
financial position, results of operations and cash flow position of the
Company and its subsidiaries as at the end of such quarter and for such year-
to-date period, as the case may be.
13.2. ANNUAL INFORMATIGN. The Company will deliver
to each Holder as soon as practicable after the end of each
fiscal year of the Company, and in any event within 90 days
thereafter, one copy of:
(i) an audited consolidated balance sheet of the
Company and its subsidiaries as at the end of such year, and
(ii) audited consolidated statements of income, retained earnings and cash
flow of the Company and its subsidiaries for such year;
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year; all prepared in accordance
with GAAP, and which audited financial statements shall be accompanied by (i)
an opinion thereon of the independent certified public accountants regularly
retained by the Company, or any other firm of independent certified public
accountants of recognized national standing selected by the Company and (ii) a
report of such independent certified public accountants confirming any
adjustment made pursuant to Section 4 during such year.
13.3. FILINGS. The Company will file on or before the required date all
regular or periodic reports (pursuant to the Exchange Act) with the Commission
and will deliver to Holder promptly upon their becoming available one copy of
each report, notice or proxy statement sent by the Company to its stockholders
generally, and of each regular or periodic report (pursuant to the Exchange
Act) and any Registration Statement, prospectus or written communication
(other than transmittal letters) (pursuant to the Securities Act), filed by
the Company with (i) the Commission or (ii) any securities exchange on which
shares of Common Stock are listed.
14. REPURCHASE BY THE COMPANY OF WARRANT OR WARRANT STOCK
14.1. OHLIGATION TO REPURCHASE WARRANT OR WARRANT
STOCK.
(a) From time to time on or after September 30, 1992 and until the
Expiration Date, upon written demand from any Holder, the Company shall
repurchase, on the date and in the manner set forth in Section 14.2 below,
from such Holder all or the portion of this Warrant or the Warrant Stock held
by Holder designated in such notice for an amount determined by multiplying
(i) the number of shares of Warrant Stock or Common Stock subject to this
Warrant or portion thereof being repurchased by (ii) Sixty-Seven Dollars
($67.00). Nothing herein shall preclude the exercise by Holder of any portion
of this Warrant exercisable at any time prior to such repurchase.
(b) Notwithstanding the provisions of Section 14.1 (a), if, at any time
during the period between the date on which any Holder shall have exercised
its rights under Section 14.1 to cause the Company to repurchase all or a
portion of such Holder's Warrant and, on or prior to the date of such
repurchase, the Company shall consolidate or merge with, or sell all or
substantially all of its property and assets to, any Person and the
consideration received by stockholders in connection with such merger,
consolidation or sale shall consist solely of cash, THEN such Holder shall
(whether or not such Holder shall have previously surrendered such Holder's
Warrant for repurchase by the Company pursuant to this Section 14) be entitled
to receive, on the date of such repurchase, the higher of (i) the amount
payable to such Holder as determined pursuant to Section 14.1(a) and (ii) and
amount equal to the amount of cash such Holder would have received upon such
consolidation, merger or sale had such Holder's Warrant (or the portion
thereof being repurchased) been fully exercised immediately prior thereto LESS
the purchase price payable at such time for the purchase of the shares of
Common Stock then subject to such Holder's Warrant (or the portion thereof
being repurchased).
(c) If the number of shares of Common Stock which may be purchased upon
exercise of this warrant is adjusted pursuant to Section 4 of this Warrant,
the purchase price for any repurchase pursuant to Section 14.1 (the
"Repurchase Price") shall be similarly adjusted so that the aggregate amount
of the Repurchase Price for this Warrant shall be Four Hundred Two Thousand
Dollars ($402,000.00).
14.2. PAYMENT OF REPURCHASE PRICE.
The Repurchase Price shall be payable in cash within 20 days following the
date of the repurchase notice. The Company shall provide to Holder
documentation supporting its calculation of the repurchase price. On the date
of any repurchase of Warrant Stock or Warrants pursuant to Section 14.1,
Holder shall assign to the Company such Holder's Warrant Stock or Warrant or
portion thereof being repurchased, as the case may be, without any
representation or warranty, by the surrender of such Holder's Warrant Stock or
Warrant at the office of the Company referred to in Section 2.1 against
payment therefor of the Repurchase Price by, at the option of such Holder, (i)
wire transfer to an account in a bank located in the United States designated
by such Holder for such purpose or (ii) a certified or official bank check
drawn on a member of the New York Clearing House payable to the order of such
Holder. If less than all of Holder's Warrant is being repurchased, the
Company shall, pursuant to Section 3, cancel such Warrant and issue in the
name of, and deliver to, such Holder a new Warrant for the portion not being
repurchased.
15. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by Holder to
purchase shares of Cormnon Stock, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder
for the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
16. MISCELLANEOUS
16.1. NONWAIVER AND EXPENSES. No course of dealing or any delay or failure
to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or
remedies. if the Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other provision of this Warrant, the
Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys, fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.
16.2. NOTICE GENERALLY. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Warrant shall be sufficiently given or make if in
writing and either delivered in person with receipt acknowledged or sent by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to Holder or any holder of Warrant Stock, at its last known address
appearing on the books of the Company maintained for such purpose. The
current address of IFII is:
Indiana Financial Investors, Inc.
151 North Delaware Street, Suite 425
Indianapolis, Indiana 46204
Attention: President
(b) If to the Company at
Hickory Furniture Company
856 Seventh Avenue, S.E.
Hickory, North Carolina 28603
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent, approval, declaration, delivery or other communication
hereunder shall be deemed to have been duly given or served on the date on
which personally delivered, with receipt acknowledged, or three (3) Business
Days after the same shall have been deposited in the United States mail.
Failure or delay in delivering copies of any notice, demand, request,
approval, declaration, delivery or other communication to the person
designated above to receive a copy shall in no way adversely affect the
effectiveness of such notice, demand, request, approval, declaration, delivery
or other communication.
16.3. SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections 3.1
and 9, this Warrant and the rights evidenced hereby shall inure to the benefit
of and be binding upon the successors of the Company and the successors and
assigns of Holder. The provisions of this Warrant are intended to be for the
benefit of all Holders from time to time of this Warrant, and shall be
enforceable by any such Holder.
16.4. AMENDMENT. This Warrant and all other warrants may be modified or
amended or the provisions hereof waived with the written consent of the
Company and the Holder, provided that no such Warrant may be modified or
amended to reduce the number of shares of Common Stock for which such Warrant
is exercisable or to increase the price at which such shares may be purchased
upon exercise of such Warrant (before giving effect to any adjustment as
provided therein) without the prior written consent of the Holder thereof.
16.5. SEVERABILITY. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Warrant.
16.6. HEADINGS. The headings used in this Warrant
are for the convenience of reference only and shall not, for
any purpose, be deemed a part of this Warrant.
16.7. GOVERNING LAW. This Warrant shall be
governed by the laws of the State of Indiana, without regard to
the provisions thereof relating to conflict of laws.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
and its corporate seal to be impressed hereon and attested by its Secretary or
an Assistant Secretary.
Dated: February 13, 1990
HICKORY FURNITURE COMPANY
BY: /S/ RICHARD E. HENKEL
Printed: RICHARD E. HENKEL
Title: PRESIDENT AND CEO
Attest:
By: /S/ MICHAEL A. ROBINSON
Printed: MICHAEL A. ROBINSON
Title: VICE PRESIDENT OF FINANCE
EXHIBIT A
SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably exercises this
Warrant for the purchase of ____ Shares of Common Stock of Hickory Furniture
Company, and herewith makes payment therefor, all at the price and on the
terms and conditions specified in this Warrant and requests that certificates
for the shares of Common Stock hereby purchased (and any securities or other
property issuable upon such exercise) be issued in the name of and delivered
to _________________ whose address is ____________________________and, if such
shares of Common Stock shall not include all of the shares of Common Stock
issuable as provided in this Warrant, that a new Warrant of like tenor and
date for the balance of the shares of Common Stock issuable hereunder be
delivered to the undersigned.
(Name of Registered Owner)
(Signature of Registered Owner)
(Street Address)
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name
as written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
1179X/41
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED BY THE
HOLDER FOR ITS OWN ACCOUNT, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO THE
DISTRIBUTION OF SUCH SECURITIES. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION THEREFROM.
1179X/42
<PAGE>
August 13, 1990
Indiana Financial Investors, Inc.
151 N. Delaware St., Suits 425
Indianapolis, Indiana 46204
Gentlemen:
This letter will set forth the agreement and
understanding between Hickory Furniture Company ("Hickory") and
Indiana Financial Investors, Inc. ("IFI") concerning the
transaction outlined below:
1.IFI shall purchase from Hickory an interest in the amount
of $790,000 in that certain Demand Promissory Note held by
Hickory, from Wisconsin Real Estate Investment Trust ("WREIT")
dated as of January 1, 1989 in the principal amount of
$10,581,384.80 (the "WREIT Note").
2. For the interest described in paragraph 1, IFI shall pay
to Hickory the sum of $750,000.
3. Hickory represents and warrants to IFI that the WREIT Note
is secured by a pledge by WREIT to Hickory of the shares of
Acton Corp. owned by WREIT (the "Acton Collateral"). Hickory
agrees to assign to IFI its interest in the Acton Collateral
to secure payment of IFI's interest in the WREIT Note.
4. Hickory agrees to subordinate its right to receive
principal and interest under the WREIT Note and its rights in
the Acton Collateral, to the interest and rights of IFI in the
WREIT Note and the Acton Collateral.
5. IFI agrees that its interest in the WREIT Note and the
Acton Collateral may be subordinated to rights which may be
granted to New England Life in an amount not to exceed
$2,000,000.
6. If IFI has not received $790,000 of principal and all
accrued interest thereon on or before August 15, 1992, then IFI
shall be entitled to demand payment from WREIT and to exercise
all other remedies under the WREIT Note and the Acton
Collateral documents.
7. This transaction shall be subject to the preparation of
documentation satisfactory to IFI and to Hickory.
8. Notwithstanding any other provision herein to the
contrary, if the transaction contemplated by this letter has
not been approved by the IFI Board of Directors on or before
August 31, 1990, Hickory shall immediately refund to IFI
$75O,OOO, plus interest thereon at the rate of 12% per annum.
If the foregoing correctly sets forth our agreement, please so
indicate by signing a copy of this letter in the space provided
below.
HICKORY FURNITURE COMPANY
By:______________________
Accepted and agreed to this _______day of August, 1990.
INDIANA FINANCIAL INVESTORS, INC.
By:______________________
