<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 13, 1994
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
STOKELY USA, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
WISCONSIN 2033 39-0513230
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
Industry Classification Code
incorporation or organization) Number) Identification No.)
</TABLE>
1055 CORPORATE CENTER DRIVE
OCONOMOWOC, WISCONSIN 53066
(414) 569-1800
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
MR. VERNON L. WIERSMA, PRESIDENT
1055 CORPORATE CENTER DRIVE
OCONOMOWOC, WISCONSIN 53066
(414) 569-1800
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
COPIES TO:
<TABLE>
<S> <C>
FRANK J. PELISEK, ESQ. LARRY A. BARDEN, ESQ.
KATE M. FLEMING, ESQ. SIDLEY & AUSTIN
MICHAEL BEST & FRIEDRICH ONE FIRST NATIONAL PLAZA
100 EAST WISCONSIN AVENUE CHICAGO, ILLINOIS 60603
MILWAUKEE, WISCONSIN 53202
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<S> <C> <C> <C> <C>
PROPOSED
MAXIMUM
TITLE OF EACH CLASS OF AMOUNT PROPOSED OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED(1) SHARE(2)(3) PRICE(2)(3) FEE(3)
- ------------------------------------------------------------------------------------------------
Common Stock, $0.05 par
value per share....... 3,496,000 shares $11.38 $39,784,480 $13,718
</TABLE>
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- --------------------------------------------------------------------------------
(1) Includes 456,000 shares which the Underwriters have the option to purchase
from the Company solely to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Calculated in accordance with Rule 457(c) of the Securities Act of 1933, as
amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
STOKELY USA, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM S-1 NUMBER AND CAPTION LOCATION IN PROSPECTUS
---------------------------------------- ----------------------------------------------
<S> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of
the Prospectus.......................... Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus..................... Inside Front Cover of Prospectus; Outside Back
Cover of Prospectus
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges...... Prospectus Summary; Risk Factors
4. Use of Proceeds......................... Use of Proceeds
5. Determination of Offering Price......... Underwriting
6. Dilution................................ Not Applicable
7. Selling Security Holders................ Principal and Selling Shareholders
8. Plan of Distribution.................... Underwriting
9. Description of Securities to be
Registered.............................. Description of Capital Stock
10. Interests of Named Experts and
Counsel................................. Legal Matters
11. Information with Respect to
the Registrant.......................... Prospectus Summary; Risk Factors;
Capitalization; Price Range of Common Stock;
Dividend Policy; Selected Consolidated
Financial Data; Management's Discussion and
Analysis of Financial Condition and Results of
Operations; Business; Management; Certain
Transactions; Principal and Selling
Shareholders; Consolidated Financial
Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. Not Applicable
</TABLE>
<PAGE> 3
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED , 1994
PROSPECTUS
3,040,000 SHARES
Stokely USA, Inc.
COMMON STOCK
Of the 3,040,000 shares of Common Stock offered hereby, 3,000,000 shares
are being sold by Stokely USA, Inc. ("Stokely" or the "Company") and 40,000
shares are being sold by the Selling Shareholder. See "Principal and Selling
Shareholders." The Company will not receive any of the proceeds from the sale of
shares of Common Stock by the Selling Shareholder.
The Company's Common Stock is traded in the over-the-counter market and
quoted on the Nasdaq National Market under the symbol "STKY." On September 9,
1994, the closing sale price of the Common Stock as reported by Nasdaq was
$11.375 per share. See "Price Range of Common Stock."
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OF COMMON STOCK OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
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- ------------------------------------------------------------------------------------------------
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) SHAREHOLDER
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share............... $ $ $ $
Total(3)................ $ $ $ $
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- ------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company and the Selling Shareholder have agreed to indemnify the
Underwriters against certain liabilities, including certain liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $425,000.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
an additional 456,000 shares of Common Stock solely to cover
over-allotments, if any. See "Underwriting." If all such shares are
purchased, the total Price to Public, Underwriting Discount and Proceeds to
Company will be $ , $ and $ , respectively.
The shares of Common Stock are being offered by the several Underwriters
when, as and if delivered to and accepted by them and subject to their right to
reject orders in whole or in part. It is expected that delivery of the
certificates for the shares of Common Stock will be made on or about
, 1994.
WILLIAM BLAIR & COMPANY DAIN BOSWORTH INCORPORATED
THE DATE OF THIS PROSPECTUS IS , 1994
<PAGE> 4
[PICTURES]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON
STOCK ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10b-6A UNDER THE
SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."
2
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus. Except as otherwise indicated, the information contained in
this Prospectus assumes the Underwriters' over-allotment option is not
exercised. See "Underwriting."
THE COMPANY
Stokely USA, Inc. is a leading domestic producer of canned and frozen
vegetables. The Company processes, markets and sells a broad range of vegetables
under customer private labels and under the Stokely's Finest(R) label, Stokely's
Gold(TM) label and other brand labels through the retail, food service and
industrial channels of distribution. The Company believes it is the largest
processor of private label canned vegetables in the United States, selling to
most major supermarket chains, including Winn Dixie, Kroger, A&P, Aldi and
Safeway, and to major food wholesalers, including Super Valu and Fleming
Companies, Inc. The Company is also a leading United States exporter of canned
vegetables to Europe and Asia. The Company believes the breadth and mix of its
product lines, including both basic and specialty vegetables, enhance its
competitive position by allowing it to market its products to many different
distribution channels and consumer markets. In 1993, the processed vegetable
industry represented approximately $3.0 billion in annual sales of canned
vegetables and approximately $2.1 billion in annual sales of frozen vegetables.
During fiscal 1993, the Company began to implement a new business strategy
designed to enhance its leadership position in certain markets and products, and
to facilitate the Company's ability to achieve a higher and more consistent
level of earnings. The key elements of the strategy are as follows:
- FOCUS ON CORE PRODUCT LINES. The Company has narrowed its product focus
to product lines in which it has significant market share -- corn, green
beans, peas and root crops -- and has eliminated several unprofitable
non-core lines. This focus has allowed the Company to significantly reduce
its fixed manufacturing and administrative expenses and to reduce its
variable cost per unit in an industry generally characterized by a high
ratio of variable to fixed costs.
- EMPHASIZE THE PRIVATE LABEL CHANNEL OF DISTRIBUTION. Since fiscal 1993,
the Company has placed significant emphasis on expanding its presence in
the private label channel of distribution. This channel accounts for
approximately 35% of the canned vegetable industry's total retail sales
and is currently experiencing market share growth. In addition, the
Company's operating margins in private label are higher than margins
achieved in its brand products business because of lower selling and
support expenses. Currently, the Company believes its three largest
competitors in the vegetable processing industry focus primarily on brand
products.
- MAINTAIN THE COMPANY'S BRAND MARKET SHARE WHILE PURSUING CHANGES IN
PRODUCT MIX. The Stokely's Finest(R) brand is one of the major brands in
its primary brand geographic area of distribution, the southeastern United
States. The Company has maintained its brand position while rationalizing
its brand product line, including a 25% reduction in the number of SKUs
over the last two years. In addition, the Company seeks to enhance
consumer recognition of its brand names and selectively expand its brand
product line by developing new brand specialty products, such as its
specialty line of premium products sold under the Stokely's Gold(TM)
label. The Stokely's Gold(TM) label product line has experienced average
annual sales growth of 20% during each of the last three years.
- PURSUE GROWTH OPPORTUNITIES IN FOREIGN MARKETS. Exports of processed
vegetables represent a growing channel of distribution in the processed
vegetable industry. For the past five years, the volume of total canned
corn exported by U.S. processors, the major component of exported
processed vegetables, has grown at a compound annual rate of 15%. The
Company believes that its strength as a leading U.S. canned corn producer
and a major exporter create opportunities for the Company to expand its
export sales. The Company has achieved a significant market share in
exports to Germany and Scandinavia and intends to increase its emphasis on
expanding export sales to Eastern Europe, Asia, Canada and Mexico.
3
<PAGE> 6
- IMPROVE EFFECTIVENESS AND EFFICIENCY OF FROZEN VEGETABLE BUSINESS. In
order to increase its profit margins in the frozen vegetable business, the
Company has downsized its frozen vegetable operations following a period
of rapid expansion and redirected most of its sales to industrial
customers. The Company generally has been able to generate higher margins
on its industrial sales due to decreased packaging and promotional
expenses associated with sales of frozen products in bulk. The Company
plans to continue to increase its presence in this channel through the
addition of new customers, and to increase its leading position in certain
higher margin specialty products, while remaining one of the major players
in frozen corn production, the leading category item in the frozen
vegetable market.
Prior to fiscal 1993, the Company's principal business strategy had been to
increase its revenues by expanding sales of its brand products and by
developing, through acquisitions, a significant frozen vegetable business. At
the time, the Company believed that the brand vegetable market and frozen
vegetable market tended to have higher margins than the Company's canned private
label business and would help smooth out the price fluctuations inherent in the
vegetable processing industry. This strategy, however, significantly increased
the Company's operating expenses and as a result its operating margins began to
deteriorate in fiscal 1991. Furthermore, the Company's acquisitions and capital
expenditures were funded primarily by debt, which increased the Company's
leverage and interest expense. This strategy, together with unfavorable market
conditions in the vegetable processing industry, culminated in net losses
(after-tax) for fiscal 1992 and 1993 of $9.9 million and $31.1 million
(including a restructuring charge of $14.7 million), respectively.
Commencing in June of 1992, the Company made significant management changes
and adopted a major restructuring program allowing it to implement its new
strategy. The primary elements of the restructuring program implemented in
fiscal 1993 and 1994 were as follows: ELIMINATION OF UNPROFITABLE PRODUCTS - the
Company eliminated or greatly reduced its capacity for several low margin or
unprofitable products, including the elimination of frozen broccoli, frozen
okra, frozen cauliflower, tomato products, various fruit products and other
items; PLANT CLOSINGS - to increase manufacturing efficiencies, lower operating
costs and reduce working capital needs, the Company closed six plants, four of
which have been sold, and downsized two other facilities. Fixed manufacturing
overhead has been reduced by $12.8 million, or 24.7%, for fiscal 1994 compared
to fiscal 1992; REDUCTION OF FIXED SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
- - with an increased focus on core products, the Company has been able to operate
with a lower cost structure. Fixed selling, general and administrative expenses
have been reduced by $5.7 million, or 37.5%, for fiscal 1994 compared to fiscal
1992; and DEBT REDUCTION - by focusing on its core business and liquidating
non-essential assets, the Company has reduced total debt by $29.5 million, or
22.4%, since fiscal 1992 to $102.3 million at the end of fiscal 1994.
Principally as a result of these restructuring efforts, the Company has achieved
net profits in each of its last four fiscal quarters.
THE OFFERING
<TABLE>
<S> <C>
Shares Offered by the Company....................... 3,000,000
Shares Offered by the Selling Shareholder........... 40,000
Shares Outstanding Immediately After the
Offering(1)....................................... 11,364,645
Use of Proceeds to the Company...................... Reduce indebtedness.
Nasdaq National Market Symbol....................... STKY
</TABLE>
- -------------------------
(1) Excludes 223,300 shares of Common Stock reserved for issuance pursuant to
currently outstanding options, 400,000 shares of Common Stock reserved for
issuance pursuant to options available for grant under an existing option
plan and 50,000 shares of Common Stock reserved for issuance pursuant to
currently outstanding warrants which are not expected to be exercised in
connection with this Offering; includes 40,000 shares of Common Stock to be
acquired by the Selling Shareholder through the exercise of currently
outstanding warrants immediately prior to the Offering and sold in the
Offering. See "Principal and Selling Shareholders."
4
<PAGE> 7
- --------------------------------------------------------------------------------
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
FISCAL YEARS ENDED MARCH 31, JUNE 30,
---------------------------------------------------- -----------------
1990 1991 1992 1993 1994 1993 1994
-------- -------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales........................... $271,963 $257,520 $280,368 $281,382 $256,145 $56,357 $38,818
Other revenue....................... (436) 1,090 676 2,145 4,691 246 13
-------- -------- -------- -------- -------- ------- -------
Total revenues.................. 271,527 258,610 281,044 283,527 260,836 56,603 38,831
Cost of products sold............... 193,454 204,922 238,804 249,982 216,392 51,152 30,243
Selling, general and administrative
expenses.......................... 44,461 40,902 48,481 42,139 36,476 8,303 5,698
Nonrecurring charge(1).............. -- -- -- 21,145 -- -- --
-------- -------- -------- -------- -------- ------- -------
Operating earnings (loss)........... 33,612 12,786 (6,241) (29,739) 7,968 (2,852) 2,890
Interest expense.................... 4,721 7,082 8,592 12,721 12,710 3,267 2,375
-------- -------- -------- -------- -------- ------- -------
Earnings (loss) before income taxes
and cumulative effect of change in
accounting principle.............. 28,891 5,704 (14,833) (42,460) (4,742) (6,119) 515
Income taxes (credit)............... 11,156 1,888 (4,931) (12,983) (2,527) (734) 108
-------- -------- -------- -------- -------- ------- -------
Earnings (loss) before cumulative
effect of change in accounting
principle......................... 17,735 3,816 (9,902) (29,477) (2,215) (5,385) 407
Cumulative effect of change in
accounting principle(2)........... -- -- -- (1,650) -- -- --
-------- -------- -------- -------- -------- ------- -------
Net earnings (loss)................. $ 17,735 $ 3,816 $ (9,902) $(31,127) $ (2,215) $(5,385) $ 407
========= ========= ========= ========= ========= ======== ========
Net earnings (loss) per share(2).... $2.15 $0.46 $(1.19) $(3.75) $(0.27) $(0.65) $0.05
===== ===== ====== ====== ====== ====== ======
Weighted average shares
outstanding....................... 8,260 8,287 8,288 8,302 8,320 8,302 8,325
Dividends per share................. $0.26 $0.20 $0.20 -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1994
--------------------------
ACTUAL AS ADJUSTED(3)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital............................................................. $ 42,129 $ 56,782
Total assets................................................................ 151,844 160,516
Total debt.................................................................. 90,233 66,937
Shareholders' equity........................................................ 33,047 65,015
</TABLE>
-------------------------------
(1) In connection with the Company's restructuring plan, the Company sold,
closed or downsized certain processing facilities, resulting in a
nonrecurring charge during the fiscal year ended March 31, 1993 from
the write-down of such processing facilities, equipment and
inventories to their estimated net realizable value and from
provisions for severance, consolidation costs and plant closing costs.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
(2) On April 1, 1992, the Company adopted Statement of Financial
Accounting Standard No. 106 ("SFAS No. 106"), "Employers' Accounting
for Postretirement Benefits Other than Pensions." The Company
recognized as expense in fiscal 1993 the accumulated postretirement
benefit obligation aggregating $1.7 million, after taxes of $850,000.
The net loss per share for the fiscal year ended March 31, 1993
includes a $0.20 per share loss due to the adoption of SFAS No. 106.
(3) Adjusted to reflect the sale of 3,000,000 shares of Common Stock being
offered by the Company, after deducting the underwriting discount and
estimated expenses of the Offering payable by the Company, the
exercise by the Selling Shareholder of warrants to acquire 40,000
shares of Common Stock and the application of the estimated net
proceeds therefrom. See "Use of Proceeds" and "Capitalization."
- --------------------------------------------------------------------------------
The Company was incorporated in Wisconsin in 1920 under the name
"Oconomowoc Canning and Products Company" and has been continuously engaged in
the food processing business since that time. The Company changed its name to
"Stokely USA, Inc." in January 1985. The Company's most significant wholly-owned
subsidiary is Oconomowoc Canning Company, Inc., a Wisconsin corporation. Unless
otherwise indicated, all references in this Prospectus to the "Company" or
"Stokely" refer to Stokely USA, Inc. and its subsidiaries. Stokely's principal
executive offices are located at 1055 Corporate Center Drive, Oconomowoc,
Wisconsin 53066-0248. The Company's telephone number is (414) 569-1800.
5
<PAGE> 8
STOKELY RESTRUCTURING PROGRAM
Prior to fiscal 1993, the Company's principal business strategy had been to
increase revenues by expanding sales of its brand products and by developing,
through acquisitions, a significant frozen vegetable business. At the time, the
Company believed that the brand vegetable market and frozen vegetable market
tended to have higher margins than the Company's private label business and
would help smooth out the price fluctuations inherent in the vegetable
processing industry. This strategy, however, significantly increased the
Company's operating expenses and as a result its operating margins began to
deteriorate in fiscal 1991. Furthermore, the Company's acquisitions and capital
expenditures were funded primarily by debt, which increased the Company's
leverage and interest expense. In the early 1990s, average selling prices in the
processed vegetable industry declined dramatically. The Company experienced a
7.8% selling price decline in fiscal 1991, an 8.5% decline in fiscal 1992 and a
5.9% decline in fiscal 1993. Stokely's strategy at that time, together with
unfavorable market conditions, resulted in net losses (after-tax) for fiscal
1992 and 1993 of $9.9 million and $31.1 million (including a restructuring
charge of $14.7 million), respectively. Commencing in June of 1992, the Board of
Directors of the Company made significant management changes and adopted a new
strategy designed to return the Company to profitability. The new management
team determined that in order to implement the new strategy and return the
Company to profitability, restructuring was necessary.
Under the direction of the new management team, the Company undertook a
number of restructuring measures, including consolidating production at larger,
more efficient facilities, eliminating certain low margin or unprofitable
product lines, reducing operating overhead and lowering interest expense through
debt reduction. As part of such restructuring, the Company recorded in fiscal
1993 a non-recurring restructuring charge of $14.7 million ($21.1 million
pre-tax) relating to the write-down of the eight processing plants to be sold,
closed or downsized and the costs associated therewith. In particular, the
Company redefined its core products as corn, green beans, peas and root crops
produced in the Midwest and Northwest, and exited the canned tomato and fruit
product lines and southern frozen vegetable lines, including frozen broccoli,
okra and cauliflower. Stokely also eliminated certain marginally contributing
channels of distribution and facilities in its frozen vegetable business.
Finally, the Company's general and administrative workforce was reduced by 25%
between the end of fiscal 1992 and the end of fiscal 1994. During fiscal 1994,
the Company completed the major portion of its restructuring plan by (i) selling
two canning plants and two freezing plants; (ii) closing and consolidating the
operations of an additional canning plant with an existing plant; (iii) closing
a freezing plant that focused on retail products; and (iv) downsizing two other
plants. The Company intends to sell its two remaining closed plants.
As a result of these restructuring initiatives, fixed manufacturing
overhead was reduced 24.7%, from $51.9 million for fiscal 1992 to $39.1 million
for fiscal 1994, while direct manufacturing costs on a per unit basis were
reduced by 1.8% during this same two-year period. In addition, the Company's
fixed selling, general and administrative expenses were reduced 37.5%, from
$15.2 million for fiscal 1992 to $9.5 million for fiscal 1994.
The net proceeds from the sale of plants and liquidation of discontinued
inventories were used to pay down outstanding debt. The Company's total debt was
reduced $29.5 million, from $131.8 million at March 31, 1992 to $102.3 million
at March 31, 1994. The Company intends to further reduce its debt with the
proceeds from this Offering. See "Use of Proceeds."
At June 30, 1994, the Company had remaining restructuring reserves
aggregating $6.6 million for the disposal of plant facilities and related
inventories. Based on the Company's current review and evaluation, these
reserves are considered adequate to complete the restructuring plan in fiscal
1995.
6
<PAGE> 9
RISK FACTORS
INDUSTRY CONDITIONS AND PRICE AND VOLUME FLUCTUATIONS
The Company's financial performance and growth are related to conditions in
the vegetable processing industry. The United States vegetable processing
industry is a mature industry, with a relatively modest 1.8% compounded annual
growth rate from 1988 to 1993. The Company's net sales are a function of product
availability and market pricing. In the vegetable processing industry, product
availability and market prices tend to have an inverse relationship: market
prices tend to decrease as more product is available, whereas if less product is
available, market prices tend to increase. Product availability is a direct
result of plantings, growing conditions, crop yields and inventories, all of
which vary from year to year. In addition, price can be affected by the
planting, inventory level and individual pricing decisions of the three or four
largest processors in the industry. Generally, the market prices in the
vegetable processing industry tend to adjust more quickly to variations in
product availability than an individual processor can adjust its cost structure;
thus, in an over-supply situation, a processor's margins likely will weaken, as
suppliers generally are not able to adjust their cost structure as rapidly as
market prices adjust for the over-supply. The Company typically has experienced
lower margins during times of industry over-supply. There can be no assurance
the Company's margins will improve in response to favorable market conditions or
that the Company will be able to operate profitably during depressed market
conditions.
RECENT OPERATING LOSSES; IMPLEMENTATION OF RESTRUCTURING PROGRAM; LEVERAGE
CONSIDERATIONS
The Company reported net losses (after-tax) of $9.9 million, $31.1 million
(which includes the effect of a restructuring charge of $14.7 million) and $2.2
million for the fiscal years ended March 31, 1992, 1993 and 1994, respectively.
In fiscal 1993, the Company's business faced continuing depressed vegetable
market conditions caused primarily by over-supply and excess capacity. In
response to these net losses and market conditions, the Company implemented
restructuring measures designed to return the Company to profitability. See
"Stokely Restructuring Program." Although the Company believes the restructuring
program has contributed to the Company's ability to achieve favorable operating
results during the last four fiscal quarters, there can be no assurance the
Company will be able to sustain such results. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business --
Business Strategy."
The terms and conditions of the Company's multi-year credit facility with
various lenders and the other indebtedness of the Company currently impose
restrictions that affect, among other things, the ability of the Company to
incur debt, pay dividends, make acquisitions, create liens and make capital
expenditures. Terms of the Company's indebtedness also require it to satisfy
certain financial covenants on a monthly basis. The ability of the Company to
make cash payments to satisfy its indebtedness and to comply with such financial
or similar covenants that may be contained in future agreements will depend upon
its future operating performance, which is subject to prevailing economic
conditions, and to financial, business and other factors beyond the Company's
control. In addition, the Company's debt service obligations and related
financial and operating covenants could limit its ability to withstand
competitive pressures or a downturn in its business or in the economy. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
SEASONALITY AND QUARTERLY FLUCTUATIONS
The Company's operations are affected by the growing cycle of the
vegetables it processes. Most of the Company's production occurs during the
second quarter of each fiscal year (due to the timing of crop production and
climate conditions) and a majority of sales occurs during the third and fourth
quarter of each fiscal year (due to seasonal consumption patterns for its
products). Accordingly, inventory levels are highest during the second and third
quarters, and accounts receivable levels are highest during the fourth quarter.
Net sales generated during the third and fourth quarter of each fiscal year have
a significant impact on the Company's results of operations. Because of seasonal
fluctuations, there can be no assurance that the results of any particular
quarter will be indicative of results for the full year or for future years. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
7
<PAGE> 10
COMPETITION
All of the Company's products compete with those of other national, major
and smaller regional food processing companies under highly competitive
conditions. Three of the Company's major competitors, Del Monte, Green Giant and
Dean Foods, are larger and have greater financial and marketing resources than
the Company. In addition, many of the Company's major competitors in the
international export market are larger and have greater financial and marketing
resources than the Company. Continued industry consolidation also may increase
the market strength of the Company's larger competitors. See "Business --
Competition."
As a result of recent plant reduction and consolidation in the vegetable
processing industry, many of the Company's principal national competitors have
narrowed their business focus to specific product lines and channels of
distribution. To date, the Company believes its major competitors have not
placed significant emphasis on the private label channel of distribution. Del
Monte has focused on brand label canned products, with a limited emphasis on the
private label canned business. Both Green Giant and Dean Foods have significant
frozen vegetable operations. However, should such competitors in the future
increase their emphasis on the private label channel of distribution, the
Company's results of operations may be adversely affected.
DEPENDENCE ON KEY PERSONNEL
In connection with the Company's restructuring program, the Company's
management team was substantially changed. The Company's success is dependent to
a great extent on its current management team and other key personnel, the loss
of one or more of whom could have a material adverse effect on the Company. The
Company does not maintain key man life insurance policies on any of its
executive officers. See "Management."
EXPORT SALES
The Company derived 8.1%, 8.6% and 7.4% of its net sales for the fiscal
years ended March 31, 1992, 1993 and 1994, respectively, from export sales. The
Company intends to increase its emphasis on export sales. International sales
are subject to various risks, including exposure to currency fluctuations,
political and economic instability, the greater difficulty of administering
business abroad and the need to comply with a wide variety of international and
domestic export laws and regulatory requirements. There can be no assurance the
Company will be able to successfully expand its export sales, or that the
Company's export sales will be profitable. See "Business."
REGULATION
United States and foreign governmental laws, regulations and policies
directly affect the agricultural industry and the vegetable processing industry.
The Company is subject to regulation by the Food and Drug Administration, the
United States Department of Agriculture, the Federal Trade Commission, the
Environmental Protection Agency and various state agencies with respect to the
production, packaging, labeling and distribution of its food products. In
addition, the disposal of solid and liquid vegetable waste material resulting
from the preparation and processing of foods is subject to various federal,
state and local laws and regulations relating to the protection of the
environment. In some international markets, there are regulations and policies
designed to discourage the importation of agricultural commodities. The
application or modification of existing, or the adoption of new, laws,
regulations or policies could have an adverse effect on the Company's business
and results of operations. See "Business-Regulations."
POSSIBLE VOLATILITY OF STOCK PRICE
The stock market has from time to time experienced significant price and
volume fluctuations that may be unrelated to the operating performance of
particular companies. General business, economic and other external factors, as
well as period-to-period fluctuations in Stokely's financial results or changes
in earnings estimates by analysts, may have a significant impact on the market
price of the shares of Common Stock.
8
<PAGE> 11
CERTAIN ANTI-TAKEOVER PROVISIONS
Certain provisions of the Company's Articles of Incorporation and By-Laws
and certain statutes and regulations assist the Company in maintaining its
status as an independent publicly-owned corporation, and could have the effect
of preventing or delaying a person from acquiring or seeking to acquire a
substantial equity interest in, or control of, the Company. These provisions
provide for, among other things, staggered board of directors' terms, a fair
price requirement for certain business combinations and shareholder repurchase
rights in certain circumstances. See "Description of Capital Stock."
SHARES ELIGIBLE FOR FUTURE SALE
Future sales of shares of Common Stock by existing shareholders pursuant to
Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"),
could adversely affect the price of the shares of Common Stock of the Company.
Upon completion of the Offering, approximately 11,364,645 shares of Common Stock
will be outstanding. All of these shares of Common Stock will be freely
transferable without restriction under the Securities Act, unless held by an
affiliate of the Company. The Company's executive officers and directors
beneficially own 664,833 shares of Common Stock. Each of the Company and the
executive officers and directors of the Company will agree, for a period of 90
days after the date of this Prospectus, not to sell or otherwise dispose of any
shares of Common Stock, or any rights or warrants to acquire shares of Common
Stock, without the prior written consent of the Representatives of the
Underwriters. Holders of warrants of the Company (entitling the holders to
purchase an aggregate of up to 90,000 shares of Common Stock, subject to certain
adjustments) were granted rights entitling them, under specified circumstances,
to include shares of Common Stock received by them pursuant to the exercise of
the warrants in any registered public offering of shares of Common Stock. The
Company is registering in this Offering 40,000 shares of Common Stock to be
issued upon exercise of warrants by the State of Wisconsin Investment Board
(hereinafter, the "Selling Shareholder" or "SWIB"). See "Certain Transactions"
and "Principal and Selling Shareholders." No prediction can be made as to the
effect, if any, that future sales of shares of Common Stock or the availability
of shares of Common Stock for future sale will have on the market price of the
shares of Common Stock prevailing from time to time. Sales of substantial
amounts of shares of Common Stock in the public market following the Offering,
or the perception that such sales could occur, may adversely affect prevailing
market prices of the shares of Common Stock.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
being sold by the Company are estimated to be approximately $31.7 million
(approximately $36.5 million if the over-allotment option is exercised in full),
after deducting the underwriting discount and estimated offering expenses. The
Company intends to use the net proceeds to repay a portion of the borrowings
under its revolving credit agreement. The Company has a multi-year revolving
credit facility with various lenders (the "Revolver"), providing for maximum
borrowings of $100.0 million, of which $33.8 million was outstanding at August
31, 1994. Borrowings under the Revolver bear interest at 2.25% over a bank's
specified reference rate on the first $40.0 million of borrowings and 1.25% over
the reference rate on borrowings in excess of $40.0 million. The Revolver
expires May 31, 1995. The Company has received proposals from various lenders to
provide funds under a new credit agreement (the "New Credit Agreement"), which
it intends to enter into during fiscal 1995. Due to the decreased working
capital needs of the Company at the present time, the Company anticipates that
the New Credit Agreement will provide a smaller working capital facility, and
will have a lower interest rate and less restrictive financial and operating
covenants than the existing Revolver. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources." The Company will not receive any proceeds from the sale of shares of
Common Stock by the Selling Shareholder.
9
<PAGE> 12
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "STKY." The following table sets forth the range of high and low sale
prices per share for the Common Stock for the periods indicated, as reported on
the Nasdaq National Market.
<TABLE>
<CAPTION>
PRICE RANGE
--------------
HIGH LOW
---- ----
<S> <C> <C>
FISCAL YEAR ENDED MARCH 31, 1993:
First Quarter.............................................. $ 9 $5 1/4
Second Quarter............................................. 7 1/2 6 1/8
Third Quarter.............................................. 8 3/4 6 1/8
Fourth Quarter............................................. 11 3/8 6 5/8
FISCAL YEAR ENDED MARCH 31, 1994:
First Quarter.............................................. $10 1/8 $5 3/4
Second Quarter............................................. 9 3/4 7 3/4
Third Quarter.............................................. 9 5/8 7 3/4
Fourth Quarter............................................. 8 3/4 7
FISCAL YEAR ENDED MARCH 31, 1995:
First Quarter.............................................. $10 1/2 $7 7/8
Second Quarter (through September 9, 1994)................. 12 1/4 10 1/8
</TABLE>
On September 9, 1994, the last reported sale price of the Company's Common
Stock, as reported by the Nasdaq National Market, was $11.375 per share. As of
September 1, 1994, there were 1,093 holders of record of the Common Stock.
DIVIDEND POLICY
The Company discontinued the payment of quarterly dividends during the
first quarter of the fiscal year ended March 31, 1993. Since that time, the
Company has not declared or paid any cash dividends on its shares of Common
Stock, and does not anticipate paying such dividends in the foreseeable future.
Earnings and other cash resources of the Company will be retained by the
Company. The Revolver restricts the payment of dividends without lender
permission. Any future determination to pay cash dividends will be at the
discretion of the Company's Board of Directors and will be dependent upon the
Company's results of operations, financial condition, contractual restrictions
and other factors deemed relevant by the Board of Directors. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
10
<PAGE> 13
DILUTION
The net tangible book value of Stokely at June 30, 1994 was $30.1 million
or $3.61 per share of Common Stock. "Net tangible book value" per share
represents the amount of total tangible assets of the Company reduced by the
amount of its total liabilities, divided by the number of shares of Common Stock
outstanding. After giving effect to the estimated net proceeds from the sale of
3,000,000 shares of Common Stock offered by the Company and the exercise by the
Selling Shareholder of warrants to acquire 40,000 shares of Common Stock, the
pro forma net tangible book value of the Company at June 30, 1994 would have
been approximately $62.0 million, or $5.46 per share of Common Stock. This
represents an immediate increase in net tangible book value of $1.85 per share
to existing shareholders and an immediate dilution of $5.92 per share to new
investors. The following table illustrates the per share dilution in net
tangible book value to new investors at June 30, 1994:
<TABLE>
<S> <C> <C>
Public offering price per share.............................................. $11.38
Net tangible book value per share before Offering.......................... $3.61
Increase per share attributable to new investors........................... $1.85
-----
Pro forma net tangible book value per share after Offering................... $ 5.46
------
Dilution per share to new investors.......................................... $ 5.92
======
</TABLE>
The above table excludes an aggregate of 223,300 shares of Common Stock
reserved for issuance pursuant to currently outstanding options, and 400,000
shares of Common Stock reserved for issuance pursuant to options available for
grant under the Executive Stock Option Plan. To the extent that outstanding
options are exercised, there may be further dilution to new investors.
11
<PAGE> 14
CAPITALIZATION
The following table sets forth the short-term debt and capitalization of
the Company at June 30, 1994, and as adjusted to give effect to the sale by the
Company of 3,000,000 shares of Common Stock being offered hereby, the exercise
by the Selling Shareholder of warrants to acquire 40,000 shares of Common Stock
and the application of the net proceeds as described under "Use of Proceeds."
<TABLE>
<CAPTION>
JUNE 30, 1994
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt(1):
Notes payable........................................................ $ 5,981 --
Current maturities of long-term debt................................. 3,868 $ 3,868
-------- -----------
Total short-term debt............................................. $ 9,849 $ 3,868
======== =========
Long-term debt, net of current portion(1):
Senior notes......................................................... $ 36,260 $ 35,945
Revolving credit notes............................................... 17,000 --
Industrial revenue bonds............................................. 27,124 27,124
-------- -----------
Total long-term liabilities....................................... 80,384 63,069
-------- -----------
Shareholders' equity(2):
Preferred stock, no par value, authorized 1,000,000 shares, none
issued............................................................ -- --
Common stock, par value $0.05 per share; authorized 20,000,000
shares; outstanding 8,324,645 (outstanding as adjusted,
11,364,645)....................................................... 422 574
Additional paid-in capital........................................... 18,665 50,481
Retained earnings.................................................... 14,588 14,588
Treasury stock (at cost)............................................. (628) (628)
-------- -----------
Total shareholders' equity........................................ 33,047 65,015
-------- -----------
Total capitalization............................................ $113,431 $ 128,084
======== =========
</TABLE>
- -------------------------
(1) See Note F of Notes to Consolidated Financial Statements.
(2) Excludes 223,300 shares of Common Stock issuable pursuant to stock options
outstanding at June 30, 1994 (all of which options were then exercisable at
a weighted average exercise price of $8.42 per share), 90,000 shares of
Common Stock issuable pursuant to stock warrants outstanding at June 30,
1994 (all of which warrants were then exercisable at a weighted average
exercise price of $7.88 per share), and 400,000 shares of Common Stock
reserved for issuance under the Executive Stock Option Plan. See "Management
-- Stock Option Plans." The "As Adjusted" information includes 40,000 shares
of Common Stock to be acquired by the Selling Shareholder through the
exercise of currently outstanding warrants immediately prior to the Offering
and then sold in the Offering. See "Principal and Selling Shareholders."
12
<PAGE> 15
SELECTED CONSOLIDATED FINANCIAL DATA
The following sets forth selected consolidated financial data for the
Company at and for each of the five years in the period ended March 31, 1994.
The statement of operations data in the table for the three years ended March
31, 1994, and the balance sheet data as of March 31, 1993 and 1994, have been
derived from the Company's consolidated financial statements appearing elsewhere
herein, which have been audited by Deloitte & Touche LLP, independent auditors,
and should be read in conjunction with the consolidated financial statements and
the notes thereto. The statement of operations data in the table for the two
years ended March 31, 1991, and the balance sheet data as of March 31, 1990,
1991 and 1992, have been derived from the Company's audited consolidated
financial statements which are not included herein. The selected consolidated
financial data presented at and for the three months ended June 30, 1993 and
1994 have been derived from the Company's unaudited consolidated financial
statements. In the opinion of management, the unaudited consolidated financial
statements for such periods include all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of the consolidated
financial position and results of operations for these periods. For interim
reporting purposes, certain expenses are based on estimates rather than expenses
actually incurred. The results of operations for the three months ended June 30,
1994 should not be regarded as indicative of the results that may be expected
for the full year. The following data should be read in conjunction with the
Company's consolidated financial statements, the related notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED MARCH 31, ENDED JUNE 30,
---------------------------------------------------- -------------------
1990 1991 1992 1993 1994 1993 1994
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................. $271,963 $257,520 $280,368 $281,382 $256,145 $ 56,357 $ 38,818
Other revenue......................... (436) 1,090 676 2,145 4,691 246 13
-------- -------- -------- -------- -------- -------- --------
Total revenue....................... 271,527 258,610 281,044 283,527 260,836 56,603 38,831
Cost of products sold................. 193,454 204,922 238,804 249,982 216,392 51,152 30,243
Selling, general and administrative
expenses............................ 44,461 40,902 48,481 42,139 36,476 8,303 5,698
Nonrecurring charge(1)................ -- -- -- 21,145 -- -- --
Interest expense...................... 4,721 7,082 8,592 12,721 12,710 3,267 2,375
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) before income taxes
and cumulative effect of change in
accounting principle................ 28,891 5,704 (14,833) (42,460) (4,742) (6,119) 515
Income taxes (credit)................. 11,156 1,888 (4,931) (12,983) (2,527) (734) 108
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) before cumulative
effect of change in accounting
principle........................... 17,735 3,816 (9,902) (29,477) (2,215) (5,385) 407
Cumulative effect of change in
accounting principle(2)............. -- -- -- (1,650) -- -- --
-------- -------- -------- -------- -------- -------- --------
Net earnings (loss)................... $ 17,735 $ 3,816 $ (9,902) $(31,127) $ (2,215) $ (5,385) $ 407
========= ========= ========= ========= ========= ========= =========
Net earnings (loss) per share(2)...... $ 2.15 $ 0.46 $ (1.19) $ (3.75) $ (0.27) $ (0.65) $ 0.05
========= ========= ========= ========= ========= ========= =========
Weighted average shares outstanding... 8,260 8,287 8,288 8,302 8,320 8,302 8,325
Dividends per share................... $ 0.26 $ 0.20 $ 0.20 -- -- -- --
BALANCE SHEET DATA (AT PERIOD END):
Working capital....................... $ 70,631 $ 84,584 $ 80,064 $ 40,626 $ 42,071 $ 36,357 $ 42,129
Total assets.......................... 169,892 213,067 233,737 232,843 158,535 194,596 151,844
Total debt............................ 54,663 104,216 131,826 142,566 102,298 125,353 90,233
Shareholders' equity.................. 75,100 77,266 65,761 34,777 32,640 29,394 33,047
OTHER DATA:
Capital expenditures.................. $ 15,927 $ 18,033 $ 21,666 $ 10,367 $ 4,736 $ 1,959 $ 2,572
Depreciation.......................... 5,099 6,835 8,461 9,286 7,230 2,468 1,877
</TABLE>
- -------------------------
(1) In connection with the Company's restructuring plan, the Company sold,
closed or downsized certain processing facilities, resulting in a
nonrecurring charge during the fiscal year ended March 31, 1993 from the
write-down of such processing facilities, equipment and inventories to their
estimated net realizable value and from provisions for severance,
consolidation costs and plant closing costs. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
(2) On April 1, 1992, the Company adopted Statement of Financial Accounting
Standard No. 106 ("SFAS No. 106"), "Employers' Accounting for Postretirement
Benefits Other than Pensions." The Company recognized as expense in fiscal
1993 the accumulated postretirement benefit obligation aggregating $1.7
million, after taxes of $850,000. The net loss per share for the fiscal year
ended March 31, 1993 includes a $0.20 per share loss due to the adoption of
SFAS No. 106.
13
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's financial performance and growth are directly related to
certain characteristics and trends in the vegetable processing industry. The
United States vegetable processing industry is a mature industry, with a
relatively modest 1.8% compounded annual growth rate from 1988 to 1993.
Therefore, any significant sales growth that may be experienced by the Company
likely would come at the expense of the loss of market share by another
processor, but also may occur through efforts designed to promote increased
consumption, such as through the introduction of new or improved products, or
through increased sales internationally, where the processed vegetable market is
currently growing.
The Company's net sales are affected by product availability and market
pricing. In the vegetable processing industry, product availability and market
prices tend to have an inverse relationship: market prices tend to decrease as
more product is available, whereas if less product is available, market prices
tend to increase. Product availability is a direct result of plantings, growing
conditions, crop yields and inventories, all of which may vary from year to
year. In addition, price can be affected by the planting, inventory level and
individual pricing decisions of the three or four largest processors in the
industry.
Increased plantings and improved growing conditions caused over-supply in
the processed vegetable market during fiscal 1992 and 1993, forcing industry
prices and profit margins down. During the latter part of fiscal 1994, market
prices rebounded because of an undersupply of products due to reduced plantings,
poor growing conditions and reduced carryover inventory.
In addition to the effects of vegetable processing industry conditions and
trends, the Company's restructuring initiatives commenced in fiscal 1993 have
impacted its financial performance in fiscal 1993 and fiscal 1994. The
restructuring initiatives included consolidating production at larger, more
efficient facilities, eliminating marginally profitable and unprofitable product
lines, reducing operating overhead and lowering interest expense through debt
reduction. Primarily as a result of the restructuring program, the Company's
cost of products sold and fixed selling, general and administrative expenses
have declined from levels experienced in fiscal 1992. See "Stokely Restructuring
Program." As a result, the Company recorded in fiscal 1993 a non-recurring
restructuring charge of $14.7 million ($21.1 million pre-tax) relating to the
write-down of the eight processing plants to be sold, closed or downsized and
the costs associated therewith. At June 30, 1994, the Company had remaining
restructure reserves aggregating $6.6 million for the disposal of plant
facilities and related inventories.
The cost savings associated with these restructuring initiatives were
largely realized by the end of fiscal 1994. The Company anticipates its fixed
manufacturing expenses will increase during fiscal 1995 due primarily to an
anticipated increase in production volume; however, fixed manufacturing expense
per unit is expected to decline. The Company also expects that its fixed
selling, general and administrative expenses will increase during fiscal 1995,
primarily due to the reinstatement of certain employee wage increases and
related benefits. The Company expects that its interest expense will decrease
during fiscal 1995, primarily due to a lower level of borrowings.
In fiscal 1992, 1993 and 1994, the effective tax rates used for calculating
tax credits for the Company were 33.2%, 30.6%, and 53.3%, respectively, and
differed from statutory rates due primarily to allowable tax benefits from net
operating losses and tax credit carryforwards and adjustments of prior year tax
accruals. At March 31, 1994, the Company had net operating loss carryforwards of
$23.3 million and tax credit carryforwards of $2.9 million, which are expected
to continue to reduce and/or offset tax liabilities in future years.
During the fourth quarter of fiscal 1994, the Company changed its method of
valuing its inventories from the last-in, first-out method to the average cost
method. Management believes that the average cost method provides a more
meaningful presentation of the Company's financial position and related
financial ratios. In
14
<PAGE> 17
accordance with generally accepted accounting principles, the prior years'
financial statements have been retroactively adjusted to reflect this change.
The effect of this restatement was to increase the net loss in fiscal 1993 by
$784,000 or $0.09 per share and reduce the net loss in fiscal 1992 by $842,000
or $0.11 per share. In addition, the effect of the restatement was to increase
retained earnings at April 1, 1991 by $5.3 million.
In fiscal 1993, the Company adopted Statement of Financial Accounting
Standard No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." This statement established accounting standards for employers'
accounting for postretirement benefits other than pensions, particularly
postretirement health care benefits. The Company elected to recognize as expense
during fiscal 1993 the entire accumulated postretirement benefit obligation
(transition obligation) aggregating $1.7 million, net of related tax benefits as
of April 1, 1992 of $850,000.
Effective April 1, 1993, the Company adopted Statement of Financial
Accounting Standard No. 109 ("SFAS No. 109"), "Accounting for Income Taxes."
This statement requires the recognition of the tax consequences in future years
of events which have been recognized in the financial statements. There was no
material cumulative effect of adoption of SFAS No. 109 on the financial position
or results of operations of the Company.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits." This statement requires the accrual for postemployment benefits
during the years an employee provides services. The Statement must be adopted
during the fiscal year ending March 31, 1995. The impact of adopting this
statement is not material.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain items
from the Company's consolidated statements of operations, each expressed as a
percentage of net sales.
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
----------------------------------------------
THREE MONTHS
FISCAL YEAR ENDED ENDED
MARCH 31, JUNE 30,
------------------------- ---------------
1992 1993 1994 1993 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales(1)....................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of products sold.............................. 85.2 88.8 84.5 90.8 77.9
----- ----- ----- ----- -----
Gross profit....................................... 14.8 11.2 15.5 9.2 22.1
Selling, general and administrative expenses....... 17.3 15.0 14.2 14.7 14.7
Nonrecurring charge................................ -- 7.5 -- -- --
Other revenue...................................... (0.2) (0.7) (1.8) (0.4) --
Interest expense(2)................................ 3.0 4.5 5.0 5.8 6.1
----- ----- ----- ----- -----
Earnings (loss) before income taxes and cumulative
effect of change in accounting principle......... (5.3) (15.1) (1.9) (10.9) 1.3
Income taxes....................................... (1.8) (4.6) (1.0) (1.3) 0.3
----- ----- ----- ----- -----
Earnings (loss) before cumulative effect of change
in accounting principle.......................... (3.5) (10.5) (0.9) (9.6) 1.0
Cumulative effect of change in accounting
principle........................................ -- (0.6) -- -- --
----- ----- ----- ----- -----
Net earnings (loss)................................ (3.5)% (11.1)% (0.9)% (9.6)% 1.0%
===== ===== ===== ===== =====
</TABLE>
- -------------------------
(1) Net sales does not include other revenue.
(2) Lower net sales for the fiscal year ended March 31, 1994 and for the three
months ended June 30, 1994 caused percentage rate increases in interest
expense, although the actual expense amount declined from comparative prior
periods.
15
<PAGE> 18
THREE MONTHS ENDED JUNE 30, 1994 COMPARED TO THREE MONTHS ENDED JUNE 30, 1993
NET SALES. Net sales decreased $17.6 million, or 31.1%, to $38.8 million
for the three months ended June 30, 1994 compared to $56.4 million for the three
months ended June 30, 1993. The decline in net sales was primarily due to lower
available canned inventories at the beginning of fiscal 1995 caused by a poor
growing season during fiscal 1994, higher sales generated during the fiscal 1994
first quarter due to the Company's restructuring-related inventory reduction
program during the three months ended June 30, 1993 designed to reduce excess
inventory levels at March 31, 1993, and the absence in the fiscal 1995 first
quarter results of a significant reduction of sales of certain low margin or
unprofitable products in both the canned and frozen divisions that were
discontinued by the Company in fiscal 1994.
Total canned vegetable sales decreased $9.3 million, or 24.4%, to $28.8
million for the three months ended June 30, 1994 compared to $38.1 million for
the three months ended June 30, 1993. Sales of canned private label products
declined $4.7 million to $21.5 million for the three months ended June 30, 1994,
compared to $26.2 million for the three months ended June 30, 1993. The decline
in canned private label sales was the result of an approximate $10.2 million
reduction in sales volume, partially offset by an approximate $5.5 million
increase in sales due to improved pricing. The reduction in sales volume was
primarily due to lower available canned inventories, the restructuring-related
inventory reduction program in fiscal 1993 and the discontinuance of certain
product lines. Sales of canned brand products declined $4.6 million, or 38.6%,
to $7.3 million compared to $11.9 million for the three months ended June 30,
1994. Substantially all of the decline in brand sales was due to lower sales
volume, resulting primarily from lower available canned inventories, the
restructuring-related inventory reduction program in fiscal 1993 and the
discontinuance of certain product lines.
Total frozen sales declined $8.3 million, or 45.4%, to $10.0 million for
the three months ended June 30, 1994 compared to $18.3 million for the three
months ended June 30, 1993. This reduction in sales volume was primarily the
result of the elimination of certain low margin or unprofitable frozen products
and the related inventory reduction efforts during the three months ended June
30, 1993 as part of the Company's restructuring program.
COST OF PRODUCTS SOLD. Cost of products sold decreased $21.0 million, or
40.9%, to $30.2 million for the three months ended June 30, 1994 from $51.2
million for the three months ended June 30, 1993. The decrease in cost of
products sold was due primarily to lower sales volume in both the canned and
frozen divisions, offset in part by slightly higher per unit costs of canned
products as a result of below normal production during fiscal 1994. Cost of
products sold as a percentage of net sales decreased to 77.9% for the three
months ended June 30, 1994 compared to 90.8% for the three months ended June 30,
1993. This decrease was due to higher selling prices, the elimination of certain
low margin or unprofitable products and cost reductions resulting from the
Company's restructuring program.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses declined by $2.6 million, or 31.4%, to $5.7 million for
the three months ended June 30, 1994 from $8.3 million for the three months
ended June 30, 1993. This reduction was primarily the result of lower variable
selling expenses associated with lower brand sales volume. Selling, general and
administrative expenses as a percentage of net sales remained relatively
constant at 14.7% for both the three months ended June 30, 1994 and 1993 due
primarily to a significant reduction in net sales for the period.
INTEREST EXPENSE. Interest expense decreased $892,000, or 27.3%, to $2.4
million for the three months ended June 30, 1994 compared to $3.3 million for
the three months ended June 30, 1993. This reduction was primarily the result of
lower short-term borrowings resulting from lower working capital requirements
and the payment of long-term debt from the proceeds of sales of plants closed,
partially offset by increases in short-term interest rates and higher financing
expenses associated with the June 1993 amendment of the Revolver.
INCOME TAXES. The effective income tax rate for calculating tax credits was
21% for the three months ended June 30, 1994 compared to the 12% used for
calculating tax credits for the three months ended June 30, 1993. Each of the
effective tax rates differ from the statutory rates due to recognition of
allowable tax benefits from net operating loss carryforwards.
NET EARNINGS (LOSS). Net earnings for the three months ended June 30, 1994
were $407,000 compared to the net loss of $5.4 million for the three months
ended June 30, 1993.
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<PAGE> 19
FISCAL YEAR ENDED MARCH 31, 1994 COMPARED TO FISCAL YEAR ENDED MARCH 31, 1993
NET SALES. Net sales in fiscal 1994 decreased $25.3 million, or 9.0%, to
$256.1 million from $281.4 million in fiscal 1993. Limited supplies of available
canned finished goods inventory caused by a poor growing season was the primary
reason for the decline. This volume shortfall was only partially offset by a
modest improvement in pricing.
Total canned vegetable sales decreased $22.7 million, or 11.4%, to $175.7
million in fiscal 1994 from $198.4 million in fiscal 1993. The decline in sales
in fiscal 1994 was due primarily to lower available inventory of canned
vegetables caused by a poor growing season in fiscal 1994, partially offset by a
3.3% improvement in canned division pricing. Sales of canned private label
products declined $10.6 million, or 7.7%, to $126.5 million in fiscal 1994
compared to $137.1 million in fiscal 1993. The decline in private label sales
was a result of an $18.8 million, or 13.7%, reduction in sales due to lower
sales volume, partially offset by an $8.2 million, or 6.0%, increase in sales
due to improved pricing experienced in the second half of fiscal 1994. Sales of
canned brand products declined by $12.1 million, or 19.7%, to $49.2 million in
fiscal 1994 compared to $61.3 million in fiscal 1993. The decline in brand sales
was a result of an $11.0 million, or 17.9%, reduction in sales due to lower
sales volume and a $1.1 million, or 1.8%, decrease in sales due to lower prices.
Total frozen sales declined $2.6 million, or 3.1%, to $80.4 million in
fiscal 1994 compared to $83.0 million in fiscal 1993. This reduction in sales
was primarily the result of a 3.7% decrease in pricing related to elimination of
higher priced but marginally unprofitable products and the sale of related
inventories.
OTHER REVENUE. Other revenue of $4.7 million in fiscal 1994 included
revenues of $4.1 million resulting from insurance claim proceeds related to
reconstruction costs at the Company's fire damaged Hoopeston, Illinois facility.
See Note K of Notes to Consolidated Financial Statements.
COST OF PRODUCTS SOLD. Cost of products sold decreased $33.6 million, or
13.4%, to $216.4 million in fiscal 1994 from $250.0 million in fiscal 1993. The
decrease in cost of products sold was due primarily to lower sales volume. Cost
of products sold as a percentage of net sales declined to 84.5% in fiscal 1994
compared to 88.8% in fiscal 1993. This decline resulted primarily from the
elimination of low margin product lines. Average variable manufacturing costs
remained relatively flat in fiscal 1994 compared to fiscal 1993 despite adverse
weather-related production conditions.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Total selling, general and
administrative expenses decreased $7.7 million (or $5.6 million excluding a
charge of $2.1 million relating to the settlement of a product liability claim
in fiscal 1994), or 18.3%, to $36.5 million from $42.1 million in fiscal 1993.
This decrease was in part due to a $4.1 million decrease in sales promotions
related primarily to lower canned brand sales in fiscal 1994. Other
administrative expenses decreased $3.6 million in fiscal 1994 due to cost
reduction and other expense control programs instituted by the Company. Selling,
general and administrative expenses as a percentage of net sales declined to
14.2% in fiscal 1994 compared to 15.0% in fiscal 1993 primarily due to
restructuring initiatives which lowered fixed general and administrative
expenses. The product liability claim in fiscal 1994 relates to an acquired
business and predates the Company's acquisition of such business. Had the $2.1
million product liability charge not occurred, selling, general and
administrative expenses as a percentage of net sales in fiscal 1994 would have
been 13.4% rather than 14.2%.
INTEREST EXPENSE. Interest expense totalled $12.7 million in fiscal 1994
and $12.7 million in fiscal 1993. Interest expense remained flat in fiscal 1994
despite a reduction in average short-term debt because of an increase in
short-term interest rates and higher financing expenses resulting from a June
1993 amendment to the Revolver.
INCOME TAXES. The effective income tax rates for calculating tax credits
were 53.3% for fiscal 1994 and 30.6% for fiscal 1993. The effective tax rate
differs from the statutory rates due to recognition of allowable tax benefits
from net operating loss carrybacks and adjustment to prior year accruals. See
Note G of Notes to Consolidated Financial Statements.
NET EARNINGS (LOSS). The net loss for fiscal 1994 was $2.2 million compared
to a net loss of $31.1 million in fiscal 1993. The fiscal 1993 loss included a
non-recurring restructuring charge of $14.7 million ($21.1
17
<PAGE> 20
million pre-tax) and the cumulative effect of adoption of SFAS No. 106 on
postretirement benefits of $1.7 million ($2.5 million pre-tax).
FISCAL YEAR ENDED MARCH 31, 1993 COMPARED TO FISCAL YEAR ENDED MARCH 31, 1992
NET SALES. Net sales increased $1.0 million, or 0.4%, to $281.4 million in
fiscal 1993 from $280.4 million in fiscal 1992. The Company experienced an
increase in sales volume of $17.5 million, or 6.2%, in fiscal 1993 primarily in
the private label canned and frozen businesses. These volume increases were
partially offset by a decline in sales of $16.5 million, or 5.9%, due to a
decline in prices.
Total canned vegetable sales decreased $12.0 million, or 5.7%, to $198.4
million in fiscal 1993 compared to $210.4 million in fiscal 1992. Lower prices
caused a decline in sales of $16.1 million, or 7.7%, in fiscal 1993 compared to
fiscal 1992, partially offset by volume increases accounting for $4.1 million or
a 1.9% increase in sales. Excess production of canned vegetables in fiscal 1993
combined with a large fiscal 1992 carryover inventory created downward pressure
on the Company's pricing of all canned vegetable products. Per unit pricing also
was adversely affected by a lower proportion of brand sales to total canned
sales.
Sales of canned private label products increased $3.2 million, or 2.4%, to
$137.1 million in fiscal 1993 compared to $133.9 million in fiscal 1992,
reflecting an increased emphasis on private label business. The increase in
private label sales included an $8.0 million or 6.0% increase in sales due to
higher volume, offset by a $4.9 million or 3.7% decrease in sales due to lower
pricing. Sales of canned brand products declined by $15.2 million, or 19.9%, to
$61.3 million in fiscal 1993 compared to $76.5 million in fiscal 1992. The
decline in brand sales was a result of a $7.2 million or 9.4% reduction in sales
due to lower volume and an $8.0 million or 10.5% decrease in sales due to lower
prices.
Total frozen sales increased $13.0 million, or 18.6%, to $83.0 million in
fiscal 1993 compared to $70.0 million in fiscal 1992 as a result of the emphasis
on increased sales volume and higher unit priced repackaged goods. This increase
in sales included $10.5 million, or 15.0%, due to volume increases and $2.5
million, or 3.6%, due to price increases. The price increase for frozen products
was due primarily to an increase in sales of higher unit-priced repackaged
products in relation to total frozen sales.
OTHER REVENUE. Other revenue of $2.1 million in fiscal 1993 included
revenue of $1.6 million resulting from insurance claim proceeds for business
interruption due to a fire at the Company's Hoopeston, Illinois facility. That
revenue represented recovery of lost profit margin due to a shortage of finished
goods normally produced at that plant and recovery of costs incurred as a result
of the fire. Other revenue of $676,000 in fiscal 1992 primarily consisted of a
gain on the disposal of an investment and a gain on sale of assets, partially
offset by a write-down of obsolete equipment.
COST OF PRODUCTS SOLD. Cost of products sold increased $11.2 million, or
4.7%, to $250.0 million in fiscal 1993 from $238.8 million in fiscal 1992,
primarily due to an increase of 15.1% in frozen product sales volume. Cost of
products sold as a percentage of net sales was 88.8% in fiscal 1993 and 85.2% in
fiscal 1992. The increase in cost of products sold as a percentage of net sales
in fiscal 1993 as compared to fiscal 1992 was due primarily to lower selling
prices and an increase in frozen product sales, which carry a lower margin, as a
percentage of total net sales.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Total selling, general and
administrative expenses decreased $6.4 million, or 13.2%, to $42.1 million in
fiscal 1993 from $48.5 million in fiscal 1992. This decrease was primarily due
to a $4.3 million decrease in variable selling expenses related to lower canned
brand sales in fiscal 1993. Administrative expenses were reduced $2.0 million
due to cost reduction initiatives implemented during fiscal 1993. Selling,
general and administrative expenses as a percentage of net sales decreased to
15.0% in fiscal 1993 from 17.3% in fiscal 1992, due primarily to reduced canned
sales promotion expenses and lower fixed general and administrative expenses
resulting primarily from the restructuring initiatives.
NONRECURRING CHARGE. In fiscal 1993, the Company recorded a one-time,
non-cash charge of $14.7 million ($21.1 million pre-tax) relating to the
write-down of eight plants to be sold, closed or downsized and the costs
associated with disposing of them.
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<PAGE> 21
INTEREST EXPENSE. Interest expense increased $4.1 million, or 47.7%, to
$12.7 million in fiscal 1993 from $8.6 million in fiscal 1992. The increase in
interest expense in fiscal 1993 was the result of higher interest rates and
higher borrowing levels. In fiscal 1993, the Revolver carried interest rates
which were higher than a bank's reference rate. In fiscal 1992, the Company was
able to borrow at or below a bank's reference rate via revolving debt and
commercial paper. Average total borrowings were higher in fiscal 1993 due to
higher inventory levels and reduced profitability.
INCOME TAXES. The effective tax rates for calculating tax credits were
30.6% for fiscal 1993 and 33.2% for fiscal 1992. The lower effective tax rate in
fiscal 1993 reflected a reduction in the amount of tax benefit that was
recognized because the alternative minimum tax limited the amount of currently
refundable taxes available from net operating loss carrybacks.
NET EARNINGS (LOSS). The net loss for fiscal 1993 was $31.1 million,
compared to a net loss of $9.9 million in fiscal 1992. The fiscal 1993 loss
included a non-recurring restructuring charge of $14.7 million ($21.1 million
pre-tax) and the cumulative effect of adoption of SFAS No. 106 on postretirement
benefits of $1.7 million ($2.5 million pre-tax).
SELECTED QUARTERLY OPERATING RESULTS
The following table sets forth certain unaudited quarterly results of
operations for fiscal 1993 and 1994 and for the first quarter of fiscal 1995. In
management's opinion, this unaudited consolidated condensed information has been
prepared on the same basis as the annual financial statements and includes all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the information for the quarters presented, when read in
conjunction with the consolidated financial statements and notes thereto
included elsewhere in this Prospectus. The operating results for any previous
quarter are not necessarily indicative of results for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED QUARTER ENDED
------------------------------------------------ --------------------------------------------------- -------------
JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1992 1992 1992 1993(1) 1993 1993 1993 1994 1994(2)
-------- ------------- ------------ --------- -------- ------------- ------------ --------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net
sales(3)... $ 59,188 $62,798 $ 78,910 $ 80,486 $ 56,357 $71,148 $ 71,983 $56,657 $38,818
Gross
profit(4).. 9,128 8,833 12,494 945 5,205 8,708 12,166 13,674 8,575
Net
earnings
(loss).... (3,959) (2,370) (707) (24,091) (5,385) 118 226 2,826 407
</TABLE>
- -------------------------
(1) During the fourth quarter of 1993, the Company recorded a one-time, noncash
charge of $14.7 million ($21.1 million pre-tax), which related to the
writedown of eight plants to be sold, closed or downsized and the costs
associated with disposing of them. See "Stokely Restructuring Program."
(2) For interim reporting purposes, certain expenses are based on estimates
rather than expenses actually incurred.
(3) Net sales does not include other revenue.
(4) Gross profit is defined as net sales less cost of products sold.
The Company's operations are seasonally affected by the growing cycle of
the vegetables it processes. Most of the Company's production occurs during the
second quarter of each fiscal year (due to the timing of crop production and
climate conditions) and a majority of sales occurs during the third and fourth
quarter of each fiscal year (due to seasonal consumption patterns for its
products). Accordingly, inventory levels are highest during the second and third
quarters, and accounts receivable levels are highest during the fourth quarter.
Net sales generated during the third and fourth quarter of each fiscal year have
a significant impact on the Company's results of operations. However, the
Company's quarterly operating results for fiscal 1993 and 1994 shown above do
not fully reflect this seasonality, due primarily to the impact of the Company's
restructuring program as well as the effects of industry market conditions (in
terms of price and supply).
The Company's cost and expense reduction programs began to have a greater
impact as fiscal 1994 progressed. The sale or closing of various plants
identified in the restructuring plan reduced fixed manufacturing expenses while
staff reductions affecting most other areas of the Company reduced general and
administrative expenses. The increasing impact of cost reduction programs and
the upward trend in selling
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<PAGE> 22
prices is evident in the improvement in the Company's gross margin (sales less
cost of products sold) by quarter. Gross margin increased from 9.2% in the first
quarter of fiscal 1994 to 12.2% in the second, 16.9% in the third and 24.1% in
the fourth.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
Due to the seasonal production nature of the canned and frozen vegetable
processing business, the Company must maintain substantial inventories of
processed vegetables throughout the year. The working capital requirements
associated with producing and maintaining such inventories are financed
primarily through short-term borrowings and deferred payment terms with major
raw product and container suppliers. The Company's Revolver provides for
borrowings up to $100.0 million as revolving credit loans. The Revolver matures
on May 31, 1995. The Company believes that the Revolver is adequate to meet the
Company's seasonal borrowing needs. Borrowings under the Revolver were $23.0
million at June 30, 1994 and are projected to peak at less than $60.0 million
during fiscal 1995. The maximum amount borrowed in fiscal 1994 under the
Revolver was $68.9 million compared to $97.5 million in fiscal 1993 under the
Revolver and $88.0 million in fiscal 1992 under various short-term credit
facilities. The decrease of $28.6 million in maximum borrowings from fiscal 1993
to fiscal 1994 was due primarily to the Company's restructuring initiatives
resulting in lower inventory levels and operating costs.
From fiscal 1988 to fiscal 1992, the Company funded its acquisitions and
capital expenditures primarily through debt. In addition, during fiscal 1991 and
1992, high production levels led to inventory accumulation which also was
primarily funded through short-term borrowings. As part of the restructuring
plan, the Company reduced its outstanding debt by $29.5 million, from $131.8
million at March 31, 1992 to $102.3 million at March 31, 1994, and intends to
further reduce its outstanding debt with the proceeds from this Offering. For
fiscal 1991 and 1992, the Company's average interest rates paid on its
short-term credit facilities were 8.8% and 5.8%, respectively, and the Company
was able to utilize short-term commercial paper borrowings to fund a portion of
its working capital needs. However, during fiscal 1993, the expanded working
capital requirements and the Company's inability to obtain commercial paper
financing caused the Company to enter into the Revolver, which bears interest at
2.25% over a specified bank's reference rate on the first $40.0 million and
1.25% over a specified bank's reference rate on borrowings in excess of $40.0
million. As a result, for fiscal 1993 and 1994, the Company's average interest
rate on short-term debt (including commercial paper in fiscal 1993 and a portion
of the Revolver) was 7.3% and 8.4%, respectively. The Company has received
proposals from various lenders to provide funds under a New Credit Agreement,
which it intends to enter into in fiscal 1995. Due to the decreased working
capital needs of the Company at the present time, the Company anticipates that
the New Credit Agreement will provide a smaller working capital facility, and
also will have a lower interest rate and less restrictive financial and
operating covenants than the existing Revolver.
In addition to the Revolver, the Company has various long-term debt
obligations, which aggregated $80.4 million at June 30, 1994, excluding current
maturities of $3.9 million. Included in the long-term facilities at June 30,
1994 were two senior notes totaling $36.3 million, various Industrial
Development Revenue Bonds totaling $27.1 million, and $17.0 million of revolving
credit notes classified as long-term. The two senior notes had long-term
principal amounts of $21.2 million and $15.1 million at March 31, 1994,
respectively, bear interest at fixed rates of 9.37% and 9.74%, respectively, and
mature in the years 2000 and 2001, respectively. At June 30, 1994, the majority
of the Industrial Development Revenue Bonds were fixed rate bonds with aggregate
long-term principal amounts of $24.2 million, excluding current maturities.
These fixed rate bonds have scheduled maturities through the year 2005 and bear
interest at fixed interest rates ranging from 7.00% to 8.88%. The remainder of
the Industrial Development Revenue Bonds consist of variable rate bonds which
totaled $2.9 million at June 30, 1994, exclusive of current maturities, have
scheduled maturities through the year 2011 and bear interest at rates which
ranged from 3.88% to 6.38% at June 30, 1994. The $17.0 million principal amount
long-term notes payable at June 30, 1994 consist of that portion of the Revolver
which is not expected to be repaid currently. See Note F of Notes to
Consolidated Financial Statements.
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<PAGE> 23
During fiscal 1993, certain long-term Industrial Development Revenue Bond
issues were classified as current liabilities because the Company was in
technical default of certain financial ratio covenants. During fiscal 1994,
financial covenants in all affected issues, except a $1.4 million Paulding,
Ohio, bond, were amended by the bondholders, such that the Company was again in
compliance. Accordingly, the amended bonds were again classified as long-term
debt at March 31, 1994. The Paulding, Ohio facility was sold in fiscal 1994 and
the proceeds were used to repay the bonds in July 1994.
CASH FLOWS FROM OPERATING ACTIVITIES
Cash flow from operations during the three months ended June 30, 1994
totaled $14.9 million. Of the total cash flow generated, changes in operating
assets and liabilities provided cash of $12.1 million primarily from a reduction
in accounts receivable of $7.6 million and an increase of $5.4 million in
accounts payable.
During fiscal 1994, the Company realized significant improvements in cash
flow from operating activities and applied such cash flow primarily to reduce
short-term debt and accounts payable. Net cash provided by operations improved
$36.7 million to $38.1 million in fiscal 1994 from $1.4 million in fiscal 1993.
The increase in cash provided by operations is partially attributable to reduced
net losses (net of a nonrecurring restructuring charge in fiscal 1993) in fiscal
1994 compared to fiscal 1993. Additionally, cash provided by changes in
operating assets and liabilities increased $23.3 million primarily from the
benefits of inventory and accounts receivable reductions of $45.3 million and
$21.0 million, respectively, offset in part by a reduction in accounts payable
of $25.3 million. The Company's aggressive inventory reduction programs in the
first quarter of fiscal 1994, combined with the elimination of certain product
lines and the adverse growing and harvesting conditions during fiscal 1994, were
the primary reasons for the Company's reduced inventories.
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash provided by (used in) investing activities during the three months
ended June 30, 1994 and during fiscal 1994, 1993 and 1992 were ($2.7 million),
$3.8 million, ($7.3 million) and ($33.5 million), respectively. Purchase of
property, plant and equipment was $2.6 million, $5.2 million, $12.9 million and
$21.7 million during the three months ended June 30, 1994, and in fiscal 1994,
1993 and 1992, respectively.
Capital expenditures during the three months ended June 30, 1994 were
primarily related to the capacity consolidation at the Waunakee, Wisconsin
facility and investment in product quality control equipment at several
processing plants. Capital expenditures in fiscal 1994 were focused on improved
plant efficiency and ongoing compliance with environmental regulations.
Expenditures in fiscal 1994 included capacity consolidation and operation
efficiency projects at the Pickett, Wisconsin, and Waunakee, Wisconsin,
facilities, and improvements to a wastewater disposal system in Walla Walla,
Washington. These capital expenditures were financed through cash flow from
operations. There were also capital expenditures to complete the reconstruction
of the Company's Hoopeston, Illinois, facility damaged by fire in fiscal 1993,
which were financed with insurance proceeds.
In fiscal 1994, the Company generated $9.1 million in additional cash flow
from the sale of four processing facilities and other miscellaneous assets as
part of the Company's restructuring program. Proceeds from the plant sales were
used primarily to pay down long-term debt.
Capital expenditures for fiscal 1993 and 1994 were below the amount of
depreciation. In these years, the Company intentionally limited its level of
capital expenditures to short-term pay back and necessary quality and
environmental projects, but plans to increase capital expenditures to the level
of annual depreciation in future years. Capital expenditures budgeted for fiscal
1995 total $4.0 million, primarily for product quality improvements and the
initial phase of a new management information system.
Capital expenditures in fiscal 1993 included expansion of corn capacity at
the Wells, Minnesota, facility, wastewater disposal systems at the Paulding,
Ohio, and Scottville, Michigan, facilities and completion of the corporate
offices in Oconomowoc, Wisconsin. The capital expenditures were financed through
short-term debt. Capital expenditures also were made to begin rebuilding the
Company's Hoopeston, Illinois, facility that was damaged by fire. These
expenditures were financed by insurance proceeds. In fiscal 1992, the Company
21
<PAGE> 24
acquired the assets of Americana Packing and Distribution of McAllen, Texas, a
frozen vegetable processing company, for $9.3 million.
CASH FLOWS FROM FINANCING ACTIVITIES
During the three months ended June 30, 1994, the Company decreased its
borrowings under the Revolver by $12.0 million to $23.0 million. This decrease
generally was funded by the cash flow of $14.9 million generated by operating
activities.
At March 31, 1994, the Company had $35.0 million of borrowings under the
Revolver, of which $17.0 million was classified as long-term and $18.0 million
was classified as short-term. At March 31, 1993, the Company had $66.3 million
of borrowings under the Revolver, of which $35.0 million was classified as long-
term and $31.3 million was classified as short-term. During fiscal 1994, the
Company decreased its borrowings under the Revolver by $31.3 million through
planned cash flow improvements from the reduction in accounts receivable and
inventories.
In fiscal 1992, the Company issued new long-term debt consisting of a $20.0
million private placement and a $3.0 million Industrial Development Revenue
Bond. In fiscal 1992, $20.0 million of commercial paper borrowings were
classified as long-term debt.
IMPACT OF INFLATION
Current financial statements are prepared in accordance with generally
accepted accounting principles and report operating results in terms of
historical costs. They provide a reasonable, objective, quantifiable statement
of financial results but do not evaluate the impact of inflation. Competitive
conditions permitting, the Company modifies its selling prices to recognize cost
changes as incurred. Management believes the impact of inflation does not
distort the Company's financial statements since prices are determined by supply
and demand.
22
<PAGE> 25
BUSINESS
GENERAL
Stokely USA, Inc. is a leading domestic producer of canned and frozen
vegetables. The Company processes, markets and sells a broad range of vegetables
under customer private labels and under the Stokely's Finest(R) label, Stokely's
Gold(TM) label and other brand labels through the retail, food service and
industrial channels of distribution. The Company believes it is the largest
processor of private label canned vegetables in the United States, selling to
most major supermarket chains, including Winn Dixie, Kroger, A&P, Aldi and
Safeway, and to major food wholesalers, including Super Valu and Fleming
Companies, Inc. The Company is also a leading United States exporter of canned
vegetables to Europe and Asia. The Company believes the breadth and mix of its
product lines, including both basic and specialty vegetables, enhance its
competitive position by allowing it to market its products to many different
distribution channels and consumer markets.
THE VEGETABLE PROCESSING INDUSTRY
The processed canned and frozen vegetable industry in the United States
currently accounts for an estimated $5.1 billion in sales per year and is
estimated to be growing at a rate of 1.8% per year. In addition, an estimated
98% of households in the United States purchased canned vegetables in 1989. The
canned vegetable market, the Company's primary market, represented an estimated
$3.0 billion in annual sales in 1993. Of the canned vegetable market, the
private label channel of distribution accounts for approximately 35% of the
canned vegetable industry's total retail sales, and is currently experiencing
market share growth.
The vegetable processing industry is characterized by several large
producers, but also includes a number of smaller independently owned producers.
In general, the canned and frozen processed vegetable industry is mature and
capital intensive, and, as such, there have been few entrants into the market in
recent years. Over the past ten years, the Company believes the industry has
been characterized by plant reduction and consolidation.
The pricing structure in the canned and frozen vegetable processing
industry is dependent upon the supply of agricultural products and is subject to
the variable nature of agricultural production. Selling prices of canned and
frozen products are a direct result of industry product supply, which correlate
to plantings, growing conditions and inventories. A year of high supply
generally results from two critical factors. First, inventory carryover levels
provide processors with an indication of which markets might be short on product
and, therefore, might hold the best promise for favorable price trends.
Declining carryovers typically encourage processors to expand acreage devoted to
a particular crop in anticipation of higher prices. Second, weather impacts
total production through its influence on yield per acre. Favorable growing
conditions typically boost yield per acre and, therefore, total production.
Unfavorable growing conditions have the opposite effect. Weather impacts not
only crop size, but also crop quality.
Increased plantings and improved growing conditions caused over-supply in
the vegetable market during fiscal 1992 and 1993, forcing industry prices and
margins downward. During the latter part of fiscal 1993 and continuing into
fiscal 1994, market prices improved due to reduced plantings, unfavorable
growing conditions and the consequential effects on supply and pricing.
BUSINESS STRATEGY
In fiscal 1993, the Company began to implement a new business strategy
designed to enhance its leadership position in certain markets and products and
to facilitate the Company's ability to achieve a higher level and consistency of
earnings over time. The key elements of the strategy are as follows:
- FOCUS ON CORE PRODUCTS LINES. The Company has narrowed its product focus
to product lines in which it has significant market share -- corn, green beans,
peas and root crops -- and eliminated several unprofitable non-core lines,
including the canned tomato and fruit product lines and southern frozen
vegetables. This focus has allowed the Company to significantly reduce its fixed
manufacturing and administrative expenses and its variable costs per unit in an
industry generally characterized by a high ratio of variable to fixed costs.
Fixed
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<PAGE> 26
manufacturing expenses for the canned portion of the business were reduced 24.7%
for fiscal 1994 compared to fiscal 1992. During the same period, fixed selling,
general and administrative expenses were reduced 37.5%.
- EMPHASIZE THE PRIVATE LABEL CHANNEL OF DISTRIBUTION. Since fiscal 1992,
the Company has placed significant emphasis on its presence in the private label
channel of distribution. Private label has been the Company's primary
distribution channel since it was established in 1920, and the Company currently
holds a leading market share in this channel. Customers include major national
supermarket chains such as Winn Dixie, Kroger, A&P, Aldi and Safeway. In
addition, the Company does not believe the three largest industry suppliers
currently are emphasizing the private label channel of distribution. The
Company's operating margins in private label are generally higher than the
margins realized in its brand products business because of lower selling and
support expenses. Other advantages of increasing its share position in the
private label market in addition to sales growth include greater operating
efficiency, supplier leverage, channel influence and cross-selling
opportunities.
The Company believes that opportunities exist to achieve share growth in
this channel on an internal basis and through selective mergers or acquisitions.
The Company's competitive advantages in this channel include: (1) the Company's
74 years of experience as a private label processor/marketer has enabled the
Company to develop substantial expertise in agriculture operations, plant
operations, distribution, marketing, sales and customer service; (2) the Company
is the largest producer of corn, the leading category item, for the private
label channel of distribution which the Company believes gives it supplier
leverage and channel influence; (3) the Company is a large producer of root and
specialty crops, relatively stable margin items for the Company which are
demanded by the private label channel of distribution and are not produced on a
full-line basis by many of Stokely's competitors; (4) the Company can leverage
its brand marketing expertise and private label market share to participate in
the emerging upscale private label market; (5) the Company has the ability to
combine brand and private label shipments to a single destination, thereby
reducing costs for its customers; and (6) the Company believes it has a
recognized level of service responsiveness and innovation.
- MAINTAIN THE COMPANY'S BRAND MARKET SHARE WHILE PURSUING CHANGES IN
PRODUCT MIX. The Stokely's Finest(R) brand is one of the major brands in its
primary brand geographic area of distribution, the southeastern United States.
The Company has maintained its brand position while rationalizing its product
line, including a 25% reduction in the number of SKUs over the last two years.
The Company believes that opportunities exist to enhance consumer
recognition of its brand names and to selectively expand its brand product lines
by developing new brand specialty products. For example, the Company has
introduced a line of value-added specialty products sold under the Stokely's
Gold(TM) label which utilizes specialty varieties and upscale packaging. The
Company believes these products have not only provided the Company with a
competitive advantage, but also have improved profit margins in Stokely's brand
business. The Company has realized 20% average annual sales growth for this line
during each of the last three years and the Company sees additional growth
potential for this line. In fiscal 1994, the Stokely's Gold(TM) label products
consisted of 14 different products, and accounted for 7% of the Company's brand
sales. Because of their uniqueness, sales of these products do not overly
cannibalize the Stokely's Finest(R) brand.
- PURSUE GROWTH OPPORTUNITIES IN FOREIGN MARKETS. Exports of processed
vegetables represent a growing channel of distribution in the processed
vegetable industry. For the past five years, the volume of total canned corn
exported by U.S. processors, the major component of U.S. exported processed
vegetables, has grown at a compound annual rate of 15%. The Company believes
that its strengths as a leading U.S. canned corn producer and a major exporter
create opportunities for the Company to expand its export sales. The Company has
achieved a significant market share in exports to Germany and Scandinavia and
intends to increase its emphasis on expanding export sales to Eastern Europe,
Asia, Canada and Mexico. The Company's marketing approach to the export markets
varies from its North American competition. The Company prefers to establish
direct selling relationships with customers rather than the conventional
practice of dealing through export traders and brokers, and thereby attempt to
reduce its variable selling expenses.
- IMPROVE EFFECTIVENESS AND EFFICIENCY OF FROZEN VEGETABLE BUSINESS. In
order to increase its profit margins in the frozen vegetable business, the
Company has downsized its frozen vegetable operations following a period of
rapid expansion and redirected its sales to industrial customers. The Company
generally has been
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<PAGE> 27
able to generate higher margins on its industrial sales due to decreased
packaging and promotional expenses associated with sales of frozen products in
bulk. The Company plans to continue to increase its presence in this channel
through the addition of new customers, and to increase its leading position in
certain higher margin specialty products, while remaining one of the major
players in frozen corn production, the leading category item in the frozen
vegetable market.
PRODUCTS
GENERAL
The Company cans, freezes and sells a variety of vegetables. Its principal
products are corn, green beans, peas and root crops, including carrots, beets,
mixed vegetables and potatoes. Other products processed and marketed by the
Company include sauerkraut, processed dry beans and pumpkin, supplemented by
purchased items such as asparagus, which is packed for Stokely by others under
contractual co-pack arrangements. The following table shows, for each of the
last three fiscal years, the amount and percentage of net sales for each of the
Company's principal raw product groups.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31,
-----------------------------------------------------------------
1992 1993 1994
------------------- ------------------- -------------------
NET NET NET
SALES PERCENT SALES PERCENT SALES PERCENT
-------- ------- -------- ------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CANNED VEGETABLES:
Corn................................. $ 70,200 25.0% $ 78,400 27.8% $ 67,400 26.3%
Green beans.......................... 40,200 14.4 35,800 12.7 41,500 16.2
Peas................................. 23,000 8.2 23,100 8.2 20,100 7.9
Root crops........................... 15,200 5.4 13,900 5.0 14,700 5.7
Other................................ 61,800 22.0 47,200 16.8 32,000 12.5
-------- ------- -------- ------- -------- -------
Total canned vegetables........... 210,400 75.0 198,400 70.5 175,700 68.6
-------- ------- -------- ------- -------- -------
FROZEN VEGETABLES:
Corn................................. 18,000 6.4 19,600 7.0 24,700 9.7
Peas................................. 19,000 6.8 8,100 2.9 13,400 5.2
Other................................ 33,000 11.8 55,300 19.6 42,300 16.5
-------- ------- -------- ------- -------- -------
Total frozen vegetables........... 70,000 25.0 83,000 29.5 80,400 31.4
-------- ------- -------- ------- -------- -------
Total canned and frozen
vegetables................... $280,400 100.0% $281,400 100.0% $256,100 100.0%
======== ===== ======== ===== ======== =====
</TABLE>
CANNED VEGETABLES
The Company produces ten different canned vegetable products, each in
numerous varieties, styles and quality grades, and utilizes seven different can
sizes and three different glass jar sizes. Each vegetable product is produced
and sold in three to seven quality grades, which are mainly defined by maturity
of the raw product. The highest grades typically are used for premium private
label products and Stokely's Gold(TM) brand label products. The lower grades
typically are used by customers who emphasize price value. The Company uses a
white-lined can for most of its brand products, which the Company believes
favorably impacts quality perceptions among consumers.
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<PAGE> 28
By supplying all major can sizes in all major Midwest-type vegetables in a
variety of styles, mixtures and features, as well as supplying certain other
vegetables purchased for resale as accommodation items, the Company is a
"full-line" or "turn" supplier to its customers. "Turn" business refers to
supplying a broad line of products to a retailer on a regular basis principally
in single shipments, to support that retailer's everyday needs. "Turn" business
typically is sold at higher prices than "promotion" business, which usually
consists of a large quantity of various items.
The Company's product development efforts are designed to respond to
customer needs and emerging markets and to create more demand for its vegetable
products by focusing on new varieties, styles and mixtures. The Company produces
to order for certain customers based on their product specification demands. In
addition, in recent years, the Company has developed and now offers no-salt
versions of many of its vegetable products. The Company also has introduced new
mixtures and varieties.
Corn. Corn is the Company's leading product, as measured by both sales
dollars and volume. Based on industry data, in 1993, the Company was one of the
largest producers of canned corn products in the United States, producing
approximately 13% of all canned corn sold by United States processors. The
Company's canned corn consists of various varieties (super sweet, Gold'n White,
Shoepeg White Corn and traditional) and styles (whole kernel, cream style,
mixtures and no-salt versions). During fiscal 1994, approximately 61% of the
Company's canned corn was sold to the private label industry, 22% was sold under
the Company's brand label, with an emphasis on special varieties for the
Stokely's Gold(TM) label, and 17% was sold to the food service industry. Recent
canned corn product introductions include Stokely's Gold Fiesta Corn(TM),
Stokely's Gold'n White Corn and Stokely's Crisp'n Sweet Corn(TM). The Company's
corn for canned products is grown primarily in Wisconsin, Minnesota, Illinois
and Iowa.
Green Beans. Green beans are the Company's second highest volume product.
Based on industry data, in 1993, the Company was one of the larger producers of
canned green bean products in the United States, producing approximately 10% of
all canned green beans sold by United States processors. The Company's canned
green beans consist of various varieties (Italian flat pod beans and European
slender whole green beans) and styles (cut, french style and whole). During
fiscal 1994, approximately 42% of the Company's canned green beans were sold to
the private label industry, 30% were sold to the food service industry and 28%
were sold under the Company's brand labels. Recent canned green bean product
introductions include Stokely's Gold European Whole Green Beans and Stokely's
Gold Italian Flat Green Beans. The Company's green beans are grown primarily in
Wisconsin and Michigan.
Peas. Based on industry data, in 1993, the Company was one of the larger
producers of canned peas in the United States, producing approximately 15% of
all canned peas sold by United States processors. The Company's canned peas
consist of various varieties (early maturing, small berry, large berry and
various mixtures) and styles, including no-salt versions. During fiscal 1994,
approximately 65% of the Company's canned peas were sold to the private label
industry, 20% were sold under the Company's brand labels and 15% were sold to
the food service industry. Recent canned pea product introductions include
varieties such as Stokely's Gold Tiny Party Peas & Petite & Sweet Baby Carrots.
The Company's peas are grown primarily in Wisconsin and Minnesota.
Root Crop Vegetables. The Company's root crop vegetables consist of
carrots, beets, mixed vegetables and potatoes, all of which are grown primarily
in Wisconsin. The Company occasionally will source root crop vegetables from
various Southern states, to assure the Company has a continuous supply. Based on
industry data, in 1993, the Company sold approximately 10% of all canned root
crop vegetables sold by United States processors. The Company's root crop
vegetable products consist of various varieties (based on count and mix) and
styles (whole, sliced, crinkled slices and waffle slices). During fiscal 1994,
approximately 47% of the Company's canned root crop vegetables were sold to the
private label industry, 36% were sold to the food service industry and 17% were
sold under the Company's brand labels. Recent canned root crop vegetable product
introductions include Petite & Sweet Baby Carrots.
26
<PAGE> 29
Other Vegetables. The Company also cans and sells various other vegetables,
including pumpkin, processed dry beans (pinto, kidney, pork'n beans and garbanzo
beans) and sauerkraut. During fiscal 1994, approximately 60% of the Company's
other vegetables were sold to the food service industry, 31% were sold to the
private label industry and 9% were sold under the Company's brand labels. The
Company has a major share of private label pumpkin sales in both retail and food
service markets. The Company's sauerkraut business utilizes brands, private
label retail and food service to create an efficient manufacturing base. In
addition to the Stokely's Finest(R) brand, its Meeter's Sauerkraut(R) has a
strong presence in various markets. The Stokely's Finest(R) brand was the first
to introduce Bavarian Sauerkraut(R), now a major category item. In fiscal 1992,
Stokely's Finest Sweet & Sour Kraut(R) was introduced in regional markets.
Processed dry beans, such as canned kidney beans, pork'n beans, pinto beans and
garbanzo beans, are processed year-round, and have a consumption pattern
counter-seasonal to traditional Midwest items.
FROZEN VEGETABLES
Most of the Company's frozen vegetable products are sold through the
industrial channel of distribution in bulk quantities. The Company also sells a
small amount of its frozen vegetable products to the private label industry, the
food service industry and as exports. Because of the Company's emphasis on the
industrial channel of distribution for its frozen vegetable products, new
product development is not actively pursued.
Each frozen vegetable is produced, frozen and sold in three to eight
quality grades, which are mainly defined by maturity of the raw product. The
frozen vegetable products sold through the industrial channel of distribution
are sold primarily in bulk size quantities, while sales to the private label,
food service and export markets are packaged in bulk and in individual boxes and
bags. The Company's vegetables for its frozen products are grown primarily in
Washington.
Corn. The Company's frozen corn consists of various varieties (super sweet,
jubilee and white) and styles (cob corn, cut corn and blends). During fiscal
1994, approximately 74% of the Company's frozen corn was sold through the
industrial channel of distribution, 16% was sold to the private label industry
and 10% was sold to the food service industry.
Peas. The Company's frozen peas consist of various varieties (regular size
and petite) and styles. During fiscal 1994, approximately 79% of the Company's
frozen peas were sold through the industrial channel of distribution, 13% were
sold to the private label industry and 8% were sold to the food service
industry.
Other Vegetables. The Company also freezes and sells various other
vegetables, including sugar snap peas, carrots, pearl onions and lima beans. The
Company is a leading United States producer of frozen sugar snap peas. These
other vegetables are sold in different varieties and styles. During fiscal 1994,
approximately 67% of the Company's sales of other frozen vegetables were sold
through the industrial channel of distribution, 18% were sold to the private
label industry and 15% were sold to the food service industry.
CUSTOMERS, MARKETING AND SALES
GENERAL
The Company markets and sells its canned and frozen vegetable products
under private labels and its brand labels for home use, and also to the food
service industry, including restaurants, fast food chains, hospitals, schools
and the military, and to industrial accounts. The Company is a leading processor
of private label canned vegetables in the United States, and sells to many major
supermarket chains and other food distributors who market the products under
their own label. The Company also processes and markets its vegetable products
under the Stokely's Finest(R), Stokely's Gold(TM) and other brand labels to
grocery wholesalers and grocery chain stores. The Company's food service sales
involve sales, generally in large containers, directly to or through food
service distributors, to purchasers of food products such as the United States
government, fast food chains, restaurants and hospitals. The Company also sells
its vegetable products to industrial customers who either blend, repack or use
the Company's vegetable products as an ingredient.
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<PAGE> 30
The following table shows the net sales and percentage of total net sales
contributed by the Company's brand label, private label, food service and frozen
sales accounts for each of the last three fiscal years.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------------------------------------------------
1992 1993 1994
------------------ ------------------ -------------------
NET NET NET
SALES PERCENT SALES PERCENT SALES PERCENT
-------- ------- -------- ------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Private label(1)...................... $ 91,700 32.7% $ 89,400 31.8% $ 82,700 32.3%
Brand label(2)........................ 76,500 27.3 61,100 21.7 49,100 19.2
Food service(3)....................... 42,200 15.0 47,900 17.0 43,900 17.1
Frozen (industrial and other)(4)...... 70,000 25.0 83,000 29.5 80,400 31.4
-------- ------- -------- ------- -------- -------
Total............................... $280,400 100.0% $281,400 100.0% $256,100 100.0%
======== ===== ======== ===== ======== =====
</TABLE>
- -------------------------
(1) Of the Company's total private label sales shown above, export sales
totalled $17.0 million, $16.5 million and $13.6 million for fiscal 1992,
1993 and 1994, respectively.
(2) Of the Company's total brand label sales shown above, export sales totalled
$2.3 million, $2.2 million and $1.0 million and U.S. government sales
(including sales through military commissaries) totalled $9.5 million, $6.9
million and $6.1 million for fiscal 1992, 1993 and 1994, respectively.
(3) Of the Company's total food service sales shown above, U.S. government sales
totalled $12.8 million and $9.7 million for fiscal 1993 and 1994,
respectively.
(4) Sales to industrial accounts accounted for $58.0 million and $57.0 million
of total frozen sales shown for fiscal 1993 and 1994.
For the fiscal year ended March 31, 1994, no single customer accounted for
more than 10% of the Company's total sales.
PRIVATE LABEL SALES
The Company's private label sales involve sales to major supermarket chains
and other food distributors who market the products under their own labels.
Major private label customers of the Company include Kroger, Winn Dixie, A&P,
Meijer, Aldi, HEB, Associated Grocers, Roundy's, Shaws, Supermarkets General,
Grand Union and Super Valu. Most of the Company's private label sales are canned
vegetable products, although the Company also sells a limited amount of frozen
private label products. The Company is the leading supplier of Midwest-type
canned vegetables (such as corn, green beans, peas and root crops) to the
grocery private label industry, with significant private label canned corn
sales.
Private label sales are made through the Company's wholly-owned subsidiary,
Oconomowoc Canning Company, Inc. Approximately 80% of private label sales are
made through commissioned brokerage representatives, while the remaining 20% are
made direct to the customer. The Company's private label division's primary
responsibilities include selling private label products, ensuring customer
satisfaction, managing inventories and gaining new customers and distribution.
The division includes four sales managers and a national sales manager who is
the Vice President of Oconomowoc Canning Company, Inc.
Customers include most major grocery wholesalers and chains. Customer and
market development efforts focus primarily on helping customers lower costs of
buying, receiving and merchandising canned vegetables through a combined
"partnering" approach which involves the Company's sales force meeting with key
customer representatives from various divisions within the customer's
organization to develop a joint logistic plan. Development efforts also include
increasing profitability by targeting higher price/quality-seeking customers in
an attempt to benefit from the emerging upscale private label market. The
Company's implementation of and experience with the Stokely's Gold(TM) brand
label products provide an opportunity to increase private label sales through
the development of customer labels for premium private label lines. For example,
the Company is promoting private label sales of flat pod green beans and slender
whole green beans, two canned items recently introduced under the Stokely's
Gold(TM) program.
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<PAGE> 31
BRAND LABEL SALES
The Company's brand label division sells brand canned vegetables to grocery
wholesalers and chains. Major customers include Kroger, Food Lion, HEB, Grocers
Supply, Bi-Lo, Marsh, Piggly Wiggly, Super Valu, Roundy's, Fleming Companies,
Inc. and Walmart. The products primarily include a complete line of Midwest-type
vegetables sold under the Stokely's Finest(R) brand name, and also include
products sold under the premium Stokely's Gold(TM) brand and other regional
labels. Products sold under Stokely's brand labels are marketed through
independent food brokers who sell on a commission basis and provide local
marketing and service support to their distributors. The Company's sales of
brand label products have declined from $76.5 million, or 27.3%, of total sales
during fiscal 1992 to $49.1 million, or 19.2%, of total sales during fiscal
1994. The decline was due primarily to the discontinuance of certain low margin
or unprofitable product lines as part of the Company's restructuring program.
The Stokely's Finest(R) brand products sales accounted for approximately
10% of total industry brand canned sales in the Midwest and Southeast United
States in 1993, the Company's primary brand geographic area of distribution.
Sales under the Stokely's Gold(TM) program, a premium line of unique vegetable
varieties such as Crisp'n Sweet Corn, European Slender Whole Green Beans, and
two new items (Fiesta Corn and Tiny Party Peas & Petite & Sweet Baby Carrots),
have increased approximately 20% on an annual basis over the last three years.
The Company sells its brand label products through a broker network under
the direction of Stokely's regional sales manager. Approximately 40 independent
food brokers operate in Stokely's major metropolitan markets. This broker
network focuses upon gaining display, advertising and other retailer support, in
addition to ensuring customer satisfaction and developing the customer base.
Marketing efforts include television advertising and print media-delivered
promotions in major markets. Initiatives that help customers increase their
category profitability include the Stokely's Gold(TM) program (with the
principal advantage of higher margins for both the Company and its customers)
and joint brand-private label shipping options (with the competitive selling
point of higher inventory turns and lower average inventories for the customer).
These initiatives are instrumental in maintaining shelf presence and customer
support.
FOOD SERVICE SALES
Food service sales are made, generally in larger containers, directly to or
through food service distributors, to purchasers of food products such as the
United States government, fast food chains, restaurants and hospitals. Most food
service sales are made through commissioned brokerage organizations. Sales
efforts are managed by a Director of Food Service Sales who is supported by
three sales managers for the commercial market. The Company's largest single
customer in food service sales is the U.S. government.
Approximately 75% of the Company's canned food service sales are private
label, primarily to large corporate distributors (such as Sysco, US Foodservice,
Rykoff Sexton, Gordon's Foodservice) and large buying groups (such as Pocahontas
and PYA/Monarch). Food service distributors then sell to restaurants, schools
and hospitals. Contact with food service distributors also cultivates
relationships with national chain restaurant accounts, a growing part of the
Company's food service business. The Company's sales to national chain
restaurants include Chi Chi's, Grandy's and Golden Corral. The Company has a
strong position in corn (accounting for food service sales of $11.1 million, or
13% of estimated total industry food service sales in 1993), a growing position
in canned pumpkin, and a growing position as a supplier to national chain
restaurant accounts.
FROZEN SALES
The Company's frozen sales principally involve sales to industrial
customers that either blend, repack or use the vegetable products as an
ingredient. National restaurant chains are another large customer in frozen
sales. The frozen sales division of the Company has been restructured and
downsized to emphasize profitable products and channels. Frozen product sales
are managed by the Director of Frozen Sales. The frozen product sales team
focuses on industrial and national chain food service business, with a smaller
presence in export sales and retail sales that can be efficiently serviced from
the Company's Northwest operations. The sales
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<PAGE> 32
group emphasizes direct sales, without broker commissions, to large corporate
bulk customers, such as Con Agra, Campbells, and Simplot, and national chain
restaurants, such as Denny's, Chi Chi's and Morrisons Cafeterias.
EXPORT SALES
Exports of processed vegetables represent a growing channel of
distribution. From 1988 to 1993, total canned corn exports, the major component
of exported processed vegetables, have grown at a compound annual rate of 15%.
The Company's export sales principally involve sales of private label canned
vegetables. The Company believes it is the leading exporter of canned corn to
Germany and Scandinavia. The Company's export sales accounted for 8.1%, 8.6%,
and 7.4% of total canned sales for fiscal 1992, 1993 and 1994, respectively. The
decline in fiscal 1994 was primarily due to the low yield of the corn crop that
year and thus the reduced availability of corn product to export. The Company
intends to continue to emphasize export sales in future years. The Company's
international sales organization is based in Oconomowoc, Wisconsin and sells
through agents, commissioned brokers and direct sales. In fiscal 1994, export
sales account for 20% of the Company's total canned corn sales. The Company sees
additional opportunities to increase exports to Eastern Europe, Asia, Canada and
Mexico primarily because these markets are becoming more open to United States
exports generally, and because canned vegetables are perceived as a specialty
and convenience item in these areas.
ADVERTISING, PROMOTION AND CUSTOMER SERVICE
The Company's marketing effort is led by a marketing group that also is
responsible for new product development, new label and package initiatives and
other customer focused innovation projects in all sales divisions. The customer
service and inventory management team also support sales by ensuring customer
orders are filled smoothly and inventory at various distribution centers remain
at adequate levels.
The Company emphasizes responsiveness to customer needs, and the Company
has invested in technology to support its Efficient Customer Response
initiatives. In addition, the Company has developed modular pallets that allow
customers to avoid storage costs by "cross-docking" the pallet directly to the
retail outlet, allowing customers to avoid set-up labor costs when the product
arrives at the retail location. The marketing team supports all marketing
requirements for brand label products, and also assists other sales groups in
supporting customer driven innovation in services.
The Company supports its brand marketing efforts with regional media
advertising programs, including radio and television commercials, coupon
circulation and newspaper advertisements, in addition to strong emphasis on
in-store point-of-sale promotions. Media advertising is employed to support the
Company's brand sales and is focused in the Midwest and Southeast United States
geographic markets. Private label, food service and industrial sales are not
supported by Company media advertising because the Company produces and labels
the product for direct end-user marketing by the customer.
SOURCES OF SUPPLY
The Company acquires its raw agricultural products for processing from
independent growers who operate under annual contracts with the Company. Most
raw agricultural production is contracted before the growing season with farmers
who agree to plant and cultivate the crops. This method of securing raw product
has been satisfactory to the Company and its growers, and the Company has not
experienced difficulty in contracting for raw agricultural products. Contracts
are negotiated in late winter for the upcoming processing season. Contracts
specify, among other things, the type and quantity of raw product to be supplied
as well as the price. The Company has an established base of experienced growers
and has experienced only modest turnover from year to year.
The Company attempts to reduce the agricultural risk of unfavorable growing
conditions by utilizing greater geographic diversity and a higher proportion of
irrigated acreage than its competitors. The Company currently contracts
approximately 110,000 acres in Wisconsin, Minnesota, Iowa, Illinois, Michigan
and Washington, with irrigated acres accounting for approximately 40% of the
total. Contracted acreage is in close
30
<PAGE> 33
proximity to producing plants due to the perishable nature of the raw product.
Processing generally is performed within several hours of harvest to assure the
best possible product quality.
Stokely field personnel are involved in all phases of crop production. The
Company works closely with major seed companies in the testing of improved
varieties. Desirable traits include superior flavor and color retention, pest
and disease resistance, yield improvement and drought resistance. Field
personnel provide the proper seed variety to the grower and instruct them on the
precise time to plant. This is important to assure harvest schedules that result
in sufficient supplies of raw product to capture operating efficiencies
associated with maximum plant output. The Company conducts periodic inspections
of crops during the growing cycle and generally performs the actual harvesting
for the growers.
The Company utilizes integrated pest management techniques to assure
maximum control of damaging insects while minimizing the use of chemical control
methods. Such techniques include field location selection for specific crops,
rotation patterns, census activity during the growing season and chemical
control only when necessary based on census data. This results in minimizing
insect related damage problems while keeping chemical control usage well below
allowable levels.
Stokely agricultural personnel monitor crop maturation rates utilizing
sophisticated harvest management practices. Maturity is a primary determinant of
product quality and the maturity "window" to meet a required specification is
very narrow. To assure that product is harvested within this window, the Company
directs all harvesting operations utilizing its own equipment and personnel. In
this manner, the Company maintains proper supplies of raw product entering the
processing facilities at the desired maturity level while minimizing unharvested
acreage.
Cans are a major component in the final product cost for the Company's
canned business, representing approximately one-third of total direct
manufacturing cost. Cans are sourced principally from Ball Corporation, American
National Can and Crown Cork & Seal under contract supply agreements. The Company
has excellent working relationships with its can vendors and has not experienced
difficulty in obtaining adequate supplies of cans for production. The Company's
size allows it to source cans at a competitive price, which is a significant
factor given the importance of the container cost component to the overall cost
structure.
PRODUCTION AND DISTRIBUTION
The Company operates twelve processing plants, nine of which are dedicated
to canned vegetables and three of which are dedicated to frozen vegetables. Most
of the Company's raw products must be processed within hours of harvesting to
maintain desired product quality, so plants are located in close proximity to
the Company's principal growing areas. Following harvesting, raw products are
transported to the processing facility where they are sorted, sized, cut or
trimmed, washed, inspected and then canned and cooked or individually quick
frozen. In addition to visual inspection, the Company increasingly relies on
electronic inspection machinery that recognizes and rejects any off-color or
blemished product. The Company's high emphasis on quality assurance during the
production process also includes the grading and inspection of raw products,
inspection of incoming cans, sampling and laboratory testing of products during
production and inspection of finished goods on a sample basis prior to shipment.
Monitoring systems continuously record cooking times and temperatures as well as
freezing temperatures so that each product is processed according to the precise
method proven to yield consistent quality results and ensure maximum retention
of flavor and texture. The Company employs quality control inspectors at each
facility and four food technologists supervised by the Director of Quality
Management, whose primary responsibilities include quality assurance and
compliance. Technologists also run tests to ensure that all standards for food
safety are met or exceeded.
The Company recognizes that consistent product quality is crucial to the
success of its business and has a formal program in place utilizing Total
Quality Management ("TQM") techniques. These techniques employ statistical
analysis that enable employees to identify problems, gather and prioritize data,
evaluate solutions and implement them. An essential part of the TQM process
relating to production is attribute grading, which is a statistical product
evaluation technique utilized at all of the Company's plants. From thousands of
non-destructive samples taken, quality assurance personnel are able to observe
potentially troublesome trends
31
<PAGE> 34
developing. Supervisors are alerted who then trace problems to sources such as
seed varieties, growing conditions, bird or insect damage, harvesting or
handling.
Finished products are carefully monitored throughout the handling and
storage process. Frozen vegetables are stored in 1,500 pound bulk containers and
held in temperature controlled warehouses. Packaging of frozen product into
other size containers takes place as orders are received. Finished canned goods
for the Stokely brand are labeled prior to storage. Private label retail and
food service finished goods are stored unlabeled until orders are received. The
appropriate customer label is affixed at that time and the order shipped. The
Company maintains a large inventory of customer-owned can labels to assure rapid
order fulfillment.
In addition to producing quality products, careful storage and efficient
distribution are vital to success. The Company distributes its products through
its two state-of-the-art distribution centers in Wisconsin and through a network
of rented forward warehouses, the largest of which are in Chattanooga,
Tennessee; Indianapolis, Indiana; Orange County, California; and Tampa, Florida.
The Company also ships full loads directly from its processing facilities. The
Company's transportation personnel are responsible for routing goods from
production plants to regional and consolidating warehouses and finally to
customers. Depending on quantities and distance, finished goods are shipped by
rail or truck, whichever is most cost-effective. The Company's transportation
personnel have negotiated special rail rates for shipments of canned products to
forward distribution centers. As a result, the Company is able to compete
effectively in the large Southern California markets with processors based in
the Northwest region of the United States.
MANAGEMENT INFORMATION SYSTEMS
The Company depends upon the accuracy, quality and proper utilization of
its management information systems to effectively manage its business. The
Company has installed both customized and purchased management information
systems operating on an IBM AS/400 computer that allow for centralized data
collection and management of key functions such as inventory control, accounts
receivable, order processing, production control, sales and distribution, and
general accounting. These systems provide concise and timely information
critical to business operations and are adequate to support current operations.
Currently approximately 80% of the Company's sales are ordered through
electronic means.
The Company is seeking to use service innovation as a point of competitive
differentiation. As it develops increasingly sophisticated programs to bring
value to its customers, new demands will be placed on its information systems.
In order to prepare for this, the Company recently completed an extensive
evaluation of its current systems and business processes and has targeted phased
implementation of new core processing systems beginning in fiscal 1996. The new
systems will be more flexible and are intended to yield greater fact based
analysis and decision making throughout all levels of the Company. This added
analytical capability and flexibility will assist the Company in meeting the
increasingly complex and rapidly evolving needs of its customers. These needs
include vendor managed inventory programs, Executive Information Systems,
improved customer and market region sales management, and additional Electronic
Data Interchange services. Customer service, order entry and distribution system
improvements are the priority for the initial implementation phase of the new
systems.
COMPETITION
All of the Company's products compete with those of other national, major
and smaller regional food processing companies under highly competitive
conditions. The principal factors of competition in the brand and private label
canned vegetable business are price and product quality, availability of a broad
line of products, timely delivery, and customer service and satisfaction. An
additional competitive factor for the Company's brand canned products is
consumer demand as developed through expenditures on advertising, sales
promotion and maintenance of retail shelf space. The principal factors of
competition in the Company's frozen vegetable business, which primarily involves
sales to industrial customers, are price, product quality differentiation and
customer service.
Three of the Company's major competitors on the national level, Del Monte,
Green Giant and Dean Foods, have greater financial and marketing resources than
the Company. The Company believes it can
32
<PAGE> 35
compete effectively in the canned vegetable business by focusing on private
label retail sales and core brand products, delivering consistent product
quality, meeting customer service expectations, continuing to improve the
Company's cost structure and focusing capital expenditures on quality and
service innovations.
As a result of recent plant reduction and consolidation in the vegetable
processing industry, many of the Company's principal national competitors have
narrowed their business focus to specific product categories and channels of
distribution. Del Monte has focused on brand label canned products, with a
limited emphasis on the private label canned business. Both Green Giant and Dean
Foods (through the Birdseye and Freshlike brands) have placed emphasis on the
frozen vegetable market. The Company's principal competitors in the private
label canned business are major and smaller regional companies, including Friday
Canning Co., owned by Chiquita Brands. The Company's major competitors in the
international export market are Friday Canning Co., Green Giant and Dean Foods,
most of whom are larger and have greater resources than the Company.
PROPERTIES
Stokely's principal facilities are described below:
<TABLE>
<CAPTION>
PLANT AND
WAREHOUSE SIZE
LOCATION -------------- PRINCIPAL PRODUCTS
- ------------------------------ (SQ. FT.) --------------------------------------
<S> <C> <C>
CANNED VEGETABLE PRODUCTION
AND DISTRIBUTION:
Ackley, Iowa 199,000 Whole kernel corn; canned dry pack
beans
Cobb, Wisconsin 65,000 Warehouse
DeForest, Wisconsin 538,000 Warehouse and distribution center;
field department office
Hoopeston, Illinois 240,000 Golden whole kernel corn; pumpkin
Merrill, Wisconsin 56,000 Green, wax and romano beans
Pickett, Wisconsin 145,000 Peas; whole kernel corn
Poynette, Wisconsin 345,000 Green and wax beans; sauerkraut;
warehouse and distribution center
Scottville, Michigan 238,000 Green, shellie and romano beans
Sun Prairie, Wisconsin 108,000 Peas; peas and carrots; golden and
white whole kernel corn; mixed
vegetables; beets; carrots
Waunakee, Wisconsin 181,000 Peas; peas and carrots; whole kernel
corn; beets; carrots; potatoes;
mixed vegetables
Wells, Minnesota 103,000 Peas and cream style corn
FROZEN VEGETABLE PRODUCTION:
Grandview, Washington 86,000 Sugar snap peas; corn; asparagus
Green Bay, Wisconsin 76,000 Peas; whole kernel corn; green beans;
carrots
Walla Walla, Washington 199,00 Asparagus; peas; zucchini; carrots;
lima beans; onions; squash
CORPORATE HEADQUARTERS:
Oconomowoc, Wisconsin 52,000 General offices
CLOSED FACILITIES(1):
Appleton, Wisconsin 121,000 Peas; canned and glass-packed beets;
potatoes; carrots
Jefferson, Wisconsin 28,000 Frozen vegetable repackaging
--------------
Total 2,692,000
===========
</TABLE>
- -------------------------
(1) These facilities were closed during fiscal 1994 as part of the Company's
restructuring plan and are being held for sale.
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<PAGE> 36
All of the facilities and related real estate are owned by the Company,
subject to mortgage and collateral assignments under loan agreements with
Stokely's lenders. See Note F of Notes to Consolidated Financial Statements.
Stokely's facilities operate at or near capacity during the processing season.
Except for Poynette's sauerkraut operation and the Ackley plant, which run
year-round, the Company utilizes its production facilities principally from June
through November, as is customary in the vegetable processing industry. Certain
distribution and repackaging facilities also operate year-round. The Company
believes all of its plants are in good condition and adequate for current
processing needs and will be able to meet presently anticipated future needs
with these facilities. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
TRADEMARKS
In the course of its business, the Company uses various trademarks, trade
names and service marks in the packaging and advertising of its products.
"Stokely's Finest(R)" is a registered United States trademark and is significant
to the Company. Stokely's ability to compete in the branded product vegetable
market depends in part upon having a nationally recognized trademark. Some of
the Company's other registered United States trademarks include "School
Days(R)," "Chef's Best(R)," "Hart(R)," "Our Favorite(R)," "Shellie(R)," "Sweet &
Sour Kraut(TM)" and "Meeter's Sauerkraut(R)." "Stokely's Crisp'n Sweet Corn(TM)"
and "Stokely's Gold(TM)" are registered United States trademarks on an
intent-to-use basis, and Stokely has common law rights to "Bavarian Style(R)."
While important, none of these other trademarks are as significant to the
Company's business as "Stokely's Finest(R)."
REGULATIONS
The Company is subject to regulation by the Food and Drug Administration,
the United States Department of Agriculture, the Federal Trade Commission, the
Environmental Protection Agency and various state agencies with respect to the
production, packaging, labeling and distribution of its food products, and
believes it is in material compliance with all applicable rules and regulations
of such federal and state agencies. The principal federal laws that regulate the
Company with respect to the production, packaging, labeling and distribution of
its food products include: (i) the Food, Drug and Cosmetic Act of 1938, which
ensures that foods are produced under sanitary conditions and are properly
labeled; (ii) the Federal Insecticide, Fungicide and Rodenticide Act, which
ensures that pesticides used on food are registered with and approved by the
Environmental Protection Agency; (iii) the Fair Packaging and Labeling Act,
which regulates trade practices and requires that consumers receive accurate
information regarding the quality and value of products; (iv) the National Label
Education Act, which regulates information which must be included in food
labels; and (v) the Federal Trade Commission Act, which regulates methods of
competition, advertising and trade practices.
The disposal of solid and liquid vegetable waste material resulting from
the preparation and processing of foods is subject to various federal, state and
local laws and regulations relating to the protection of the environment. While
the Company cannot predict with certainty the effect of any proposed or future
environmental legislation or regulations on its processing operations, Stokely
believes the waste disposal systems which are now in operation or which are
being constructed and designed for Stokely are sufficient to comply with all
currently applicable environmental laws and regulations. Expenditures for
facilities related to protection of the environment are made pursuant to the
Company's capital budget and have not had, nor are they expected to have, a
material effect on the earnings of the Company.
EMPLOYEES
At peak employment periods during the processing season, the Company
employs approximately 4,060 employees, of which approximately 3,100 are seasonal
and part-time production personnel, 850 are full-time, year-round production
personnel, and 110 are management, sales and administration personnel.
Approximately 1,670 regular hourly and seasonal employees belong to labor
unions. Stokely's eight union contracts are generally three years in length and
provide for average wage increases of 4.0% during fiscal 1995. During fiscal
1995, three union contracts will expire: a labor union contract covering some of
the employees at Stokely's
34
<PAGE> 37
Waunakee and Poynette, Wisconsin facilities will expire on December 31, 1994; a
labor union contract covering some of the employees at Stokely's Walla Walla,
Washington facility will expire on January 1, 1995; and a labor union contract
covering some of the employees at Stokely's Deforest, Wisconsin facility will
expire on March 31, 1995. Stokely recruits migrant workers for seasonal
employment at its seasonal plants and maintains migrant housing facilities in
Sun Prairie, Wisconsin, Pickett, Wisconsin and Hoopeston, Illinois to
accommodate those employees. The Company believes that relationships with its
employees are good.
LEGAL PROCEEDINGS
The Company is not a party to any material litigation and is not aware of
any threatened litigation that would be expected to have a material adverse
effect on its business.
35
<PAGE> 38
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH THE COMPANY
- ----------------------------------- --- ----------------------------------------------
<S> <C> <C>
Frank J. Pelisek(1)(3)(4).......... 64 Chairman of the Board and Director
Vernon L. Wiersma(1)(4)............ 44 President, Chief Executive Officer and
Director
Stephen W. Theobald(1)............. 48 Vice Chairman, Treasurer and Director
Russell J. Trunk................... 54 Senior Vice President, Operations
Leslie J. Wilson................... 50 Vice President, Finance and Chief Financial
and Accounting Officer
Robert M. Brill.................... 46 Vice President, General Counsel and Secretary
Robert Cook........................ 44 Vice President, Operations
Eddie W. Foster.................... 56 Vice President, National Sales Manager
Kenneth C. Murray.................. 36 Vice President, Canned Sales and Marketing
Michael A. Wilkes.................. 39 Vice President, Human Resources
Orren J. Bradley(2)................ 69 Director
Russell W. Britt(1)(2)(4).......... 68 Director
Charles J. Carey(3)................ 69 Director
James H. DeWees(2)................. 65 Director
Ody J. Fish(1)(3)(4)............... 69 Director
Carol Ward Knox(3)................. 43 Director
Thomas W. Mount(1)................. 63 Director
Joseph B. Weix..................... 66 Director
</TABLE>
- -------------------------
(1) Member of the Executive Committee of the Board of Directors.
(2) Member of the Audit Committee of the Board of Directors.
(3) Member of the Compensation Committee of the Board of Directors.
(4) Member of the Nominating Committee of the Board of Directors.
Frank J. Pelisek has been Chairman of the Board of the Company since June
1992, and has been a member of the Board of Directors of the Company since 1983.
Mr. Pelisek served as Chief Executive Officer of the Company from June 1992 to
August 1993. Mr. Pelisek has been a partner with Michael Best & Friedrich (legal
counsel to the Company) since 1965, and serves as a member of the Board of
Directors of various privately held corporations.
Vernon L. Wiersma has been Chief Executive Officer of the Company since
August 1993 and President since June 1992. He has been a member of the Board of
Directors of the Company since 1982. Mr. Wiersma was Executive Vice President of
Operations of the Company from 1985 to 1992, Vice President of Operations from
1983 to 1985 and Controller from 1975 to 1983. Mr. Wiersma joined the Company in
1973.
Stephen W. Theobald has been Vice Chairman and Treasurer of the Company
since June 1992. He previously was Vice President, Administration since joining
the Company in 1985. Mr. Theobald has been a member of the Board of Directors of
the Company since 1980. From 1972 to 1985, Mr. Theobald held various financial
and managerial positions at Morgan Stanley & Co. Incorporated, an investment
banking firm, and Harris Trust and Savings Bank, a commercial bank.
Russell J. Trunk has been Senior Vice President, Operations of the Company
since August 1992. He also was the General Manager of the Company's Texas/Mexico
operations from 1991 to 1992. Mr. Trunk joined the Company in 1991. From 1964 to
1991, Mr. Trunk held various financial and operational positions with Green
Giant Company.
36
<PAGE> 39
Leslie J. Wilson has been Vice President, Finance and Chief Financial and
Accounting Officer since June 1992, when he joined the Company. Mr. Wilson
previously served as Vice President and General Manager of Packaging
Specialties, Inc., a wholesale distributor of shrink wrap equipment and film,
from 1990 to 1992, and was Vice President of Finance and Administration of
Duetz-Allis Credit, an agricultural equipment finance company, from 1976 to
1990.
Robert M. Brill has been Vice President and General Counsel of the Company
since joining the Company in 1989, and Secretary since 1990. Mr. Brill was a
Senior Partner at Brill and Eustice, S.C. from 1986 to 1989. He also serves as a
member of the Board of Directors of a privately held corporation.
Robert Cook has been Director of Operations of the Company since 1989 and
Vice President, Operations since 1990. Mr. Cook joined the Company in 1985 and
served as plant manager until 1990. From 1977 to 1985, Mr. Cook held various
supervisory operations and management positions at Green Giant Company.
Eddie W. Foster has been Vice President, National Sales Manager of the
Company since 1991. Mr. Foster was President of Merchandise Warehouse, Inc., a
general warehousing company, from 1990 to 1991, and was President of LVS Food
Distributors from 1989 to 1990. Mr. Foster previously served as Vice President
of Brand Marketing and Sales of the Company from 1985 to 1989.
Kenneth C. Murray has been Vice President, Canned Sales and Marketing of
the Company since December 1992. Mr. Murray joined the Company in 1990 as the
Director of Marketing and Business Development. Prior to joining the Company,
Mr. Murray held various sales and marketing management positions at S.C. Johnson
Wax & Son, Inc., a manufacturer of cleaners, insecticides and personal care
products, from 1981 to 1990.
Michael A. Wilkes has been Vice President, Human Resources of the Company
since August 1993. He was Director of Total Quality Management for the Company
from 1991 to 1993. Mr. Wilkes previously served as Manager, Management and
Organization Development at Northrop Corporation, an aerospace and military
aircraft design and manufacturing company, from 1983 to 1991.
Orren J. Bradley has been a member of the Board of Directors of the Company
since 1985. Mr. Bradley has been Senior Vice President of the Laub Group, Inc.,
an insurance operations company, since 1985. He also served as Chairman, Boston
Store Division of Federated Department Stores, Inc., from 1967 to 1985. Mr.
Bradley is a director of Northwestern Mutual Life Insurance Investment Funds and
Oshkosh B'Gosh, Inc., an apparel manufacturer.
Russell W. Britt has been a member of the Board of Directors of the Company
since 1985. Mr. Britt served as President, Chief Operating Officer and Director
of Wisconsin Energy Corp., a utility service company, from 1987 to 1991, and
Vice President from 1981 to 1987. He also served as an executive officer and a
director of Wisconsin Electric Power Co. and Wisconsin Natural Gas Co.,
subsidiaries of Wisconsin Energy Corp., from 1982 to 1991. Mr. Britt is a
director of Bank One Wisconsin Trust Company, N.A.
Charles J. Carey has been a member of the Board of Directors of the Company
since 1989. He has been an independent consultant since 1989. Mr. Carey served
as President and Chief Executive Officer of National Food Processors
Association, a trade association, from 1972 to 1989.
James H. DeWees has been a member of the Board of Directors of the Company
since August 1994. Mr. DeWees served as President and Chief Executive Officer of
Godfrey Company, a division of Fleming Companies, Inc., a wholesale food
distributor, from 1984 to 1994, and also as Vice President of Fleming Companies,
Inc. from 1987 to 1994.
Ody J. Fish has been a member of the Board of Directors of the Company
since 1985. He served as President of Pal-O-Pak Insulation Co., Inc., an
insulation manufacturing company, from 1951 to 1986. Mr. Fish is a director of
the Marshall Family of Mutual Funds.
Carol Ward Knox has been a member of the Board of Directors of the Company
since 1993. She has been a principal at Morgan & Myers, Inc., a public relations
consulting company, since 1982.
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<PAGE> 40
Thomas W. Mount has been a member of the Board of Directors of the Company
since 1966. Mr. Mount served as Chairman of the Board of the Company from 1992
to 1993, and President and Chief Operating Officer of the Company from 1975 to
1992. He is a director of the Fiduciary Capital Growth Fund, Inc. and the
Fiduciary Total Return Fund, Inc.
Joseph B. Weix has been a member of the Board of Directors of the Company
since 1963. Mr. Weix served as Chairman of the Board and Chief Executive Officer
of the Company from 1975 to 1992.
With the exception of Messrs. Mount and Weix who are cousins, there are no
family relationships among the executive officers and directors, and there are
no arrangements or understandings pursuant to which any of them were elected as
executive officers and/or directors. However Mr. Wilson has an employment
agreement with the Company. See "-- Employment Agreements."
BOARD TERMS AND COMMITTEES
The directors of the Company are divided into three classes, with directors
holding office for staggered terms of three years, in each case until their
successors are elected and qualified. The members of the Board of Directors
whose terms of office expire in 1995 are Messrs. Britt, Fish, Theobald and
Wiersma. The members whose terms of office expire in 1996 are Messrs. Carey,
Pelisek and Weix. The members whose terms expire in 1997 are Messrs. Bradley,
DeWees and Mount, and Ms. Knox.
The Board of Directors of the Company has standing Executive, Audit,
Compensation and Nominating Committees. The Executive Committee has the
authority during intervals between Board meetings to exercise the powers of the
Board, except for certain powers reserved exclusively for the Board. The
Executive Committee consists of Messrs. Pelisek (Chairman), Britt, Fish, Mount,
Theobald and Wiersma. The Audit Committee reviews the scope and timing of the
audit of the Company's financial statements by the Company's independent public
accountants and reviews with the independent public accountants the Company's
management policies and procedures with respect to auditing and accounting
controls. The Audit Committee also reviews and evaluates the independence of the
Company's accountants, approves services rendered by such accountants and
recommends to the Board the engagement, continuation or discharge of the
Company's accountants. Deloitte & Touche LLP has served as the Company's
independent auditors for the past 15 years. The Audit Committee consists of
Messrs. Britt (Chairman), Bradley and DeWees. The Compensation Committee is
responsible for overseeing the management of human resources activities of the
Company, including compensation for directors and executive officers, and the
establishment and operation of employee pension investment plans. The
Compensation Committee also is responsible for determining the recipients and
terms of stock options granted under the Incentive Stock Option Plan and the
Executive Stock Option Plan. The Compensation Committee consists of Messrs. Fish
(Chairman), Carey and Pelisek, and Ms. Knox. The Nominating Committee selects
nominees for directors to stand for election at the Company's annual meetings,
and consists of Messrs. Pelisek (Chairman), Britt, Fish and Wiersma.
DIRECTOR COMPENSATION
Non-employee directors receive compensation of $6,000 per year of service
on the Board plus $500 for each Board or Committee meeting attended. Directors
may defer all or any portion of such compensation under a Directors' Deferred
Compensation Plan adopted in 1985. Deferred compensation is credited to the
account of a participating director in the form of "phantom stock" of the
Company based on the market price at the time of each quarterly credit. Shares
credited to the accounts of directors electing to participate in the Directors'
Deferred Compensation Plan during the fiscal year ended March 31, 1994, were as
follows: Mr. Bradley, 1,816 shares; Mr. Britt, 7,471 shares; Mr. Carey, 2,407
shares; and Mr. Fish, 7,512 shares. Directors who have served two full terms
(six years) and are Board members upon attaining the age of 65 become eligible
for retirement compensation of $500 per month upon completion of service.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Frank J. Pelisek served as Chief Executive Officer of the Company from June
1992 to August 1993, and currently serves as a member of the Compensation
Committee of the Board of Directors of the Company. Mr. Pelisek is a partner
with Michael Best & Friedrich, counsel to the Company.
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<PAGE> 41
EXECUTIVE COMPENSATION
The following table summarizes the total compensation earned by the
Company's Chief Executive Officer and the next four highest compensated
executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION(1) ------------
------------------------------ NUMBER OF
FISCAL OPTION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(2) COMPENSATION(3)
- --------------------------------------- ------ -------- ------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Vernon L. Wiersma...................... 1994 $162,167 $70,000 -- $ 7,496
President and Chief Executive Officer 1993 136,500 -- -- 15,556
1992 136,500 -- -- --
Stephen W. Theobald.................... 1994 $128,333 $56,000 -- $ 9,891
Vice Chairman and Treasurer 1993 105,000 -- -- 13,653
1992 105,000 -- -- --
Kenneth C. Murray...................... 1994 $100,000 $20,000 -- $ 926
Vice President, Canned Sales and 1993 94,333(4) -- 6,000 4,681
Marketing 1992 88,200 -- 5,000 --
Russell J. Trunk....................... 1994 $100,000 $20,000 -- $16,963
Senior Vice President, Operations 1993 104,667 -- -- 22,626
1992 99,744 -- 4,000 --
Leslie J. Wilson....................... 1994 $100,000 $20,000 -- $ 9,864
Vice President, Finance and Chief 1993 78,889(4) -- 10,000 14,072
Financial and Accounting Officer
</TABLE>
- -------------------------
(1) Perquisites provided to the named executive officers by the Company did not
exceed 10% of each named executive officer's total annual salary and bonus
during fiscal 1992, 1993 and 1994.
(2) Amounts shown represent the total number of options awarded under the 1985
Incentive Stock Option Plan (the "Incentive Stock Option Plan") during the
fiscal year indicated.
(3) Amounts shown in this column represent contributions by the Company for the
benefit of the named individuals pursuant to the Stokely USA, Inc.
Retirement Savings Profit Sharing Plan and the Split Dollar Life Insurance
Plan (the "Split Dollar Plan") in the form of premium payments on behalf of
the named executive officers during the fiscal year indicated.
(4) Each of Mr. Murray's and Mr. Wilson's annualized compensation during fiscal
1993 was $100,000. Mr. Murray received an increase to that level in December
1992 when he was promoted to his present position. Mr. Wilson joined the
Company in June 1992.
EMPLOYMENT AGREEMENTS
In 1992, the Company entered into Change of Control Contingent Employment
Agreements with Messrs. Wiersma, Theobald, Murray, Trunk and Wilson
(collectively, the "Contingent Employment Agreements"). Under the Contingent
Employment Agreements, if a change of control occurs, the Company will continue
to employ Messrs. Wiersma and Theobald for three years, Mr. Wilson for two years
and, Messrs. Murray and Trunk for one year, following the date of the change of
control. "Change of Control," as defined in the Contingent Employment
Agreements, includes the acquisition of 20% or more of the Company's Common
Stock, a merger, consolidation or reorganization, the sale of substantially all
of the Company's assets or a significant change in the composition of the Board
of Directors of the Company. In the event of a Change of Control, the employee
shall be employed by the Company for the applicable number of years and shall
receive a salary equal to his salary on the date of the Change of Control,
subject to annual upward adjustments
39
<PAGE> 42
commensurate with increases awarded to other officers and employees. If, after a
Change of Control, the Company terminates the employee for any reason other than
for cause or if the employee elects to terminate his employment, he shall
continue to be paid monthly an amount equal to his then current monthly base
salary plus a certain amount of incentive payments and shall continue to be
entitled to receive all other employee benefits and perquisites made available
to other employees of comparable status until the end of his employment term. If
the Company terminates the employee for "cause" (as defined in the Contingent
Employment Agreements), the employee is entitled to receive only his
compensation through the date of termination. For purposes of the Contingent
Employment Agreements, the current base salary for Mr. Wiersma is $205,000, Mr.
Theobald is $160,400, Messrs. Murray and Trunk is $118,000, and Mr. Wilson is
$114,500. The amount of the base salary and any incentive payments are reviewed
regularly by the Compensation Committee of the Board of Directors. The Company
also has entered into similar Contingent Employment Agreements with other key
officers of the Company.
In June 1992, the Company entered into an employment agreement (the
"Employment Agreement") with Mr. Wilson for a two-year term which automatically
is extended for a period of one year on each anniversary date unless the Company
or Mr. Wilson provides notice of nonrenewal within 30 days prior to the date
thereof. For purposes of the Employment Agreement, the current base salary for
Mr. Wilson is $114,500. In addition to base salary, the Employment Agreement
provides for payments from other Company incentive compensation plans, and
provides for other benefits, including participation in any group health, life,
disability or similar insurance program and in any pension, profit-sharing,
deferred compensation, 401(k) or other retirement plans maintained by the
Company. The Employment Agreement also provides for participation in any
stock-based incentive programs made available to executive officers of the
Company. The Employment Agreement will terminate in the event the Company ceases
operations and may be terminated by the Company in the event of Mr. Wilson's
disability or retirement, or for "cause" (as defined in the Employment
Agreement) at any time.
DEFERRED COMPENSATION AGREEMENTS
In 1990, the Company entered into deferred compensation agreements (the
"Deferred Compensation Agreements") with Messrs. Thomas W. Mount, former
President and Chairman of the Board of Directors of the Company, and Joseph B.
Weix, former Chairman of the Board of Directors of the Company. Under the
Deferred Compensation Agreements, the Company is obligated to pay Messrs. Mount
and Weix deferred compensation in monthly installments of $7,500 each for a
period of 120 consecutive months (or at their election in one lump sum based
upon a present value calculation outlined in the Deferred Compensation
Agreements) following their death, disability or retirement. In the event of the
death of Messrs. Mount or Weix, their designated beneficiaries shall receive the
deferred compensation payments over the stated period, or at the Company's
election, such payments may be paid in one lump sum based upon a present value
calculation outlined in the Deferred Compensation Agreements. The Deferred
Compensation Agreements are non-tax qualified, unfunded deferred compensation
plans. Mr. Mount retired in April 1993, and Mr. Weix retired in June 1992, and
the Company commenced the monthly installment payments at these times.
EXECUTIVE ANNUAL INCENTIVE PLAN AND STOCK OWNERSHIP REQUIREMENTS
The Company's Annual Incentive Plan (the "Incentive Plan") was developed to
recognize and reward performance and provide a total annual cash bonus
consistent with the Company's executive compensation strategy. Under the
Incentive Plan, executives earn incentive compensation if the Company achieves
various targets set for profits (defined as income before taxes and before
profit-sharing expense) as a percent of sales. Incentive compensation earned is
established as a percentage of each officer's base salary, and the applicable
percentage is dependent upon the individual's base salary amount. If the
financial performance of the Company falls below the threshold level, no awards
will be earned. If threshold levels of the performance indicators are achieved,
the Incentive Plan provides for payment of incentive compensation in amounts
ranging between 10% to 25% of an individual's base salary. If target levels are
achieved by the Company, the Incentive Plan provides for payment of incentive
compensation in amounts ranging from 20% to 50% of an individual's base salary.
Incentive compensation may exceed 50% of an individual's base salary if the
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<PAGE> 43
Company surpasses target levels, but may not exceed 75% of an individual's base
salary. Prior to payment of incentive compensation after completion of the
Company's financial audit, the Compensation Committee certifies that the
performance objectives of the Incentive Plan have been met.
The Compensation Committee believes that aligning the financial interests
of management more closely with those of the shareholders influences the
creation of shareholder value. Therefore, the Compensation Committee has
required certain executive stock ownership levels for certain of its executive
officers. For Messrs. Wiersma and Theobald, the requirement is stock ownership
representing a value at least two times their annual salary, and for Messrs.
Murray, Trunk and Wilson, the stock ownership requirement is value representing
at least one times their annual salary. Executives are required to use a portion
of any annual cash bonus received to purchase shares of Common Stock until the
ownership requirement is met.
BENEFITS
SPLIT DOLLAR PLAN
The Company established the Split Dollar Life Insurance Plan, effective
February 1, 1990 (the "Split Dollar Plan"), in which Messrs. Wiersma, Theobald,
Murray, Trunk and Wilson participate. The life insurance benefit is equal to
four times the executive's salary. The executive pays the economic value of the
insurance and the Company pays the balance of the premium. Upon the executive's
death or the retirement of the executive, the Company will receive all premiums
paid by it on behalf of the executive and the executive will receive the
remainder of the death benefit or the cash surrender value.
RETIREMENT SAVINGS PLAN
The Company maintains a retirement savings plan, the Stokely USA, Inc.
Retirement Savings Profit Sharing Plan (the "Retirement Savings Plan"), covering
all of its eligible employees. Employees are eligible to participate after
completing a twelve-month period of 1,000 or more hours of employment. The
Retirement Savings Plan involves a Company Profit Sharing Contribution account,
a Voluntary Contribution account and a 401(k) Salary Deferral account. Subject
to the Company's operating results, the Company may make contributions up to 8%
of pre-tax profits to the Profit Sharing Contribution account which would be
allocated to participants pro rata based upon their eligible compensation.
Participants become 20% vested in the profit sharing contributions credited to
their accounts and the earnings thereon after three years of credited service,
and 20% per year thereafter until 100% vested after seven years. Participants
also become 100% vested upon death, disability and attainment of age 62. The
Voluntary Contribution account permits participants to make voluntary after-tax
savings contributions in amounts between 2% and 10% of their annual
compensation. Participants in the Voluntary Contribution account are 100% vested
in their contributions and the earnings thereon. Under the Retirement Savings
Plan, through the 401(k) Salary Deferral account, participants are permitted,
subject to the limitations imposed by Section 401(k) of the Internal Revenue
Code of 1986, as amended (the "Internal Revenue Code"), to make voluntary
tax-deferred contributions in amounts between 1% and 10% of their annual
compensation. The Company may make a matching contribution to the 401(k) Salary
Deferral account in an amount up to 25% of the first 6% of compensation deferred
by the participant for participants who meet all eligibility and participant
requirements. Participants in the 401(k) Salary Deferral account are 100% vested
in their contributions, the Company's matching contribution and the earnings
thereon. Under the Retirement Savings Plan, a separate account is maintained for
each type of account and each participating employee. Participating employees
direct the Retirement Savings Plan trustee with respect to the investment of
assets held in their accounts among up to six investment options made available
by the trustee.
STOCK OPTION PLANS
INCENTIVE STOCK OPTION PLAN
The Company established the 1985 Incentive Stock Option Plan (the
"Incentive Stock Option Plan") in which key employees of the Company and its
subsidiaries, as determined by the Compensation Committee, are eligible to
participate. The Incentive Stock Option Plan authorizes the grant of options to
purchase shares
41
<PAGE> 44
of Common Stock intended to qualify as incentive stock options under Section
422A of the Internal Revenue Code. The Compensation Committee of the Board
administers the Incentive Stock Option Plan. As of August 31, 1994, options to
purchase 176,000 shares of Common Stock were outstanding under the Incentive
Stock Option Plan and a total of 49,550 shares of Common Stock were available
for granting under the Incentive Stock Option Plan. However, in August 1994 the
Board of Directors of the Company decided not to grant any additional options
under the Incentive Stock Option Plan. There were no individual grants of stock
options under the Incentive Stock Option Plan to any of the named executive
officers in the Summary Compensation Table during fiscal 1994.
No options issued under the Incentive Stock Option Plan were exercised by
any of the named executive officers in the Summary Compensation Table during
fiscal 1994. The number and total value of unexercised in-the-money options at
March 31, 1994 are shown in the following table:
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
NUMBER OF OPTIONS AT FISCAL YEAR END FISCAL YEAR END(1)
SHARES ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Vernon L. Wiersma......... 0 $0 30,000 0 $55,250 $ 0
Stephen W. Theobald....... 0 0 15,000 0 21,630 0
Kenneth L. Murray......... 0 0 8,000 3,000 0 0
Russell J. Trunk.......... 0 0 4,000 0 0 0
Leslie J. Wilson.......... 0 0 10,000 0 16,250 0
</TABLE>
- -------------------------
(1) The value of unexercised in-the-money options is based upon the difference
between the fair market value of the securities underlying the options of
$8.00 at March 31, 1994 and the exercise price of the options as follows:
$5.83 for Mr. Wiersma, $6.56 for Mr. Theobald, $10.72 for Mr. Murray,
$10.00 for Mr. Trunk, and $6.38 for Mr. Wilson.
EXECUTIVE STOCK OPTION PLAN
On June 3, 1994, the Board of Directors of the Company adopted the Stokely
USA, Inc. 1994 Executive Stock Option Plan (the "Executive Stock Option Plan").
The Executive Stock Option Plan was ratified by the shareholders of the Company
at the Annual Meeting of Shareholders held on August 26, 1994. All key full-time
employees of the Company and its subsidiaries are eligible to participate in the
Executive Stock Option Plan. The Executive Stock Option Plan provides for the
granting of (i) incentive stock options ("ISOs"), (ii) non-qualified stock
options ("NSOs"), and (iii) stock appreciation rights ("SARs"). Options for a
total of 400,000 shares of Common Stock are available for granting to eligible
participants under the Executive Stock Option Plan. Under the Executive Stock
Option Plan, the maximum number of shares for which grants may be made to any
eligible employee may not exceed 50,000 shares. As of the date hereof, no option
grants have been made under the Executive Stock Option Plan.
The Compensation Committee of the Board, or such other committee appointed
by the Board (the "Committee") will administer the Executive Stock Option Plan.
The Committee will consist of at least three members of the Board, and a
majority of the Committee shall be "disinterested persons," as defined under
applicable federal law, at the time any ISOs, NSOs, or SARs are granted under
the Executive Stock Option Plan. The Committee also will have the power, subject
to the express provisions of the Executive Stock Option Plan, to: (i) determine
the recipients and the terms of options granted; (ii) construe and interpret the
Executive Stock Option Plan and options granted thereunder; and (iii) establish,
amend, and revoke rules and regulations for Executive Stock Option Plan
administration as necessary or expedient to make the Executive Stock Option Plan
fully effective and in the best interests of the Company. The Committee will
determine the maximum number of options which may be exercisable in any year.
42
<PAGE> 45
CERTAIN TRANSACTIONS
WARRANTS TO PURCHASE SHARES OF COMMON STOCK
In June 1993, the Company requested amendments to certain provisions of the
agreements pursuant to which the Company previously had issued senior notes in
the aggregate principal amount of $45.0 million to Nationwide Life Insurance
Company ("NLIC"), Employers Life Insurance Company of Wisconsin ("ELIC"), West
Coast Life Insurance Company ("WCLIC") and the State of Wisconsin Investment
Board ("SWIB") (collectively, the "Warrant Holders"). In connection with such
amendments, the Company issued Warrants to Purchase Shares of Common Stock (the
"Warrants") to NLIC, ELIC, WCLIC and SWIB, evidencing the right to purchase
41,000, 6,000, 3,000 and 40,000 shares of Common Stock, respectively, at an
exercise price of $7.88 per share (subject to adjustments to protect the Warrant
Holders against dilution in certain circumstances). The Warrant Holders have the
option to pay the exercise price in cash or by surrendering for cancellation all
or a portion of the senior notes held by them, designating the appropriate
unpaid principal amount thereof representing the exercise price. All of the
Warrants are immediately exercisable. The Warrants issued to NLIC, ELIC and
WCLIC expire on January 15, 2000, and the Warrant issued to SWIB expires on
December 15, 2001.
Pursuant to the provisions of the Warrants, whenever the Company proposes
to register its securities under the Securities Act, the Warrant Holders may
require the Company, subject to certain limitations, to include in such
registration all or a part of the shares issued upon exercise of the Warrants.
SWIB intends to exercise its Warrants and sell the 40,000 shares of Common Stock
acquired thereto in this Offering.
43
<PAGE> 46
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of July 29, 1994, and as adjusted to
reflect the sale of the shares of Common Stock offered hereby, (i) by each
person who is known to the Company to own beneficially more than 5% of the
Common Stock, (ii) by each of the executive officers of the Company, (iii) by
each director of the Company, (iv) by the Selling Shareholder, and (v) by all
directors and executive officers as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING(1) AFTER OFFERING(1)
------------------------ ------------------------
PERCENT OF SHARES PERCENT OF
NUMBER OF SHARES BEING NUMBER OF SHARES
NAME SHARES(2) OUTSTANDING OFFERED SHARES OUTSTANDING
- ------------------------------------------- --------- ----------- ------- --------- -----------
<S> <C> <C> <C> <C> <C>
Winogene Kile(3)(4)........................ 741,000 8.9% -- 741,000 6.5%
Vernon L. Wiersma(5)....................... 33,000 * -- 33,000 *
Stephen W. Theobald(6)..................... 266,297 3.2 -- 266,297 2.4
Russell J. Trunk(7)........................ 4,000 * -- 4,000 *
Leslie J. Wilson(8)........................ 10,000 * -- 10,000 *
Robert M. Brill(9)......................... 10,000 * -- 10,000 *
Robert Cook(10)............................ 4,500 * -- 4,500 *
Eddie W. Foster(11)........................ 5,000 * -- 5,000 *
Kenneth C. Murray(12)...................... 8,000 * -- 8,000 *
Michael A. Wilkes.......................... 0 -- -- 0 --
Frank J. Pelisek........................... 1,400 * -- 1,400 *
Orren J. Bradley........................... 500 * -- 500 *
Russell W. Britt........................... 200 * -- 200 *
Charles J. Carey........................... 200 * -- 200 *
James H. DeWees............................ 0 -- -- 0 --
Ody J. Fish................................ 1,000 * -- 1,000 *
Carol Ward Knox............................ 1,000 * -- 1,000 *
Thomas W. Mount............................ 179,256 2.2 -- 179,256 1.6
Joseph B. Weix(13)......................... 140,480 1.7 -- 140,480 1.2
State of Wisconsin Investment Board(14).... 40,000 * 40,000 0 --
All directors and executive officers as a
group (18 persons)....................... 664,833 7.9% -- 664,833 5.9
</TABLE>
- -------------------------
* Amount represents less than 1% of the total shares of Common Stock
outstanding.
(1) The number of shares of Common Stock deemed outstanding prior to the
offering consists of (i) 8,324,646 shares of Common Stock outstanding as of
July 29, 1994, (ii) 90,000 shares of Common Stock issuable pursuant to the
exercise of warrants, 40,000 of which are held by the State of Wisconsin
Investment Board who has notified the Company that they intend to exercise
the warrants immediately prior to the offering and sell such shares of
Common Stock acquired pursuant thereto in the offering, and (iii) 86,500
shares of Common Stock issuable pursuant to options held by the respective
person or group which may be exercised within 60 days after July 29, 1994
("presently exercisable stock options"), as set forth below. The number of
shares of Common Stock deemed outstanding after the offering includes an
additional 3,000,000 shares of Common Stock which are being offered for
sale by the Company in the Offering.
(2) Unless otherwise indicated, includes shares of Common Stock held directly
by the individuals as well as by members of such individual's immediate
family who share the same household, shares held in trust and other
indirect forms of ownership over which shares the individuals exercise sole
or shared voting and/or dispositive power.
(3) Winogene Kile's address is P. O. Box 592, Oconomowoc, Wisconsin 53066.
44
<PAGE> 47
(4) Includes 50,000 shares of Common Stock held indirectly by Mrs. Kile's
husband, as trustee, and 40,000 shares of Common Stock held by Mrs. Kile's
husband and a son of Mr. Weix as co-trustees, as to which she disclaims any
beneficial ownership.
(5) Includes 30,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(6) Includes 162,191 shares of Common Stock held by Mr. Theobald as co-trustee
for which he has shared dispositive and voting power with The First
National Bank of Chicago, 88,106 shares of Common Stock held by Mr.
Theobald as co-trustee for which he has shared dispositive and voting power
with Bank One Wisconsin Trust Company, N.A., and as to which he disclaims
any beneficial interest, and 15,000 shares of Common Stock issuable
pursuant to presently exercisable stock options.
(7) Includes 4,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(8) Includes 10,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(9) Includes 10,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(10) Includes 4,500 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(11) Includes 5,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(12) Includes 8,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(13) Includes 50,000 shares of Common Stock held by Mr. Weix as co-trustee for
which he has shared dispositive and voting power, and as to which he
disclaims any beneficial interest.
(14) Assumes the exercise by SWIB immediately prior to the offering of Warrants
to acquire 40,000 shares of Common Stock.
45
<PAGE> 48
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue twenty million (20,000,000) shares of
common stock having a par value of $0.05 per share (the "Common Stock") and one
million (1,000,000) shares of Preferred Stock having no par value per share (the
"Preferred Stock"). The Company currently has 8,324,645 shares of Common Stock
issued and outstanding, and will have 11,364,645 shares of Common Stock
(11,820,645 shares assuming the Underwriters' over-allotment option is exercised
in full) issued and outstanding following completion of the Offering. No shares
of Preferred Stock are issued and outstanding.
COMMON STOCK
Subject to Section 180.1150(2) of the Wisconsin Business Corporation Law
(the "WBCL")(described below under "-- Restrictions on Acquisition of the
Company"), holders of Common Stock are entitled to one vote for each share of
Common Stock held by them on all matters properly presented to shareholders.
Subject to the prior rights of the holders of any shares of Preferred Stock that
are outstanding, the Board of Directors of the Company may in its discretion
declare and pay dividends on the Common Stock out of earnings or assets of the
Company legally available for the payment thereof. Subject to the prior rights
of the holders of any shares of Preferred Stock that are outstanding, in the
event the Company is liquidated, any amounts remaining after the discharge of
outstanding indebtedness will be paid pro rata to the holders of the Company's
Common Stock. The outstanding shares of Common Stock are, and the Common Stock
to be issued in this Offering will be, legally issued, fully paid and
nonassessable, except for certain statutory liabilities which may be imposed by
Section 180.0622 of the WBCL for unpaid employee wages. Holders of shares of
Common Stock have no statutory preemptive, subscription or conversion rights.
PREFERRED STOCK
None of the 1,000,000 shares of authorized Preferred Stock will be issued
in the Offering. The Company's Board of Directors is authorized to issue from
time to time, without shareholder authorization, in one or more designated
series, shares of Preferred Stock with such dividend, redemption, conversion and
exchange provisions as are provided in the particular series. No dividends or
other distributions are payable on the Common Stock unless dividends are paid in
full on the Preferred Stock and all sinking fund obligations for the Preferred
Stock, if any, are fully funded. In the event of a liquidation or dissolution of
the Company, the outstanding shares of Preferred Stock would have priority over
the Common Stock to receive the amount specified in each particular series out
of the remaining assets of the Company.
RESTRICTIONS ON ACQUISITION OF THE COMPANY
Acquisitions of control of the Company are subject to various state
statutory restrictions. In addition to these restrictions, there are various
provisions in the Company's Articles of Incorporation and By-laws which may be
deemed to restrict the ability of a person, firm or entity to acquire the
Company. These provisions provide for, among other things, staggered terms of
office for members of the Board of Directors and limits on the calling of
special meetings of shareholders. Such provisions will render the replacement of
the current Board of Directors more difficult. The issuance of Preferred Stock
by the Company also may have the effect of delaying or preventing a change of
control of the Company. All of these provisions may have the effect of
discouraging a future takeover attempt which is not approved by the Board of
Directors but which shareholders of the Company may deem to be in their best
interests or in which shareholders may receive a substantial premium for their
shares over the then-current market price. As a result, shareholders who might
desire to participate in such a transaction might not have the opportunity to do
so. These provisions also could decrease the likelihood of temporary increases
in the price of the Common Stock, which frequently result from non-negotiated
takeover attempts, and may tend to perpetuate existing management. The
description of these provisions is necessarily general and reference should be
made to the actual law and to the Articles of Incorporation and By-laws of the
Company. See "Additional Information."
46
<PAGE> 49
CERTAIN STATUTORY PROVISIONS
Section 180.1150(2) of the WBCL provides that the voting power of shares of
an "issuing public corporation," such as the Company, which are held by any
persons holding in excess of 20% of the voting power of the issuing public
corporation's shares, shall be limited to such 20% of the voting power plus 10%
of the voting power of such excess shares. This statute is a "scaled voting
rights/control share acquisition" statute and is designed to protect
corporations against uninvited take-over bids. This statutory voting restriction
is not applicable to shares of Common Stock acquired prior to April 22, 1986,
shares acquired directly from the Company and shares acquired in certain other
circumstances more fully described in Section 180.1150(3) of the WBCL.
Sections 180.1130 to 180.1134 of the WBCL provide that certain business
combinations not meeting specified adequacy-of-price standards specified in the
statute must be approved by the vote of at least (i) 80% of the votes entitled
to be cast by shareholders, and (ii) two-thirds of the votes entitled to be cast
by holders of voting shares other than voting shares beneficially owned by a
"significant shareholder" or an affiliate or associate thereof who is a party to
the transaction. The term "business combination" is defined to include, subject
to certain exceptions, a merger or consolidation of an issuing public
corporation (or any subsidiary thereof), such as the Company, with, or the sale
or other disposition of substantially all assets of an issuing public
corporation to, any significant shareholder or affiliate thereof. "Significant
shareholder" is defined generally to include a person that is the beneficial
owner of 10% or more of the voting power of the shares of the issuing public
corporation.
Sections 180.1140 to 180.1145 of the WBCL provide that a "resident domestic
corporation," such as the Company, may not engaged in a "business combination"
with an "interested stockholder" (a person beneficially owning 10% or more of
the aggregate voting power of the stock of such corporation) for three years
after the date (the "stock acquisition date") the interested stockholder
acquired his or her 10% or greater interest, unless the business combination (or
the acquisition of the 10% or greater interest) was approved before the stock
acquisition date by such corporation's board of directors. After the three-year
period, a business combination that was not so approved may be consummated only
if it is approved by a majority of the outstanding voting shares not held by the
interested stockholder or is made at a specified formula price intended to
provide a fair price for the shares held by disinterested shareholders.
These statutory restrictions may have the effect of discouraging or making
it more difficult for a person to acquire a substantial equity interest in the
Company and may otherwise restrict the market for the purchase or sale of a
significant number of shares of Common Stock.
CERTAIN CHARTER AND BY-LAW PROVISIONS
The Company's Articles of Incorporation provide that if any person or
entity (the "Acquiring Person") who is the beneficial owner of 50% or more of
the outstanding shares of Common Stock of the Company and if any of such shares
of Common Stock were acquired pursuant to a tender offer not recommended by the
Board of Directors, then all holders of Common Stock (and holders of rights,
options, warrants and securities then exercisable or convertible into Common
Stock), with the exception of the Acquiring Person, shall have the right to have
their shares of Common Stock redeemed by the Company for cash ("Repurchase
Rights"). The Company is required to provide shareholders with notice of their
Repurchase Rights (the "Repurchase Notice") within 30 days of the date the
Company first receives notice that any person or entity has become an Acquiring
Person. The repurchase price shall be the highest of: (i) the highest price per
share, including any commissions paid to brokers or dealers, at which shares
held by an Acquiring Person were acquired at any time pursuant to a tender offer
or in any market purchase within the 18-month period prior to the date
shareholders received a Repurchase Notice from the Company; (ii) the highest
sales price per share of Common Stock for any trading day during the 18-month
period prior to the date shareholders received a Repurchase Notice from the
Company; or (iii) shareholders' equity per share of Common Stock as reflected in
any report published by the Company as of the fiscal quarter prior to the date
shareholders received a Repurchase Notice from the Company.
47
<PAGE> 50
The Company's By-laws provide procedures by which shareholders may raise
matters at annual meetings and may call special meetings. These provisions also
establish the procedure for fixing a record date for special meetings called by
shareholders. The affirmative vote of either (i) holders of a majority of the
voting power of shares entitled to vote in the election of directors, or (ii) a
majority of the directors then in office, is required to amend, repeal or adopt
any provision inconsistent with the foregoing By-law provisions.
Under the Articles of Incorporation, the Board of Directors is divided into
three classes. One class is elected each year for a three-year term. In
addition, a director may be removed from office only by affirmative vote of at
least 80% of the outstanding shares entitled to vote for the election of such
director, and any vacancy so created may be filled by the affirmative vote of at
least 80% of such shares. The staggered board provisions and the provision
regarding the 80% vote required for removal of a director may only be amended by
the affirmative vote of shareholders possessing at least 80% of the outstanding
shares entitled to vote.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Bank One,
Indianapolis, N.A., Indianapolis, Indiana.
UNDERWRITING
The underwriters named below (the "Underwriters"), for whom William Blair &
Company and Dain Bosworth Incorporated are acting as representatives (the
"Representatives"), have severally agreed, subject to the terms and conditions
set forth in the underwriting agreement among the Company, the Selling
Shareholder and the Underwriters (the "Underwriting Agreement"), to purchase
from the Company and the Selling Shareholder, and the Company and the Selling
Shareholder have agreed to sell to the Underwriters, the respective number of
shares of Common Stock (excluding the over-allotment shares) set forth opposite
each Underwriter's name below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
William Blair & Company............................................
Dain Bosworth Incorporated.........................................
---------
Total......................................................... 3,040,000
=========
</TABLE>
The nature of the Underwriters' obligations under the Underwriting
Agreement is such that all shares of Common Stock being offered must be
purchased if any are purchased. In the event of a default by any Underwriter,
the Underwriting Agreement provides that, in certain circumstances, the purchase
commitments of the non-defaulting Underwriters under the Underwriting Agreement
may be increased or such Underwriting Agreement may be terminated.
The Underwriters have advised the Company and the Selling Shareholder that
the Underwriters propose to offer the shares of Common Stock directly to the
public initially at the public offering price set forth on the cover page of
this Prospectus, and to selected dealers at such price less a concession of not
more than $ per share. Additionally, the Underwriters may allow, and such
dealers may reallow, a concession not in excess of $ per share to certain
other dealers. After the public offering of the Common Stock, the public
offering price and other selling terms may be changed by the Representatives.
The Company has granted the Underwriters an option, exercisable within 30
days after the date of this Prospectus, to purchase up to an additional 456,000
shares of Common Stock at the same price per share to be paid by the
Underwriters for the other shares offered hereby. If the Underwriters purchase
any of such
48
<PAGE> 51
additional shares pursuant to this option, each Underwriter will be committed to
purchase such additional shares in approximately the same proportion as set
forth in the table above. The Underwriters may exercise the option only for the
purpose of covering over-allotments, if any, made in connection with the
distribution of the Common Stock offered hereby.
The Company, the Selling Shareholder and all executive officers and
directors of the Company have agreed not to offer, sell, contract to sell or
otherwise dispose of any shares of Common Stock or any interest therein for a
period of 90 days after the effective date of the Registration Statement of
which this Prospectus is a part without the prior written consent of the
Representatives.
The Company and the Selling Shareholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments the Underwriters may be required to
make in respect thereof.
In connection with this offering, the Underwriters may engage in passive
market-making transactions in the Common Stock on Nasdaq immediately prior to
the commencement of the sale of shares in this Offering, in accordance with Rule
10b-6A under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Passive market-making consists of displaying bids on Nasdaq limited by
the bid prices of market-makers not connected with this offering and purchases
limited by such prices and effected in response to order flow. Net purchases by
a passive market-maker on each day are limited in amount to a specified
percentage of the passive market-marker's average daily trading volume in the
Common Stock during a specified period prior to the filing with the Commission
of the Registration Statement of which this Prospectus is a part and must be
discontinued when such limit is reached. Passive market-making may stabilize the
market price of the Common Stock at a level above that which might otherwise
prevail and, if commenced, may be discontinued at any time.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Michael Best & Friedrich, Milwaukee, Wisconsin. Frank J.
Pelisek, a partner of Michael Best & Friedrich, is Chairman of the Board and a
director of the Company. Certain legal matters in connection with this Offering
will be passed upon for the Underwriters by Sidley & Austin, Chicago, Illinois.
EXPERTS
The consolidated financial statements as of March 31, 1993 and 1994, and
for each of the three years in the period ended March 31, 1994, included in this
Prospectus, the related consolidated financial statement schedules included
elsewhere in the Registration Statement, and the consolidated financial
statements from which the Selected Consolidated Financial Data included in this
Prospectus have been derived, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports appearing herein and elsewhere
in the Registration Statement, which reports express an unqualified opinion and
include explanatory paragraphs referring to the changes in the methods of
valuing inventories, accounting for postretirement benefits other than pensions
and accounting for income taxes. Such consolidated financial statements,
consolidated financial statement schedules, and Selected Consolidated Financial
Data have been included herein and elsewhere in the Registration Statement in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission
("Commission"), Washington, D.C. 20549, a Registration Statement on Form S-1
under the Securities Act with respect to the Common Stock offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto, certain of which have been
omitted in accordance with the rules and regulations of the Commission. The
omitted information may be inspected and
49
<PAGE> 52
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C., and copies of such materials
may be obtained from the public reference section of the Commission, Washington,
D.C. 20549, at prescribed rates. For further information with respect to the
Company and the shares of Common Stock, reference is hereby made to such
Registration Statement, exhibits and schedules. Statements contained in this
Prospectus as to the contents of any contract or other document referred to are
not necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. Copies of such reports, proxy statements and
other information filed by the Company with the Commission can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
regional offices located at 75 Park Place, New York, New York 10007 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material
can be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
50
<PAGE> 53
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
STOKELY USA, INC.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.......................................................... F-2
Consolidated Balance Sheets at March 31, 1993 and 1994 and
June 30, 1994 (unaudited)........................................................... F-3
Consolidated Statements of Operations for the Years Ended
March 31, 1992, 1993 and 1994 and for the Three Months
Ended June 30, 1993 and 1994 (unaudited)............................................ F-5
Consolidated Statements of Stockholders' Equity for the
Years Ended March 31, 1992, 1993 and 1994 and for the
Three Months Ended June 30, 1994 (unaudited)........................................ F-6
Consolidated Statements of Cash Flows for the Years
Ended March 31, 1992, 1993 and 1994 and for the
Three Months Ended June 30, 1993 and 1994 (unaudited)............................... F-7
Notes to Consolidated Financial Statements............................................ F-8
</TABLE>
F-1
<PAGE> 54
INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors of
Stokely USA, Inc.:
We have audited the accompanying consolidated balance sheets of Stokely
USA, Inc. and subsidiaries as of March 31, 1993 and 1994 and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended March 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the companies as of March 31,
1993 and 1994 and the results of their operations and their cash flows for each
of the three years in the period ended March 31, 1994, in conformity with
generally accepted accounting principles.
As discussed in Note C to the consolidated financial statements, the
Company changed its method of valuing inventories from the last-in, first-out
method to the average cost method in 1994 and, retroactively, restated the 1993
and 1992 consolidated financial statements for the change.
As discussed in Notes E and G to the consolidated financial statements, the
Company changed its methods of accounting for postretirement benefits other than
pensions effective April 1, 1992 and accounting for income taxes effective April
1, 1993 to conform with Statement of Financial Accounting Standards No. 106 and
No. 109, respectively.
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
June 17, 1994
F-2
<PAGE> 55
STOKELY USA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS -- NOTE F
<TABLE>
<CAPTION>
MARCH 31,
-------------------- JUNE 30,
1993 1994 1994
-------- -------- -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents -- Note A........................ $ 1,251 $ 2,898 $ 2,989
Accounts receivable, less allowance for losses ($670, $385
and
$337, respectively)..................................... 41,515 20,817 13,218
Refundable income taxes -- Note G.......................... 3,869 1,979 785
Inventories -- Notes A and C............................... 100,591 55,256 57,844
Prepaid Expenses........................................... 1,555 1,983 1,039
-------- -------- -----------
TOTAL CURRENT ASSETS.................................. 148,781 82,933 75,875
OTHER ASSETS:
Property held for disposition (net) -- Note B.............. 9,419 3,541 3,541
Trademarks -- Note A....................................... 918 838 819
Other -- Note A............................................ 5,306 3,867 3,558
-------- -------- -----------
TOTAL OTHER ASSETS.................................... 15,643 8,246 7,918
PROPERTY, PLANT AND EQUIPMENT, at cost -- Note A:
Land and land improvements................................. 2,932 3,184 3,201
Buildings.................................................. 24,370 27,386 27,474
Machinery and equipment.................................... 62,961 66,296 69,325
Construction in progress................................... 1,637 562 --
-------- -------- -----------
91,900 97,428 100,000
Less accumulated depreciation.............................. 23,481 30,072 31,949
-------- -------- -----------
68,419 67,356 68,051
-------- -------- -----------
TOTAL ASSETS.......................................... $232,843 $158,535 $ 151,844
======== ======== =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-3
<PAGE> 56
STOKELY USA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
MARCH 31,
------------------- JUNE 30,
1993 1994 1994
-------- -------- -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
CURRENT LIABILITIES:
Notes payable -- Note F....................................... $ 31,258 $ 17,992 $ 5,981
Accounts payable.............................................. 39,159 13,867 19,312
Accrued compensation and withholdings......................... 3,462 3,065 2,874
Other accrued liabilities..................................... 5,291 1,840 1,509
Income taxes -- Note G........................................ 531 230 202
Current maturities on long-term debt.......................... 2,259 3,868 3,868
-------- -------- -----------
81,960 40,862 33,746
Additional long-term debt classified as a current liability --
Note F..................................................... 26,195 -- --
-------- -------- -----------
TOTAL CURRENT LIABILITIES................................ 108,155 40,862 33,746
LONG-TERM DEBT -- Less current maturities -- Note F............. 82,854 80,438 80,384
OTHER LIABILITIES -- Note D..................................... 7,057 4,595 4,667
STOCKHOLDERS' EQUITY -- Notes F and H:
Preferred stock -- no par value, authorized 1,000,000 shares,
none issued................................................ -- -- --
Common stock -- $0.05 par value, authorized 20,000,000 shares,
issued 8,435,195 shares.................................... 422 422 422
Additional paid-in capital.................................... 18,636 18,661 18,665
Retained earnings............................................. 16,396 14,181 14,588
-------- -------- -----------
35,454 33,264 33,675
Less treasury stock at cost (119,500, 110,550 and 110,550
shares, respectively)...................................... (677) (624) (628)
-------- -------- -----------
TOTAL.................................................... 34,777 32,640 33,047
COMMITMENTS AND CONTINGENCIES -- Note I......................... -- -- --
-------- -------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................... $232,843 $158,535 $ 151,844
======== ======== =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-4
<PAGE> 57
STOKELY USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED MARCH 31, JUNE 30,
--------------------------------- ---------------------
1992 1993 1994 1993 1994
--------- --------- --------- --------- ---------
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
REVENUES:
Net sales................................ $280,368 $281,382 $256,145 $56,357 $38,818
Other -- Note K.......................... 676 2,145 4,691 246 13
-------- -------- -------- ------- -------
TOTAL REVENUES...................... 281,044 283,527 260,836 56,603 38,831
COSTS AND EXPENSES:
Cost of products sold.................... 238,804 249,982 216,392 51,152 30,243
Selling, general and administrative
expenses.............................. 48,481 42,139 36,476 8,303 5,698
Nonrecurring charge -- Note B............ -- 21,145 -- -- --
Interest................................. 8,592 12,721 12,710 3,267 2,375
-------- -------- -------- ------- -------
TOTAL COSTS AND EXPENSES............ 295,877 325,987 265,578 62,722 38,316
EARNINGS (LOSS) BEFORE INCOME TAXES
(CREDIT) AND CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE.................. (14,833) (42,460) (4,742) (6,119) 515
INCOME TAXES (CREDIT) -- Note G............ (4,931) (12,983) (2,527) (734) 108
-------- -------- -------- ------- -------
EARNINGS (LOSS) BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE........... (9,902) (29,477) (2,215) (5,385) 407
CUMULATIVE EFFECT OF CHANGE IN METHOD OF
ACCOUNTING FOR POSTRETIREMENT BENEFITS --
Note E (net of income tax benefit of
$850).................................... -- (1,650) -- -- --
-------- -------- -------- ------- -------
NET EARNINGS (LOSS)........................ $ (9,902) $(31,127) $ (2,215) $(5,385) $ 407
======== ======== ======== ======= =======
PER SHARE AMOUNTS:
Earnings (loss) per common share before
cumulative effect of a change in
accounting method..................... $ (1.19) $ (3.55) $ (0.27) $ (0.65) $ 0.05
Cumulative effect of a change in method
of accounting for postretirement
benefits -- Note E.................... -- $ (0.20) -- -- --
-------- -------- -------- ------- -------
NET EARNINGS (LOSS) PER SHARE OF COMMON
STOCK.................................... $ (1.19) $ (3.75) $ (0.27) $ (0.65) $ 0.05
======== ======== ======== ======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING........ 8,288,255 8,301,591 8,319,649 8,301,591 8,324,645
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-5
<PAGE> 58
STOKELY USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TREASURY STOCK
--------------------- PAID-IN RETAINED -------------------
SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT
--------- -------- ---------- -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balances, April 1, 1991, as
previously reported............ 8,435,195 $422 $ 18,628 $ 53,742 152,700 $ (867)
Restatement for change in method
of valuing inventories -- Note
C.............................. -- -- -- 5,341 -- --
--------- -------- ---------- -------- ------- --------
Balances, as restated April 1,
1991........................... 8,435,195 422 18,628 59,083 152,700 (867)
Net loss......................... -- -- -- (9,902) -- --
Cash dividends declared $0.20 a
share.......................... -- -- -- (1,658) -- --
Exercise of stock options........ -- 6 (8,500) 49
--------- -------- ---------- -------- ------- --------
Balances, March 31, 1992......... 8,435,195 422 18,634 47,523 144,200 (818)
Net loss......................... -- -- -- (31,127) -- --
Exercise of stock options........ -- -- 2 -- (24,700) 141
--------- -------- ---------- -------- ------- --------
Balances, March 31, 1993......... 8,435,195 422 18,636 16,396 119,500 (677)
Net loss......................... -- -- -- (2,215) -- --
Stock warrants issued............ -- -- 23 -- -- --
Exercise of stock options........ -- -- 2 -- (8,950) 53
--------- -------- ---------- -------- ------- --------
Balances, March 31, 1994......... 8,435,195 422 18,661 14,181 110,550 (624)
Net earnings..................... -- -- -- 407 -- --
Reclassification................. -- -- 4 -- -- (4)
--------- -------- ---------- -------- ------- --------
Balance June 30, 1994
(unaudited).................... 8,435,195 $422 $ 18,665 $ 14,588 110,550 $ (628)
======== ======== ======= ======= ======= ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-6
<PAGE> 59
STOKELY USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31, JUNE 30,
------------------------------ -------------------
1992 1993 1994 1993 1994
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)................................ $ (9,902) $(31,127) $ (2,215) $ (5,385) $ 407
Adjustments to net earnings (loss):
Depreciation..................................... 8,461 9,286 7,230 2,468 1,877
Nonrecurring charge.............................. -- 21,145 -- -- --
Deferred compensation and postretirement
benefits...................................... 62 2,713 (36) 23 72
Deferred income taxes............................ 734 (9,833) -- -- --
Amortization of trademarks....................... 96 82 80 20 19
Amortization of deferred debt issuance costs..... 131 887 1,637 323 480
Provision for equipment writedown................ 350 -- -- -- --
Provision for bad debts.......................... (70) 270 (285) (201) (48)
Gains on disposal of property, plant and
equipment..................................... (117) (693) (361) -- --
-------- -------- -------- -------- --------
(255) (7,270) 6,050 (2,752) 2,807
Changes in operating assets and liabilities:
Accounts receivable.............................. 1,378 (14,824) 20,983 21,972 7,647
Refundable income taxes.......................... (3,765) 1,831 1,890 2,996 1,194
Inventories...................................... (5,587) (2,526) 45,335 12,100 (2,588)
Prepaid expenses................................. 725 769 (428) 71 944
Accounts payable................................. 2,914 23,739 (25,292) (15,079) 5,445
Accrued compensation and withholdings............ 1,069 307 (397) (116) (191)
Profit sharing contribution...................... (522) -- -- 1 --
Income taxes..................................... (79) (135) (301) (43) (28)
Other -- net..................................... 393 (448) (9,773) (653) (331)
-------- -------- -------- -------- --------
(3,474) 8,713 32,017 21,249 12,092
-------- -------- -------- -------- --------
Net cash provided by (used in) operating
activities....................................... (3,729) 1,443 38,067 18,497 14,899
-------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment......... (21,713) (12,871) (5,174) (1,959) (2,572)
(Increase) decrease in construction funds held by
trustee.......................................... (560) 1,362 -- -- --
Proceeds from sales of property, plant and
equipment........................................ 164 3,197 9,143 710 --
Acquisition of business............................ (9,260) -- -- -- --
Other -- net....................................... (2,162) 1,034 (176) (78) (171)
-------- -------- -------- -------- --------
Net cash provided by (used in) investing
activities....................................... (33,531) (7,278) 3,793 (1,327) (2,743)
-------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in short-term debt (net).................... 6,609 13,036 (31,266) (17,157) (12,011)
Proceeds from long-term debt....................... 23,000 -- -- -- --
Payments of long-term debt......................... (1,999) (2,296) (9,002) (56) (54)
Payments of cash dividends......................... (1,658) (415) -- -- --
Payments of deferred debt issuance costs........... (248) (3,436) -- -- --
Exercise of stock options.......................... 55 143 55 2 --
-------- -------- -------- -------- --------
Net cash provided by (used in) financing
activities....................................... 25,759 7,032 (40,213) (17,211) (12,065)
-------- -------- -------- -------- --------
Net increase (decrease) in cash and cash
equivalents........................................ (11,501) 1,197 1,647 (41) 91
Cash and cash equivalents at beginning of year....... 11,555 54 1,251 1,251 2,898
-------- -------- -------- -------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR............... $ 54 $ 1,251 $ 2,898 $ 1,210 $ 2,989
========= ========= ========= ========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-7
<PAGE> 60
STOKELY USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1992, 1993 AND 1994
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1993 AND 1994 IS
UNAUDITED.)
NOTE A -- DESCRIPTION OF COMPANY BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Stokely USA, Inc. and its subsidiaries (the "Company") are engaged
primarily in the processing, marketing and distribution of both branded and
private label canned and frozen vegetables, which management considers to be a
single segment.
Unaudited Three Month Periods -- Detailed footnote information for the
three month periods is not presented. In the opinion of management, the
unaudited interim financial information reflects all adjustments, consisting
only of normal recurring accruals, necessary for a fair presentation thereof.
The results of operations for the three months ended June 30, 1994 are not
necessarily indicative of results expected for the year ending March 31, 1995.
Consolidation -- The consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
Cash Equivalents -- The Company considers all highly liquid investments
with purchased maturities of three months or less to be cash equivalents.
Inventories -- Inventories are stated at the lower of cost or market. Cost
has been determined using the average cost method (see Note C).
Deferred Debt Issuance Costs -- Included in Other Assets in the
consolidated balance sheets are unamortized deferred debt issuance costs of
$3,268,000 and $2,435,000 at March 31, 1993 and 1994, respectively. The debt
issuance costs are being amortized by the straight-line or interest method over
the life of the related debt issue. The accumulated amortization was $1,290,000
and $2,927,000, respectively, at March 31, 1993 and 1994.
Depreciation -- Depreciation of plant and equipment is provided over the
estimated useful lives of the respective assets on the straight-line method.
Trademarks -- Trademarks are being amortized on a straight-line basis
primarily over 20 years. Accumulated amortization was $691,000 and $771,000,
respectively, at March 31, 1993 and 1994.
NOTE B -- NONRECURRING CHARGE
During the fourth quarter of fiscal 1993, the Company recorded a
nonrecurring charge aggregating $21,145,000 related to its decision to sell,
close or downsize certain processing facilities. The nonrecurring charge
included the write-down of such processing facilities and related equipment to
their estimated net realizable or salvage value. Also included in the
nonrecurring charge are provisions for severance, consolidation costs, plant
carrying costs and the write-down of certain discontinued inventories to their
estimated net realizable value.
NOTE C -- INVENTORIES
Inventories (in thousands) consisted of the following:
<TABLE>
<CAPTION>
FINISHED MANUFACTURING
GOODS SUPPLIES TOTAL
-------- ------------- --------
<S> <C> <C> <C>
March 31, 1993.............................................. $ 93,656 $ 6,935 $100,591
March 31, 1994.............................................. 50,256 5,000 55,256
</TABLE>
F-8
<PAGE> 61
STOKELY USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE C -- INVENTORIES (CONTINUED)
During the fourth quarter of 1994, the Company changed its method of
valuing its inventories from the last-in, first-out ("LIFO") method to the
average cost method. Management believes that the average cost method provides a
more meaningful presentation of the Company's financial position and related
financial ratios. In accordance with generally accepted accounting principles,
the prior years' financial statements have been retroactively adjusted to
reflect this change. The effect of this restatement was to reduce the net loss
in 1992 by $842,000 or $0.11 per share and increase the net loss in 1993 by
$784,000 or $.09 per share. In addition, the effect of the restatement was to
increase retained earnings at April 1, 1991 by $5,341,000.
NOTE D -- OTHER LIABILITIES
Other liabilities (in thousands) consisted of the following:
<TABLE>
<CAPTION>
MARCH 31,
----------------
1993 1994
------ ------
<S> <C> <C>
Postretirement benefits..................................................... $2,719 $2,769
Accrued disposition costs................................................... 2,426 --
Deferred compensation....................................................... 1,912 1,826
------ ------
$7,057 $4,595
====== ======
</TABLE>
NOTE E -- EMPLOYEES' RETIREMENT PLAN AND OTHER BENEFIT PLANS
The Company provides certain postretirement health care benefits and life
insurance benefits to retired employees. The benefits and eligibility
requirements vary by location and various union agreements.
Generally, eligibility is attained at age 55 or 62 with minimum service
requirements. Employees hired currently by the Company are not entitled to
postretirement health care benefits. The medical benefits generally are subject
to lifetime maximum benefits of $750,000 and after age 65 are coordinated with
Medicare. During the year ended March 31, 1993, the Company adopted, effective
April 1, 1992, Statement of Financial Accounting Standard No. 106 ("SFAS No.
106"), "Employers' Accounting for Postretirement Benefits Other than Pensions."
The Company previously had provided for postretirement health care benefits on a
pay-as-you-go basis. In connection with the adoption of SFAS No. 106, the
Company elected to recognize as expense during 1993 the entire accumulated
postretirement benefit obligation (transition obligation) aggregating $2,500,000
as of April 1, 1992, rather than amortizing such amount to expense over a
20-year period. The Company continues to fund benefit costs on a pay-as-you-go
basis.
F-9
<PAGE> 62
STOKELY USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE E -- EMPLOYEES' RETIREMENT PLAN AND OTHER BENEFIT PLANS (CONTINUED)
The following table sets forth the plan's status reconciled with amounts
recognized in the balance sheet:
<TABLE>
<CAPTION>
MARCH 31,
----------------
1993 1994
------ ------
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees.................................................................. $1,371 $1,377
Fully eligible active plan participants................................... 227 234
Other active plan participants............................................ 1,121 1,174
------ ------
2,719 2,785
Unrecognized net loss....................................................... -- 16
------ ------
Accrued postretirement benefit cost......................................... $2,719 $2,769
====== ======
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED
MARCH 31,
--------------
1993 1994
---- ----
<S> <C> <C>
Net periodic postretirement benefit cost included the following components:
Service cost -- benefits attributed to service during period.............. $122 $131
Interest cost on accumulated postretirement benefit obligation............ 193 206
Curtailment gain.......................................................... -- (71)
---- ----
Net periodic postretirement benefit cost.................................... $315 $266
==== ====
</TABLE>
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 14% in 1994, gradually declining to 6% in
2001.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 8% in 1993 and 7.5% in 1994.
If the health care cost trend assumptions were increased by 1%, the
accumulated postretirement benefit obligation as of March 31, 1994, would
increase by $230,000. The effect of this change on the aggregate of the service
cost and interest cost would be an additional charge to expense of approximately
$35,000 for the year ended March 31, 1994.
During 1994, the Company had a curtailment gain which represented the
accumulated postretirement benefit obligation of employees at operations
divested of during the year.
The Company has a profit sharing plan which covers substantially all
full-time employees who have completed one year (minimum of 1,000 hours) of
service and provides for Company contributions to a separate trust based upon 8%
of the profit sharing income base as defined in the plan. No profit sharing
contributions were required during the three years ended March 31, 1994.
In addition, the Company also has salary deferral profit sharing plans
(401(k) plans) and other defined contribution plans. Contributions under these
plans were $661,000, $670,000, and $337,000 in 1992, 1993 and 1994,
respectively.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 112 "Employers' Accounting for Postemployment
Benefits." This statement requires the accrual of postemployment benefits during
the years an employee provides services. The Statement must be adopted during
the year ended March 31, 1995. The impact of adopting this Statement has not
been determined.
F-10
<PAGE> 63
STOKELY USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE F -- NOTES PAYABLE AND LONG-TERM DEBT
<TABLE>
<CAPTION>
MARCH 31,
-------------------
1993 1994
-------- -------
(IN THOUSANDS)
<S> <C> <C>
9.37% senior notes due January 2000...................................... $ 25,000 $21,186
9.74% senior notes due December 2001..................................... 19,500 16,071
Revolving credit notes................................................... 35,000 17,000
Industrial Development Revenue Bonds:
7.00% to 8.88%......................................................... 27,748 26,569
5.28% (floating at 88% of prime)....................................... 850 600
4.32% (floating at 72% of prime)....................................... 360 180
4.05% Variable......................................................... 2,850 2,700
-------- -------
111,308 84,306
Less:
Current maturities on long-term debt................................... (2,259) (3,868)
Additional long-term debt classified as current liability.............. (26,195) --
-------- -------
$ 82,854 $80,438
======== =======
</TABLE>
On August 20, 1992, the Company entered into a loan and security agreement
with a commercial lender and various banks which provides for borrowings under
revolving credit loans and matures on May 31, 1995. The agreement, which was
amended on June 15, 1993, provides for maximum borrowings under revolving credit
loans of $100,000,000. Borrowings under the revolving credit loans bear interest
at 2.25% over a specified bank's reference rate on the first $40,000,000 of
loans and 1.25% over the reference rate on any borrowings in excess of
$40,000,000. The amended agreement generally restricts borrowings to an amount
equal to 85% of eligible accounts receivable plus 65% of eligible inventory
subject to an inventory sub-limit, as defined in the agreement, reduced by the
amount of any outstanding letters of credit and $8,140,000.
The amended agreement requires an agent's fee of .25% per annum times the
average daily used portion of the commitment, including outstanding letters of
credit. The amended agreement required the Company to pay a restructuring fee of
$600,000 in installments and provides for a fee equal to .25% per annum of the
unused portion of the commitment.
Covenants contained in the amended agreement require the Company to
maintain minimum levels of adjusted tangible net worth, net cash flow and
interest coverage. Other covenants place limitations on liens, capital
expenditures, leases, disposition of assets, dividends and the ability to incur
additional debt.
In addition to the covenants under the amended loan and security agreement,
the Company also has similar covenants under its various other agreements. At
March 31, 1994, all of the retained earnings are restricted as to the payment of
future cash dividends.
On June 15, 1993, the Company issued warrants to the holders of the 9.37%
and 9.74% senior notes in consideration for amending the applicable loan
agreement. The warrants entitle the holders to purchase an aggregate of 90,000
shares of common stock at a price of $7.88 per share through January 15, 2000.
The estimated fair market value of the warrants at June 15, 1993, aggregating
$22,500, has been credited to additional paid-in capital.
During 1993 certain Industrial Revenue Development Bond issues were
classified as current liabilities because the Company was in technical default
of certain financial ratio covenants. During 1994, all of the Industrial Revenue
Development Bond issues, with the exception of one issue aggregating $1,400,000,
were amended by the bondholders such that the Company was in compliance with the
related debt covenants and,
F-11
<PAGE> 64
STOKELY USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE F -- NOTES PAYABLE AND LONG-TERM DEBT (CONTINUED)
accordingly, such amounts have been classified as long-term debt at March 31,
1994. On June 13, 1994, the trustee of the $1,400,000 Paulding, Ohio, bond issue
declared these bonds immediately payable due to events of default under the
Indenture of Trust. Therefore, the bonds are included in current maturities of
long-term debt at March 31, 1994. The facility related to the Paulding bond
issue was sold during 1994, and proceeds from the sale, aggregating $1,400,000,
were placed in a segregated cash account in anticipation of the acceleration
notice from the Trustee.
The amended loan and security agreement and the senior note agreements
contain cross-default provisions. Such cross-default provisions specify that a
default on any other debt agreement is also an event of default under the
agreement containing the cross-default provision. In addition, the amended loan
and security agreement and the senior note agreements contain acceleration
clauses which give the holders the right to accelerate the maturity date of the
obligation if any other obligation owed by the Company is accelerated or payment
is demanded other than in accordance with the stated maturity dates. The Company
has obtained waivers from the holders of the revolving credit notes and the
senior notes with respect to the cross-default provision and acceleration
clauses relating to the Paulding issue.
Substantially all of the assets of the Company are pledged as collateral
under the various loan agreements.
At March 31, 1994, $17,992,000 of revolving credit loans payable were
classified as short-term, reflecting the Company's intent to repay these
borrowings during 1995. The interest rate on the outstanding revolving credit
loans (including the amounts classified as long-term) at March 31, 1994, was
8.5%.
The stated aggregate amounts of scheduled maturities on long-term debt each
year for the five years subsequent to March 31, 1994, are as follows: 1995 --
$3,868,000; 1996 -- $19,536,000; 1997 -- $2,150,000; 1998 -- $2,650,000; and
1999 -- $7,215,000.
Revolving credit loans payable at March 31, 1994, under the Company's
amended loan and security agreement approximate estimated fair value as the
interest rate remained unchanged under the amended agreement on June 15, 1993.
The 9.37% and 9.74% senior notes are estimated to have an approximate fair value
of $22,296,217 and $16,695,826, respectively, at March 31, 1994, based on quoted
prices for similar issues for debt of the same maturities. Management of the
Company has estimated the fair value of the Industrial Development Revenue Bond
issues to be approximately $29,148,000.
NOTE G -- INCOME TAXES
Effective April 1, 1993, the Company adopted Statement of Financial
Accounting Standard No. 109 ("SFAS No. 109"). This statement requires that
deferred income taxes be calculated using an asset and liability method, which
generally requires the recognition of the tax consequences on future years of
events which have been recognized in financial statements. In addition, a
valuation allowance is to be recognized if it is more likely than not that some
or all of a deferred tax asset will not be realized. Due to the recent history
of operating losses, a valuation allowance has been established which reduces
the deferred tax assets to zero after giving effect to deferred tax liabilities.
There was no material cumulative effect of adoption of SFAS No. 109 on the
financial position or results of operations of the Company for the year ended
March 31, 1994.
F-12
<PAGE> 65
STOKELY USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE G -- INCOME TAXES (CONTINUED)
Income taxes consisted of the following:
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
------------------------------
1992 1993 1994
------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Currently payable (refundable):
Federal....................................................... $(5,765) $ (4,050) $(2,577)
State......................................................... 100 50 50
Deferred -- Federal............................................. 734 (8,983) --
------- -------- -------
$(4,931) $(12,983) $(2,527)
======= ======== =======
</TABLE>
Total incomes tax credits differ from the amounts computed by applying the
federal income tax rate to loss before income taxes. The following table
provides a reconciliation between the United States statutory rate to the
effective tax rate reported:
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
------------------------
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
U.S. Statutory rate................................................ 34.0% 34.0% 34.0%
State income taxes net of federal income tax benefits.............. (0.6) (0.1) (1.1)
Effect of net operating loss carryback............................. -- (4.0) 3.6
Tax rate differential on carryback of product liability claim...... -- -- 5.2
Adjustment of prior years accrual.................................. -- -- 11.6
Other items -- net................................................. (0.2) 0.5 --
---- ---- ----
Effective tax rate................................................. 33.2% 30.6% 53.3%
==== ==== ====
</TABLE>
Deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes, and (b) net
operating loss and tax credit carryforwards. Significant components of the
Company's net deferred tax liability as of March 31, 1994, are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Deferred tax assets:
Reserves not currently deductible............................................ $ 1,325
Provision for nonrecurring charge............................................ 2,451
Postretirement benefits...................................................... 942
Tax credit carryforwards..................................................... 2,921
Net operating loss carryforwards............................................. 7,922
Valuation allowance.......................................................... (4,520)
--------------
Total deferred tax assets...................................................... 11,041
--------------
Deferred tax liabilities:
Change in method of inventory valuation...................................... 1,530
Deferred casualty gain....................................................... 1,408
Tax over book depreciation................................................... 7,816
Other........................................................................ 287
--------------
Total deferred tax liabilities................................................. 11,041
--------------
Net deferred tax liability..................................................... $ 0
===========
</TABLE>
F-13
<PAGE> 66
STOKELY USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE G -- INCOME TAXES (CONTINUED)
Deferred income taxes for 1992 and 1993 resulted principally from
depreciation, provision for nonrecurring charges and inventory valuations. At
March 31, 1994, the Company had an alternative minimum tax credit carry-forward
of approximately $1,916,000, which may be carried forward indefinitely, and the
Company also had a general business credit carryforward of approximately
$1,005,000 which expires in various years through 2003 to 2008. At March 31,
1994, the Company had net operating loss carryforwards of approximately
$23,300,000 which expire in the year 2009.
NOTE H -- CAPITAL STOCK
In June 1989, the Company amended its Articles of Incorporation to grant,
in the event any person ("Acquiring Person") becomes the beneficial owner, as
defined, of 50% or more of the Company's common stock, any of which was acquired
pursuant to a tender offer, such holder of common stock other than the Acquiring
Person the right to have their shares repurchased for cash by the Company. The
repurchase price will be the highest of (i) the highest price paid by Acquiring
Person for those shares acquired within the prior 18 months, (ii) the highest
price on any trading day in the prior 18 months, or (iii) the per common share
amount of stockholders' equity as reflected in the previously completed quarter.
In 1985, the stockholders approved a 1985 Incentive Stock Option Plan
pursuant to which 320,000 shares of the Company's common stock were reserved for
the grant of options to executive officers and other key employees. Under the
Plan, stock grants may be made over a ten-year period at not less than 100% of
fair market value at the date of grant. One year after date of grant, 50% of the
options become exercisable with the remaining options exercisable after the
second year. No option granted under the Plan may be exercised more than ten
years after the date of grant. Changes in shares as to options are as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK
------------------------------------
OUTSTANDING
RESERVED OPTIONS AVAILABLE
-------- ----------- ---------
<S> <C> <C> <C>
Balances at April 1, 1991 ($5.125 to $16.25)................... 266,700 159,500 107,200
Granted ($10.50)............................................... -- 53,500 (53,500)
Expired ($16.25)............................................... -- (4,000) 4,000
Exercised ($5.125 to $6.875)................................... (8,500) (8,500) --
-------- ----------- ---------
Balances at March 31, 1992 ($5.125 to $15.875)................. 258,200 200,500 57,700
Granted ($6.25 to $10.625)..................................... -- 19,600 (19,600)
Expired ($5.125 to $16.25)..................................... -- (36,200) 36,200
Exercised ($5.125 to $10.50)................................... (24,700) (24,700) --
-------- ----------- ---------
Balances at March 31, 1993 ($5.125 to $15.875)................. 233,500 159,200 74,300
Granted ($6.125 to $8.625)..................................... -- 6,500 (6,500)
Expired ($6.25 to $15.125)..................................... -- (14,750) 14,750
Exercised ($5.125 to $6.875)................................... (8,950) (8,950) --
-------- ----------- ---------
Balances at March 31, 1994..................................... 224,550 142,000 82,550
======= ========= =======
</TABLE>
At March 31, 1994, a total of 133,950 options were exercisable at $5.125 to
$15.875.
In addition, during 1990 the Company granted options to purchase 17,500
shares of Common Stock at $10 per share to certain employees. These options have
substantially the same terms as the Incentive Stock Option Plan. During 1993,
options for 15,000 of these shares expired.
F-14
<PAGE> 67
STOKELY USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE I -- COMMITMENTS AND CONTINGENCIES
The Company has operating leases covering primarily equipment and land. The
majority of the equipment leases are for terms of one year or less. The Company
does, however, in the normal course of business continue to lease the equipment
after the minimum lease period. Certain leases require payment of insurance and
maintenance costs.
Aggregate minimum rental commitments at March 31, 1994 under noncancellable
leases with terms of more than one year are immaterial.
Total rent expense aggregated approximately $3,268,000, $2,850,000 and
$1,900,000, respectively, during the years 1992, 1993 and 1994.
The Company is involved in various legal actions and claims primarily
arising in the normal course of its business. In the opinion of management of
the Company, the liability, if any, would not have a material effect on the
Company's financial condition or results of operations.
NOTE J -- SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash payments for (refunds of) interest and income taxes were as follows:
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
-----------------------------
1992 1993 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest......................................................... $ 7,246 $11,607 $11,854
Income taxes -- net.............................................. (1,821) (5,695) (4,118)
</TABLE>
NOTE K -- INSURANCE CLAIM
During fiscal 1993, the Company had a boiler explosion and ensuing fire at
its Hoopeston, Illinois, processing facility. An initial claim was filed with
the insurance carrier relating to the property and equipment destroyed and the
estimated business interruption losses incurred. As of March 31, 1993, advances
had aggregated $5,000,000, of which $1,250,000 was received in cash and
$3,750,000 was included in accounts receivable. This advance was recorded to
write off $2,500,000 of property and equipment destroyed in the fire and to
record a gain of $2,500,000 relating to recovery of expenses incurred and lost
margin resulting from the fire.
During fiscal 1994, the Company received additional insurance proceeds from
the final settlement of this claim, resulting in a gain included in other
revenues of $4,118,000.
F-15
<PAGE> 68
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY STOKELY, THE SELLING SHAREHOLDER OR
ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANYONE
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALES MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Stokely Restructuring Program......... 6
Risk Factors.......................... 7
Use of Proceeds....................... 9
Price Range of Common Stock........... 10
Dividend Policy....................... 10
Dilution.............................. 11
Capitalization........................ 12
Selected Consolidated Financial
Data................................ 13
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 14
Business.............................. 23
Management............................ 36
Certain Transactions.................. 43
Principal and Selling Shareholders.... 44
Description of Capital Stock.......... 46
Underwriting.......................... 48
Legal Matters......................... 49
Experts............................... 49
Additional Information................ 49
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
3,040,000 SHARES
Stokely USA, Inc.
COMMON STOCK
------------------------
PROSPECTUS
, 1994
------------------------
WILLIAM BLAIR & COMPANY
DAIN BOSWORTH
INCORPORATED
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 69
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Registration Fee -- Securities and Exchange Commission............. $ 13,718
NASD Filing Fee.................................................... 4,478
NASDAQ Listing Fees................................................ 17,500
Printing and Engraving Expenses.................................... 150,000
Accounting Fees.................................................... 40,000
Transfer Agent Fees................................................ 10,000
Legal Fees and Expenses............................................ 150,000
Blue Sky Qualification Fees and Expenses (including Fees of
Counsel)......................................................... 10,000
Miscellaneous...................................................... 29,304
--------
Total......................................................... $425,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is incorporated under the Wisconsin Business Corporation Law
("WBCL"). Under Section 180.0851(1) of the WBCL, the Company is required to
indemnify a director or officer, to the extent such person is successful on the
merits or otherwise in the defense of a proceeding, for all reasonable expenses
incurred in the proceeding if such person was a party because he or she was a
director or officer of the Company. In all other cases, the Company is required
by Section 180.0851(2) to indemnify a director or officer against liability
incurred in a proceeding to which such a person was a party because he or she
was a director or officer of the Company, unless it is determined that he or she
breached or failed to perform a duty owed to the Company and the breach or
failure to perform constitutes: (i) a willful failure to deal fairly with the
Company or its shareholders in connection with a matter in which the director or
officer has a material conflict of interest; (ii) a violation of criminal law,
unless the director or officer had reasonable cause to believe his or her
conduct was lawful or no reasonable cause to believe his or her conduct was
unlawful; (iii) a transaction from which the director or officer derived an
improper personal profit; or (iv) willful misconduct. Section 180.0858(1)
provides that, subject to certain limitations, the mandatory indemnification
provisions do not preclude any additional right to indemnification or allowance
of expenses that a director or officer may have under the company's articles of
incorporation, by-laws, a written agreement or a resolution of the Board of
Directors or shareholders.
Section 180.0859 of the WBCL provides that it is the public policy of the
state of Wisconsin to require or permit indemnification, allowance of expenses
and insurance to the extent required to be permitted under Sections 180.0850 to
180.0858 of the WBCL, for any liability incurred in connection with a proceeding
involving a federal or state statute, rule or regulation regulating the offer,
sale or purchase of securities.
Section 180.0828 of the WBCL provides that, with certain exceptions, a
director is not liable to a corporation, its shareholders, or any person
asserting rights on behalf of the corporation or its shareholders, for damages,
settlements, fees, fines, penalties or other monetary liabilities arising from a
breach of, or failure to perform, any duty resulting solely from his or her
status as a director, unless the person asserting liability proves that the
breach or failure to perform constitutes any of the four exceptions to mandatory
indemnification under Section 180.0851(2) referred to above.
II-1
<PAGE> 70
Under Article VII of the Company's By-laws, directors and officers are
indemnified against liability, in both derivative and nonderivative suits, which
they may incur in their capacities as such, subject to certain determinations by
the Board of Directors, independent legal counsel or the shareholders that the
applicable standards of conduct have been met. The scope of such indemnification
is substantially the same as permitted and described in Sections 180.0850 to
180.0858 of the WBCL.
Under Section 180.0833 of the WBCL, directors of the Company against whom
claims are asserted with respect to the declaration of improper dividends or
distributions to shareholders or certain other improper acts which they approved
are entitled to contribution from other directors who approved such actions and
from shareholders who knowingly accepted an improper dividend or distribution,
as provided therein.
The directors and officers of the Company and its subsidiaries are covered
by a directors' and officers' liability insurance policy. The insurance policy
provides that, subject to the applicable liability limits and retention amounts,
the insurer will reimburse directors and officers of the Company for a "loss"
(as defined in the policy) sustained by a director or officer resulting from any
"claim" (as defined in the policy) made against them for a "wrongful act" (as
defined in the policy), except for such a loss which the Company indemnifies (or
is required or permitted to indemnify) the director or officer. The policy also
provides that, subject to the applicable liability limits and retention amounts,
the insurer will reimburse the Company for a loss for which the Company has
lawfully indemnified (or is required or permitted by law to indemnify) a
director or officer resulting from any such claim. Subject to certain exclusions
set forth in the policy, "wrongful act" is defined in the policy to mean any
negligent act, error, omission, misstatement, misleading statement, or breach of
duty by the Company's directors or officers in the discharge of their duties
solely in their capacities as such directors or officers.
The Registrant will agree to indemnify, defend and hold harmless each of
the Underwriters and each person who controls any Underwriters from and against
any loss, expense, liability or claim under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, or otherwise which
arises out of or is based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or in the Prospectus,
or arises out of or is based upon any omission or alleged omission to state a
material fact required to be stated in either such Registration Statement or
such Prospectus or necessary to make the statements made therein not misleading.
These indemnification obligations will not extend to any such loss, expense,
liability or claim which arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in and in conformity with
information furnished in writing by any Underwriter through either or both of
the Managing Underwriters to the Registrant expressly for use with reference to
such Underwriter in such Registration Statement or such Prospectus, or which
arises out of or is based upon any omission or alleged omission to state a
material fact in connection with such information required to be stated in
either such Registration Statement or such Prospectus or necessary to make such
information not misleading.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
During the past three years, Registrant sold securities which were not
registered under the Securities Act of 1933, as amended, as described below. The
securities of Registrant were sold in reliance on the exemption
II-2
<PAGE> 71
from registration contained in Section 4(2) of the Securities Act of 1933, as
amended. No underwriters were involved in the sale of the securities and no
commissions were paid to any person.
<TABLE>
<CAPTION>
TITLE AND AMOUNT PRICE PER SHARE PURCHASER DATE OF SALE NATURE OF TRANSACTION
- -------------------- --------------- ------------------- ------------ ------------------------
<S> <C> <C> <C> <C>
Warrants to purchase $7.88 Nationwide Life June 1993 Warrants issued in
41,000 shares of Common Insurance Company connection with
Stock amendments to a
promissory note, price
per share is exercise
price per warrant share
Warrants to purchase $7.88 State of Wisconsin June 1993 Warrants issued in
40,000 shares of Common Investment Board connection with
Stock amendments to a
promissory note, price
per share is exercise
price per warrant share
Warrants to purchase $7.88 Employers Life June 1993 Warrants issued in
6,000 shares of Common Insurance Company connection with
Stock of Wisconsin amendments to a
promissory note, price
per share is exercise
price per warrant share
Warrants to purchase $7.88 West Coast Life June 1993 Warrants issued in
3,000 shares of Common Insurance Company connection with
Stock amendments to a
promissory note, price
per share is exercise
price per warrant share
Options to purchase $8.50 Vernon L. Wiersma April 1994 Stock option grant,
30,000 shares of price per share is
Common Stock exercise price per
option share
Options to purchase $8.50 Stephen W. Theobald April 1994 Stock option grant,
15,000 shares of price per share is
Common Stock exercise price per
option share
</TABLE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
A. EXHIBITS:
<TABLE>
<S> <C>
1. Proposed Form of Underwriting Agreement(1).
3.1 Restated and Amended Articles of Incorporation of Registrant(3).
3.2 By-laws of Registrant, as amended(1)(3).
4.1 Specimen Common Stock Certificate(3).
5. Opinion of Michael Best & Friedrich Regarding Legality of Securities being
Issued(2).
10(a) No longer in effect.
10(b) Loan Agreement between the City of Green Bay, Wisconsin and Stokely USA, Inc.
dated December 1, 1988 with respect to $3,000,000 in principal amount of City of
Green Bay, Wisconsin Industrial Revenue Bonds (Stokely USA, Inc. Project),
relating to Stokely's Green Bay, Wisconsin facility(5).
10(c) Loan and Mortgage Agreement with respect to $6,000,000 in principal amount of
Industrial Development Bonds relating to Stokely's Poynette, Wisconsin sauerkraut
facility(5).
</TABLE>
II-3
<PAGE> 72
<TABLE>
<S> <C>
10(d) Note Agreement between Stokely USA, Inc. and Nationwide Life Insurance Company,
Employers Life Insurance Company of Wausau and West Coast Life Insurance Company
dated January 5, 1990 with respect to $25,000,000 in principal amount of 9.12%
Senior Notes due January 15, 2000(10).
10(e) No longer in effect.
10(f) Loan Agreement between the Village of Poynette, Wisconsin and Stokely USA, Inc.
dated December 1, 1989, with respect to $1,600,000 in principal amount of
Refunding Revenue Bonds (Stokely USA, Inc. Project) relating to Stokely's
Poynette, Wisconsin facility(6).
10(g) Loan Agreement between the Village of Waunakee, Wisconsin and Stokely USA, Inc.
dated June 1, 1989 with respect to $4,000,000 in principal amount of Industrial
Revenue Bonds (Stokely USA, Inc. Project) relating to Stokely's Waunakee,
Wisconsin facility(6).
10(h) Loan Agreement between the City of Ackley, Iowa and Stokely USA, Inc. dated July
1, 1989 with respect to $3,000,000 in principal amount of Industrial Development
Revenue Bonds (Stokely USA, Inc. Project) Series 1989 relating to Stokely's
Ackley, Iowa facility(6).
10(i) Executive Deferred Compensation Agreements between Stokely USA, Inc. and each of
Thomas W. Mount, Joseph B. Weix and Robert J. Whelan, Sr.(6).
10(j) 1985 Incentive Stock Option Plan(6).
10(k) Loan Agreement between the Town of Utica, Wisconsin and Stokely USA, Inc. dated
June 1, 1990 with respect to $3,000,000 in principal amount of Industrial Revenue
Bonds (Stokely USA, Inc. Project) relating to Stokely's Pickett, Wisconsin
facility(7).
10(l) Loan Agreement between Port of Walla Walla Public Corporation and Stokely USA,
Inc. dated September 1, 1990 with respect to $4,000,000 in principal amount of
Industrial Revenue Bonds, Series 1990 relating to Stokely's Walla Walla,
Washington facility(7).
10(m) Loan Agreement between City of Wells, Minnesota and Stokely USA, Inc. dated
December 1, 1991 with respect to $3,000,000 in principal amount of Industrial
Revenue Bonds (Stokely USA, Inc. Project) Series 1991 relating to Stokely's
Wells, Minnesota facility(8).
10(n) Note Agreement between the State of Wisconsin Investment Board and Stokely USA,
Inc. dated December 1, 1991 with respect to $20,000,000 in principal amount of
9.49% Senior Notes due December 15, 2001(8).
10(o) Loan and Security Agreement by and among Barclays Business Credit, Inc. as agent
and lender, various other lenders and Stokely USA, Inc. dated August 18, 1992
with respect to a $120,000,000 Credit Facility(11).
10(p) Restated Agreement for Purchase and Sale of Containers between Stokely USA, Inc.
and Heekin Can, Inc. dated January 1, 1992, and as amended on July 24, 1992(11).
10(q) Supply Agreement between Stokely USA, Inc. and American National Can Company
dated July 24, 1992 and as amended on June 11, 1993(11).
10(r) Amendment to Note Agreement dated August 18, 1992 regarding $25,000,000 Original
Principal Amount of 9.12% Senior Notes due January 15, 2000 (see Exhibit
10(d))(11).
10(s) Amendment to Note Agreement dated December 1, 1991 regarding $20,000,000 in
principal amount of 9.49% Senior Notes due December 15, 2000 (see Exhibit
10(n))(11).
10(t) Amendment to Revenue Agreement between Stokely USA, Inc. and the City of
Appleton, Wisconsin, dated December 1, 1988(9).
10(u) Reserved.
10(v) Second Amendment to Note Agreement dated June 11, 1993 regarding $20,000,000
Promissory Note (see Exhibit 10(n))(9).
10(w) Reserved.
10(x) First Amendment to Security Agreement dated June 1993 relating to the Credit
Facility (see Exhibit 10(o))(9).
10(y) Second Amendment to Note Agreement dated June 11, 1993 regarding $25,000,000
Original Principal Amount of 9.37% Senior Notes Due January 15, 2000 (see Exhibit
10(d))(9).
</TABLE>
II-4
<PAGE> 73
<TABLE>
<S> <C>
10(z) Warrant to Purchase Shares of Common Stock of Stokely USA, Inc. issued to
Nationwide Life Insurance Company dated June 1993(9).
10(aa) Warrant to Purchase Shares of Common Stock of Stokely USA, Inc. issued to EMPL
and Co. dated June 1993(9).
10(bb) Warrant to Purchase Shares of Common Stock of Stokely USA, Inc. issued to West
Coast Life Insurance Company dated June 1993(9).
10(cc) No longer applicable.
10(dd) First Amendment to Loan Agreement with the City of Ackley, Iowa (see Exhibit
10(h)), dated as of March 31, 1994, between Stokely USA, Inc. and Norwest Bank
Minnesota, N.A., as trustee(12).
10(ee) First Amendment to Loan Agreement with the Village of Poynette, Wisconsin (see
Exhibit 10(c)), dated as of March 31, 1994, between Stokely USA, Inc. and Norwest
Bank Minnesota, N.A., as trustee(12).
10(ff) First Amendment to Loan Agreement with the Village of Poynette, Wisconsin (see
Exhibit 10(f)), dated as of March 31, 1994, between Stokely USA, Inc. and
NationsBank of Virginia, N.A., as trustee(12).
10(gg) First Amendment to Loan Agreement with the Village of Waunakee, Wisconsin (see
Exhibit 10(g)), dated as of March 31, 1994, between Stokely USA, Inc. and
NationsBank of Virginia, N.A., as trustee(12).
10(hh) First Amendment to Loan Agreement with the City of Jefferson, Wisconsin, dated as
of June 17, 1994, between Stokely USA, Inc. and NationsBank of Virginia, N.A., as
trustee(12).
10(ii) First Amendment to Loan Agreement with the Port of Walla Walla, Washington Public
Corporation (see Exhibit 10(l)), dated as of June 17, 1994, between Stokely USA,
Inc. and NationsBank of Virginia, N.A., as trustee(12).
10(jj) First Amendment to Loan Agreement with the Town of Utica, Wisconsin (see Exhibit
10(k)), dated as of June 17, 1994, between Stokely USA, Inc. and NationsBank of
Virginia, N.A., as trustee(12).
10(kk) First Amendment to Loan Agreement with the City of Green Bay, Wisconsin (see Ex-
hibit 10(b)), dated as of June 17, 1994, between Stokely USA, Inc. and
NationsBank of Virginia, N.A., as trustee(12).
10(ll) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Vernon L. Wiersma dated October 16, 1992(1).
10(mm) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Stephen W. Theobald dated October 16, 1992(1).
10(nn) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Kenneth L. Murray dated January 27, 1993(1).
10(oo) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Russell J. Trunk dated October 16, 1992(1).
10(pp) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Leslie J. Wilson dated October 16, 1992(1).
10(qq) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Robert M. Brill dated October 16, 1992(1).
10(rr) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Michael A. Wilkes dated October 16, 1992(1).
10(ss) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Robert L. Cook dated October 16, 1992(1).
10(tt) Change of Control Contingent Employment Agreement between Stokely USA, Inc. and
Eddie Foster dated October 16, 1992(1).
10(uu) Stokely USA, Inc. 1994 Executive Stock Option Plan(1).
10(vv) Stock Option Agreement between Stokely USA, Inc. and Kenneth C. Murray dated
March 13, 1990(1).
</TABLE>
II-5
<PAGE> 74
<TABLE>
<S> <C>
10(ww) Stock Option Agreement between Stokely USA, Inc. and Vernon L. Wiersma dated
April 8, 1994(1).
10(xx) Stock Option Agreement between Stokely USA, Inc. and Stephen Theobald dated April
8, 1994(1).
10(yy) Warrant to Purchase Shares of Common Stock of Stokely USA, Inc. issued to the
State of Wisconsin Investment Board dated June 1993(1).
10(zz) Employment Agreement by and between Stokely USA, Inc. and Leslie J. Wilson dated
June 17, 1992(1).
10(aaa) Loan Agreement between the City of Jefferson, Wisconsin and Stokely USA, Inc.
with respect to $6,500,000 in principal amount of Industrial Development Revenue
Bonds (Stokely USA, Inc. Project) relating to Stokely's Jefferson, Wisconsin
facility(4).
10(bbb) Loan Agreement between the Town of Windsor, Wisconsin and Stokely USA, Inc. with
respect to $1,500,000 in principal amount of Industrial Development Revenue Bonds
(Stokely USA, Inc. -- 1985 Project)(3).
10(ccc) Loan Agreement between the Michigan Job Development Authority and Stokely USA,
Inc. with respect to $1,800,000 in principal amount of Limited Obligation Revenue
Bonds (Oconomowoc Canning Company Project), Series A(3).
10(ddd) No longer applicable.
10(eee) Loan Agreement between the City of Appleton, Wisconsin and Stokely USA, Inc. with
respect to $1,000,000 in principal amount of Industrial Development Revenue Bonds
(Stokely USA, Inc. Project)(4).
10(fff) Second Amendment to Loan Documents dated October 13, 1992 regarding the Credit
Facility (see Exhibit 10(o))(1).
10(ggg) Third Amendment to Loan Documents dated December 16, 1992 regarding the Credit
Facility (see Exhibit 10(o))(1).
10(hhh) Fourth Amendment to Loan Documents dated June 11, 1993 regarding the Credit
Facility (see Exhibit 10(o))(1).
10(iii) Fifth Amendment to Loan Document dated March 24, 1994 regarding the Credit
Facility (see Exhibit 10(o))(1).
10(jjj) Summary Plan Description of Split Dollar Life Insurance Plan(1).
11. Statement regarding computation of per share earnings(1).
18. Letter regarding change in accounting principles(12).
22. List of subsidiaries(1).
23.1 Consent of Deloitte & Touche LLP(1).
23.2 Consent of Michael Best & Friedrich (included in opinion)(2).
24.1 Powers of Attorney for certain officers and directors (contained on the signature
page of this Registration Statement).
</TABLE>
- -------------------------
(1) Filed herewith.
(2) To be filed by amendment.
(3) Incorporated by reference to exhibits filed with Registrant's Form S-1
Registration Statement declared effective on October 29, 1985 (Registration
Number 33-339).
(4) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1986.
(5) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1989.
(6) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1990.
(7) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1991.
II-6
<PAGE> 75
(8) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1992.
(9) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1993.
(10) Incorporated by reference to exhibits filed with Registrant's Form 10-Q for
the three months ended December 31, 1989.
(11) Incorporated by reference to exhibits filed with Registrant's Form 10-Q for
the three months ended September 30, 1992.
(12) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1994.
B. FINANCIAL STATEMENT SCHEDULES:
Report of Independent Auditors on Schedules
Schedule V
Schedule VI
Schedule VIII
Schedule IX
Schedule X
All other schedules are omitted because they are inapplicable or the
required information is shown in the financial statements or notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant undertakes as follows:
(a) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers
and controlling persons of the Registrant, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act
of 1933, as amended, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933, as amended, and
will be governed by the final adjudication of such issue.
(b) For purposes of determining any liability under the Securities Act
of 1933, as amended the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933, as amended
shall be deemed to be part of this Registration Statement as of the time it
was declared effective.
(c) For the purpose of determining any liability under the Securities
Act of 1933, as amended, any post-effective amendment that contains a form
of prospectus shall be deemed to be a new Registration Statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
II-7
<PAGE> 76
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Milwaukee, and the State
of Wisconsin, on the 12th day of September, 1994.
STOKELY USA, INC.
By: /s/ VERNON L. WIERSMA
------------------------------------
Vernon L. Wiersma
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Vernon L. Wiersma and Stephen W. Theobald, or
either of them, his true and lawful attorneys-in-fact and agents, for him and in
his name, place and stead in any and all capacities, to sign any and all
amendments (including pre-and post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission and any
state of the United States, granting unto said attorneys-in-fact and agents full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents may lawfully do or cause to be done by
virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ ------------------------------------ -----------------------
<S> <C> <C>
/s/ VERNON L. WIERSMA President, Chief Executive Officer
- ------------------------------ and Director
Vernon L. Wiersma
/s/ STEPHEN W. THEOBALD Vice Chairman, Treasurer and
- ------------------------------ Director
Stephen W. Theobald
/s/ LESLIE J. WILSON Vice President and Chief Financial
- ------------------------------ and Accounting Officer
Leslie J. Wilson
/s/ FRANK J. PELISEK Chairman of the Board and Director
- ------------------------------
Frank J. Pelisek
September 12, 1994
/s/ ORREN J. BRADLEY Director
- ------------------------------
Orren J. Bradley
/s/ RUSSELL W. BRITT Director
- ------------------------------
Russell W. Britt
/s/ CHARLES J. CAREY Director
- ------------------------------
Charles J. Carey
/s/ JAMES H. DEWEES Director
- ------------------------------
James H. DeWees
</TABLE>
II-8
<PAGE> 77
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ ------------------------------------ -----------------------
<S> <C> <C>
/s/ ODY J. FISH Director
- ------------------------------
Ody J. Fish
/s/ CAROL WARD KNOX Director
- ------------------------------
Carol Ward Knox
September 12, 1994
/s/ THOMAS W. MOUNT Director
- ------------------------------
Thomas W. Mount
/s/ JOSEPH B. WEIX Director
- ------------------------------
Joseph B. Weix
</TABLE>
II-9
<PAGE> 78
REPORT OF INDEPENDENT AUDITORS ON SCHEDULES
We have audited the consolidated financial statements of Stokely USA, Inc.
as of March 31, 1993 and 1994, and for each of the three years in the period
ended March 31, 1994 and have issued our report thereon dated June 17, 1994
(included elsewhere in this Registration Statement). Our audits also included
the financial statement schedules listed in Item 16(b) of this Registration
Statement. These schedules are the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basis financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
June 17, 1994
II-10
<PAGE> 79
SCHEDULE V
STOKELY USA, INC. AND SUBSIDIARIES
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED MARCH 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
CLASSIFICATION
----------------------------------------------------------
LAND AND
LAND MACHINERY & CONSTRUCTION
IMPROVEMENT BUILDINGS EQUIPMENT IN PROGRESS TOTAL
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balances, April 1, 1991..... $ 2,206,000 $24,822,000 $ 65,675,000 $ 4,017,000 $ 96,720,000
Additions(1)................ 622,000 3,163,000 19,777,000 3,450,000 27,012,000
Retirements................. (3,000) (12,000) (1,880,000) -- (1,895,000)
----------- ----------- ------------ ------------ ------------
Balances, March 31, 1992.... 2,825,000 27,973,000 83,572,000 7,467,000 121,837,000
Additions................... 1,549,000 6,528,000 10,624,000 (5,830,000) 12,871,000
Retirements................. (3,000) (592,000) (9,758,000) -- (10,353,000)
Reclass & other
(deduct)(2)............... (1,439,000) (9,539,000) (21,477,000) -- (32,455,000)
----------- ----------- ------------ ------------ ------------
Balances, March 31, 1993.... 2,932,000 24,370,000 62,961,000 1,637,000 91,900,000
Additions................... 283,000 1,316,000 3,422,000 153,000 5,174,000
Retirements................. (56,000) (50,000) (543,000) -- (649,000)
Reclass & other
(deduct)(2)............... 25,000 1,750,000 456,000 (1,228,000) 1,003,000
----------- ----------- ------------ ------------ ------------
Balances, March 31, 1994.... $ 3,184,000 $27,386,000 $ 66,296,000 $ 562,000 $ 97,428,000
========== ========== =========== ========== ===========
</TABLE>
- -------------------------
(1) Additions include purchase of McAllen, Texas, and Monterrey, Mexico
facilities.
(2) Includes reclassification of assets held for disposition.
In general, the annual rates used for depreciation are as follows:
<TABLE>
<S> <C>
Land Improvements.............................................. 10%
Buildings...................................................... 2.50% to 5%
Machinery & Equipment.......................................... 8.33% to 33%
</TABLE>
II-11
<PAGE> 80
SCHEDULE VI
STOKELY USA, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED MARCH 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
LAND
AND LAND MACHINERY &
IMPROVEMENT BUILDINGS EQUIPMENT TOTAL
----------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Balances, April 1, 1991................... $ 246,000 $3,489,000 $ 21,709,000 $ 25,444,000
Additions charged to cost and expenses.... 73,000 765,000 7,623,000 8,461,000
Retirements............................... (3,000) (12,000) (1,485,000) (1,500,000)
----------- ---------- ------------ ------------
Balances, March 31, 1992.................. 316,000 4,242,000 27,847,000 32,405,000
Additions................................. 174,000 930,000 8,182,000 9,286,000
Retirements............................... (3,000) (250,000) (7,596,000) (7,849,000)
Reclass and other (deduct)(1)............. -- -- (10,361,000) (10,361,000)
----------- ---------- ------------ ------------
Balances, March 31, 1993.................. 487,000 4,922,000 18,072,000 23,481,000
Additions................................. 186,000 715,000 6,329,000 7,230,000
Retirements............................... (56,000) (50,000) (1,071,000) (1,177,000)
Reclass and other (deduct)................ (132,000) (530,000) 1,200,000 538,000
----------- ---------- ------------ ------------
Balances, March 31, 1994.................. $ 485,000 $5,057,000 $ 24,530,000 $ 30,072,000
========= ========= =========== ===========
</TABLE>
- -------------------------
(1) Includes reclassification of assets held for disposition.
II-12
<PAGE> 81
SCHEDULE VIII
STOKELY USA, INC. AND SUBSIDIARIES
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED MARCH 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
DESCRIPTION
---------------------
VALUATION ASSETS
DEDUCTED FROM ASSETS-
ALLOWANCE FOR LOSSES
ON RECEIVABLES
---------------------
<S> <C>
Balance April 1, 1991..................................................... $ 470,000
Additions charged to costs and expenses................................... 152,000
Deductions................................................................ (222,000)(1)
---------------------
Balance March 31, 1992.................................................... 400,000
Additions charged to costs and expenses................................... 747,000
Deductions................................................................ (477,000)(1)
---------------------
Balance March 31, 1993.................................................... 670,000
Deductions................................................................ (285,000)(2)
---------------------
Balance March 31, 1994.................................................... $ 385,000
=====================
</TABLE>
- -------------------------
(1) Write off of bad debts.
(2) Uncollectible accounts written off, net of recoveries and reduction in bad
debt reserve.
II-13
<PAGE> 82
SCHEDULE IX
STOKELY USA, INC. AND SUBSIDIARIES
SCHEDULE IX -- SHORT-TERM BORROWINGS
YEARS ENDED MARCH 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
MAX. AMOUNT AVG. AMOUNT WEIGHTED AVG.
BALANCE AT WEIGHTED AVG. OUTSTANDING OUTSTANDING DURING INTEREST RATE
END OF PERIOD INT. RATE DURING THE YEAR THE YEAR(1) DURING THE YEAR(2)
------------- -------------- --------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
March 31, 1994
Notes Payable....... $ 34,992,000 8.25% $68,872,000 $ 53,239,000 8.4%
March 31, 1993
Notes Payable....... $ 66,258,000 7.85% $97,495,000 $ 61,264,000 7.5%
Commercial Paper.... N/A N/A 40,271,000 4,261,000 4.5%
March 31, 1992
Notes Payable....... $ 46,408,000 5.58% $67,357,000 $ 33,325,000 5.8%
Commercial Paper.... N/A 4.54% 34,045,000 21,784,000 5.8%
</TABLE>
- -------------------------
(1) Average amount outstanding during the year is computed by dividing the total
of daily outstanding principal by 360 days.
(2) The weighted average interest rates were calculated by dividing the interest
expense for the year for such borrowings by the average amounts outstanding
during the period.
II-14
<PAGE> 83
SCHEDULE X
STOKELY USA, INC. AND SUBSIDIARIES
SCHEDULE X -- SUPPLEMENTARY EARNINGS STATEMENT AND INFORMATION
YEARS ENDED MARCH 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
CHARGED TO COSTS AND EXPENSES
------------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Maintenance and repairs.............................. $5,363,000 $6,827,000 $7,844,000
Advertising.......................................... $ 688,000 $1,206,000 $2,269,000
</TABLE>
The amounts of royalties, taxes other than payroll and income taxes, and
amortization of intangible assets are not material.
II-15
<PAGE> 84
APPENDIX TO
FORM S-1 REGISTRATION STATEMENT
OF
STOKELY USA, INC.
In accordance with Item 304(a) of Regulation S-T, the following is a
description of all graphic and image information to be contained in the Form S-1
Registration Statement:
INSIDE FRONT COVER PAGE: Color pictures depicting a collage of Stokely's
private label canned vegetable products and Stokely's industrial bulk
containers of vegetable products.
INSIDE BACK COVER PAGE: Color pictures depicting a collage of Stokely's
brand label canned vegetable products, including Stokely's Finest(R) items
and Stokely's Gold(TM) label items.
<PAGE> 85
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBITS
TO
REGISTRATION STATEMENT
ON FORM S-1
OF
STOKELY USA, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 86
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ------------
A. EXHIBITS:
<S> <C> <C>
1. Proposed Form of Underwriting Agreement(1).
3.1 Restated and Amended Articles of Incorporation of Registrant(3).
3.2 By-laws of Registrant, as amended(1)(3).
4.1 Specimen Common Stock Certificate(3).
5. Opinion of Michael Best & Friedrich Regarding Legality of Securities
being Issued(2).
10(a) No longer in effect.
10(b) Loan Agreement between the City of Green Bay, Wisconsin and Stokely
USA, Inc. dated December 1, 1988 with respect to $3,000,000 in
principal amount of City of Green Bay, Wisconsin Industrial Revenue
Bonds (Stokely USA, Inc. Project), relating to Stokely's Green Bay,
Wisconsin facility(5).
10(c) Loan and Mortgage Agreement with respect to $6,000,000 in principal
amount of Industrial Development Bonds relating to Stokely's Poynette,
Wisconsin sauerkraut facility(5).
10(d) Note Agreement between Stokely USA, Inc. and Nationwide Life Insurance
Company, Employers Life Insurance Company of Wausau and West Coast
Life Insurance Company dated January 5, 1990 with respect to
$25,000,000 in principal amount of 9.12% Senior Notes due January 15,
2000(10).
10(e) No longer in effect.
10(f) Loan Agreement between the Village of Poynette, Wisconsin and Stokely
USA, Inc. dated December 1, 1989, with respect to $1,600,000 in
principal amount of Refunding Revenue Bonds (Stokely USA, Inc.
Project) relating to Stokely's Poynette, Wisconsin facility(6).
10(g) Loan Agreement between the Village of Waunakee, Wisconsin and Stokely
USA, Inc. dated June 1, 1989 with respect to $4,000,000 in principal
amount of Industrial Revenue Bonds (Stokely USA, Inc. Project)
relating to Stokely's Waunakee, Wisconsin facility(6).
10(h) Loan Agreement between the City of Ackley, Iowa and Stokely USA, Inc.
dated July 1, 1989 with respect to $3,000,000 in principal amount of
Industrial Development Revenue Bonds (Stokely USA, Inc. Project)
Series 1989 relating to Stokely's Ackley, Iowa facility(6).
10(i) Executive Deferred Compensation Agreements between Stokely USA, Inc.
and each of Thomas W. Mount, Joseph B. Weix and Robert J. Whelan,
Sr.(6).
10(j) 1985 Incentive Stock Option Plan(6).
10(k) Loan Agreement between the Town of Utica, Wisconsin and Stokely USA,
Inc. dated June 1, 1990 with respect to $3,000,000 in principal amount
of Industrial Revenue Bonds (Stokely USA, Inc. Project) relating to
Stokely's Pickett, Wisconsin facility(7).
10(l) Loan Agreement between Port of Walla Walla Public Corporation and
Stokely USA, Inc. dated September 1, 1990 with respect to $4,000,000
in principal amount of Industrial Revenue Bonds, Series 1990 relating
to Stokely's Walla Walla, Washington facility(7).
</TABLE>
<PAGE> 87
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ------------ ------------
<S> <C> <C>
10(m) Loan Agreement between City of Wells, Minnesota and Stokely USA, Inc.
dated December 1, 1991 with respect to $3,000,000 in principal amount
of Industrial Revenue Bonds (Stokely USA, Inc. Project) Series 1991
relating to Stokely's Wells, Minnesota facility(8).
10(n) Note Agreement between the State of Wisconsin Investment Board and
Stokely USA, Inc. dated December 1, 1991 with respect to $20,000,000
in principal amount of 9.49% Senior Notes due December 15, 2001(8).
10(o) Loan and Security Agreement by and among Barclays Business Credit,
Inc. as agent and lender, various other lenders and Stokely USA, Inc.
dated August 18, 1992 with respect to a $120,000,000 Credit
Facility(11).
10(p) Restated Agreement for Purchase and Sale of Containers between Stokely
USA, Inc. and Heekin Can, Inc. dated January 1, 1992, and as amended
on July 24, 1992(11).
10(q) Supply Agreement between Stokely USA, Inc. and American National Can
Company dated July 24, 1992 and as amended on June 11, 1993(11).
10(r) Amendment to Note Agreement dated August 18, 1992 regarding
$25,000,000 Original Principal Amount of 9.12% Senior Notes due
January 15, 2000 (see Exhibit 10(d))(11).
10(s) Amendment to Note Agreement dated December 1, 1991 regarding
$20,000,000 in principal amount of 9.49% Senior Notes due December 15,
2000 (see Exhibit 10(n))(11).
10(t) Amendment to Revenue Agreement between Stokely USA, Inc. and the City
of Appleton, Wisconsin, dated December 1, 1988(9).
10(u) Reserved.
10(v) Second Amendment to Note Agreement dated June 11, 1993 regarding
$20,000,000 Promissory Note (see Exhibit 10(n))(9).
10(w) Reserved.
10(x) First Amendment to Security Agreement dated June 1993 relating to the
Credit Facility (see Exhibit 10(o))(9).
10(y) Second Amendment to Note Agreement dated June 11, 1993 regarding
$25,000,000 Original Principal Amount of 9.37% Senior Notes Due
January 15, 2000 (see Exhibit 10(d))(9).
10(z) Warrant to Purchase Shares of Common Stock of Stokely USA, Inc. issued
to Nationwide Life Insurance Company dated June 1993(9).
10(aa) Warrant to Purchase Shares of Common Stock of Stokely USA, Inc. issued
to EMPL and Co. dated June 1993(9).
10(bb) Warrant to Purchase Shares of Common Stock of Stokely USA, Inc. issued
to West Coast Life Insurance Company dated June 1993(9).
10(cc) No longer applicable.
10(dd) First Amendment to Loan Agreement with the City of Ackley, Iowa (see
Exhibit 10(h)), dated as of March 31, 1994, between Stokely USA, Inc.
and Norwest Bank Minnesota, N.A., as trustee(12).
10(ee) First Amendment to Loan Agreement with the Village of Poynette,
Wisconsin (see Exhibit 10(c)), dated as of March 31, 1994, between
Stokely USA, Inc. and Norwest Bank Minnesota, N.A., as trustee(12).
</TABLE>
<PAGE> 88
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ---------------------------------------------------------------------- ------------
<S> <C> <C>
10(ff) First Amendment to Loan Agreement with the Village of Poynette,
Wisconsin (see Exhibit 10(f)), dated as of March 31, 1994, between
Stokely USA, Inc. and NationsBank of Virginia, N.A., as trustee(12).
10(gg) First Amendment to Loan Agreement with the Village of Waunakee,
Wisconsin (see Exhibit 10(g)), dated as of March 31, 1994, between
Stokely USA, Inc. and NationsBank of Virginia, N.A., as trustee(12).
10(hh) First Amendment to Loan Agreement with the City of Jefferson,
Wisconsin, dated as of June 17, 1994, between Stokely USA, Inc. and
NationsBank of Virginia, N.A., as trustee(12).
10(ii) First Amendment to Loan Agreement with the Port of Walla Walla,
Washington Public Corporation (see Exhibit 10(l)), dated as of June
17, 1994, between Stokely USA, Inc. and NationsBank of Virginia, N.A.,
as trustee(12).
10(jj) First Amendment to Loan Agreement with the Town of Utica, Wisconsin
(see Exhibit 10(k)), dated as of June 17, 1994, between Stokely USA,
Inc. and NationsBank of Virginia, N.A., as trustee(12).
10(kk) First Amendment to Loan Agreement with the City of Green Bay,
Wisconsin (see Exhibit 10(b)), dated as of June 17, 1994, between
Stokely USA, Inc. and NationsBank of Virginia, N.A., as trustee(12).
10(ll) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Vernon L. Wiersma dated October 16, 1992(1).
10(mm) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Stephen W. Theobald dated October 16, 1992(1).
10(nn) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Kenneth L. Murray dated January 27, 1993(1).
10(oo) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Russell J. Trunk dated October 16, 1992(1).
10(pp) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Leslie J. Wilson dated October 16, 1992(1).
10(qq) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Robert M. Brill dated October 16, 1992(1).
10(rr) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Michael A. Wilkes dated October 16, 1992(1).
10(ss) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Robert L. Cook dated October 16, 1992(1).
10(tt) Change of Control Contingent Employment Agreement between Stokely USA,
Inc. and Eddie Foster dated October 16, 1992(1).
10(uu) Stokely USA, Inc. 1994 Executive Stock Option Plan(1).
10(vv) Stock Option Agreement between Stokely USA, Inc. and Kenneth C. Murray
dated March 13, 1990(1).
10(ww) Stock Option Agreement between Stokely USA, Inc. and Vernon L. Wiersma
dated April 8, 1994(1).
10(xx) Stock Option Agreement between Stokely USA, Inc. and Stephen Theobald
dated April 8, 1994(1).
10(yy) Warrant to Purchase Shares of Common Stock of Stokely USA, Inc. issued
to the State of Wisconsin Investment Board dated June 1993(1).
</TABLE>
<PAGE> 89
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ---------------------------------------------------------------------- ------------
<S> <C> <C>
10(zz) Employment Agreement by and between Stokely USA, Inc. and Leslie J.
Wilson dated June 17, 1992(1).
10(aaa) Loan Agreement between the City of Jefferson, Wisconsin and Stokely
USA, Inc. with respect to $6,500,000 in principal amount of Industrial
Development Revenue Bonds (Stokely USA, Inc. Project) relating to
Stokely's Jefferson, Wisconsin facility(4).
10(bbb) Loan Agreement between the Town of Windsor, Wisconsin and Stokely USA,
Inc. with respect to $1,500,000 in principal amount of Industrial
Development Revenue Bonds (Stokely USA, Inc. -- 1985 Project)(3).
10(ccc) Loan Agreement between the Michigan Job Development Authority and
Stokely USA, Inc. with respect to $1,800,000 in principal amount of
Limited Obligation Revenue Bonds (Oconomowoc Canning Company Project),
Series A(3).
10(ddd) No longer applicable.
10(eee) Loan Agreement between the City of Appleton, Wisconsin and Stokely
USA, Inc. with respect to $1,000,000 in principal amount of Industrial
Development Revenue Bonds (Stokely USA, Inc. Project)(4).
10(fff) Second Amendment to Loan Documents dated October 13, 1992 regarding
the Credit Facility (see Exhibit 10(o))(1).
10(ggg) Third Amendment to Loan Documents dated December 16, 1992 regarding
the Credit Facility (see Exhibit 10(o))(1).
10(hhh) Fourth Amendment to Loan Documents dated June 11, 1993 regarding the
Credit Facility (see Exhibit 10(o))(1).
10(iii) Fifth Amendment to Loan Document dated March 24, 1994 regarding the
Credit Facility (see Exhibit 10(o))(1).
10(jjj) Summary Plan Description of Split Dollar Life Insurance Plan(1).
11. Statement regarding computation of per share earnings(1).
18. Letter regarding change in accounting principles(12).
22. List of subsidiaries(1).
23.1 Consent of Deloitte & Touche(1).
23.2 Consent of Michael Best & Friedrich (included in opinion)(2).
24.1 Powers of Attorney for certain officers and directors (contained on
the signature page of this Registration Statement).
</TABLE>
- -------------------------
(1) Filed herewith.
(2) To be filed by amendment.
(3) Incorporated by reference to exhibits filed with Registrant's Form S-1
Registration Statement declared effective on October 29, 1985 (Registration
Number 33-339).
(4) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1986.
(5) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1989.
(6) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1990.
(7) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1991.
<PAGE> 90
(8) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1992.
(9) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1993.
(10) Incorporated by reference to exhibits filed with Registrant's Form 10-Q for
the three months ended December 31, 1989.
(11) Incorporated by reference to exhibits filed with Registrant's Form 10-Q for
the three months ended September 30, 1992.
(12) Incorporated by reference to exhibits filed with Registrant's Form 10-K for
the year ended March 31, 1994.
B. FINANCIAL STATEMENT SCHEDULES:
Report of Independent Auditors on Schedules
Schedule V
Schedule VI
Schedule VIII
Schedule IX
Schedule X
All other schedules are omitted because they are inapplicable or the
required information is shown in the financial statements or notes thereto.
<PAGE> 1
(EXHIBIT 1.)
STOKELY U.S.A., INC.
3,040,000 SHARES COMMON STOCK*
UNDERWRITING AGREEMENT
, 1994
William Blair & Company
Dain Bosworth Incorporated
As Representatives of the Several
Underwriters Named in Schedule A
c/o William Blair & Company
222 West Adams Street
Chicago, Illinois 60606
Ladies and Gentlemen:
SECTION 1. INTRODUCTION. Stokely U.S.A., Inc. (the "Company"), a Wisconsin
corporation, has an authorized capital stock consisting of 1,000,000 shares, no
par value, of Preferred Stock, of which no shares were outstanding as of
, and 20,000,000 shares, $0.05 par value, of Common Stock ("Common
Stock"), of which shares were outstanding as of . The
Company proposes, subject to the terms and conditions stated herein, to issue
and sell 3,000,000 shares of its authorized but unissued Common Stock, and
(the "Selling Shareholder") proposes, subject to the terms and
conditions stated herein, to sell 40,000 shares of the Company's issued and
outstanding Common Stock owned by such Selling Shareholder, to the several
underwriters named in Schedule A, as it may be amended by the Pricing Agreement
as hereinafter defined ("Underwriters"), who are acting severally and not
jointly. Collectively, such total of 3,040,000 shares of Common Stock proposed
to be sold by the Company and the Selling Shareholder is hereinafter referred to
as the "Firm Shares." In addition, the Company proposes to grant to the
Underwriters an option to purchase up to an aggregate of 456,000 additional
shares of Common Stock ("Option Shares") for the purpose of covering
over-allotments in connection with the sale of the Firm Shares as provided in
Section 5 hereof. The Firm Shares and, to the extent such option is exercised,
the Option Shares are hereinafter collectively referred to as the "Shares."
You have advised the Company and the Selling Shareholder that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon as you deem advisable after the registration statement
hereinafter referred to becomes effective, if as of the date hereof it has not
yet become effective, and the Pricing Agreement as hereinafter defined has been
executed and delivered.
Prior to the purchase and public offering of the Shares by the several
Underwriters, the Company, the Selling Shareholder and the Representatives,
acting on behalf of the several Underwriters, shall enter into an agreement
substantially in the form of Exhibit A hereto (the "Pricing Agreement"). The
Pricing Agreement may take the form of an exchange of any standard form of
written telecommunication between the Company, the Selling Shareholder and the
Representatives and shall specify such applicable information as is indicated in
Exhibit A hereto. The offering of the Shares will be governed by this Agreement,
as supplemented by the Pricing Agreement. From and after the date of the
execution and delivery of the Pricing Agreement, this Agreement shall be deemed
to incorporate the Pricing Agreement.
- ---------------
* Plus an option to acquire up to 456,000 additional shares to cover
overallotments.
<PAGE> 2
The Company and the Selling Shareholder hereby confirm their respective
agreements with the Underwriters as follows:
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the several Underwriters that:
(a) A registration statement on Form S-1 (File No. 33- ) and a related
preliminary prospectus with respect to the Shares have been prepared and filed
with the Securities and Exchange Commission ("Commission") by the Company in
conformity with the requirements of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the "1933
Act;" all references herein to specific rules are to rules promulgated under the
1933 Act); and the Company has so prepared and has filed such amendments
thereto, if any, and such amended preliminary prospectuses as may have been
required to the date hereof. If the Company and the Underwriters have elected
not to rely upon Rule 430A, the Company has prepared and will promptly file an
amendment to the registration statement and an amended prospectus. If the
Company and the Underwriters have elected to rely upon Rule 430A, the Company
will prepare and file a prospectus pursuant to Rule 424(b) that discloses the
information previously omitted from the prospectus in reliance upon Rule 430A.
There have been or will promptly be delivered to you three signed copies of such
registration statement and all amendments, and three copies of each exhibit
filed therewith, and conformed copies of such registration statement and
amendments (but without exhibits) and of the related preliminary prospectus or
prospectuses and final forms of prospectus for each of the Underwriters.
The registration statement and prospectus, each as amended, on file with
the Commission at the time the registration statement became or becomes
effective, including the information deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A(b), if applicable,
are hereinafter called the "Registration Statement" and the "Prospectus,"
respectively, except that if the prospectus filed by the Company pursuant to
Rule 424(b) differs from the prospectus on file at the time the Registration
Statement became or becomes effective, the term "Prospectus" shall refer to the
Rule 424(b) prospectus from and after the time it is filed with the Commission
or transmitted to the Commission for filing. The Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder are
hereinafter collectively referred to as the "Exchange Act."
(b) The Commission has not issued any order preventing or suspending the
use of any preliminary prospectus, and each preliminary prospectus, at the time
of filing thereof, has conformed in all material respects with the requirements
of the 1933 Act (except to the extent that, in conformity with the 1933 Act,
such preliminary prospectus is subject to completion), and, as of its date, has
not included any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; when the Registration
Statement and any amendment thereto became or becomes effective, and at all
times subsequent thereto, up to the First Closing Date or the Second Closing
Date, each as hereinafter defined, as the case may be, the Registration
Statement, or such amendment, including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant to Rule 430A(b), if
applicable, and the Prospectus and any amendments or supplements thereto,
contained or will contain all statements that are required to be stated therein
in accordance with the 1933 Act and in all material respects conformed or will
in all material respects conform to the requirements of the 1933 Act, and
neither the Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, included or will include any untrue statement of a material
fact or omitted or will omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and neither
the Company's Annual Report on Form 10-K for the fiscal year ended March 31,
1994 nor the Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1994, when filed with the Commission, included any untrue statement of a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company makes no
representation or warranty as to information contained in or omitted from any
preliminary prospectus, the Registration Statement, the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Representatives regarding the Underwriters specifically for use in the
preparation thereof.
2
<PAGE> 3
(c) The Company and its subsidiaries have been duly incorporated and are
validly existing as corporations in good standing under the laws of their
respective places of incorporation, with corporate power and authority to own or
lease their properties and conduct each of their businesses as described in the
Prospectus; the Company and each of its subsidiaries are duly qualified to do
business as foreign corporations under the corporation law of, and are in good
standing as such in, each jurisdiction in which they own or lease substantial
properties, have an office, or in which substantial business is conducted and
such qualification is required, except in any such case where the failure to so
qualify or be in good standing would not have a material adverse affect on the
Company's ability to perform its obligations under this Agreement or on the
condition (financial or otherwise) or results of operations of the Company and
its subsidiaries, taken as a whole; and no proceeding has been instituted in any
such jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification.
(d) Except as disclosed in the Registration Statement, the Company owns
directly or indirectly 100 percent of the issued and outstanding capital stock
of each of its subsidiaries, free and clear of any claims, liens, encumbrances
or security interests and all of such capital stock has been duly authorized and
validly issued and is fully paid and nonassessable.
(e) The issued and outstanding shares of capital stock of the Company are
as set forth in the Prospectus and such shares have been duly authorized and
validly issued, are fully paid and nonassessable, except as described in the
Prospectus, and conform to the description thereof contained in the Prospectus
and, except as disclosed in the Prospectus, there are no options, rights or
warrants for the purchase of Common Stock, or securities convertible into Common
Stock and there are no agreements with respect thereto.
(f) The Shares to be sold by the Company have been duly authorized and when
issued, delivered and paid for pursuant to this Agreement, will be validly
issued, fully paid and nonassessable, and will conform to the description
thereof contained in the Prospectus.
(g) The making and performance by the Company of this Agreement and the
Pricing Agreement have been duly authorized by all necessary corporate action
and (i) will not violate any provision of the Company's charter or bylaws and
(ii) will not result in the breach, or be in contravention, of any provision of
any agreement, franchise, license, indenture, mortgage, deed of trust or other
instrument to which the Company or any subsidiary is a party or by which the
Company, any subsidiary or the property of any of them may be bound or affected,
or any order, rule or regulation applicable to the Company or any subsidiary of
any court or regulatory body, administrative agency or other governmental body
having jurisdiction over the Company or any subsidiary or any of their
respective properties, or any order of any court or governmental agency or
authority entered in any proceeding to which the Company or any subsidiary was
or is now a party or by which it is bound. No consent, approval, authorization
or other order of any court, regulatory body, administrative agency or other
governmental body is required for the execution and delivery of this Agreement
or the Pricing Agreement or the consummation of the transactions contemplated
herein or therein, except for compliance with the 1933 Act and blue sky laws
applicable to the public offering of the Shares by the several Underwriters and
clearance of such offering with the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement has been duly executed and delivered by the
Company.
(h) The accountants who have expressed their opinions with respect to
certain of the financial statements and schedules included in the Registration
Statement are independent accountants as required by the 1933 Act.
(i) The consolidated financial statements and schedules of the Company and
its predecessors included in the Registration Statement present fairly the
consolidated financial position of the Company and its predecessors as of the
respective dates of such financial statements, and the consolidated results of
operations and cash flows of the Company and its predecessors for the respective
periods covered thereby, all in conformity with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed in the Prospectus, and the supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein. The financial information set forth in the Prospectus under "Selected
Consolidated Financial Data" presents fairly on the basis stated in the
Prospectus the information set forth therein.
3
<PAGE> 4
The pro forma financial statements and other pro forma information, if any,
included in the Prospectus present fairly the information shown therein, have
been prepared in accordance with generally accepted accounting principles and
the Commission's rules and guidelines with respect to pro forma financial
statements and other pro forma information, have been properly compiled on the
pro forma basis described therein, and, in the opinion of the Company, the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate under the circumstances.
(j) Neither the Company nor any subsidiary is in violation of its charter
or bylaws or is in default under any consent decree, or order of any court or
administrative body or in default with respect to any material provision of any
lease, loan agreement, franchise, license, permit or other contractual
obligation to which it is a party; and there does not exist any state of facts
which constitutes an event of default as defined in such documents or which,
with notice or lapse of time or both, would constitute such an event of default,
in each case, except for defaults which neither singly nor in the aggregate are
material to the Company and its subsidiaries taken as a whole.
(k) There are no material legal or governmental proceedings pending or, to
the Company's knowledge, threatened to which the Company or any subsidiary is or
may be a party or of which material property owned or leased by the Company or
any subsidiaries is or may be the subject, or related to environmental or
discrimination matters which are not disclosed in the Prospectus, or which
question the validity of this Agreement or the Pricing Agreement or any action
taken or to be taken pursuant hereto or thereto.
(l) There are no holders of securities of the Company having rights,
contractual or otherwise, to cause registration thereof or preemptive rights to
purchase Common Stock except as disclosed in the Prospectus. All holders of
registration rights have waived such rights with respect to the offering being
made by the Prospectus.
(m) The Company and each of its subsidiaries have good and marketable title
to all the properties and assets reflected as owned in the financial statements
hereinabove described (or elsewhere in the Prospectus), subject to no lien,
mortgage, pledge, charge, security interest or encumbrance of any kind except
those, if any, reflected in such financial statements (or elsewhere in the
Prospectus) or such as are not material to the Company and its subsidiaries
taken as a whole. The Company and its subsidiaries hold their respective leased
properties which are material to the Company and its subsidiaries taken as a
whole under valid and binding leases.
(n) The Company has not taken and will not take, directly or indirectly,
any action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(o) Subsequent to the respective dates as of which information is given in
the Registration Statement and Prospectus, and except as contemplated by the
Prospectus, the Company and its subsidiaries, taken as a whole, have not
incurred any material liabilities or obligations, direct or contingent, or
entered into any material transactions not in the ordinary course of business
and there has not been any material adverse change in their condition (financial
or otherwise) or results of operations or any material change in the capital
stock, short-term debt or long-term debt in each case as to the Company and its
subsidiaries, taken as a whole.
(p) The Company has obtained agreements from each of the Company's
executive officers and directors, in which each such person agrees not to (1)
sell, contract to sell or otherwise dispose of any Common Stock for a period of
90 days after the effective date of the Registration Statement without the prior
written consent of the Representatives or (2) announce an intent to sell any
shares of the Company's Common Stock, or exercise any registration rights with
respect to shares of the Company's Common Stock, for a period of 90 days after
the effective date of the Registration Statement without the prior written
consent of the Representatives.
(q) There is no material document of a character required to be described
in the Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement which is not described or filed as required.
4
<PAGE> 5
(r) The Company, together with its subsidiaries, owns and possesses all
right, title and interest in and to, or has duly licensed from third parties a
valid and enforceable right to use, all trademarks, copyrights, patents, trade
secrets and other proprietary rights ("Trade Rights") presently employed by the
Company or any subsidiary in connection with its business, whether such Trade
Rights are registered or unregistered. Neither the Company nor its subsidiaries
has received any notice of infringement, misappropriation or conflict from any
third party as to such material Trade Rights which has not been resolved or
disposed of and neither the Company nor its subsidiaries have infringed,
misappropriated or otherwise conflicted with Trade Rights of any third parties,
which infringement, misappropriation or conflict would have a material adverse
effect upon the condition (financial or otherwise) or results of operations of
the Company and its subsidiaries taken as a whole.
(s) The conduct of the business of the Company and each of its subsidiaries
is in compliance in all respects with applicable federal, state, local and
foreign laws and regulations, except where the failure to be in compliance would
not have a material adverse effect upon the condition (financial or otherwise)
or results of operations of the Company and its subsidiaries taken as a whole.
(t) All offers and sales of the Company's and its subsidiaries' capital
stock since were at all relevant times exempt from the registration
requirements of the 1933 Act and were duly registered with or the subject of an
available exemption from the registration of the applicable state securities or
blue sky laws.
(u) The Company and its subsidiaries have filed all necessary federal and
state income and franchise tax returns and have paid all taxes shown as due
thereon, and there is no tax deficiency that has been, or to the knowledge of
the Company might be, asserted against the Company, its subsidiaries, or their
respective properties or assets that would or could be expected to adversely
affect the financial condition, assets, operations or prospects of the Company
and its subsidiaries taken as a whole.
(v) A registration statement relating to the Common Stock has been declared
effective by the Commission pursuant to the Securities Exchange Act of 1934, as
amended, and the Common Stock is duly registered thereunder. The Shares have
been authorized for listing on the NASDAQ National Market ("NASDAQ/NM").
(w) The Company is in compliance with all provisions of Section 1 of Laws
of Florida, Chapter 92-198, An Act Relating to Disclosure of Doing Business with
Cuba, and the Company further agrees that if it commences engaging in business
with the government of Cuba or with any person or affiliate located in Cuba
after the date the Registration Statement becomes or has become effective with
the Commission or with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information reported in the
Prospectus, if any, concerning the Company's business with Cuba, or with any
person or affiliate located in Cuba, changes in any material way, the Company
will provide the Department notice of such business or change, as appropriate,
in a form acceptable to the Department.
(x) The Company and its subsidiaries are not and do not intend to conduct
their respective businesses in a manner in which any of them would become, an
"investment company" as defined in Section 3(a) of the Investment Company Act of
1940, as amended ("Investment Company Act").
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING
SHAREHOLDER.
(a) The Selling Shareholder represents and warrants to, and agrees with,
the Company and the Underwriters that:
(i) The Selling Shareholder has valid marketable title to the Shares
proposed to be sold by the Selling Shareholder hereunder on such date and
full right, power legal capacity and authority to enter into this Agreement
and the Pricing Agreement and to sell, assign, transfer and deliver such
Shares hereunder, free and clear of all voting trust arrangements, liens,
encumbrances, equities, claims and community property rights; and upon
delivery of and payment for such Shares hereunder, the Underwriters will
acquire valid marketable title thereto, free and clear of all voting trust
arrangements, liens, encumbrances, equities, security interests, claims and
community property rights.
5
<PAGE> 6
(ii) The making and performance by the Selling Shareholder of this
Agreement and the Pricing Agreement have been duly authorized by all
necessary action (corporate or otherwise) and (A) will not violate any
provision of the Selling Shareholder's charter, bylaws, partnership
agreement, or trust agreement, as the case may be, and (B) will not result
in the breach, or be in contravention, of any provision of any agreement,
franchise, license, indenture, mortgage, deed of trust, or other instrument
to which the Selling Shareholder or any subsidiary thereof is a party or by
which the Selling Shareholder, any subsidiary thereof or the property of
any of them may be bound or affected, or any order, rule or regulation
applicable to the Selling Shareholder or any such subsidiary of any court
or regulatory body, administrative agency or other governmental body having
jurisdiction over the Selling Shareholder or any such subsidiary or any of
their respective properties, or any order of any court or governmental
agency or authority entered in any proceeding to which the Selling
Shareholder or any such subsidiary was or is now a party or by which it is
bound, and which, in the case of clause (B) above, would have a material
adverse effect on the Selling Shareholder's ability to perform its
obligations under this Agreement. No consent, approval, authorization or
other order of any court, regulatory body, administrative agency or other
government body is required for the execution and delivery of this
Agreement or the Pricing Agreement or the consummation of the transactions
contemplated herein or therein, except for compliance with the 1933 Act and
blue sky laws applicable to the public offering of the Shares by the
several Underwriters and clearance of such offering with the NASD. This
Agreement has been duly executed and delivered by the Selling Shareholder.
(iii) The Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to or which might be reasonably
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares.
(iv) Each preliminary prospectus, insofar as it relates to the Selling
Shareholder, at the time of filing thereof, conformed in all material
respects with the requirements of the 1933 Act and, as of its date, did not
include any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and the
Registration Statement at the time of effectiveness, and at all times
subsequent thereto, up to the First Closing Date or the Second Closing Date
as hereinafter as defined, as the case may be, (1) as to such parts of the
Registration Statement and the Prospectus and any amendments or supplements
thereto as relate to the Selling Shareholder, contained or will contain all
statements that are required to be stated therein in accordance with the
1933 Act and in all material respects conformed or will in all material
respects conform to the requirements of the 1933 Act; and (2) neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, as it relates to the Selling Shareholder, included or will include
any untrue statement of a material fact or omitted or will omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
(v) The Selling Shareholder agrees with the Company and the
Underwriters not to sell, contract to sell or otherwise dispose of any
Common Stock for a period of 90 days after this Agreement becomes effective
without the prior written consent of the Representatives.
(b) In order to document the Underwriter's compliance with the reporting
and withholding provisions of the Internal Revenue Code of 1986, as amended,
with respect to the transactions herein contemplated, the Selling Shareholder
agrees to deliver to you prior to or on the First Closing Date, as hereinafter
defined, a properly completed and executed United States Treasury Department
Form W-8 or W-9 (or other applicable form of statement specified by Treasury
Department regulations in lieu thereof).
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS. The
Representatives, on behalf of the several Underwriters, represent and warrant to
the Company that the information set forth (a) in the last paragraph on the
cover page of the Prospectus with respect to price, underwriting discount and
the terms of the offering, (b) in the last two paragraphs on the second page of
the Prospectus concerning stabilization and market-making transactions and (c)
in the third paragraph under the caption "Underwriting" in the Prospectus
concerning the terms of the Offering by the Underwriters is the only information
furnished to the
6
<PAGE> 7
Company by and on behalf of the Underwriters for use in connection with the
preparation of the Registration Statement and such information is correct and
complete in all material respects.
SECTION 5. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company and Selling Shareholder,
severally and not jointly, agree to sell to the Underwriters named in Schedule A
hereto, and the Underwriters agree, severally and not jointly, to purchase from
the Company 3,000,000 Firm Shares and from the Selling Shareholder 40,000 Firm
Shares at the price per share set forth in the Pricing Agreement. The obligation
of each Underwriter to the Company and the Selling Shareholder shall be to
purchase from the Company or the Selling Shareholder, as appropriate, that
number of full shares which (as nearly as practicable, as determined by you)
bears to the number of Firm Shares to be sold by the Company or the Selling
Shareholder, as the case may be, the same proportion as the number of Shares set
forth opposite the name of such Underwriter in Schedule A hereto bears to the
total number of Firm Shares to be purchased by all Underwriters under this
Agreement. The initial public offering price and the purchase price shall be set
forth in the Pricing Agreement.
At 10:00 A.M., Chicago Time, on the fifth full business day after the
initial public offering of the Shares, or at such other time not later than nine
full business days after the initial public offering, as you and the Company may
agree, the Company and the Selling Shareholder will deliver to you at the
offices of counsel for the Underwriters or through the facilities of The
Depository Trust Company for the accounts of the several Underwriters,
certificates representing the Firm Shares to be sold by it and the Selling
Shareholder against payment of the purchase price therefor by certified or bank
cashier's checks in Chicago Clearing House funds (next-day funds) payable to the
order of the Company and the Selling Shareholder as their interests appear. Such
time of delivery and payment is herein referred to as the "First Closing Date."
The certificates for the Firm Shares so to be delivered will be in such
denominations and registered in such names as you request by notice to the
Company prior to 10:00 A.M., Chicago Time, on the third full business day
preceding the First Closing Date, and will be made available at the Company's
expense for checking and packaging by the Representatives at 10:00 A.M., Chicago
Time, on the first full business day preceding the First Closing Date. Payment
for the Firm Shares so to be delivered shall be made at the time and in the
manner described above at the offices of counsel for the Underwriters.
In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants an option to the several Underwriters to purchase up to an
aggregate of 456,000 Option Shares, at the same purchase price per share to be
paid for the Firm Shares, for use solely in covering any overallotments made by
the Underwriters in the sale and distribution of the Firm Shares. The option
granted hereunder may be exercised at any time (but not more than once) within
30 days after the date of the initial public offering upon notice by you to the
Company and the Agents setting forth the aggregate number of Option Shares as to
which the Underwriters are exercising the option, the names and denominations in
which the certificates for such shares are to be registered and the time and
place at which such certificates will be delivered. Such time of delivery (which
may not be earlier than the First Closing Date), being herein referred to as the
"Second Closing Date," shall be determined by you, but if at any time other than
the First Closing Date, shall not be earlier than three nor later than 10 full
business days after delivery of such notice of exercise. The number of Option
Shares to be purchased by each Underwriter shall be determined by multiplying
the number of Option Shares to be sold by the Company pursuant to such notice of
exercise by a fraction, the numerator of which is the number of Firm Shares to
be purchased by such Underwriter as set forth opposite its name in Schedule A
and the denominator of which is the total number of Firm Shares (subject to such
adjustments to eliminate any fractional share purchases as you in your absolute
discretion may make). Certificates for the Option Shares will be made available
at the Company's expense for checking and packaging at 10:00 A.M., Chicago Time,
on the first full business day preceding the Second Closing Date. The manner of
payment for and delivery of the Option Shares shall be the same as for the Firm
Shares as specified in the preceding paragraph, except that payment shall be
made to the order of the Company.
You have advised the Company and the Selling Shareholder that each
Underwriter has authorized you to accept delivery of its Shares, to make payment
and to receipt therefor. You, individually and not as the
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<PAGE> 8
Representatives of the Underwriters, may make payment for any Shares to be
purchased by any Underwriter whose funds shall not have been received by you by
the First Closing Date or the Second Closing Date, as the case may be, for the
account of such Underwriter, but any such payment shall not relieve such
Underwriter from any obligation hereunder.
SECTION 6. COVENANTS OF THE COMPANY. The Company covenants and agrees that:
(a) The Company will advise you and the Selling Shareholder promptly of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the institution of any proceedings for that
purpose, or of any notification of the suspension of qualification of the Shares
for sale in any jurisdiction or the initiation or threatening of any proceedings
for that purpose, and will also advise you and the Selling Shareholder promptly
of any request of the Commission for amendment or supplement of the Registration
Statement, of any preliminary prospectus or of the Prospectus, or for additional
information, and will not file any amendment or supplement to the Registration
Statement, to any preliminary prospectus or of the Prospectus of which you and
the Selling Shareholder have not been furnished with a copy prior to such filing
or to which you reasonably object.
(b) If at any time when a prospectus relating to the Shares is required to
be delivered under the 1933 Act, any event occurs as a result of which the
Prospectus, including any amendments or supplements thereto, would include an
untrue statement of a material fact, or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus, including any amendments or
supplements thereto and including any revised prospectus which the Company
proposes for use by the Underwriters in connection with the offering of the
Shares which differs from the prospectus on file with the Commission at the time
of effectiveness of the Registration Statement, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) to comply with the
1933 Act, the Company promptly will advise you thereof and will promptly prepare
and file with the Commission an amendment or supplement which will correct such
statement or omission or an amendment which will effect such compliance; and, in
case any Underwriter is required to deliver a prospectus nine months or more
after the effective date of the Registration Statement, the Company upon
request, but at the expense of such Underwriter, will prepare promptly such
prospectus or prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the 1933 Act.
(c) Neither the Company nor its subsidiaries will, prior to the earlier of
the Second Closing Date or termination or expiration of the related option,
incur any liability or obligation, direct or contingent, or enter into any
material transaction, other than in the ordinary course of business, except as
contemplated by the Prospectus.
(d) Neither the Company nor its subsidiaries will acquire any capital stock
of the Company prior to the earlier of the Second Closing Date or termination or
expiration of the related option nor will the Company declare or pay any
dividend or make any other distribution upon the Common Stock payable to
stockholders of record on a date prior to the earlier of the Second Closing Date
or termination or expiration of the related option, except in either case as
contemplated by the Prospectus.
(e) As soon as practicable, but in any event not later than
, 1995, the Company will make generally available to its security
holders an earnings statement (which need not be audited) covering a period of
at least 12 months beginning after the effective date of the Registration
Statement, which will satisfy the provisions of the last paragraph of Section
11(a) of the 1933 Act.
(f) During such period as a prospectus is required by law to be delivered
in connection with offers and sales of the Shares by an Underwriter or dealer,
the Company will furnish to you at its expense, subject to the provisions of
subsection (b) hereof, copies of the Registration Statement, the Prospectus,
each preliminary prospectus and all amendments and supplements to any such
documents in each case as soon as available and in such quantities as you may
reasonably request, for the purposes contemplated by the 1933 Act.
(g) The Company will cooperate with the Underwriters in qualifying or
registering the Shares for sale under the blue sky laws of such jurisdictions as
you designate and will continue such qualifications in effect so
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<PAGE> 9
long as reasonably required for the distribution of the Shares. The Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any such jurisdiction where it is not currently
qualified.
(h) During the period of five years hereafter, the Company will furnish you
and the other Underwriters with a copy (i) as soon as practicable after the
filing thereof, of each report filed by the Company with the Commission, any
securities exchange or the NASD; (ii) as soon as available, of each report of
the Company mailed to stockholders; (iii) every material press release with
respect to the Company; and (iv) any additional information of a public nature
concerning the Company or its business that you may request.
(i) The Company will use the net proceeds received by it from the sale of
the Shares being sold by it in the manner specified in the Prospectus.
(j) If, at the time of effectiveness of the Registration Statement, any
information shall have been omitted therefrom in reliance upon Rule 430A, then
immediately following the execution and delivery of the Pricing Agreement, the
Company will prepare, and file or transmit for filing with the Commission in
accordance with such Rule 430A and Rule 424(b), copies of an amended prospectus,
or, if required by such Rule 430A, a post-effective amendment to the
Registration Statement (including an amended prospectus), containing all
information so omitted.
(l) The Company will not sell, contract to sell or otherwise dispose of any
Common Stock or securities convertible into Common Stock (except Common Stock
issued pursuant to currently outstanding options, warrants or convertible
securities) for a period of 90 days after this Agreement becomes effective
without the prior written consent of the Representatives. The Company has
obtained similar agreements from each of its executive officers and directors.
SECTION 7. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective as to
all of its provisions or is terminated, the Company agrees to pay (i) all costs,
fees and expenses (except legal fees and disbursements of counsel for the
Underwriters and the expenses incurred by the Underwriters other than those
contemplated by clause (ii) below) incurred in connection with the performance
of the Company's and the Selling Shareholder's obligations hereunder, including
without limiting the generality of the foregoing, all fees and expenses of legal
counsel for the Company and of the Company's independent accountants, all costs
and expenses incurred in connection with the preparation, printing, filing,
shipping and distribution of the Registration Statement, each preliminary
prospectus and the Prospectus (including all exhibits and financial statements)
and all amendments and supplements provided for herein, this Agreement, the
Pricing Agreement and the Blue Sky Memorandum, (ii) all costs, fees and expenses
(including legal fees and disbursements of counsel for the Underwriters)
incurred by the Underwriters in connection with qualifying or registering all or
any part of the Shares for offer and sale under blue sky laws, including the
preparation of a blue sky memorandum relating to the Shares and clearance of
such offering with the NASD; and (iii) all fees and expenses of the Company's
transfer agent, printing of the certificates for the Shares and all transfer
taxes, if any, with respect to the sale and delivery of the Shares to the
several Underwriters.
The Selling Shareholder agrees to pay, if not otherwise paid by the
Company, all costs and expenses incident to the performance of the Selling
Shareholder's obligations hereunder, including (i) any fees and expenses of
counsel for the Selling Shareholder and (ii) all expenses and taxes incident to
the sale and delivery of the Shares to be sold by the Selling Shareholder to the
Underwriters hereunder. The provisions of this Section shall not affect any
agreement which the Company and the Selling Shareholder may make for the
allocation or sharing of such expenses and costs.
SECTION 8. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Firm Shares
on the First Closing Date and the Option Shares on the Second Closing Date shall
be subject to the accuracy of the representations and warranties on the part of
the Company herein set forth as of the date hereof and as of the First Closing
Date or the Second Closing Date, as the case may be, to the accuracy of the
statements of officers of the Company made pursuant to the provisions
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<PAGE> 10
hereof, to the performance by the Company of any of its obligations hereunder,
and to the following additional conditions:
(a) The Registration Statement shall have become effective either prior to
the execution of this Agreement or not later than 1:00 P.M., Chicago Time, on
the first full business day after the date of this Agreement, or such later time
as shall have been consented to by you but in no event later than 1:00 P.M.,
Chicago Time, on the third full business day following the date hereof; and
prior to the First Closing Date or the Second Closing Date, as the case may be,
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been instituted
or shall be pending or, to the knowledge of the Company or you, shall be
contemplated by the Commission and there shall not have come to the attention of
the Representatives any facts that would cause them to believe that the
Prospectus, at the time it was required to be delivered to purchasers of the
Shares, contained any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. If the
Company and the Underwriters have elected to rely upon Rule 430A, the
information concerning the initial public offering price of the Shares and
price-related information shall have been properly transmitted to the Commission
for filing pursuant to Rule 424(b) within the prescribed period and the Company
will provide evidence satisfactory to the Representatives of such timely filing
(or a post-effective amendment providing such information shall have been filed
and declared effective in accordance with the requirements of Rules 430A and
424(b)).
(b) The Shares shall have been qualified for sale under the blue sky laws
of such states as shall have been specified by the Representatives.
(c) The legality and sufficiency of the authorization, issuance and sale or
transfer and sale of the Shares hereunder, the validity and form of the
certificates representing the Shares, the execution and delivery of this
Agreement and the Pricing Agreement, and all corporate proceedings and other
legal matters incident thereto, and the form of the Registration Statement and
the Prospectus (except financial statements) shall have been approved by counsel
for the Underwriters exercising reasonable judgment.
(d) You shall not have advised the Company that the Registration Statement
or the Prospectus or any amendment or supplement thereto contains an untrue
statement of fact, which, in the opinion of counsel for the Underwriters, is
material or omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein or necessary to make the
statements therein not misleading.
(e) Subsequent to the execution and delivery of this Agreement, there shall
not have occurred any change, or any development involving a prospective change,
in or affecting particularly the business or properties of the Company or its
subsidiaries, whether or not arising in the ordinary course of business, which,
in the judgment of the Representatives, makes it impractical or inadvisable to
proceed with the public offering or purchase of the Shares as contemplated
hereby.
(f) There shall have been furnished to you, as Representatives of the
Underwriters, on the First Closing Date or the Second Closing Date, as the case
may be, except as otherwise expressly provided below:
(i) An opinion of Michael, Best & Friedrich, counsel for the Company,
addressed to the Underwriters and dated the First Closing Date or the
Second Closing Date, as the case may be, to the effect that:
(1) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
Wisconsin with corporate power and authority to own its properties and
conduct its business as described in the Prospectus; and the Company has
been duly qualified to do business as a foreign corporation under the
corporation law of, and is in good standing as such in, every
jurisdiction where the ownership or leasing of property, or the conduct
of its business requires such qualification except where the failure so
to qualify would not have a material adverse effect upon the condition
(financial or otherwise) or results of operations of the Company and its
subsidiaries taken as a whole;
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<PAGE> 11
(2) an opinion to the same general effect as clause (1) of this
subparagraph (i) in respect of each direct and indirect subsidiary of
the Company;
(3) except as disclosed in the Registration Statement, all of the
issued and outstanding capital stock of the subsidiaries of the Company
has been duly authorized, validly issued and is fully paid and
nonassessable, and, except as disclosed in the Registration Statement,
the Company owns directly or indirectly 100 percent of the outstanding
capital stock of each subsidiary and, to the best knowledge of such
counsel, such stock is owned free and clear of any claims, liens,
encumbrances or security interests;
(4) the authorized capital stock of the Company, of which there is
outstanding the amount set forth in the Registration Statement and
Prospectus (except for subsequent issuances, if any, pursuant to stock
options described in the Prospectus), conforms as to legal matters in
all material respects to the description thereof in the Registration
Statement and Prospectus;
(5) except as disclosed in the Registration Statement, the issued
and outstanding capital stock of the Company has been duly authorized
and validly issued and is fully paid and nonassessable, and free of
preemptive rights;
(6) the certificates for the Shares to be delivered hereunder are
in due and proper form, and when duly countersigned by the Company's
transfer agent and delivered to you or upon your order against payment
of the agreed consideration therefor in accordance with the provisions
of this Agreement and the Pricing Agreement, the Shares represented
thereby will be duly authorized and validly issued, fully paid and
nonassessable, except as disclosed in the Registration Statement and
free of preemptive rights and, to the knowledge of such counsel, will be
free of any pledge, lien, encumbrance, claim or preemptive rights of, or
rights of first refusal in favor of, stockholders with respect to any of
the Shares or the issuance or sale thereof, pursuant to the Restated
Articles of Incorporation or bylaws of the Company and, to such
counsel's knowledge, there are no contractual preemptive rights, rights
of first refusal, rights of co-sale or other similar rights which exist
with respect to any of the Shares or the issuance and sale thereof; and
the Shares to be sold hereunder have been duly and validly authorized
and qualified for inclusion on NASDAQ/NM, subject to notice of issuance;
(7) the Registration Statement has become effective under the 1933
Act, and, to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the 1933 Act, and the Registration Statement
(including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A(b), if
applicable), the Prospectus and each amendment or supplement thereto
(except for the financial statements and notes thereto, the financial
statement schedules and other statistical or financial data included
therein as to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the 1933 Act;
such counsel have participated in the preparation of the Registration
Statement and the Prospectus and nothing has come to the attention of
such counsel which causes such counsel to believe that (i) the
Registration Statement (including the information deemed to be part of
the Registration Statement at the time of effectiveness pursuant to Rule
430A(b), if applicable) as amended or supplemented (except for the
financial statements and notes thereto, the financial statement
schedules and other statistical or financial data included therein as to
which such counsel need express no opinion), as of its effective date,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or that (ii) as of its date, the
Prospectus or any amendment or supplement thereto, (except for the
financial statements and notes thereto, the financial statement
schedules and other statistical or financial data included therein as to
which such counsel need express no opinion) contained any untrue
statement of a material fact or omitted to state any material fact
necessary to make the statements therein not misleading in the light of
the circumstances under which they were made, or that (iii) as of the
First
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<PAGE> 12
Closing Date or the Second Closing Date, as the case may be, either the
Registration Statement or the Prospectus or any further amendment or
supplement thereto made by the Company prior to the First Closing Date
or the Second Closing Date, as the case may be, (except for the
financial statements and notes thereto, the financial statement
schedules and other statistical or financial data included therein to
which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state any material fact
necessary to make the statements therein not misleading in the light of
the circumstances under which they were made; and such counsel does not
know of any legal or governmental proceedings pending or threatened
required to be described in the Prospectus which are not described as
required, nor of any contracts or documents of a character required to
be described in the Registration Statement or Prospectus or to be filed
as exhibits to the Registration Statement which are not described or
filed, as required;
(8) this Agreement and the Pricing Agreement and the performance of
the Company's obligations hereunder and thereunder have been duly
authorized by all necessary corporate action and this Agreement and the
Pricing Agreement have been duly executed and delivered by and on behalf
of the Company, and are legal, valid and binding agreements of the
Company, except as enforceability of the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights and by the exercise of judicial discretion
in accordance with general principles applicable to equitable and
similar remedies and except as to those provisions relating to
indemnities and contribution for liabilities arising under the 1933 Act
as to which no opinion need be expressed; and no approval, order,
authorization or consent of any public board, agency or instrumentality
of the United States or of any state or other jurisdiction is necessary
in connection with the issue or sale of the Shares by the Company
pursuant to this Agreement (other than under the 1933 Act, applicable
blue sky laws and the rules of the NASD) or the consummation of the
Company of any other transactions contemplated hereby;
(9) the execution and performance of this Agreement and the Pricing
Agreement, the issue and sale of the Shares, and the consummation of the
transactions herein contemplated by the Company, will not contravene,
conflict with any of the provisions of, or result in a breach or default
under, any of the terms or provisions of any agreement, franchise,
license, indenture, mortgage, deed of trust, note agreement or other
agreement or instrument known to such counsel of the Company or its
subsidiaries or by which the property of any of them is bound and which
contravention or default would be material to the Company and its
subsidiaries taken as a whole; nor will such actions violate any of the
provisions of the charter or bylaws of the Company or its subsidiaries
or, so far as is known to such counsel, violate any statute, order, rule
or regulation of any court or regulatory or governmental body having
jurisdiction over the Company or its subsidiaries;
(10) to such counsel's knowledge, except as disclosed in the
Prospectus, no person has the right, contractual or otherwise, to cause
the Company or any of its subsidiaries to register pursuant to the 1933
Act any shares of capital stock of the Company or any of its
subsidiaries, upon the issue and sale of the Shares to be sold by the
Company to the Underwriters pursuant to this Agreement;
(11) neither the Company nor any of its subsidiaries is an
"investment company" or a person "controlled by" an "investment company"
within the meaning of the Investment Company Act; and
(12) to such counsel's knowledge, all offers and sales of the
Company's and each of its subsidiaries' capital stock since
were at all relevant times exempt from the registration
requirements of the 1933 Act and were duly registered or the subject of
an available exemption from the registration requirements of the
applicable state securities or blue sky laws.
In rendering such opinion, such counsel may state that they are
relying upon the certificate of officers of the Company as to factual
matters, the transfer agent for the Common Stock, as to the number of
shares of Common Stock at any time or times outstanding, and that insofar
as their opinion under clause (7) above relates to the accuracy and
completeness of the Prospectus and Registration Statement, it is based upon
a general review with the Company's representatives and independent
accountants of the information contained therein, without independent
verification by such counsel of the accuracy or
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<PAGE> 13
completeness of such information. Such counsel may also rely upon the
opinions of other competent counsel and, as to factual matters, on
certificates of officers of the Company and of state officials, in which
case their opinion is to state that they are so doing and copies of such
opinions or certificates are to be attached to the opinion unless such
opinions or certificates (or, in the case of certificates, the information
therein) have been furnished to the Representatives otherwise.
(ii) an opinion of , counsel for the Selling
Shareholder, addressed to the Underwriters and dated the First Closing
Date, to the effect that:
(1) this Agreement and the Pricing Agreement have been duly
authorized, executed and delivered by or on behalf of the Selling
Shareholder; and the execution and performance of this Agreement and the
Pricing Agreement, the sale and transfer of the Shares by the Selling
Shareholder, and the consummation of the transactions herein
contemplated by the Selling Shareholder will not contravene, conflict
with any of the provisions of, or result in a breach or default under,
any agreement, franchise, license, indenture, mortgage, deed of trust,
note agreement or other agreement or instrument known to such counsel to
which the Selling Shareholder is a party or is bound or to which any of
the property of the Selling Shareholder is subject, nor will such
actions violate any order, rule or regulation known to such counsel of
any court or regulatory or governmental body having jurisdiction over
the Selling Shareholder or its properties; and no consent, approval,
authorization or order of any court or governmental agency or body is
required for the consummation of the transactions contemplated by this
Agreement and the Pricing Agreement or the sale of Shares to be sold by
the Selling Shareholder hereunder, except such as have been obtained
under the 1933 Act and such as may be required under applicable blue sky
laws in connection with the purchase and distribution of such Shares by
the Underwriters and the clearance of such offering with the NASD;
(2) the Selling Shareholder has full right, power and authority to
enter into this Agreement and the Pricing Agreement and to sell,
transfer and deliver the Shares to be sold on the First Closing Date by
the Selling Shareholder hereunder; upon registration in the name of the
Underwriters of such Shares to be sold by the Selling Shareholder
hereunder, the Underwriters (who counsel may assume to be bona fide
purchasers) will acquire valid title to such Shares so sold, free and
clear of all voting trust arrangements, liens, encumbrances, adverse
claims, security interests and community property rights or any other
restriction on transfer imposed on such Shares by the Selling
Shareholder or the Company;
(3) this Agreement and the Pricing Agreement are legal, valid and
binding agreements of the Selling Shareholder except as enforceability
of the same may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights and by the
exercise of judicial discretion in accordance with general principles
applicable to equitable and similar remedies and except with respect to
those provisions relating to indemnities and contributions for
liabilities arising under the 1933 Act, as to which no opinion need be
expressed; and
(4) nothing has come to the attention of such counsel which causes
such counsel to believe that the Registration Statement, insofar as it
relates to the Selling Shareholder (including the information deemed to
be part of the Registration Statement at the time of effectiveness
pursuant to Rule 430A(b), if applicable), as amended or supplemented,
insofar as such amendment or supplement relates to the Selling
Shareholder, (i) as of its effective date contained any untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or that (ii) as of its date, the Prospectus, insofar as it
relates to the Selling Shareholder, or any amendment or supplement
thereto, insofar as such amendment or supplement relates to the Selling
Shareholder, contained any untrue statement of a material fact or
omitted to state any material fact necessary to make the statements
therein not misleading in the light of the circumstances under which
they were made, or that (iii) as of the First Closing Date, either the
Registration Statement or the Prospectus, insofar as such Registration
Statement or Prospectus relates to the Selling Shareholder, or any
further amendment or
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<PAGE> 14
supplement thereto made by the Company prior to the First Closing Date,
insofar as such amendment or supplement relates to the Selling
Shareholder, contained an untrue statement of a material fact or omitted
to state any material fact necessary to make the statements therein not
misleading in the light of the circumstances under which they were made.
In rendering such opinion, such counsel may state that they are
relying upon the certificate of the Selling Shareholder as to factual
matters, and that insofar as their opinion under clause (4) above relates
to the accuracy and completeness of the Prospectus and Registration
Statement, it is based upon a general review with the Selling Shareholder's
representatives. Such counsel may also rely, as to factual matters, on
certificates of officers of the Company and of state officials, in which
case their opinion is to state that they are so doing and copies of such
opinions or certificates are to be attached to the opinion unless such
opinions or certificates (or, in the case of certificates, the information
therein) have been furnished to the Representatives otherwise.
(iii) Such opinion or opinions of Sidley & Austin, counsel for the
Underwriters, dated the First Closing Date or the Second Closing Date, as
the case may be, with respect to the incorporation of the Company, the
validity of the Shares to be sold by the Company, the form of the
Registration Statement and the Prospectus and other related matters as you
may reasonably require, and the Company shall have furnished to such
counsel such documents and shall have exhibited to them such papers and
records as they request for the purpose of enabling them to pass upon such
matters.
(iv) A certificate of the chief executive officer and the principal
financial officer of the Company, dated the First Closing Date or the
Second Closing Date, as the case may be, to the effect that:
(1) the representations and warranties of the Company set forth in
Section 2 of this Agreement are true and correct as of the date of this
Agreement and as of the First Closing Date or the Second Closing Date,
as the case may be, and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied at or prior to such Closing Date; and
(2) the Commission has not issued an order preventing or suspending
the use of the Prospectus or any preliminary prospectus filed as a part
of the Registration Statement or any amendment thereto; no stop order
suspending the effectiveness of the Registration Statement has been
issued; and, to the best knowledge of the respective signers, no
proceedings for that purpose have been instituted or are pending or
contemplated under the 1933 Act.
The delivery of the certificate provided for in this subparagraph
shall be and constitute a representation and warranty of the Company as to
the facts required in the immediately foregoing clauses (1) and (2) of this
subparagraph to be set forth in said certificate.
(v) A certificate of the Selling Shareholder dated the First Closing
Date to the effect that the representations and warranties of the Selling
Shareholder set forth in Section 3 of this Agreement are true and correct
as of such date and the Selling Shareholder has complied with all the
agreements and satisfied all the conditions on the part of the Selling
Shareholder to be performed or satisfied at or prior to such date.
(vi) Such further certificates and documents as you may reasonably
request.
(g) At the time the Pricing Agreement is executed and also on the First
Closing Date or the Second Closing Date, as the case may be, there shall be
delivered to you a letter addressed to you, as Representatives of the
Underwriters, from Deloitte & Touche, independent accountants, the first one to
be dated the date of the Pricing Agreement, the second one to be dated the First
Closing Date and the third one (in the event of a second closing) to be dated
the Second Closing Date, to the effect set forth in Schedule B. There shall not
have been any change or decrease specified in the letters referred to in this
subparagraph which makes it impractical or inadvisable in the judgment of the
Representatives to proceed with the public offering or purchase of the Shares as
contemplated hereby.
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<PAGE> 15
(h) At the time the Pricing Agreement is executed, there shall be delivered
to you agreements from each of the Company's executive officers and directors,
in which each such person agrees not to (1) sell, contract to sell or otherwise
dispose of any Common Stock for a period of 90 days after the date of
effectiveness of the Registration Statement without the prior written consent
the Representatives or (2) announce an intent to sell any shares of the
Company's Common Stock, or exercise any registration rights with respect to
shares of the Company's Common Stock, for a period of 90 days after the date of
the effectiveness of the Registration Statement without the prior written
consent of the Representatives.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
to you and to Sidley & Austin, counsel for the Underwriters. The Company shall
furnish you with such manually signed or conformed copies of such opinions,
certificates, letters and documents as you request.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification to the Company and the Selling
Shareholder without liability on the part of any Underwriter or the Company or
the Selling Shareholder, except for the expenses to be paid or reimbursed by the
Company pursuant to Sections 7 and 9 hereof and except to the extent provided in
Section 11 hereof.
SECTION 9. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale to the
Underwriters of the Shares on the First Closing Date is not consummated because
any condition of the Underwriters' obligations hereunder is not satisfied or
because of any refusal, inability or failure on the part of the Company or the
Selling Shareholder to perform any agreement herein or to comply with any
provision hereof (unless such failure to satisfy such condition or to comply
with any provision hereof is due to the default or omission of any Underwriter)
the Company agrees to reimburse you and the other Underwriters upon demand for
all out-of-pocket expenses (including reasonable fees and expenses of Sidley &
Austin) that shall have been reasonably incurred by you and them in connection
with the proposed purchase and the sale of the Shares. Any such termination
shall be without liability of any party to any other party except that the
provisions of this Section, Section 7 and Section 11 shall at all times be
effective and shall continue to apply.
SECTION 10. EFFECTIVENESS OF REGISTRATION STATEMENT. You, the Company and
the Selling Shareholder will use your and their best efforts to cause the
Registration Statement to become effective, if it has not yet become effective,
and to prevent the issuance of any stop order suspending the effectiveness of
the Registration Statement and, if such stop order be issued, to obtain as soon
as possible the lifting thereof.
SECTION 11. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of the 1933
Act or the Exchange Act against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter or such controlling person may
become subject under the 1933 Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise (including in settlement
of any litigation if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
including the information deemed to be part of the Registration Statement at the
time of effectiveness pursuant to Rule 430A, if applicable, any preliminary
prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and will reimburse each Underwriter and each such
controlling person for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action. In addition to its
other obligations under this Section 11(a), the Company agrees that, as an
interim measure during the pendency of any such claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in this Section 11(a),
it will reimburse the Underwriters on a monthly basis for all reasonable legal
and other expenses incurred in connection with investigating or defending any
such claim, action, investigation, inquiry or other proceeding, notwithstanding
the absence of a
15
<PAGE> 16
judicial determination as to the propriety and enforceability of the Company's
obligation to reimburse the Underwriters for such expenses and the possibility
that such payment might later be held to have been improper by a court of
competent jurisdiction. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
The Selling Shareholder agrees to indemnify and hold harmless each
Underwriter, and each person who controls any Underwriter within the meaning of
the 1933 Act and the Exchange Act, to the same extent as the foregoing indemnity
to each Underwriter set forth in the immediately preceding paragraph, but only
with reference to information relating to the Selling Shareholder furnished to
the Company or the Underwriters by the Selling Shareholder or by its agents or
attorneys on behalf of the Selling Shareholder specifically for use in the
preparation of the documents referred to in the foregoing indemnity.
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement, and the Selling Shareholder and each person, if any, who controls the
Company within the meaning of the 1933 Act or the Exchange Act, against any
losses, claims, damages or liabilities to which the Company, or any such
director, officer, Selling Shareholder or controlling person may become subject
under the 1933 Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in the Registration Statement, any
preliminary prospectus, the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus, or any amendment or supplement thereto in reliance
upon and in conformity with Section 4 of this Agreement or any other written
information furnished to the Company by such Underwriter through the
Representatives regarding the Underwriters and specifically for use in the
preparation thereof; and will reimburse any legal or other expenses reasonably
incurred by the Company, or any such director, officer, Selling Shareholder or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action. In addition to their other obligations under
this Section 11(b), the Underwriters agree that, as an interim measure during
the pendency of any such claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in this Section 11(b), they will
reimburse the Company and the Selling Shareholder on a monthly basis for all
reasonable legal and other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Underwriters' obligation to reimburse the Company and the
Selling Shareholder for such expenses and the possibility that such payments
might later be held to have been improper by a court of competent jurisdiction.
This indemnity agreement will be in addition to any liability which such
Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party except to the extent that
the indemnifying party was prejudiced by such failure to notify. In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, or the indemnified and indemnifying parties may have
conflicting interests which would make it inappropriate for the same counsel to
represent both of them, the
16
<PAGE> 17
indemnified party or parties shall have the right to select separate counsel to
assume such legal defense and otherwise to participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defense in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel, approved by the
Representatives in the case of paragraph (a) representing all indemnified
parties not having different or additional defenses or potential conflicting
interest among themselves who are parties to such action), (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability arising out of such proceeding. It is
agreed that any controversy arising out of the operation of the interim
reimbursement arrangements set forth in Section 11(a) or (b) hereof, including
the amount of any requested reimbursement payments, the method of determining
such amounts and the basis on which such amounts shall be apportioned among the
indemnifying parties, shall be settled by arbitration conducted pursuant to the
Code of Arbitration Procedure of the National Association of Securities Dealers,
Inc. Any such arbitration must be commenced by service of a written demand for
arbitration or a written notice of intention, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make such
designation of an arbitration tribunal in such demand or notice, then the party
responding to said demand or notice is authorized to do so. Any such arbitration
will be limited to the operation of the interim reimbursement provisions
contained in Section 11(a) or (b) hereof and will not resolve the ultimate
propriety or enforceability of the obligation to indemnify for expenses that are
created by the provisions of such Section 11(a) or (b) hereof.
(d) If the indemnification provided for in this Section is unavailable to
an indemnified party under paragraph (a) or (b) of this Section 11 in respect of
any losses, claims, damages or liabilities referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company, the
Selling Shareholder and the Underwriters from the offering of the Shares or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company, the Selling Shareholder and the Underwriters in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
respective relative benefits received by the Company, the Selling Shareholder
and the Underwriters shall be deemed to be in the same proportion in the case of
the Company and the Selling Shareholder, as the total price paid to the Company
and the Selling Shareholder for the Shares by the Underwriters (net of
underwriting discount but before deducting expenses), and in the case of the
Underwriters as the underwriting discount received by them bears to the total of
such amounts paid to the Company and the Selling Shareholder and received by the
Underwriters as underwriting discount in each case as contemplated by the
Prospectus. The relative fault of the Company, the Selling Shareholder and the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Selling Shareholder or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim.
17
<PAGE> 18
The Company, the Selling Shareholder and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section were
determined by pro rata allocation, even if the Underwriters were considered as
one person, or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section, no Underwriter shall be required
to contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were offered
to the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section are several in proportion to their respective underwriting commitments
and not joint.
(e) The provisions of this Section shall survive any termination of this
Agreement.
SECTION 12. DEFAULT OF UNDERWRITERS. It shall be a condition to the
agreement and obligation of the Company and the Selling Shareholder to sell and
deliver the Shares hereunder, and of each Underwriter to purchase the Shares
hereunder, that, except as hereinafter in this paragraph provided, each of the
Underwriters shall purchase and pay for all Shares agreed to be purchased by
such Underwriter hereunder upon tender to the Representatives of all such Shares
in accordance with the terms hereof. If any Underwriter or Underwriters default
in their obligations to purchase Shares hereunder on the First Closing Date and
the aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10 percent of the total number of
Shares which the Underwriters are obligated to purchase on the First Closing
Date, the Representatives may make arrangements satisfactory to the Company for
the purchase of such Shares by other persons, including any of the Underwriters,
but if no such arrangements are made by such date the nondefaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Shares which such defaulting Underwriters agreed but
failed to purchase on such date. If any Underwriter or Underwriters so default
and the aggregate number of Shares with respect to which such default or
defaults occur is more than the above percentage and arrangements satisfactory
to the Representatives and the Company for the purchase of such Shares by other
persons are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any nondefaulting Underwriter or the
Company or the Selling Shareholder, except for the expenses to be paid by the
Company pursuant to Section 7 hereof and except to the extent provided in
Section 11 hereof.
In the event that Shares to which a default relates are to be purchased by
the nondefaulting Underwriters or by another party or parties, the
Representatives or the Company shall have the right to postpone the First
Closing Date for not more than seven business days in order that the necessary
changes in the Registration Statement, Prospectus and any other documents, as
well as any other arrangements, may be effected. As used in this Agreement, the
term "Underwriters" includes any person substituted for an Underwriter under
this Section. Nothing herein will relieve a defaulting Underwriter from
liability for its default.
SECTION 13. EFFECTIVE DATE. This Agreement shall become effective
immediately as to Sections 7, 9, 11 and 14 and as to all other provisions at the
time at which the Pricing Agreement is executed and delivered, unless such a day
is a Saturday, Sunday or holiday (and in that event this Agreement shall become
effective at such hour on the business day next succeeding such Saturday, Sunday
or holiday); but this Agreement shall nevertheless become effective at such
earlier time after the Pricing Agreement is executed and delivered as you may
determine on and by notice to the Company and the Selling Shareholder or by
release of any Shares for sale to the public. For the purposes of this Section,
the Shares shall be deemed to have been so released upon the release for
publication of any newspaper advertisement relating to the Shares or upon the
release by you of telegrams (i) advising Underwriters that the Shares are
released for public offering, or (ii) offering the Shares for sale to securities
dealers, whichever may occur first.
18
<PAGE> 19
SECTION 14. TERMINATION. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you and
the Selling Shareholder or by you by notice to the Company and the Selling
Shareholder at any time prior to the time this Agreement shall become effective
as to all its provisions, and any such termination shall be without liability on
the part of the Company or the Selling Shareholder to any Underwriter (except
for the expenses to be paid or reimbursed pursuant to Section 7 hereof and
except to the extent provided in Section 11 hereof) or of any Underwriter to the
Company or the Selling Shareholder.
(b) This Agreement may also be terminated by you prior to the First Closing
Date, and the option referred to in Section 5, if exercised, may be cancelled at
any time prior to the Second Closing Date, if (i) trading in securities on the
New York Stock Exchange shall have been suspended or minimum prices shall have
been established on such exchange, or (ii) a banking moratorium shall have been
declared by Illinois, New York, or United States authorities, or (iii) there
shall have been an outbreak of major armed hostilities between the United States
and any foreign power which in the opinion of the Representatives makes it
impractical or inadvisable to offer or sell the Shares. Any termination pursuant
to this paragraph (b) shall be without liability on the part of any Underwriter
to the Company or the Selling Shareholder or on the part of the Company to any
Underwriter or the Selling Shareholder (except for expenses to be paid or
reimbursed pursuant to Section 7 hereof and except to the extent provided in
Section 11 hereof).
SECTION 15. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Shareholder and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, or the Selling Shareholder, as
the case may be, and will survive delivery of and payment for the Shares sold
hereunder.
SECTION 16. NOTICES. All communications hereunder will be in writing and,
if sent to the Underwriters will be mailed, delivered or telegraphed and
confirmed to you c/o William Blair & Company, 222 West Adams Street, Chicago,
Illinois 60606, with a copy to Larry A. Barden, Sidley & Austin, One First
National Plaza, Chicago, Illinois 60603; if sent to the Company will be mailed,
delivered or telegraphed and confirmed to the Company at its corporate
headquarters with a copy to Frank J. Pelisek, Michael Best & Friedrich, 100 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202-4108; and if sent to the Selling
Shareholder will be mailed, delivered or telegraphed to
.
SECTION 17. SUCCESSORS. This Agreement and the Pricing Agreement will inure
to the benefit of and be binding upon the parties hereto and their respective
successors, personal representatives and assigns, and to the benefit of the
officers and directors and controlling persons referred to in Section 11, and no
other person will have any right or obligation hereunder. The term "successors"
shall not include any purchaser of the Shares as such from any of the
Underwriters merely by reason of such purchase.
SECTION 18. REPRESENTATION OF UNDERWRITERS. You will act as Representatives
for the several Underwriters in connection with this financing, and any action
under or in respect of this Agreement taken by you will be binding upon all the
Underwriters.
SECTION 19. PARTIAL UNENFORCEABILITY. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.
SECTION 20. APPLICABLE LAW. THIS AGREEMENT AND THE PRICING AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS.
* * * * * *
19
<PAGE> 20
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company, the Selling Shareholder and the
several Underwriters including you, all in accordance with its terms.
Very truly yours,
STOKELY U.S.A., INC.
By:__________________________________
Chief Executive Officer
[SELLING SHAREHOLDER]
By:__________________________________
Agent and Attorney-in-Fact
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
WILLIAM BLAIR & COMPANY
DAIN BOSWORTH INCORPORATED
Acting as Representatives of the
several Underwriters named in
Schedule A.
By William Blair & Company
By:__________________________________
20
<PAGE> 21
EXHIBIT A
STOKELY U.S.A., INC.
3,040,000 SHARES COMMON STOCK*
PRICING AGREEMENT
, 1994
William Blair & Company
Dain Bosworth Incorporated
As Representatives of the Several
Underwriters
c/o William Blair & Company
135 South LaSalle Street
Chicago, Illinois 60603
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated , 1994
(the "Underwriting Agreement") relating to the sale by the Company and
(the "Selling Shareholder") and the purchase by the several
Underwriters for whom William Blair & Company and Dain Bosworth Incorporated are
acting as representatives (the "Representatives"), of the above Shares. All
terms herein shall have the definitions contained in the Underwriting Agreement
except as otherwise defined herein.
Pursuant to Section 5 of the Underwriting Agreement, the Company and the
Selling Shareholder agree with the Representatives as follows:
1. The initial public offering price per share for the Shares shall be
$ .
2. The purchase price per share for the Shares to be paid by the several
Underwriters shall be $ , being an amount equal to the initial public
offering price set forth above less $ per share.
Schedule A is amended as follows:
[If Applicable]
- ---------------
* Plus an option to acquire up to 456,000 additional shares to cover
overallotments.
<PAGE> 22
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company, [the Selling Shareholder] and the
several Underwriters, including you, all in accordance with its terms.
Very truly yours,
STOKELY U.S.A., INC.
By:_______________________________
Chief Executive Officer
[SELLING SHAREHOLDER]
By:_______________________________
Agent and Attorney-in-Fact
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
WILLIAM BLAIR & COMPANY
DAIN BOSWORTH INCORPORATED
Acting as Representatives of the
several Underwriters
By William Blair & Company
By:_______________________________
Partner
2
<PAGE> 23
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF
FIRM SHARES
TO BE
UNDERWRITER PURCHASED
- ----------- -----------
<S> <C>
William Blair & Company..........................................................
Dain Bosworth Incorporated.......................................................
-----------
Total.......................................................................
===========
</TABLE>
<PAGE> 24
SCHEDULE B
COMFORT LETTER OF DELOITTE & TOUCHE
(1) They are independent public accountants with respect to the Company and
its subsidiaries within the meaning of the 1933 Act.
(2) In their opinion the consolidated financial statements and schedules of
the Company, and the Company's subsidiaries included in the Registration
Statement and the consolidated financial statements of the Company from which
the information presented under the caption "Selected Consolidated Financial
Data" has been derived which are stated therein to have been examined by them
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act.
(3) On the basis of specified procedures (but not an examination in
accordance with generally accepted auditing standards), including inquiries of
certain officers of the Company and its subsidiaries responsible for financial
and accounting matters as to transactions and events subsequent to March 31,
1994, a reading of minutes of meetings of the stockholders and directors of the
Company and its subsidiaries since March 31, 1994, a reading of the latest
available interim unaudited consolidated financial statements of the Company and
its subsidiaries (with an indication of the date thereof) and other procedures
as specified in such letter, nothing came to their attention which caused them
to believe that (i) the unaudited consolidated financial statements of the
Company included in the Registration Statement do not comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act or
that such unaudited financial statements are not fairly presented in accordance
with generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in the
Registration Statement; (ii) the amounts in "Selected Consolidated Financial
Data" and "Summary Financial Data" included in the Registration Statement and
Prospectus as of, and for the periods ended March 31, 1990, March 31, 1991,
March 31, 1992, March 31, 1993, June 30, 1993, March 31, 1994 and June 30, 1994
do not agree or are not derivable from the corresponding amounts in the audited
or unaudited, as the case may be, financial statements from which such amounts
were derived; (iii) the unaudited condensed financial statements of the Company,
from which the amounts in "Selected Financial and Operating Data" and "Summary
Financial and Operating Data" included in the Registration Statement and
Prospectus for the years ended, March 31, 1989, 1990, 1991, 1992 and 1993 were
derived, do not comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act, and such unaudited condensed financial
statements of the Company are not in conformity with generally accepted
accounting principles, applied on a basis consistent with that of the Company's
audited consolidated financial statements included in the Registration Statement
and Prospectus; (iv) the financial information contained under the caption
"Summary Financial Data," under the caption "Capitalization," under the caption
"Selected Consolidated Financial Data," under the caption "Management Discussion
and Analysis" and under the caption "Management" included in the Registration
Statement and the Prospectus do not comply as to form in all material respects
with the applicable requirements of the 1933 Act; and (v) at a specified date
not more than five days prior to the date thereof in the case of the first
letter and not more than two business days prior to the date thereof in the case
of the second and third letters, there was any change in the capital stock or
long-term debt or short-term debt (other than normal payments) of the Company
and its subsidiaries on a consolidated basis or any decrease in consolidated net
current assets or consolidated stockholders' equity as compared with amounts
shown on the latest unaudited balance sheet of the Company included in the
Registration Statement or for the period from the date of such balance sheet to
a date not more than five days prior to the date thereof in the case of the
first letter and not more than two business days prior to the date thereof in
the case of the second and third letters, there were any decreases, as compared
with the corresponding period of the prior year, in consolidated net sales,
consolidated income before income taxes or in the total or per share amounts of
consolidated net income except, in all instances, for changes or decreases which
the Prospectus disclosed have occurred or may occur or which are set forth in
such letter.
(4) They have carried out specified procedures, which have been agreed to
by the Representatives, with respect to certain information in the Prospectus
specified by the Representatives, and on the basis of such procedures, they have
found such information to be in agreement with the general accounting records of
the Company and its subsidiaries.
<PAGE> 1
EXHIBIT 3.2
BY-LAWS
OF
STOKELY USA, INC.
(a Wisconsin corporation)
<PAGE> 2
BY-LAWS
OF
STOKELY USA, INC.
(a Wisconsin Corporation)
Introduction - Variable References
0.01. Date of annual shareholders' meeting: the last Friday in August
beginning at 11:00 a.m. central standard time (See Section 2.01)
0.02. Required notice of shareholders' meeting (See Section 2.04): not less
than 10 days.
0.03. Authorized number of Directors (See Section 3.01): 11.
0.04. Required notice of Director's meeting (See Section 3.05): not less
than 24 hours.
0.05. Authorized number of Vice Presidents (See Section 4.01): up to 12.
0.06. Fiscal year of the Corporation shall commence on the first day of April
and end on the last day of March.
<PAGE> 3
<TABLE>
<CAPTION>
TABLE OF CONTENTS
ARTICLE I. OFFICES
<S> <C> <C>
1.01 Principal and Business Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. SHAREHOLDERS
2.01 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.02 Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.03 Place of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.04 Notice of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.05 Closing of Stock Transfer Books or Fixing of Record Date . . . . . . . . . . . . . . . 2
2 06 Voting Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.07 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.08 Conduct of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.09 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.11 Voting of Shares by Certain Holders . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Other Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Legal Representatives and Fiduciaries . . . . . . . . . . . . . . . . . . . . . . 5
(c) Pledgees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(d) Treasury Stock and Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 5
(e) Minors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(f) Incompetents and Spendthrifts . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(g) Joint Tenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.12 Waiver of Notice By Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.13 Unanimous Consent Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III. BOARD OF DIRECTORS
3.01 General Powers and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.02 Tenure and Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.03 Nominations For Election to the Board of Directors . . . . . . . . . . . . . . . . . . 7
3.04 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.05 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.06 Notice; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.07 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.08 Manner of Acting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.09 Conduct of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.10 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.12 Presumption of Assent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.13 Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.14 Unanimous Consent Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.15 Meetings By Telephone Or By Other Communication Technology . . . . . . . . . . . . . . 11
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE IV. OFFICERS
<S> <C> <C>
4.01 Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.02 Election and Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.03 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.04 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.05 Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.06 Vice Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.07 President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.08 Executive Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.09 The Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.10 The Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.11 The Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.12 Assistant Secretaries and Assistant Treasurers . . . . . . . . . . . . . . . . . . . . 14
4.13 Other Assistants and Acting Officers . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.14 Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE V. CONFLICT OF INTEREST TRANSACTIONS,
CONTRACTS, LOANS, CHECKS AND DEPOSITS:
SPECIAL CORPORATE ACTS
5.01 Conflict of Interest Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.02 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.03 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.04 Checks, Drafts, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.05 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.06 Voting of Securities Owned by this Corporation . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.01 Certificate for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.02 Facsimile Signatures and Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.03 Signature by Former Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.04 Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.05 Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.06 Lost, Destroyed or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . . . . 17
6.07 Consideration for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.08 Uncertificated Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.09 Transfer Agent and Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.10 Stock Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII. INDEMNIFICATION
7.01 Indemnification for Successful Defense . . . . . . . . . . . . . . . . . . . . . . . . 19
7.02 Other Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.03 Written Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.04 Nonduplication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.05 Determination of Right to Indemnification . . . . . . . . . . . . . . . . . . . . . . 20
7.06 Advance Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.07 Nonexclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.08 Court-Ordered Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.09 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.10 Securities Law Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.11 Liberal Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.12 Definitions Applicable to This Article . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE VIII. SEAL
ARTICLE IX. AMENDMENTS
<S> <C> <C>
9.01 By Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.02 By Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.03 Implied Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE X. FISCAL YEAR
</TABLE>
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ARTICLE I. OFFICES
1.01 Principal and Business Offices. The Corporation may
have such principal and other business offices, either within or without the
State of Wisconsin, as the Board of Directors may designate or as the business
of the Corporation may require from time to time.
1.02 Registered Office. The registered office of the
Corporation required by the Wisconsin Business Corporation Law to be maintained
in the State of Wisconsin may be, but need not be, identical with the principal
office in the State of Wisconsin, and the address of the registered office may
be changed from time to time by the Board of Directors or by the registered
agent. The business office of the registered agent of the Corporation shall be
identical to such registered office.
ARTICLE II. SHAREHOLDERS
2.01 Annual Meeting. The annual meeting of the
shareholders shall be held at the date and hour in each year set forth in
Section 0.01, or at such other time and date before or after said date as may
be fixed by or under the authority of the Board of Directors, for the purpose
of electing Directors and for the transaction of such other business as may
come before the meeting. If the day fixed for the annual meeting shall be a
legal holiday in the State of Wisconsin, such meeting shall be held on the next
succeeding business day. If the election of Directors shall not be held on the
day designated herein, or fixed as herein provided, for any annual meeting of
the shareholders, or at any adjournment thereof, the Board of Directors
shall cause the election to be held at a special meeting of the shareholders
as soon thereafter as conveniently may be.
2.02 Special Meeting. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise prescribed by
the Wisconsin Business Corporation Law, may be called by the Chairman of the
Board or a majority of the Board of Directors or by the holders of at least ten
percent of all the votes entitled to be cast on any issue proposed to be
considered at the proposed special meeting who sign, date and deliver to the
Corporation one or more written demands for the meeting describing one or more
purposes for which it is to be held. If duly called, the Corporation shall
communicate notice of a special meeting as set forth in Section 2.04.
2.03 Place of Meeting. The Board of Directors may
designate any place, either within or without the State of Wisconsin, as
the place of meeting for any annual meeting or for any special meeting. If no
designation is made, the place of
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meeting shall be the principal business office of the Corporation in the State
of Wisconsin, but any meeting may be adjourned to reconvene at any place
designated by vote of a majority of the shares represented thereat.
2.04 Notice of Meeting. Notice may be communicated in
person, by telephone, telegraph, teletype, facsimile or other form of wire or
wireless communication, or by mail or private carrier, and, if these forms of
personal notice are impracticable, notice may be communicated by a newspaper of
general circulation in the area where published, or by radio, television or
other form of public broadcast communication. Such notice stating the place,
day and hour of the meeting and, in case of a special meeting, a description of
each purpose for which the meeting is called, shall be communicated or sent not
less than the number of days set forth in Section 0.02 (unless a longer
period is required by the Wisconsin Business Corporation Law or the
articles of incorporation) nor more than sixty days before the date of the
meeting, by or at the direction of the Chairman of the Board or the Secretary,
or other Officer or persons calling the meeting, to each shareholder of record
entitled to vote at such meeting. Written notice by the Corporation to its
shareholders is effective when mailed and may be addressed to the shareholder's
address shown in the Corporation's current record of shareholders. Oral notice
is effective when communicated and the Corporation shall maintain a record
setting forth the date, time, manner and recipient of the notice.
2.05 Closing of Stock Transfer Books or Fixing of Record
Date. A "shareholder" of the Corporation shall mean the person in whose name
shares are registered in the stock transfer books of the Corporation or the
beneficial owner of shares to the extent of the rights granted by a nominee
certificate on file with the Corporation. Such nominee certificates, if any,
shall be reflected in the stock transfer books of the Corporation. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may
provide that the stock transfer books shall be closed for a stated period
but not to exceed, in any case, seventy days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to
notice of or to vote at a meeting of shareholders, such books shall be closed
for at least ten days immediately preceding such meeting. In lieu of closing
the stock transfer books, the Board of Directors may fix in advance a date as
the record date for any such determination of shareholders, such date in any
case to be not more than seventy days and, in case of a meeting of
shareholders, not less than ten days prior to the date on which the particular
action requiring such determination of shareholders is to be taken. If the
stock transfer books are not
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closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the close of business on the date on
which notice of the meeting is mailed or on the date on which the resolution of
the Board of Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of shareholders. When a
determination of shareholders entitled to vote at any meeting of shareholders
has been made as provided in this section, such determination shall be
applied to any adjournment thereof except where the determination has been
made through the closing of the stock transfer books and the stated period of
closing has expired.
2.06 Voting Record. The Officer or agent having charge of
the stock transfer books for shares of the Corporation shall, before each
meeting of shareholders, make a complete list of the shareholders entitled to
vote at such meeting, or any adjournment thereof, with the address of and the
number of shares held by each. Such record shall be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting for the purposes of the
meeting. The original stock transfer books shall be prima facie evidence as to
who are the shareholders entitled to examine such record or transfer books or
to vote at any meeting of shareholders. Failure to comply with the
requirements of this section shall not affect the validity of any action taken
at such meeting.
2.07 Quorum. Shares entitled to vote as a separate
voting group as defined in the Wisconsin Business Corporation Law may take
action on a matter at a meeting only if a quorum of those shares exists with
respect to that matter. Unless the articles of incorporation or the Wisconsin
Business Corporation Law provides otherwise, a majority of the votes entitled
to be cast on the matter by the voting group constitutes a quorum of that
voting group for action on that matter.
Once a share is represented for any purpose at a meeting, other
than for the purpose of objecting to holding the meeting or transacting
business at the meeting, it is considered present for purposes of determining
whether a quorum exists, for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
If a quorum exists, action on a matter by a voting group is approved
if the votes cast within the voting group favoring the action exceed the votes
cast opposing the action, unless the articles of incorporation or the Wisconsin
Business Corporation Law requires a qreater number of affirmative votes.
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"Voting group" means any of the following:
(a) All shares of one or more classes or series that
under the articles of incorporation or the Wisconsin Business Corporation Law
are entitled to vote and be counted together collectively on a matter at a
meeting of shareholders.
(b) All shares that under the articles of
incorporation or the Wisconsin Business Corporation Law are entitled to
vote generally on a matter.
Though less than a quorum of the outstanding shares are represented at
a meeting, a majority of the shares so represented may adjourn the meeting from
time to time without further notice. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified.
2.08 Conduct of Meetings. The Chairman of the Board, or
in the Chairman's absence, the Vice Chairman of the Board, or in the Vice
Chairman's absence, the President, or in the President's absence, the
Executive Vice President, or in the Executive Vice President's absence, a Vice
President in the order provided under Section 4.08, and in their absence, any
person chosen by the shareholders present shall call the meeting of the
shareholders to order and shall act as chairman of the meeting, and the
Secretary of the Corporation shall act as Secretary of all meetings of the
shareholders, but, in the absence of the Secretary, the presiding Officer
may appoint any other person to act as Secretary of the meeting.
2.09 Proxies. At all meetings of shareholders, a
shareholder entitled to vote may vote in person or by proxy. A shareholder may
appoint a proxy to vote or otherwise act for the shareholder by signing an
appointment form, either personally or by his or her attorney-in-fact. Such
proxy appointment is effective when received by the Secretary of the
Corporation before or at the time of the meeting. Unless otherwise provided in
the appointment form of proxy, a proxy appointment may be revoked at any time
before it is voted, either by written notice filed with the Secretary or the
acting Secretary of the meeting or by oral notice given by the shareholder to
the presiding officer during the meeting. The presence of a shareholder who
has filed his or her proxy appointment shall not of itself constitute
a revocation. No proxy appointment shall be valid after eleven months from
the date of its execution, unless otherwise provided in the appointment form of
proxy. The Board of Directors shall have the power and authority to make
rules establishing presumptions as to the validity and sufficiency of
proxy appointments.
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2.10 Voting of Shares. Each outstanding share shall be
entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders, except to the extent that the voting rights of the shares of any
voting group or groups are enlarged, limited or denied by the articles of
incorporation.
2.11 Voting of Shares by Certain Holders.
(a) Other Corporations. Shares standing in the name of
another corporation may be voted either in person or by proxy, by the president
of such corporation or any other officer appointed by such president. An
appointment form of proxy executed by any principal officer of such other
corporation or assistant thereto shall be conclusive evidence of the signer's
authority to act, in the absence of express notice to this Corporation, given
in writing to the Secretary of this Corporation, or the designation of
some other person by the Board of Directors or by the by-laws of such other
corporation.
(b) Legal Representatives and Fiduciaries. Shares held
by an administrator, executor, guardian, conservator, trustee in bankruptcy,
receiver or assignee for creditors may be voted by him, either in person or by
proxy, without a transfer of such shares into his or her name, provided that
there is filed with the Secretary before or at the time of meeting proper
evidence of his or her incumbency and the number of shares held. Shares
standing in the name of a fiduciary may be voted by him, either in person or by
proxy. An appointment form of proxy executed by a fiduciary shall be
conclusive evidence of the signer's authority to act, in the absence of express
notice to this Corporation, given in writing to the Secretary of this
Corporation, that such manner of voting is expressly prohibited or otherwise
directed by the document creating the fiduciary relationship.
(c) Pledgees. A shareholder whose shares are pledged
shall be entitled to vote such shares until the shares have been transferred
into the name of the pledgee, and thereafter the pledgee shall be entitled to
vote the shares so transferred; provided, however, a pledgee shall be entitled
to vote shares held of record by the pledgor if the Corporation receives
acceptable evidence of the pledgee's authority to sign.
(d) Treasury Stock and Subsidiaries. Neither treasury
shares, nor shares held by another corporation if a majority of the shares
entitled to vote for the election of Directors of such other corporation is
held by this Corporation, shall be voted at any meeting or counted in
determining the total number of outstanding shares entitled to vote, but shares
of its own issue held by this Corporation in a fiduciary capacity, or held by
such other corporation in a fiduciary capacity, may be voted and shall be
counted in determining the total number of outstandinq shares entitled to vote.
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(e) Minors. Shares held by a minor may be voted by such
minor in person or by proxy and no such vote shall be subject to disaffirmance
or avoidance, unless prior to such vote the Secretary of the Corporation has
received written notice or has actual knowledge that such shareholder is a
minor. Shares held by a minor may be voted by a personal representative,
administrator, executor, guardian or conservator representing the minor if
evidence of such fiduciary status is presented and acceptable to the
Corporation.
(f) Incompetents and Spendthrifts. Shares held by an
incompetent or spendthrift may be voted by such incompetent or spendthrift in
person or by proxy and no such vote shall be subject to disaffirmance or
avoidance, unless prior to such vote the Secretary of the Corporation has
actual knowledge that such shareholder has been adjudicated an incompetent or
spendthrift or actual knowledge of filing of judicial proceedings for
appointment of a guardian. Shares held by an incompetent or spendthrift may be
voted by a personal representative, administrator, executor, guardian or
conservator representing the minor if evidence of such fiduciary status is
presented and acceptable to the Corporation.
(g) Joint Tenants. Shares registered in the names of two
or more individuals who are named in the registration as joint tenants may be
voted in person or by proxy signed by any one or more of such individuals if
either (i) no other such individual or his or her legal representative is
present and claims the right to participate in the voting of such shares or
prior to the vote files with the Secretary of the Corporation a contrary
written voting authorization or direction or written denial or authority of the
individual present or signing the appointment form of proxy proposed to be
voted or (ii) all such other individuals are deceased and the Secretary of
the Corporation has no actual knowledge that the survivor has been adjudicated
not to be the successor to the interests of those deceased.
2.12 Waiver of Notice by Shareholders. Whenever any
notice whatever is required to be given to any shareholder of the Corporation
under the articles of incorporation or by-laws or any provision of law, a
waiver thereof in writing, signed at any time, whether before or after the time
of meeting, by the shareholder entitled to such notice, shall be deemed
equivalent to the giving of such notice and the Corporation shall include
copies of such waivers in its corporate records; provided that such waiver in
respect to any matter of which notice is required under any provision of the
Wisconsin Business Corporation Law, shall contain the same information as would
have been required to be included in such notice, except the time and place of
meeting.
2.13 Unanimous Consent Without Meeting. Any action
required or permitted by the articles of incorporation or by-laws or any
provision of law to be taken at a meeting of the
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shareholders, may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE III. BOARD OF DIRECTORS
3.01 General Powers and Number. All corporate powers
shall be exercised by or under the authority of, and the business and affairs
of the Corporation managed under the direction of, the Board of Directors,
subject to any limitation set forth in the articles of incorporation. The
number of Directors of the Corporation shall be as provided in Section 0.03,
but shall be not less than nine (9) nor more than fifteen (15).
The Board of Directors shall be divided into three (3) classes of
not less than three (3) nor more than five (5) Directors each. The term
of office of the first class of Directors shall expire at the first annual
meeting after their initial election and until their successors are elected
and qualified, the term of office of the second class shall expire at the
second annual meeting after their initial election and until their successors
are elected and qualified, and the term of office of the third class shall
expire at the third annual meeting after the initial election and until their
successors are elected and qualified. At each annual meeting after the
initial classification of the Board of Directors, the class of Directors whose
term expires at the time of such election shall be elected to hold office until
the third succeeding annual meeting and until their successors are elected and
qualified.
3.02 Tenure and Qualifications. Each Director shall hold
office until the next annual meeting of shareholders in the year in which such
Director's term expires and until his successor shall have been elected, or
until his prior death, resignation or removal for cause only. A Director may
be removed from office for cause only by affirmative vote of 80% of the
outstanding shares entitled to vote for the election of such Director, taken at
an annual meeting or a special meeting of shareholders called for that purpose,
and any vacancy so created may be filled by the affirmative vote of 80% of such
shares. A Director may resign at any time by filing his written resignation
with the Secretary of the Corporation. Directors need not be residents of the
State of Wisconsin or shareholders of the Corporation.
3.03 Nominations for Election to the Board of Directors.
Nominations for election to the Board of Directors may be made by the Board of
Directors or by any shareholder of any outstanding class of capital stock of
the Corporation entitled to vote for election of Directors. Nominations, other
than those made by or on behalf of the existing management of the
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Corporation, shall be made in writing and shall be delivered or mailed to the
Chairman of the Board, the Vice Chairman of the Board and/or the President of
the Corporation, not less than 14 days nor more than 60 days prior to any
meeting of shareholders called for the election of directors; provided,
however, that if less than 14 days' notice of the meeting is given to
shareholders, such nomination shall be mailed or delivered to the Chairman of
the Board, the Vice Chairman of the Board and/or the President of the
Corporation not later than the close of business on the fourth day following
the day on which the notice of meeting was mailed. Such notification shall
contain the following information to the extent known to the nominating
shareholder: (a) the name and address of each proposed nominee; (b) the
principal occupation of each proposed nominee; (c) the name and residence
address of the nominating shareholder; and (d) the number of shares of capital
stock of the Corporation owned by the nominating shareholder. Nominations not
made in accordance herewith may be disregarded by the chairman of the meeting,
in his or her discretion, and upon his or her instructions, the vote tellers
may disregard all votes cast for each such nominee.
3.04 Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this by-law immediately after
the annual meeting of shareholders, and each adjourned session thereof. The
place of such regular meeting shall be the same as the place of the meeting of
shareholders which precedes it, or such other suitable place as may be
announced at such meeting of shareholders. The Board of Directors may provide,
by resolution, the time and place, either within or without the State of
Wisconsin, for the holding of additional regular meetings without other notice
than such resolution.
3.05 Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Chairman of the Board, the
Vice Chairman of the Board, the Secretary or any two Directors. The Chairman,
Vice Chairman, Secretary or Directors calling any special meeting of the Board
of Directors may fix any place, either within or without the State of
Wisconsin, as the place for holding any special meeting of the Board of
Directors called by them, and if no other place is fixed, the place of meeting
shall be the principal business office of the Corporation in the State of
Wisconsin.
3.06 Notice; Waiver. Notice may be communicated in
person, by telephone, telegraph, teletype, facsimile or other form of wire or
wireless communication, or by mail or private carrier, and, if these forms of
personal notice are impracticable, notice may be communicated by a newspaper of
general circulation in the area where published, or by radio, television or
other form of public broadcast communication. Notice of each meeting of the
Board of Directors (unless otherwise provided in or pursuant to Section 3.03)
shall be communicated to each Director at his or her
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business address or telephone number or at such other address or telephone
number as such Director shall have designated in writing filed with the
Secretary, in each case not less than that number of hours prior thereto as set
forth in Section 0.04. Written notice is effective at the earliest of the
following:
(i) when received;
(ii) five days after its deposit in the U.S. Mail, if
mailed postpaid and correctly addressed; or
(iii) on the date shown on the return receipt, if sent by registered
or certified mail, return receipt requested and the receipt is
signed by or on behalf of the addressee.
Oral notice is effective when communicated and the Corporation shall maintain a
record setting forth the date, time, manner and recipient of the notice.
Whenever any notice whatever is required to be given to any Director of
the Corporation under the articles of incorporation or by-laws or any provision
of law, a waiver thereof in writing, signed at any time, whether before or
after the time of meeting, by the Director entitled to such notice, shall be
deemed equivalent to the giving of such notice, and the Corporation shall
retain copies of such waivers in its' corporate records. A Director's
attendance at or participation in a meeting waives any required notice to him
or her of the meeting unless the director at the beginning of the meeting or
promptly upon his or her arrival objects to holding the meeting or transacting
business at the meeting and does not thereafter vote for or assert to action
taken at the meeting. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
3.07 Quorum. Except as otherwise provided by the Wisconsin
Business Corporation Law or by the articles of incorporation or these by-laws,
a majority of the number of Directors as provided in Section 0.03 shall
constitute a quorum for the transaction of business at any meeting of the Board
of Directors, but a majority of the Directors present or participating (though
less than such quorum) may adjourn the meeting from time to time without
further notice.
3.08 Manner of Acting. If a quorum is present or
participating when a vote is taken, the affirmative vote of a majority of
directors present or participating is the act of the Board of Directors or a
committee of the Board of Directors, unless the Wisconsin Business Corporation
Law or the articles of
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incorporation or these by-laws require the vote of a greater number of
directors.
3.09 Conduct of Meetings. Any Director chosen by the
Directors present shall call meetings of the Board of Directors to order and
shall act as chairman of the meeting. The Secretary of the Corporation shall
act as Secretary of all meetings of the Board of Directors, but in the absence
of the Secretary, the presiding Officer may appoint any Assistant Secretary or
any Director or other person present or participating to act as Secretary of
the meeting.
3.10 Vacancies. Any vacancy occurring in the Board of
Directors, including a vacancy created by an increase in the number of
Directors, may be filled until the next succeeding annual election by the
affirmative vote of a majority of the Directors then in office, though less
than a quorum of the Board of Directors; provided, that in case of a vacancy
created by the removal of a Director for cause by vote of the shareholders, the
shareholders shall have the right to fill such vacancy at the same meeting or
any adjournment thereof by the affirmative vote of 80% of the outstanding
shares entitled to vote for the election of such Director.
3.11 Compensation. The Board of Directors, by
affirmative vote of a majority of the Directors then in office, and
irrespective of any personal interest of any of its members, may establish
reasonable compensation of all Directors for services to the Corporation
as Directors, Officers or otherwise, or may delegate such authority to an
appropriate committee. The Board of Directors also shall have authority to
provide for or to delegate authority to an appropriate committee to provide for
reasonable pensions, disability or death benefits, and other benefits of
payments, to Directors, Officers and employees and to their estates, families,
dependents or beneficiaries on account of prior services rendered by such
Directors, Officers and employees to the Corporation.
3.12 Presumption of Assent. A Director of the
Corporation who is present at or participates in a meeting of the Board of
Directors or a committee thereof of which he or she is a member, at which
action on any corporate matter is taken, shall be presumed to have assented to
the action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless he or she shall file his or her written dissent to such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
Secretary of the Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a Director who voted in favor of such
action.
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3.13 Committees. The Board of Directors, by resolution
adopted by the affirmative vote of a majority of the number of Directors as
provided in Section 0.03, may designate one or more committees, each committee
to consist of two or more Directors elected by the Board of Directors, which to
the extent provided in said resolution as initially adopted, and as thereafter
supplemented or amended by further resolution adopted by a like vote, shall
have and may exercise, when the Board of Directors is not in session, the
powers of the Board of Directors in the management of the business and affairs
of the Corporation, except that a committee may not do any of the following:
(a) authorize distributions; (b) approve or propose to shareholders action that
the Wisconsin Business Corporation Law requires be approved by shareholders;
(c) fill vacancies on the Board of Directors or on any of its committees,
unless the Board of Directors provides by resolution that any vacancies on a
committee shall be filled by the affirmative vote of a majority of the
remaining committee members; (d) amend articles of incorporation under
Section 180.1002 of the Wisconsin Business Corporation Law; (e) adopt, amend
or repeal by-laws; (f) approve a plan of merger not requiring shareholder
approval; (g) authorize or approve reacquisition of shares, except according
to a formula or method prescribed by the Board of Directors; or (h) authorize
or approve the issuance or sale or contract for sale of shares, or determine
the designation and relative rights, preferences and limitations of a class or
series of shares, except that the Board of Directors may authorize a committee
or a senior executive officer of the Corporation to do so within limits
prescribed by the Board of Directors. The Board of Directors may elect one or
more of its members as alternate members of any such committee who may take the
place of any absent member or members at any meeting of such committee, upon
request by the Chairman of the Board or the Vice Chairman of the Board or upon
request by the chairman of such meeting. Each such committee shall fix its own
rules governing the conduct of its activities and shall make such reports to
the Board of Directors of its activities as the Board of Directors may request.
3.14 Unanimous Consent Without Meeting. Any action
required or permitted by the articles of incorporation or by-laws or any
provision of law to be taken by the Board of Directors at a meeting or by
resolution may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the Directors then in
office.
3.15 Meetings By Telephone Or By Other Communication
Technology. Meetings of the Board of Directors or committees may be conducted
by telephone or by other communication technology in accordance with Section
180.0820 of the Wisconsin Business Corporation Law.
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ARTICLE IV. OFFICERS
4.01 Number. The principal Officers of the Corporation
shall be a Chairman of the Board, a Vice Chairman of the Board, a President, an
Executive Vice President, the number of Vice Presidents as provided in Section
0.05, a Secretary, and a Treasurer, each of whom shall be elected annually by
the Board of Directors. Such other Officers and assistant officers as may be
deemed necessary may be elected or appointed by the Board of Directors, and
shall have such powers and perform such duties as may be assigned by the Board
of Directors. The Board of Directors may authorize a duly appointed officer to
appoint one or more officers or assistant officers. The same natural person may
simultaneously hold more than one office in the Corporation, provided that such
person holding any two or more offices may sign documents in only one capacity
as an officer of the Corporation.
4.02 Election and Term of Office. The Officers of the
Corporation to be elected by the Board of Directors shall be elected annually
by the Board of Directors at the first meeting of the Board of Directors held
after each annual meeting of the shareholders. If the election of Officers
shall not be held at such meeting, such election shall be held as soon
thereafter as conveniently may be. Each Officer shall hold office until his or
her successor shall have been duly elected or until his or her prior death,
resignation or removal.
4.03 Removal. Any Officer or agent may be removed by the
Board of Directors with or without cause whenever in its judgment the best
interests of the Corporation will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Election or appointment shall not of itself create contract rights.
4.04 Vacancies. A vacancy in any principal office because
of death, resignation, removal, disqualification or otherwise, shall be filled
by the Board of Directors for the unexpired portion of the term.
4.05 Chairman of the Board. The Chairman of the Board
shall perform such duties and have such responsibilities as may be determined
from time to time by the Board of Directors or a committee of the Board of
Directors created in accordance with Section 3.13 hereof.
4.06 Vice Chairman of the Board. The Vice Chairman of the
Board shall perform such duties and have such responsibilities as may be
determined from time to time by the Board of Directors or a committee of the
Board of Directors created in accordance with Section 3.13 hereof.
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4.07 President. The President shall perform such duties
and have such responsibilities as may be determined from time to time by the
Board of Directors or a committee of the Board of Directors created in
accordance with Section 3.13 hereof.
4.08 The Executive Vice President. The Executive Vice
President shall assist the President in the discharge of supervisory,
managerial and executive duties and functions. He or she shall perform such
other duties as from time to time may be assigned to him or her by the Board of
Directors or a committee of the Board of Directors created in accordance with
Section 3.13 hereof. The Board of Directors (or a committee thereof) may
amend, limit or modify the Executive Vice President's duties described herein
at any time for any reason.
4.09 The Vice Presidents. In the absence of the
Chairman, the Vice Chairman, the President and the Executive Vice President or
in the event of their death, inability or refusal to act, or in the event for
any reason it shall be impracticable for them to act personally, the Vice
President (or in the event there be more than one Vice President, the Vice
Presidents in the order designated by the Board of Directors, or in the absence
of any designation, then in the order of their election) shall perform the
duties of the President, and when so acting, shall have all the powers of and
be subject to all the restrictions upon the President. A Vice President shall
perform such other duties and have such authority as from time to time may be
delegated or assigned to him or her by the Board of Directors or a committee of
the Board of Directors created in accordance with Section 3.13 hereof. The
Board of Directors (or a committee thereof) may amend, limit or modify the
Vice President's duties described herein at any time for any reason.
4.10 The Secretary. The Secretary shall: (a) keep the
minutes of the meetings of the shareholders and of the Board of Directors in
one or more books provided for that purpose; (b) see that all notices are duly
given in accordance with the provisions of these by-laws or as required by law;
(c) be custodian of the corporate records and of the seal of the Corporation
and see that the seal of the Corporation is affixed to all documents, the
execution of which on behalf of the Corporation under its seal is duly
authorized; (d) keep or arrange for the keeping of a register of the post
office address of each shareholder which shall be furnished to the Secretary by
such shareholder; (e) have general charge of the stock transfer books of the
Corporation; and (f) in general, perform all duties incident to the office of
Secretary and have such other duties and exercise such authority as from time
to time may be delegated or assigned to him or her by the Chairman, the Vice
Chairman, the President or the Board of Directors or a committee of the Board
of Directors created in accordance with Section 3.13 hereof. The Board of
Directors (or
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a committee thereof) may amend, limit or modify the Secretary's duties
described herein at any time for any reason.
4.11 The Treasurer. The Treasurer shall: (a) have charge
and custody of and be responsible for all funds and securities of the
Corporation; (b) receive and give receipts for moneys due and payable to the
Corporation from any source whatsoever, and deposit all such moneys in the name
of the Corporation in such banks, trust companies or other depositories as
shall be selected in accordance with the provisions of Section 5.05; and (c) in
general, perform all of the duties incident to the office of Treasurer and have
such other duties and exercise such other authority as from time to time may be
delegated or assigned to him or her by the Chairman, the Vice Chairman, the
President, the Board of Directors or a committee of the Board of Directors
created in accordance with Section 3.13 hereof. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the Board of Directors
shall determine. The Board of Directors (or a committee thereof) may amend,
limit or modify the Treasurer's duties described herein at any time for any
reason.
4.12 Assistant Secretaries and Assistant Treasurers. There
shall be such number of Assistant Secretaries and Assistant Treasurers as the
Board of Directors may from time to time authorize. The Assistant Treasurers
shall, respectively, if required by the Board of Directors, give bonds for
the faithful discharge of their duties in such sums and with such sureties as
the Board of Directors shall determine. The Assistant Secretaries and
Assistant Treasurers, in general, shall perform such duties and have such
authority as shall from time to time be delegated or assigned to them by the
Secretary or the Treasurer, respectively, or by the Chairman, the Vice
Chairman, the President, the Board of Directors or a Committee of the Board of
Directors created in accordance with Section 3.13 hereof.
4.13 Other Assistants and Acting Officers. The Board of
Directors shall have the power to appoint any person to act as assistant to any
Officer, or as agent for the Corporation in his or her stead, or to perform the
duties of such Officer whenever for any reason it is impracticable for such
Officer to act personally and such assistant or acting Officer or other agent
so appointed by the Board of Directors shall have the power to perform all the
duties of the office to which he or her is so appointed to be assistant, or as
to which he or her is so appointed to act, except as such power may be
otherwise defined or restricted by the Board of Directors.
4.14 Salaries. The salaries of the principal Officers
shall be fixed from time to time by the Board of Directors or by a duly
authorized committee thereof, and no Officer shall be
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prevented from receiving such salary by reason of the fact that he or she is
also a Director of the Corporation.
ARTICLE V. CONFLICT OF INTEREST TRANSACTIONS,
CONTRACTS, LOANS, CHECKS AND DEPOSITS: SPECIAL CORPORATE ACTS
5.01 Conflict of Interest Transactions. A "conflict of
interest" transaction means a transaction with the Corporation in which a
Director of the Corporation has a direct or indirect interest. The
circumstances in which a Director of the Corporation has an indirect interest
in a transaction include but are not limited to a transaction under any of the
following circumstances: (1) another entity in which the Director has a
material financial interest or in which the Director is a general partner is a
party to the transaction; or (2) another entity of which the Director is a
director, officer or trustee is a party to the transaction and the transaction
is or, because of its significance to the Corporation, should be considered by
the Board of Directors of the Corporation. A conflict of interest transaction
is not voidable by the Corporation solely because of the Director's interest in
the transaction if any of the circumstances set forth in Section 180.0831 of
the Wisconsin Business Corporation Law are true or occur.
5.02 Contracts. The Board of Directors may authorize any
Officer or Officers, agent or agents, to enter into any contract or execute or
deliver any instrument in the name of and on behalf of the Corporation, and
such authorization may be general or confined to specific instances. In the
absence of other designation, all deeds, mortgages and instruments of
assignment or pledge made by the Corporation shall be executed in the name of
the Corporation by the Chairman of the Board, Vice Chairman of the Board,
President or Executive Vice President or one of the Vice Presidents and by the
Secretary, or Assistant Secretary, the Treasurer or Assistant Treasurer; the
Secretary or an Assistant Secretary, when necessary or required, shall affix
the corporate seal thereto; and when so executed no other party to such
instrument or any third party shall be required to make any inquiry into the
authority of the signing officer or officers.
5.03 Loans. No indebtedness for borrowed money shall be
contracted on behalf of the Corporation and no evidences of such indebtedness
shall be issued in its name unless authorized by or under the authority of a
resolution of the Board of Directors. Such authorization may be general or
confined to specific instances.
5.04 Checks, Drafts, etc. All checks, drafts or other
orders for the payment of money, notes or other evidences of indebtedness
issued in the name of the Corporation, shall be signed by such Officer or
Officers, agent or agents of the
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Corporation and in such manner as shall from time to time be determined by or
under the authority of a resolution of the Board of Directors.
5.05 Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies or other depositories as may be
selected by or under the authority of a resolution of the Board of Directors.
5.06 Voting of Securities Owned by this Corporation.
Subject always to the specific directions of the Board of Directors, (a) any
shares or other securities issued by any other corporation and owned or
controlled by this Corporation may be voted at any meeting of security holders
of such other corporation by the Chairman of the Board of this Corporation if
he or she be present, or in the Chairman's absence, by the Vice Chairman of the
Board, or in the Vice Chairman's absence, by the President, or in the
President's absence, by the Executive Vice President, or in the Executive Vice
President's absence, by any Vice President of this Corporation who may be
present, and (b) whenever, in the judgment of the Chairman of the Board, or in
the Chairman's absence, the Vice Chairman of the Board, or in the Vice
Chairman's absence, the President, or in the President's absence, the Executive
Vice President, or in the Executive Vice President's absence, by any Vice
President, it is desirable for this Corporation to execute a proxy or written
consent in respect to any shares or other securities issued by any other
corporation and owned by this Corporation, such proxy or consent shall be
executed in the name of this Corporation by the Chairman, the Vice Chairman,
the President, the Executive Vice President, or one of the Vice Presidents of
this Corporation in the order as provided in clause (a) of this Section,
without necessity of any authorization by the Board of Directors, affixation of
corporate seal or countersignature or attestation by another officer. Any
person or persons designated in the manner above stated as the proxy or proxies
of this Corporation shall have full right, power and authority to vote the
shares or other securities issued by such other corporation and owned by this
Corporation the same as such shares or other securities might be voted by this
Corporation.
ARTICLE VI. CERTIFICATES FOR
SHARES AND THEIR TRANSFER
6.01 Certificates for Shares. Certificates
representing shares of the Corporation shall be in such form, consistent with
law, as shall be determined by the Board of Directors. Such Certificates
shall be signed by the Chairman of the Board, the Vice Chairman of the Board or
the President or by another Officer designated by the Chairman or the Board of
Directors. All certificates for shares shall be consecutively
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numbered or otherwise identified. The name and address of the person to whom
the shares represented thereby are issued, with the number of shares and date
of issue, shall be entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be canceled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled, except as provided
in Section 6.06.
6.02 Facsimile Signatures and Seal. The seal of the
Corporation on any certificates for shares may be a facsimile. The signature of
the Chairman, the Vice Chairman or the President or other authorized Officer
upon a certificate may be a facsimile if the certificate is manually signed on
behalf of a transfer agent, or a registrar, other than the Corporation itself
or an employee of the Corporation.
6.03 Signature by Former Officers. In case any
Officer, who has signed or whose facsimile signature has been placed upon, any
certificate for shares, shall have ceased to be such Officer before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he or she were such Officer at the date of its issue.
6.04 Transfer of Shares. Prior to due presentment of a
certificate for shares for registration of transfer, the Corporation may treat
the shareholder of such shares as the person exclusively entitled to vote, to
receive notifications and otherwise to have and exercise all the rights and
powers of an owner. Where a certificate for shares is presented to the
Corporation with a request to register for transfer, the Corporation shall not
be liable to the owner or any other person suffering loss as a result of such
registration of transfer if (a) there were on or with the certificate the
necessary endorsements, and (b) the corporation had no duty to inquire into
adverse claims or has discharged any such duty. The Corporation may require
reasonable assurance that said endorsements are genuine and effective and in
compliance with such other regulations as may be prescribed by or under the
authority of the Board of Directors.
6.05 Restrictions on Transfer. The face or reverse side
of each certificate representing shares shall bear a conspicuous notation of
any restriction imposed by the Corporation upon the transfer of such shares.
6.06 Lost, Destroyed or Stolen Certificates. Where the
owner claims that his or her certificate for shares has been lost, destroyed or
wrongfully taken, a new certificate shall be issued in place thereof if the
owner (a) so requests before the Corporation has notice that such shares have
been acquired by a bona fide purchaser, and (b) files with the Corporation a
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sufficient indemnity bond, and (c) satisfies such other reasonable requirements
as may be prescribed by or under the authority of the Board of Directors.
6.07 Consideration for Shares. The shares of the
Corporation may be issued for such consideration as shall be fixed from time to
time by the Board of Directors, provided that any shares having a par value
shall not be issued for a consideration less than the par value thereof. The
consideration to be received for shares may consist of any tangible or
intangible property or benefit to the Corporation, including cash, promissory
notes, services performed, contracts for services to be performed or other
securities of the Corporation. When the Corporation receives the consideration
for which the Board of Directors authorized the issuance of shares, the shares
issued for that consideration are fully paid and nonassessable, except as
provided by Section 180.0622 of the Wisconsin Business Corporation Law which
may require further assessment for unpaid wages to employees under certain
circumstances. The Corporation may place in escrow shares issued for a
contract for future services or benefits or a promissory note, or make other
arrangements to restrict the transfer of the shares, and may credit
distributions in respect of the shares against their purchase price, until the
services are performed, the benefits are received or the note is paid. If the
services are not performed, the benefits are not received or the note is not
paid, the Corporation may cancel, in whole or in part, the shares escrowed or
restricted and the distributions credited.
6.08 Uncertificated Shares. In accordance with Section
180.0626 of the Wisconsin Business Corporation Law, the Board of Directors may
issue any shares of any of its classes or series without certificates. The
authorization does not affect shares already represented by certificates until
the certificates are surrendered to the Corporation. Within a reasonable time
after the issuance or transfer of shares without certificates, the Corporation
shall send the shareholder a written statement of the information required on
share certificates by Sections 180.0625 and 180.0627, if applicable, of the
Wisconsin Business Corporation Law, and by the By-laws of the Corporation.
The Corporation shall maintain at its offices, or at the office of its
transfer agent, an original or duplicate stock transfer book containing the
names and addresses of all shareholders and the number of shares held by each
shareholder. If the shares are uncertificated, the Corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as such, as the owner of shares for all purposes, and shall not be bound to
recognize any equitable or other claim to or interest in such shares on the
part of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of the State of Wisconsin.
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6.09 Transfer Agent and Registrar. The Corporation may
maintain one or more transfer offices or agencies, each in charge of a transfer
agent designated by the Board of Directors, where the shares of stock of the
Corporation shall be transferable. The Corporation may also maintain one or
more registry offices, each in charge of a registrar designated by the Board of
Directors, where such shares of stock shall be registered. The same person or
entity may be both a transfer agent and registrar.
6.10 Stock Regulations. The Board of Directors shall have
the power and authority to make all such further rules and regulations not
inconsistent with the statutes of the State of Wisconsin as it may deem
expedient concerning the issue, transfer and registration of certificates
representing shares of the Corporation.
ARTICLE VII. INDEMNIFICATION
7.01 Indemnification for Successful Defense. Within 20
days after receipt of a written request pursuant to Section 7.03, the
Corporation shall indemnify a Director, Officer, Employee or Agent, to the
extent he or she has been successful on the merits or otherwise in the defense
of a proceeding, for all reasonable expenses incurred in the proceeding if the
Director, Officer, Employee or Agent was a party because he or she is a
Director, Officer, Employee or Agent of the Corporation.
7.02 Other Indemnification. (a) In cases not included
under Section 7.01, the Corporation shall indemnify a Director, Officer,
Employee or Agent against all liabilities and expenses incurred by the
Director, Officer, Employee or Agent in a proceeding to which the
Director, Officer, Employee or Agent was a party because he or she is a
Director, Officer, Employee or Agent of the Corporation, unless liability was
incurred because the Director, Officer, Employee or Agent breached or failed to
perform a duty he or she owes to the Corporation and the breach or failure to
perform constitutes any of the following:
(1) A willful failure to deal fairly with the Corporation
or its shareholders in connection with a matter in which the Director,
Officer, Employee or Agent has a material conflict of interest.
(2) A violation of criminal law, unless the Director,
Officer, Employee or Agent had reasonable cause to believe his or her
conduct was lawful or no reasonable cause to believe his or her
conduct was unlawful.
(3) A transaction from which the Director, Officer,
Employee or Agent derived an improper personal profit.
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(4) Willful misconduct.
(b) Determination of whether indemnification is required
under this Section shall be made pursuant to Section 7.05.
(c) The termination of a proceeding by judgment, order, settlement
or conviction, or upon a plea of no contest or an equivalent plea, does not, by
itself, create a presumption that indemnification of the Director, Officer,
Employee or Agent is not required under this Section.
7.03 Written Request. A Director, Officer, Employee or
Agent who seeks indemnification under Sections 7.01 or 7.02 shall make a
written request to the Corporation.
7.04 Nonduplication. The Corporation shall not indemnify
a Director, Officer, Employee or Agent under Sections 7.01 or 7.02 if the
Director, Officer, Employee or Agent has previously received indemnification or
allowance of expenses from any person, including the Corporation, in connection
with the same proceeding. However, the Director, Officer, Employee or Agent
has no affirmative duty to look to any other person for indemnification nor to
first exhaust his remedies to seek indemnification from such other person.
7.05 Determination of Right to Indemnification.
(a) Unless otherwise provided by the articles of incorporation
or by written agreement between the Director, Officer, Employee or Agent
and the Corporation, the Director, Officer, Employee or Agent seeking
indemnification under Section 7.02 shall select one of the following means for
determining his or her right to indemnification:
(1) By a majority vote of a quorum of the Board of
Directors consisting of Directors not at the time parties to
the same or related proceedings. If a quorum of disinterested
Directors cannot be obtained, by majority vote of a committee duly
appointed by the Board of Directors and consisting solely of two
or more Directors not at the time parties to the same or related
proceedings. Directors who are parties to the same or related
proceedings may participate in the designation of members of the
committee.
(2) By independent legal counsel selected by a quorum of
the Board of Directors or its committee in the manner prescribed in
sub. (1) or, if unable to obtain such a quorum or committee, by a
majority vote of the full Board of Directors, including Directors who
are parties to the same or related proceedings.
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(3) By a panel of three arbitrators consisting of one
arbitrator selected by those Directors entitled under sub. (2) to
select independent legal counsel, one arbitrator selected by the
Director or Officer seeking indemnification and one arbitrator
selected by the two arbitrators previously selected.
(4) By an affirmative vote of the majority of shares
represented at a meeting of shareholders at which a quorum is present.
Shares owned by, or voted under the control of, persons who are at the
time parties to the same or related proceedings, whether as plaintiffs
or defendants or in any other capacity, may not be voted in making the
determination.
(5) By a court under Section 7.08.
(6) By any other method provided for in any additional
right to indemnification permitted under Section 7.07.
(b) In any determination under (a), the burden of proof is on the
Corporation to prove by clear and convincing evidence that indemnification
under Section 7.02 should not be allowed.
(c) A written determination as to a Director, Officer, Employee or
Agent's indemnification under Section 7.02 shall be submitted to both the
Corporation and the Director, Officer, Employee or Agent within 60 days of the
selection made under (a).
(d) If it is determined that indemnification is required under
Section 7.02, the Corporation shall pay all liabilities and expenses not
prohibited by Section 7.04 within 10 days after receipt of the written
determination under (c). The Corporation shall also pay all expenses incurred
by the Director, Officer, Employee or Agent, in the determination process under
(a).
7.06 Advance Expenses. Within 10 days after receipt of a
written request by a Director, Officer, Employee or Agent who is a party to a
proceeding, the Corporation shall pay or reimburse his or her reasonable
expenses as incurred if the Director, Officer, Employee or Agent provides the
Corporation with all of the following:
(1) A written affirmation of his or her good faith belief
that he or she has not breached or failed to perform his or her duties
to the Corporation.
(2) A written undertaking, executed personally or on his
or her behalf, to repay the allowance (together with reasonable
interest thereon) to the extent that it
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is ultimately determined under Section 7.05 that indemnification
under Section 7.02 is not required and that indemnification is not
ordered by a court under Section 7.08(b)(2). The undertaking under
this subsection shall be an unlimited general obligation of the
Director, Officer, Employee or Agent, and may be accepted without
reference to his or her ability to repay the allowance. The
undertaking may be secured or unsecured.
7.07 Nonexclusivity. (a) Except as provided in (b),
Sections 7.01, 7.02 and 7.06 do not preclude any additional right to
indemnification or allowance of expenses that a Director, Officer, Employee or
Agent may have under any of the following:
(1) The articles of incorporation.
(2) A written agreement between the Director, Officer,
Employee or Agent, and the Corporation.
(3) A resolution of the Board of Directors.
(4) A resolution, after notice, adopted by a majority
vote of all of the Corporation's voting shares then issued and
outstanding.
(b) Regardless of the existence of an additional right under (a),
the Corporation shall not indemnify a Director, Officer, Employee or Agent, or
permit a Director, Officer, Employee or Agent to retain any allowance of
expenses, unless it is determined by or on behalf of the Corporation that the
Director, Officer, Employee or Agent did not breach or fail to perform a duty
he or she owes to the Corporation which constitutes conduct under Section
7.02(a)(1), (2), (3) or (4). A Director, Officer, Employee or Agent who is a
party to the same or related proceeding for which indemnification or an
allowance of expenses is sought may not participate in a determination under
this subsection.
(c) Sections 7.01 to 7.12 do not affect the Corporation's
power to pay or reimburse expenses incurred by a Director, Officer, Employee
or Agent in any of the following circumstances.
(1) As a witness in a proceeding to which he or she is
not a party.
(2) As a plaintiff or petitioner in a proceeding because
he or she is or was a Director, Officer, Employee or Agent of the
Corporation.
-22-
<PAGE> 28
7.08 Court-Ordered Indemnification. (a) Except as
provided otherwise by written agreement between the Director, Officer,
Employee or Agent and the Corporation, a Director, Officer, Employee or Agent
who is a party to a proceeding may apply for indemnification to the court
conducting the proceeding or to another court of competent jurisdiction.
Application may be made for an initial determination by the court under Section
7.05(a)(5) or for review by the court of an adverse determination under Section
7.05(a) (1), (2), (3), (4) or (6). After receipt of an application, the court
shall give any notice it considers necessary.
(b) The court shall order indemnification if it determines
any of the following:
(1) That the Director, Officer, Employee or Agent is
entitled to indemnification under Sections 7.01 or 7.02.
(2) That the Director, Officer, Employee or Agent is
fairly and reasonably entitled to indemnification in view of all the
relevant circumstances, regardless of whether indemnification is
required under Section 7.02.
(c) If the court determines under (b) that the Director,
Officer, Employee or Agent is entitled to indemnification, the Corporation
shall pay the Director, Officer, Employee or Agent's expenses incurred to
obtain the court-ordered indemnification.
7.09 Insurance. The Corporation may purchase and
maintain insurance on behalf of an individual who is a Director, Officer,
Employee or Agent of the Corporation against liability asserted against or
incurred by the individual in his or her capacity as a Director, Officer,
Employee or Agent, regardless of whether the Corporation is required or
authorized to indemnify or allow expenses to the individual against the same
liability under Sections 7.01, 7.02, or 7.06.
7.10 Securities Law Claims. (a) Pursuant to the public
policy of the State of Wisconsin, the Corporation shall provide
indemnification, allowance of expenses and insurance for any liability
incurred in connection with a proceeding involving securities regulation
described under (b) to the extent required or permitted under Sections 7.01 to
7.09.
(b) Sections 7.01 to 7.09 apply, to the extent applicable
to any other proceeding, to any proceeding involving a federal or state
statute, rule or regulation regulating the offer, sale or purchase of
securities, securities brokers or dealers, or investment companies or
investment advisers.
-23-
<PAGE> 29
7.11 Liberal Construction. In order for the corporation
to obtain and retain qualified Directors, Officers, Employees and Agents, the
foregoing provisions shall be liberally administered in order to afford maximum
indemnification of Directors, Officers, Employees or Agents and, accordingly,
the indemnification above provided for shall be granted in all cases unless to
do so would clearly contravene applicable law, controlling precedent or public
policy.
7.12 Definitions Applicable to This Article.
(a) "Affiliate" shall include, without limitation, any
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise that directly or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the Corporation.
(b) "Corporation" means this Corporation and any domestic or
foreign predecessor of this Corporation where the predecessor corporation's
existence ceased upon the consummation of a merger or other transaction.
(c) "Director, Officer, Employee or Agent" means any of the
following:
(1) A natural person who is or was a director, officer,
employee or agent (including attorneys) of this Corporation; provided,
however, that no attorney of the Corporation shall be considered an
agent with respect to those actions taken by such attorney solely in
his capacity as an independent contractor to the Corporation.
(2) A natural person who, while a director, officer,
employee or agent, of this Corporation, is or was serving at the
Corporation's request as a director, officer, employee, agent,
partner, trustee, member of any governing or decision-making
committee, of another Corporation or foreign corporation, partnership,
joint venture, trust or other enterprise.
(3) A natural person who, while a director, officer,
employee or agent of this Corporation, is or was serving an employee
benefit plan because his or her duties to the Corporation also impose
duties on, or otherwise involve services by, the person to the plan or
to participants or beneficiaries of the plan.
(4) Unless the context requires otherwise, the estate or
personal representative of a Director, Officer, Employee or Agent.
-24-
<PAGE> 30
For purposes of this Article, it shall be conclusively presumed that any
Director, Officer, Employee or Agent serving as a director, officer, employee,
agent, partner, trustee, member of any governing or decision-making committee
of an Affiliate shall be so serving at the request of the Corporation.
(d) "Expenses" include fees, costs, charges, disbursements,
attorney fees and other expenses incurred in connection with a proceeding.
(e) "Liability" includes the obligation to pay a judgment,
settlement, penalty, assessment, forfeiture or fine, including an excise tax
assessed with respect to an employee benefit plan, and reasonable expenses.
(f) "Party" includes a natural person who was or is, or who is
threatened to be made, a named defendant or respondent in a proceeding.
(g) "Proceeding" means any threatened, pending or completed
civil, criminal, administrative or investigative action, suit, arbitration or
other proceeding, whether formal or informal, which involves foreign, federal,
state or local law and which is brought by or in the right of the Corporation
or by any other person.
ARTICLE VIII. SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation
and the state of incorporation and the words "Corporate Seal".
ARTICLE IX. AMENDMENTS
9.01. By Shareholders. These by-laws may be altered,
amended or repealed and new by-laws may be adopted by the shareholders by
affirmative vote of not less than a majority of the shares present or
represented at an annual or special meeting of the shareholders at which a
quorum is in attendance.
9.02. By Directors. These by-laws may also be altered,
amended or repealed and new by-laws may be adopted by the Board of Directors by
affirmative vote of a majority of the number of Directors present at or
participating in any meeting at which a quorum is in attendance; but no by-law
adopted by the shareholders shall be amended or repealed by the Board of
Directors if the by-law so adopted so provides.
-25-
<PAGE> 31
9.03. Implied Amendments. Any action taken or
authorized by the shareholders or by the Board of Directors, which would be
inconsistent with the by-laws then in effect but is taken or authorized by
affirmative vote of not less than the number of shares or the number of
Directors required to amend the by-laws so that the by-laws would be consistent
with such action, shall be given the same effect as though the by-laws had been
temporarily amended or suspended so far, but only so far, as is necessary to
permit the specific action so taken or authorized.
ARTICLE X. FISCAL YEAR
The fiscal year of the Corporation shall be as provided in Section
0.06.
-26-
<PAGE> 1
EXHIBIT 10(ll)
CHANGE IN CONTROL CONTINGENT EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this 16th day of October, 1992, by and between STOKELY
USA, INC., a Wisconsin corporation the ("Company"), and VERNON L. WIERSMA,
President of the Company (the "Employee"),
W I T N E S S E T H :
WHEREAS, sudden takeovers, acquisitions or changes of control of domestic
corporations have occurred frequently in recent years, and current conditions
may contribute to the continuation or acceleration of this trend; and
WHEREAS, the possibility of a sudden takeover, acquisition or change of
control can create uncertainty of employment and may cause the loss of valuable
Company officers, to the detriment of the Company and its shareholders; and
WHEREAS, it is believed that the detriment described can be substantially
reduced by an agreement on the terms hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter set forth, IT IS AGREED:
(1) Continued Employment. If a change of control of the Company occurs
when the Employee is employed by the Company, the Company will continue
thereafter to employ the Employee, and the Employee will remain in the employ
of the Company, in accordance with the terms and provisions of this Agreement,
for a period of three (3) years following the date of such change (the
"Employment Period"). As used herein, the phrase "change of control of the
Company" means the first to occur of the following:
(a) The acquisition of more than twenty (20%) percent of the
outstanding shares of voting stock of the Company by any person or entity or
group thereof acting in concert, excluding affiliates of the Company, by means
of an offer made publicly to the holders of all or substantially all of the
outstanding shares of the voting stock of the Company to acquire such shares
for cash, securities, other property or any combination thereof; or
(b) Any person or entity acquires, subsequent to the date of this
Agreement, beneficial ownership of twenty (20%) percent or more of the then
issued and outstanding voting common stock of the Company in any manner other
than a purchase of such stock directly from the Company for cash; or
(c) The sale, assignment or transfer by the Company of all or
substantially all of its business or assets, in a
<PAGE> 2
transaction or related series of transactions, except any such sales to
affiliates of the Company; or
(d) The Company merges or consolidates or reorganizes with or into
any other corporation or corporations other than its affiliates or engages in
any other similar business combination or reorganization; or
(e) A Schedule 13D or its equivalent is filed under the Securities
Exchange Act of 1934 with respect to the voting common stock of the Company, by
or on behalf of any person (within the meaning of that term as defined in the
regulations governing such Schedules), which states expressly or by implication
that such person intends to change the management, direction or control of the
Company or its policies; or
(f) A majority of the Board of Directors of the Company does not
consist of persons who were serving in the capacity on the date of this
Agreement, or who were appointed or nominated to serve as a Director by such
persons or by persons who were themselves so appointed or nominated.
(2) Duties. Unless otherwise agreed by the Company and Employee, during
the Employment Period the Employee shall be employed by the Company in the same
position as that which the Employee held on the date of the change of control
of the Company. In such employment, his duties and authority shall consist of
and include all duties and authority customarily performed and held by a person
holding an equivalent position with a corporation of similar nature and size,
as such duties and authority related to such position are reasonably defined
and delegated from time to time by the Board of Directors of the Company.
However, no change of the Employee's location of employment to outside the
Oconomowoc area, or in the Employee's title, shall be made without the prior
written consent of the Employee. The Employee shall have the powers necessary
to perform the duties assigned and shall be provided such supporting services,
staff, secretarial and other assistance, office space and accouterments as
shall be reasonably necessary and appropriate in light of the duties assigned
(but in no event, in any case, smaller in size or lesser in quality than that
being furnished to the Employee on the date of the change of control of the
Company).
The Employee shall devote his entire business time, energy and skills
to such employment while so employed, but the Employee shall not be required to
devote more than an average of approximately 45 hours per calendar week to such
employment. The Employee shall be entitled to a minimum of four (4) weeks
(twenty [20] working days) of paid vacation annually. The Employee shall have
the sole discretion to determine the time and intervals of such vacation.
<PAGE> 3
(3) Compensation. During the Employment Period, the Employee shall be
compensated as follows:
(a) He shall receive a base salary of $160,000.00 per year or, if his
base salary as of the date of the change of control of the Company exceeds
$160,000.00 per year, then he shall receive the base salary in effect as of the
date of the change of control of the Company; subject to adjustment as
hereinafter provided.
(b) He shall be reimbursed for any and all monies advanced in
connection with his employment for reasonable and necessary expenses incurred
by him on behalf of the Company.
(c) He shall be included to the extent eligible thereunder in any
and all plans providing benefits for the Company's employees, including, but
not limited to, life, accidental death and dismemberment, long term disability,
hospitalization, medical and retirement, and be provided any and all other
benefits and perquisites (including use of an automobile) made available to
other employees of comparable status, at the expense of the Company on a
comparable basis; and
(d) He shall be included in all profit sharing, bonus, deferred
compensation, split dollar life insurance, and similar or comparable plans
customarily extended by the Company to corporate officers and key employees of
the Company.
(4) Annual Compensation Adjustments. The Board of Directors of the
Company or an appropriate committee thereof will consider and appraise the
contributions of the Employee to the Company's operating efficiency, growth,
production and profits, at least annually during the Employment Period, and in
accordance with past practice, the Employee's compensation rate shall be
annually adjusted upward to be commensurate with increases given to other
corporate officers and key employees generally and as the scope and success of
the Company's operations or the Employee's duties expand.
(5) Retirement. If, during the Employment Period, or during the
applicable period, if any, described in paragraph (7), the Employee shall
deliver to the Company a statement signed by him, stating that the Employee
voluntarily chooses to retire early from the Company, or if the Employee shall
reach the age of 65, or shall with the mutual agreement of the Company agree in
writing on early retirement, then this Agreement shall terminate on the
effective date of such event and the terms of the Company's retirement policies
or such mutual agreement shall immediately become effective.
(6) Termination Other Than for Cause.
(a) If, during the Employment Period, the Company shall terminate the
employment of the Employee for any reason other than the reasons set forth in
paragraph (5) above or paragraph (7)
<PAGE> 4
below, thereafter he or his personal representatives shall continue to be paid
monthly an amount equal to his then current monthly base salary plus
one-twelfth (1/12th) of the annual average of the executive incentive program
payments and all bonuses paid to the Employee in the preceding five (5) years,
and he shall be entitled to continue life, accidental death and dismemberment,
long term disability and hospitalization and medical insurances and shall
receive the other employee benefits and perquisites described in subparagraphs
(3)(c) and (3)(d) hereof, for the remainder of the Employment Period or as
specified by Federal law, whichever time period is longer.
(b) If during the Employment Period the Employee's duties shall be
changed substantially without his written consent from those specified in
paragraph (2) or he shall fail to be reelected or he shall be removed as a
corporate officer of the Company, or if the Company violates this Agreement,
the Employee shall have the right to elect to terminate his employment under
this Agreement; and if he so elects, he or his personal representatives
shall continue to be paid monthly an amount equal to his then current monthly
base salary plus one-twelfth (1/12th) of the average of the executive incentive
program payments and all bonuses paid to the Employee in the preceding five (5)
years, and he shall be entitled to participate in group life, hospitalization
and medical insurance and shall receive the other employee benefits and
perquisites described in subparagraphs (3)(c) and (3)(d) hereof, for the
remainder of the Employment Period.
(7) Termination for Cause. Employee agrees that this Agreement may be
terminated by the Company at any time for cause, which shall mean only death,
conviction for criminal fraud, the commission of a felony, or becoming the
subject of a final nonappealable judgement of a court of competent
jurisdiction holding that the Employee is liable to the Company for damages for
obtaining a personal benefit in a transaction adverse to the interest of the
Company. In the event this Agreement is terminated for cause, the Employee
shall forfeit his right to any and all benefits he would otherwise have been
entitled thereafter to receive under the Agreement.
(8) Enforceability. The parties agree that nothing in this Agreement
shall in any way abrogate the right of the Company and the Employee to enforce
by injunction or otherwise the due and proper performance and observance of the
several covenants herein contained to be performed by the Employee or the
Company or to recover damages for breach thereof.
(9) Successors and Assigns. If the Company sells, assigns or transfers
all or substantially all of its business and assets to any person, excluding
affiliates of the Company, or if the Company merges into or consolidates or
otherwise combines with any person which is a continuing or successor entity,
then the Company shall assign all of its right, title and interest in this
Agreement as of the date of such event to the person which is either the
acquiring
<PAGE> 5
or successor corporation, and such person(s) shall assume and perform
from and after the date of such assignment all of the terms, conditions and
provisions imposed by this Agreement upon the Company. In case of such
assignment by the Company and of assumption and agreement by such person(s),
all further rights as well as all other obligations of the Company under this
Agreement thenceforth shall cease and terminate and thereafter the expression
"the Company" wherever used herein shall be deemed to mean such person(s).
(10) Affiliate. The term "affiliate" as used in this Agreement means any
corporation more than fifty (50%) percent of the outstanding voting common
stock of which is owned at the time by the Company or an affiliate of the
Company.
(11) Supplemental Agreement. This Agreement supplements, and is not an
amendment to or in derogation of, any other agreement between the Company and
the Employee relating to the employment or the terms and conditions thereof.
No person, other than such person as may be designated by the Board of
Directors of the Company, shall have any authority on behalf of the Company to
agree to modify or change this Agreement.
(12) Severability. This Agreement is to be governed by and construed under
the laws of the State of Wisconsin. If any provision of this Agreement shall
be held invalid and unenforceable for any reason, such provision shall be
deemed deleted and the remainder of the Agreement shall be valid and
enforceable without such provision.
(13) Termination of Agreement. The Company has the right to terminate the
employment of the Employee except in contemplation of a change in control of
the Company, and the Employee may elect at his discretion to terminate his
employment, at any time prior to a change in control of the Company, in either
of which events this Agreement shall terminate.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its corporate seal affixed and attested by its duly authorized officers,
and the Employee has hereunto set his hand and seal as of the date first above
written.
STOKELY USA, INC.
By /s/ Robert Brill
--------------------------
(Corporate Seal) Attest: Secretary
---------------------
/s/ Vernon L. Wiersma
-----------------------------
Vernon L. Wiersma, Employee
<PAGE> 1
EXHIBIT 10(mm)
CHANGE IN CONTROL CONTINGENT EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this 16th day of October, 1992, by and between STOKELY
USA, INC., a Wisconsin corporation (the "Company"), and STEPHEN W. THEOBALD,
Vice Chairman and Treasurer of the Company (the "Employee"),
W I T N E S S E T H :
WHEREAS, sudden takeovers, acquisitions or changes of control of domestic
corporations have occurred frequently in recent years, and current conditions
may contribute to the continuation or acceleration of this trend; and
WHEREAS, the possibility of a sudden takeover, acquisition or change of
control can create uncertainty of employment and may cause the loss of valuable
Company officers, to the detriment of the Company and its shareholders; and
WHEREAS, it is believed that the detriment described can be substantially
reduced by an agreement on the terms hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter set forth, IT IS AGREED:
(1) Continued Employment. If a change of control of the Company occurs
when the Employee is employed by the Company, the Company will continue
thereafter to employ the Employee, and the Employee will remain in the employ
of the Company, in accordance with the terms and provisions of this Agreement,
for a period of three (3) years following the date of such change (the
"Employment Period"). As used herein, the phrase "change of control of the
Company" means the first to occur of the following:
(a) The acquisition of more than twenty (20%) percent of the
outstanding shares of voting stock of the Company by any person or entity or
group thereof acting in concert, excluding affiliates of the Company, by means
of an offer made publicly to the holders of all or substantially all of the
outstanding shares of the voting stock of the Company to acquire such shares
for cash, securities, other property or any combination thereof; or
(b) Any person or entity acquires, subsequent to the date of this
Agreement, beneficial ownership of twenty (20%) percent or more of the then
issued and outstanding voting common stock of the Company in any manner other
than a purchase of such stock directly from the Company for cash; or
<PAGE> 2
(c) The sale, assignment or transfer by the Company of all or
substantially all of its business or assets, in a transaction or related series
of transactions, except any such sales to affiliates of the Company; or
(d) The Company merges or consolidates or reorganizes with or into
any other corporation or corporations other than its affiliates or engages in
any other similar business combination or reorganization; or
(e) A Schedule 13D or its equivalent is filed under the Securities
Exchange Act of 1934 with respect to the voting common stock of the Company, by
or on behalf of any person (within the meaning of that term as defined in the
regulations governing such Schedules), which states expressly or by implication
that such person intends to change the management, direction or control of the
Company or its policies; or
(f) A majority of the Board of Directors of the Company does not
consist of persons who were serving in the capacity on the date of this
Agreement, or who were appointed or nominated to serve as a Director by such
persons or by persons who were themselves so appointed or nominated.
(2) Duties. Unless otherwise agreed by the Company and Employee, during
the Employment Period the Employee shall be employed by the Company in the same
position as that which the Employee held on the date of the change of control
of the Company. In such employment, his duties and authority shall consist of
and include all duties and authority customarily performed and held by a person
holding an equivalent position with a corporation of similar nature and size,
as such duties and authority related to such position are reasonably defined
and delegated from time to time by the Board of Directors of the Company.
However, no change of the Employee's location of employment to outside the
Oconomowoc area, or in the Employee's title, shall be made without the prior
written consent of the Employee. The Employee shall have the powers necessary
to perform the duties assigned and shall be provided such supporting services,
staff, secretarial and other assistance, office space and accouterments as
shall be reasonably necessary and appropriate in light of the duties assigned
(but in no event, in any case, smaller in size or lesser in quality than that
being furnished to the Employee on the date of the change of control of the
Company).
The Employee shall devote his entire business time, energy and skills
to such employment while so employed, but the Employee shall not be required to
devote more than an average of approximately 45 hours per calendar week to such
employment. The
2
<PAGE> 3
Employee shall be entitled to a minimum of four (4) weeks (twenty [20] working
days) of paid vacation annually. The Employee shall have the sole discretion
to determine the time and intervals of such vacation.
(3) Compensation. During the Employment Period, the Employee shall be
compensated as follows:
(a) He shall receive a base salary of $140,000.00 per year or, if his
base salary as of the date of the change of control of the Company exceeds
$140,000.00 per year, then he shall receive the base salary in effect as of the
date of the change of control of the Company; subject to adjustment as
hereinafter provided.
(b) He shall be reimbursed for any and all monies advanced in
connection with his employment for reasonable and necessary expenses incurred
by him on behalf of the Company.
(c) He shall be included to the extent eligible thereunder in any
and all plans providing benefits for the Company's employees, including, but
not limited to, life, accidental death and dismemberment, long term disability,
hospitalization, medical and retirement, and be provided any and all other
benefits and perquisites (including use of an automobile) made available to
other employees of comparable status, at the expense of the Company on a
comparable basis; and
(d) He shall be included in all profit sharing, bonus, deferred
compensation, split dollar life insurance, and similar or comparable plans
customarily extended by the Company to corporate officers and key employees of
the Company.
(4) Annual Compensation Adjustments. The Board of Directors of the
Company or an appropriate committee thereof will consider and appraise the
contributions of the Employee to the Company's operating efficiency, growth,
production and profits, at least annually during the Employment Period, and in
accordance with past practice, the Employee's compensation rate shall be
annually adjusted upward to be commensurate with increases given to other
corporate officers and key employees generally and as the scope and success of
the Company's operations or the Employee's duties expand.
(5) Retirement. If, during the Employment Period, or during the
applicable period, if any, described in paragraph (7), the Employee shall
deliver to the Company a statement signed by him, stating that the Employee
voluntarily chooses to retire early from the Company, or if the Employee shall
reach the age of 65, or shall
3
<PAGE> 4
with the mutual agreement of the Company agree in writing on early retirement,
then this Agreement shall terminate on the effective date of such event and the
terms of the Company's retirement policies or such mutual agreement shall
immediately become effective.
(6) Termination Other Than for Cause.
(a) If, during the Employment Period, the Company shall terminate the
employment of the Employee for any reason other than the reasons set forth in
paragraph (5) above or paragraph (7) below, thereafter he or his personal
representatives shall continue to be paid monthly an amount equal to his then
current monthly base salary plus one-twelfth (1/12th) of the annual average of
the executive incentive program payments and all bonuses paid to the Employee
in the preceding five (5) years, and he shall be entitled to continue life,
accidental death and dismemberment, long term disability and hospitalization
and medical insurances and shall receive the other employee benefits and
perquisites described in subparagraphs (3)(c) and (3)(d) hereof, for the
remainder of the Employment Period or as specified by Federal law, whichever
time period is longer.
(b) If during the Employment Period the Employee's duties shall be
changed substantially without his written consent from those specified in
paragraph (2) or he shall fail to be reelected or he shall be removed as a
corporate officer of the Company, or if the Company violates this Agreement,
the Employee shall have the right to elect to terminate his employment under
this Agreement; and if he so elects, he or his personal representatives shall
continue to be paid monthly an amount equal to his then current monthly base
salary plus one-twelfth (1/12th) of the average of the executive incentive
program payments and all bonuses paid to the Employee in the preceding five (5)
years, and he shall be entitled to participate in group life, hospitalization
and medical insurance and shall receive the other employee benefits and
perquisites described in subparagraphs (3)(c) and (3)(d) hereof, for the
remainder of the Employment Period.
(7) Termination for Cause. Employee agrees that this Agreement may be
terminated by the Company at any time for cause, which shall mean only death,
conviction for criminal fraud, the commission of a felony, or becoming the
subject of a final nonappealable judgement of a court of competent jurisdiction
holding that the Employee is liable to the Company for damages for obtaining a
personal benefit in a transaction adverse to the interest of the Company. In
the event this Agreement is terminated for cause, the Employee shall forfeit
his right to any and all
4
<PAGE> 5
benefits he would otherwise have been entitled thereafter to receive under the
Agreement.
(8) Enforceability. The parties agree that nothing in this Agreement
shall in any way abrogate the right of the Company and the Employee to enforce
by injunction or otherwise the due and proper performance and observance of the
several covenants herein contained to be performed by the Employee or the
Company or to recover damages for breach thereof.
(9) Successors and Assigns. If the Company sells, assigns or transfers
all or substantially all of its business and assets to any person, excluding
affiliates of the Company, or if the Company merges into or consolidates or
otherwise combines with any person which is a continuing or successor entity,
then the Company shall assign all of its right, title and interest in this
Agreement as of the date of such event to the person which is either the
acquiring or successor corporation, and such person(s) shall assume and
perform from and after the date of such assignment all of the terms, conditions
and provisions imposed by this Agreement upon the Company. In case of such
assignment by the Company and of assumption and agreement by such person(s),
all further rights as well as all other obligations of the Company under this
Agreement thenceforth shall cease and terminate and thereafter the expression
"the Company" wherever used herein shall be deemed to mean such person(s).
(10) Affiliate. The term "affiliate" as used in this Agreement means any
corporation more than fifty (50%) percent of the outstanding voting common
stock of which is owned at the time by the Company or an affiliate of the
Company.
(11) Supplemental Agreement. This Agreement supplements, and is not an
amendment to or in derogation of, any other agreement between the Company and
the Employee relating to the employment or the terms and conditions thereof.
No person, other than such person as may be designated by the Board of
Directors of the Company, shall have any authority on behalf of the Company to
agree to modify or change this Agreement.
(12) Severability. This Agreement is to be governed by and construed under
the laws of the State of Wisconsin. If any provision of this Agreement shall
be held invalid and unenforceable for any reason, such provision shall be
deemed deleted and the remainder of the Agreement shall be valid and
enforceable without such provision.
(13) Termination of Agreement. The Company has the right to terminate the
employment of the Employee except in contemplation of
5
<PAGE> 6
a change in control of the Company, and the Employee may elect at his
discretion to terminate his employment, at any time prior to a change in
control of the Company, in either of which events this Agreement shall
terminate.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its corporate seal affixed and attested by its duly authorized officers,
and the Employee has hereunto set his hand and seal as of the date first above
written.
STOKELY USA, INC.
By /s/ Robert Brill
---------------------------
(Corporate Seal) Attest: Secretary
-----------------------
/s/ Stephen W. Theobald
-------------------------------
Stephen W. Theobald, Employee
<PAGE> 1
EXHIBIT 10(nn)
CHANGE IN CONTROL CONTINGENT EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this 27th day of January, 1993, by and between
STOKELY USA, INC., a Wisconsin corporation (the "Company"), and KENNETH
MURRAY, Vice President-Canned Sales and Marketing (the "Employee"),
W I T N E S S E T H :
WHEREAS, sudden takeovers, acquisitions or changes of control of domestic
corporations have occurred frequently in recent years, and current conditions
may contribute to the continuation or acceleration of this trend; and
WHEREAS, the possibility of a sudden takeover, acquisition or change of
control can create uncertainty of employment and may cause the loss of valuable
Company officers, to the detriment of the Company and its shareholders; and
WHEREAS, it is believed that the detriment described can be substantially
reduced by an agreement on the terms hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter set forth, IT IS AGREED:
(1) Continued Employment. If a change of control of the Company occurs
when the Employee is employed by the Company, the Company will continue
thereafter to employ the Employee, and the Employee will remain in the employ
of the Company, in accordance with the terms and provisions of this Agreement,
for a period of one (1) year following the date of such change (the "Employment
Period"). As used herein, the phrase "change of control of the Company" means
the first to occur of the following:
(a) The acquisition of more than twenty (20%) percent of the
outstanding shares of voting stock of the Company by any person or entity or
group thereof acting in concert, excluding affiliates of the Company, by means
of an offer made publicly to the holders of all or substantially all of the
outstanding shares of the voting stock of the Company to acquire such shares
for cash, securities, other property or any combination thereof; or
<PAGE> 2
(b) Any person or entity acquires, subsequent to the date of this
Agreement, beneficial ownership of twenty (20%) percent or more of the then
issued and outstanding voting common stock of the Company in any manner other
than a purchase of such stock directly from the Company for cash; or
(c) The sale, assignment or transfer by the Company of all or
substantially all of its business or assets, in a transaction or
related series of transactions, except any such sales to affiliates of the
Company; or
(d) The Company merges or consolidates or reorganizes with or into
any other corporation or corporations other than its affiliates or engages in
any other similar business combination or reorganization; or
(e) A Schedule 13D or its equivalent is filed under the Securities
Exchange Act of 1934 with respect to the voting common stock of the Company, by
or on behalf of any person (within the meaning of that term as defined in the
regulations governing such Schedules), which states expressly or by implication
that such person intends to change the management, direction or control of the
Company or its policies; or
(f) A majority of the Board of Directors of the Company does not
consist of persons who were serving in the capacity on the date of this
Agreement, or who were appointed or nominated to serve as a Director by such
persons or by persons who were themselves so appointed or nominated.
(2) Duties. Unless otherwise agreed by the Company and Employee, during
the Employment Period the Employee shall be employed by the Company in the
same position as that which the Employee held on the date of the change of
control of the Company. In such employment, his duties and authority shall
consist of and include all duties and authority customarily performed and held
by a person holding an equivalent position with a corporation of similar nature
and size, as such duties and authority related to such position are reasonably
defined and delegated from time to time by the Board of Directors of the
Company. However, no change of the Employee's location of employment to
outside the Oconomowoc area, or in the Employee's title, shall be made without
the prior written consent of the Employee. The Employee shall have the powers
necessary to perform the duties assigned and shall be provided such supporting
services, staff, secretarial and other assistance, office space and
accouterments as shall be reasonably necessary and appropriate in light of the
duties assigned (but in no event, in any case, smaller in size or lesser in
quality than that being furnished to the Employee on the date of the change of
control of the Company).
<PAGE> 3
The Employee shall devote his entire business time, energy and skills
to such employment while so employed, but the Employee shall not be required to
devote more than an average of approximately 45 hours per calendar week to such
employment. The Employee shall be entitled to a minimum of three (3) weeks
(fifteen [15] working days) of paid vacation annually. The Employee shall have
the sole discretion to determine the time and intervals of such vacation.
(3) Compensation. During the Employment Period, the Employee shall be
compensated as follows:
(a) He shall receive a salary equal to his salary as in effect as of
the date of the change of control of the Company, subject to adjustment as
hereinafter provided.
(b) He shall be reimbursed for any and all monies advanced in
connection with his employment for reasonable and necessary expenses incurred
by him on behalf of the Company.
(c) He shall be included to the extent eligible thereunder in any and
all plans providing benefits for the Company's employees, including, but not
limited to, life, accidental death and dismemberment, long term disability,
hospitalization, medical and retirement, and be provided any and all other
benefits and perquisites (including use of an automobile) made available to
other employees of comparable status, at the expense of the Company on a
comparable basis; and
(d) He shall be included in all profit sharing, bonus, deferred
compensation, split dollar life insurance, and similar or comparable plans
customarily extended by the Company to corporate officers and key employees of
the Company.
(4) Annual Compensation Adjustments. The Board of Directors of the
Company or an appropriate committee thereof will consider and appraise the
contributions of the Employee to the Company's operating efficiency, growth,
production and profits, at least annually during the Employment Period, and in
accordance with past practice, the Employee's compensation rate shall be
annually adjusted upward to be commensurate with increases given to other
corporate officers and key employees generally and as the scope and success of
the Company's operations or the Employee's duties expand.
(5) Retirement. If, during the Employment Period, or during the
applicable period, if any, described in paragraph (7), the Employee shall
deliver to the Company a statement signed by him, stating that the Employee
voluntarily chooses to retire early from the Company, or if the Employee shall
reach the age of 65, or shall
<PAGE> 4
with the mutual agreement of the Company agree in writing on early retirement,
then this Agreement shall terminate on the effective date of such event
and the terms of the Company's retirement policies or such mutual agreement
shall immediately become effective.
(6) Termination Other Than for Cause.
(a) If, during the Employment Period, the Company shall terminate the
employment of the Employee for any reason other than the reasons set forth in
paragraph (5) above or paragraph (7) below, thereafter he or his personal
representatives shall continue to be paid monthly an amount equal to his then
current monthly base salary plus one-twelfth (1/12th) of the annual average of
the executive incentive program payments and all bonuses paid to the Employee
in the preceding five (5) years, and he shall be entitled to continue life,
accidental death and dismemberment, long term disability and hospitalization
and medical insurances and shall receive the other employee benefits and
perquisites described in subparagraphs (3)(c) and (3)(d) hereof, for the
remainder of the Employment Period or as specified by Federal law, whichever
time period is longer.
(b) If during the Employment Period the Employee's duties shall be
changed substantially without his written consent from those specified in
paragraph (2) or he shall fail to be reelected or he shall be removed as a
corporate officer of the Company, or if the Company violates this Agreement,
the Employee shall have the right to elect to terminate his employment under
this Agreement; and if he so elects, he or his personal representatives
shall continue to be paid monthly an amount equal to his then current monthly
base salary plus one-twelfth (1/12th) of the average of the executive incentive
program payments and all bonuses paid to the Employee in the preceding five (5)
years, and he shall be entitled to participate in group life, hospitalization
and medical insurance and shall receive the other employee benefits and
perquisites described in subparagraphs (3)(c) and (3)(d) hereof, for the
remainder of the Employment Period.
(7) Termination for Cause. Employee agrees that this Agreement
may be terminated by the Company at any time for cause, which shall mean only
death, conviction for criminal fraud, the commission of a felony, or becoming
the subject of a final nonappealable judgement of a court of competent
jurisdiction holding that the Employee is liable to the Company for damages for
obtaining a personal benefit in a transaction adverse to the interest of the
Company. In the event this Agreement is terminated for cause, the Employee
shall forfeit his right to any and all benefits he would otherwise have been
entitled thereafter to receive under the Agreement.
<PAGE> 5
(8) Enforceability. The parties agree that nothing in this Agreement
shall in any way abrogate the right of the Company and the Employee to enforce
by injunction or otherwise the due and proper performance and observance of the
several covenants herein contained to be performed by the Employee or the
Company or to recover damages for breach thereof.
(9) Successors and Assigns. If the Company sells, assigns or transfers
all or substantially all of its business and assets to any person, excluding
affiliates of the Company, or if the Company merges into or consolidates or
otherwise combines with any person which is a continuing or successor entity,
then the Company shall assign all of its right, title and interest in this
Agreement as of the date of such event to the person which is either the
acquiring or successor corporation, and such person(s) shall assume and
perform from and after the date of such assignment all of the terms, conditions
and provisions imposed by this Agreement upon the Company. In case of such
assignment by the Company and of assumption and agreement by such person(s),
all further rights as well as all other obligations of the Company under this
Agreement thenceforth shall cease and terminate and thereafter the expression
"the Company" wherever used herein shall be deemed to mean such person(s).
(10) Affiliate. The term "affiliate" as used in this Agreement means any
corporation more than fifty (50%) percent of the outstanding voting common
stock of which is owned at the time by the Company or an affiliate of the
Company.
(11) Supplemental Agreement. This Agreement supplements, and is not an
amendment to or in derogation of, any other agreement between the Company and
the Employee relating to the employment or the terms and conditions thereof.
No person, other than such person as may be designated by the Board of
Directors of the Company, shall have any authority on behalf of the Company to
agree to modify or change this Agreement.
(12) Severability. This Agreement is to be governed by and construed under
the laws of the State of Wisconsin. If any provision of this Agreement shall
be held invalid and unenforceable for any reason, such provision shall be
deemed deleted and the remainder of the Agreement shall be valid and
enforceable without such provision.
(13) Termination of Agreement. The Company has the right to terminate the
employment of the Employee except in contemplation of a change in control of
the Company, and the Employee may elect at his discretion to terminate his
employment, at any time prior to a change in control of the Company, in either
of which events this Agreement shall terminate.
<PAGE> 6
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its corporate seal affixed and attested by its duly authorized officers,
and the Employee has hereunto set his hand and seal as of the date first above
written.
STOKELY USA, INC.
By /s/ Robert Brill
_________________________
(Corporate Seal) Attest: Vice President
____________________
/s/ Kenneth Murray
____________________________
Kenneth Murray, Employee
<PAGE> 1
EXHIBIT 10(oo)
CHANGE IN CONTROL CONTINGENT EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this 16th day of October, 1992, by and between STOKELY
USA, INC., a Wisconsin corporation (the "Company"), and RUSSELL TRUNK, Senior
Vice President of Operations of the Company (the "Employee"),
W I T N E S S E T H :
WHEREAS, sudden takeovers, acquisitions or changes of control of domestic
corporations have occurred frequently in recent years, and current conditions
may contribute to the continuation or acceleration of this trend; and
WHEREAS, the possibility of a sudden takeover, acquisition or change of
control can create uncertainty of employment and may cause the loss of valuable
Company officers, to the detriment of the Company and its shareholders; and
WHEREAS, it is believed that the detriment described can be substantially
reduced by an agreement on the terms hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter set forth, IT IS AGREED:
(1) Continued Employment. If a change of control of the Company occurs
when the Employee is employed by the Company, the Company will continue
thereafter to employ the Employee, and the Employee will remain in the employ
of the Company, in accordance with the terms and provisions of this Agreement,
for a period of one (1) years following the date of such change (the
"Employment Period"). As used herein, the phrase "change of control of the
Company" means the first to occur of the following:
(a) The acquisition of more than twenty (20%) percent of the
outstanding shares of voting stock of the Company by any person or entity or
group thereof acting in concert, excluding affiliates of the Company, by means
of an offer made publicly to the holders of all or substantially all of the
outstanding shares of the voting stock of the Company to acquire such shares
for cash, securities, other property or any combination thereof; or
<PAGE> 2
(b) Any person or entity acquires, subsequent to the date of this
Agreement, beneficial ownership of twenty (20%) percent or more of the then
issued and outstanding voting common stock of the Company in any manner other
than a purchase of such stock directly from the Company for cash; or
(c) The sale, assignment or transfer by the Company of all or
substantially all of its business or assets, in a transaction or
related series of transactions, except any such sales to affiliates of the
Company; or
(d) The Company merges or consolidates or reorganizes with or into
any other corporation or corporations other than its affiliates or engages in
any other similar business combination or reorganization; or
(e) A Schedule 13D or its equivalent is filed under the Securities
Exchange Act of 1934 with respect to the voting common stock of the Company, by
or on behalf of any person (within the meaning of that term as defined in the
regulations governing such Schedules), which states expressly or by implication
that such person intends to change the management, direction or control of the
Company or its policies; or
(f) A majority of the Board of Directors of the Company does not
consist of persons who were serving in the capacity on the date of this
Agreement, or who were appointed or nominated to serve as a Director by such
persons or by persons who were themselves so appointed or nominated.
(2) Duties. Unless otherwise agreed by the Company and Employee, during
the Employment Period the Employee shall be employed by the Company in the same
position as that which the Employee held on the date of the change of control
of the Company. In such employment, his duties and authority shall consist of
and include all duties and authority customarily performed and held by a person
holding an equivalent position with a corporation of similar nature and size,
as such duties and authority related to such position are reasonably defined
and delegated from time to time by the Board of Directors of the Company.
However, no change of the Employee's location of employment to outside the
Oconomowoc area, or in the Employee's title, shall be made without the prior
written consent of the Employee. The Employee shall have the powers necessary
to perform the duties assigned and shall be provided such supporting services,
staff, secretarial and other assistance, office space and accouterments as
shall be reasonably necessary and appropriate in light of the duties assigned
(but in no event, in any case, smaller in size or lesser in quality than that
being furnished to the Employee on the date of the change of control of the
Company).
<PAGE> 3
The Employee shall devote his entire business time, energy and skills
to such employment while so employed, but the Employee shall not be required to
devote more than an average of approximately 45 hours per calendar week to such
employment. The Employee shall be entitled to a minimum of three (3) weeks
(fifteen [15] working days) of paid vacation annually. The Employee shall have
the sole discretion to determine the time and intervals of such vacation.
(3) Compensation. During the Employment Period, the Employee shall be
compensated as follows:
(a) He shall receive a salary equal to his salary as in effect as of
the date of the change of control of the Company, subject to adjustment as
hereinafter provided.
(b) He shall be reimbursed for any and all monies advanced in
connection with his employment for reasonable and necessary expenses incurred
by him on behalf of the Company.
(c) He shall be included to the extent eligible thereunder in any and
all plans providing benefits for the Company's employees, including, but not
limited to, life, accidental death and dismemberment, long term disability,
hospitalization, medical and retirement, and be provided any and all other
benefits and perquisites (including use of an automobile) made available to
other employees of comparable status, at the expense of the Company on a
comparable basis; and
(d) He shall be included in all profit sharing, bonus, deferred
compensation, split dollar life insurance, and similar or comparable plans
customarily extended by the Company to corporate officers and key employees of
the Company.
(4) Annual Compensation Adjustments. The Board of Directors of the
Company or an appropriate committee thereof will consider and appraise the
contributions of the Employee to the Company's operating efficiency, growth,
production and profits, at least annually during the Employment Period, and in
accordance with past practice, the Employee's compensation rate shall be
annually adjusted upward to be commensurate with increases given to other
corporate officers and key employees generally and as the scope and success of
the Company's operations or the Employee's duties expand.
(5) Retirement. If, during the Employment Period, or during the
applicable period, if any, described in paragraph (7), the Employee shall
deliver to the Company a statement signed by him, stating that the Employee
voluntarily chooses to retire early from the Company, or if the Employee shall
reach the age of 65, or shall
<PAGE> 4
with the mutual agreement of the Company agree in writing on early retirement,
then this Agreement shall terminate on the effective date of such event
and the terms of the Company's retirement policies or such mutual agreement
shall immediately become effective.
(6) Termination Other Than for Cause.
(a) If, during the Employment Period, the Company shall terminate the
employment of the Employee for any reason other than the reasons set forth in
paragraph (5) above or paragraph (7) below, thereafter he or his personal
representatives shall continue to be paid monthly an amount equal to his then
current monthly base salary plus one-twelfth (1/12th) of the annual average of
the executive incentive program payments and all bonuses paid to the Employee
in the preceding five (5) years, and he shall be entitled to continue life,
accidental death and dismemberment, long term disability and hospitalization
and medical insurances and shall receive the other employee benefits and
perquisites described in subparagraphs (3)(c) and (3)(d) hereof, for the
remainder of the Employment Period or as specified by Federal law, whichever
time period is longer.
(b) If during the Employment Period the Employee's duties shall be
changed substantially without his written consent from those specified in
paragraph (2) or he shall fail to be reelected or he shall be removed as a
corporate officer of the Company, or if the Company violates this Agreement,
the Employee shall have the right to elect to terminate his employment under
this Agreement; and if he so elects, he or his personal
representatives shall continue to be paid monthly an amount equal to his then
current monthly base salary plus one-twelfth (1/12th) of the average of the
executive incentive program payments and all bonuses paid to the Employee in
the preceding five (5) years, and he shall be entitled to participate in group
life, hospitalization and medical insurance and shall receive the other
employee benefits and perquisites described in subparagraphs (3)(c) and (3)(d)
hereof, for the remainder of the Employment Period.
(7) Termination for Cause. Employee agrees that this Agreement may
be terminated by the Company at any time for cause, which shall mean only
death, conviction for criminal fraud, the commission of a felony, or becoming
the subject of a final nonappealable judgement of a court of competent
jurisdiction holding that the Employee is liable to the Company for damages for
obtaining a personal benefit in a transaction adverse to the interest of the
Company. In the event this Agreement is terminated for cause, the Employee
shall forfeit his right to any and all benefits he would otherwise have been
entitled thereafter to receive under the Agreement.
<PAGE> 5
(8) Enforceability. The parties agree that nothing in this Agreement
shall in any way abrogate the right of the Company and the Employee to enforce
by injunction or otherwise the due and proper performance and observance of the
several covenants herein contained to be performed by the Employee or the
Company or to recover damages for breach thereof.
(9) Successors and Assigns. If the Company sells, assigns or transfers
all or substantially all of its business and assets to any person, excluding
affiliates of the Company, or if the Company merges into or consolidates or
otherwise combines with any person which is a continuing or successor entity,
then the Company shall assign all of its right, title and interest in this
Agreement as of the date of such event to the person which is either the
acquiring or successor corporation, and such person(s) shall assume and
perform from and after the date of such assignment all of the terms, conditions
and provisions imposed by this Agreement upon the Company. In case of such
assignment by the Company and of assumption and agreement by such person(s),
all further rights as well as all other obligations of the Company under this
Agreement thenceforth shall cease and terminate and thereafter the expression
"the Company" wherever used herein shall be deemed to mean such person(s).
(10) Affiliate. The term "affiliate" as used in this Agreement
means any corporation more than fifty (50%) percent of the outstanding voting
common stock of which is owned at the time by the Company or an affiliate of
the Company.
(11) Supplemental Agreement. This Agreement supplements, and is not an
amendment to or in derogation of, any other agreement between the Company and
the Employee relating to the employment or the terms and conditions thereof.
No person, other than such person as may be designated by the Board of
Directors of the Company, shall have any authority on behalf of the Company to
agree to modify or change this Agreement.
(12) Severability. This Agreement is to be governed by and construed under
the laws of the State of Wisconsin. If any provision of this Agreement shall
be held invalid and unenforceable for any reason, such provision shall be
deemed deleted and the remainder of the Agreement shall be valid and
enforceable without such provision.
(13) Termination of Agreement. The Company has the right to terminate the
employment of the Employee except in contemplation of a change in control of
the Company, and the Employee may elect at his discretion to terminate his
employment, at any time prior to a change in control of the Company, in either
of which events this Agreement shall terminate.
<PAGE> 6
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its corporate seal affixed and attested by its duly authorized officers,
and the Employee has hereunto set his hand and seal as of the date first above
written.
STOKELY USA, INC.
By /s/ Robert M. Brill, Secretary
(Corporate Seal) Attest:
/s/ Russell Trunk
Russell Trunk, Employee
10/19/92
<PAGE> 1
EXHIBIT 10(pp)
CHANGE IN CONTROL CONTINGENT EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this 17 day of June, 1992, by and between STOKELY
USA, INC., a Wisconsin corporation (the "Company"), and LESLIE J. WILSON, Chief
Financial Officer of the Company (the "Employee"),
W I T N E S S E T H:
WHEREAS, sudden takeovers, acquisitions or changes of control of
domestic corporations have occurred frequently in recent years, and current
conditions may contribute to the continuation or acceleration of this trend;
and
WHEREAS, the possibility of a sudden takeover, acquisition or change
of control can create uncertainty of employment and may cause the loss of
valuable Company officers, to the detriment of the Company and its
shareholders; and
WHEREAS, it is believed that the detriment described can be
substantially reduced by an agreement on the terms hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter set forth, IT IS AGREED:
(1) Continued Employment. If a change of control of the Company
occurs when the Employee is employed by the Company, the Company will continue
thereafter to employ the Employee, and the Employee will remain in the employ
of the Company, in accordance with the terms and provisions of this Agreement,
for a period of two (2) years following the date of such change (the "Employment
Period"). As used herein, the phrase "change of control of the Company" means
the first to occur of the following:
(a) The acquisition of more than twenty (20%) percent of the
oustanding shares of voting stock of the Company by any person or entity or
group thereof acting in concert, excluding affiliates of the Company, by means
of an offer made publicly to the holders of all or substantially all of the
outstanding shares of the voting stock of the Company to acquire such shares
for cash, securities, other property or any combination thereof; or
<PAGE> 2
(b) Any person or entity acquires, subsequent to the date of
this Agreement, beneficial ownership of twenty (20%) percent or more of the
then issued and outstanding voting common stock of the Company in any manner
other than a purchase of such stock directly from the Company for cash; or
(c) The sale, assignment or transfer by the Company of all or
substantially all of its business or assets, in a transaction or related
series of transactions, except any such sales to affiliates of the Company; or
(d) The Company merges or consolidates or reorganizes with or
into any other corporation or corporations other than its affiliates or
engages in any other similar business combination or reorganization; or
(e) A Schedule 13D or its equivalent is filed under the
Securities Exchange Act of 1934 with respect to the voting common stock of the
Company, by or on behalf of any person (within the meaning of that term as
defined in the regulations governing such Schedules), which states expressly or
by implication that such person intends to change the management, direction or
control of the Company or its policies; or
(f) A majority of the Board of Directors of the Company does
not consist of persons who were serving in the capacity on the date of this
Agreement, or who were appointed or nominated to serve as a Director by such
persons or by persons who were themselves so appointed or nominated.
(2) Duties. Unless otherwise agreed by the Company and Employee,
during the Employment Period the Employee shall be employed by the Company in
the same position as that which the Employee held on the date of the change of
control of the Company. In such employment, his duties and authority shall
consist of and include all duties and authority customarily performed and held
by a person holding an equivalent position with a corporation of similar nature
and size, as such duties and authority related to such position are reasonably
defined and delegated from time to time by the Board of Directors of the
Company. However, no change of the Employee's location of employment to outside
the Oconomowoc area, or in the Employee's title, shall be made without the
prior written consent of the Employee. The Employee shall have the powers
necessary to perform the duties assigned and shall be provided such supporting
services, staff, secretarial and other assistance, office space and
accouterments as shall be reasonably necessary and appropriate in light of the
duties assigned (but in no event, in any case, smaller in size or lesser in
quality than that being furnished to the Employee on the date of the change of
control of the Company).
<PAGE> 3
The Employee shall devote his entire business time, energy and skills
to such employment while so employed, but the Employee shall not be required to
devote more than an average of approximately 45 hours per calendar week to such
employment. The Employee shall be entitled to a minimum of three (3) weeks
(fifteen [15] working days) of paid vacation annually. The Employee shall have
the sole discretion to determine the time and intervals of such vacation.
(3) Compensation. During the Employment Period, the Employee shall be
compensated as follows:
(a) He shall receive a salary equal to his salary as in effect as of
the date of the change of control of the Company, subject to adjustment as
hereinafter provided.
(b) He shall be reimbursed for any and all monies advanced in
connection with his employment for reasonable and necessary expenses
incurred by him on behalf of the Company.
(c) He shall be included to the extent eligible thereunder in any
and all plans providing benefits for the Company's employees, including, but
not limited to, life, accidental death and dismemberment, long term disability,
hospitalization, medical and retirement, and be provided any and all other
benefits and perquisites (including use of an automobile) made available to
other employees of comparable status, at the expense of the Company on a
comparable basis; and
(d) He shall be included in all profit sharing, bonus, deferred
compensation, split dollar life insurance, and similar or comparable plans
customarily extended by the Company to corporate officers and key employees of
the Company.
(4) Annual Compensation Adjustments. The Board of Directors of the
Company or an appropriate committee thereof will consider and appraise the
contributions of the Employee to the Company's operating efficiency, growth,
production and profits, at least annually during the Employment Period, and in
accordance with past practice, the Employee's compensation rate shall be
annually adjusted upward to be commensurate with increases given to other
corporate officers and key employees generally and as the scope and success of
the Company's operations or the Employee's duties expand.
(5) Retirement. If, during the Employment Period, or during the
applicable period, if any, described in paragraph (7), the Employee shall
deliver to the Company a statement signed by him, stating that the Employee
voluntarily chooses to retire early from the Company, or if the Employee shall
reach the age of 65, or shall
<PAGE> 4
with the mutual agreement of the Company agree in writing on early retirement,
then this Agreement shall terminate on the effective date of such event and the
terms of the Company's retirement policies or such mutual agreement shall
immediately become effective.
(6) Termination Other Than for Cause.
(a) If, during the Employment Period, the Company shall terminate the
employment of the Employee for any reason other than the reasons set forth in
paragraph (5) above or paragraph (7) below, thereafter he or his personal
representatives shall continue to be paid monthly an amount equal to his then
current monthly base salary plus one-twelfth (1/12th) of the annual average of
the executive incentive program payments and bonuses paid to the Employee in
the preceding five (5) years, and he shall be entitled to continue life,
accidental death and dismemberment, long term disability and hospitalization
and medical insurances and shall receive the other employee benefits and
perquisites described in subparagraphs (3)(c) and (3)(d) hereof, for the
remainder of the Employment Period or as specified by Federal law, whichever
time period is longer.
(b) If during the Employment Period the Employee's duties shall be
changed substantially without his written consent from those specified in
paragraph (2) or he shall fail to be re-elected or he shall be removed as a
corporate officer of the Company, or if the Company violates this Agreement,
the Employee shall have the right to elect to terminate his employment under
this Agreement; and if he so elects, he or his personal representatives shall
continue to be paid monthly an amount equal to his then current monthly base
salary plus one-twelfth (1/12th) of the average of the executive incentive
program payments and bonuses paid to the Employee in the preceding five (5)
years, and he shall be entitled to participate in group life, hospitalization
and medical insurance and shall receive the other employee benefits and
perquisites described in subparagraphs (3)(c) and (3)(d) hereof, for the
remainder of the Employment Period.
(7) Termination for Cause. Employee agrees that this Agreement may
be terminated by the Company at any time for cause, which shall mean only
death, conviction for criminal fraud, the commission of a felony, or becoming
the subject of a final nonappealable judgement of a court of competent
jurisdiction holding that the Employee is liable to the Company for damages for
obtaining a personal benefit in a transaction adverse to the interest of the
Company. In the event this Agreement is terminated for cause, the Employee
shall forfeit his right to any and all benefits he would otherwise have been
entitled thereafter to receive under the Agreement.
<PAGE> 5
(8) Enforceability. The parties agree that nothing in this Agreement
shall in any way abrogate the right of the Company and the Employee to enforce
by injunction or otherwise the due and proper performance and observance of the
several covenants herein contained to be performed by the Employee or the
Company or to recover damages for breach thereof.
(9) Successors and Assigns. If the Company sells, assigns or
transfers all or substantially all of its business and assets to any person,
excluding affiliates of the Company, or if the Company merges into or
consolidates or otherwise combines with any person which is a continuing or
successor entity, then the Company shall assign all of its right, title and
interest in this Agreement as of the date of such event to the person which is
either the acquiring or successor corporation, and such person(s) shall assume
and perform from and after the date of such assignment all of the terms,
conditions and provisions imposed by this Agreement upon the Company. In case
of such assignment by the Company and of assumption and agreement by such
person(s), all further rights as well as all other obligations of the Company
under this Agreement thenceforth shall cease and terminate and thereafter the
expression "the Company" wherever used herein shall be deemed to mean such
person(s).
(10) Affiliate. The term "affiliate" as used in this Agreement means
any corporation more than fifty (50%) percent of the outstanding voting common
stock of which is owned at the time by the Company or an affiliate of the
Company.
(11) Supplemental Agreement. This Agreement supplements, and is not
an amendment to or in derogation of, any other agreement between the Company
and the Employee relating to the employment or the terms and conditions
thereof. No person, other than such person as may be designated by the Board
of Directors of the Company, shall have any authority on behalf of the Company
to agree to modify or change this Agreement.
(12) Severability. This Agreement is to be governed by and construed
under the laws of the State of Wisconsin. If any provision of this Agreement
shall be held invalid and unenforceable for any reason, such provision shall be
deemed deleted and the remainder of the Agreement shall be valid and
enforceable without such provision.
(13) Termination of Agreement. The Company has the right to terminate
the employment of the Employee, and the Employee may elect at his discretion to
terminate his employment, at any time prior to a change in control of the
Company, in either of which events this Agreement shall terminate; subject to
the terms and
<PAGE> 6
conditions of the Employment Agreement between the parties dated effective June
17, 1992.
At any time prior to a change in control of the Company by
action of its Board of Directors, this Agreement may be terminated by either
party hereto upon written notice to the other.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its corporate seal affixed and attested by its duly authorized
officers, and the Employee has hereunto set his hand and seal as of the date
first above written.
STOKELY USA, INC.
By /s/ TOM MOUNT
__________________________
Tom Mount
(Corporate Seal) Attest: _____________________
/s/ L. J. WILSON
____________________________
Leslie J. Wilson, Employee
<PAGE> 1
EXHIBIT 10(qq)
CHANGE IN CONTROL CONTINGENT EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this 16th day of October, 1992, by and between
STOKELY USA, INC., a Wisconsin corporation (the "Company"), and ROBERT M.
BRILL, Vice President, Secretary and General Counsel of the Company (the
"Employee"),
WITNESSETH:
WHEREAS, sudden takeovers, acquisitions or changes of control of
domestic corporations have occurred frequently in recent years, and current
conditions may contribute to the continuation or acceleration of this trend;
and
WHEREAS, the possibility of a sudden takeover, acquisition or change of
control can create uncertainty of employment and may cause the loss of valuable
Company officers, to the detriment of the Company and its shareholders; and
WHEREAS, it is believed that the detriment described can be
substantially reduced by an agreement on the terms hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter set forth, IT IS AGREED:
(1) Continued Employment. If a change of control of the Company
occurs when the Employee is employed by the Company, the Company will continue
thereafter to employ the Employee, and the Employee will remain in the employ
of the Company, in accordance with the terms and provisions of this Agreement,
for a period of two (2) years following the date of such change (the
"Employment Period"). As used herein, the phrase "change of control of the
Company" means the first to occur of the following:
(a) The acquisition of more than twenty (20%) percent of the
outstanding shares of voting stock of the Company by any person or entity or
group thereof acting in concert, excluding affiliates of the Company, by means
of an offer made publicly to the holders of all or substantially all of the
outstanding shares of the voting stock of the Company to acquire such shares
for cash, securities, other property or any combination thereof; or
<PAGE> 2
(b) Any person or entity acquires, subsequent to the date of
this Agreement, beneficial ownership of twenty (20%) percent or more of the then
issued and outstanding voting common stock of the Company in any manner other
than a purchase of such stock directly from the Company for cash; or
(c) The sale, assignment or transfer by the Company of all or
substantially all of its business or assets, in a transaction or related series
of transactions, except any such sales to affiliates of the Company; or
(d) The Company merges or consolidates or reorganizes with or
into any other corporation or corporations other than its affiliates or engages
in any other similar business combination or reorganization; or
(e) A Schedule 13D or its equivalent is filed under the
Securities Exchange Act of 1934 with respect to the voting common stock of the
Company, by or on behalf of any person (within the meaning of that term as
defined in the regulations governing such Schedules), which states expressly
or by implication that such person intends to change the management, direction
or control of the Company or its policies; or
(f) A majority of the Board of Directors of the Company does
not consist of persons who were serving in the capacity on the date of this
Agreement, or who were appointed or nominated to serve as a Director by such
persons or by persons who were themselves so appointed or nominated.
(2) Duties. Unless otherwise agreed by the Company and Employee,
during the Employment Period the Employee shall be employed by the Company in
the same position as that which the Employee held on the date of the change of
control of the Company. In such employment, his duties and authority shall
consist of and include all duties and authority customarily performed and held
by a person holding an equivalent position with a corporation of similar nature
and size, as such duties and authority related to such position are reasonably
defined and delegated from time to time by the Board of Directors of the
Company. However, no change of the Employee's location of employment to outside
the Oconomowoc area, or in the Employee's title, shall be made without the
prior written consent of the Employee. The Employee shall have the powers
necessary to perform the duties as assigned and shall be provided such
supporting services, staff, secretarial and other assistance, office space and
accouterments as shall be reasonably necessary and appropriate in light of the
duties assigned (but in no event, in any case, smaller in size or lesser in
quality than that being furnished to the Employee on the date of the change of
control of the Company).
<PAGE> 3
The Employee shall devote his entire business time, energy and skills
to such employment while so employed, but the Employee shall not be required to
devote more than an average of approximately 45 hours per calendar week to such
employment. The Employee shall be entitled to a minimum of three (3) weeks
(fifteen [15] working days) of paid vacation annually. The Employee shall have
the sole discretion to determine the time and intervals of such vacation.
(3) Compensation. During the Employment Period, the Employee shall be
compensated as follows:
(a) He shall receive a salary equal to his salary as in effect as of
the date of the change of control of the Company, subject to adjustment as
hereinafter provided.
(b) He shall be reimbursed for any and all monies advanced in
connection with his employment for reasonable and necessary expenses incurred
by him on behalf of the Company.
(c) He shall be included to the extent eligible thereunder in
any and all plans providing benefits for the Company's employees,
including, but not limited to, life, accidental death and dismemberment,
long term disability, hospitalization, medical and retirement, and be
provided any and all other benefits and perquisites (including use of an
automobile) made available to other employees of comparable status, at the
expense of the Company on a comparable basis; and
(d) He shall be included in all profit sharing, bonus, deferred
compensation, split dollar life insurance, and similar or comparable plans
customarily extended by the Company to corporate officers and key employees of
the Company.
(4) Annual Compensation Adjustments. The Board of Directors of the
Company or an appropriate committee thereof will consider and appraise the
contributions of the Employee to the Company's operating efficiency, growth,
production and profits, at least annually during the Employment Period, and in
accordance with past practice, the Employee's compensation rate shall be
annually adjusted upward to be commensurate with increases given to other
corporate officers and key employees generally and as the scope and success of
the Company's operations or the Employee's duties expand.
(5) Retirement. If, during the Employment Period, or during the
applicable period, if any, described in paragraph (7), the Employee shall
deliver to the Company a statement signed by him, stating that the Employee
voluntarily chooses to retire early from the Company, or if the Employee shall
reach the age of 65, or shall
<PAGE> 4
with the mutual agreement of the Company agree in writing on early retirement,
then this Agreement shall terminate on the effective date of such event and
the terms of the Company's retirement policies or such mutual agreement
shall immediately become effective.
(6) Termination Other Than for Cause.
(a) If, during the Employment Period, the Company shall terminate
the employment of the Employee for any reason other than the reasons set forth
in paragraph (5) above or paragraph (7) below, thereafter he or his personal
representatives shall continue to be paid monthly an amount equal to his then
current monthly base salary plus one-twelfth (1/12th) of the annual average of
the executive incentive program payments and all bonuses paid to the Employee
in the preceding five (5) years, and he shall be entitled to continue life,
accidental death and dismemberment, long term disability and hospitalization
and medical insurances and shall receive the other employee benefits and
perquisites described in subparagraphs (3)(c) and (3)(d) hereof, for the
remainder of the Employment Period or as specified by Federal law, whichever
time period is longer.
(b) If during the Employment Period the Employee's duties shall be
changed substantially without his written consent from those specified in
paragraph (2) or he shall fail to be reelected or he shall be removed as a
corporate officer of the Company, or if the Company violates this Agreement,
the Employee shall have the right to elect to terminate his employment under
this Agreement; and if he so elects, he or his personal representatives shall
continue to be paid monthly an amount equal to his then current monthly base
salary plus one-twelfth (1/12th) of the average of the executive incentive
program payments and all bonuses paid to the Employee in the preceding
five (5) years, and he shall be entitled to participate in group life,
hospitalization and medical insurance and shall receive the other employee
benefits and perquisites described in subparagraphs (3)(c) and (3)(d)
hereof, for the remainder of the Employment Period.
(7) Termination for Cause. Employee agrees that this Agreement
may be terminated by the Company at any time for cause, which shall mean only
death, conviction for criminal fraud, the commission of a felony, or
becoming the subject of a final nonappealable judgement of a court of
competent jurisdiction holding that the Employee is liable to the Company for
damages for obtaining a personal benefit in a transaction adverse to the
interest of the Company. In the event this Agreement is terminated for cause,
the Employee shall forfeit his right to any and all benefits he would otherwise
have been entitled thereafter to receive under the Agreement.
<PAGE> 5
(8) Enforceability. The parties agree that nothing in this Agreement
shall in any way abrogate the right of the Company and the Employee to enforce
by injunction or otherwise the due and proper performance and observance of the
several covenants herein contained to be performed by the Employee or the
Company or to recover damages for breach thereof.
(9) Successors and Assigns. If the Company sells, assigns or
transfers all or substantially all of its business and assets to any person,
excluding affiliates of the Company, or if the Company merges into or
consolidates or otherwise combines with any person which is a continuing or
successor entity, then the Company shall assign all of its right, title and
interest in this Agreement as of the date of such event to the person which is
either the acquiring or successor corporation, and such person(s) shall
assume and perform from and after the date of such assignment all of the terms,
conditions and provisions imposed by this Agreement upon the Company. In case
of such assignment by the Company and of assumption and agreement by such
person(s), all further rights as well as all other obligations of the Company
under this Agreement thenceforth shall cease and terminate and thereafter the
expression "the Company" wherever used herein shall be deemed to mean such
person(s).
(10) Affiliate. The term "affiliate" as used in this Agreement
means any corporation more than fifty (50%) percent of the outstanding voting
common stock of which is owned at the time by the Company or an affiliate of
the Company.
(11) Supplemental Agreement. This Agreement supplements, and is not an
amendment to or in derogation of, any other agreement between the Company and
the Employee relating to the employment or the terms and conditions thereof. No
person, other than such person as may be designated by the Board of Directors
of the Company, shall have any authority on behalf of the Company to agree to
modify or change this Agreement.
(12) Severability. This Agreement is to be governed by and construed
under the laws of the State of Wisconsin. If any provision of this Agreement
shall be held invalid and unenforceable for any reason, such provision shall be
deemed deleted and the remainder of the Agreement shall be valid and
enforceable without such provision.
(13) Termination of Agreement. The Company has the right to terminate
the employment of the Employee except in contemplation of a change in control
of the Company, and the Employee may elect at his discretion to terminate his
employment, at any time prior to a change in control of the Company, in either
of which events this Agreement shall terminate.
<PAGE> 6
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its corporate seal affixed and attested by its duly authorized
officers, and the Employee has hereunto set his hand and seal as of the date
first above written.
STOKELY USA, INC.
By /s/ STEPHAN W. THEOBALD
__________________________________
Stephen W. Theobald, Vice Chairman
(Corporate Seal) Attest:
_____________________________
/s/ ROBERT M. BRILL
_____________________________________
Robert M. Brill, Employee
<PAGE> 1
EXHIBIT 10(rr)
CHANGE IN CONTROL CONTINGENT EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this 16th day of October, 1992, by and between
STOKELY USA, INC., a Wisconsin corporation (the "Company"), and MICHAEL A.
WILKES, Director of Total Quality Management of the Company (the "Employee"),
WITNESSETH:
WHEREAS, sudden takeovers, acquisitions or changes of control of
domestic corporations have occurred frequently in recent years, and current
conditions may contribute to the continuation or acceleration of this trend;
and
WHEREAS, the possibility of a sudden takeover, acquisition or change of
control can create uncertainty of employment and may cause the loss of valuable
Company officers, to the detriment of the Company and its shareholders; and
WHEREAS, it is believed that the detriment described can be
substantially reduced by an agreement on the terms hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter set forth, IT IS AGREED:
(1) Continued Employment. If a change of control of the Company occurs
when the Employee is employed by the Company, the Company will continue
thereafter to employ the Employee, and the Employee will remain in the employ
of the Company, in accordance with the terms and provisions of this Agreement,
for a period of one (1) years following the date of such change (the
"Employment Period"). As used herein, the phrase "change of control of the
Company" means the first to occur of the following:
(a) The acquisition of more than twenty (20%) percent of the
outstanding shares of voting stock of the Company by any person or entity or
group thereof acting in concert, excluding affiliates of the Company, by means
of an offer made publicly to the holders of all or substantially all of the
outstanding shares of the voting stock of the Company to acquire such shares
for cash, securities, other property or any combination thereof; or
<PAGE> 2
(b) Any person or entity acquires, subsequent to the date of
this Agreement, beneficial ownership of twenty (20%) percent or more of the
then issued and outstanding voting common stock of the Company in any manner
other than a purchase of such stock directly from the Company for cash; or
(c) The sale, assignment or transfer by the Company of all or
substantially all of its business or assets, in a transaction or related series
of transactions, except any such sales to affiliates of the Company; or
(d) The Company merges or consolidates or reorganizes with or
into any other corporation or corporations other than its affiliates or
engages in any other similar business combination or reorganization; or
(e) A Schedule 13D or its equivalent is filed under the
Securities Exchange Act of 1934 with respect to the voting common stock of the
Company, by or on behalf of any person (within the meaning of that term as
defined in the regulations governing such Schedules), which states expressly
or by implication that such person intends to change the management, direction
or control of the Company or its policies; or
(f) A majority of the Board of Directors of the Company does
not consist of persons who were serving in the capacity on the date of this
Agreement, or who were appointed or nominated to serve as a Director by such
persons or by persons who were themselves so appointed or nominated.
(2) Duties. Unless otherwise agreed by the Company and Employee,
during the Employment Period the Employee shall be employed by the Company in
the same position as that which the Employee held on the date of the change of
control of the Company. In such employment, his duties and authority shall
consist of and include all duties and authority customarily performed and held
by a person holding an equivalent position with a corporation of similar nature
and size, as such duties and authority related to such position are reasonably
defined and delegated from time to time by the Board of Directors of the
Company. However, no change of the Employee's location of employment to outside
the Oconomowoc area, or in the Employee's title, shall be made without the
prior written consent of the Employee. The Employee shall have the powers
necessary to perform the duties assigned and shall be provided such supporting
services, staff, secretarial and other assistance, office space and
accouterments as shall be reasonably necessary and appropriate in light of the
duties assigned (but in no event, in any case, smaller in size or lesser in
quality than that being furnished to the Employee on the date of the change of
control of the Company).
<PAGE> 3
The Employee shall devote his entire business time, energy and skills
to such employment while so employed, but the Employee shall not be required to
devote more than an average of approximately 45 hours per calendar week to such
employment. The Employee shall be entitled to a minimum of three (3) weeks
(fifteen [15] working days) of paid vacation annually. The Employee shall have
the sole discretion to determine the time and intervals of such vacation.
(3) Compensation. During the Employment Period, the Employee shall be
compensated as follows:
(a) He shall receive a salary equal to his salary as in effect
as of the date of the change of control of the Company, subject to adjustment as
hereinafter provided.
(b) He shall be reimbursed for any and all monies advanced in
connection with his employment for reasonable and necessary expenses incurred
by him on behalf of the Company.
(c) He shall be included to the extent eligible thereunder in
any and all plans providing benefits for the Company's employees, including,
but not limited to, life, accidental death and dismemberment, long term
disability, hospitalization, medical and retirement, and be provided any and
all other benefits and perquisites (including use of an automobile) made
available to other employees of comparable status, at the expense of the
Company on a comparable basis; and
(d) He shall be included in all profit sharing, bonus, deferred
compensation, split dollar life insurance, and similar or comparable plans
customarily extended by the Company to corporate officers and key employees of
the Company.
(4) Annual Compensation Adjustments. The Board of Directors of the
Company or an appropriate committee thereof will consider and appraise the
contributions of the Employee to the Company's operating efficiency, growth,
production and profits, at least annually during the Employment Period, and in
accordance with past practice, the Employee's compensation rate shall be
annually adjusted upward to be commensurate with increases given to other
corporate officers and key employees generally and as the scope and success of
the Company's operations or the Employee's duties expand.
(5) Retirement. If, during the Employment Period, or during the
applicable period, if any, described in paragraph (7), the Employee shall
deliver to the Company a statement signed by him, stating that the Employee
voluntarily chooses to retire early from the Company, or if the Employee shall
reach the age of 65, or shall
<PAGE> 4
with the mutual agreement of the Company agree in writing on early retirement,
then this Agreement shall terminate on the effective date of such event and
the terms of the Company's retirement policies or such mutual agreement
shall immediately become effective.
(6) Termination Other Than for Cause.
(a) If, during the Employment Period, the Company shall
terminate the employment of the Employee for any reason other than the reasons
set forth in paragraph (5) above or paragraph (7) below, thereafter he or his
personal representatives shall continue to be paid monthly an amount equal to
his then current monthly base salary plus one-twelfth (1/12th) of the annual
average of the executive incentive program payments and all bonuses paid to
the Employee in the preceding five (5) years, and he shall be entitled to
continue life, accidental death and dismemberment, long term disability and
hospitalization and medical insurances and shall receive the other employee
benefits and perquisites described in subparagraphs (3)(c) and (3)(d) hereof,
for the remainder of the Employment Period or as specified by Federal law,
whichever time period is longer.
(b) If during the Employment Period the Employee's duties
shall be changed substantially without his written consent from those specified
in paragraph (2) or he shall fail to be reelected or he shall be removed as
a corporate officer of the Company, or if the Company violates this Agreement,
the Employee shall have the right to elect to terminate his employment under
this Agreement; and if he so elects, he or his personal representatives
shall continue to be paid monthly an amount equal to his then current monthly
base salary plus one-twelfth (1/12th) of the average of the executive incentive
program payments and all bonuses paid to the Employee in the preceding five (5)
years, and he shall be entitled to participate in group life, hospitalization
and medical insurance and shall receive the other employee benefits and
perquisites described in subparagraphs (3)(c) and (3)(d) hereof, for the
remainder of the Employment Period.
(7) Termination for Cause. Employee agrees that this Agreement may be
terminated by the Company at any time for cause, which shall mean only death,
conviction for criminal fraud, the commission of a felony, or becoming the
subject of a final nonappealable judgement of a court of competent jurisdiction
holding that the Employee is liable to the Company for damages for obtaining a
personal benefit in a transaction adverse to the interest of the Company. In
the event this Agreement is terminated for cause, the Employee shall forfeit
his right to any and all benefits he would otherwise have been entitled
thereafter to receive under the Agreement.
<PAGE> 5
(8) Enforceability. The parties agree that nothing in this Agreement
shall in any way abrogate the right of the Company and the Employee to enforce
by injunction or otherwise the due and proper performance and observance of the
several covenants herein contained to be performed by the Employee or the
Company or to recover damages for breach thereof.
(9) Successors and Assigns. If the Company sells, assigns or
transfers all or substantially all of its business and assets to any person,
excluding affiliates of the Company, or if the Company merges into or
consolidates or otherwise combines with any person which is a continuing or
successor entity, then the Company shall assign all of its right, title and
interest in this Agreement as of the date of such event to the person which is
either the acquiring or successor corporation, and such person(s) shall
assume and perform from and after the date of such assignment all of the terms,
conditions and provisions imposed by this Agreement upon the Company. In case
of such assignment by the Company and of assumption and agreement by such
person(s), all further rights as well as all other obligations of the Company
under this Agreement thenceforth shall cease and terminate and thereafter the
expression "the Company" wherever used herein shall be deemed to mean such
person(s).
(10) Affiliate. The term "affiliate" as used in this Agreement
means any corporation more than fifty (50%) percent of the outstanding voting
common stock of which is owned at the time by the Company or an affiliate of
the Company.
(11) Supplemental Agreement. This Agreement supplements, and is not an
amendment to or in derogation of, any other agreement between the Company and
the Employee relating to the employment or the terms and conditions thereof. No
person, other than such person as may be designated by the Board of Directors
of the Company, shall have any authority on behalf of the Company to agree to
modify or change this Agreement.
(12) Severability. This Agreement is to be governed by and construed
under the laws of the State of Wisconsin. If any provision of this Agreement
shall be held invalid and unenforceable for any reason, such provision shall be
deemed deleted and the remainder of the Agreement shall be valid and
enforceable without such provision.
(13) Termination of Agreement. The Company has the right to terminate
the employment of the Employee except in contemplation of a change in control
of the Company, and the Employee may elect at his discretion to terminate his
employment, at any time prior to a change in control of the Company, in either
of which events this Agreement shall terminate.
<PAGE> 6
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its corporate seal affixed and attested by its duly authorized
officers, and the Employee has hereunto set his hand and seal as of the date
first above written.
STOKELY USA, INC.
By /s/ Robert M. Brill
-------------------------
(Corporate Seal) Attest: Secretary
----------------------
/s/ Michael A. Wilkes
------------------------------
Michael A. Wilkes, Employee
<PAGE> 1
EXHIBIT 10(ss)
CHANGE IN CONTROL CONTINGENT EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this 16th day of October, 1992, by and between
STOKELY USA, INC., a Wisconsin corporation (the "Company"), and ROBERT L. COOK,
Vice President of Operations of the Company (the "Employee"),
WITNESSETH:
WHEREAS, sudden takeovers, acquisitions or changes of control of
domestic corporations have occurred frequently in recent years, and current
conditions may contribute to the continuation or acceleration of this trend;
and
WHEREAS, the possibility of a sudden takeover, acquisition or change of
control can create uncertainty of employment and may cause the loss of valuable
Company officers, to the detriment of the company and its shareholders; and
WHEREAS, it is believed that the detriment described can be
substantially reduced by an agreement on the terms hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter set forth, IT IS AGREED:
(1) Continued Employment. If a change of control of the Company
occurs when the Employee is employed by the Company, the Company will continue
thereafter to employ the Employee, and the Employee will remain in the employ
of the Company, in accordance with the terms and provisions of this Agreement,
for a period of one (1) years following the date of such change (the
"Employment Period"). As used herein, the phrase "change of control of the
Company" means the first to occur of the following:
(a) The acquisition of more than twenty (20%) percent of the
outstanding shares of voting stock of the Company by any person or entity or
group thereof acting in concert, excluding affiliates of the Company, by means
of an offer made publicly to the holders of all or substantially all of the
outstanding shares of the voting stock of the Company to acquire such shares
for cash, securities, other property or any combination thereof; or
<PAGE> 2
(b) Any person or entity acquires, subsequent to the date of this
Agreement, beneficial ownership of twenty (20%) percent or more of the then
issued and outstanding voting common stock of the Company in any manner other
than a purchase of such stock directly from the Company for cash; or
(c) The sale, assignment or transfer by the Company of all or
substantially all of its business or assets, in a transaction or related series
of transactions, except any such sales to affiliates of the Company; or
(d) The Company merges or consolidates or reorganizes with or
into any other corporation or corporations other than its affiliates or
engages in any other similar business combination or reorganization; or
(e) A Schedule 13D or its equivalent is filed under the
Securities Exchange Act of 1934 with respect to the voting common stock of the
Company, by or on behalf of any person (within the meaning of that term as
defined in the regulations governing such Schedules), which states expressly
or by implication that such person intends to change the management, direction
or control of the Company or its policies; or
(f) A majority of the Board of Directors of the Company does not
consist of persons who were serving in the capacity on the date of this
Agreement, or who were appointed or nominated to serve as a Director by
such persons or by persons who were themselves so appointed or nominated.
(2) Duties. Unless otherwise agreed by the Company and Employee,
during tho Employment Period the Employee shall be employed by the Company in
the same position as that which the employee held on the date of the change of
control of the Company. In such employment, his duties and authority shall
consist of and include all duties and authority customarily performed and held
by a person holding an equivalent position with a corporation of similar nature
and size, as such duties and authority related to such position are reasonably
defined and delegated from time to time by the Board of Directors of the
Company. However, no change of the Employee's location of employment to
outside the Oconomowoc area, or in the Employee's title, shall be made without
the prior written consent of the Employee. The Employee shall have the powers
necessary to perform the duties assigned and shall be provided such supporting
services, staff, secretarial and other assistance, office space and
accouterments as shall be reasonably necessary and appropriate in light of the
duties assigned (but in no event, in any case, smaller in size or lesser in
quality than that being furnished to the Employee on the date of the change of
control of the Company).
<PAGE> 3
The Employee shall devote his entire business time, energy and skills
to such employment while so employed, but the Employee shall not be required to
devote more than an average of approximately 45 hours per calendar week to such
employment. The Employee shall be entitled to a minimum of three (3) weeks
(fifteen [15] working days) of paid vacation annually. The Employee shall have
the sole discretion to determine the time and intervals of such vacation.
(3) Compensation. During the Employment Period, the Employee shall be
compensated as follows:
(a) He shall receive a salary equal to his salary as in effect as
of the date of the change of control of the Company, subject to adjustment as
hereinafter provided.
(b) He shall be reimbursed for any and all monies advanced in
connection with his employment for reasonable and necessary expenses incurred
by him on behalf of the Company.
(c) He shall be included to the extent eligible thereunder in
any and all plans providing benefits for the Company's Employees,
including, but not limited to, life, accidental death and dismemberment,
long term disability, hospitalization, medical and retirement, and be
provided any and all other benefits and perquisites (including use of an
automobile) made available to other employees of comparable status, at the
expense of the Company on a comparable basis; and
(d) He shall be included in all profit sharing, bonus, deferred
compensation, split dollar life insurance, and similar or comparable plans
customarily extended by the Company to corporate officers and key employees of
the Company.
(4) Annual Compensation Adjustments. The Board of Directors of the
Company or an appropriate committee thereof will consider and appraise the
contributions of the Employee to the Company's operating efficiency, growth,
production and profits, at least annually during the Employment Period, and in
accordance with past practice, the Employee's compensation rate shall be
annually adjusted upward to be commensurate with increases given to other
corporate officers and key employees generally and as the scope and success of
the Company's operations or the Employee's duties expand.
(5) Retirement. If, during the Employment Period, or during the
applicable period, if any, described in paragraph (7), the Employee shall
deliver to the Company a statement signed by him, stating that the Employee
voluntarily chooses to retire early from the Company, or if the Employee shall
reach the age of 65, or shall
<PAGE> 4
with the mutual agreement of the Company agree in writing on early retirement,
then this Agreement shall terminate on the effective date of such event and
the terms of the Company's retirement policies or such mutual agreement
shall immediately become effective.
(6) Termination Other Than for Cause.
(a) If, during the Employment Period, the Company shall terminate
the employment of the Employee for any reason other than the reasons set forth
in paragraph (5) above or paragraph (7) below, thereafter he or his personal
representatives shall continue to be paid monthly an amount equal to his then
current monthly base salary plus one-twelfth (1/12th) of the annual average of
the executive incentive program payments and all bonuses paid to the Employee
in the preceding five (5) years, and he shall be entitled to continue life,
accidental death and dismemberment, long term disability and hospitalization
and medical insurances and shall receive the other employee benefits and
perquisites described in subparagraphs (3)(c) and (3)(d) hereof, for the
remainder of the Employment Period or as specified by Federal law, whichever
time period is longer.
(b) If during the Employment Period the Employee's duties shall be
changed substantially without his written consent from those specified in
paragraph (2) or he shall fail to be reelected or he shall be removed as a
corporate officer of the Company, or if the Company violates this Agreement,
the Employee shall have the right to elect to terminate his employment
under this Agreement; and if he so elects, he or his personal
representatives shall continue to be paid monthly an amount equal to his then
current monthly base salary plus one-twelfth (1/12th) of the average of the
executive incentive program payments and all bonuses paid to the Employee in
the preceding five (5) years, and he shall be entitled to participate in group
life, hospitalization and medical insurance and shall receive the other
employee benefits and perquisites described in subparagraphs (3)(c) and
(3)(d) hereof, for the remainder of the Employment Period.
(7) Termination for Cause. Employee agrees that this Agreement
may be terminated by the Company at any time for cause, which shall mean only
death, conviction for criminal fraud, the commission of a felony, or
becoming the subject of a final nonappealable judgement of a court of
competent jurisdiction holding that the Employee is liable to the Company for
damages for obtaining a personal benefit in a transaction adverse to the
interest of the Company. In the event this Agreement is terminated for cause,
the Employee shall forfeit his right to any and all benefits he would otherwise
have been entitled thereafter to receive under the Agreement.
<PAGE> 5
(8) Enforceability. The parties agree that nothing in this Agreement
shall in any way abrogate the right of the Company and the Employee to enforce
by injunction or otherwise the due and proper performance and observance of the
several covenants herein contained to be performed by the Employee or the
Company or to recover damages for breach thereof.
(9) Successors and Assigns. If the Company sells, assigns or
transfers all or substantially all of its business and assets to any person,
excluding affiliates of the Company, or if the Company merges into or
consolidates or otherwise combines with any person which is a continuing or
successor entity, then the Company shall assign all of its right, title and
interest in this Agreement as of the date of such event to the person which is
either the acquiring or successor corporation, and such person(s) shall
assume and perform from and after the date of such assignment all of the terms,
conditions and provisions imposed by this Agreement upon the Company. In case
of such assignment by the Company and of assumption and agreement by such
person(s), all further rights as well as all other obligations of the Company
under this Agreement thenceforth shall cease and terminate and thereafter the
expression "the Company" wherever used herein shall bs deemed to mean such
person(s).
(10) Affiliate. The term "affiliate" as used in this Agreement
means any corporation more than fifty (50%) percent of the outstanding voting
common stock of which is owned at the time by the Company or an affiliate of
the Company.
(11) Supplemental Agreement. This Agreement supplements, and is not an
amendment to or in derogation of, any other agreement between the Company and
the Employee relating to the employment or the terms and conditions thereof. No
person, other than such person as may be designated by the Board of Directors
of the Company, shall have any authority on behalf of the Company to agree to
modify or change this Agreement.
(12) Severability. This Agreement is to be governed by and construed
under the laws of the State of Wisconsin. If any provision of this Agreement
shall be held invalid and unenforceable for any reason, such provision shall be
deemed deleted and the remainder of the Agreement shall be valid and
enforceable without such provision.
(13) Termination of Agreement. The Company has the right to terminate
the employment of the Employee except in contemplation of a change in control
of the Company, and the Employee may elect at his discretion to terminate his
employment, at any time prior to a change in control of the Company, in either
of which events this Agreement shall terminate.
<PAGE> 6
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its corporate seal affixed and attested by its duly authorized
officers, and the Employee has hereunto set his hand and seal as of the date
first above written.
STOKELY USA, INC.
By /s/ Robert M. Brill, Secretary
-----------------------------
(Corporate Seal) Attest:
-----------------------
/s/ Robert L. Cook
---------------------------
Robert L. Cook, Employee
<PAGE> 1
EXHIBIT 10(tt)
CHANGE IN CONTROL CONTINGENT EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this 16th day of October, 1992, by and between
STOKELY USA, INC., a Wisconsin corporation (the "Company"), and EDDIE FOSTER,
Vice President National Sales Manager of the Company (the "Employee"),
WITNESSETH:
WHEREAS, sudden takeovers, acquisitions or changes of control of
domestic corporations have occurred frequently in recent years, and current
conditions may contribute to the continuation or acceleration of this trend;
and
WHEREAS, the possibility of a sudden takeover, acquisition or change of
control can create uncertainty of employment and may cause the loss of valuable
Company officers, to the detriment of the Company and its shareholders; and
WHEREAS, it is believed that the detriment described can be
substantially reduced by an agreement on the terms hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter set forth, IT IS AGREED:
(1) Continued Employment. If a change of control of the Company
occurs when the Employee is employed by the Company, the Company will continue
thereafter to employ the Employee, and the Employee will remain in the employ
of the Company, in accordance with the terms and provisions of this Agreement,
for a period of one (1) years following the date of such change (the
"Employment Period"). As used herein, the phrase "change of control of the
Company" means the first to occur of the following:
(a) The acquisition of more than twenty (20%) percent of the
outstanding shares of voting stock of the Company by any person or entity or
group thereof acting in concert, excluding affiliates of the Company, by means
of an offer made publicly to the holders of all or substantially all of the
outstanding shares of the voting stock of the Company to acquire such shares
for cash, securities, other property or any combination thereof; or
<PAGE> 2
(b) Any person or entity acquires, subsequent to the date of this
Agreement, beneficial ownership of twenty (20%) percent or more of the then
issued and outstanding voting common stock of the Company in any manner other
than a purchase of such stock directly from the Company for cash; or
(c) The sale, assignment or transfer by the Company of all or
substantially all of its business or assets, in a transaction or
related series of transactions, except any such sales to affiliates of the
Company; or
(d) The Company merges or consolidates or reorganizes with or
into any other corporation or corporations other than its affiliates or
engages in any other similar business combination or reorganization; or
(e) A Schedule 13D or its equivalent is filed under the
Securities Exchange Act of 1934 with respect to the voting common stock of the
Company, by or on behalf of any person (within the meaning of that term as
defined in the regulations governing such Schedules), which states expressly or
by implication that such person intends to change the management, direction or
control of the Company or its policies; or
(f) A majority of the Board of Directors of the Company does not
consist of persons who were serving in the capacity on the date of this
Agreement, or who were appointed or nominated to serve as a Director by such
persons or by persons who were themselves so appointed or nominated.
(2) Duties. Unless otherwise agreed by the Company and Employee,
during the Employment Period the Employee shall be employed by the Company in
the same position as that which the Employee held on the date of the change of
control of the Company. In such employment, his duties and authority shall
consist of and include all duties and authority customarily performed and held
by a person holding an equivalent position with a corporation of similar nature
and size, as such duties and authority related to such position are reasonably
defined and delegated from time to time by the Board of Directors of the
Company. However, no change of the Employee's location of employment to
outside the Oconomowoc area, or in the Employee's title, shall be made without
the prior written consent of the Employee. The Employee shall have the powers
necessary to perform the duties assigned and shall be provided such supporting
services, staff, secretarial and other assistance, office space and
accouterments as shall be reasonably necessary and appropriate in light of the
duties assigned (but in no event, in any case, smaller in size or lesser in
quality than that being furnished to the Employee on the date of the change of
control of the Company).
<PAGE> 3
The Employee shall devote his entire business time, energy and skills
to such employment while so employed, but the Employee shall not be required to
devote more than an average of approximately 45 hours per calendar week to such
employment. The Employee shall be entitled to a minimum of three (3) weeks
(fifteen [15] working days) of paid vacation annually. The Employee shall have
the sole discretion to determine the time and intervals of such vacation.
(3) Compensation. During the Employment Period, the Employee shall be
compensated as follows:
(a) He shall receive a salary equal to his salary as in effect as
of the date of the change of control of the Company, subject to adjustment as
hereinafter provided.
(b) He shall be reimbursed for any and all monies advanced in
connection with his employment for reasonable and necessary expenses incurred by
him on behalf of the Company.
(c) He shall be included to the extent eligible thereunder in
any and all plans providing benefits for the Company's employees,
including, but not limited to, life, accidental death and dismemberment,
long term disability, hospitalization, medical and retirement, and be
provided any and all other benefits and perquisites (including use of an
automobile) made available to other employees of comparable status, at the
expense of the Company on a comparable basis; and
(d) He shall be included in all profit sharing, bonus, deferred
compensation, split dollar life insurance, and similar or comparable plans
customarily extended by the Company to corporate officers and key employees of
the Company.
(4) Annual Compensation Adjustments. The Board of Directors of the
Company or an appropriate committee thereof will consider and appraise the
contributions of the Employee to the Company's operating efficiency, growth,
production and profits, at least annually during the Employment Period, and in
accordance with past practice, the Employee's compensation rate shall be
annually adjusted upward to be commensurate with increases given to other
corporate officers and key employees generally and as the scope and success of
the Company's operations or the Employee's duties expand.
(5) Retirement. If, during the Employment Period, or during the
applicable period, if any, described in paragraph (7), the Employee shall
deliver to the Company a statement signed by him, stating that the Employee
voluntarily chooses to retire early from the Company, or if the Employee shall
reach the age of 65, or shall
<PAGE> 4
with the mutual agreement of the Company agree in writing on early retirement,
then this Agreement shall terminate on the effective date of such event and
the terms of the Company's retirement policies or such mutual agreement
shall immediately become effective.
(6) Termination Other Than for Cause.
(a) If, during the Employment Period, the Company shall terminate
the employment of the Employee for any reason other than the reasons set forth
in paragraph (5) above or paragraph (7) below, thereafter he or his personal
representatives shall continue to be paid monthly an amount equal to his then
current monthly base salary plus one-twelfth (1/12th) of the annual average of
the executive incentive program payments and all bonuses paid to the Employee
in the preceding five (5) years, and he shall be entitled to continue life,
accidental death and dismemberment, long term disability and hospitalization
and medical insurances and shall receive the other employee benefits and
perquisites described in subparagraphs (3)(c) and (3)(d) hereof, for the
remainder of the Employment Period or as specified by Federal law, whichever
time period is longer.
(b) If during the Employment Period the Employee's duties shall be
changed substantially without his written consent from those specified in
paragraph (2) or he shall fail to be reelected or he shall be removed as a
corporate officer of the Company, or if the Company violates this Agreement,
the Employee shall have the right to elect to terminate his employment under
this Agreement; and if he so elects, he or his personal
representatives shall continue to be paid monthly an amount equal to his then
current monthly base salary plus one-twelfth (1/12th) of the average of the
executive incentive program payments and all bonuses paid to the Employee in
the preceding five (5) years, and he shall be entitled to participate in group
life, hospitalization and medical insurance and shall receive the other
employee benefits and perquisites described in subparagraphs (3)(c) and
(3)(d) hereof, for the remainder of the Employment Period.
(7) Termination for Cause. Employee agrees that this Agreement
may be terminated by the Company at any time for cause, which shall mean only
death, conviction for criminal fraud, the commission of a felony, or
becoming the subject of a final nonappealable judgement of a court of
competent jurisdiction holding that the Employee is liable to the Company for
damages for obtaining a personal benefit in a transaction adverse to the
interest of the Company. In the event this Agreement is terminated for cause,
the Employee shall forfeit his right to any and all benefits he would otherwise
have been entitled thereafter to receive under the Agreement.
<PAGE> 5
(8) Enforceability. The parties agree that nothing in this Agreement
shall in any way abrogate the right of the Company and the Employee to enforce
by injunction or otherwise the due and proper performance and observance of the
several covenants herein contained to be performed by the Employee or the
Company or to recover damages for breach thereof.
(9) Successors and Assigns. If the Company sells, assigns or
transfers all or substantially all of its business and assets to any person,
excluding affiliates of the Company, or if the Company merges into or
consolidates or otherwise combines with any person which is a continuing or
successor entity, then the Company shall assign all of its right, title and
interest in this Agreement as of the date of such event to the person which is
either the acquiring or successor corporation, and such person(s) shall
assume and perform from and after the date of such assignment all of the terms,
conditions and provisions imposed by this Agreement upon the Company. In case
of such assignment by the Company and of assumption and agreement by such
person(s), all further rights as well as all other obligations of the Company
under this Agreement thenceforth shall cease and terminate and thereafter the
expression "the Company" wherever used herein shall be deemed to mean such
person(s).
(10) Affiliate. The term "affiliate" as used in this Agreement
means any corporation more than fifty (50%) percent of the outstanding voting
common stock of which is owned at the time by the Company or an affiliate of
the Company.
(11) Supplemental Agreement. This Agreement supplements, and is not an
amendment to or in derogation of, any other agreement between the Company and
the Employee relating to the employment or the terms and conditions thereof. No
person, other than such person as may be designated by the Board of Directors
of the Company, shall have any authority on behalf of the Company to agree to
modify or change this Agreement.
(12) Severability. This Agreement is to be governed by and construed
under the laws of the State of Wisconsin. If any provision of this Agreement
shall be held invalid and unenforceable for any reason, such provision shall be
deemed deleted and the remainder of the Agreement shall be valid and
enforceable without such provision.
(13) Termination of Agreement. The Company has the right to terminate
the employment of the Employee except in contemplation of a change in control
of the Company, and the Employee may elect at his discretion to terminate his
employment, at any time prior to a change in control of the Company, in either
of which events this Agreement shall terminate.
<PAGE> 6
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its corporate seal affixed and attested by its duly authorized
officers, and the Employee has hereunto set his hand and seal as of the date
first above written.
STOKELY USA, INC.
By /s/ Robert M. Brill, Secretary
-----------------------------
(Corporate Seal) Attest:
----------------------------
/s/ Eddie W. Foster
----------------------------------
Eddie Foster, Employee
<PAGE> 1
EXHIBIT 10(uu)
STOKELY USA, INC.
1994 EXECUTIVE STOCK OPTION PLAN
I. PURPOSE
1.1 Establishment of Plan. The purpose of the Stokely USA, Inc. 1994
Executive Stock Option Plan (the "Plan") is to promote the growth of Stokely
USA, Inc. ("Stokely") by providing increased incentives for key employees of
Stokely and of any or future subsidiaries. A "Subsidiary" as used herein
shall mean any corporation in which Stokely or another corporation qualifying
as a Subsidiary within this definition owns 50% of more of the total combined
voting power of all classes of stock. This Plan provides for the granting of
(i) incentive stock options ("ISOs") intended to qualify as such within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended from
time to time (the "Code"), (ii) non-qualified stock options ("NSOs"), and (iii)
stock appreciation rights ("SARs").
II. SHARES SUBJECT TO OPTION
2.1 Available Shares. The shares available for options of whatever type
under this Plan shall be 400,000 shares of Stokely's common stock, ($.05 par
value) and may be authorized but unissued stock or stock issued and reacquired
by Stokely. Shares subject to and not issued under any option which expires,
terminates, or is cancelled for any reason during the term of the Plan shall
again become available for the granting of options under the Plan.
2.2 Changes in the Number of Available Shares. In the event of any
recapitalization, stock split, or reverse split, combination or exchange of
shares, stock dividend, merger in which Stokely is the surviving corporation,
combination or exchange of shares, or other capital change affecting the common
stock of Stokely, the Committee (defined in paragraph 3.1 hereof) shall make,
subject to the approval of the Board of Directors of Stokely, equitable and
appropriate changes in the aggregate number and kind of shares available for
options under the plan and in the number, price, and kind of shares covered by
options granted or to be granted under the Plan, provided that no changes shall
be made in any ISO which would cause such option to fail to continue to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
III. ADMINISTRATION
3.1 The Compensation Committee of the Board of Directors of Stokely (the
"Board") or such other committee appointed by the Board (the "Committee") shall
administer the Plan with respect to options granted in accordance with the
provisions of paragraph 4.1.
<PAGE> 2
The Committee shall consist of at least three members of the Board, and a
majority of the Committee shall be "disinterested persons", as that term is
defined under applicable federal law, at the time any ISOs, NSOs, or SARs are
granted under the Plan. The Committee shall have the power, subject always to,
the express provisions of the Plan:
a) to determine from time to time which of the eligible persons shall be
granted options under the Plan, the type of options, the time or times
when, and the price per share and number of shares for which, an
option or options shall be granted to such persons;
b) to prescribe the other terms and provisions (which need not be
identical) of each option granted under the Plan to eligible persons;
c) to construe and interpret the Plan and options granted under it, and
to establish, amend, and revoke rules and regulations for Plan
administration. The Committee, in the exercise of this power, may
correct any defect or supply any omission, or reconcile any
inconsistency in the Plan, in any option agreement, in the manner and
to the extend it shall deem necessary or expedient to make the Plan
fully effective. All decisions and determinations by the
Committee in exercising this power shall be final and binding upon
Stokely and the optionees; and
d) generally, to exercise such powers and to perform such acts as are
deemed necessary or expedient to promote the best interests of Stokely
with respect to the Plan.
IV. ELIGIBILITY FOR OPTIONS
4.1 Key full-time employees of Stokely or any Subsidiary shall be
eligible to receive ISOs, NSOs, and SARs. The Committee may from time to time
grant options to one or more eligible persons. Further, the Committee may
grant SARs to eligible persons in accordance with Article VIII. The maximum
number of shares for which grants may be made to any eligible employee shall
not exceed 50,000 shares.
V. OPTION TERMS AND CONDITIONS
5.1 Option Agreements. Options granted hereunder shall be evidenced
by option agreements containing such terms and conditions as the Committee
shall establish from time to time consistent with the Plan. Option agreements
need not be identical but each option
2
<PAGE> 3
agreement shall, as appropriate, contain language including the substance of
the following provisions:
(a) Number of Shares and Price. Each option agreement shall state the
number of shares subject to the option and the option price therefor.
The price for each ISO shall be not less than 100% of the fair market
value of a share on the date such option is granted. The price for
each NSO granted to an employee shall be not less than 90% of the fair
market value of the share on the date such NSO is granted. For all
purposes of the Plan, fair market value shall mean the closing price for
the shares in the over-the-counter market on the valuation date, as
reported by NASDAQ (the National Association of Securities Dealers, Inc.
Automatic Quotation System). In the absence of reported sales on
NASDAQ on any trading date, fair market value shall be the average of
the reported closing bid and asked price for the stock on NASDAQ on such
date. Notwithstanding any other provision in this Plan, for any eligible
employee who, at the time an ISO is granted, owns (directly and under
the attributable rules of Section 425(d) of the Code) stock possessing
more than 10% of the total combined voting power of Stokely (or any
parent or Subsidiary) the option price under such ISO shall be not less
than 110% of the fair market value of the shares subject to such ISO
and such option, by its terms, shall not be exercisable after the
expiration of five years from the date such option is granted.
(b) Vesting of Options. Options may be exercised only in accordance with
the terms of each option agreement. The Committee shall determine the
maximum number of shares which may be exercisable in any year. The
maximum fair market value of Stokely stock (determined at the time of
grant) covered by ISOs that first become exercisable by any optionee in
any calendar year is limited to $100,000.
(c) Term of Options and Restriction on Exercise. An NSO granted in
conjunction with an SAR under paragraph 8.1 shall only be exercisable
during the period beginning on the third business day following the date
of release of quarterly or annual summary statements of operations and
ending on the twelfth business day following such date (the "Window
Period"). All rights to exercise an ISO or NSO shall expire ten years
from the date such option is granted; provided, however that the
Committee may designate an earlier expiration date for options granted
to optionees. Although Stokely intends to exert its best efforts so
that the shares purchasable upon the exercise of an option will be
registered under, or exempt from the registration requirements of the
Federal Securities Act
3
<PAGE> 4
of 1933 (the "Act") and any applicable state securities law at the time
the option becomes exercisable, if the exercise of an option would
otherwise result in the violation by Stokely of any provision of the Act
or of any state securities law, Stokely may require that exercise be
deferred until Stokely has taken appropriate action to avoid any
violation of the Act.
(d) Non-transferability. Except as provided in Section VI hereof:
(i) all options granted pursuant to the Plan shall not be transferable
except by will or the laws of descent and distribution, and shall be
exercisable during the optionee's lifetime only by the optionee or by
his/her guardian or legal representative; and (ii) no options or any
privileges pertaining thereto or under the Plan shall be transferred,
assigned, pledged, or hypothecated in any way, whether by operation of
law or otherwise, nor be subject to execution, attachment, or similar
process.
(e) Method of Exercise and Payment of Purchase Price. Subject to
subparagraph (c) above, an option may be exercised, as to all or part
of the shares covered by the option, by the optionee by delivering to
the Security of Stokely at its principal business office on any business
day, a written notice specifying the number of shares the optionee
desires to purchase. The option price shall be paid in full in cash
or, in the discretion of the Committee in shares of stock of Stokely,
valued at its fair market value determined as of the date of exercise,
or in a combination thereof.
5.2 Rights as Shareholder. An optionee shall not be deemed the holder of
any shares subject to an option until such shares are fully paid and issued to
the optionees after exercise of such option.
5.3 Withholding Taxes. The Committee may require, as a condition to the
exercise of a NSO, that the optionee concurrently pay to Stokely the entire
amount or portion of any taxes which Stokely may be required to withhold by
reason of such exercise, in such amount as the Committee in its discretion may
determine. The required withholding may be paid in cash or, in the discretion
of the Committee, in shares of stock of Stokely to be issued upon exercise,
valued at their fair market value as of the date the withholding obligation
arises, or in a combination thereof.
4
<PAGE> 5
VI. TERMINATION OF EMPLOYMENT OR SERVICE
6.1 Death. In the event of the death of an optionee while in the employ of
Stokely or its Subsidiaries, the options then held by such optionee, whether or
not otherwise exercisable at the time of such death, may be exercised, by the
estate of the optionee or by a person who acquired the right to exercise such
options by bequest or inheritance from such optionee, within one year after the
date of such death, but not later than the date on which the options would
otherwise expire. Any options or portions thereof not so exercised shall
terminate.
6.2 Disability. If the employment of an optionee is terminated by
reason of disability (in case of an ISO, as defined in Section 105(d)(4) of
the Code and in case of an NSO, as determined by the Committee, the options
then held by such optionee may be exercised, whether or not otherwise
exercisable at the time of such termination, within one year after such
termination, but not later than the date on which the options would otherwise
expire. Any options or portions thereof not so exercised shall terminate.
6.3 Other Termination. If the employment or service of an optionee is
terminated for any reason other than such death or disability, but is not
terminated for cause or by the optionee's voluntary termination, options then
held by such optionee to the extent that the same are exercisable on the
date of such termination shall be exercisable at any time within three months
thereafter, but not later than the date on which the options would otherwise
expire. Notwithstanding the foregoing, an optionee whose employment or service
is terminated by retirement in accordance with Stokely's normal retirement
policies, as determined by the Committee, shall be permitted to exercise any
options held by such optionee, whether or not exercisable at the time
of such termination, within three months after the date of such
termination, but not later than the date on which the options would otherwise
expire. However, notwithstanding any other provision of the Plan, if the
employment or service of an optionee is terminated for cause, as determined by
the Committee or if an optionee's voluntary termination of employment with
Stokely, all options then held by such optionee shall be deemed immediately
terminated and shall not be exercisable by such optionee.
6.4 Transfers and Leaves. A change in employment from Stokely to a
Subsidiary, or vice versa, shall not constitute termination of employment for
purposes of the Plan. The Committee may determine that for purposes of the
Plan, an optionee who is on leave of absence (but in the case of ISOs, only to
the extent that his/her employment is not determined to be interrupted thereby
for purposes of Section 422 of the Code) will still be considered as in the
continuous employment of Stokely or a Subsidiary.
5
<PAGE> 6
VII. CORPORATE SALE OR CHANGE OF CONTROL
7.1 Effect of Change in Control of Stokely Notwithstanding any of the
provisions of the Plan or any option agreement evidencing options granted
hereunder, upon a Change in Control of Stokely (as defined in Section 7.2) all
outstanding options shall become fully exercisable and all restrictions thereon
shall terminate in order that optionees may fully realize the benefits
thereunder. Further, in addition to Committee's authority set forth in Section
III, the Committee, as constituted before such Change in Control, is
authorized, and has sole discretion, as to any option, either at the time such
option is granted hereunder or any time thereafter, to take any one or more of
the following actions: (a) provide for the purchase of any such option, upon
the optionee's request, for an amount of cash equal to the difference between
the exercise price and then Fair Market Value of the Common Stock covered
thereby had such option been currently exercisable; (b) make such adjustment to
any such option then outstanding as the Committee deems appropriate to reflect
such Change in Control; and (c) cause any such option then outstanding to be
assumed, by the acquiring or surviving corporation, after such Change in
Control.
7.2 Definition of Change in Control. The term "Change in Control" shall
mean the occurrence, at any time during the specified term of an option granted
under the Plan, of any of the following events:
(a) Stokely is merged or consolidated or reorganized into or with another
corporation or other legal person (an "Acquiror") and as a result of such
merger, consolidation or reorganization less than 50% of the outstanding
voting securities or other capital interests of the surviving, resulting
or acquiring corporation or other person are owned in the aggregate by the
stockholders of Stokely, directly or indirectly, immediately prior to such
merger, consolidation or reorganization, other than the Acquiror or any
corporation or other person controlling, controlled by or under common
control with the Acquiror;
(b) Stokely sells all or substantially all of its business and/or assets
to an Acquiror, of which less than 50% of the outstanding voting securities
or other capital interests are owned in the aggregate by the stockholders
of Stokely, directly or indirectly, immediately prior to such sale, other
than the Acquiror or any corporation or other person controlling,
controlled by or under common control with the Acquiror; or
6
<PAGE> 7
(c) The election to the Board, without the recommendation or approval
of the incumbent Board, of the lesser of (i) three Directors of (ii)
Directors constituting a majority of the number of Directors of Stokely
then in office.
VIII. STOCK APPRECIATION RIGHTS
8.1 SAR Grants. Stock Appreciation Rights ("SARs") may be granted by the
Committee in conjunction with any NSO granted under this Plan, at the time
of the grant of such NSO, on the basis of up to one SAR for each share subject
to an NSO. All of the terms of this Plan respecting NSOs shall also apply to
SARs, subject to the further special rules of this Article and such other terms
and conditions not inconsistent therewith as the Committee may determine.
Accordingly, each SAR by its terms shall (1) become exercisable only when and
to the extent that the underlying NSO is exercised, (2) become transferable
only when the underlying NSO is transferable and under the same conditions, and
(3) expire when the underlying NSO expires.
8.2 Method of Exercise. SARs may be exercised by an optionee exercising
the underlying NSO or applicable portion thereof. An optionee may not exercise
an SAR if the underlying NSO has not been exercised. As provided in paragraph
8.1 above, SARs shall be exercisable at such time or times and only to the
extent that the underlying NSO is exercised; further, with respect to employees
who are officers of Stokely, SARs may be exercised only during such periods of
time as such may be allowed under Rule 16b-3 of the Securities and Exchange
Commission Act of 1934. To the extent that an NSO is exercised without a
simultaneous exercise of the related SARs, the related SARs shall terminate.
Notwithstanding the foregoing, if an optionee elects to have Stokely repurchase
an option pursuant to paragraph 7.1 above, the related SARs shall be deemed
exercised as of the Advanced Termination Date.
8.3 Payment. Upon such exercise of an SAR the optionee shall become
entitled to receive in cash (less normal state and federal withholding taxes)
the economic value of the SAR. The economic value shall be equal to the excess
of the fair market value (determined on the date of exercise of such SAR) of
one share of stock over the option price per share specified in the underlying
NSO, multiplied by the number of SARs exercised.
IX. MISCELLANEOUS
9.1 Term of Plan and Effective Date. Options may be granted under this
Plan at any time up until the expiration of ten years following the effective
Date of the Plan; on which date the plan shall expire, except as to
notwithstanding options, which options
7
<PAGE> 8
shall remain in effect until they have been exercised or have expired. The
Effective Date of the Plan shall be June 3, 1994, the date of its adoption by
the Board, subject, however, to approval by the shareholders of Stokely within
a period of twelve months after such adoption.
9.2 No Employment or Retention Agreement Intended. The grant of an option
hereunder shall not be deemed to imply the right to continued employment or
retention in service in any capacity by Stokely or a Subsidiary and shall not
constitute an employment agreement of any kind.
9.3 Separate Plan. This Plan is separate and independent from any other
stock option plan or similar plan of Stokely.
9.4 Amendment or Discontinuance. The Board may amend or discontinue the
Plan at any time, but may not, without the consent of the optionee to whom an
option has been granted, make any alteration in an option which would adversely
affect the same, or (except as provided in paragraph 2.2 hereof) without the
approval of the shareholders of Stokely, make any alteration which would
increase the aggregate number of shares available for options under the Plan,
decrease the minimum option price, extend the term of the Plan or the
maximum period during which any option may be exercised, or so alter the
Plan that ISOs issued under it would fail to meet the requirements for
incentive stock options under Section 422 of the Code.
9.5 Liability. No member of the Board, the Committee, the officers, or
employees of Stokely shall be personally liable for any action, omission or
determination made in good faith in connection with the Plan.
9.6 Government and Other Regulations. The obligations of Stokely to sell
and deliver shares of stock under this Plan shall be subject to all applicable
laws, rules, and regulations and the obtaining of all such approvals by the
governmental agencies as may be deemed necessary or desirable by the board of
Directors of Stokely, including (without limitation) the satisfaction of all
applicable federal, state, and local tax withholding requirements.
9.7 Governing Law. The Plan and any option contracts extended pursuant
hereto shall be interpreted and enforced in accordance with the laws of the
State of Wisconsin.
8
<PAGE> 1
EXHIBIT 10(vv)
[Stokely Logo]
March 13, 1990
Mr. Kenneth C. Murray
Stokely USA, Inc.
626 East Wisconsin Avenue
Oconomowoc, WI 53066
Dear Mr. Murray:
You are hereby granted an Option to Purchase at the price of $10.00 per share
and subject to the provisions hereinafter set forth, the total of two thousand
five hundred (2,500) shares of common stock of Stokely USA, Inc. ("Stokely").
Except as hereinafter provided, you may exercise this Option as follows: (a)
This option shall not be exercisable as to any of the shares subject hereto
prior to February 5, 1991. (b) Fifty (50%) percent of the total number of
shares subject to this Option shall be subject to exercise commencing February
5, 1991. (c) The remaining fifty (50%) percent of the total number of
shares subject to this Option shall be exercisable commencing February 5, 1992;
provided however, that the Option as to all shares covered hereby shall be
exercised within ten (10) years from the date of this Agreement and on March
13, 2000, the option as to all shares covered hereby shall terminate.
In the event of a change in control of Stokely (as defined herein), you shall
be immediately entitled to exercise all of the Options granted hereby as of the
date of such event and the foregoing provisions for periodic exercise shall be
of no further force or effect. In the event of a proposed dissolution of
Stokely approved by the Board of Directors or a proposed sale of substantially
all of the assets and property of Stokely approved by the Board of Directors,
you shall also be immediately entitled to exercise all of the Options granted
hereby as of the date of such event.
"Change in control" shall mean either the acquisition by purchase or otherwise
of any person acting directly or indirectly or in concert with one or more
other persons of 50% or more of any outstanding class of voting securities of
Stokely or the election of a member of the Board of Directors of Stokely who is
not nominated by management.
626 East Wisconsin Avenue P.O. Box 248 Oconomowoc, WI 53066-0248
414-567-1731 Telex 26-9589 FAX 414-567-1079
<PAGE> 2
Kenneth C. Murray
March 13, 199O Page 2
Subject to the foregoing, you may exercise your Option in whole or in part, and
from time to time, so long as each partial exercise of the Option amounts to a
purchase by you of not less than 100 shares.
This Option is a non-qualified (non-statutory) option. Under the present
Internal Revenue Code, the spread between the option price and the market
price, whether received in cash or in Stokely stock, will be considered
compensation to you and will be deductible by Stokely.
To exercise your option, you must give written notice to Stokely identifying
the number of shares for which you are exercising said option. The notice of
exercise shall be effective on the date of its receipt by Stokely. Stokely
shall then determine the market price of its Common Stock as indicated in the
NASDAQ National Market Issues tabulation, or the last price per share traded on
any national securities exchange, as published by the Wall Street Journal as
of the close of business on the date of receipt by Stokely of the said notice
of exercise. At its election, Stokely will pay to you the difference between
the $10 per share option price and the market price as determined above
multiplied by the number of shares for which you have given notice of exercise
or, in the alternative, Stokely may distribute to you certificates for the
number of whole shares of Common Stock of Stokely determined by dividing the
aggregate amount due you as a result of such exercise by the market price on
the effective date of your exercise.
If you cease to be employed by Stokely, or a parent or subsidiary thereof, this
Option to the extent exercisable as of the date of cessation of employment
shall terminate one month thereafter, provided that if you are discharged for
cause, all unexercised rights under this Option shall expire on notification of
such discharge, and provided, further, that if cessation is due to your death,
any option exercisable on the date of your death shall be exercisable for a
period not more than six months thereafter by your estate or by the person who
shall have acquired the right to exercise the Option by bequest or inheritance.
For the purposes of this Agreement cause shall mean malfeasance or dishonesty
on the part of the employee while engaged in the employment of Stokely.
This Option shall not be transferrable or assignable by you otherwise than by
your will or the laws of descent and distribution as already specified. During
your life, this Option shall be
<PAGE> 3
Kenneth C. Murray
March 13, 1990 Page 3
exercisable only by you. Any attempted transfer or assignment by you of this
Option in contravention of these provisions shall constitute valid grounds for
the cancellation of this Option at the discretion of Stokely.
In the event that any of the following occur: (a) there are any changes in
the capital stock of Stokely through stock splits, combinations or
reclassification, or creation of or changes in par value of share; or (b) any
stock dividends or other distributions (except cash dividends) are made to
holders of the capital stock; (c) any rights to purchase stock at prices
substantially below fair market value are granted to holders of the capital
stock; or (d) as a result of any other recapitalization, merger or
consolidation, the capital stock is converted into or exchangeable for any
other share; then in any such case, Stokely shall make such adjustments in this
agreement as it deems equitable to prevent substantial dilution or enlargement
of the rights granted to or available to you under this agreement.
This Agreement: (i) constitutes the entire understanding between the parties
with respect to the subject matter covered; (ii) supersedes all prior and
contemporaneous understandings between the parties with respect to the subject
matter covered; (iii) may be amended by mutual agreement of the parties
provided any amendment must be in writing duly executed by both parties in
order to be effective and binding; (iv) shall be governed by the laws of the
State of Wisconsin and, (v) shall be executed in duplicate original so that
each party may retain an original counterpart and be effective when signed by
both parties.
STOKELY USA, INC.
____________________________
Thomas W. Mount, President
I hereby accept and agree to the provisions set forth herein:
____________________________
Kenneth C. Murray
<PAGE> 1
EXHIBIT 10(ww)
April 8, 1994
Mr. Vernon Wiersma
Stokely USA, Inc.
1055 Corporate Center Drive
Oconomowoc, WI 53066
Dear Mr. Wiersma:
You are hereby granted an Option to Purchase at the price of $8.50 per share
and subject to the provisions hereinafter set forth, the total of thirty
thousand (30,000) shares of common stock of Stokely USA, Inc. ("Stokely").
Except as hereinafter provided, you may exercise this Option as follows: (a)
This option shall not be exercisable as to any of the shares subject hereto
prior to April 8, 1995; (b) Fifty (50%) percent of the total number of
shares subject to this Option shall be subject to exercise commencing April 8,
1995; (c) The remaining (50%) percent of the total number of shares subject to
this Option shall be exercisable commencing April 8, 1996; provided however,
that the Option as to all shares covered hereby shall be exercised within ten
(10) years from the date of this Agreement and on April 8, 2004, the option
as to all shares covered hereby shall terminate.
In the event of a change in control of Stokely (as defined herein), you shall
be immediately entitled to exercise all of the Options granted hereby as of the
date of such event, and the foregoing provisions for periodic exercise shall be
of no further force or effect. In the event of a proposed dissolution of
Stokely approved by the Board of Directors or a proposed sale of substantially
all of the assets and property of Stokely approved by the Board of Directors,
you shall also be immediately entitled to exercise all of the Options granted
hereby as of the date of such event.
"Change in control" shall mean either the acquisition by purchase or otherwise
of any person acting directly or indirectly or in concert with one or more
other persons of 50% or more of any outstanding class of voting securities of
Stokely or the election of a member of the Board of Directors of Stokely who is
not nominated by management.
<PAGE> 2
Vernon Wiersma
April 8, 1994
Page Two
Subject to the foregoing, you may exercise your Option in whole or in part, and
from time to time, so long as each partial exercise of the Option amounts to a
purchase by you of not less than 100 shares.
This Option is a non-qualified (non-statutory) option. Under the present
Internal Revenue Code, the spread between the option price and the market
price, whether received in cash or in Stokely stock, will be considered
compensation to you and will be deductible by Stokely.
To exercise your option, you must give written notice to Stokely identifying
the number of shares for which you are exercising said option. The notice of
exercise shall be effective on the date of its receipt by Stokely. Stokely
shall then determine the market price of its Common Stock as indicated in the
NASDAQ National Market Issues tabulation, or the last price per share traded on
any national securities exchange, as published by the Wall Street Journal as
of the close of business on the date of receipt by Stokely of the said notice
of exercise. At its election, Stokely will pay to you the difference between
the $8.50 per share option price and the market price as determined above
multiplied by the number of shares for which you have given notice of exercise
or, in the alternative, Stokely may distribute to you certificates for the
number of whole shares of Common Stock of Stokely determined by dividing the
aggregate amount due you as a result of such exercise by the market price on
the effective date of your exercise.
If you cease to be employed by Stokely, or a parent or subsidiary thereof, this
Option to the extent exercisable as of the date of cessation of employment
shall terminate three months thereafter, provided that, if you are discharged
for cause, all unexercised rights under this Option shall expire on
notification of such discharge, and provided, further, that, if cessation is
due to your death, any option exercisable on the date of your death shall be
exercisable for a period not more than one year thereafter by your estate or by
the person who shall have acquired the right to exercise the Option by bequest
or inheritance. For the purposes of this Agreement, cause shall mean
malfeasance or dishonesty on the part of the employee while engaged in the
employment of Stokely.
This Option shall not be transferrable or assignable by you otherwise than by
your will or the laws of descent and distribution as already specified.
During your life, this Option shall be exercisable only by you. Any attempted
transfer or assignment by you of this Option in contravention of these
provisions shall constitute valid grounds for the cancellation of this Option
at the discretion of Stokely.
<PAGE> 3
Vernon Wiersma
April 8, 1994
Page Three
In the event that any of the following occur: (a) there are any changes in
the capital stock of Stokely through stock splits, combinations or
reclassification, or creation of or changes in par value of share; or (b) any
stock dividends or other distributions (except cash dividends) are made to
holders of the capital stock; (c) any rights to purchase stock at prices
substantially below fair market value are granted to holders of the capital
stock; or (d) as a result of any other recapitalization, merger or
consolidation, the capital stock is converted into or exchangeable for any
other share; then in any such case, Stokely shall make such adjustments in this
agreement as it deems equitable to prevent substantial dilution or enlargement
of the rights granted to or available to you under this agreement.
This Agreement: (i) constitutes the entire understanding between the parties
with respect to the subject matter covered; (ii) supersedes all prior and
contemporaneous understandings between the parties with respect to the subject
matter covered; (iii) may be amended by mutual agreement of the parties
provided any amendment must be in writing duly executed by both parties in
order to be effective and binding; (iv) shall be governed by the laws of the
State of Wisconsin and, (v) shall be executed in duplicate original so that
each party may retain an original counterpart and be effective when signed by
both parties.
STOKELY USA, INC.
/s/
_____________________________
Stephen Theobald
Vice Chairman
I hereby accept and agree to the provisions set forth herein:
/s/
_____________________________
Vernon Wiersma
<PAGE> 1
EXHIBIT 10(xx)
April 8, 1994
Mr. Stephen Theobald
Stokely USA, Inc.
1055 Corporate Center Drive
Oconomowoc, WI 53066
Dear Mr. Theobald:
You are hereby granted an Option to Purchase at the price of $8.50 per share
and subject to the provisions hereinafter set forth, the total of fifteen
thousand (15,000) shares of common stock of Stokely USA, Inc. ("Stokely").
Except as hereinafter provided, you may exercise this Option as follows: (a)
This option shall not be exercisable as to any of the shares subject hereto
prior to April 8, 1995; (b) Fifty (50%) percent of the total number of
shares subject to this Option shall be subject to exercise commencing April 8,
1995; (c) The remaining (50%) percent of the total number of shares subject to
this Option shall be exercisable commencing April 8, 1996; provided however,
that the Option as to all shares covered hereby shall be exercised within ten
(10) years from the date of this Agreement and on April 8, 2004, the option
as to all shares covered hereby shall terminate.
In the event of a change in control of Stokely (as defined herein), you shall
be immediately entitled to exercise all of the Options granted hereby as of the
date of such event, and the foregoing provisions for periodic exercise shall be
of no further force or effect. In the event of a proposed dissolution of
Stokely approved by the Board of Directors or a proposed sale of substantially
all of the assets and property of Stokely approved by the Board of Directors,
you shall also be immediately entitled to exercise all of the Options granted
hereby as of the date of such event.
"Change in control" shall mean either the acquisition by purchase or otherwise
of any person acting directly or indirectly or in concert with one or more
other persons of 50% or more of any outstanding class of voting securities of
Stokely or the election of a member of the Board of Directors of Stokely who is
not nominated by management.
<PAGE> 2
Stephen Theobald
April 8, 1994
Page Two
Subject to the foregoing, you may exercise your Option in whole or in part, and
from time to time, so long as each partial exercise of the Option amounts to a
purchase by you of not less than 100 shares.
This Option is a non-qualified (non-statutory) option. Under the present
Internal Revenue Code, the spread between the option price and the market
price, whether received in cash or in Stokely stock, will be considered
compensation to you and will be deductible by Stokely.
To exercise your option, you must give written notice to Stokely identifying
the number of shares for which you are exercising said option. The notice of
exercise shall be effective on the date of its receipt by Stokely. Stokely
shall then determine the market price of its Common Stock as indicated in the
NASDAQ National Market Issues tabulation, or the last price per share traded on
any national securities exchange, as published by the Wall Street Journal as
of the close of business on the date of receipt by Stokely of the said notice
of exercise. At its election, Stokely will pay to you the difference between
the $8.50 per share option price and the market price as determined above
multiplied by the number of shares for which you have given notice of exercise
or, in the alternative, Stokely may distribute to you certificates for the
number of whole shares of Common Stock of Stokely determined by dividing the
aggregate amount due you as a result of such exercise by the market price on
the effective date of your exercise.
If you cease to be employed by Stokely, or a parent or subsidiary thereof, this
Option to the extent exercisable as of the date of cessation of employment
shall terminate three months thereafter, provided that, if you are discharged
for cause, all unexercised rights under this Option shall expire on
notification of such discharge, and provided, further, that, if cessation is
due to your death, any option exercisable on the date of your death shall be
exercisable for a period not more than one year thereafter by your estate or by
the person who shall have acquired the right to exercise the Option by bequest
or inheritance. For the purposes of this Agreement, cause shall mean
malfeasance or dishonesty on the part of the employee while engaged in the
employment of Stokely.
This Option shall not be transferrable or assignable by you otherwise than by
your will or the laws of descent and distribution as already specified.
During your life, this Option shall be exercisable only by you. Any attempted
transfer or assignment by you of this Option in contravention of these
provisions shall constitute valid grounds for the cancellation of this Option
at the discretion of Stokely.
<PAGE> 3
Stephen Theobald
April 8, 1994
Page Three
In the event that any of the following occur: (a) there are any changes in the
capital stock of Stokely through stock splits, combinations or
reclassification, or creation of or changes in par value of share; or (b) any
stock dividends or other distributions (except cash dividends) are made to
holders of the capital stock; (c) any rights to purchase stock at prices
substantially below fair market value are granted to holders of the capital
stock; or (d) as a result of any other recapitalization, merger or
consolidation, the capital stock is converted into or exchangeable for any
other share; then in any such case, Stokely shall make such adjustments in this
agreement as it deems equitable to prevent substantial dilution or enlargement
of the rights granted to or available to you under this agreement.
This Agreement: (i) constitutes the entire understanding between the parties
with respect to the subject matter covered; (ii) supersedes all prior and
contemporaneous understandings between the parties with respect to the subject
matter covered; (iii) may be amended by mutual agreement of the parties
provided any amendment must be in writing duly executed by both parties in
order to be effective and binding; (iv) shall be governed by the laws of the
State of Wisconsin and, (v) shall be executed in duplicate original so that
each party may retain an original counterpart and be effective when signed by
both parties.
STOKELY USA, INC.
/s/
____________________________
Vernon Wiersma
President
I hereby accept and agree to the provisions set forth herein:
/s/
____________________________
Stephen Theobald
<PAGE> 1
EXHIBIT 10(yy)
No. W-4 40,000 SHARES
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
STOKELY USA, INC.
Void after December 15, 2001
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C> <C>
SECTION 1. EXERCISE OF WARRANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. RESERVATION OF COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. PROTECTION AGAINST DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3.1. Share Dividends, Subdivisions and Combinations . . . . . . . . . . . . . 2
Section 3.2. Issuance of Additional Shares of Common Stock . . . . . . . . . . . . . . 3
Section 3.3. Issuance of Warrants or Other Rights,
Convertible Securities . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.4. Other Provisions Applicable to Adjustments
Under this Section . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.5. Extraordinary Dividends . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.6. Adjustment of Number of Shares Purchasable . . . . . . . . . . . . . . . 6
Section 3.7. Minimum Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.8. Notice of Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.9. Date of Determination of Current Market
Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4. MERGERS, CONSOLIDATIONS, SALES . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 5. DISSOLUTION OR LIQUIDATION . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 6. NOTICE OF EXTRAORDINARY DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 7. FRACTIONAL SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 8. FULLY PAID STOCK; TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 9. CLOSING OF TRANSFER BOOKS . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 10. RESTRICTIONS ON TRANSFERABILITY OF WARRANTS AND
SHARES; COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 10.1. In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 10.2. Restrictive Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 10.3. Notice of Proposed Transfer; Registration Not Required . . . . . . . . . . 10
Section 10.4. Incidental Registration . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 10.5. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
Section 10.6. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 11. PARTIAL EXERCISE AND PARTIAL ASSIGNMENT . . . . . . . . . . . . . . . . . . . 13
SECTION 12. WARRANT DENOMINATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 13. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 14. LOST, STOLEN WARRANTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 15. WARRANT HOLDER NOT SHAREHOLDER . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 16. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 17. INDEX AND CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 18. APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
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<PAGE> 4
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED OR QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR ANY SUCH STATE
LAWS WHICH MAY BE APPLICABLE.
NO. W-4 40,000 SHARES
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
STOKELY USA, INC.
Void after December 15, 2001
THIS IS TO CERTIFY that, for value received and subject to the
provisions hereinafter set forth,
STATE OF WISCONSIN INVESTMENT BOARD
or assigns,
is entitled to purchase from Stokely USA, Inc., a Wisconsin corporation (the
"Company"), at any time up to and including 5:00 P.M. E.S.T. on December 15,
2001 (the "Expiration Date"), 40,000 shares of Common Stock of the Company of
the par value of $.05 per share, subject to the provisions and adjustments and
on the terms and conditions hereinafter set forth, at the price per share equal
to $7.88.
The aggregate price of the Common Stock which may be purchased upon the
exercise of this Warrant shall be equal to the initial price per share
multiplied by the number of shares initially purchasable hereunder. The
aggregate price is not subject to adjustment and is herein sometimes referred
to as the "aggregate Warrant Price." The price per share is, however, subject
to adjustment as provided in Section 3 (such price, or such price as last
adjusted, as the case may be, being herein referred to as the "per share
Warrant Price"). The said number of shares purchasable hereunder is likewise
subject to adjustment as hereinafter provided.
<PAGE> 5
The terms which are capitalized herein shall have the meanings
specified in Section 13 unless the context shall otherwise require.
SECTION 1. EXERCISE OF WARRANT.
Subject to the conditions hereinafter set forth, this Warrant may be
exercised in whole at any time or in part from time to time prior to the
Expiration Date (the "Exercise Date") by the holder hereof, by the surrender of
this Warrant (with the subscription form at the end hereof duly executed) at
the principal office of the Company in Oconomowoc, Wisconsin, and upon payment
to the Company of the aggregate Warrant Price (or the proportionate part
thereof if exercised in part) for the shares so purchased. Payment for the
shares purchased by the holder pursuant to this Section 1 shall be made at the
holder's option either (i) in funds current in Oconomowoc, Wisconsin or (ii) by
surrender for cancellation of any of the Notes held by such holder, at par, for
the shares to be purchased. If this Warrant is exercised in respect of less
than all of the shares of said Common Stock at the time purchasable hereunder,
the holder hereof shall be entitled to receive a new Warrant covering the
number of shares in respect of which this Warrant shall not have been exercised
and setting forth the per share Warrant Price applicable to such shares;
provided, however, that this Warrant and all rights and options hereunder shall
expire on the Expiration Date, and shall be wholly null and void to the extent
this Warrant is not exercised before it expires.
If the principal of any Note is tendered in payment of the purchase
price and the unpaid principal amount thereof exceeds the purchase price, the
Company will (without charge to the holder) promptly issue and deliver to the
holder a new Note, in exchange for the Note so tendered, in a principal amount
equal to such excess and issued in the name of the holder or its designated
nominee or assignee and dated as provided in the Note Agreement.
SECTION 2. RESERVATION OF COMMON STOCK.
The Company covenants and agrees that at all times prior to the
Expiration Date it will have authorized, and in reserve, a sufficient number of
shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant.
SECTION 3. PROTECTION AGAINST DILUTION.
The per share Warrant Price and the number of shares deliverable
hereunder shall be adjusted as hereinafter set forth:
Section 3.1. Share Dividends, Subdivisions and Combinations. In case
after the date hereof the Company shall:
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<PAGE> 6
(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, Common Stock, or
(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 the per share Warrant Price shall be adjusted to that price determined by
multiplying the per share Warrant Price in effect immediately prior to such
event by a fraction (i) the numerator of which shall be the total number of
outstanding shares of Common Stock of the Company immediately prior to such
event, and (ii) the denominator of which shall be the total number of
outstanding shares of Common Stock of the Company immediately after such event.
Section 3.2. Issuance of Additional Shares of Common Stock. In case
after the date hereof the Company shall (except as hereinafter provided) issue
any Additional Shares of Common Stock for a consideration (i) less than the
then effective per share Warrant Price or (ii) less than the Current Market
Price per share, then the per share Warrant Price upon each such issuance shall
be adjusted to that price determined by multiplying the per share Warrant Price
in effect immediately prior to such event by a fraction:
(a) if issued for a consideration per share less than the
then effective per share Warrant Price:
(1) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock plus the
number of shares of Common Stock which the aggregate
consideration for the total number of such Additional Shares
of Common Stock so issued would purchase at the then effective
per share Warrant Price, and
(2) the denominator of which shall be the number
of shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock plus the
number of such Additional Shares of Common Stock so issued.
(b) if issued for a consideration per share less than the
Current Market Price per share of Common Stock:
(1) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock plus the
number of shares of Common Stock which the aggregate
consideration for the total number of such Additional Shares
of
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<PAGE> 7
Common Stock so issued would purchase at the Current Market
Price per share, and
(2) the denominator of which shall be the number
of shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock plus the
number of such Additional Shares of Common Stock so issued.
If such Additional Shares of Common Stock shall be issued at a
price per share less than both the then effective per share Warrant
Price and the then Current Market Price per share of Common Stock, the
per share Warrant Price shall be adjusted in the manner which will
result in the greatest reduction of the per share Warrant Price. The
provisions of this Section 3.2 shall not apply to any Additional
Shares of Common Stock which are distributed to holders of Common
Stock as a stock dividend, distribution or subdivision, for which an
adjustment is provided for under Section 3.1. No adjustment of the
per share Warrant Price shall be made under this Section 3.2 prior to
or 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 warrants or other rights
therefor) pursuant to Section 3.3.
Section 3.3. Issuance of Warrants or Other Rights, Convertible
Securities. In case the Company shall issue any warrants or other rights to
subscribe for or purchase any Additional Shares of Common Stock or issue
Convertible Securities and the consideration per share for which Additional
Shares of Common Stock may at any time thereafter be issuable pursuant to such
warrants or other rights or pursuant to the terms of such Convertible
Securities shall be (i) less than the then effective per share Warrant Price or
(ii) less than the Current Market Price, then the per share Warrant Price shall
be adjusted as provided in Section 3.2 above on the basis that:
(a) 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 as of the earlier of
(i) the date on which the Company shall enter into a firm contract or
commitment for the issuance of such warrants, other rights or
Convertible Securities or (ii) the date of actual issuance of such
warrants, other rights or Convertible Securities, and
(b) the aggregate consideration for such maximum number
of Additional Shares of Common Stock shall be deemed to be the minimum
consideration received and receivable by the Company for the issuance
of such Additional Shares of Common Stock pursuant to such warrants or
other rights or pursuant to the terms of such Convertible Securities.
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<PAGE> 8
No adjustment of the per share Warrant Price shall be made under this
section 3.3 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 this Section 3.3.
Section 3.4. Other Provisions Applicable to Adjustments Under this
Section. The following provisions shall be applicable to the making of
adjustments in the per share Warrant Price hereinbefore provided in this
Section 3:
(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
for a cash consideration, the consideration received by the Company
therefor shall be deemed to be the amount of the cash received by the
Company therefor, or, if such Additional Shares of Common Stock or
Convertible Securities or warrants or other rights are offered by the
Company for subscription, the subscription price, or, if such
Additional Shares of Common Stock or Convertible Securities or
warrants or other rights are sold to underwriters or dealers for
public offering without a subscription offering, the initial public
offering price, in any such case excluding any amounts paid or
receivable for accrued interest or accrued dividends and without
deduction of any compensation, discounts or expenses paid or incurred
by the Company for and in the underwriting thereof, or otherwise in
connection with the issue 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 shall
be deemed to be the fair value of such consideration at the time of
such issuance as determined in good faith by the Board of Directors of
the Company. 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 the 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 any 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 of 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 dividend upon any class
of equity securities 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.
(b) Readjustment of per share Warrant Price. Upon
expiration of the right of conversion or exchange of any Convertible
Securities, or upon the expiration of
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<PAGE> 9
any rights, options or warrants, or upon any increase in the minimum
consideration receivable by the Company for the issuance of Additional
Shares of Common Stock pursuant to such Convertible Securities,
rights, options or warrants, if any such Convertible Securities shall
not have been converted or exchanged, or if any such rights, options
or warrants shall not have been exercised, the number of shares of
Common Stock deemed to be issued and outstanding by reason of the fact
that they were issuable upon conversion or exchange of any such
Convertible Securities or upon exercise of any such rights, options or
warrants shall no longer be computed as set forth above, and the per
share Warrant Price shall forthwith be readjusted and thereafter be
the price which it would have been (but reflecting any other
adjustments in the per share Warrant Price made pursuant to the
provisions of this Section 3 after the issuance of such Convertible
Securities, rights, options or warrants) had the adjustment of the per
share Warrant Price made upon the issuance or sale of such Convertible
Securities or the issuance of such rights, options or warrants been
made on the basis of the issuance only of the number of Additional
Shares of Common Stock actually issued upon conversion or exchange of
such Convertible Securities or upon the exercise of such rights,
options or warrants, or upon the basis of such increased minimum
consideration, as the case may be, and thereupon only the number of
Additional Shares of Common Stock actually so issued or the number
thereof issuable upon the basis of such increased minimum
consideration shall be deemed to have been issued and only the
consideration actually received or such increased minimum
consideration receivable by the Company (computed in accordance with
3.4(a)) shall be deemed to have been received by the Company.
Section 3.5. Extraordinary Dividends. In case the Company shall declare
a dividend upon its Common Stock (except a dividend payable in shares of Common
Stock referred to in Section 3.1(a) or a dividend payable in warrants, rights
or Convertible Securities referred to in Section 3.3) payable otherwise than
out of retained earnings or surplus (other than revaluation surplus or paid-in
surplus), the per share Warrant Price in effect immediately prior to the
declaration of such dividend shall be reduced by an amount equal, in the case
of a dividend in cash, to the amount thereof payable per share of Common Stock
or, in the case of any other dividend, to the fair value thereof per share of
Common Stock as determined in good faith by the Board of Directors of the
Company. For the purposes of the foregoing, a dividend payable other than in
cash shall be considered payable out of retained earnings or surplus (other
than revaluation surplus or paid-in surplus) only to the extent that such
retained earnings or surplus are charged an amount equal to the fair value of
such dividend as determined by the Board of Directors of the Company. Such
reduction shall take effect as of the date on which a record is taken for the
purpose of such dividend or, if a record is not taken, the date as of which the
holders of the Common Stock of record entitled to such dividend are to be
determined. Appropriate readjustment of the per share Warrant Price shall be
made in the event that any dividend referred to in this Section 3.5 shall be
lawfully abandoned.
Section 3.6. Adjustment of Number of Shares Purchasable. Upon each
adjustment of the per share Warrant Price, the number of shares of Common Stock
purchasable hereunder
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<PAGE> 10
shall be equal to the amount determined by dividing the aggregate Warrant Price
then in effect by the per share Warrant Price in effect immediately following
such adjustment.
Section 3.7. Minimum Adjustment. Except as hereinafter provided, no
adjustment of the per share Warrant Price hereunder shall be made if such
adjustment results in a change of the per share Warrant Price then in effect of
less than $.05. Any adjustment of less than $.05 shall be carried forward and
shall be made at the time of and together with any subsequent adjustment which,
together with the adjustment or adjustments so carried forward, amounts to $.05
or more of the per share Warrant Price then in effect. However, upon the
exercise of this Warrant, the Company shall make all necessary adjustments not
theretofore made to the per share Warrant Price up to and including the date
upon which this Warrant is exercised.
Section 3.8. Notice of Adjustments. Whenever the per share Warrant
Price or number of shares deliverable upon exercise of this Warrant shall be
adjusted pursuant to this Section 3, the Company shall promptly prepare a
certificate signed by the President or a Vice President and by the principal
financial officer or principal accounting officer of the Company setting forth,
in reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated (including a
description of the basis on which the Board of Directors of the Company made
any determination hereunder), and shall promptly cause copies of such
certificate to be mailed (by first class mail, postage prepaid) to the holder
of this Warrant.
Section 3.9. Date of Determination of Current Market Price. For all
purposes of this Warrant, the date of determination of the Current Market Price
of any Additional Shares of Common Stock shall be the earlier of (i) the date
on which the Company shall enter into a firm contract for the issuance of such
Additional Shares of Common Stock or (ii) the date of actual issuance of such
Additional Shares of Common Stock.
SECTION 4. MERGERS, CONSOLIDATIONS, SALES.
In the case of any consolidation or merger of the Company with another
entity, or the sale of all or substantially all of its assets to another
entity, or any reorganization or reclassification of the Common Stock or other
equity securities of the Company (except a split-up or combination provision
for which is made in Section 3.1), then, as a condition of such consolidation,
merger, sale, reorganization or reclassification, lawful and adequate provision
shall be made whereby the holder of this Warrant shall thereafter have the
right to receive upon the basis and upon the terms and conditions specified
herein and in lieu of the shares of Common Stock immediately theretofore
purchasable hereunder, such shares of stock, securities or assets as may (by
virtue of such consolidation, merger, sale, reorganization or reclassification)
be issued or payable with respect to or in exchange for the number of shares of
Common Stock immediately theretofore so purchasable hereunder had such
consolidation, merger, sale, reorganization or reclassification not taken
place, and in any such case appropriate provisions shall be made with respect
to the rights and interests of the holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for adjustment of
the per share Warrant Price) shall thereafter be applicable, as nearly as
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<PAGE> 11
may be, in relation to any shares of stock, securities or assets thereafter
deliverable upon exercise of this Warrant. The Company shall not effect any
such consolidation, merger or sale, unless prior to or simultaneously with the
consummation thereof, the successor entity (if other than the Company)
resulting from such consolidation or merger or the entity purchasing such
assets shall assume by written instrument executed and mailed or delivered to
the holder of this Warrant, the obligation to deliver to such holder such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to receive.
SECTION 5. DISSOLUTION OR LIQUIDATION.
In the event of any proposed distribution of the assets of the Company
in dissolution or liquidation except under circumstances when the foregoing
Section 4 shall be applicable, the Company shall mail notice thereof to the
holder of this Warrant and shall make no distribution to shareholders until the
expiration of 30 days from the date of mailing of the aforesaid notice and, in
any such case, the holder of this Warrant may exercise the purchase rights with
respect to this Warrant within 30 days from the date of mailing such notice and
all rights herein granted not so exercised within such 30-day period shall
thereafter become null and void.
SECTION 6. NOTICE OF EXTRAORDINARY DIVIDENDS.
If the Board of Directors of the Company shall declare any dividend or
other distribution on its Common Stock except out of retained earnings or
surplus or by way of a stock dividend payable on its Common Stock, the Company
shall mail notice thereof to the holder of this Warrant not less than 30 days
prior to the record date fixed for determining shareholders entitled to
participate in such dividend or other distribution and the holder of this
Warrant shall not participate in such dividend or other distribution or be
entitled to any rights on account or as a result thereof (except adjustments in
the per share Warrant Price as provided in Section 3.5) unless and to the
extent that this Warrant is exercised prior to such record date. The provisions
of this paragraph shall not apply to distributions made in connection with
transactions covered by Section 4.
SECTION 7. FRACTIONAL SHARES .
Fractional shares shall not be issued upon the exercise of this
Warrant but in any case where the holder hereof would, except for the
provisions of this paragraph, be entitled under the terms hereof to receive a
fractional share upon the complete exercise of this Warrant, the Company shall,
upon the exercise of this Warrant for the largest number of whole shares then
called for, pay to the holders of this Warrant a sum in cash equal to the
proportional part of the per share Warrant Price represented by such fractional
share.
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<PAGE> 12
SECTION 8. FULLY PAID STOCK; TAXES.
The Company covenants and agrees that the shares of stock represented
by each and every certificate for its Common Stock to be delivered on the
exercise of the purchase rights herein provided for shall, at the time of such
delivery, be validly issued and outstanding and be fully paid and
nonassessable. The Company further covenants and agrees that it will pay when
due and payable any and all Federal, State and local taxes which may be payable
in respect of the delivery of this Warrant or any Common Stock or certificates
therefor upon the exercise of the purchase rights herein provided for pursuant
to the provisions hereof. The Company shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the
transfer and delivery of stock certificates in the name other than that of the
holder exercising this Warrant, and any such tax shall be paid by such holder
at the time of presentation.
SECTION 9. CLOSING OF TRANSFER BOOKS.
The right to exercise this Warrant shall not be suspended during any
period that the stock transfer books of the Company for its Common Stock may be
closed. The Company shall not be required, however, to deliver certificates of
its Common Stock upon such exercise while such books are duly closed for any
purpose, but the Company may postpone the delivery of the certificates for such
Common Stock until the opening of such books, and they shall, in such case, be
delivered forthwith upon the opening thereof, or as soon as practicable
thereafter.
SECTION 10. RESTRICTIONS ON TRANSFERABILITY OF WARRANTS AND SHARES;
COMPLIANCE WITH LAWS.
Section 10.1. In General. This Warrant and the Common Stock issued
upon the exercise hereof shall not be transferable except upon the conditions
hereinafter specified, which conditions are intended to insure compliance with
the provisions of the Securities Act (or any similar Federal statute at the
time in effect) and any applicable State securities laws in respect of the
transfer of this Warrant or any such Common Stock.
Section 10.2. Restrictive Legends. Each Warrant shall bear on the face
thereof a legend substantially in the form of the notice endorsed on the first
page of this Warrant.
Each certificate for shares of Common Stock initially issued upon the
exercise of any Warrant and each certificate for shares of Common Stock issued
to a subsequent transferee of such certificate shall, unless otherwise
permitted by the provisions of this Section 10.2, bear on the face thereof a
legend reading substantially as follows:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or any State
securities laws and may not be sold or transferred in the absence of
such registration or an exemption therefrom under said Act and any
such State laws which may be applicable and are transferable only
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<PAGE> 13
upon the conditions specified in the Warrant pursuant to which such
shares were issued."
In the event that a registration statement covering the Underlying
Shares or the Restricted Stock shall become effective under the Securities Act
and under any applicable State securities laws or in the event that the Company
shall receive an opinion of its counsel that, in the opinion of such counsel,
such legend is not, or is no longer, necessary or required (including, without
limitation, because of the availability of the exemption afforded by Rule 144
of the General Rules and Regulations of the Securities and Exchange
Commission), the Company shall, or shall instruct its transfer agents and
registrars to, remove such legend from the certificates evidencing the
Restricted Stock or issue new certificates without such legend in lieu thereof.
Upon the written request of the holder or holders of any Warrant or of any
Restricted Stock, the Company covenants and agrees forthwith to request its
counsel to render an opinion with respect to the matters covered by this
section 10.2 and to bear all expenses in connection with the same.
Section 10.3. Notice of Proposed Transfer; Registration Not Required.
The holder of each Warrant or any Restricted Stock, by acceptance thereof,
agrees to give prior written notice to the Company of such holder's intention
to transfer such Warrant or the Underlying Shares relating thereto or such
Restricted Stock (or any portion thereof), describing briefly the manner and
circumstances of the proposed transfer. Promptly after receiving such written
notice, the Company shall present copies thereof to Company counsel. If in the
opinion of such counsel the proposed transfer may be effected without
registration or qualification under any Federal or State law of such Warrant or
the Underlying Shares or such Restricted Stock, the Company, as promptly as
practicable, shall notify such holder of such opinion and of the terms and
conditions, if any, to be observed, whereupon such holder shall be entitled to
transfer such Warrant or Underlying Shares or such Restricted Stock, all in
accordance with the terms of the notice delivered to such holder by the
Company; provided that in the event such counsel is unable to render such a
favorable opinion permitting such transfer, the holder of this Warrant shall be
entitled to consult with its counsel regarding the basis for such inability to
render any proposed legal opinion. If counsel for the Company is unable to
render such an opinion (in which case said counsel shall set forth in writing
the basis for its legal conclusions in this regard), the proposed transfer
described in the written notice given pursuant to the first sentence of this
Section 10.3 may not be effected except upon registration or qualification or
compliance with the conditions of an exemptive regulation of the Commission or
any applicable State securities regulatory authority. The Company shall
promptly notify such holder that registration, qualification, filing or
compliance is required prior to transfer by such holder and thereafter such
holder shall not be entitled to effect such transfer until receipt of a
subsequent notice from the Company pursuant to the immediately preceding
sentence or until such registration or qualification, filing or compliance has
become effective. All fees and expenses of counsel for the Company furnishing
the opinion provided for in this section 10.3 and the reasonable fees and
expenses of counsel designated by any holder of Warrants or Restricted Stock
for consultation in accordance with this section 10.3 shall be paid by the
Company.
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<PAGE> 14
Section 10.4. Incidental Registration. (a) The Company agrees that at
any time it proposes to register any of its Common Stock under the Securities
Act on Form S-1 or any other form of registration statement then available for
the registration under the Securities Act of securities of the Company and
which is appropriate for the inclusion therein of the Underlying Shares and/or
the Restricted Stock as herein contemplated (excluding any registration (i) on
Form S-8 relating to employee benefit plans or (ii) for the purpose of offering
such securities to another business entity or the shareholders of such entity
in connection with the acquisition of assets or shares of capital stock,
respectively, of such entity), it will give written notice to all holders of
outstanding Warrants and Restricted Stock of its intention so to do and upon
the written request of the holder of any such Warrants or Restricted Stock who
intends to transfer such Warrants or Restricted Stock promptly upon the
effectiveness of such registration given within 20 days after receipt of any
such notice from the Company, the Company will in each instance use its best
efforts to cause all Underlying Shares relating to the Warrants and all such
Restricted Stock held by any requesting holder to be registered under said
Securities Act and registered or qualified in those jurisdictions in which the
Company intends to qualify the Common Stock under applicable Blue Sky or other
state securities laws and up to five additional jurisdictions requested by any
requesting holder, all to the extent necessary to permit the sale or other
disposition thereof in the manner stated in such request by the prospective
seller of the securities so registered. Any holder of such Warrants or
Restricted Stock requesting registration of the Underlying Shares relating to
such Warrants or such Restricted Stock shall in its request describe briefly
the manner of any proposed transfer of such Underlying Shares or Restricted
Stock. Nothing in this Section 10.4 shall be deemed to require the Company to
proceed with any registration of its securities after giving the notice herein
provided.
(b) The Company shall furnish to the holders of the
Underlying Shares or Restricted Stock requesting registration pursuant to
section 10.4, on the date that the registration statement with respect to such
Underlying Shares or Restricted Stock becomes effective, and redeliver in
connection with the filing of each post-effective amendment, (i) an opinion,
dated such date, of the independent counsel representing the Company for the
purposes of such registration, addressed to such holders, stating that such
registration statement has become effective under the Securities Act and
addressing such other customary legal matters as reasonably requested by such
holders; and (ii) to the extent practicable a letter dated such date, from the
independent certified public accountants of the Company, addressed to such
holders, stating that they are independent certified public accountants within
the meaning of the Securities Act, and that, in the opinion of such
accountants, the financial statements and other financial data of the Company
included in the registration statement or the prospectus, or any amendment or
supplement thereto, comply as to form in all material respects with the
applicable accounting requirements of the Securities Act. Such letter from the
independent certified public accountants shall additionally cover such other
financial matters (including information as to the period ending not more than
five Business Days prior to the date of such letter) with respect to the
registration in respect of which such letter is being given as the holders of
the Requisite Percentage of the Warrants and Restricted Stock may reasonably
request.
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<PAGE> 15
(c) The Company's obligation to register Underlying
Shares and Restricted Stock under this section 10.4 shall be subject to the
condition that each holder of Underlying Shares and Restricted Stock
participating in any registered offering shall have provided such information
and executed such documents (including an underwriting agreement) not
inconsistent with the terms of this Warrant and the Related Warrants, as may be
requested by the Company and/or any underwriter in connection with such
registration.
Section 10.5. Expenses. The Company agrees to pay all expenses
(including without limitation registration fees, qualification fees, legal
expenses, including the reasonable fees and expenses of counsel to the holders
of Warrants or Restricted Stock whose Underlying Shares relating to such
Warrants or whose Restricted Stock are being registered, printing expenses, the
costs of special audits or "cold comfort" letters and expenses of underwriters,
excluding discounts and commissions but including the reasonable fees and
expenses of any necessary special experts) in connection with all
registrations, qualifications, notifications or exemptions pursuant to section
10.4 and all offerings and sales by each such holder of the Restricted Stock
which is being registered in such registration pursuant to section 10.4.
Section 10.6. Indemnification. In connection with any registration,
qualification, notification, or exemption of securities under section 10.4, the
Company hereby agrees to indemnify the holder of the Warrants and/or Restricted
Stock, and each underwriter thereof including each person, if any, who controls
such Warrant holder or stockholder within the meaning of Section 15 of the
Securities Act, against all losses, claims, damages and liabilities caused by
any untrue, or alleged untrue, statement of a material fact contained in any
registration statement or prospectus or notification or offering circular (and
as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) or any preliminary prospectus or caused by any
omission, or alleged omission, to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or alleged untrue statement or omission based upon information
furnished in writing to the Company or any such underwriter by or on behalf of
such holder expressly for use therein, and the Company and each officer,
director and controlling person of the Company shall be indemnified by each
holder of Warrants and/or Restricted Stock for all such losses, claims, damages
and liabilities caused by any untrue, or alleged untrue statement or omission,
or alleged omission, based upon information furnished in writing to the Company
by such holder for any such use.
Promptly upon receipt by a party indemnified under this section 10.6
of notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section, such indemnified party shall notify the
indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may have to any indemnified party otherwise than under this
section 10.6. In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
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<PAGE> 16
expressly for use therein, and the Company and each officer, director and
controlling person of the Company shall be indemnified by each holder of
Warrants and/or Restricted Stock for all such losses, claims, damages and
liabilities caused by any untrue, or alleged untrue, statement or omission, or
alleged omission, based upon information furnished in writing to the Company by
such holder for any such use.
Promptly upon receipt by a party indemnified under this Section 10.6 of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section, such indemnified party shall notify the
indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may have to any indemnified party otherwise than under this
Section 10.6. In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless the indemnifying
party either agrees to pay the same or fails to assume the defense of such
action with counsel satisfactory to the indemnified party. No indemnifying
party shall be liable for any settlement entered into without its consent.
SECTION 11. PARTIAL EXERCISE AND PARTIAL ASSIGNMENT.
If this Warrant is exercised in part only, the holder hereof shall be
entitled to receive a new Warrant covering the number of shares in respect of
which this Warrant shall not have been exercised as provided in Section 1. If
this Warrant is partially assigned, this Warrant shall be surrendered at the
principal office of the Company (with the partial assignment form at the end
hereof duly executed), and thereupon a new Warrant shall be issued to the
holder hereof covering the number of shares not assigned and setting forth the
proportionate aggregate Warrant Price applicable to such shares not assigned.
The assignee of such partial assignment of this Warrant shall also be entitled
to receive a new Warrant covering the number of shares so assigned and setting
forth the proportionate aggregate Warrant Price applicable to such assigned
shares.
SECTION 12. WARRANT DENOMINATIONS.
Warrants are issuable or transferable in the minimum denomination of
1,000 shares and any amount of shares in excess thereof (as nearly as may be
practicable and subject to required adjustments hereunder), and the Warrants of
each denomination are interchangeable upon surrender thereof at the principal
office of the Company for Warrants of other denominations, but aggregating the
same number of shares as the Warrants so surrendered. All Warrants will be
dated the same date as this Warrant.
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<PAGE> 17
SECTION 13. DEFINITIONS.
In addition to the terms defined elsewhere in this Warrant, the
following terms have the following respective meanings:
The term "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company on or after the date of this Warrant, except
(a) Common Stock issued upon exercise of the Warrants;
(b) Common Stock issued upon exercise of the Nationwide
Warrants; and
(c) Up to 320,000 shares of Common Stock issued to
officers of the Company under the Company's stock option, stock
purchase or other benefit plans.
The term "Business Day" shall mean any date except a Saturday, Sunday
or other day on which commercial banks are generally not open for business in
Milwaukee, Wisconsin or Columbus, Ohio.
The term "Commission" shall mean the Securities and Exchange
Commission, or any other Federal agency at the time administering the
Securities Act or the Trust Indenture Act, as the case may be.
The term "Common Stock" as used herein shall include any class of
capital stock of the Company now or hereafter authorized, the right of which to
share in distributions either of earnings or assets of the Company is without
limit as to any amount or percentage; provided, however, that the shares of
Common Stock deliverable upon the exercise of the rights granted under this
Warrant shall include only Common Stock of the Company having a par value of
$.05 per share authorized at the date hereof and any class of Common Stock
issued in substitution therefor.
The term "Convertible Securities" shall mean evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for Additional Shares of Common Stock, either immediately or upon
the arrival of a specified date or the happening of a specified event.
The term "Current Market Price" per share of Common Stock for the
purposes of any provision of this Warrant shall be, as of the date of any
determination thereof, deemed to be the average of the daily market prices per
share for the five consecutive Business Days immediately preceding the date of
determination. The market price for each such Business Day shall be (i) if the
Common Stock shall at the time be listed or admitted to unlisted trading
privileges on the New York Stock Exchange, on the basis of the last reported
sale price regular way of the Common Stock on the Composite Tape (or if the
Common Stock at the time be not so listed or admitted to unlisted trading
privileges on the New York Stock Exchange but be listed or admitted to unlisted
trading privileges on another national securities exchange, on the basis of the
last reported sale price regular way on a national
-14-
<PAGE> 18
securities exchange on which the Common Stock is at the time listed or admitted
to unlisted trading privileges) on each such Business Day upon which such a
sale shall have been effected (or if no sale takes place on any such day on
such exchange, the average of the closing bid and asked prices on such day as
officially quoted on such exchange), or (ii) if the Common Stock is not at the
time so listed or admitted to unlisted trading privileges on a national
securities exchange, on the basis of the average of the highest reported bid
and lowest reported asked prices of the Common Stock in the over-the-counter
market on each such Business Day, as reported by the National Association of
Securities Dealers Automated Quotations System ("NASDAQ") or similar
organization if NASDAQ is no longer reporting such information or, if not so
available, the fair market price as determined in good faith by the Board of
Directors of the Company.
The term "Nationwide Warrants" shall mean the warrants initially
issued by the Company on the date hereof to Nationwide Life Insurance Company,
Employers Life Insurance Company of Wausau and West Coast Life Insurance
Company and all warrants hereafter issued in exchange for the Nationwide
Warrants.
The term "Note Agreement" shall mean the Note Agreement dated as of
December 1, 1991, as amended, between the Company and the institutional
investor named therein.
The term "Notes" shall mean the 9.74% Promissory Note due December 15,
2001, of the Company issued pursuant to the Note Agreement.
The term "Requisite Percentage" shall mean the holders of Warrants and
Restricted Stock which constitute 50% or more of the sum of (i) the Underlying
Shares which are issuable upon the exercise of all Warrants then outstanding
plus (ii) the aggregate number of shares of Restricted Stock at the time
outstanding.
The term "Restricted Stock" shall mean the shares of Common Stock of
the Company issued upon the exercise of any of the Warrants and evidenced by a
certificate required to bear the legend specified in Section 10.2.
The term "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.
The term "Trust Indenture Act" shall mean the Trust Indenture Act of
1939, 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.
The term "Underlying Shares" shall mean the shares of Common Stock of
the Company issuable upon exercise of any of the Warrants.
The term "Warrants" as used herein shall mean this Warrant and all
warrants hereafter issued in exchange or substitution for this Warrant.
-15-
<PAGE> 19
SECTION 14. LOST, STOLEN WARRANTS, ETC.
In case this Warrant shall be mutilated, lost, stolen or destroyed,
the Company may issue a new Warrant of like date, tenor and denomination and
deliver the same in exchange and substitution for and upon surrender and
cancellation of the mutilated Warrant, or in lieu of the Warrant lost, stolen
or destroyed, upon receipt of evidence satisfactory to the Company of the loss,
theft or destruction of such Warrant, and upon receipt of indemnity
satisfactory to the Company. If an institutional holder is the owner of any
such lost, stolen or destroyed Warrant, then the affidavit of an authorized
officer of such owner, setting forth the facts of loss, theft or destruction
and of its ownership of the Warrant at the time of such loss, theft or
destruction shall be accepted as satisfactory evidence thereof and no further
indemnity shall be required as a condition to the execution and delivery of a
new Warrant other than the written agreement of such owner to indemnify the
Company.
SECTION 15. WARRANT HOLDER NOT SHAREHOLDER.
This Warrant does not confer upon the holder hereof any right to vote
or to consent or to receive notice as a shareholder of the Company, as such, in
respect of any matters whatsoever, or any other rights or liabilities as a
shareholder, prior to the exercise hereof as hereinbefore provided.
SECTION 16. SEVERABILITY.
Should any part of this Warrant for any reason be declared invalid,
such decision shall not affect the validity of any remaining portion, which
remaining portion shall remain in force and effect as if this Warrant had been
executed with the invalid portion thereof eliminated, and it is hereby declared
the intention of the parties hereto that they would have executed and accepted
the remaining portion of this Warrant without including therein any such part,
parts or portion which may, for any reason, be hereafter declared invalid.
SECTION 17. INDEX AND CAPTIONS.
The index and the descriptive headings of the various sections of this
Warrant are for convenience only and shall not affect the meaning or
construction of the provisions hereof.
SECTION 18. APPLICABLE LAW.
This Warrant will be construed in accordance with and governed by the
laws of the State of Wisconsin.
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<PAGE> 20
IN WITNESS WHEREOF, Stokely USA, Inc. has caused this Warrant to be
signed by its President or one of its Vice Presidents and its corporate seal to
be hereunto affixed and attested by its Secretary or one of its Assistant
Secretaries and this Warrant to be dated June ___, 1993.
STOKELY USA, INC.
By________________________
ATTEST: ________________President
_______________________________________
__________________Secretary
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<PAGE> 21
SUBSCRIPTION
STOKELY USA, INC.
The undersigned, ____________________________________, pursuant to the
provisions of the within Warrant, hereby elects to purchase__________________
shares of Common Stock of Stokely USA, Inc. covered by the within Warrant.
Signature_________________________
Address____________________________
Dated___________________________________
-18-
<PAGE> 22
ASSIGNMENT
FOR VALUE RECEIVED _____________________________ hereby sells,
assigns and transfers unto ___________________________________________ the
within Warrant and all rights evidenced thereby and does irrevocably
constitute and appoint _______________________________________, attorney, to
transfer the said Warrant on the books of the within-named Company.
_______________________________
Dated:___________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED __________________________ hereby sells, assigns and
transfers unto ______________________ that portion of the within Warrant and the
rights evidenced thereby which will on the date hereof entitle the holder to
purchase _______________________________ shares of Common Stock of Stokely USA,
Inc., and does hereby irrevocably constitute and appoint _____________________,
attorney, to transfer that part of the said Warrant on the books of the
within-named Company.
_________________________________
Dated:________________________________
-19-
<PAGE> 1
EXHIBIT 10(zz)
EMPLOYMENT AGREEMENT
Agreement made, effective as of June 17, 1992, by and between Stokely
USA, Inc., a corporation duly organized and existing under the laws of the
State of Wisconsin, with a place of business at 1055 Corporate Center Drive,
City of Oconomowoc, County of Waukesha, State of Wisconsin, hereinafter
referred to as "employer" and Leslie J. Wilson of W180 N8215 Town Hall Road,
City of Menomonee Falls, County of Waukesha, State of Wisconsin, hereinafter
referred to as "employee".
RECITALS
The parties recite and declare:
A. Employer is engaged in the business of food processing, and
maintains its principal office at 1055 Corporate Center Drive, City of
Oconomowoc, County of Waukesha, State of Wisconsin. It desires to engage the
services of employee as its' Chief Financial Officer.
B. Employee has been engaged and has had a great deal of experience as
a senior financial executive. He desires to accept employment with employer as
its' Chief Financial Officer.
For the reasons set forth above, and in consideration of the mutual
promises and agreements set forth in this agreement, employer and employee
agree as follows:
SECTION ONE
EMPLOYMENT
A. Employer hereby employs, engages, and hires employees as its' Chief
Financial Officer, and employee hereby accepts and agrees to such hiring,
engagement, and employment, subject to the general supervision and pursuant to
the orders, advice, and direction of employer.
B. Employee shall perform such other duties as are customarily
performed by one holding such position in other, same, or similar businesses or
enterprises as that engaged in by employer, and shall also render such other
services and duties as may be reasonably assigned to him from time to time by
employer.
<PAGE> 2
SECTION TWO
BEST EFFORTS OF EMPLOYEE
Employee agrees that he will at all times faithfully, industriously,
and to the best of his ability, experience, and talents, perform all of the
duties that may be required of and from him pursuant to the express and
implicit terms of this agreement, to the reasonable satisfaction of employer.
Such duties shall be rendered at 1055 Corporate Center Drive, City of
Oconomowoc, State of Wisconsin, and at such other place or places as employer
shall in good faith require or as the interest, needs, business, or opportunity
of employer shall require.
Employee's normal work day begins at 7:30 a.m. and ends at 5:00 p.m.,
exclusive of meal periods. Within reason, employee may follow flexible work
hours consistent with his duties to employer.
SECTION THREE
TERM OF EMPLOYMENT
The agreement shall be effective for a period of two (2) years from
the effective date stated above, and shall automatically be extended for a
period of one year on each annual anniversary of its effective date unless at
least thirty (30) days prior to such annual anniversary date either party has
sent the other notice of nonrenewal indicating that this agreement will not be
extended at the end of the period, in which event it shall terminate at the end
of such period.
SECTION FOUR
COMPENSATION OF EMPLOYEE
Employer shall pay employee, and employee shall accept from employer,
in full payment for employee's services under this agreement, compensation at
the rate of one hundred thousand ($100,000) dollars per year, payable in twelve
(12) equal monthly payments on the last weekday of each month while this
agreement is in force.
Employer shall reimburse employee for all necessary expenses incurred
by employee while traveling pursuant to employer's directions.
SECTION FIVE
TERMINATION DUE TO DISCONTINUANCE OF BUSINESS
In spite of anything contained in this agreement to the contrary, in
the event that employer shall discontinue operating its business, then this
agreement shall terminate as of the
<PAGE> 3
last day of the month in which employer ceases operation with the same force
and effect as if such last day of the month were originally set as the
termination date of this agreement, except that, in such case, employee shall
receive, as severance, the sum of one hundred thousand ($100,000) dollars
payable in twelve (12) equal monthly installments on the last weekday of each
such month commencing the last work day of the month following the month in
which employer ceases operations.
For purposes of this section, a transaction covered by section 16 is
not within the scope hereof.
SECTION SIX
OTHER EMPLOYMENT
Employee shall devote all of his time, attention, knowledge, and
skills solely to the business and interest of employer, and employer shall be
entitled to all of the benefits, profits, or other issues arising from or
incident to all work, services, and advice of employee, and employee shall not,
during the term of this agreement, be interested directly or indirectly, in any
manner, as partner, officer, director, shareholder, advisor, employee, or in
any other capacity in any other business similar to employer's business or any
allied trade; provided, however, that nothing contained in this section shall
be deemed to prevent or to limit the right of employee to invest any of his
money in the capital stock or other securities of any corporation whose stock
or securities are publicly owned or are regularly traded on any public
exchange, nor shall anything contained in this section be deemed to prevent
employee from investing or limit employee's rights to invest his money in real
estate.
SECTION SEVEN
RECOMMENDATIONS FOR IMPROVING OPERATIONS
Employee shall make available to employer all information of which
employee shall have any knowledge and shall make all suggestions and
recommendations that will be of mutual benefit to employer and employee.
SECTION EIGHT
TRADE SECRETS
Employee shall not at any time or in any manner, either directly or
indirectly divulge, disclose or communicate to any person, firm, corporation,
or other entity in any manner
<PAGE> 4
whatsoever any information concerning any matter affecting or relating to the
business of employer, including without limitation any of its customers, the
prices it obtains or has obtained form the sale of, or at which it sells or has
sold, its products, or any other information concerning the business of
employer, its manner of operation, its plants, processes, or other data without
regard to whether all of the above-stated matters will be deemed confidential,
material, or important, employer and employee specifically and expressly
stipulating that as between them, such matters are important, material, and
confidential and gravely affect the effective and successful conduct of the
business of employer, and employer's good will, and that any breach of the
terms of this section shall be a material breach of this agreement.
SECTION NINE
TRADE SECRETS AFTER TERMINATION OF EMPLOYMENT
All of the terms of Section Eight of this agreement shall remain in
full force and effect for the period of eighteen (18) months after the
termination of employee's employment for any reason.
SECTION TEN
ADDITIONAL COMPENSATION
In addition to the compensation stated in Paragraph Four of this
agreement, employee shall be included in the executive incentive bonus plan as
a middle group participant. As such, employee is eligible to receive an annual
incentive cash bonus based upon a factor of twenty (20%) percent of the
compensation stated in Paragraph Four of this agreement. Calculation and
payment of the bonus is dependent upon employer achieving stated profit
objectives. A copy of the said executive incentive bonus plan is attached as
"Exhibit A" and incorporated herein.
SECTION ELEVEN
EMPLOYER-FURNISHED AUTOMOBILE
Employer will provide employee the use a company car. The following
are the conditions governing the use of such car by employee:
At Company expense, it shall be the responsibility of the employee to
keep the automobile serviced, maintained, and repaired in good driving
condition. In the event of tire purchases, major repairs, repairs required
because of an accident, or repairs covered by insurance, employee shall obtain
prior approval of company (except in emergencies) before authorizing the work
or making the purchase.
<PAGE> 5
For personal use of the company automobile, the account of the
employee with the company shall be charged with the sum of thirty ($30) dollars
per month.
Gas, oil, and lubrication expenses incurred by employee in the
performance of his duties under this agreement shall be paid by employer.
Employer will provide insurance on the automobile.
SECTION TWELVE
STOCK OPTIONS
On the effective date hereof, employer shall grant to employee the
option to purchase ten thousand (10,000) shares of employer's common stock
pursuant to the Stokely Incentive Stock Option Plan. The price per share and
all conditions of the grant shall be as required by the said plan.
SECTION THIRTEEN
OTHER EMPLOYEE BENEFITS
A. Vacation. Employee shall be entitled to fifteen (15) days of
paid vacation each year during the term of this agreement, the time for such
vacation to be determined by mutual agreement between employer and employee.
B. Holidays. As set forth in employer's Handbook for Monthly
Salaried Employees.
C. Profit Sharing. As established by employer's Employee's
Profit-Sharing Retirement Plan.
D. Salary Deferral Profit-Sharing. As established by employer's
Salary Deferral Profit-Sharing Plan (401(k)).
E. Health Insurance. As established by employer's Employee
Welfare Benefit Trust for Full-time, Year-round Employees of the Employer and
it's Wholly Owned Subsidiaries.
F. Life Insurance. As established by CIGNA Split Dollar Group
Life Insurance Plan for Monthly Salaried Employees.
G. Accidental Death Insurance and Dismemberment Insurance. As
provided by two plans; one providing an accidental death benefit of one hundred
thousand ($100,000) dollars and scheduled dismemberment benefit and the other
providing an accidental death benefit of four (4) times annual salary and a
scheduled dismemberment benefit.
H. Long Term Disability Insurance. As established by Stokely's
Long Term Disability Income Plan.
This section is not intended to do other than identify various
benefits to which employee
<PAGE> 6
will become entitled on the effective date hereof. Employee is referred to the
relevant plan documents and Employer's Handbook for Monthly Salaried Employees
for further specifics and agrees, in all cases, to be bound by the same with
regard to the benefits described herein.
SECTION FOURTEEN
AGREEMENTS OUTSIDE OF CONTRACT
This agreement contains the complete agreement concerning the
employment arrangement between the parties and shall, as of the effective date
hereof, supersede all other agreements between the parties. The parties
stipulate that neither of them has made any representation with respect to the
subject matter of this agreement or any representations including the execution
and delivery of this agreement except such representations as are specifically
set forth in this agreement and each of the parties acknowledges that he or it
has relied on its own judgement in entering into this agreement. The parties
further acknowledge that any payments or representations that may have been
made by either of them to the other prior to the date of executing this
agreement are of no effect and that neither of them has relied thereon in
connection with his or its dealings with the other.
SECTION FIFTEEN
MODIFICATION OF AGREEMENT
Any modification of this agreement or additional obligation assumed by
either party in connection with this agreement shall be binding only if
evidenced in writing signed by each party or an authorized representative of
each party.
SECTION SIXTEEN
CHANGE IN CONTROL OF EMPLOYER
On the effective date hereof, employer shall execute and deliver to
employee a change of control agreement in the form attached hereto as "Exhibit
B" which will continue the employment of employee for a period of two (2) years
following the date of a change of control of employer as defined therein.
<PAGE> 7
SECTION SEVENTEEN
DISCHARGE FOR CAUSE
A. Employer may discharge employee for gross negligence and
willful failure to perform duties, intoxication on the job, drug addiction,
criminal misconduct, and any continuing breach of a reasonable and material
rule or regulation that may be established from time to time for the conduct of
the employer's business provided employee has reasonable notice of violation
and reasonable time to correct, and for any failure of employee to perform any
agreement, duty, or obligation of employee under this agreement.
B. If employer discharges employee pursuant to the provisions of
this section or for any reason referred to in this section, employer shall only
be liable to pay to employee his salary to the date of termination of
employment.
SECTION EIGHTEEN
TERMINATION OF AGREEMENT BY EMPLOYER
Employer may terminate this agreement without cause. If such
termination occurs prior to the one year anniversary of the effective date
hereof, employee shall receive, as severance, an amount equal to the
compensation he would have received from employer pursuant to Section Four
hereof if employee had remained in the employ of employer through the initial
term hereof (June 16, 1994). If such termination occurs after the one year
anniversary of the effective date hereof, employee shall receive, as severance,
an amount equal to the compensation he would have received from employer
pursuant to Section Four hereof if employee had remained in the employ of
employer for one year beyond the date of termination. In both cases, such
compensation may be paid either in lump sum or in equal monthly installments,
at the discretion of employer.
SECTION NINETEEN
TERMINATION FOR TOTAL AND PERMANENT DISABILITY
A. In spite of anything in this agreement to the contrary,
employer is hereby given the option to terminate this agreement in the event
that employee shall, during the term of this agreement, become permanently
disabled as the term permanently disabled is fixed and defined in this Section.
Such option shall be exercised by employer giving notice to employee by
registered mail, addressed to him at W180 N8215 Town Hall Road, City of
Menomonee Falls, State of Wisconsin, or at such other address as employee shall
designate in writing of employer's intention to terminate this agreement on the
last day of the month during which such notice is
<PAGE> 8
mailed. On the giving of such notice, this agreement shall cease on the last
day of the month in which the notice is so mailed, with the same force and
effect as if such last day of the month were the date originally set forth in
this agreement as the termination date of this agreement.
B. For the purposes of this agreement, employee shall be deemed
to have become permanently disabled, if during any year of the term of this
agreement, because of ill health, physical or mental disability or for other
causes beyond employee's control he shall be continuously unable or unwilling
or shall have failed to perform his duties under this agreement for one hundred
eighty (180) consecutive days, or if, during any year of the term of this
agreement, employee shall be been unable or unwilling or shall have failed to
perform his duties for a total period of one hundred eighty (180) days,
irrespective of whether or not such days are consecutive. For the purposes of
this agreement, the term "any year of the term of this agreement" is defined to
mean any 12 calendar months period commencing on June 17, and terminating June
16, during the term of this agreement.
SECTION TWENTY
EFFECT OF PARTIAL INVALIDITY
The invalidity of any portion of this agreement will not and shall not
be deemed to affect the validity of any other provision. In the event that any
provision of this agreement is held to be invalid, the parties agree that the
remaining provisions shall be deemed to be in full force and effect as if they
had been executed by both parties subsequent to the expungement of the invalid
provision.
SECTION TWENTY-ONE
CHOICE OF LAW
It is the intention of the parties to this agreement that this
agreement and the performance under this agreement, and all suits and special
proceedings under this agreement, be construed in accordance with and under and
pursuant to the laws of the State of Wisconsin, and that, in any action,
special proceeding or other proceeding that may be brought arising out of, in
connection with, or by reason of this agreement, the laws of the State of
Wisconsin, shall be applicable and shall govern to the exclusion of the law of
any other forum, without regard to jurisdiction in which any action or special
proceeding may be instituted.
<PAGE> 9
SECTION TWENTY-TWO
NO WAIVER
The failure of either party to this agreement to insist upon the
performance of any of the terms and conditions of this agreement, or the waiver
of any breach of any of the terms and conditions of this agreement, shall not
be construed as thereafter waiving any such terms and conditions, but the same
shall continue and remain in full force and effect as if no such forbearance or
waiver had occurred.
SECTION TWENTY-THREE
ATTORNEY FEES
In the event that any action is filed in relation to this agreement,
the unsuccessful party in the action shall pay to the successful party, in
addition to all the sums that either party may be called on to pay, a
reasonable sum for the successful party's attorney's fees; except where
statutory provisions prevail.
SECTION TWENTY-FOUR
PARAGRAPH HEADINGS
The titles to the paragraphs of this agreement are solely for the
convenience of the parties and shall not be used to explain, modify, simplify,
or aid in the interpretation of the provisions of this agreement.
In witness whereof, each party to this agreement has caused it to be
executed at Oconomowoc, Wisconsin, on the date indicated below.
STOKELY USA, INC. LESLIE J. WILSON
/s/ Leslie J. Wilson
- ----------------------------- ----------------------
Thomas W. Mount, As President Leslie J. Wilson
<PAGE> 10
EXHIBIT A
REVISED
INCENTIVE BONUS PLAN
March 26, 1982
Deferred Compensation Plan
The current existing incentive bonus plan dated March 31, 1965, amended
December 16, 1966, and amended December 14, 1979, is hereby rescinded.
The deferred compensation amounts so credited under the plan are to
remain intact; except that the interest applied annually to the account
would be calculated using the same fixed rate as used by the Employees'
Profit Sharing Retirement Fund to determine annual increases on those
funds instead of the current prime rate calculation.
Revised Plan
1. A revised executive incentive bonus plan be established for each
executive payable as a % (percent) of salary based on pre-tax FIFO
profit (profit before incentive bonus, profit sharing
contribution, LIFO adjustments and income tax).
2. The amount of the bonus is determined as follows:
The participating group of executives and the classification of
those executives into a designated group will be approved by the
Board of Directors annually.
Executives are divided into three groups. The top group would
receive an incentive cash bonus equal to 30% of their salary. The
middle group would receive an amount equal to 20% and a third
group bonus equal to 10% of their salaries. If the corporate
profit objective of 3 3/4% of sales is achieved, the bonus pool at
100% level would be declared and paid. Adjustments to the award
schedule for increases or decreases above or below profit
objective of 3 3/4% are as follows:
<TABLE>
<CAPTION>
% Pre-Tax % of Bonus
FIFO Profit Paid
----------- ---------
<S> <C>
Less than 1 1/4% O%
1 1/4% 50%
2 1/2% 75%
3 3/4% 100%
------ ----
5% 125%
6 1/4% 150%
over 7 1/2% 175%
</TABLE>
3. Incentive bonus pool distribution would be as follows:
The final paid amounts to individuals shall be determined by the
executive compensation committee.
<PAGE> 11
4. Payments will be made after the pre-tax FIFO profits have been
determined. A payment date in June would be selected. Payments
are made only to those executives who are either in the employ of
the Oconomowoc Canning Company on the payment date or who had
retired during the current fiscal year.
Executive Deferred Compensation Option
It is proposed that the Company offer to the Executive Officer group
the option of individual contributions to the deferred compensation
account. In particular, they may elect to participate after reaching
the age 55 to elect each fiscal year to defer any part of his salary or
bonus which would otherwise be paid to him. Amounts so deferred are
credited with interest at the fixed rate as used by the Employees'
Profit Sharing Retirement Fund. Withdrawals from the fund are to be
paid after termination of his employment, and in no event more than 10
years after termination.
The Executive Deferred Compensation account may be either an unfunded
or funded account, but in either event it will be an unsecured
obligation of the corporation.
<PAGE> 12
EXHIBIT B
CHANGE IN CONTROL CONTINGENT EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this 17 day of June, 1992, by and between
STOKELY USA, INC., a Wisconsin corporation (the "Company"), and LESLIE J.
WILSON, Chief Financial Officer of the Company (the "Employee"),
W I T N E S S E T H :
WHEREAS, sudden takeovers, acquisitions or changes of control of
domestic corporations have occurred frequently in recent years, and
current conditions may contribute to the continuation or acceleration of
this trend; and
WHEREAS, the possibility of a sudden takeover, acquisition or change
of control can create uncertainty of employment and may cause the loss of
valuable Company officers, to the detriment of the Company and its
shareholders; and
WHEREAS, it is believed that the detriment described can be
substantially reduced by an agreement on the terms hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter set forth, IT IS AGREED:
(1) Continued Employment. If a change of control of the Company
occurs when the Employee is employed by the Company, the Company will
continue thereafter to employ the Employee, and the Employee will remain
in the employ of the Company, in accordance with the terms and provisions
of this Agreement, for a period of two (2) years following the date of
such change (the "Employment Period"). As used herein, the phrase
"change of control of the Company" means the first to occur of the
following:
(a) The acquisition of more than twenty (20%) percent of the
outstanding shares of voting stock of the Company by any person or entity
or group thereof acting in concert, excluding affiliates of the Company,
by means of an offer made publicly to the holders of all or substantially
all of the outstanding shares of the voting stock of the Company to
acquire such shares for cash, securities, other property or any
combination thereof; or
<PAGE> 13
(b) Any person or entity acquires, subsequent to the date of
this Agreement, beneficial ownership of twenty (20%) percent or more of
the then issued and outstanding voting common stock of the Company in any
manner other than a purchase of such stock directly from the Company for
cash; or
(c) The sale, assignment or transfer by the Company of all or
substantially all of its business or assets, in a transaction or
related series of transactions, except any such sales to affiliates of
the Company; or
(d) The Company merges or consolidates or reorganizes with or
into any other corporation or corporations other than its affiliates or
engages in any other similar business combination or reorganization; or
(e) A Schedule 13D or its equivalent is filed under the
Securities Exchange Act of 1934 with respect to the voting common stock
of the Company, by or on behalf of any person (within the meaning of that
term as defined in the regulations governing such Schedules), which
states expressly or by implication that such person intends to change the
management, direction or control of the Company or its policies; or
(f) A majority of the Board of Directors of the Company does
not consist of persons who were serving in the capacity on the date of
this Agreement, or who were appointed or nominated to serve as a Director
by such persons or by persons who were themselves so appointed or
nominated.
(2) Duties. Unless otherwise agreed by the Company and Employee,
during the Employment Period the Employee shall be employed by the
Company in the same position as that which the Employee held on the date
of the change of control of the Company. In such employment, his duties
and authority shall consist of and include all duties and authority
customarily performed and held by a person holding an equivalent position
with a corporation of similar nature and size, as such duties and
authority related to such position are reasonably defined and delegated
from time to time by the Board of Directors of the Company. However, no
change of the Employee's location of employment to outside the Oconomowoc
area, or in the Employee's title, shall be made without the prior written
consent of the Employee. The Employee shall have the powers necessary
to perform the duties assigned and shall be provided such supporting
services, staff, secretarial and other assistance, office space and
accouterments as shall be reasonably necessary and appropriate in light
of the duties assigned (but in no event, in any case, smaller in size or
lesser in quality than that being furnished to the Employee on the date
of the change of control of the Company).
<PAGE> 14
The Employee shall devote his entire business time, energy and
skills to such employment while so employed, but the Employee shall not
be required to devote more than an average of approximately 45 hours per
calendar week to such employment. The Employee shall be entitled to a
minimum of three (3) weeks (fifteen [15] working days) of paid vacation
annually. The Employee shall have the sole discretion to determine the
time and intervals of such vacation.
(3) Compensation. During the Employment Period, the Employee shall
be compensated as follows:
(a) He shall receive a salary equal to his salary as in effect
as of the date of the change of control of the Company, subject to
adjustment as hereinafter provided.
(b) He shall be reimbursed for any and all monies advanced in
connection with his employment for reasonable and necessary expenses
incurred by him on behalf of the Company.
(c) He shall be included to the extent eligible
thereunder in any and all plans providing benefits for the
Company's employees, including, but not limited to, life,
accidental death and dismemberment, long term disability,
hospitalization, medical and retirement, and be provided any and all
other benefits and perquisites (including use of an automobile) made
available to other employees of comparable status, at the expense of the
Company on a comparable basis; and
(d) He shall be included in all profit sharing, bonus, deferred
compensation, split dollar life insurance, and similar or comparable
plans customarily extended by the Company to corporate officers and key
employees of the Company.
(4) Annual Compensation Adjustments. The Board of Directors of the
Company or an appropriate committee thereof will consider and appraise
the contributions of the Employee to the Company's operating efficiency,
growth, production and profits, at least annually during the Employment
Period, and in accordance with past practice, the Employee's
compensation rate shall be annually adjusted upward to be commensurate
with increases given to other corporate officers and key employees
generally and as the scope and success of the Company's operations or the
Employee's duties expand.
(5) Retirement. If, during the Employment Period, or during the
applicable period, if any, described in paragraph (7), the Employee
shall deliver to the Company a statement signed by him, stating that the
Employee voluntarily chooses to retire early from the Company, or if the
Employee shall reach the age of 65, or shall
<PAGE> 15
with the mutual agreement of the Company agree in writing on early
retirement, then this Agreement shall terminate on the effective date of
such event and the terms of the Company's retirement policies or such
mutual agreement shall immediately become effective.
(6) Termination Other Than for Cause.
(a) If, during the Employment Period, the Company shall
terminate the employment of the Employee for any reason other than the
reasons set forth in paragraph (5) above or paragraph (7) below,
thereafter he or his personal representatives shall continue to be paid
monthly an amount equal to his then current monthly base salary plus
one-twelfth (1/12th) of the annual average of the executive incentive
program payments and bonuses paid to the Employee in the preceding five
(5) years, and he shall be entitled to continue life, accidental death
and dismemberment, long term disability and hospitalization and medical
insurances and shall receive the other employee benefits and perquisites
described in subparagraphs (3)(c) and (3)(d) hereof, for the remainder of
the Employment Period or as specified by Federal law, whichever time
period is longer.
(b) If during the Employment Period the Employee's duties shall
be changed substantially without his written consent from those specified
in paragraph (2) or he shall fail to be re-elected or he shall be removed
as a corporate officer of the Company, or if the Company violates this
Agreement, the Employee shall have the right to elect to terminate his
employment under this Agreement; and if he so elects, he or his
personal representatives shall continue to be paid monthly an amount
equal to his then current monthly base salary plus one-twelfth (1/12th)
of the average of the executive incentive program payments and bonuses
paid to the Employee in the preceding five (5) years, and he shall be
entitled to participate in group life, hospitalization and medical
insurance and shall receive the other employee benefits and perquisites
described in subparagraphs (3)(c) and (3)(d) hereof, for the
remainder of the Employment Period.
(7) Termination for Cause. Employee agrees that this
Agreement may be terminated by the Company at any time for cause, which
shall mean only death, conviction for criminal fraud, the commission of
a felony, or becoming the subject of a final nonappealable
judgement of a court of competent jurisdiction holding that the
Employee is liable to the Company for damages for obtaining a personal
benefit in a transaction adverse to the interest of the Company. In the
event this Agreement is terminated for cause, the Employee shall forfeit
his right to any and all benefits he would otherwise have been entitled
thereafter to receive under the Agreement.
<PAGE> 16
(8) EnforceabilitY. The parties agree that nothing in this
Agreement shall in any way abrogate the right of the Company and the
Employee to enforce by injunction or otherwise the due and proper
performance and observance of the several covenants herein contained to
be performed by the Employee or the Company or to recover damages for
breach thereof.
(9) Successors and Assigns. If the Company sells, assigns or
transfers all or substantially all of its business and assets to any
person, excluding affiliates of the Company, or if the Company merges
into or consolidates or otherwise combines with any person which is a
continuing or successor entity, then the Company shall assign all of its
right, title and interest in this Agreement as of the date of such event
to the person which is either the acquiring or successor corporation,
and such person(s) shall assume and perform from and after the date of
such assignment all of the terms, conditions and provisions imposed by
this Agreement upon the Company. In case of such assignment by the
Company and of assumption and agreement by such person(s), all further
rights as well as all other obligations of the Company under this
Agreement thenceforth shall cease and terminate and thereafter the
expression "the Company" wherever used herein shall be deemed to mean
such person(s).
(10) Affiliate. The term "affiliate" as used in this
Agreement means any corporation more than fifty (50%) percent of the
outstanding voting common stock of which is owned at the time by the
Company or an affiliate of the Company.
(11) Supplemental Agreement. This Agreement supplements, and is not
an amendment to or in derogation of, any other agreement between the
Company and the Employee relating to the employment or the terms and
conditions thereof. No person, other than such person as may be
designated by the Board of Directors of the Company, shall have any
authority on behalf of the Company to agree to modify or change this
Agreement.
(12) Severability. This Agreement is to be governed by and construed
under the laws of the State of Wisconsin. If any provision of this
Agreement shall be held invalid and unenforceable for any reason, such
provision shall be deemed deleted and the remainder of the Agreement
shall be valid and enforceable without such provision.
(13) Termination of Agreement. The Company has the right to
terminate the employment of the Employee, and the Employee may elect at
his discretion to terminate his employment, at any time prior to a change
in control of the Company, in either of which events this Agreement shall
terminate; subject to the terms and
<PAGE> 17
conditions of the Employment Agreement between the parties dated
effective June 17, 1992.
At any time prior to a change in control of the Company by
action of its Board of Directors, this Agreement may be terminated by
either party hereto upon written notice to the other.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its corporate seal affixed and attested by its duly
authorized officers, and the Employee has hereunto set his hand and seal
as of the date first above written.
STOKELY USA, INC.
By /S/ TOM MOUNT
---------------------
Tom Mount
(Corporate Seal) Attest:
Leslie J. Wilson, Employee
<PAGE> 1
EXHIBIT (fff)
SECOND AMENDMENT
TO LOAN DOCUMENTS
October 13, 1992
Stokely USA, Inc.
1055 Corporate Center Drive
Oconomowoc, Wisconsin 53066
Attention: Stephen W. Theobald
Ladies and Gentlemen:
Reference is made to the Loan and Security Agreement dated
August 18, 1992 (the "Loan Agreement") among Stokely USA, Inc.
("Borrower"), the lenders party thereto (the "Lenders") and Barclays
Business Credit, Inc., as a Lender and as agent for the Lenders (the
"Agent"). Unless defined herein, capitalized terms used herein shall
have the meanings given to such terms in the Loan Agreement. Reference
is further made to the letter agreement dated August 18, 1992 executed by
Agent, the other Lenders party thereto and Bank One, Milwaukee, N.A.
and agreed to by Borrower (the "Letter Agreement"), a copy of which is
attached hereto as Exhibit A. Pursuant to the Letter Agreement, Borrower
agreed that on or prior to the "Operative Date" (as defined in the Letter
Agreement), Borrower would either (i) deliver to Agent a waiver executed
by the U.S. Department of Commerce, Economic Development Administration
("EDA") of a certain default then in existence under the Loan Agreement
dated March 28, 1978 (the "EDA Loan Agreement") between EDA and D&K
Frozen Foods, Inc. ("D&K") and a consent by EDA to consummation by
Borrower and D&K of the "Inventory Transfer" (as defined in the Letter
Agreement) or (ii) prepay in full the outstanding amount of the
liabilities owing from D&K to EDA under the EDA Loan Agreement (the "EDA
Loans"). As defined in the Loan Agreement, the Operative Date will be
the earliest of October 19, 1992 (the "Final Date") and the dates upon
which certain specific events occur.
EDA has advised Borrower that it is only willing to consider
executing the above-described waiver and consent if Borrower agrees
to guaranty repayment of the EDA Loans (the "Guaranty"). Borrower
has informed Agent and Lenders that execution and delivery by
Borrower of the Guaranty would constitute a violation of Section
9.2(c) of the Loan Agreement and, consequently, has requested that
Required Lenders amend the Loan Agreement to permit Borrower to execute
and deliver the Guaranty. Borrower has also requested that Required
Lenders agree to amend the Letter Agreement to extend the Final Date from
October 19, 1992 until December 1, 1992. Required Lenders have agreed
to the
<PAGE> 2
foregoing in the manner described herein, and subject to the terms
hereof, as follows:
1. The Letter Agreement is hereby amended by extending the
Final Date from October 19, 1992 until December 1, 1992.
2. Section 9.2(c) of the Loan Agreement is hereby amended by
(a) deleting the word "and" at the end of clause (vii) thereof and (b)
amending and restating clause (viii) thereof as clauses (viii) and (ix)
set forth below:
"(viii) an unsecured guaranty by Borrower of the
Indebtedness of D&K Frozen Foods, Inc. owing to the U.S.
Department of Commerce, Economic Development
Administration under a certain Loan Agreement dated March
28, 1978; and
(ix) Indebtedness not included in paragraphs (i)
through (viii) above which does not exceed at any time, in the
aggregate, the sum of Five Hundred Thousand Dollars ($500,000)."
3. The effectiveness of this Second Amendment to Loan
Documents, as provided in Section 4 below, shall constitute
amendments of the Loan Agreement, the Letter Agreement and all of the
other Loan Documents as appropriate to express the agreements contained
herein. In all other respects, the Loan Agreement, the Letter Agreement
and the other Loan Documents shall remain unchanged and in full
force and effect in accordance with their respective terms.
4. The amendments described herein shall be effective when
Agent has received counterparts of this Second Amendment to Loan
Documents executed by Required Lenders and acknowledged and accepted by
Borrower on or before October 16, 1992; provided, that the amendments
contained herein shall have no further force or effect and the original
provisions of the Loan Agreement, the Letter Agreement and the other
Loan Documents shall be reinstated, if on or prior to the amended
Operative Date, the EDA has not provided to Borrower the waiver and
consent described in the Letter Agreement, in form and substance
acceptable to Required Lenders. The executed Second Amendment to Loan
Documents should be sent to Agent's attorneys, Goldberg, Kohn, Bell,
Black, Rosenbloom & Moritz, Ltd., 55 East Monroe Street, Suite 3900,
Chicago, Illinois 60603, Attention: David L. Dranoff, Esq., on or before
October 16, 1992.
5. This Second Amendment to Loan Documents may be executed in
counterparts, each of which shall be deemed an
<PAGE> 3
original, but all of which counterparts taken together shall constitute one
and the same instrument.
Very truly yours,
BARCLAYS BUSINESS CREDIT, INC.
By _______________________________
Its ___________________________
NBD BANK, N.A.
By _______________________________
Its ___________________________
FIRST BANK (N.A.)
By _______________________________
Its ___________________________
BANK ONE, MILWAUKEE, NATIONAL
ASSOCIATION
By _______________________________
Its ___________________________
LASALLE NATIONAL BANK
By _______________________________
Its ___________________________
BA BUSINESS CREDIT, INC.
By _______________________________
Its ___________________________
Acknowledged and agreed to
this ____ day of October, 1992.
STOKELY USA, INC.
By___________________________
Its________________________
-3-
<PAGE> 1
EXHIBIT 10(ggg)
THIRD AMENDMENT
TO LOAN DOCUMENTS
December 16, 1992
Stokely USA, Inc.
1055 Corporate Center Drive
Oconomowoc, Wisconsin 53066
Attention: Stephen W. Theobald
Ladies and Gentlemen:
Reference is made to the Loan and Security Agreement dated as of
August 18, 1992 (the "Loan Agreement") among Stokely USA, Inc.
("Borrower"), the Lenders party thereto and Barclays Business Credit,
Inc., as Agent for the Lenders (the "Agent"). Unless defined herein,
capitalized terms used herein shall have the meanings provided to such
terms in the Loan Agreement.
Borrower has requested that Lenders agree to amend the Loan
Agreement to provide that the credit facility described therein may
include guaranties to be issued by a Lender to any Person to secure
Borrower's obligations to such Person in connection with certain short
term foreign exchange sale contracts to be entered into from time to time
by such Person at Borrower's request and in the ordinary course of
Borrower's business for hedging purposes. Lenders have agreed to the
foregoing in the manner described herein and subject to the terms hereof,
as follows:
1. The Loan Agreement is hereby amended as follows:
(a) Section 1.1(bi) of the Loan Agreement is hereby amended
and restated in its entirety, as follows:
"(bi) LC Guaranty - any guaranty at any time executed hereunder
by Agent or any Lender at Borrower's request in favor of a Person,
including without limitation any Affiliate of Agent or any Lender,
who has either (i) issued a letter of credit for the account of
Borrower or (ii) entered into a short term foreign exchange contract
at the request of Borrower for the sale of foreign currency."
(b) The first sentence of Section 2.7(a) of the Loan Agreement
is hereby amended and restated in its entirety, as follows:
"(a) Subject to all of the terms and conditions of this
Agreement and for so long as no Default or Event of
<PAGE> 2
Default exists or would be created by the issuance of the Letters of
Credit or LC Guaranties requested, and, if requested to do so by
Borrower, Agent shall, on behalf of Lenders, issue its, or cause to
be issued its Affiliates', Letters of Credit for the account of
Borrower, or may execute LC Guaranties by which Agent or such Affil-
iate, on behalf of Lenders, shall guaranty the payment or performance
by Borrower of its reimbursement obligations with respect to either
(x) Letters of Credit issued for Borrower's account by other Persons
or (y) short term foreign exchange contracts for the sale of foreign
currency entered into for Borrower's account for hedging purposes by
other Persons (collectively, "Exchange Guaranties"); provided, that
no Letter of Credit or LC Guaranty shall be issued if, after giving
effect to such issuance, (i) the sum of the unpaid balance of the
Revolving Credit Loans and the LC Amount would exceed the lesser of
One Hundred Twenty Million Dollars and the Borrowing Base or (ii) the
LC Amount would exceed Forty Million Dollars; and provided further,
that no Exchange Guaranty shall be issued if, after giving effect to
such issuance, the LC Amount related to Exchange Guaranties would
exceed Two Million Dollars ($2,000,000) or if such Exchange Guaranty
relates to foreign exchange contracts entered, or to be entered,
into outside the ordinary course of Borrower's business or for any
purpose other than currency hedging."
(c) The effectiveness of this Third Amendment to Loan Documents, as
provided in Section 2 below, shall constitute amendments of the Loan Agreement
and all of the other Loan Documents as appropriate to express the agreements
contained herein. In all other respects, the Loan Agreement and the other Loan
Documents shall remain unchanged and in full force and effect in accordance
with their respective terms.
(d) The effectiveness of this Third Amendment to Loan Documents,
as provided in Section 2 below, shall also constitute notice to Borrower by
Agent that Agent has established, pursuant to Section 2.5 of the Loan
Agreement, a reserve against Revolving Credit Loans in the amount of ten
percent (10%) of the aggregate amount of the Exchange Guaranties described
in amended Section 2.7(a) above at any time issued and outstanding.
2. The amendments described herein shall be effective when Agent
has received counterparts of this Third Amendment to Loan Documents executed
by Required Lenders and acknowledged and accepted by Borrower. The executed
Third Amendment to Loan Documents should be sent to Agent's attorneys,
Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd., 55 East Monroe Street,
Suite 3900, Chicago, Illinois 60603, Attention: David L. Dranoff, Esq., on or
before December 31, 1992.
<PAGE> 3
3. This Third Amendment to Loan Documents may be executed in
counterparts, each of which shall be deemed an original, but all of which
counterparts taken together shall constitute one and the same instrument.
Very truly yours,
BARCLAYS BUSINESS CREDIT, INC.,
as Agent and as a Lender
By _________________________________
Its _____________________________
BANK ONE, MILWAUKEE, NATIONAL
ASSOCIATION
By _________________________________
Its _____________________________
FIRST BANK (N.A.)
By _________________________________
Its _____________________________
LASALLE NATIONAL BANK
By _________________________________
Its _____________________________
BA BUSINESS CREDIT, INC.
By _________________________________
Its _____________________________
NBD BANK, N.A.
By _________________________________
Its _____________________________
Acknowledged and agreed to this
____ day of December, 1992
STOKELY USA, INC.
By ____________________________
Its ________________________
-3-
<PAGE> 1
EXHIBIT 10(hhh)
WAIVER AND FOURTH AMENDMENT TO LOAN DOCUMENTS
June 11, 1993
Stokely USA, Inc.
1055 Corporate Center Drive
Oconomowoc, Wisconsin 53066
Attention: Stephen W. Theobald
Ladies and Gentlemen:
Reference is made to the Loan and Security Agreement dated as of
August 18, 1992 (the "Loan Agreement") among Stokely USA, Inc. ("Borrower"),
the Lenders party thereto and Barclays Business Credit, Inc., as Agent for the
Lenders (the "Agent"). Unless defined herein, capitalized terms used herein
shall have the meanings provided to each term as in the Loan Agreement.
Borrower has requested that Lenders agree to (i) amend the Loan
Agreement in certain respects, and (ii) waive certain existing Events of
Default under the Loan Agreement, and Lenders have agreed to do so, in the
manner described herein, and subject to the terms hereof, as follows:
1. The Loan Agreement is hereby amended as follows:
(a) Section 1.1(n)(A) of the Loan Agreement is hereby amended by
deleting therefrom the amount "One Hundred Twenty Million Dollars
($120,000,000)" and inserting in its place the amount "One Hundred Million
Dollars ($100,000,000)."
(b) Section 1.1(n)(B)(2)(x) of the Loan Agreement is hereby amended
by deleting therefrom the amount "One Hundred Million Dollars ($100,000,000)"
and inserting in its place the phrase "the Inventory Sublimit."
(c) Section 1.1(p) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(p) Can Supply Agreements - collectively, (i) the Restated Agreement
for Purchase and Sale of Containers dated on or before the Closing Date
between Borrower and Heekin Can, Inc. ("Heekin"), as amended by letter
dated April 6, 1993, executed by Heekin in favor of Borrower, (ii) the
agreement dated on or before the Closing Date between Borrower and Crown
Cork and Seal Company, Inc. ("Crown"), as amended by letter agreement dated
April 7, 1993 between Crown and Borrower, and as further amended
<PAGE> 2
by letter agreement dated June 9, 1993 between Crown and Borrower, (iii)
the Supply Agreement dated January 24, 1992, between Borrower and American
National Can Company ("ANC"), as amended by letter agreement dated April 6,
1993 between Borrower and ANC, and as further amended by letter agreement
dated June 11, 1993 between Borrower and ANC, and (iv) the Letter of
Understanding dated July 20, 1992 among Borrower, ANC, Crown and Heekin, all
providing for the supply to Borrower of cans and related supplies used in
its and its Subsidiaries' operations, along with all amendments,
modifications, renewals, restructurings and replacements of each thereof
approved by Required Lenders in their sole discretion and all similar
agreements or arrangements approved by Required Lenders in their reasonable
discretion into which Borrower may enter from time to time."
(d) Section 1.1 of the Loan Agreement is hereby amended by inserting
as a new Section 1.1(r-1) a definition of the term "Carrying Costs," between
the defined terms "Capitalized Lease Obligation" (Section 1.1(r)) and "Closing
Date" (Section 1.1(s)), as follows:
"(r-1) Carrying Costs - the aggregate amount of all costs and expenses
for taxes, insurance and maintenance incurred by Borrower or any Subsidiary
with respect to, or incurred by Borrower or any Subsidiary as expenses for,
and allocated by Borrower or any Subsidiary to, any particular Scheduled
Assets that are sold or otherwise disposed of by Borrower or such
Subsidiary, and that have accrued during the period commencing on the date
(which shall be no earlier than the project shutdown date specified for
each Scheduled Asset, as shown on Exhibit U attached hereto) on which such
Scheduled Assets were idled or shuttered by Borrower or such Subsidiary
without intent to reopen or reactivate such Scheduled Assets, and ending on
the earliest to occur of (i) the sale or other disposition of such Scheduled
Assets, (ii) the acceleration of the Obligations and (iii) receipt of notice
by Agent from Long Term Agent that the Long Term Loans have been
accelerated."
(e) Section 1.1 of the Loan Agreement is hereby amended by inserting
as a new Section 1.1(ai-1) a definition of the term "Excess Advance Period" and
by inserting as a new Section 1.1(ai-2) a definition of the term "Excess
Advances," each between the defined terms "Event of Default" (Section 1.1(ai))
and "Existing Issuer" (Section 1.1(aj)), as follows:
"(ai-1) Excess Advance Period - the period of time commencing on June
1, 1993 and ending on August 31, 1993, which period shall not be extended
without the consent of all Lenders and Long Term Lenders.
-2-
<PAGE> 3
(ai-2) Excess Advances - all outstanding Revolving Credit Loans at any
time during the Excess Advance Period to the extent that Availability
exceeds the sum of the Borrowing Base and the LC Amount by less than Five
Million Dollars ($5,000,000)."
(f) Section 1.1 of the Loan Agreement is hereby amended by inserting
as a new Section 1.1(ak-1) a definition of the term "Existing Percentages,"
between the defined terms "Existing Letter of Credit" (Section 1.1(ak)) and
"Existing Reimbursement Agreement" (Section 1.1(al)), as follows:
"(ak-l) Existing Percentages - with respect to each Lender, the
percentage set forth below opposite such Lender's name:
<TABLE>
<CAPTION>
LENDER PERCENTAGE
------ ----------
<S> <C>
Barclays Business Credit, Inc. 29.1667%
Bank One, Milwaukee, National Association 20.8442%
First Bank (N.A.) 15.4058%
LaSalle National Bank 15.2083%
BA Business Credit, Inc. 15.2083%
NBD Bank, N.A. 4.1667%"
</TABLE>
(g) Section 1.1(au) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(au) Facility B Notes - the Amended and Restated Facility B Revolving
Credit Notes to be executed by Borrower on June 11, 1993 in favor of Lenders
to evidence the Facility B Loans, which shall be in the form of Exhibit A-2
attached hereto."
(h) Section 1.1(bd) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(bd) Intercreditor Agreement - that certain Intercreditor Agreement
executed by Agent, Lenders and Long Term Lenders, as contemplated by Section
9.2(h)(ii), as amended by a certain First Amendment to Intercreditor
Agreement dated June 11, 1993 among Agent, Lenders and Long Term Lenders."
(i) Section 1.1(be) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
-3-
<PAGE> 4
"(be) Interest Coverage - with respect to any period of determination,
Consolidated EBIT for such period minus Consolidated Interest Expense for
such period, all as determined in accordance with GAAP."
(j) Section 1.1 of the Loan Agreement is hereby amended by inserting
as a new Section 1.1(bg-1) a definition of the term "Inventory Sublimit," and
inserting as a new Section 1.1(bg-2) a definition of the term "IRB Loans," each
between the defined terms "Inventory" (Section 1.1(bg)) and "LC Amount"
(Section 1.1(bh)), as follows:
"(bg-1) Inventory Sublimit - for any period set forth below, the
amount set forth below opposite such period:
<TABLE>
<CAPTION>
PERIOD AMOUNT
------ ------
<S> <C>
May, 1993 $60,000,000
June, 1993 62,000,000
July, 1993 71,000,000
August, 1993 83,000,000
September, 1993 90,000,000
October, 1993 90,000,000
November, 1993 86,000,000
December, 1993 90,000,000
January, 1994 79,000,000
February, 1994 70,000,000
March, 1994 50,000,000
April, 1994 43,000,000
May, 1994 41,000,000
June, 1994 44,000,000
July, 1994 56,000,000
August, 1994 71,000,000
September, 1994 79,000,000
October, 1994 86,000,000
November, 1994 77,000,000
December, 1994 78,000,000
January, 1995 67,000,000
</TABLE>
-4-
<PAGE> 5
<TABLE>
<CAPTION>
PERIOD AMOUNT
------ ------
<S> <C>
February, 1995 58,000,000
March, 1995 35,000,000
April, 1995 35,000,000
May, 1995 35,000,000
</TABLE>
(bg-2) IRB Loans - collectively, the Indebtedness for Money Borrowed
of Borrower and each of its Subsidiaries in respect of any industrial
revenue bond or similar financings, all as set forth in Exhibit Q attached
hereto."
(k) Section 1.1(bq) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(bq) Long Term Intercreditor Agreement - that certain Intercreditor
and Collateral Agency Agreement executed by Long Term Lenders and Lenders
with Facility A Loan Commitments, as contemplated by Section 9.2(h)(ii),
as amended by a certain First Amendment to Intercreditor and Collateral
Agency Agreement dated June 11, 1993 among Long Term Lenders and Lenders."
(l) Section 1.1(bs) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(bs) Long Term Loans - the Indebtedness of Borrower owing to Long
Term Lenders under (i) the Note Agreement dated as of December 1, 1991 Re:
$20,000,000 9.74% Senior Notes, due December 15, 2001 in favor of SWIB, as
amended by First Amendment to Note Agreement dated August 18, 1992 and as
further amended by Second Amendment to Note Agreement dated June 11, 1993,
and all agreements, instruments and documents related to any of the
foregoing and (ii) the Note Agreement dated as of January 1, 1990 Re:
$25,000,000 9.37% Senior Notes due January 15, 2000 in favor of the
Nationwide Group, as amended by Amendment to Note Agreement dated August 18,
1992 and as further amended by Second Amendment to Note Agreement dated June
11, 1993, and all agreements, instruments and documents related to any of
the foregoing, or any refinancing, restructuring or replacement of any
thereof, or amendment, modification or supplement of any thereto, in each
case acceptable to Agent in its sole discretion."
(m) Section 1.1(bt) of the Loan Agreement is hereby amended by
deleting therefrom the amount "One Hundred Twenty Million Dollars
($120,000,000)" and inserting in its place the amount "One Hundred Million
Dollars ($100,000,000)."
-5-
<PAGE> 6
(n) Section 1.1(bw) of the Loan Agreement is hereby amended by
inserting the following after clause (vi) and before the period:
"minus (vii) all repayments made to Long Term Lenders or other Lenders
other than those resulting from any sale or disposition of Scheduled Assets
or other fixed assets"
(o) Section 1.1(cv) of the Loan Agreement is hereby amended by
deleting therefrom each reference to the term "Aggregate Percentages" and
inserting in its place the term "Existing Percentages."
(p) Section 1.1 of the Loan Agreement is hereby amended by inserting
as a new Section 1.1(da-1) a definition of the term "Scheduled Assets," between
the defined terms "Schedule of Accounts" (Section 1.1(da)) and "Security
Documents" (Section 1.1(db)), as follows:
"(da-1) Scheduled Assets - the assets identified on Borrower's May 5,
1993 Review of Business Plan, a copy of which is attached hereto as Exhibit
U, as being held for sale or shutdown."
(q) The introductory language to Section 2 of the Loan Agreement is
hereby amended by deleting therefrom the amount "One Hundred Twenty Million
Dollars ($120,000,000)" and inserting in its place the amount "One Hundred
Million Dollars ($100,000,000)."
(r) Section 2.2(a) of the Loan Agreement is hereby amended by
deleting therefrom each reference to the amount "Eighty Million Dollars
($80,000,000)" and inserting in its place the amount "Sixty Million Dollars
($60,000,000)."
(s) Section 2.3 of the Loan Agreement is hereby amended by adding a
proviso at the end thereof after the word "Agreement" and before the period, as
follows:
"; provided, that Borrower shall not be permitted to use the proceeds
of the Revolving Credit Loans in order to pay Carrying Costs on any idled or
shuttered Scheduled Assets at any time after (a) the aggregate amount of
such Carrying Costs relating to any particular Scheduled Asset exceeds forty
percent (40%) of the anticipated net proceeds of the sale of such Scheduled
Asset, as set forth on Exhibit U attached hereto, (b) the aggregate amount
of Carrying Costs with respect to all Scheduled Assets incurred in any
fiscal year exceeds One Million Two Hundred Fifty Thousand Dollars
($1,250,000) or (c) after the occurrence and during the continuance of an
Event of Default."
-6-
<PAGE> 7
(t) Section 2.4 of the Loan Agreement is hereby amended by deleting
therefrom each reference to the term "Aggregate Percentages" and inserting in
its place the term "Existing Percentages."
(u) Section 2.5 of the Loan Agreement is hereby amended by adding the
following at the end thereof:
"In addition to the foregoing, as of June 11, 1993, Agent and Lenders
have established a reserve in the aggregate amount at any time of the
portion of the proceeds of the sale or disposition, after June 11, 1993, of
any Property consisting of (a) Scheduled Assets, that is equal to the sum of
(x) the aggregate amount of Carrying Costs relating to such Scheduled
Assets and (y) the aggregate amount of proceeds of such sale or other
disposition that are paid to Lenders with Facility A Loan Commitments
pursuant to the terms of the Intercreditor Agreement and the Long Term
Intercreditor Agreement and (b) fixed assets of Borrower or any of its
Subsidiaries other than the Scheduled Assets, that is equal to the aggregate
amount of proceeds of such sale or other disposition that are paid to
Lenders with Facility A Loan Commitments pursuant to the terms of the
Intercreditor Agreement and the Long Term Intercreditor Agreement. Such
reserve shall not be lowered or released without the consent of all
Lenders."
(v) Section 2.7(a) of the Loan Agreement is hereby amended by deleting
therefrom the reference to the amount "One Hundred Twenty Million Dollars
($120,000,000)" and inserting in its place the amount "One Hundred Million
Dollars ($100,000,000)."
(w) Section 3.1 of the Loan Agreement is hereby amended by adding new
Sections 3.1(g) and 3.1(h) at the end thereof, as follows:
"(g) Unused Line Fee. At all times during the period commencing on
June 11, 1993 and ending on June 11, 1994, Borrower shall pay to Agent for
the ratable benefit of Lenders as set forth below, an unused line fee equal
to one quarter of one percent (.25%) per annum of the average monthly amount
by which (i) the sum of the Facility A Loan Commitments and the Facility B
Loan Commitments exceeds (ii) the sum of the outstanding principal balance
of the Loans and the LC Amount. The unused line fees shall be payable
monthly in arrears on the first day of each calendar month for the preceding
month and shall be allocated among Lenders as follows:
(i) if the aggregate amount of the Facility A Loan Commitments is
fully borrowed at all times during such month, the unused line fee for
such
-7-
<PAGE> 8
month shall be allocated among Lenders with Facility B Loan Commitments
on a pro rata basis in accordance with their respective Facility B
Percentages; or
(ii) if the aggregate amount of the Facility A Loan Commitments
is not fully borrowed at all times during such month, the unused line fee
for such month shall be allocated between Lenders with Facility A Loan
Commitments and Lenders with Facility B Loan Commitments as follows: (A)
Lenders with Facility A Loan Commitments shall receive an amount of the
unused line fee equal to the product of the ratio of the average unused
portion of the aggregate amount of the Facility A Loan Commitments during
such month to the average unused portion of the sum of the aggregate amount
of the Facility A Loan Commitments and the aggregate amount of the Facility
B Loan Commitments for such month, multiplied by the total amount of the
unused line fee for such month; and (B) Lenders with Facility B Loan
Commitments shall receive the balance of the unused line fee for such
month. All such amounts shall be allocated to individual Lenders in
accordance with their respective Facility A Percentages and Facility B
Percentages.
(h) Restructuring Fee. Borrower shall pay to Agent for the ratable
benefit of Lenders in accordance with their respective Existing Percentages,
a restructuring fee of Six Hundred Thousand Dollars ($600,000), payable as
follows: Two Hundred Thousand Dollars ($200,000) payable on June 11, 1993;
Two Hundred Thousand Dollars ($200,000) payable on December 31, 1993; and Two
Hundred Thousand Dollars ($200,000) payable on April 1, 1994. The entire
amount of the restructuring fee shall be deemed to have been fully earned on
June 11, 1993, notwithstanding the fact that the restructuring fee is payable
in installments."
(x) Section 3.5(a)(A) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(A) the Loans must be repaid so that the sum of the outstanding
principal balance of the Loans and the LC Amount does not exceed either (a)
Forty Million Dollars ($40,000,000) for a consecutive thirty (30) day period
during the period commencing on April 1, 1994 and ending on June 30, 1994 or
(b) Twenty Million Dollars ($20,000,000) during the period commencing on May
1, 1995 and ending on May 31, 1995;"
-8-
<PAGE> 9
(y) Section 3.6(b) of the Loan Agreement is hereby amended by
deleting the second sentence thereof in its entirety and replacing it with the
following:
"Any such proceeds payable to Borrower under the terms of the
Intercreditor Agreement shall be immediately turned over to Agent for
application to the Obligations in the manner otherwise provided in this
Agreement."
(z) Section 3.6 of the Loan Agreement is hereby amended by adding new
Section 3.6(c) at the end thereof, as follows:
"(c) Notwithstanding anything to the contrary contained in this
Agreement and consistent with the terms of the Intercreditor Agreement, one
hundred percent (100%) of the estimated Three Million Three Hundred Thousand
Dollar ($3,300,000) proceeds of the insurance claim arising from the
casualty at Borrower's Hoopeston, Illinois facility and sixty percent (60%)
of the estimated Six Hundred Forty-Seven Thousand Dollar ($647,000) proceeds
of the sale of the former corporate offices in Oconomowoc, Wisconsin and a
certain corporate airplane (collectively, "Special Proceeds") paid to
Borrower need not be turned over to the Long Term Lenders and Lenders with
Facility A Loan Commitments promptly after receipt thereof. Rather, such
proceeds shall be promptly turned over by Borrower to Agent for application
to the Obligations in the manner otherwise provided in this Agreement. The
amount of such proceeds may be paid by Borrower to the Long Term Lenders
and Lenders with Facility A Loan Commitments at the time, and to the extent,
set forth in Section 9.2(ab)."
(aa) Section 8.1(u) of the Loan Agreement is hereby amended by
amending and restating the second sentence thereof, as follows:
"As of June 11, 1993, except as provided on Exhibit V attached hereto
with respect to certain IRB Loans of Borrower and its Subsidiaries, neither
Borrower nor any of its Subsidiaries is in default and no event has occurred
and no condition exists which constitutes, or which with the passage of time
or the giving of notice or both would constitute, a default in respect of
any agreement evidencing, securing or relating to any Indebtedness to any
Person for Money Borrowed, including without limitation the Long Term Loans
and the IRB Loans and no such default will be caused by the execution and
delivery of this Agreement or the performance by Borrower of its obligations
hereunder. As of June 11, 1993, neither Borrower nor any of its Subsidiaries
has received any notice of the occurrence or existence of any default of,
or breach under, any IRB Loans, including without
-9-
<PAGE> 10
limitation any of the matters listed on Exhibit V attached hereto. No
enforcement action has been taken by any holder of any IRB Loans in respect
of any matters listed on Exhibit V attached hereto, including without
limitation the acceleration of the maturity of all or any part of such IRB
Loans."
(ab) Section 9.1(j)(iv) of the Loan Agreement is hereby amended by
amending and restating clauses (A) and (B) thereof in their entirety, as
follows:
"(A) forty-five (45) days after the end of each month ending during
the period commencing on the Closing Date and ending on September 30, 1992
and forty-five (45) days after the end of the month ending on April 30,
1993, (B) sixty (60) days after the end of the month ending on March 31,
1993 and (C) thirty (30) days after the end of each month during the period
commencing on October 1, 1992 and ending on February 28, 1993 and thirty
(30) days after the end of each month thereafter,"
(ac) Section 9.1(k)(iv) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(iv) promptly after Borrower's learning thereof, of any default by
Borrower or any of its Subsidiaries under any note, indenture, loan
agreement, mortgage, lease, deed, guaranty or other similar agreement
relating to any Indebtedness of Borrower or any of its Subsidiaries,
including without limitation any IRB Loans; and promptly after receipt
thereof by Borrower or any of its Subsidiaries, Borrower shall provide Agent
and each Lender with a copy of any notice of default or acceleration
received by Borrower or any of its Subsidiaries under or in connection with
any of the foregoing agreements and instruments."
(ad) Section 9.1(q) of the Loan Agreement is hereby amended by
inserting the following sentence after the first sentence thereof:
"In particular, Borrower shall maintain Can Supply Agreements with
terms at least as favorable to Borrower as those contained in its current
Can Supply Agreements, including without limitation having an aggregate
amount of at least Thirty-Two Million Dollars ($32,000,000) of open credit
available to Borrower under such Can Supply Agreements."
(ae) Section 9.1(r) of the Loan Agreement is hereby amended by
inserting a new clause (iii) at the end thereof, as follows:
-10-
<PAGE> 11
"(iii) Borrower and each Subsidiary will comply in all respects with
all applicable requirements of Wis. Stats. Anno. Section 100.03 et seq."
(af) Section 9.1(t) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(t) Indebtedness for Money Borrowed. Remain at all times in
compliance with all of the terms of all agreements evidencing, securing or
relating to any Indebtedness of Borrower or any of its Subsidiaries to any
Person for Money Borrowed, other than the IRB Loans; remain in compliance
with all payment obligations under any of the IRB Loans; and promptly
provide Agent and each Lender with a copy of each notice or other written
communication sent or received by Borrower or any of its Subsidiaries under
or in connection with any Indebtedness for Money Borrowed."
(ag) Section 9.1 of the Loan Agreement is hereby amended by inserting
new Sections 9.1(v) and 9.1(w) at the end thereof, as follows:
"(v) Crisis Consultant. Continue to retain Silverman Korenthal &
Company Inc. or another crisis consultant acceptable to Required Lenders in
their sole discretion.
(w) Plant Shut Downs. In its discretion, shutter or otherwise idle or
shutdown the operations of any of the Scheduled Assets identified on Exhibit
U attached hereto as being held for shutdown."
(ah) Section 9.2(h)(ii) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(ii) Liens granted in favor of Long Term Agent, for the benefit of
Long Term Lenders and for the benefit of Lenders on Borrower's and each
Domestic Subsidiary's Equipment, real Property, Accounts, Inventory and
General Intangibles and on the capital stock of D & K Frozen Foods, Inc.
(which Liens on Accounts, Inventory and General Intangibles shall be junior
and subordinate to the Liens of Agent, for its benefit and the ratable
benefit of Lenders, in such Property), and such other assets as shall be
approved by Agent, subject to the execution and delivery of (A) the
Intercreditor Agreement, in form and substance acceptable to Agent and (B)
the Long Term Intercreditor Agreement, in form and substance acceptable to
Agent."
(ai) Section 9.2(l) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
-11-
<PAGE> 12
"(l) Capital Expenditures. Make Capital Expenditures (including
without limitation by way of Capitalized Leases) which, in the aggregate, as
to Borrower and its Subsidiaries, exceed (i) during the 1993 fiscal year of
Borrower, Nine Million Five Hundred Thousand Dollars ($9,500,000), (ii)
during the 1994 fiscal year of Borrower, Seven Million Seven Hundred
Thousand Dollars ($7,700,000), and (iii) during the 1995 fiscal year of
Borrower, Three Million Seven Hundred Thousand Dollars ($3,700,000) plus the
amount by which Seven Million Seven Hundred Thousand Dollars ($7,700,000)
exceeded the actual amount of Capital Expenditures made during the 1994
fiscal year of Borrower."
(aj) Section 9.2(o) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(o) Disposition of Assets. Subject to Section 7.3, sell, lease or
otherwise dispose, or permit any of its Subsidiaries to sell, lease or
otherwise dispose, of any of its Properties (including without limitation
any of the capital stock of any of its Subsidiaries), including any
disposition of Property as part of a sale and leaseback transaction, to or
in favor of any Person, except that Borrower and its Subsidiaries may
complete the following transactions: (i) sales of Inventory in the ordinary
course of Borrower's and its Subsidiaries' businesses for so long as no
Event of Default exists hereunder; (ii) a transfer of Property to Borrower
by a Subsidiary; (iii) sales of Borrower's real Property and improvements
located in Cobb, Wisconsin; Hart, Michigan; Merrill, Wisconsin; and
Borrower's former corporate headquarters located in Oconomowoc, Wisconsin;
(iv) with the consent of Agent, which consent shall not be unreasonably
withheld, the sale of all or substantially all of the assets of D & K Frozen
Foods, Inc.; (v) other sales of real Property, Borrower's Equipment and/or
equipment of any Subsidiary which, in the aggregate, have a fair market
value or book value, whichever is less, of no more than One Million Dollars
($1,000,000) during the period commencing on the date hereof and ending on
the day before the first anniversary of the date hereof, One Million Five
Hundred Thousand Dollars ($1,500,000) during the period commencing on the
first anniversary of the date hereof and ending on the day before the second
anniversary of the date hereof and Two Million Dollars ($2,000,000) during
the period commencing on the second anniversary of the date hereof and
ending on the third anniversary of the date hereof; (vi) sales of Scheduled
Assets, provided that the gross cash proceeds payable at closing of each
such sale are at least equal to the amount set forth on Exhibit U attached
hereto that is applicable to the Scheduled Assets being sold; provided
-12-
<PAGE> 13
that if Borrower proposes to sell its real Property and Equipment
located at (A) Jefferson, Wisconsin and subject to the $6,500,000 City of
Jefferson, Wisconsin secured IRB Loans, and the proceeds of such sale are
not sufficient to repay the applicable IRB Loans in full, the holders of
such IRB Loans shall have agreed in writing, on terms acceptable to Required
Lenders, to restructure the balance of such IRB Loans and to waive any then
existing defaults in respect of such IRB Loans, including without limitation
any default caused by the sale of such real Property and Equipment and (B)
Paulding County, Ohio and subject to the $1,400,000 County of Paulding, Ohio
unsecured IRB Loans, the holders of the applicable IRB Loans shall have
agreed in writing to restructure such IRB Loans and to waive any then
existing defaults in respect of such IRB Loans, including without limitation
any default caused by the sale of such real Property and Equipment; (vii)
sales of Inventory in bulk and out of the ordinary course of business,
provided that the net cash proceeds of such are at least equal to the
greater of the amount of Availability predicated on the value of such
Inventory and the fair market value of such Inventory, as determined by
Agent in its sole judgment; or (viii) any other dispositions expressly
authorized by this Agreement; provided, that (x) the proceeds of any sale or
disposition permitted under Section 9.2(o)(iii), (iv), (v) or (vi) (in the
case of the Jefferson, Wisconsin real Property and Equipment, after
repayment in full of the applicable IRB Loans), and (y) the proceeds of any
other sale or disposition of any of the Property (other than sales of
Inventory described in Section 9.2(o)(vii)) of Borrower or any Subsidiary in
bulk and outside the ordinary course of Borrower's or such Subsidiary's
business and to which Required Lenders have consented, shall, subject to
Section 3.6(c), be applied in the manner set forth in the Intercreditor
Agreement and the Facility A Loan Commitments shall be permanently reduced
in the manner set forth in Section 3.6(b) of this Agreement. The
Intercreditor Agreement provides, among other things, that if any income or
capital gains taxes are payable in connection with the sale of any Scheduled
Assets, a portion of the proceeds of such sale equal to the estimated amount
of such taxes shall be placed in escrow with Agent for payment of such taxes
and shall be disbursed as set forth in the Intercreditor Agreement. Agent
hereby agrees to promptly release any Liens in favor of Agent, for its
benefit and the ratable benefit of Lenders, on any Property of Borrower or
any Subsidiary sold in connection with any sale or disposition permitted or
approved by Required Lenders under this Section 9.2(o)."
-13-
<PAGE> 14
(ak) Section 9.2 of the Loan Agreement is hereby amended by inserting
new Sections (aa) and (ab) to the end thereof, as follows:
"(aa) Carrying Costs. Pay or incur, or permit the payment or
incurrence by any of its Subsidiaries of, Carrying Costs (i) in an aggregate
amount in excess of One Million Two Hundred Fifty Thousand Dollars
($1,250,000) in any fiscal year of Borrower or (ii) relating to any
particular Scheduled Asset in an aggregate amount in excess of forty percent
(40%) of the anticipated net proceeds of the sale of such Scheduled Asset,
as set forth on Exhibit U attached hereto.
(ab) Special Proceeds. Pay to Long Term Lenders or Lenders with
Facility A Loan Commitments all or any portion of the Special Proceeds,
except that, on or after September 15, 1993, Borrower may pay such amount to
Long Term Lenders and Lenders with Facility A Loan Commitments (i) if all
Excess Advances have been repaid in full, (ii) if and to the extent that
sufficient Availability exists to make such payments and (iii) with respect
to the Special Proceeds relating to the Hoopeston, Illinois insurance claim
only, such insurance claim has been paid to Borrower by the insurance
carrier."
(al) Section 9.3(a) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(a) Adjusted Tangible Net Worth. Achieve a Consolidated Adjusted
Tangible Net Worth on the last day of each month set forth below, of not
less than the amount set forth below opposite such month:
<TABLE>
<CAPTION>
MONTH AMOUNT
----- ------
<S> <C>
April, 1993 $25,000,000
May, 1993 24,000,000
June, 1993 21,000,000
July, 1993 23,000,000
August, 1993 through November, 1993 22,000,000
December, 1993 through January, 1994 20,000,000
February, 1994 through March, 1994 19,000,000
April, 1994 through May, 1994 18,000,000
June, 1994 17,000,000
</TABLE>
-14-
<PAGE> 15
<TABLE>
<CAPTION>
MONTH AMOUNT
----- ------
<S> <C>
July, 1994 through August, 1994 16,000,000
September, 1994 through December, 17,000,000
1994
January, 1995 through February, 18,000,000
1995
March, 1995 through May, 1995 19,000,000"
</TABLE>
(am) Section 9.3(b) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(b) Net Cash Flow. Achieve a Consolidated Net Cash Flow on
the last day of each month set forth below, on a fiscal year to date basis,
of not less than the amount set forth below opposite such month:
<TABLE>
<CAPTION>
MONTH AMOUNT
----- ------
<S> <C>
April, 1993 $( 4,000,000)
May, 1993 ( 7,000,000)
June, 1993 ( 9,000,000)
July, 1993 ( 7,000,000)
August, 1993 ( 8,000,000)
September, 1993 (12,000,000)
October, 1993 (13,000,000)
November, 1993 (13,000,000)
December, 1993 (13,000,000)
January, 1994 (15,000,000)
February, 1994 (16,000,000)
March, 1994 (15,000,000)
April, 1994 ( 3,000,000)
May, 1994 ( 3,000,000)
June, 1994 ( 4,000,000)
July, 1994 ( 5,000,000)
August, 1994 ( 4,000,000)
September, 1994 ( 4,000,000)
</TABLE>
-15-
<PAGE> 16
<TABLE>
<CAPTION>
MONTH AMOUNT
----- ------
<S> <C>
October, 1994 ( 4,000,000)
November, 1994 ( 4,000,000)
December, 1994 ( 3,000,000)
January, 1995 ( 4,000,000)
February, 1995 ( 3,000,000)
March, 1995 ( 2,000,000)
April, 1995 1
May, 1995 2"
</TABLE>
(an) Section 9.3(c) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(c) Interest Coverage. Achieve Interest Coverage on the last day of
each month set forth below, on a fiscal year to date basis, of not less than
the amount set forth below opposite such month:
<TABLE>
<CAPTION>
MONTH AMOUNT
----- ------
<S> <C>
April, 1993 $( 3,500,000)
May, 1993 ( 5,500,000)
June, 1993 ( 7,500,000)
July, 1993 ( 6,000,000)
August, 1993 ( 8,000,000)
September, 1993 ( 9,000,000)
October, 1993 (10,500,000)
November, 1993 (10,500,000)
December, 1993 (11,500,000)
January, 1994 (14,000,000)
February, 1994 (15,000,000)
March, 1994 (16,000,000)
April, 1994 ( 2,500,000)
May, 1994 ( 2,500,000)
June, 1994 ( 3,500,000)
July, 1994 ( 5,000,000)
</TABLE>
-16-
<PAGE> 17
<TABLE>
<CAPTION>
MONTH AMOUNT
----- ------
<S> <C>
August, 1994 ( 5,000,000)
September, 1994 ( 5,000,000)
October, 1994 ( 6,500,000)
November, 1994 ( 6,500,000)
December, 1994 ( 6,500,000)
January, 1995 ( 8,000,000)
February, 1995 ( 8,000,000)
March, 1995 ( 7,000,000)
April, 1995 1
May, 1995 2"
</TABLE>
(ao) Section 9.3(d) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(d) Availability. Maintain at all times, other than during the
Excess Advance Period, Availability calculated on a daily basis of not less
than Five Million Dollars ($5,000,000)."
(ap) Section 11.1(d) of the Loan Agreement is hereby amended by
inserting the phrase "9.1(r)(iii), 9.1(v)" after the reference to Section
9.1(j) in the fourth line thereof and prior to the reference to Section 9.2.
(aq) Section 11.1(g) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(g) Other Defaults. There shall occur any Default or Event of
Default on the part of Borrower or any Guarantor (including specifically,
but without limitation, due to non-payment) under any agreement, document or
instrument to which Borrower or such Guarantor is a party or by which
Borrower or such Guarantor or any of its Property is bound, creating or
relating to (i) any Indebtedness (other than the Obligations, the Long Term
Loans and the Indebtedness described in Exhibit Q attached hereto) which
gives the other party to such agreement, document or instrument the right to
accelerate the obligations thereunder; (ii) any issue of Indebtedness
described in Exhibit O attached hereto which is caused by the nonpayment by
Borrower or such Guarantor of any amount or amounts due thereunder; or (iii)
any issue of Indebtedness described in Exhibit Q attached hereto
-17-
<PAGE> 18
which results in the acceleration of the maturity of all or any part thereof."
(ar) Section 11.1 is hereby amended by inserting a new Section 11.1(t)
at the end thereof, as follows:
"(t) Farm Product Procurement. Borrower shall be required to post a
surety bond or a letter of credit or file other security under the
provisions of Wis. Stats. Anno. Section 100.03 et seq., unless Agent, in
its sole discretion, determines that the amount of such surety bond, letter
of credit or other security is diminimus and could not have a material
adverse effect on Borrower."
(as) Section 13.3(c)(x)(viii) of the Loan Agreement is hereby amended
by deleting the phrase "below Five Million Dollars ($5,000,000)" after the word
"Agreement" and before the word "or."
(at) Sections 13.3(a) and (c) of the Loan Agreement is hereby amended
by deleting each reference to the term "Aggregate Percentages" and inserting in
its place the term "Existing Percentages."
(au) The Lenders' signature blocks to the Loan Agreement are hereby
amended and restated in their entirety, as follows:
"BARCLAYS BUSINESS CREDIT, INC., as
Agent and as a Lender
By _______________________________
Title ____________________________
Facility A Loan Commitment: $0
Facility A Percentage: 0%
Facility B Loan Commitment: $26,250,000
Facility B Percentage: 43.7500%
Existing Percentage: 29.1667%
Aggregate Percentage: 26.2500%
-18-
<PAGE> 19
BANK ONE, MILWAUKEE, NATIONAL ASSOCIATION
BY ________________________________
Title _____________________________
Address: 111 East wisconsin Avenue
P.O. Box 2033
Milwaukee, Wisconsin 53202
Attn: Jeffrey Germanotta/
Corporate Banking Group
Telecopy: (414) 765-2176
Facility A Loan Commitment: $25,013,000
Facility A Percentage: 62.5325%
Facility B Loan Commitment: $0
Facility B Percentage: 0%
Existing Percentage: 20.8442%
Aggregate Percentage: 25.0130%
FIRST BANK (N.A.)
By ________________________________
Title _____________________________
Address: c/o First Bank National
Association
First Bank Place MPFP 1803
601 Second Avenue South
Minneapolis, MN 55402-4302
Attn: David C. Larsen
Telecopy: (612) 973-2148
Facility A Loan Commitment: $13,487,000
Facility A Percentage: 33.7175%
Facility B Loan Commitment: $3,750,000
Facility B Percentage: 6.2500%
Existing Percentage: 15.4058%
Aggregate Percentage: 17.2370%
-19-
<PAGE> 20
NBD BANK, N.A.
By _________________________________
Title ______________________________
Address: 611 Woodward Avenue
Detroit, Michigan 48226
Attn: Richard Haslinger/
Illinois-Wisconsin-
Minnesota Group
Telecopy: (313) 225-1671
Facility A Loan Commitment: $1,500,000
Facility A Percentage: 3.7500%
Facility B Loan Commitment: $2,625,000
Facility B Percentage: 4.3750%
Existing Percentage: 4.1667%
Aggregate Percentage: 4.1250%
LASALLE NATIONAL BANK
By _________________________________
Title ______________________________
Address: 120 South LaSalle Street
Chicago, Illinois 60003
Attn: Christopher Clifford
Telecopy: (312) 781-8416
Facility A Loan Commitment: $0
Facility A Percentage: 0%
Facility B Loan Commitment: $13,687,500
Facility B Percentage: 22.8125%
Existing Percentage: 15.2083%
Aggregate Percentage: 13.6875%
-20-
<PAGE> 21
BA BUSINESS CREDIT, INC.
By _______________________________
Title ____________________________
Address: 55 West Monroe Street
Xerox Center
Suite 3600
Chicago, Illinois 60603
Attn: Marwin Spencer
Telecopy: (312) 704-1255
Facility A Loan Commitment: $0
Facility A Percentage: 0%
Facility B Loan Commitment: $13,687,500
Facility B Percentage: 22.8125%
Existing Percentage: 15.2083%
Aggregate Percentage: 13.6875%"
(av) The list of exhibits at the end of the Loan Agreement is hereby
amended by adding the new Exhibits U and V to the end of this list as follows:
<TABLE>
<S> <C>
"Exhibit U May 5, 1993 Review of Business Plan and
List of Scheduled Assets
Exhibit V Existing Defaults in Respect of IRB Loans"
</TABLE>
(aw) Exhibit A-2 to the Loan Agreement is hereby amended by deleting
the existing Exhibit A-2 in its entirety and replacing it with the form of
Exhibit A-2 attached hereto as Annex 1.
(ax) The Exhibits to the Loan Agreement are hereby amended by adding a
new Exhibit U in the form of Annex 2 attached hereto and a new Exhibit V in the
form of Annex 3 attached hereto.
2. Borrower has informed Agent and Lenders that Events of Default
currently exists under Section 9.1(j) of the Loan Agreement because of
Borrower's failure to timely deliver its financial statements for the months
ended March 31, 1993 and April 30, 1993. In connection with this Waiver and
Fourth Amendment to Loan Documents, Lenders hereby agree to waive (a) the
foregoing Events of Default and (b) the "Existing Events of Default," as
defined in that certain Forbearance Agreement dated April 16, 1993 among
Borrower and Lenders, under Sections 9.2(1) and 9.3(a) of the Loan Agreement.
Other than as specifically described herein, the waivers contained herein shall
not constitute a consent to any other departure from, or waiver of any other
breach of, the terms of the Loan Agreement or any other Loan Document, or of
any rights that Agent or any Lender may have under the Loan Agreement, any
other Loan Document or applicable law with respect thereto, all of which rights
are expressly reserved hereby.
-21-
<PAGE> 22
3. The effectiveness of this Waiver and Fourth Amendment to Loan
Documents, as provided in Section 4 below, shall constitute amendments of the
Loan Agreement and all of the other Loan Documents as appropriate to express
the agreements contained herein. In all other respects, the Loan Agreement and
the other Loan Documents shall remain unchanged and in full force and effect in
accordance with their respective terms.
4. The amendments and waivers described herein shall be effective
upon satisfaction of the following conditions on or prior to June 11, 1993, all
in a manner satisfactory to Lenders in their sole discretion:
a. Borrower shall have paid to Agent for the ratable benefit of
Lenders the first installment of $200,000 of the restructuring fee.
b. Borrower shall have executed or caused to be executed and
delivered to Agent the following agreements and instruments, all in form and
substance satisfactory to Lenders in their sole discretion:
1. This Waiver and Fourth Amendment to Loan Documents;
2. Amendment to Intercreditor Agreement;
3. Amendment to Long Term Intercreditor Agreement;
4. Amended and Restated Facility B Notes;
5. Closing Certificate;
6. Secretary's Certificate as to Corporate Resolutions
evidencing the approval of Borrower's Board of Directors of (A) the engagement
of Silverman Korenthal & Company Inc. as a crisis consultant, (B) the
adoption of the Review of Business Plan dated May 5, 1993, and (C) the
execution of this Waiver and Fourth Amendment to Loan Documents and all other
necessary agreements and instruments described herein,
7. Appropriate waivers, consents and amendments to the Long
Term Loan Documents between Borrower and SWIB;
8. Appropriate waivers, consents and amendments to the Long
Term Loan Documents between Borrower and Nationwide Group; and
-22-
<PAGE> 23
9. Appropriate amendments to various security documents relating
to the Long Term Loans and the Facility A Loans.
c. Evidence that Borrower will be able to classify as long term
Indebtedness a portion of its Indebtedness for Money borrowed that is
satisfactory to Lenders; and evidence of the concurrence of Borrower's
certified public accountants with such classification.
d. Completion of all open items remaining in connection with the
original closing of the Revolving Credit Loans.
e. Evidence that Borrower's can suppliers have (i) accepted the
amendments of the Loan Agreement and the Long Term Loan Documents described
herein and (ii) executed the June 11, 1993 amendments to the can supply
agreements with ANC and Crown.
f. Payment by Borrower to Long Term Lenders of a closing fee equal to
$90,000 and issuance by Borrower to Long Term Lenders of warrants for 90,000
shares of common stock of Borrower.
5. This Waiver and Fourth Amendment to Loan Documents may be
executed in counterparts, each of which shall be deemed an original, but all of
which counterparts taken together shall constitute one and the same instrument.
Very truly yours,
BARCLAYS BUSINESS CREDIT, INC.,
as Agent and as a Lender
By __________________________
Title _______________________
BANK ONE, MILWAUKEE, NATIONAL
ASSOCIATION
By __________________________
Title _______________________
FIRST BANK (N.A.)
By __________________________
Title _______________________
-23-
<PAGE> 24
LASALLE NATIONAL BANK
By____________________________________
Title_________________________________
BA BUSINESS CREDIT, INC.
By____________________________________
Title_________________________________
NBD BANK. N.A.
By____________________________________
Title_________________________________
Acknowledged and Agreed to this _ day of June, 1993
STOKELY USA, INC.
By____________________________________
Title_______________________________
Each of the undersigned Guarantors hereby agree and consent this _ day
of June, 1993 to the foregoing Waiver and Fourth Amendment to Loan Documents
and acknowledges that its Corporate Guaranty of Borrower's Obligations to
Lenders remain in full force and effect notwithstanding such amendment and
waiver.
OCONOMOWOC CANNING COMPANY, INC.
By ___________________________
Its __________________________
ANC EXPRESS, INC.
By ___________________________
Its __________________________
D & K FROZEN FOODS, INC.
By ___________________________
Its __________________________
-24-
<PAGE> 1
EXHIBIT 10(iii)
FIFTH AMENDMENT
TO LOAN AND SECURITY AGREEMENT
March 24, 1994
Stokely USA, Inc.
1055 Corporate Center Drive
Oconomowoc, Wisconsin 53066
Attention: Stephen W. Theobald
Ladies and Gentlemen:
Reference is made to the Loan and Security Agreement dated as of
August 18, 1992, as amended (the "Loan Agreement") among Stokely USA, Inc.
("Borrower"), the Lenders party thereto and Barclays Business Credit, Inc., as
Agent for the Lenders (the "Agent"). Unless defined herein, capitalized terms
used herein shall have the meanings provided to such terms in the Loan
Agreement.
Borrower has requested that Lenders agree to amend the Loan Agreement
in certain respects, and Lenders have agreed to do so, in the manner described
herein and subject to the terms hereof, as follows:
1. The Loan Agreement is hereby amended as follows:
a. Section 2.5 of the Loan Agreement is hereby amended by inserting
a proviso at the end of the last sentence thereto, as follows:
"; provided, that such reserve shall not be applicable at any time
that Facility B Loans are not outstanding."
b. Section 9.3(d) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:
"(d) Availability. Maintain at all times, other than during the
Excess Advance Period and during the period commencing March 31, 1994
and ending June 30, 1994, Availability calculated on a daily basis of
not less than Five Million Dollars ($5,000,000)."
c. The effectiveness of this Fifth Amendment to Loan and Security
Agreement, as provided in Section 2
<PAGE> 2
Stokely USA, Inc.
March 24, 1994
Page 2
below, shall constitute amendments of the Loan Agreement and all other
Loan Documents as appropriate to express the agreements contained herein.
In all other respects, the Loan Agreement and the other Loan Documents shall
remain unchanged and in full force and effect in accordance with their
respective terms.
2. The Amendments described herein shall be effective when each
Lender, Borrower and each Guarantor of Borrower's Obligations set forth below,
shall have executed a counterpart of this Fifth Amendment to Loan and Security
Agreement and shall have delivered the same to Agent.
3. This Fifth Amendment to Loan and Security Agreement may be
executed in counterparts, each of which shall be deemed an original but all of
which counterparts taken together shall constitute one and the same instrument.
Very truly yours,
BARCLAYS BUSINESS CREDIT, INC., as Agent and as a Lender
By ____________________________________
Its ___________________________________
BANK ONE, MILWAUKEE, NATIONAL ASSOCIATION
By ____________________________________
Its ___________________________________
FIRST BANK (N.A.)
By ____________________________________
Its ___________________________________
<PAGE> 3
Stokely USA, Inc.
March 24, 1994
Page 3
LASALLE NATIONAL BANK
By ____________________________
Its ___________________________
BA BUSINESS CREDIT, INC.
By ___________________________
Its ___________________________
NBD BANK, N.A.
By ___________________________
Its___________________________
Acknowledged and Agreed to this day of March, 1994
STOKELY USA, INC.
By __________________________
Title _______________________
<PAGE> 4
Stokely USA, Inc.
March 24, 1994
Page 4
Each of the undersigned Guarantors hereby agree and consent this 24th
day of March, 1994 to the foregoing Fifth Amendment to Loan and Security
Agreement and acknowledges that its Corporate Guaranty of Borrower's
Obligations to Lenders remain in full force and effect notwithstanding such
amendment.
OCCONOMOWOC CANNING COMPANY, INC.
By________________________________________
Its_______________________________________
ANC EXPRESS, INC.
By________________________________________
Its_______________________________________
D & K FROZEN FOODS, INC.
By________________________________________
Its_______________________________________
<PAGE> 1
EX. 10(jjj)
STOKELY U.S.A.
EXECUTIVE SPLIT DOLLAR INSURANCE
SUMMARY OF BENEFITS
TERM INSURANCE -- THE ORDINARY PLAN
If you have had a term insurance policy through a group plan, you may have
paid income tax for the imputed value of any insurance in excess of $50,000. The
government requires that you make contributions for all insurance above the
$50,000 level.
If you retire with a group term insurance policy, since term insurance has
no cash value, the policy terminates and provides you with no further insurance
protection.
EXECUTIVE SPLIT DOLLAR INSURANCE -- THE SUPERIOR ALTERNATIVE
Your cost, as an executive, for a permanent split dollar insurance policy
is similar to the combined costs of a term insurance plan. However, you own the
policy plus any cash value in excess of the cumulative premiums paid by your
company.
In the event that you would leave the company, such as when you retire, you
have the option of continuing the policy. You can continue to pay the premium
necessary to maintain existing level of coverage, or a lower death benefit
amount could be maintained by making reduced or no further premiums.
<PAGE> 2
STOKELY U.S.A.
MAXIMIZING RETIREMENT INCOME
- Maintaining this life insurance policy after retirement will allow you to
protect the future income needs of your spouse in the unfortunate event
of your death occurring soon after retirement.
- You can maximize the amount of income you receive from your retirement
plan at Stokely USA by maintaining your whole life policy after you
retire. You will have the option to choose between two levels of
retirement income from the retirement plan provided for you by Stokely
USA: 1) payments will equal approximately 100% of your pre-retirement
income and will be payable throughout your life, or 2) payments will be
approximately 80% of your pre-retirement income and will be payable
throughout both you and your spouses lives. By maintaining this plan
after you retire, you can elect to receive your retirement plan benefits
at 100% since your spouse would receive a substantial income from the
life insurance proceeds.
- If both you and your spouse live to life expectancy, you could increase
your spendable income by utilizing the policy's cash value.
- If your spouse should die before you, the policy's cash value would be
available to you in addition to the higher retirement income you were
able to elect from your retirement plan.
- You could use the insurance policy to pass greater wealth onto your heirs
if you do not need it to sustain your income.
<PAGE> 3
STOKELY U.S.A.
EXECUTIVE -- AGE 35
INCOME OF $50,000
<TABLE>
<CAPTION>
IF YOU LIVE
---------------------
THE CASH VALUE YOU
WILL HAVE IF YOU DIE
ANNUAL IF THE INTEREST -----------
EXECUTIVE CREDITING RATE IS: WHAT YOUR
AT AGE CONTRIBUTION 9.0% OR 7.5% FAMILY GETS
- ------ ------------ -------- -------- -----------
<S> <C> <C> <C> <C>
35 $ 139 $ 0 $ 0 $ 240,000
40 $ 183 $ 3,601 $ 2,557 $ 306,308
45 $ 312 $ 21,975 $ 17,608 $ 390,935
50 $ 563 $ 58,369 $ 46,282 $ 498,943
55 $1,006 $123,716 $ 95,930 $ 636,791
60 $2,332 $228,834 $170,807 $ 812,724
65 $ 0 $377,330 $263,835 $ 987,871
</TABLE>
<PAGE> 4
SPLIT DOLLAR
GROUP TERM CARVE-OUT
KRIZEK & ASSOCIATES
<PAGE> 5
BENEFITS OF STOKELY PERMANENT INSURANCE PLAN
FOR EXECUTIVES
- Insurance continuing after retirement allows an executive to select a no
survivor option under a retirement plan.
- Premium is split with Company contributing most of the premium.
- Each executive has the right to purchase the Company's interest in the
policy in the event of termination.
- Cash value can be accessed for early retirement needs.
FOR COMPANY
- Permanent insurance will return premiums to the corporation, whereas
group term coverage has no cost recovery.
- Permanent insurance has a fixed premium, as compared to the increasing
cost of group term insurance due to age.
- Group term rates are negotiated and can increase due to factors in
addition to the average age increase, such as AIDS.
- Cash value is accumulated free of income taxes, and is an allowable
offset to the premium cost.
<PAGE> 6
- - CORPORATE -- SPONSORED PLAN
- - EXECUTIVE -- OWNED INDIVIDUAL POLICY
- - DEATH BENEFIT
-- Defined in relation to annual salary
- - CASH VALUE
-- Builds over time
- - PREMIUM
-- Shared between corporation and executive
- - PLAN MATURITY
-- Later of age 65 or 15 years
-- Minimum of 15 years
- - TERMINATIONS
-- Executive may elect to continue policy personally
- - CORPORATE IMPACT
-- Pays a portion of policy premium offset by collateral assignment on the
executive's policy
-- No involvement after plan maturity
- - EXECUTIVE IMPACT
-- Executive owns policy
-- Low cost death benefit
-- Capital accumulation
-- No payments after plan maturity
<PAGE> 7
DEATH BENEFIT
- - BEFORE PLAN MATURITY
-- Corporation receives death proceeds equal to its share of premiums paid
-- Executive's beneficiary receives balance of death proceeds
- - AFTER PLAN MATURITY
-- Policy controlled entirely by executive
-- All proceeds payable to executive's beneficiary
-- All proceeds received income tax free
<PAGE> 8
SUMMARY OF BENEFITS
Permanent insurance avoids increasing term cost, because term cost goes up
with age for continued employment while permanent insurance has fixed premiums.
A different tax table may be used to impute income.
Five of six men age 45 will live until age 65. When the corporate and
executive costs are prorated over probability of one in six deaths, group
insurance will cost $1.20 for every $1.00 of benefit paid out. Permanent
insurance will pay at some point in the future.
If insurance provides a post retirement benefit, it would aid executive in
allowing a no survivor option under pension plan from previous employer or
corporation.
At death, corporation will recover premium paid under split dollar whereas
term has no cost recovery.
Cash surrender value could be used for early retirement; supplemental
retirement income plan could be used in special circumstances.
Policy will accumulate cash surrender value free of income taxes unless the
policy is surrendered.
Policy can be purchased by executive for estate planning reasons by
repaying corporation for premiums paid or cash value. Present group contribution
would be offset against purchase price.
In the event of the termination of executive, an exchange of life could be
made to another executive, thereby avoiding new policy acquisition cost. (Not
available if executive owns policy.)
<PAGE> 1
EXHIBIT 11
STOKELY USA, INC.
SCHEDULE OF COMPUTATION OF EARNINGS (LOSS) PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEARS ENDED MARCH 31, JUNE 30,
-------------------------------------------------------- ----------------------
1990 1991 1992 1993 1994 1993 1994
---- ---- ---- ---- ---- ---- ----
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Net earnings(loss) . . . . . $17,735 $3,816 ($9,902) ($31,127) ($2,215) ($5,385) $407
Weighted average number of
common shares outstanding
during the period . . . . . 8,260,287 8,287,131 8,288,255 8,301,591 8,319,649 8,301,591 8,324,645
Earnings(loss) per share . . $2.15 $0.46 ($1.19) ($3.75) ($0.27) ($0.65) $0.05
</TABLE>
<PAGE> 1
EXHIBIT 22
STOKELY USA, INC.
LIST OF
WHOLLY-OWNED SUBSIDIARIES
1. Oconomowoc Canning Company, Inc., a Wisconsin corporation.
2. Ocono International, Ltd., a Virgin Islands corporation.
3. D&K Frozen Foods, Inc., a Washington corporation.
4. Stokely Mexicana S.A. DE C.V., a Mexican corporation.
5. Stokely U.K. Limited, an English corporation.
<PAGE> 1
(EXHIBIT 23.1)
CONSENT OF DELOITTE & TOUCHE LLP
To the Stockholders and Board of Directors
Stokely USA, Inc. and Subsidiaries
Oconomowoc, Wisconsin
We consent to the use in this Registration Statement relating to 3,040,000
shares of Common Stock of Stokely USA, Inc. and subsidiaries on Form S-1 of our
report dated June 17, 1994, appearing in the Prospectus, which is a part of
this Registration Statement, and to the references to us under the headings
"Selected Consolidated Financial Data" and "Experts" in such Prospectus.
Our audits of the consolidated financial statements referred to in our
aforementioned report also included the consolidated financial statement
schedules of Stokely USA, Inc. and subsidiaries listed in Item 16(b). These
consolidated financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such consolidated financial statement schedules, when
considered in relation to the basic consolidated financial statements taken as
a whole, present fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
September 12, 1994
