SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1996 Commission File Number 0-13943
--------------- -------
STOKELY USA, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
WISCONSIN 39-0513230
- ---------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1055 Corporate Center Drive, Oconomowoc, WI 53066
- --------------------------------------------------
(Address of principal executive office)
Registrant's telephone number, including area code: (414) 569-1800
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
------ ------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Class Outstanding at August 9, 1996
- ------------------------ -------------------------------
Common Stock, 11,357,472 Shares
$.05 par value per share
<PAGE>
STOKELY USA, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - 3-4
June 30, 1996, June 30, 1995 and
March 31, 1996
Consolidated Condensed Statements of 5
Operations - Three Months Ended
June 30, 1996 and 1995
Consolidated Condensed Statements of 6
Cash Flow - Three Months Ended
June 30, 1996 and 1995
Notes to Consolidated Condensed Financial 7
Statements
Item 2. Management's Discussion and Analysis 8-11
of Financial Condition and Results
of Operations
PART II. Other Information
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Default Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of 12
Security Holders
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STOKELY USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
June 30, June 30, March 31,
1996 1995 1996
(unaudited) (unaudited) (note)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 890 $ 944 $ 777
Accounts receivable, less
allowance for losses of $570,
$477 and $570, respectively 16,378 14,113 16,975
Refundable income taxes -- 380 11
Inventories: Finished goods 58,445 66,832 78,922
Manufacturing supplies 8,023 7,708 6,482
Prepaid expenses 1,251 1,424 1,406
Property held for disposition 9,500 -- 9,500
---------- --------- --------
Total Current Assets 94,487 91,401 114,073
OTHER ASSETS 4,428 4,689 4,147
PROPERTY, PLANT & EQUIPMENT, at cost 91,656 110,284 91,142
Less accumulated depreciation 35,087 40,879 33,641
---------- --------- --------
56,569 69,405 57,501
---------- --------- --------
TOTAL ASSETS $155,484 $165,495 $175,721
========== ========= ==========
See accompanying notes to consolidated condensed financial statements
(unaudited).
Note: The balance sheet at March 31, 1996 has been condensed from the
audited financial statements at that date.
<PAGE>
STOKELY USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
June 30, June 30, March 31,
1996 1995 1996
(unaudited) (unaudited) (note)
LIABILITIES & STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Notes payable $13,996 $ 2,817 $ 19,887
Accounts payable 14,559 18,099 21,365
Current maturities on long-
term debt 15,150 2,536 15,150
Other current liabilities 5,934 4,671 9,253
-------- -------- ---------
Total Current Liabilities 49,639 28,123 65,655
LONG-TERM DEBT, less current
maturities 77,230 78,441 77,230
OTHER LIABILITIES 3,210 4,319 3,269
STOCKHOLDERS' EQUITY:
Capital stock 572 572 572
Additional paid-in capital 43,628 43,683 43,683
Retained earnings (18,334) 10,975 (14,070)
Treasury stock at cost (461) (618) (618)
--------- --------- ---------
Total Stockholder's Equity 25,405 54,612 29,567
--------- --------- ---------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $155,484 $165,495 $175,721
========= ========= =========
See accompanying notes to consolidated condensed financial statements
(unaudited).
Note: The balance sheet at March 31, 1996 has been condensed from the
audited financial statements at that date.
<PAGE>
STOKELY USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share amounts)
(unaudited)
Three Months Ended
June 30,
1996 1995
REVENUES:
Net Sales $ 42,342 $ 40,700
Other 35 59
--------- ---------
Total Revenues 42,377 40,759
COST AND EXPENSES:
Cost of products sold 37,200 35,494
Selling, general & administrative expenses 6,333 6,650
Nonrecurring charge 433 --
Interest 2,675 2,391
--------- ---------
Total Cost and Expenses 46,641 44,535
LOSS BEFORE INCOME TAX (4,264) (3,776)
INCOME TAXES -- --
--------- ---------
NET LOSS $ (4,264) $ (3,776)
========= =========
NET LOSS PER COMMON SHARE $ (.38) $(.33)
======= ======
WEIGHTED AVERAGE SHARES OUTSTANDING 11,332,303 11,325,652
========== ==========
See accompanying notes to consolidated condensed financial statements
(unaudited).
<PAGE>
STOKELY USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Three Months Ended
June 30,
1996 1995
Net cash provided by operating activities $ 7,262 $19,733
-------- --------
Cash flows from investing activities:
Purchases of property, plant and equipment (521) (2,903)
Increase in other assets - net (110) (543)
-------- -------
Net cash used in investing activities (631) (3,446)
-------- -------
Cash flows from financing activities:
Change in short-term debt - net (5,891) (16,474)
Payments of long-term debt -- (56)
Payment of deferred debt issuance costs (729) --
Capital stock transactions - net 102 10
-------- --------
Net cash used in financing activities (6,518) (16,520)
-------- --------
Net increase (decrease) in cash and
cash equivalents 113 (233)
Cash and cash equivalents at beginning
of period 777 1,177
-------- --------
Cash and cash equivalents at end of period $ 890 $ 944
======== ========
See accompanying notes to consolidated condensed financial statements
(unaudited).
<PAGE>
STOKELY USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of management, the accompanying unaudited
consolidated condensed financial statements contain all normal and
recurring adjustments necessary to present fairly Stokely USA, Inc.'s
consolidated condensed balance sheets as of June 30, 1996 and 1995, and
March 31, 1996, the consolidated condensed statements of operations for
the three month periods ended June 30, 1996 and 1995, and the
consolidated condensed statements of cash flow for the three month
periods then ended.
The results of operations for the three months ended June 30, 1996 are
not necessarily indicative of the results to be expected for the full
year. For interim reporting purposes, certain expenses are based on
estimates rather than expenses actually incurred. The unaudited interim
consolidated condensed financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
for the fiscal year ended March 31, 1996, included in the Company's Form
10-K filed with the Securities and Exchange Commission.
The accounting policies followed by the Company are described in Note A
of the financial statements of the Company's Form 10-K for the year
ended March 31, 1996.
2. Supplemental cash flow disclosures: Cash payments for interest
were $2,561,000 and $2,080,000 for the three months ended June 30, 1996
and 1995, respectively. Net payments of income taxes were $27,000 for
the three months ended June 30, 1996. The Company recorded a non-cash
charge of $433,000 related to the write-off of deferred debt cost
associated with the replacement of the Company's revolving credit
facility on May 21, 1996.
3. A nonrecurring charge of $12,500,000 was recognized in the fourth
quarter of fiscal 1996 as discussed in the Company's Annual Report on
Form 10-K. The Company utilized reserves of $3,302,000, leaving a
balance of $8,254,000 at June 30, 1996. Reserves were utilized in
connection with the sale of inventory, severance payments and other
miscellaneous costs.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the Company's operations during
the periods included in the accompanying (unaudited) consolidated
condensed statements of operations and balance sheets.
The discussion in this Form 10-Q includes forward-looking statements
based on current management expectations. Factors which could cause
future results to differ from these expectations include the following:
general economic conditions; vegetable processing industry conditions
and price and volume fluctuations; competitive pressures and pricing
pressures; inventory risks; supply-related risks; demand-related risks;
third party lender actions; and results of Company - specific cost
containment and profit enhancement initiatives. Additional factors are
described in the Company's other reports filed with the Securities and
Exchange Commission.
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 growth. 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.
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. 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 oversupply 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 oversupply. The
Company typically has experienced lower margins during times of industry
oversupply. 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.
<PAGE>
RESULTS OF OPERATIONS:
Three Months Ended June 30, 1996 Compared to Three Months Ended
June 30, 1995
Net Sales
Net sales increased $1.6 million, or 3.9%, to $42.3 million for the
quarter ended June 30, 1996 compared to $40.7 million for the quarter
ended June 30, 1995. The increase in sales was due primarily to a $3.9
million increase in frozen sales as a result of the liquidation of
frozen inventory in conjunction with the Company's exit from the frozen
business. The remaining frozen inventory of approximately $17 million
at June 30, 1996 is scheduled to be sold during the second and third
quarters of fiscal 1997.
Total canned vegetable sales decreased $2.3 million, or 6.9%, to $31.0
million for the quarter ended June 30, 1996 compared to $33.3 million
for the quarter ended June 30, 1995. The decrease in total canned
vegetable sales was primarily the result of a $3.7 million decrease in
sales volume offset in part by a $1.4 million increase in average
selling prices. The decline in sales volume was caused primarily by
lower available inventory due to poorer growing and harvesting
conditions last summer. Also contributing to the lower first quarter
canned sales volume and improved selling prices were the Company's
actions to increase prices in certain markets and exit others to improve
operating results.
Cost of Products Sold
Cost of products sold increased $1.7 million, or 4.8%, to $37.2 million
for the quarter ended June 30, 1996 compared to $35.5 million for the
quarter ended June 30, 1995. The increase in cost of goods sold was due
primarily to higher frozen sales volume. Cost of products sold as a
percent of sales was 87.9% for the quarter ended June 30, 1996 compared
to 87.2% for the quarter ended June 30, 1995. The increase of 0.7% in
cost of products sold as a percent of sales is due primarily to the
decline in selling prices associated with the liquidation of the frozen
business inventory.
Selling, General and Administrative Expense
Selling, general and administrative expense decreased $0.4 million to
$6.3 million for the quarter ended June 30, 1996 compared to $6.7
million for the quarter ended June 30, 1995. This decrease is primarily
the result of cost reduction initiatives taken in fiscal 1996.
Interest Expense
Interest expense increased $0.3 million to $2.7 million for the quarter
ended June 30, 1996 from $2.4 million for the quarter ended June 30,
1995 due to higher average borrowing levels.
Net Loss
Net loss for the quarter ended June 30, 1996 was $4.3 million compared
to a net loss of $3.8 million for the quarter ended June 30, 1995. The
larger net loss was due primarily to a nonrecurring charge of $0.4
million related to the write-off of deferred debt issuance costs
associated with the replacement of the Company's revolving credit
facility on May 21, 1996.
<PAGE>
FINANCIAL CONDITION AND 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.
Cash Flows from Operating Activities
Cash flow provided from operations during the three months ended
June 30, 1996 totaled $7.3 million. Of the total cash provided, changes
in operating assets and liabilities provided cash of $9.5 million,
primarily due to decreases in inventory of $18.9 million partially
offset by decreases in accounts payable and other current liabilities of
$6.8 million and $3.3 million, respectively. The decrease in inventory
levels and associated reduction in accounts payable reflects the
seasonal reduction in inventories prior to the current year growing and
harvesting season and the liquidation of frozen inventory in conjunction
with the Company's previously announced exit from the frozen business.
The decrease in other liabilities relates to decreases in reserves
established in connection with the Company's decision to exit the frozen
business as severance costs and selling expenses were paid as well as
decreases in accrued compensation and withholding amounts associated
with the frozen business.
Cash Flows from Investing Activities
Net cash used in investing activities during the three months ended
June 30, 1996 was $0.6 million. Purchase of property, plant and
equipment was $0.5 million during the three months ended June 30, 1996.
Cash Flows from Financing Activities
Cash used in financing activities during the three months ended June 30,
1996 totaled $6.5 million, and represents primarily decreases in
revolving credit obligations through the use of cash flow generated from
the reduction in inventories. At June 30, 1996 the Company had $47.0
million of borrowings under its revolving credit facility, of which
$33.0 million was classified as long term and $14.0 million was
classified as short term.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
A class action lawsuit was filed on January 3, 1995, in the United
States District Court for the Eastern District of Wisconsin, against the
Company, all of the individual members of the Board of Directors of the
Company, William Blair & Company and Dain Bosworth, Inc. The plaintiff
alleged that he sustained losses in connection with his purchase of
shares of Common Stock of the Company during the period from October 17,
1994, to December 19, 1994, as a result of defendants' alleged
misleading statements and omissions to state material facts. A second
lawsuit seeking to represent class members who purchased shares of
common stock of the Company during the period from October 17, 1994 to
December 19, 1994 was filed on May 10, 1995 in the United States
District Court for the Eastern District of Wisconsin. The second
lawsuit made similar claims against the Company and certain officers
arising from the same facts and events. These lawsuits were
consolidated on September 22, 1995 and the complaint filed in the first
lawsuit was deemed the operative complaint superseding the complaint
filed in the second lawsuit. The plaintiff in the second lawsuit has
since elected to withdraw as a plaintiff in the consolidated lawsuit.
On March 31, 1996, the United States District Court issued a decision
dismissing the consolidated lawsuit. The plaintiff has filed a motion
to alter or amend the judgment of dismissal which is pending a decision.
The Company has opposed this motion and believes that the dismissal was
proper.
In addition to the above cases, the Company also is involved in various
other 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.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
The Company was not in compliance with certain financial covenants of
its senior note agreements. As discussed in the Company's Annual Report
on Form 10-K, the note agreements were amended and prior covenant
violations waived on July 25, 1996.
Item 4. Submission of Matters to a vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27.1 - Financial Data Schedule
Exhibit 99.1 - Loan and Security Agreement by and among
Congress Financial Corporation, as lender, and
Stokely USA, Inc. dated May 21, 1996 with
respect to a $70,000,000 Credit Facility.
Exhibit 99.2 - Amended and Restated Note Agreement dated
July 25, 1996 regarding $20,000,000 Original
Principal Amount of 9.74% Senior Notes due
January 15, 2000.
Exhibit 99.3 - Series A Warrant to purchase shares of Common
Stock by State of Wisconsin Investment Board.
Exhibit 99.4 - Series B Warrant to purchase shares of Common
Stock by State of Wisconsin Investment Board.
Exhibit 99.5 - Amended and Restated Note Agreement dated
July 25, 1996 regarding $25,000,000 Original
Principal Amount of 9.37% Senior Notes due
January 15, 2000.
Exhibit 99.6 - Series A Warrant to purchase shares of Common
Stock.
Exhibit 99.7 - Series B Warrant to purchase shares of Common
Stock.
(b) Reports on Form 8-K:
The Company filed a report on Form 8-K dated May 23, 1996
regarding its fiscal 1996 financial results, issues relating to
its long-term senior credit agreements and a new revolving credit
facility.
<PAGE>
STOKELY USA, INC.
SIGNATURES
----------
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STOKELY USA, INC.
Registrant
Date August 13, 1996 /s/ Stephen W. Theobald
Stephen W. Theobald
President and Chief Executive Officer
Date August 13, 1996 /s/ Leslie J. Wilson
Leslie J. Wilson
Vice President - Finance
(Principal Financial Officer)
<PAGE>
STOKELY USA, INC.
SIGNATURES
----------
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STOKELY USA, INC.
Registrant
Date August 13, 1996
Stephen W. Theobald
President and Chief Executive Officer
Date August 13, 1996
Leslie J. Wilson
Vice President - Finance
(Principal Financial Officer)
<PAGE>
Exhibit 27.1
Period Type 3 Months
Period Year End March 31, 1997
Period End June 30, 1996
Cash 890
Securities 0
Receivables 16,948
Allowances 570
Inventory 66,468
Current Assets 94,487
PP&E 91,656
Depreciation 35,087
Total Assets 155,484
Current Liabilities 49,639
Bonds 77,230
Common 572
Preferred Mandatory 0
Preferred 0
Other Stockholders Equity 24,833
Total Liability and Equity 155,484
Sales 42,342
Total Revenues 42,377
Cost of Goods Sold 37,200
Total Costs 37,200
Other Expenses 433
Loss Provision 0
Interest Expense 2,675
Income Pretax (4,264)
Income Tax Expense 0
Incoming Continuing Operations (4,264)
Discontinued Operation 0
Extraordinary Items 0
Changes 0
Net Income (4,264)
EPS - Primary (0.38)
EPS - Diluted (0.38)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1996
<CASH> 890
<SECURITIES> 0
<RECEIVABLES> 16948
<ALLOWANCES> 570
<INVENTORY> 66468
<CURRENT-ASSETS> 94487
<PP&E> 91656
<DEPRECIATION> 35087
<TOTAL-ASSETS> 155484
<CURRENT-LIABILITIES> 49639
<BONDS> 77230
<COMMON> 572
0
0
<OTHER-SE> 24833
<TOTAL-LIABILITY-AND-EQUITY> 155484
<SALES> 42342
<TOTAL-REVENUES> 42377
<CGS> 37200
<TOTAL-COSTS> 37200
<OTHER-EXPENSES> 433
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2675
<INCOME-PRETAX> (4264)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4264)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4264)
<EPS-PRIMARY> (.38)
<EPS-DILUTED> (.38)
</TABLE>
Exhibit 99.1
Loan and Security Agreement
by and between
CONGRESS FINANCIAL CORPORATION (CENTRAL)
as Lender
and
STOKELY USA, INC.
as Borrower
Dated: May 21, 1996<PAGE>
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated May 21, 1996, is entered into
by and between Congress Financial Corporation (Central), an Illinois
corporation ("Lender") and Stokely USA, Inc., a Wisconsin corporation
("Borrower").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrower has requested that Lender enter into certain
financing arrangements with Borrower pursuant to which Lender may make
loans and provide other financial accommodations to Borrower; and
WHEREAS, Lender is willing to make such loans and provide such
financial accommodations on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of
the Uniform Commercial Code as in effect in the State of Illinois shall
have the meanings given therein unless otherwise defined in this
Agreement. All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural. All references
to Borrower and Lender pursuant to the definitions set forth in the
recitals hereto, or to any other person herein, shall include their
respective successors and assigns. The words "hereof", "herein",
"hereunder", "this Agreement" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not any
particular provision of this Agreement and as this Agreement now exists
or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced. An Event of Default shall exist or continue or be
continuing until such Event of Default is waived in accordance with
Section 11.3. Any accounting term used herein unless otherwise defined
in this Agreement shall have the meanings customarily given to such term
in accordance with GAAP. For purposes of this Agreement, the following
terms shall have the respective meanings given to them below:
1.1 "Acceptable Foreign Account" means an Account for which
the chief executive office of the account debtor with respect thereto is
located outside the United States and either the account debtor has
delivered to Borrower an irrevocable letter of credit issued or confirmed
by a bank satisfactory to Lender, sufficient to cover such Account, in
form and substance satisfactory to Lender and, if required by Lender, the
original of such letter of credit has been delivered to Lender or
Lender's agent and the issuer thereof notified of the assignment of the
proceeds of such letter of credit to Lender, (ii) such Account is subject
to credit insurance payable to Lender issued by an insurer and on terms
and in an amount acceptable to Lender or the account debtor with respect
to such Account is one of the entities listed on Exhibit B hereto or a
Person otherwise acceptable to Lender in its discretion.
1.2 "Acceptable Third Party Agreement" shall mean an agreement
executed by the appropriate Person (i) in the form of Exhibit C hereto or
(ii) in form and substance satisfactory to Lender acknowledging Lender's
first priority security interest in all of the Inventory of Borrower in
the possession of such Person or located on property owned by such Person
or which such Person has a mortgage (or similar interest), as applicable,
waiving security interests and claims by such Person against such
Inventory and permitting Lender access to, and the right to remain on,
the applicable premises to exercise Lender's rights and remedies and
otherwise deal with Collateral.
1.3 "Accounts" shall mean all present and future rights of
Borrower to payment for goods sold or leased or for services rendered,
which are not evidenced by instruments or chattel paper, and whether or
not earned by performance.
1.4 "Adjusted Eurodollar Rate" shall mean, with respect to
each Interest Period for any Eurodollar Rate Loan, the rate per annum
(rounded upwards, if necessary, to the next 1/100 of 1%) determined by
dividing the Eurodollar Rate for such Interest Period by a percentage
equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, "Reserve Percentage" shall mean the reserve percentage, expressed
as a decimal, prescribed by any United States or foreign banking
authority for determining the reserve requirement which is or would be
applicable to deposits of United States dollars in a non-United States or
an international banking office of Reference Bank used to fund a
Eurodollar Rate Loan or any Eurodollar Rate Loan made with the proceeds
of such deposit, whether or not the Reference Bank actually holds or has
made any such deposits or loans. The Adjusted Eurodollar Rate shall be
adjusted on and as of the effective day of any change in the Reserve
Percentage.
1.5 "AGRIPAC" shall mean AGRIPAC, an Oregon corporation.
1.6 "Availability Reserves" shall mean, as of any date of
determination, such amounts as Lender may from time to time establish and
revise in good faith reducing the amount of Revolving Loans and Letter of
Credit Accommodations which would otherwise be available to Borrower
under the lending formula(s) provided for herein: (a) to reflect events,
conditions, contingencies or risks which, as determined by Lender in good
faith, do or may affect either (i) the Collateral or any other property
which is security for the Obligations or its value, (ii) the assets,
business or prospects of Borrower or any Obligor or (iii) the security
interests and other rights of Lender in the Collateral (including the
enforceability, perfection and priority thereof) or (b) to reflect
Lender's good faith belief that any collateral report or financial
information furnished by or on behalf of Borrower or any Obligor to
Lender is or may have been incomplete, inaccurate or misleading in any
material respect or (c) in respect of any state of facts which Lender
determines in good faith constitutes an Event of Default or may, with
notice or passage of time or both, constitute an Event of Default;
provided, however, that no Availability Reserves shall be established as
a result of any event, condition, contingency or risk which is
appropriately reserved for pursuant to the Supplier Reserve.
1.7 "Blocked Accounts" shall have the meaning set forth in
Section 6.3 hereof.
1.8 "Breakage Fees" shall mean with respect to any Eurodollar
Rate Loan which is at any time paid prior to the last day of its Interest
Period, regardless of the reason for such prepayment, the positive
difference, if any, between the total amount of interest that would have
been due for the balance of the scheduled Interest Period on such
Eurodollar Rate Loan if it had not been so prepaid and the amount of
interest that would be earned if the amount of the prepaid Eurodollar
Rate Loan were invested for the remaining balance of such Interest Period
at the CD Rate in effect on the first day of the month in which such
prepayment occurs. As used herein, "CD Rate" shall mean the rate quoted
in the "Money Rates" section of The Wall Street Journal for the average
of the top rates paid by New York banks on primary new issues of
negotiable certificates of deposit in amounts of $1 million and more
having a 1-month maturity, as published on the first Business Day of the
month in which any prepayment of a Eurodollar Rate Loan occurs.
1.9 "Business Day" shall mean (a) with respect to any
borrowing, payment or rate selection relating to Eurodollar Rate Loans,
a day other than Saturday or Sunday on which banks are open for business
in the States of New York and Illinois and the Commonwealth of
Pennsylvania and on which dealings in United States dollars are carried
on in the London interbank market or other applicable Eurodollar Rate
market, and (b) for all other purposes, a day other than Saturday or
Sunday on which banks are open for business in the States of New York and
Illinois and the Commonwealth of Pennsylvania.
1.10 "Code" shall mean the Internal Revenue Code of 1986, as
the same now exists or may from time to time hereafter be amended,
modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.11 "Collateral" shall have the meaning set forth in Section
5 hereof.
1.12 "Consent Opinion" shall mean an opinion of counsel to
Borrower, addressed to Lender and in form and substance satisfactory to
Lender, that this Agreement, with a Maximum Credit equal to $70,000,000,
does not violate, conflict with, breach or cause a default under any
agreement, instrument, or other document to which Borrower is party or
which Borrower or its property is bound.
1.13 "Dean Foods" shall mean Dean Foods Vegetable Company, a
Wisconsin corporation.
1.14 "Dean Foods Agreement" shall mean the Agreement in
Principle made April ___, 1996 among Dean Foods, AGRIPAC and Borrower;
provided that at all times on or after the execution and delivery of the
definitive purchase agreements to be executed and delivered in connection
with such Agreement in Principle, "Dean Foods Agreement" shall mean such
definitive agreements.
1.15 "Eligible Accounts" shall mean Accounts (other than
Accounts which arise from the sale of seed) created by Borrower which are
and continue to be acceptable to Lender based on the criteria set forth
below. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale
and shipment (or, in the case of bill and hold goods, billing) of goods
by Borrower or rendition of services by Borrower in the ordinary course
of its business which transactions are completed in accordance with the
terms and provisions contained in any documents related thereto;
(b) such Accounts are not unpaid more than one hundred and
twenty (120) days after the date of the original invoice for them;
(c) such Accounts comply with the terms and conditions
contained in Section 7.2(c) of this Agreement;
(d) such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under
which payment by the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with
respect to such Accounts is located in the United States of America or
such Accounts are Acceptable Foreign Accounts;
(f) such Accounts do not consist of progress billings,
bill and hold invoices or retainage invoices, except as to bill and hold
invoices, if Lender shall have received an agreement in writing from the
account debtor, in form and substance satisfactory to Lender, confirming
the unconditional obligation of the account debtor to take the goods
related thereto and pay such invoice;
(g) the account debtor with respect to such Accounts has
not asserted a counterclaim, defense or dispute and does not have, and
does not engage in transactions which may give rise to, any right of
setoff against such Accounts;
(h) there are no facts, events or occurrences which would
impair the validity, enforceability or collectability of such Accounts or
reduce the amount payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid
and perfected security interest of Lender and any goods giving rise
thereto are not, and were not at the time of the sale thereof, subject to
any liens except those permitted in this Agreement;
(j) neither the account debtor nor any officer or employee
of the account debtor with respect to such Accounts is an officer,
employee or agent of or affiliated with Borrower directly or indirectly
by virtue of family membership, ownership, control, management or
otherwise;
(k) the account debtors with respect to such Accounts are
not any foreign government, the United States of America, any State,
political subdivision, department, agency or instrumentality thereof,
unless, if the account debtor is the United States of America, any State,
political subdivision, department, agency or instrumentality thereof,
either (i) upon Lender's request, the Federal Assignment of Claims Act of
1940, as amended or any similar State or local law, if applicable, has
been complied with in a manner satisfactory to Lender or (ii) Lender has
not made any such request;
(l) there are no proceedings or actions which the Borrower
has knowledge of (or reasonably should have knowledge of) which are
threatened or pending against the account debtors with respect to such
Accounts which might result in any material adverse change in any such
account debtor's financial condition;
(m) such Accounts of a single account debtor or its
affiliates do not constitute more than thirty percent (30%) of all
otherwise Eligible Accounts (but the portion of the Accounts not in
excess of such percentage may be deemed Eligible Accounts);
(n) such Accounts are not owed by an account debtor who
has Accounts unpaid more than one hundred twenty (120) days after the
date of the original invoice for them which constitute more than fifty
(50%) percent of the total Accounts of such account debtor;
(o) such Accounts are owed by account debtors whose total
indebtedness to Borrower does not exceed the credit limit with respect to
such account debtors as reasonably determined by Lender from time to time
(but the portion of the Accounts not in excess of such credit limit may
still be deemed Eligible Accounts);
(p) such Accounts are owed by account debtors deemed
creditworthy at all times by Lender, as reasonably determined by Lender;
(q) such Accounts are payable in U.S. Dollars in the
United States of America; and
(r) the account debtor is not located in New Jersey,
Tennessee, Indiana, Minnesota or West Virginia unless Borrower has (i)
filed a Notice of Business Activities Report with the applicable state
taxing authority in such state, or (ii) qualified as a foreign
corporation in good standing in such state.
General criteria for Eligible Accounts may be established and revised
from time to time by Lender in good faith to reflect other matters or
circumstances which may impact the collectability of one or more
Accounts. Any Accounts which are not Eligible Accounts shall
nevertheless be part of the Collateral.
1.16 "Eligible Inventory" shall mean Inventory consisting of
finished goods held for resale in the ordinary course of the business of
Borrower and raw seeds which are acceptable to Lender based on the
criteria set forth below. In general, Eligible Inventory shall not
include (a) work-in-process (other than Inventory in transit between
locations as long as such Inventory would otherwise constitute Eligible
Inventory were it located at either of such locations); (b) components
which are not part of finished goods; (c) spare parts for equipment; (d)
packaging and shipping materials; (e) supplies used or consumed in
Borrower's business; (f) Inventory at premises other than those owned and
controlled by Borrower (other than Inventory in transit between locations
as long as such Inventory would otherwise constitute Eligible Inventory
were it located at either of such locations), except if Lender shall have
received an Acceptable Third Party Agreement from the person in
possession of such Inventory and/or the owner or operator of such
premises; (g) Inventory subject to a security interest or lien in favor
of any person other than Lender except those permitted in this Agreement;
(h) bill and hold goods, the sale of which has given rise to an Account;
(i) unserviceable, obsolete or slow moving Inventory; (j) Inventory which
is not subject to the first priority, valid and perfected security
interest of Lender; (k) returned, damaged and/or defective Inventory; and
(l) Inventory purchased or sold on consignment. General criteria for
Eligible Inventory may be established and revised from time to time by
Lender in good faith to reflect other matters or circumstances which may
impact the saleability or value of such Inventory or the Lender's first
priority perfected security interest therein. Any Inventory which is not
Eligible Inventory shall nevertheless be part of the Collateral.
1.17 "Environmental Laws" shall mean all federal, state,
district, local and foreign laws, rules, regulations, ordinances, and
consent decrees relating to health, safety, hazardous substances,
pollution and environmental matters, as now or at any time hereafter in
effect, applicable to Borrower's business and facilities (whether or not
owned by it), including laws relating to emissions, discharges, releases
or threatened releases of pollutants, contamination, chemicals, or
hazardous, toxic or dangerous substances, materials or wastes into the
environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to
the generation, manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants,
chemicals, or hazardous, toxic or dangerous substances, materials or
wastes.
1.18 "Equipment" shall mean all of Borrower's now owned and
hereafter acquired equipment, machinery, computers, computer hardware,
owned and licensed computer software, vehicles, tools, furniture,
fixtures, all attachments, accessions and property now or hereafter
affixed thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located.
1.19 "ERISA" shall mean the United States Employee Retirement
Income Security Act of 1974, as the same now exists or may hereafter from
time to time be amended, modified, recodified or supplemented, together
with all rules, regulations and interpretations thereunder or related
thereto.
1.20 "ERISA Affiliate" shall mean any person required to be
aggregated with Borrower or any of its Subsidiaries under Sections
414(b), 414(c), 414(m) or 414(o) of the Code.
1.21 "Eurodollar Rate" shall mean, with respect to any Interest
Period for a Eurodollar Rate Loan requested by Borrower by not less than
three (3) Business Days' prior notice to Lender, the interest rate per
annum equal to the arithmetic mean of the rates of interest per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) at which
Reference Bank is offered deposits of United States dollars in the London
interbank market (or other Eurodollar Rate market selected by Borrower
and approved by Lender, which approval shall not be unreasonably
withheld) at or about 9:00 a.m. (New York time) two (2) Business Days
prior to the commencement of such Interest Period in amounts
substantially equal to the principal amount of the Eurodollar Rate Loans
requested by and available to Borrower in accordance with this Agreement,
with a maturity of comparable duration to the Interest Period selected by
Borrower. Upon receipt of Borrower's request for a Eurodollar Rate Loan,
Lender will, if requested, provide Borrower with an indication of the
prevailing Eurodollar Rate on the Business Day of such request; provided,
however, that the actual Eurodollar Rate which is applicable to the
requested Interest Period shall be determined as provided above and may
be higher or lower than such indicative rate.
1.22 "Eurodollar Rate Loans" shall mean any Loans or portion
thereof on which interest is payable based on the Adjusted Eurodollar
Rate in accordance with the terms hereof.
1.23 "Event of Default" shall mean the occurrence or existence
of any event or condition described in Section 10.1 hereof.
1.24 "Frozen Vegetable Sale" shall mean the sale by the
Borrower to Dean Foods and to AGRIPAC of Borrower's frozen food Inventory
and Borrower's plants and related assets located in Grandview, Washington
and Walla Walla, Washington in accordance with the Dean Foods Agreement.
1.25 "Financing Agreements" shall mean, collectively, this
Agreement and all notes, guarantees, security agreements, trademark
security agreements, blocked account agreements, and other agreements,
documents and instruments now or at any time hereafter executed and/or
delivered by Borrower or any Obligor in connection with this Agreement,
as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.26 "GAAP" shall mean generally accepted accounting principles
in the United States of America as in effect from time to time as set
forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and the
statements and pronouncements of the Financial Accounting Standards
Boards which are applicable to the circumstances as of the date of
determination consistently applied.
1.27 "Hazardous Materials" shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including, without
limitation, hydrocarbons (including naturally occurring or man-made
petroleum and hydrocarbons), flammable explosives, asbestos, urea
formaldehyde insulation, radioactive materials, biological substances,
polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including, without limitation,
materials which include hazardous constituents), sewage, sludge,
industrial slag, solvents and/or any other similar substances, materials,
or wastes and including any other substances, materials or wastes that
are or become regulated under any Environmental Law (including, without
limitation any that are or become classified as hazardous or toxic under
any Environmental Law).
1.28 "Information Certificate" shall mean the Information
Certificate of Borrower constituting Exhibit A hereto containing material
information with respect to Borrower, its business and assets provided by
or on behalf of Borrower to Lender in connection with the preparation of
this Agreement and the other Financing Agreements and the financing
arrangements provided for herein.
1.29 "Interest Period" shall mean for any Eurodollar Rate Loan,
a period of approximately one (1), two (2) or three (3) months duration
as Borrower may elect, the exact duration to be determined in accordance
with the customary practice in the applicable Eurodollar Rate market;
provided that Borrower may not elect an Interest Period which will end
after the last day of the then-current term of this Agreement.
1.30 "Interest Rate" shall mean: (a) as to Revolving Loans
which are Prime Rate Loans and all other non-contingent Obligations not
expressly covered in the following clause (b), a rate of three-fourths of
one percent (.75%) per annum in excess of the Prime Rate, and (b) as to
Revolving Loans which are Eurodollar Rate Loans, a rate of three and one
quarter percent (3.25%) per annum in excess of the Adjusted Eurodollar
Rate for the applicable Interest Period selected by Borrower in
accordance with the terms hereof; provided that the Interest Rate shall
mean the rate of (i) two and three quarters percent (2.75%) per annum in
excess of the Prime Rate as to Revolving Loans which are Prime Rate Loans
and all other non-contingent Obligations not expressly covered in the
following clause (ii) and (ii) five and one quarter percent (5.25%) per
annum in excess of the Adjusted Eurodollar Rate as to Revolving Loans
which are Eurodollar Rate Loans, in each case at Lender's option, without
notice, (a) for the period on and after the date of termination or non-
renewal hereof, or the date of the occurrence of any Event of Default for
so long as such Event of Default is continuing as determined by Lender
and until such time as such Event of Default has been waived or all
Obligations are indefeasibly paid in full (notwithstanding entry of any
judgment against Borrower) and (b) on the Revolving Loans at any time
outstanding in excess of the amounts available to Borrower under Section
2 (if such excess(es) arise or are made without Lender's consent);
provided, however, that Lender reserves the right to condition any
consent to such excess(es) and/or waiver of an Event of Default resulting
therefrom, inter alia, on receiving the higher Interest Rates set forth
in the preceding proviso.
1.31 "Inventory" shall mean all of Borrower's now owned and
hereafter existing or acquired crops, farm products, seed, raw materials,
work in process, finished goods and all other inventory of whatsoever
kind or nature, wherever located.
1.32 "Letter of Credit Accommodations" shall mean the letters
of credit, merchandise purchase or other guaranties which are from time
to time either (a) issued or opened by Lender for the account of Borrower
or any Obligor or (b) with respect to which Lender has agreed to
indemnify the issuer or guaranteed to the issuer the performance by
Borrower of its obligations to such issuer.
1.33 "Letter of Credit Percentage" shall mean, at any time, one
hundred percent (100%) minus the percentage being applied for advances
against Eligible Inventory of the type being acquired in the transaction
which the applicable letter of credit relates to.
1.34 "Line Fee Amount" at any time shall mean $65,000,000 less
the amount by which the Line Fee Amount has been reduced pursuant to
Section 2.3 hereof.
1.35 "Loans" shall mean the Revolving Loans.
1.36 "Maximum Credit" shall mean the amount of (i) at all times
on or prior to the delivery of the Consent Opinion $65,000,000 and (ii)
at all times after the delivery of the Consent Opinion, $70,000,000, in
each case as such amount may be permanently reduced from time to time by
Borrower in accordance with Section 2.3.
1.37 "Net Amount of Acceptable Foreign Accounts" shall mean the
gross amount of Acceptable Foreign Accounts less (a) sales, excise or
similar taxes included in the amount thereof and (b) returns, discounts,
claims, credits and allowances of any nature at any time issued, owing,
granted, outstanding, available or claimed with respect thereto.
1.38 "Net Amount of Eligible Domestic Accounts" shall mean the
gross amount of Eligible Accounts (other than Acceptable Foreign
Accounts) less sales, excise or similar taxes included in the amount
thereof and returns, discounts, claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding, available or
claimed with respect thereto.
1.39 "Obligations" shall mean any and all Revolving Loans,
Letter of Credit Accommodations and all other obligations, liabilities
and indebtedness of every kind, nature and description owing by Borrower
to Lender and/or its affiliates, including principal, interest, charges,
fees, costs and expenses, however evidenced, whether as principal,
surety, endorser, guarantor or otherwise, whether arising under this
Agreement or otherwise, whether now existing or hereafter arising,
whether arising before, during or after the initial or any renewal term
of this Agreement or after the commencement of any case with respect to
Borrower under the United States Bankruptcy Code or any similar statute
(including, without limitation, the payment of interest and other amounts
which would accrue and become due but for the commencement of such case),
whether direct or indirect, absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated, secured or
unsecured, and however acquired by Lender.
1.40 "Obligor" shall mean any guarantor, endorser, acceptor,
surety or other person now or hereafter liable on or with respect to the
Obligations or who is the owner of any property which is now or hereafter
security for the Obligations, other than Borrower.
1.41 "PACA" shall mean the Perishable Agricultural Commodities
Act, 7 U.S.C. Section 499 et seq.
1.42 "Payment Account" shall have the meaning set forth in
Section 6.3 hereof.
1.43 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation,
any corporation which elects subchapter S status under the Internal
Revenue Code of 1986, as amended), business trust, unincorporated
association, joint stock corporation, trust, joint venture or other
entity or any government or any agency or instrumentality or political
subdivision thereof.
1.44 "Prime Rate" shall mean the rate from time to time
publicly announced by CoreStates Bank, N.A., or its successors, at its
office in Philadelphia, Pennsylvania, as its prime rate, whether or not
such announced rate is the best rate available at such bank.
1.45 "Prime Rate Loans" shall mean any Loans or portion thereof
on which interest is payable based on the Prime Rate in accordance with
the terms thereof.
1.46 "Records" shall mean all of Borrower's present and future
books of account of every kind or nature, purchase and sale agreements,
invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data
relating to the Collateral or any account debtor, together with the
tapes, disks, diskettes and other data and software storage media and
devices, file cabinets or containers in or on which the foregoing are
stored (including any rights of Borrower with respect to the foregoing
maintained with or by any other person).
1.47 "Reference Bank" shall mean CoreStates Bank, N.A., or such
other bank as Lender may from time to time reasonably designate.
1.48 "Revolving Loans" shall mean the loans now or hereafter
made by Lender to or for the benefit of Borrower on a revolving basis
(involving advances, repayments and readvances) as set forth in Section
2.1 hereof.
1.49 "Supplier Reserve" at any time shall mean a reserve equal
to the aggregate amount owed by Borrower at such time to any and all
Persons as the purchase price of agricultural goods.
1.50 "Value" shall mean, as determined by Lender in good faith,
with respect to Inventory, the lower of cost computed on an average cost
basis in accordance with GAAP or market value.
SECTION 2. CREDIT FACILITIES
2.1 Revolving Loans.
(a) Subject to, and upon the terms and conditions
contained herein, Lender agrees to make Revolving Loans to Borrower from
time to time in amounts requested by Borrower up to the amount equal to
the sum of:
(i) eighty-five percent (85%) of the Net Amount of
Eligible Domestic Accounts, plus
(ii) eighty-five percent (85%) of the Net Amount of
Acceptable Foreign Accounts described in clause (i) of the definition of
Acceptable Foreign Account, plus
(iii) seventy percent (70%) of the Net Amount of
Acceptable Foreign Accounts (other than Acceptable Foreign Accounts
described in clause (i) of the definition of Acceptable Foreign Account),
plus
(iv) the lesser of: (A) the sum of (1) seventy
percent (70%) of the Value of Eligible Inventory consisting of finished
goods which have been appropriately packaged in cans or which have been
packaged as frozen goods and which Dean Foods has, as of such time,
agreed to purchase pursuant to the Dean Foods Agreement (provided, that
with respect to such Inventory packaged as frozen goods, if the Dean
Foods Agreement is terminated, unenforceable or in default, the Lender
and Borrower shall negotiate in good faith to cause the advance rate with
respect to such Inventory to be changed from seventy percent (70%) to the
fifty-two and one-half percent (52.5%)) plus (2) fifty-two and one-half
percent (52.5%) of the Value of Eligible Inventory consisting of finished
goods which have been packaged as frozen goods and which Dean Foods has,
as of such time, not agreed to purchase pursuant to Dean Foods Agreement
plus (3) fifty percent (50%) of the Value of Eligible Inventory
consisting of raw seed or the amount equal to: (1) the Maximum Credit
at such time minus (2) the aggregate of the Letter of Credit Percentages
of the then undrawn amounts of the outstanding Letter of Credit
Accommodations for the purpose of purchasing Eligible Inventory, less
(v) the Supplier Reserve at such time, less
(vi) any Availability Reserves.
(b) Lender may, in its discretion, from time to time, upon
not less than five (5) days prior notice to Borrower, (i) reduce the
lending formula with respect to Eligible Accounts and/or Acceptable
Foreign Accounts to the extent that Lender determines in good faith that:
(A) the dilution with respect to the Accounts for any period (based on
the ratio of (1) the aggregate amount of reductions in Accounts other
than as a result of payments in cash to (2) the aggregate amount of total
sales) has increased in any material respect or may be reasonably
anticipated to increase in any material respect above historical levels,
or (B) the general creditworthiness of account debtors has declined or
(ii) reduce the lending formula(s) with respect to Eligible Inventory to
the extent that Lender determines that: (A) the number of days of the
turnover of the Inventory for any period has changed in any material
respect or (B) the liquidation value of the Eligible Inventory, or any
category thereof, has decreased, or (C) the nature and quality of the
Inventory has deteriorated. In determining whether to reduce the lending
formula(s), Lender may consider events, conditions, contingencies or
risks which are also considered in determining Eligible Accounts,
Acceptable Foreign Accounts, Eligible Inventory or in establishing
Availability Reserves.
(c) Except in Lender's discretion, the aggregate amount of
the Loans and the Letter of Credit Accommodations outstanding at any time
shall not exceed the Maximum Credit. In the event that the outstanding
amount of any component of the Loans, or the aggregate amount of the
outstanding Loans and Letter of Credit Accommodations, exceed the amounts
available under the lending formulas, the sublimits for Letter of Credit
Accommodations set forth in Section 2.2(c) or the Maximum Credit, as
applicable, such event shall not limit, waive or otherwise affect any
rights of Lender in that circumstance or on any future occasions and
Borrower shall, upon demand by Lender, which may be made at any time or
from time to time, immediately repay to Lender the entire amount of any
such excess(es) for which payment is demanded.
2.2 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions
contained herein, at the request of Borrower, Lender agrees to provide or
arrange for Letter of Credit Accommodations for the account of Borrower
containing terms and conditions acceptable to Lender and the issuer
thereof. Any payments made by Lender to any issuer thereof and/or
related parties in connection with the Letter of Credit Accommodations
shall constitute additional Revolving Loans to Borrower pursuant to this
Section 2.
(b) In addition to any charges, fees or expenses charged
by any bank or issuer in connection with the Letter of Credit
Accommodations, Borrower shall pay to Lender a letter of credit fee at a
rate equal to one and one half percent (1.5%) per annum on the average
daily outstanding balance of the Letter of Credit Accommodations for the
immediately preceding month (or part thereof), payable in arrears as of
the first day of each succeeding month. Such letter of credit fee shall
be calculated on the basis of a three hundred sixty (360) day year and
actual days elapsed and the obligation of Borrower to pay such fee shall
survive the termination or non-renewal of this Agreement.
(c) No Letter of Credit Accommodations shall be available
unless on the date of the proposed issuance of any Letter of Credit
Accommodations, the Revolving Loans available to Borrower (subject to the
Maximum Credit and any Availability Reserves) are equal to or greater
than: if the proposed Letter of Credit Accommodation is for the purpose
of purchasing Eligible Inventory for which Lender has a first priority
perfected security interest in any and all documents of title related to
such Inventory, the sum of the Letter of Credit Percentage of the cost
of such Eligible Inventory, plus freight, taxes, duty and other amounts
which Lender estimates must be paid in connection with such Inventory
upon arrival and for delivery to one of Borrower's locations for Eligible
Inventory within the United States of America and if the proposed Letter
of Credit Accommodation is for any other purpose, an amount equal to one
hundred (100%) percent of the face amount thereof and all other commit-
ments and obligations made or incurred by Lender with respect thereto.
Effective on the issuance of each Letter of Credit Accommodation, the
amount of Revolving Loans which might otherwise be available to Borrower
shall be reduced by the applicable amount set forth in Section 2.2(c)(i)
or Section 2.2(c)(ii).
(d) Except in Lender's discretion, (i) the amount of all
outstanding Letter of Credit Accommodations and all other commitments and
obligations made or incurred by Lender in connection therewith, shall not
at any time exceed $10,000,000 and (ii) the amount of all outstanding
Letter of Credit Accommodations for the purpose of purchasing Eligible
Inventory and all other commitments and obligations made or incurred by
Lender in connection therewith shall not at any time exceed: the amount
of the then Revolving Loans available to Borrower but not outstanding
based on Eligible Inventory pursuant to Section 2.1(a)(iv) hereof. At
any time an Event of Default exists or has occurred and is continuing,
upon Lender's request, Borrower will either furnish cash collateral to
secure the reimbursement obligations to the issuer in connection with any
Letter of Credit Accommodations or furnish cash collateral to Lender for
the Letter of Credit Accommodations, and in either case, the Revolving
Loans otherwise available to Borrower shall not be reduced as provided in
Section 2.2(c) to the extent of such cash collateral.
(e) Borrower shall indemnify and hold Lender harmless from
and against any and all losses, claims, damages, liabilities, costs and
expenses which Lender may suffer or incur in connection with any Letter
of Credit Accommodations and any documents, drafts or acceptances
relating thereto, including, but not limited to, any losses, claims,
damages, liabilities, costs and expenses due to any action taken by any
issuer or correspondent with respect to any Letter of Credit
Accommodation; provided, however, that Borrower shall not be required to
indemnify Lender for any claims, damages, losses, liabilities, costs or
expenses to the extent caused by (i) the willful misconduct or gross
negligence of Lender in determining whether a request presented under any
Letter of Credit Accommodation complied with the terms of such Letter of
Credit Accommodation or (ii) Lender's failure to pay under any Letter of
Credit Accommodation after the timely presentation to it of a request for
payment strictly complying with the terms and conditions of such Letter
of Credit Accommodation. Borrower assumes all risks with respect to the
acts or omissions of the drawer under or beneficiary of any Letter of
Credit Accommodation and for such purposes the drawer or beneficiary
shall be deemed Borrower's agent. Borrower assumes all risks for, and
agrees to pay, all foreign, Federal, State and local taxes, duties and
levies relating to any goods subject to any Letter of Credit
Accommodations or any documents, drafts or acceptances thereunder.
Borrower hereby releases and holds Lender harmless from and against any
acts, waivers, errors, delays or omissions, whether caused by Borrower,
by any issuer or correspondent or otherwise with respect to or relating
to any Letter of Credit Accommodation. The provisions of this Section
2.2(e) shall survive the payment of Obligations and the termination or
non-renewal of this Agreement.
(f) Nothing contained herein shall be deemed or construed
to grant Borrower any right or authority to pledge the credit of Lender
in any manner. Lender shall have no liability of any kind with respect
to any Letter of Credit Accommodation provided by an issuer other than
Lender unless Lender has duly executed and delivered to such issuer the
application or a guarantee or indemnification in writing with respect to
such Letter of Credit Accommodation. Borrower shall be bound by any
interpretation made in good faith by Lender, or any other issuer or
correspondent under or in connection with any Letter of Credit
Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of Borrower. Lender shall have the sole and exclusive right
and authority to, and Borrower shall not, at any time an Event of Default
exists or has occurred and is continuing, (A) approve or resolve any
questions of non-compliance of documents, (B) give any instructions as to
acceptance or rejection of any documents or goods and/or (C) execute any
and all applications for steamship or airway guaranties, indemnities or
delivery orders. Lender may take such actions either in its own name or
in Borrower's name. Without the prior written consent of Lender,
Borrower shall not (i) grant any extensions of the maturity of, time of
payment for, or time of presentation of, any drafts, acceptances, or
documents and/or (ii) agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions
of any of the applications, Letter of Credit Accommodations, or docu-
ments, drafts or acceptances thereunder or any letters of credit included
in the Collateral.
(g) Any rights, remedies, duties or obligations granted or
undertaken by Borrower to any issuer or correspondent in any application
for any Letter of Credit Accommodation, or any other agreement in favor
of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been granted or undertaken by
Borrower to Lender. Any duties or obligations undertaken by Lender to
any issuer or correspondent in any application for any Letter of Credit
Accommodation, or any other agreement by Lender in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been undertaken by Borrower to Lender and to apply in all
respects to Borrower.
2.3 Optional Reductions in Maximum Credit.
(a) Borrower may, at its option, from time to time after
the execution and delivery by all of the parties thereto of definitive
documentation with respect to each portion of the Frozen Vegetable Sale,
request in writing that the Maximum Credit be reduced to any amount not
less than $30,000,000. Any such request shall be irrevocable, unless
Lender shall otherwise agree.
(b) Effective on the first Business Day which is fifteen
(15) days after the date of the receipt by Lender of such written
request, the Maximum Credit shall be reduced as requested by Borrower;
provided, that, each such reduction shall be in the aggregate amount of
$10,000,000 or an integral multiple of $10,000,000 in excess thereof. In
addition, in connection with each reduction of the Maximum Credit
pursuant to this Section 2.3, the Line Fee Amount shall be reduced by an
amount equal to the product of (i) the Line Fee Amount immediately prior
to such reduction multiplied by (ii) a fraction the numerator of which is
the amount of such reduction and the denominator of which is the Maximum
Credit immediately prior to such reduction.
(c) Without limiting any of the other rights of Lender
pursuant to the terms hereof, effective on each date when any reduction
is effective pursuant to Section 2.3(b) above, Borrower agrees to
automatically and without demand make a payment to Lender in respect of
the Loans in an amount equal to the excess if any, of the aggregate
principal amount of the Loans and outstanding Letter of Credit
Obligations then outstanding over the amount of the Loans then available
to Borrower pursuant to the Maximum Credit as so reduced. All interest
accrued on the principal amount of the Loans paid pursuant to this
Section 2.3(c) shall be paid, or may be charged to any of the loan
account(s) of Borrower maintained by Lender, at Lender's option, on the
date such payment of principal is due.
2.4 Availability Reserves. All Revolving Loans otherwise available
to Borrower pursuant to the lending formulas and subject to the Maximum
Credit and other applicable limits hereunder shall be subject to Lender's
continuing right to establish and revise Availability Reserves.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrower shall pay to Lender interest on the daily
average outstanding principal amount of the Loans and, to the extent
permitted by applicable law, the other non-contingent Obligations from
and after the date when actually paid by Lender, at the Interest Rate.
All interest accruing hereunder on and after the date of any Event of
Default or termination or non-renewal hereof shall be payable on demand.
Lender shall make a good faith effort to pay third-party fees and
expenses when due and not to charge Borrower's loan account for
reimbursement of such Obligations until actually paid by Lender.
(b) Borrower may from time to time request that Prime Rate
Loans be converted to Eurodollar Rate Loans, that Eurodollar Rate Loans
be converted to Prime Rate Loans and/or that any existing Eurodollar Rate
Loans continue for an additional Interest Period. Such request from
Borrower shall specify the amount of the Prime Rate Loans which will be
converted to Eurodollar Rate Loans (subject to the limits set forth
below) and the Interest Period to be applicable to such Eurodollar Rate
Loans on not less than three (3) Business Days prior notice to Lender.
Subject to the terms and conditions contained herein, three (3) Business
Days after receipt by Lender of such a request from Borrower, such Prime
Rate Loans shall be converted to Eurodollar Rate Loans or such Eurodollar
Rate Loans shall continue, as the case may be, provided that (i) no Event
of Default, or event which, merely with notice or passage of time or
both, would constitute an Event of Default, exists or has occurred and is
continuing, (ii) no party hereto shall have sent any notice of
termination or non-renewal of this Agreement, (iii) Borrower shall have
complied with all reasonable and customary procedures as are established
by Lender and specified by Lender to Borrower from time to time for
requests by Borrower for Eurodollar Rate Loans, (iv) no more than four
(4) Interest Periods may be in effect at any one time, (v) the aggregate
amount of the Eurodollar Rate Loans must be in an amount not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof, (vi)
the maximum amount of the Eurodollar Rate Loans at any time requested by
Borrower shall not exceed the amount equal to sixty-six and two thirds
percent (66 2/3%) of the daily average of the principal amount of the
Revolving Loans which it is anticipated will be outstanding during the
applicable Interest Period, in each case as reasonably determined by
Borrower pursuant to a good faith written computation (but with no
obligation of Lender to make such Revolving Loans except as otherwise
provided in this Agreement), and (vii) Lender shall have determined that
the Interest Period or Adjusted Eurodollar Rate is available to Lender
through the Reference Bank and can be readily determined as of the
Business Day following the date of the request for such Eurodollar Rate
Loan by Borrower. Any request by Borrower to convert Prime Rate Loans to
Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans
shall be irrevocable. Notwithstanding anything to the contrary contained
herein, Lender and Reference Bank shall not be required to purchase
United States Dollar deposits in the London interbank market or other
applicable Eurodollar Rate market to fund any Eurodollar Rate Loans, but
the provisions hereof shall be deemed to apply as if Lender and Reference
Bank had purchased such deposits to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert
to Prime Rate Loans upon the last day of the applicable Interest Period,
unless Lender has received a request to continue such Eurodollar Rate
Loan at least three (3) Business Days prior to such last day in
accordance with the terms hereof. Any Eurodollar Rate Loans shall, at
Lender's option, upon notice by Lender to Borrower, convert to Prime Rate
Loans in the event that (i) an Event of Default shall exist, (ii) this
Agreement shall terminate or not be renewed, or (iii) the aggregate
principal amount of the Prime Rate Loans which have previously been
converted to Eurodollar Rate Loans or existing Eurodollar Rate Loans
continued, as the case may be, at the beginning of an Interest Period
shall at any time during such Interest Period exceed the sum of the then
outstanding principal amount of the Term Loan plus the Revolving Loans
then available to Borrower under Section 2 hereof. Borrower shall pay to
Lender, upon demand by Lender (or Lender may, at its option, charge any
loan account of Borrower) any Breakage Fees and, without duplication
thereof, any other reasonable and customary amounts required to
compensate Lender, the Reference Bank or any Participant for any loss
(including loss of anticipated profits), cost or expense reasonably
incurred by such person, as a result of the conversion of Eurodollar Rate
Loans to Prime Rate Loans pursuant to any of the foregoing; provided,
however, that no such Breakage Fee or other costs shall be payable if
such conversion of Eurodollar Rate Loans to Prime Rate Loans prior to the
end of the applicable Interest Period results from Lender's establishment
of Availability Reserves, changes in criteria for Eligible Accounts or
Eligible Inventory, or reduction of the lending formula set forth in
Section 2.1(a).
(d) Interest shall be payable by Borrower to Lender
monthly in arrears not later than the first Business Day of each calendar
month and shall be calculated on the daily average principal balance of
the non-contingent Obligations outstanding on the basis of a three
hundred sixty (360) day year and actual days elapsed (including the date
of borrowing but excluding the date of payment if made in accordance with
Section 6.3(b)). The interest rate on non-contingent Obligations (other
than Eurodollar Rate Loans) shall increase or decrease by an amount equal
to each increase or decrease in the Prime Rate effective on the first day
of the month after any change in such Prime Rate is announced based on
the Prime Rate in effect on the last day of the month in which any such
change occurs. In no event shall charges constituting interest payable
by Borrower to Lender exceed the maximum amount or the rate permitted
under any applicable law or regulation, and if any such part or provision
of this Agreement is in contravention of any such law or regulation, such
part or provision shall be deemed amended to conform thereto.
3.2 Closing Fee. Borrower shall pay to Lender as a closing fee the
amount of $700,000, which shall be fully earned as of the date hereof and
$350,000 of which shall be payable on the date hereof and $350,000 of
which shall be payable on the first anniversary of the date hereof.
3.3 Servicing Fee. Borrower shall pay to Lender a servicing fee in
an amount equal to $65,000 per annum in respect of Lender's services for
each year (or part thereof) while this Agreement remains in effect and
for so long thereafter as any of the Obligations are outstanding, which
fee shall be fully earned as of the date hereof and be payable quarterly
in advance on the date hereof and on the first day of each calendar
quarter hereafter.
3.4 Unused Line Fee. Borrower shall pay to Lender monthly an
unused line fee at a rate equal to one quarter of one percent (.25%) per
annum calculated upon the amount by which the average daily Line Fee
Amount exceeds the average daily principal balance of the outstanding
Revolving Loans and Letter of Credit Accommodations during the
immediately preceding month (or part thereof) while this Agreement is in
effect and for so long thereafter as any of the Obligations are
outstanding, which fee shall be payable on the first day of each month in
arrears.
3.5 Changes in Laws; Increased Costs of Loans; Breakage Fees.
(a) Notwithstanding anything to the contrary contained
herein, all Eurodollar Rate Loans shall, upon notice by Lender to
Borrower, convert to Prime Rate Loans in the event that any change in
applicable law or regulation (or the interpretation or administration
thereof by a banking authority or regulator) shall make it unlawful for
Lender, Reference Bank or any Participant to make or maintain Eurodollar
Rate Loans or to comply with the terms hereof in connection with the
Eurodollar Rate Loans. In the event that any change in applicable law or
regulation (or the interpretation or administration thereof by a banking
authority or regulator) shall (i) result in the increase in the costs to
Lender, Reference Bank or any Participant of making or maintaining any
Eurodollar Rate Loans or (ii) reduce the amounts received or receivable
by Lender in respect thereof, by an amount deemed by Lender to be
material, Borrower shall pay to Lender, upon demand by Lender (or Lender
may, at its option, charge any loan account of Borrower) any amounts
required to compensate Lender, the Reference Bank or any Participant with
Lender for any loss (including loss of anticipated profits), cost or
expense reasonably incurred by such person as a result of the foregoing,
including, without limitation, any such loss, cost or expense reasonably
incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such person to make or maintain the Eurodollar
Rate Loans or any portion thereof. A certificate of Lender setting forth
the basis for the determination of such amount necessary to compensate
Lender as aforesaid shall be delivered to Borrower and shall be
conclusive, absent manifest error. In the event that Lender shall
determine that the applicable Eurodollar Rate does not adequately reflect
the cost to Lender of making or maintaining the Eurodollar Rate Loans,
then, unless Borrower compensates Lender for Lender's increased cost of
funds, Lender may suspend generally the prospective availability of the
Eurodollar Rate option for new Interest Periods and/or Loans until such
condition no longer exists.
(b) If any payments or prepayments in respect of the
Eurodollar Rate Loans are received by Lender other than on the last day
of the applicable Interest Period (whether pursuant to acceleration, upon
maturity or otherwise), including any payments pursuant to the
application of collections under Section 6.3 or any other payments made
with the proceeds of Collateral, Borrower shall pay to Lender upon demand
by Lender (or Lender may, at its option, charge any loan account of
Borrower) Breakage Fees and, without duplication thereof, any other
reasonable and customary amounts required to compensate Lender, the
Reference Bank or any Participant with Lender for any additional loss
(including loss of anticipated profits), cost or expense reasonably
incurred by such person as a result of such prepayment or payment,
including, without limitation, any loss, cost or expense reasonably
incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such person to make or maintain such Eurodollar
Rate Loans or any portion thereof. A certificate of Lender setting forth
the basis for the determination of such amount necessary to compensate
Lender as aforesaid shall be delivered to Borrower and shall be
conclusive, absent manifest error.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Lender
making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:
(a) Lender shall have received evidence, in form and
substance satisfactory to Lender, that Lender has valid perfected and
first priority security interests in and liens upon the Collateral and
any other property which is intended to be security for the Obligations
or the liability of any Obligor in respect thereof, subject only to the
security interests and liens permitted herein or in the other Financing
Agreements;
(b) all requisite corporate action and proceedings in
connection with this Agreement and the other Financing Agreements shall
be satisfactory in form and substance to Lender, and Lender shall have
received all information and copies of all documents, including, without
limitation, records of requisite corporate action and proceedings which
Lender may have requested in connection therewith, such documents where
requested by Lender or its counsel to be certified by appropriate
corporate officers or governmental authorities;
(c) no material adverse change shall have occurred in the
assets, business or prospects of Borrower since the date of Lender's
latest field examination and no change or event shall have occurred which
would impair the ability of Borrower or any Obligor to perform its
obligations hereunder or under any of the other Financing Agreements to
which it is a party or of Lender to enforce the Obligations or realize
upon the Collateral;
(d) Lender shall have completed a field review of the
Records and such other information with respect to the Collateral as
Lender may require to determine the amount of Revolving Loans available
to Borrower, the results of which shall be satisfactory to Lender, not
more than three (3) business days prior to the date hereof;
(e) Lender shall have received, in form and substance
satisfactory to Lender, all consents, waivers, acknowledgments and other
agreements from third persons which Lender may deem necessary or
desirable in order to permit, protect and perfect its security interests
in and liens upon the Collateral or to effectuate the provisions or
purposes of this Agreement and the other Financing Agreements, including,
without limitation, acknowledgements by lessors, mortgagees and
warehousemen of Lender's security interests in the Collateral, waivers by
such persons of any security interests, liens or other claims by such
persons to the Collateral and agreements permitting Lender access to, and
the right to remain on, the premises to exercise its rights and remedies
and otherwise deal with the Collateral;
(f) Lender shall have received evidence of insurance and
loss payee endorsements required hereunder and under the other Financing
Agreements, in form and substance satisfactory to Lender, and
certificates of insurance policies and/or endorsements naming Lender as
loss payee;
(g) Lender shall have received, in form and substance
satisfactory to Lender, such opinion letters of counsel to Borrower with
respect to the Financing Agreements and such other matters as Lender may
request; and
(h) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and
delivered to Lender, in form and substance satisfactory to Lender.
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations. Each of the following is an additional condition
precedent to Lender making Loans and/or providing Letter of Credit
Accommodations to Borrower, including the initial Loans and Letter of
Credit Accommodations and any future Loans and Letter of Credit
Accommodations:
(a) all representations and warranties contained herein
and in the other Financing Agreements shall be true and correct in all
material respects with the same effect as though such representations and
warranties had been made on and as of the date of the making of each such
Loan or providing each such Letter of Credit Accommodation and after
giving effect thereto; and
(b) no Event of Default and no event or condition which,
with notice or passage of time or both, would constitute an Event of
Default, shall exist or have occurred and be continuing on and as of the
date of the making of such Loan or providing each such Letter of Credit
Accommodation and after giving effect thereto.
SECTION 5. GRANT OF SECURITY INTEREST
To secure payment and performance of all Obligations, Borrower
hereby grants to Lender a continuing security interest in, a lien upon,
and a right of set off against, and hereby assigns to Lender as security,
the following property and interests in property, whether now owned or
hereafter acquired or existing, and wherever located (collectively, the
"Collateral"):
5.1 Accounts;
5.2 all present and future contract rights, general intangibles
(including, but not limited to, tax and duty refunds, registered and
unregistered patents, trademarks, service marks, copyrights, trade names,
applications for the foregoing, trade secrets, goodwill, processes,
drawings, blueprints, customer lists, licenses, whether as licensor or
licensee, choses in action and other claims and existing and future
leasehold interests in equipment, real estate and fixtures), chattel
paper, documents, instruments, letters of credit, bankers' acceptances
and guaranties;
5.3 all present and future monies, certificated and uncertificated
securities, investment property, credit balances, deposits, deposit
accounts and other property of Borrower now or hereafter held or received
by or in transit to Lender or its affiliates or at any other depository
or other institution from or for the account of Borrower, whether for
safekeeping, pledge, custody, transmission, collection or otherwise, and
all present and future liens, security interests, rights, remedies, title
and interest in, to and in respect of Accounts and other Collateral,
including, without limitation, rights and remedies under or relating to
guaranties, contracts of suretyship, letters of credit and credit and
other insurance related to the Collateral, rights of stoppage in
transit, replevin, repossession, reclamation and other rights and
remedies of an unpaid vendor, lienor or secured party, goods described
in invoices, documents, contracts or instruments with respect to, or
otherwise representing or evidencing, Accounts or other Collateral,
including, without limitation, returned, repossessed and reclaimed goods,
and deposits by and property of account debtors or other persons
securing the obligations of account debtors;
5.4 Inventory;
5.5 Records; and
5.6 all products and proceeds of the foregoing, in any form,
including, without limitation, insurance proceeds and all claims against
third parties for loss or damage to or destruction of any or all of the
foregoing.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrower's Loan Account. Lender shall maintain one or more
loan account(s) on its books in which shall be recorded all Loans,
Letter of Credit Accommodations and other Obligations and the Collateral,
all payments made by or on behalf of Borrower and all other appropriate
debits and credits as provided in this Agreement, including, without
limitation, fees, charges, costs, expenses and interest. All entries in
the loan account(s) shall be made in accordance with Lender's customary
practices as in effect from time to time.
6.2 Statements. Lender shall render to Borrower each month a
statement setting forth the balance in the Borrower's loan account(s)
maintained by Lender for Borrower pursuant to the provisions of this
Agreement, including principal, interest, fees, costs and expenses. Each
such statement shall be subject to subsequent adjustment by Lender but
shall, absent manifest errors or omissions, be considered correct and
deemed accepted by Borrower and conclusively binding upon Borrower as an
account stated except to the extent that Lender receives a written notice
from Borrower of any specific exceptions of Borrower thereto within
thirty (30) days after the date such statement has been mailed by Lender.
Until such time as Lender shall have rendered to Borrower a written
statement as provided above, the balance in Borrower's loan account(s)
shall be presumptive evidence of the amounts due and owing to Lender by
Borrower.
6.3 Collection of Accounts.
(a) Borrower shall establish and maintain, at its
expense, blocked accounts or lockboxes and related blocked accounts (in
either case, "Blocked Accounts"), as Lender may specify, with such banks
as are acceptable to Lender into which Borrower shall promptly deposit
and direct its account debtors to directly remit all payments on Accounts
and all payments constituting proceeds of Inventory or other Collateral
in the identical form in which such payments are made, whether by cash,
check or other manner. The banks at which the Blocked Accounts are
established shall enter into an agreement, in form and substance
satisfactory to Lender, providing that all items received or deposited in
the Blocked Accounts are the property of Lender, that the depository bank
has no lien upon, or right to setoff against, the Blocked Accounts, the
items received for deposit therein, or the funds from time to time on
deposit therein and that the depository bank will wire, or otherwise
transfer, in immediately available funds, on a daily basis, all funds
received or deposited into the Blocked Accounts to such bank account of
Lender as Lender may from time to time designate for such purpose
("Payment Account"). Borrower agrees that all payments made to such
Blocked Accounts or other funds received and collected by Lender, whether
on the Accounts or as proceeds of Inventory or other Collateral or
otherwise shall be the property of Lender.
(b) For purposes of calculating interest on the
Obligations, such payments or other funds received will be applied
(conditional upon final collection) to the Obligations one (1) Business
Day following the date of receipt of immediately available funds by
Lender in the Payment Account. For purposes of calculating the amount of
the Revolving Loans available to Borrower such payments will be applied
(conditional upon final collection) to the Obligations on the business
day of receipt by Lender in the Payment Account, if such payments are
received within sufficient time (in accordance with Lender's usual and
customary practices as in effect from time to time) to credit Borrower's
loan account on such day, and if not, then on the next business day.
(c) Borrower and all of its affiliates, subsidiaries,
shareholders, directors, employees or agents shall, acting as trustee for
Lender, receive, as the property of Lender, any monies, checks, notes,
drafts or any other payment relating to and/or proceeds of Accounts or
other Collateral which come into their possession or under their control
and immediately upon receipt thereof, shall deposit or cause the same to
be deposited in the Blocked Accounts, or remit the same or cause the same
to be remitted, in kind, to Lender. In no event shall the same be
commingled with Borrower's own funds. Borrower agrees to reimburse
Lender on demand for any amounts owed or paid to any bank at which a
Blocked Account is established or any other bank or person involved in
the transfer of funds to or from the Blocked Accounts arising out of
Lender's payments to or indemnification of such bank or person. The
obligation of Borrower to reimburse Lender for such amounts pursuant to
this Section 6.3 shall survive the termination or non-renewal of this
Agreement.
6.4 Payments. All Obligations shall be payable to the Payment
Account as provided in Section 6.3 or such other place as Lender may
designate from time to time. Lender may apply payments received or
collected from Borrower or for the account of Borrower (including,
without limitation, the monetary proceeds of collections or of
realization upon any Collateral) to such of the Obligations, in such
order and manner as Lender determines. At Lender's option, all
principal, interest, fees, costs, expenses and other charges provided for
in this Agreement or the other Financing Agreements may be charged
directly to the loan account(s) of Borrower. Borrower shall make all
payments to Lender on the Obligations free and clear of, and without
deduction or withholding for or on account of, any setoff, counterclaim,
defense, duties, taxes, levies, imposts, fees, deductions, withholding,
restrictions or conditions of any kind. If after receipt of any payment
of, or proceeds of Collateral applied to the payment of, any of the
Obligations, Lender is required to surrender or return such payment or
proceeds to any Person for any reason, then the Obligations intended to
be satisfied by such payment or proceeds shall be reinstated and continue
and this Agreement shall continue in full force and effect as if such
payment or proceeds had not been received by Lender. Borrower shall be
liable to pay to Lender, and does hereby indemnify and hold Lender
harmless for the amount of any payments or proceeds surrendered or
returned. This Section 6.4 shall remain effective notwithstanding any
contrary action which may be taken by Lender in reliance upon such
payment or proceeds. This Section 6.4 shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
6.5 Authorization to Make Loans. Lender is authorized to make the
Loans and provide the Letter of Credit Accommodations based upon
telephonic or other instructions received from anyone purporting to be an
officer of Borrower or other authorized person or, at the discretion of
Lender, if such Loans are necessary to satisfy any Obligations. All
requests for Loans or Letter of Credit Accommodations hereunder shall
specify the date on which the requested advance is to be made or Letter
of Credit Accommodations established (which day shall be a Business Day)
and the amount of the requested Loan. Requests received after 11:00 a.m.
Chicago time on any day shall be deemed to have been made as of the
opening of business on the immediately following business day. All Loans
and Letter of Credit Accommodations under this Agreement shall be
conclusively presumed to have been made to, and at the request of and for
the benefit of, Borrower when deposited to the credit of Borrower or
otherwise disbursed or established in accordance with the instructions of
Borrower or in accordance with the terms and conditions of this
Agreement.
6.6 Use of Proceeds. Borrower shall use the initial proceeds of
the Loans provided by Lender to Borrower hereunder only for:
(a) payments to each of the persons listed in the disbursement direction
letter furnished by Borrower to Lender on or about the date hereof and
(b) costs, expenses and fees in connection with the preparation,
negotiation, execution and delivery of this Agreement and the other
Financing Agreements. All other Loans made or Letter of Credit
Accommodations provided by Lender to Borrower pursuant to the provisions
hereof shall be used by Borrower only for general operating, working
capital and other proper corporate purposes of Borrower not otherwise
prohibited by the terms hereof. None of the proceeds will be used,
directly or indirectly, for the purpose of purchasing or carrying any
margin security or for the purposes of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the
Loans to be considered a "purpose credit" within the meaning of
Regulation G of the Board of Governors of the Federal Reserve System, as
amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting. Borrower shall provide Lender with the
following documents in a form satisfactory to Lender: (a) on a regular
basis as required by Lender, a schedule of Accounts; (b) on a monthly
basis or more frequently as Lender may request, (i) perpetual inventory
reports, (ii) inventory reports by category and (iii) agings of accounts
payable, (c) on a weekly basis or as more frequently requested by
Lender, a listing of the amounts owing by Borrower to Persons as the
purchase price of agricultural goods, (d) upon Lender's request, (i)
copies of customer statements and credit memos, remittance advices and
reports, and copies of deposit slips and bank statements, (ii) copies of
shipping and delivery documents, and copies of purchase orders, invoices
and delivery documents for Inventory acquired by Borrower; (e) agings of
accounts receivable on a monthly basis or more frequently as Lender may
request; and such other reports as to the Collateral as Lender shall
request from time to time. If any of Borrower's records or reports of
the Collateral are prepared or maintained by an accounting service,
contractor, shipper or other agent, Borrower hereby irrevocably
authorizes such service, contractor, shipper or agent to deliver such
records, reports, and related documents to Lender and to follow Lender's
instructions with respect to further services at any time that an Event
of Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Borrower shall notify Lender promptly of: any
material delay in Borrower's performance of any of its obligations to any
account debtor or the assertion of any claims, offsets, defenses or
counterclaims by any account debtor, or any material disputes with
account debtors, or any settlement, adjustment or compromise thereof,
all material adverse information relating to the financial condition of
any account debtor and any event or circumstance which, to Borrower's
knowledge would reasonably cause Lender to consider any then existing
Accounts as no longer constituting Eligible Accounts or Acceptable
Foreign Accounts. No credit, discount, allowance or extension or
agreement for any of the foregoing shall be granted to any account debtor
without Lender's consent, except in the ordinary course of Borrower's
business in accordance with practices and policies previously disclosed
in writing to Lender (or otherwise disclosed to Lender during Lender's
due diligence process or a routine audit). So long as no Event of
Default exists or has occurred and is continuing, Borrower shall settle,
adjust or compromise any claim, offset, counterclaim or dispute with any
account debtor. At any time that an Event of Default exists or has
occurred and is continuing, Lender shall, at its option, have the
exclusive right to settle, adjust or compromise any claim, offset,
counterclaim or dispute with account debtors or grant any credits,
discounts or allowances.
(b) Borrower shall promptly report to Lender any return
of Inventory by an account debtor. At any time that Inventory is
returned, reclaimed or repossessed, the related Account shall not be
deemed an Eligible Account. In the event any account debtor returns
Inventory when an Event of Default exists or has occurred and is
continuing, Borrower shall, upon Lender's request, (i) hold the returned
Inventory in trust for Lender, (ii) segregate all returned Inventory from
all of its other property, (iii) dispose of the returned Inventory solely
according to Lender's instructions, and (iv) not issue any credits,
discounts or allowances with respect thereto without Lender's prior
written consent.
(c) With respect to each Account: (i) the amounts shown on
any invoice delivered to Lender or schedule thereof delivered to Lender
shall be true and complete, (ii) no payments shall be made thereon except
payments immediately delivered to Lender pursuant to the terms of this
Agreement, (iii) no credit, discount, allowance or extension or agreement
for any of the foregoing shall be granted to any account debtor except as
reported to Lender in accordance with this Agreement and except for
credits, discounts, allowances or extensions made or given in the
ordinary course of Borrower's business in accordance with practices and
policies previously disclosed to Lender (or otherwise disclosed to Lender
during Lender's due diligence process or a routine audit), (iv) there
shall be no material setoffs, deductions, contras, defenses,
counterclaims or disputes existing or asserted with respect thereto
except as reported to Lender in accordance with the terms of this
Agreement, (v) none of the transactions giving rise thereto will violate
any applicable State or Federal laws or regulations, all documentation
relating thereto will be legally sufficient under such laws and
regulations and all such documentation will be legally enforceable in
accordance with its terms.
(d) Lender shall have the right at any time or times, in
Lender's name or in the name of a nominee of Lender, to verify the
validity, amount or any other matter relating to any Account or other
Collateral, by mail, telephone, facsimile transmission or otherwise.
(e) Borrower shall deliver or cause to be delivered to
Lender, with appropriate endorsement and assignment, with full recourse
to Borrower, all chattel paper and instruments which Borrower now owns or
may at any time acquire immediately upon Borrower's receipt thereof,
except as Lender may otherwise agree.
(f) Lender may, at any time or times that an Event of
Default exists or has occurred and is continuing, (i) notify any or all
account debtors that the Accounts have been assigned to Lender and that
Lender has a security interest therein and Lender may direct any or all
accounts debtors to make payment of Accounts directly to Lender, (ii)
extend the time of payment of, compromise, settle or adjust for cash,
credit, return of merchandise or otherwise, and upon any terms or
conditions, any and all Accounts or other obligations included in the
Collateral and thereby discharge or release the account debtor or any
other party or parties in any way liable for payment thereof without
affecting any of the Obligations, (iii) demand, collect or enforce
payment of any Accounts or such other obligations, but without any duty
to do so, and Lender shall not be liable for its failure to collect or
enforce the payment thereof nor for the negligence of its agents or
attorneys with respect thereto and (iv) take whatever other action Lender
may deem necessary or desirable for the protection of its interests. At
any time that an Event of Default exists or has occurred and is
continuing, at Lender's request, all invoices and statements sent to any
account debtor shall state that the Accounts and such other obligations
have been assigned to Lender and are payable directly and only to Lender
and Borrower shall deliver to Lender such originals of documents
evidencing the sale and delivery of goods or the performance of services
giving rise to any Accounts as Lender may require.
7.3 Inventory Covenants. With respect to the Inventory: (a)
Borrower shall at all times maintain inventory records reasonably
satisfactory to Lender, keeping correct and accurate records itemizing
and describing the kind, type, quality and quantity of Inventory,
Borrower's cost therefor and daily withdrawals therefrom and additions
thereto; (b) Borrower shall conduct a physical count of the Inventory at
least once each year, but at any time or times as Lender may request on
or after an Event of Default, and promptly following such physical
inventory shall supply Lender with a report in the form and with such
specificity as may be reasonably satisfactory to Lender concerning such
physical count; (c) Borrower shall not remove any Inventory from the
locations set forth herein or for which Borrower has complied with the
requirements set forth in Section 9.2 hereof, without the prior written
consent of Lender, except for sales of Inventory in the ordinary course
of Borrower's business and except to move Inventory directly from one
such location to another such location; (d) after an Event of Default
and upon Lender's request, Borrower shall, at its expense, at any time or
times as Lender may request on or after an Event of Default, deliver or
cause to be delivered to Lender written reports or appraisals as to the
Inventory in form, scope and methodology acceptable to Lender and by an
appraiser acceptable to Lender, addressed to Lender or upon which Lender
is expressly permitted to rely; (e) Borrower shall produce, use, store
and maintain the Inventory, with all reasonable care and caution and in
accordance with applicable standards of any insurance and in conformity
with applicable laws (including, but not limited to, the requirements of
the Federal Fair Labor Standards Act of 1938, as amended and all rules,
regulations and orders related thereto); (f) Borrower assumes all
responsibility and liability arising from or relating to the production,
use, sale or other disposition of the Inventory; (g) Borrower shall not
sell Inventory to any customer on approval, or any other basis which
entitles the customer to return or may obligate Borrower to repurchase
such Inventory; (h) Borrower shall keep the Inventory in good and
marketable condition; and (i) Borrower shall not, without prior written
notice to Lender, acquire or accept any Inventory on consignment or
approval (other than empty cans or pie filling).
7.4 Power of Attorney. Borrower hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as Borrower's true
and lawful attorney-in-fact, and authorizes Lender, in Borrower's or
Lender's name, to: (a) at any time an Event of Default or event which
with notice or passage of time or both would constitute an Event of
Default exists or has occurred and is continuing (i) demand payment on
Accounts or other proceeds of Inventory or other Collateral, (ii) enforce
payment of Accounts by legal proceedings or otherwise, (iii) exercise all
of Borrower's rights and remedies to collect any Account or other
Collateral, (iv) sell or assign any Account upon such terms, for such
amount and at such time or times as the Lender deems advisable, (v)
settle, adjust, compromise, extend or renew an Account, discharge and
release any Account, (vii) prepare, file and sign Borrower's name on any
proof of claim in bankruptcy or other similar document against an account
debtor, (viii) notify the post office authorities to change the address
for delivery of Borrower's mail to an address designated by Lender, and
open and dispose of all mail addressed to Borrower, (ix) do all acts and
things which are necessary, in Lender's determination, to fulfill
Borrower's obligations under this Agreement and the other Financing
Agreements and (x) sign Borrower's name on any verification of Accounts
and notices thereof to account debtors and (b) at any time to (i) take
control in any manner of any item of payment or proceeds thereof, (ii)
have access to any lockbox or postal box into which Borrower's mail is
deposited, endorse Borrower's name upon any items of payment or proceeds
thereof and deposit the same in the Lender's account for application to
the Obligations, (iv) endorse Borrower's name upon any chattel paper,
document, instrument, invoice, or similar document or agreement relating
to any Account or any goods pertaining thereto or any other Collateral,
and (v) with respect to Collateral, execute in Borrower's name and file
any UCC financing statements or amendments thereto. Borrower hereby
releases Lender and its officers, employees and designees from any
liabilities arising from any act or acts under this power of attorney and
in furtherance thereof, whether of omission or commission, except as a
result of Lender's own gross negligence or wilful misconduct as
determined pursuant to a final non-appealable order of a court of
competent jurisdiction.
7.5 Right to Cure. Lender may, at its option, (a) cure any default
by Borrower under any agreement with a third party or pay or bond on
appeal any judgment entered against Borrower, (b) discharge taxes, liens,
security interests or other encumbrances at any time levied on or
existing with respect to the Collateral (except those permitted by the
terms of this Agreement) and (c) pay any amount, incur any expense or
perform any act which, in Lender's judgment, is necessary or appropriate
to preserve, protect, insure or maintain the Collateral and the rights of
Lender with respect thereto. Lender may add any amounts so expended to
the Obligations and charge Borrower's account therefor, such amounts to
be repayable by Borrower on demand. Lender shall be under no obligation
to effect such cure, payment or bonding and shall not, by doing so, be
deemed to have assumed any obligation or liability of Borrower. Any
payment made or other action taken by Lender under this Section shall be
without prejudice to any right to assert an Event of Default hereunder
and to proceed accordingly.
7.6 Access to Premises. From time to time as requested by Lender,
at the cost and expense of Borrower, (a) Lender or its designee shall
have complete access to all of Borrower's premises during normal business
hours and after notice to Borrower, or at any time and without notice to
Borrower if an Event of Default exists or has occurred and is continuing,
for the purposes of inspecting, verifying and auditing the Collateral and
all of Borrower's books and records, including, without limitation, the
Records, and (b) Borrower shall promptly furnish to Lender such copies of
such books and records or extracts therefrom as Lender may request, and
(c) use during normal business hours such of Borrower's personnel,
equipment, supplies and premises as may be reasonably necessary for the
foregoing and if an Event of Default exists or has occurred and is
continuing for the collection of Accounts and realization of other
Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender the following
(which shall survive the execution and delivery of this Agreement), the
truth and accuracy of which are a continuing condition of the making of
Loans and providing Letter of Credit Accommodations by Lender to
Borrower:
8.1 Corporate Existence, Power and Authority; Subsidiaries.
Borrower is a corporation duly organized and in good standing under the
laws of its state of incorporation and is duly qualified as a foreign
corporation and in good standing in all states or other jurisdictions
where the nature and extent of the business transacted by it or the
ownership of assets makes such qualification necessary, except for those
jurisdictions in which the failure to so qualify would not have a
material adverse effect on Borrower's financial condition, results of
operation or business or the rights of Lender in or to any of the
Collateral. The execution, delivery and performance of this Agreement,
the other Financing Agreements and the transactions contemplated
hereunder and thereunder are all within Borrower's corporate powers, have
been duly authorized and are not in contravention of law or the terms of
Borrower's certificate of incorporation, by-laws, or other organizational
documentation, or any indenture, agreement or undertaking to which
Borrower is a party or by which Borrower or its property are bound. This
Agreement and the other Financing Agreements constitute legal, valid and
binding obligations of Borrower enforceable in accordance with their
respective terms. Borrower does not have any subsidiaries except as set
forth on the Information Certificate.
8.2 Financial Statements; No Material Adverse Change. All
financial statements relating to Borrower which have been or may
hereafter be delivered by Borrower to Lender have been prepared in
accordance with GAAP and fairly present the financial condition and the
results of operation of Borrower as at the dates and for the periods set
forth therein (provided that monthly or quarterly statements are subject
to normal year-end adjustments and may not contain all footnote
information required by GAAP). Except as disclosed in any interim
financial statements furnished by Borrower to Lender prior to the date of
this Agreement, there has been no material adverse change in the assets,
liabilities, properties and condition, financial or otherwise, of
Borrower, since the date of the most recent audited financial statements
furnished by Borrower to Lender prior to the date of this Agreement.
8.3 Chief Executive Office; Collateral Locations. The chief
executive office of Borrower and Borrower's Records concerning Accounts
are located only at the address set forth below and its only other places
of business and the only other locations of Collateral, if any, are the
addresses set forth in the Information Certificate, subject to the right
of Borrower to establish new locations in accordance with Section 9.2
below. The Borrower is not "engaged" in "farming operations" within the
meanings of such terms under Section 9-109 of the Uniform Commercial Code
as in effect from time to time in any or all applicable jurisdictions.
The Information Certificate correctly identifies any of such locations
which are not owned by Borrower and sets forth the owners and/or
operators thereof and to the best of Borrower's knowledge, the holders of
any mortgages on such locations.
8.4 Priority of Liens; Title to Properties. The security interests
and liens granted to Lender under this Agreement and the other Financing
Agreements constitute valid and perfected first priority liens and
security interests in and upon the Collateral subject only to existing
liens indicated on Schedule 8.4 hereto and, with respect to Collateral
other than Accounts and Inventory, the other liens permitted under
Section 9.8 hereof. Borrower has good and marketable title to all of its
properties and assets subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except those granted to
Lender and such others as are specifically listed on Schedule 8.4 hereto
or permitted under Section 9.8 hereof.
8.5 Tax Returns. Borrower has filed, or caused to be filed, in a
timely manner all tax returns, reports and declarations which are
required to be filed by it (without requests for extension except as
previously disclosed in writing to Lender). All information in such tax
returns, reports and declarations is complete and accurate in all
material respects. Borrower has paid or caused to be paid all taxes due
and payable or claimed due and payable in any assessment received by it,
except taxes the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower and
with respect to which adequate reserves have been set aside on its books.
Adequate provision has been made for the payment of all accrued and
unpaid Federal, State, county, local, foreign and other taxes whether or
not yet due and payable and whether or not disputed.
8.6 Litigation. Except as set forth on the Information
Certificate, there is no present investigation by any governmental agency
pending, or to the best of Borrower's knowledge threatened, against or
affecting Borrower, its assets or business and there is no action, suit,
proceeding or claim by any Person pending, or to the best of Borrower's
knowledge threatened, against Borrower or its assets or goodwill, or
against or affecting any transactions contemplated by this Agreement,
which if adversely determined against Borrower would result in any
material adverse change in the assets, business or prospects of Borrower
or would impair the ability of Borrower to perform its obligations
hereunder or under any of the other Financing Agreements to which it is
a party or of Lender to enforce any Obligations or realize upon any
Collateral.
8.7 Compliance with Other Agreements and Applicable Laws. Other
than defaults in existence on the date hereof and described on Schedule
8.7 hereto, Borrower is not in default in any material respect under, or
in violation in any material respect of any of the terms of, any
agreement, contract, instrument, lease or other commitment to which it is
a party or by which it or any of its assets are bound and Borrower is in
compliance in all material respects with all applicable provisions of
laws, rules, regulations, licenses, permits, approvals and orders of any
foreign, Federal, State or local governmental authority (it being
understood that Borrower may from time to time enter into arrangements
pursuant to which suppliers of cans extend the time period for the
payment of amounts due from Borrower to such supplier).
8.8 Environmental Compliance.
(1) Except as set forth on Schedule 8.8 hereto, Borrower
has not generated, used, stored, treated, transported, manufactured,
handled, produced or disposed of any Hazardous Materials, on or off its
premises (whether or not owned by it) in any manner which at any time
violates any applicable Environmental Law or any license, permit,
certificate, approval or similar authorization thereunder and the
operations of Borrower complies in all material respects with all
Environmental Laws and all licenses, permits, certificates, approvals and
similar authorizations thereunder.
(2) Except as set forth on Schedule 8.8 hereto, there has
been no investigation, proceeding, complaint, order, directive, claim,
citation or notice by any governmental authority or any other person nor
is any pending or to the best of Borrower's knowledge threatened, with
respect to any non-compliance with or violation of the requirements of
any Environmental Law by Borrower or the release, spill or discharge,
threatened or actual, of any Hazardous Material or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials or any other environmental, health or
safety matter, which affects Borrower or its business, operations or
assets or any properties at which Borrower has transported, stored or
disposed of any Hazardous Materials.
(3) Borrower has no material liability (contingent or
otherwise) in connection with a release, spill or discharge, threatened
or actual, of any Hazardous Materials or the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal
of any Hazardous Materials.
(d) Borrower has all licenses, permits, certificates,
approvals or similar authorizations required to be obtained or filed in
connection with the operations of Borrower under any Environmental Law
and all of such licenses, permits, certificates, approvals or similar
authorizations are valid and in full force and effect.
8.9 Employee Benefits.
(a) Borrower has not engaged in any transaction in
connection with which Borrower or any of its ERISA Affiliates could be
subject to either a civil penalty assessed pursuant to Section 502(i) of
ERISA or a tax imposed by Section 4975 of the Code, including any
accumulated funding deficiency described in Section 8.9(c) hereof and any
deficiency with respect to vested accrued benefits described in Section
8.9(d) hereof.
(b) No liability to the Pension Benefit Guaranty
Corporation has been or is expected by Borrower to be incurred with
respect to any employee pension benefit plan of Borrower or any of its
ERISA Affiliates. There has been no reportable event (within the meaning
of Section 4043(b) of ERISA) or any other event or condition with respect
to any employee pension benefit plan of Borrower or any of its ERISA
Affiliates which presents a risk of termination of any such plan by the
Pension Benefit Guaranty Corporation.
(c) Full payment has been made of all amounts which
Borrower or any of its ERISA Affiliates is required under Section 302 of
ERISA and Section 412 of the Code to have paid under the terms of each
employee pension benefit plan as contributions to such plan as of the
last day of the most recent fiscal year of such plan ended prior to the
date hereof, and no accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, exists
with respect to any employee pension benefit plan, including any penalty
or tax described in Section 8.9(a) hereof and any deficiency with respect
to vested accrued benefits described in Section 8.9(d) hereof.
(d) The current value of all vested accrued benefits
under all employee pension benefit plans maintained by Borrower that are
subject to Title IV of ERISA does not exceed the current value of the
assets of such plans allocable to such vested accrued benefits, including
any penalty or tax described in Section 8.9(a) hereof and any accumulated
funding deficiency described in Section 8.9(c) hereof. The terms
"current value" and "accrued benefit" have the meanings specified in
ERISA.
(e) Neither Borrower nor any of its ERISA Affiliates is
or has ever been obligated to contribute to any "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA) that is subject to
Title IV of ERISA.
8.10 Accuracy and Completeness of Information. All information
furnished by or on behalf of Borrower in writing to Lender in connection
with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including, without
limitation, all information on the Information Certificate is true and
correct in all material respects on the date as of which such information
is dated or certified and does not omit any material fact necessary in
order to make such information not misleading. No event or circumstance
has occurred which has had or could reasonably be expected to have a
material adverse affect on the business, assets or prospects of Borrower,
which has not been fully and accurately disclosed to Lender in writing.
8.11 Assignment of Futures Contracts. Borrower shall continue to
enter into futures, options and forward purchase contracts in the
ordinary course of its business and consistent with its past practices.
If Borrower enters into agreements to hedge its risks with respect to
finished goods, Borrower shall execute and deliver to Congress
assignments of such contracts or such other documents as Congress may
request to assign to it Borrower's rights as Collateral. From and after
an Event of Default, Borrower shall not withdraw any funds from its
brokerage accounts relating to any or all of such arrangements or
agreements without the prior written consent of Congress.
8.12 Purchase of Farm Products. Borrower will take reasonable
actions consistent with past practices to ensure that all farm products
purchased by it are free and clear of all Liens (other than the trust
under PACA), including conducting Lien searches for new suppliers and
monitoring the receipt of notices of Liens and shall, whenever a Lien
exists, issue joint checks to the seller and the secured party or
otherwise obtain a release of the Lien. Borrower will furnish to
Congress such information as Congress may request in order to monitor
such matters. Borrower has received no notice given pursuant of the
Federal Food Security Act and there has not been filed any financing
statement or notice, purporting to perfect a security interest in farm
products purchased by Borrower in favor of a secured creditor of the
seller of such farm products. Borrower has registered, pursuant to the
Federal Food Security Act, with the Secretary of State of each State in
which are produced farm products purchased by Borrower and which has
established or hereafter establishes a central filing system, as a buyer
of farm products produced in such State (and each such registration is
in full force and effect).
8.13 Oconomowoc Canning. The fair market value of the assets of
Oconomowoc Canning Company, Inc. is less than $5,000.
8.14 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing
Agreements shall survive the execution and delivery of this Agreement and
shall be deemed to have been made again to Lender on the date of each
additional borrowing or other credit accommodation hereunder and shall be
conclusively presumed to have been relied on by Lender regardless of any
investigation made or information possessed by Lender. The
representations and warranties set forth herein shall be cumulative and
in addition to any other representations or warranties which Borrower
shall now or hereafter give, or cause to be given, to Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Borrower shall at all times
preserve, renew and keep in full, force and effect its corporate
existence and rights and franchises with respect thereto and maintain in
full force and effect the trademarks "Stokely," "Stokely's Finest,"
Stokely's Gold," "Stokely's Traditional," "Newport" and "School Days" and
all permits, licenses, trademarks, tradenames, approvals, authorizations,
leases and contracts necessary to carry on the business as presently or
proposed to be conducted. Borrower shall give Lender thirty (30) days
prior written notice of any proposed change in its corporate name, which
notice shall set forth the new name and Borrower shall deliver to Lender
a copy of the amendment to the Certificate of Incorporation of Borrower
providing for the name change certified by the Secretary of State of the
jurisdiction of incorporation of Borrower as soon as it is available.
9.2 New Collateral Locations. Borrower may open, or move
Collateral to, any new location within the continental United States
provided Borrower gives Lender five (5) Business Days (or such lesser
time as agreed to by Lender) prior written notice of the intended opening
of any such new location, executes and delivers, or causes to be
executed and delivered, to Lender such agreements, documents, and
instruments as Lender may deem reasonably necessary or desirable to
protect its interests in the Collateral at such location, including,
without limitation, UCC financing statements and if applicable, delivers
appropriate Acceptable Third Party Agreements with respect to such
location.
9.3 Compliance with Laws, Regulations, Etc.
(a) Borrower shall, at all times, comply in all material
respects with all laws, rules, regulations, licenses, permits, approvals
and orders applicable to it and duly observe all requirements of any
Federal, State or local governmental authority, including, without
limitation, the Employee Retirement Security Act of 1974, as amended, the
Occupational Safety and Hazard Act of 1970, as amended, the Fair Labor
Standards Act of 1938, as amended, and all statutes, rules, regulations,
orders, permits and stipulations relating to environmental pollution and
employee health and safety, including, without limitation, all of the
Environmental Laws.
(b) Borrower shall establish and maintain, at its
expense, a system to assure and monitor its continued compliance with all
Environmental Laws in all of its operations, which system shall include
annual reviews of such compliance by employees or agents of Borrower who
are familiar with the requirements of the Environmental Laws. Copies of
all environmental surveys, audits, assessments, feasibility studies and
results of remedial investigations shall be promptly furnished, or caused
to be furnished, by Borrower to Lender. Borrower shall take prompt and
appropriate action to respond to any non-compliance with any of the
Environmental Laws and shall regularly report to Lender on such response.
(c) Borrower shall give both oral and written notice to
Lender immediately upon Borrower's receipt of any notice of, or
Borrower's otherwise obtaining knowledge of, (i) the occurrence of any
event involving the release, spill or discharge, threatened or actual, of
any Hazardous Material or (ii) any investigation, proceeding, complaint,
order, directive, claims, citation or notice with respect to: (A) any
non-compliance with or violation of any Environmental Law by Borrower or
(B) the release, spill or discharge, threatened or actual, of any
Hazardous Material or (C) the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any
Hazardous Materials or (D) any other environmental, health or safety
matter, which affects Borrower or its business, operations or assets or
any properties at which Borrower transported, stored or disposed of any
Hazardous Materials.
(d) Borrower shall indemnify and hold harmless Lender,
its directors, officers, employees, agents, invitees, representatives,
successors and assigns, from and against any and all losses, claims,
damages, liabilities, costs, and expenses (including attorneys' fees and
legal expenses) directly or indirectly arising out of or attributable to
the use, generation, manufacture, reproduction, storage, release,
threatened release, spill, discharge, disposal or presence of a Hazardous
Material, including, without limitation, the costs of any required or
necessary repair, cleanup or other remedial work with respect to any
property of Borrower and the preparation and implementation of any
closure, remedial or other required plans. All representations,
warranties, covenants and indemnifications in this Section 9.3 shall
survive the payment of the Obligations and the termination or non-renewal
of this Agreement.
9.4 Payment of Taxes and Claims. Borrower shall duly pay and
discharge all taxes, assessments, contributions and governmental charges
upon or against it or its properties or assets, except for taxes the
validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Borrower and with respect
to which adequate reserves have been set aside on its books. Borrower
shall be liable for any tax or penalties imposed on Lender as a result of
the financing arrangements provided for herein and Borrower agrees to
indemnify and hold Lender harmless with respect to the foregoing, and to
repay to Lender on demand the amount thereof, and until paid by Borrower
such amount shall be added and deemed part of the Loans, provided, that,
nothing contained herein shall be construed to require Borrower to pay
any income or franchise taxes attributable to the income of Lender from
any amounts charged or paid hereunder to Lender. The foregoing indemnity
shall survive the payment of the Obligations and the termination or non-
renewal of this Agreement.
9.5 Insurance. Borrower shall, at all times, maintain with
financially sound and reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds
and in the amounts customarily insured against or carried by corporations
of established reputation engaged in the same or similar businesses and
similarly situated. Said policies of insurance shall be satisfactory to
Lender as to form, amount and insurer. Borrower shall furnish
certificates, policies or endorsements to Lender as Lender shall require
as proof of such insurance, and, if Borrower fails to do so, Lender is
authorized, but not required, to obtain such insurance at the expense of
Borrower. All policies shall provide for at least thirty (30) days prior
written notice to Lender of any cancellation or reduction of coverage and
that Lender may act as attorney for Borrower in obtaining, and at any
time an Event of Default exists or has occurred and is continuing,
adjusting, settling, amending and canceling such insurance. Borrower
shall cause Lender to be named as a loss payee and an additional insured
(but without any liability for any premiums) under such insurance
policies and Borrower shall obtain non-contributory lender's loss payable
endorsements to all insurance policies in form and substance satisfactory
to Lender. Such lender's loss payable endorsements shall specify that
the proceeds of such insurance shall be payable to Lender as its
interests may appear and further specify that Lender shall be paid
regardless of any act or omission by Borrower or any of its affiliates.
At its option, Lender may apply any insurance proceeds received by Lender
at any time to the cost of repairs or replacement of Collateral and/or to
payment of the Obligations, whether or not then due, in any order and in
such manner as Lender may determine or hold such proceeds as cash
collateral for the Obligations.
9.6 Financial Statements and Other Information.
(a) Borrower shall keep proper books and records in which
true and complete entries shall be made of all dealings or transactions
of or in relation to the Collateral and the business of Borrower and its
subsidiaries (if any) in accordance with GAAP and Borrower shall furnish
or cause to be furnished to Lender: (i) within thirty (30) days after
the end of each fiscal month other than March and April, (and within
sixty (60) days after the end of each fiscal March and forty-five (45)
days after the end of each fiscal April), monthly unaudited consolidated
financial statements, and, if Borrower has any subsidiaries, unaudited
consolidating financial statements (including in each case balance
sheets, statements of income and loss and statements of shareholders'
equity), all in reasonable detail, fairly presenting the financial
position and the results of the operations of Borrower and its
subsidiaries as of the end of and through such fiscal month, subject to
normal year-end adjustments, and (ii) within ninety (90) days after the
end of each fiscal year, audited consolidated financial statements and,
if Borrower has any subsidiaries, unaudited consolidating financial
statements of Borrower and its subsidiaries (including in each case
balance sheets, statements of income and loss, statements of cash flow
and statements of shareholders' equity), and the accompanying notes
thereto, all in reasonable detail, fairly presenting the financial
position and the results of the operations of Borrower and its
subsidiaries as of the end of and for such fiscal year, together with the
opinion of independent certified public accountants, which accountants
shall be an independent accounting firm selected by Borrower and
reasonably acceptable to Lender, that such financial statements have been
prepared in accordance with GAAP, and present fairly the results of
operations and financial condition of Borrower and its subsidiaries as of
the end of and for the fiscal year then ended.
(b) Borrower shall promptly notify Lender in writing of
the details of (i) any loss, damage, investigation, action, suit,
proceeding or claim relating to the Collateral or any other property
which is security for the Obligations or which would result in any
material adverse change in Borrower's business, properties, assets,
goodwill or condition, financial or otherwise and (ii) the occurrence of
any Event of Default or event which, with the passage of time or giving
of notice or both, would constitute an Event of Default.
(c) Borrower shall promptly after the sending or filing
thereof furnish or cause to be furnished to Lender copies of all reports
which Borrower sends to its stockholders generally and copies of all
reports and registration statements which Borrower files with the
Securities and Exchange Commission, any national securities exchange or
the National Association of Securities Dealers, Inc.
(d) Borrower shall furnish or cause to be furnished to
Lender such budgets, forecasts, projections and other information
respecting the Collateral and the business of Borrower, as Lender may,
from time to time, reasonably request. Lender is hereby authorized to
deliver a copy of any financial statement or any other information
relating to the business of Borrower to any court or other government
agency or to any participant or assignee or prospective participant or
assignee who shall be directed to maintain the confidentiality of such
information. Borrower hereby irrevocably authorizes and directs all
accountants or auditors to deliver to Lender, at Borrower's expense,
copies of the financial statements of Borrower and any reports or
management letters prepared by such accountants or auditors on behalf of
Borrower and to disclose to Lender such information as they may have
regarding the business of Borrower. Any documents, schedules, invoices
or other papers delivered to Lender may be destroyed or otherwise
disposed of by Lender one (1) year after the same are delivered to
Lender, except as otherwise designated by Borrower to Lender in writing.
(e) Not later than January 1 of each year hereafter
during the term of this Agreement, Borrower shall deliver to Lender, via
certified mail, return receipt requested, an updated letter addressed to
Borrower's auditors substantially in the form of the auditors' letter
delivered by Borrower on or before the date of the initial Loan.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc.
Borrower shall not, directly or indirectly, (a) merge into or with or
consolidate with any other Person or permit any other Person to merge
into or with or consolidate with it, or (b) sell, assign, lease,
transfer, abandon or otherwise dispose of any stock (other than stock of
the Borrower), indebtedness or all or substantially all of its assets to
any other Person (except for (i) sales of Inventory in the ordinary
course of business, (ii) the disposition of worn-out or obsolete
Equipment or Equipment or Real Estate no longer used in the business of
Borrower so long as such sales do not involve Equipment and/or Real
Estate having an aggregate fair market value in the aggregate in excess
of $10,000,000 for all such Equipment and/or Real Estate disposed of in
any fiscal year of Borrower) and (iii) the sale of assets to Dean Foods
and AGRIPAC pursuant to the Frozen Vegetable Sale and (iv) other sales of
assets made with the prior written consent of Lender (in its sole
discretion)), or (c) form or acquire any subsidiaries, or (d) wind up,
liquidate or dissolve or (e) agree to do any of the foregoing. In
addition, Borrower shall give Lender at least twenty days prior notice of
any disposition of any material portion of its assets.
9.8 Encumbrances. Borrower shall not create, incur, assume or
suffer to exist any security interest, mortgage, pledge, lien, charge or
other encumbrance of any nature whatsoever on any of its assets or
properties, including, without limitation, the Collateral, except: (a)
liens and security interests of Lender; (b) liens securing the payment of
taxes, either not yet overdue or the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrower and with respect to which adequate reserves have
been set aside on its books; (c) non-consensual statutory liens (other
than liens securing the payment of taxes) arising in the ordinary course
of Borrower's business to the extent: (i) such liens secure indebtedness
which is not overdue or (ii) such liens secure indebtedness relating to
claims or liabilities which are fully insured and being defended at the
sole cost and expense and at the sole risk of the insurer or being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrower, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which
adequate reserves have been set aside on its books; (d) zoning
restrictions, easements, licenses, covenants and other restrictions
affecting the use of real property which do not interfere in any material
respect with the use of such real property or ordinary conduct of the
business of Borrower as presently conducted thereon or materially impair
the value of the real property which may be subject thereto; purchase
money security interests in Equipment (including capital leases) and
purchase money mortgages on real estate not to exceed $5,000,000 in the
aggregate at any time outstanding so long as such security interests and
mortgages do not apply to any property of Borrower other than the
Equipment or real estate so acquired, and the indebtedness secured
thereby does not exceed the cost of the Equipment or real estate so
acquired, as the case may be; and the security interests and liens set
forth on Schedule 8.4 hereto.
9.9 Indebtedness. Borrower shall not incur, create, assume, become
or be liable in any manner with respect to, or permit to exist, any
obligations or indebtedness, except (a) the Obligations; (b) trade
obligations and normal accruals in the ordinary course of business not
yet due and payable, or with respect to which the Borrower is contesting
in good faith the amount or validity thereof by appropriate proceedings
diligently pursued and available to Borrower, and with respect to which
adequate reserves have been set aside on its books; (c) purchase money
indebtedness (including capital leases) to the extent not incurred and
paid or secured by liens (including capital leases) in violation of any
other provision of this Agreement; and (d) obligations or indebtedness
set forth on the Information Certificate; provided, that, (i) Borrower
may only make regularly scheduled payments of principal and interest in
respect of such indebtedness in accordance with the terms of the
agreement or instrument evidencing or giving rise to such indebtedness as
in effect on the date hereof, (ii) Borrower shall not, directly or
indirectly, (A) amend, modify, alter or change the terms of such
indebtedness or any agreement, document or instrument related thereto as
in effect on the date hereof, or (B) redeem, retire, defease, purchase or
otherwise acquire such indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose, and (iii) Borrower shall furnish to
Lender all notices or demands in connection with such indebtedness either
received by Borrower or on its behalf, promptly after the receipt
thereof, or sent by Borrower or on its behalf, concurrently with the
sending thereof, as the case may be.
9.10 Loans, Investments, Guarantees, Etc. Borrower shall not,
directly or indirectly, make any loans or advance money or property to
any person, or invest in (by capital contribution, dividend or otherwise)
or purchase or repurchase the stock or indebtedness or all or a
substantial part of the assets or property of any person, or guarantee,
assume, endorse, or otherwise become responsible for (directly or
indirectly) the indebtedness, performance, obligations or dividends of
any Person or agree to do any of the foregoing, except: (a) the
endorsement of instruments for collection or deposit in the ordinary
course of business; (b) investments in: (i) short-term direct obligations
of the United States Government, (ii) negotiable certificates of deposit
issued by any bank satisfactory to Lender, payable to the order of the
Borrower or to bearer and delivered to Lender, and (iii) commercial paper
rated A1 or P1; provided, that, as to any of the foregoing, unless waived
in writing by Lender, Borrower shall take such actions as are deemed
necessary by Lender to perfect the security interest of Lender in such
investments (c) the guarantees set forth in the Information Certificate
and (d) loans and advances to employees in the ordinary course of
business for travel and moving expenses in an aggregate amount not to
exceed $1,000,000 at any time outstanding.
9.11 Dividends and Redemptions. Borrower shall not, directly or
indirectly, declare or pay any dividends on account of any shares of
class of capital stock of Borrower now or hereafter outstanding, or set
aside or otherwise deposit or invest any sums for such purpose, or
redeem, retire, defease, purchase or otherwise acquire any shares of any
class of capital stock (or set aside or otherwise deposit or invest any
sums for such purpose) for any consideration other than common stock or
apply or set apart any sum, or make any other distribution (by reduction
of capital or otherwise) in respect of any such shares or agree to do any
of the foregoing, except as set forth on Schedule 9.11 hereto.
9.12 Transactions with Affiliates. Borrower shall not enter into
any transaction (other than sales of Inventory to Stokely U.K. in the
ordinary course of Borrower's business consistent with Borrower's past
practices) for the purchase, sale or exchange of property or the
rendering of any service to or by any affiliate, except in the ordinary
course of and pursuant to the reasonable requirements of Borrower's
business and upon fair and reasonable terms no less favorable to the
Borrower than Borrower would obtain in a comparable arm's length
transaction with an unaffiliated person.
9.13 Compliance with ERISA. Borrower shall not with respect to any
"employee pension benefit plans" maintained by Borrower or any of its
ERISA Affiliates:
(a) (i) terminate any of such employee pension benefit
plans so as to incur any liability to the Pension Benefit Guaranty
Corporation established pursuant to ERISA, (ii) allow or suffer to exist
any prohibited transaction involving any of such employee pension benefit
plans or any trust created thereunder which would subject Borrower or
such ERISA Affiliate to a tax or penalty or other liability on prohibited
transactions imposed under Section 4975 of the Code or ERISA, (iii) fail
to pay to any such employee pension benefit plan any contribution which
it is obligated to pay under Section 302 of ERISA, Section 412 of the
Code or the terms of such plan, (iv) allow or suffer to exist any
accumulated funding deficiency, whether or not waived, with respect to
any such employee pension benefit plan, (v) allow or suffer to exist any
occurrence of a reportable event or any other event or condition which
presents a material risk of termination by the Pension Benefit Guaranty
Corporation of any such employee pension benefit plan that is a single
employer plan, which termination could result in any liability to the
Pension Benefit Guaranty Corporation or (vi) incur any withdrawal
liability with respect to any multiemployer pension plan.
(b) As used in this Section 9.13, the term "employee
pension benefit plans," "employee benefit plans", "accumulated funding
deficiency" and "reportable event" shall have the respective meanings
assigned to them in ERISA, and the term "prohibited transaction" shall
have the meaning assigned to it in Section 4975 of the Code and ERISA.
9.14 Use of Proceeds. No proceeds of any Loan shall be used to
make a payment on or with respect to any indebtedness (other than trade
credit incurred and paid in the ordinary course of business) of Borrower
other than (i) payments hereunder, (ii) payments on or with respect to
indebtedness at the time and in the amount scheduled therefor as of the
date hereof (or as of the date of incurrence of such indebtedness, if
such indebtedness is originally incurred after the date hereof) and (iii)
with the prior written consent of Lender (which consent shall not be
unreasonably withheld), such other payments as so consented to by Lender.
9.15 Costs and Expenses. Borrower shall pay to Lender on demand
all costs, expenses, filing fees and taxes paid or payable in connection
with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof
and thereof, including, but not limited to: (a) all costs and expenses of
filing or recording (including Uniform Commercial Code financing
statement filing taxes and fees, documentary taxes, intangibles taxes and
mortgage recording taxes and fees, if applicable); (b) all title
insurance and other insurance premiums, appraisal fees and search fees;
(c) costs and expenses of remitting loan proceeds, collecting checks and
other items of payment, and establishing and maintaining the Blocked
Accounts, together with Lender's customary charges and fees with respect
thereto; (d) charges, fees or expenses charged by any bank or issuer in
connection with the Letter of Credit Accommodations; (e) costs and
expenses of preserving and protecting the Collateral; (f) costs and
expenses paid or incurred in connection with obtaining payment of the
Obligations, enforcing the security interests and liens of Lender,
selling or otherwise realizing upon the Collateral, and otherwise
enforcing the provisions of this Agreement and the other Financing
Agreements or defending any claims made or threatened against Lender
arising out of the transactions contemplated hereby and thereby
(including, without limitation, preparations for and consultations
concerning any such matters); (g) all out-of-pocket expenses and costs
heretofore and from time to time hereafter incurred by Lender during the
course of periodic field examinations of the Collateral and Borrower's
operations, plus a per diem charge at the rate of $650 per person per day
for Lender's examiners in the field and office; and (h) the reasonable
fees and disbursements of counsel (including legal assistants) to Lender
in connection with any of the foregoing.
9.16 Compliance with Federal Food Security Act. Borrower will
register, pursuant to the Federal Food Security Act, with the Secretary
of State of each state in which are produced farm products purchased by
Borrower and which has established or hereafter establishes a central
filing system, as a buyer of farm products produced in such state, and
Borrower will maintain each such registration in full force and affect.
Borrower will give written notice to Lender, no later than 30 days after
the end of each fiscal quarter of Borrower, of each state in which it is
required to file a registration under the Federal Food Security Act,
accompanied by evidence that Borrower has made such required filings.
9.17 Further Assurances. At the request of Lender at any time and
from time to time, Borrower shall, at its expense, duly execute and
deliver, or cause to be duly executed and delivered, such further
agreements, documents and instruments, and do or cause to be done such
further acts as may be necessary or proper to evidence, perfect, maintain
and enforce the security interests and the priority thereof in the
Collateral and to otherwise effectuate the provisions or purposes of this
Agreement or any of the other Financing Agreements. Lender may at any
time and from time to time request a certificate from an officer of
Borrower representing that all conditions precedent to the making of
Loans and providing Letter of Credit Accommodations contained herein are
satisfied. In the event of such request by Lender, Lender may, at its
option, cease to make any further Loans or provide any further Letter of
Credit Accommodations until Lender has received such certificate and, in
addition, Lender has determined that such conditions are satisfied. With
respect to Collateral and where permitted by law, Borrower hereby
authorizes Lender to execute and file one or more UCC financing
statements signed only by Lender.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or
more of the following events are referred to herein individually as an
"Event of Default", and collectively as "Events of Default":
(a) Borrower fails to pay when due any of the Obligations
or fails to perform any of the terms, covenants, conditions or provisions
contained in this Agreement or any of the other Financing Agreements;
(b) any representation, warranty or statement of fact
made by Borrower to Lender in this Agreement, the other Financing
Agreements or any other agreement, schedule, confirmatory assignment or
otherwise shall when made or deemed made be false or misleading in any
material respect;
(c) any Obligor revokes, terminates or fails to perform
any of the terms, covenants, conditions or provisions of any guarantee,
endorsement or other agreement of such party in favor of Lender;
(d) any judgment for the payment of money is rendered
against Borrower or any Obligor in excess of $100,000 in any one case or
in excess of $500,000 in the aggregate and shall remain undischarged or
unvacated for a period in excess of thirty (30) days or execution shall
at any time not be effectively stayed, or any judgment other than for the
payment of money, or injunction, attachment, garnishment or execution is
rendered against Borrower or any Obligor or any of their assets;
(e) any Obligor (being a natural person or a general
partner of an Obligor which is a partnership) dies or Borrower or any
Obligor, which is a partnership or corporation, dissolves or suspends or
discontinues doing business;
(f) Borrower or any Obligor becomes insolvent (however
defined or evidenced), makes an assignment for the benefit of creditors,
makes or sends notice of a bulk transfer or calls a meeting of its
creditors or principal creditors;
(g) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any
insolvency, reorganization, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or
hereafter in effect (whether at law or in equity) is filed against
Borrower or any Obligor or all or any part of its properties and such
petition or application is not dismissed within thirty (30) days after
the date of its filing or Borrower or any Obligor shall file any answer
admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding
or the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any
insolvency, reorganization, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or
hereafter in effect (whether at a law or equity) is filed by Borrower or
any Obligor or for all or any part of its property; or
(i) any default by Borrower or any Obligor under any
agreement, document or instrument relating to any indebtedness for
borrowed money owing to any person other than Lender, or any capitalized
lease obligations, contingent indebtedness in connection with any
guarantee, letter of credit, indemnity or similar type of instrument in
favor of any person other than Lender, in any case in an amount in excess
of $250,000 if the effect of such default is that the applicable Person
has accelerated the maturity of any or all of the obligations under any
or all of the applicable documents;
(j) any default (other than a default in existence on the
date hereof and described on Schedule 8.7 hereto) by Borrower or any
Obligor under any material contract, lease, license or other obligation
to any person other than Lender, which default continues for more than
the applicable cure period, if any, with respect thereto if such default
may have a material adverse effect on the Collateral, assets, business or
prospects of Borrower;
(k) any change in the controlling ownership of Borrower;
(l) the indictment of Borrower or any Obligor under any
criminal statute, pursuant to which statute the penalties or remedies
sought or available include forfeiture of any of the property of Borrower
or such Obligor;
(m) the commencement of criminal or civil proceedings
against Borrower or any Obligor pursuant to which proceedings the
penalties or remedies sought or available include forfeiture of any
property of Borrower or such Obligor and which proceeding may have a
material adverse effect on the Collateral, assets, business or prospects
of Borrower or such Obligor;
(n) there shall be a material adverse change in the
business, assets or prospects of Borrower or any Obligor after the date
hereof; or
(o) there shall be an event of default under any of the
other Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has
occurred and is continuing, Lender shall have all rights and remedies
provided in this Agreement, the other Financing Agreements, the Uniform
Commercial Code and other applicable law, all of which rights and
remedies may be exercised without notice to or consent by Borrower or any
Obligor, except as such notice or consent is expressly provided for
hereunder or required by applicable law. All rights, remedies and powers
granted to Lender hereunder, under any of the other Financing Agreements,
the Uniform Commercial Code or other applicable law, are cumulative, not
exclusive and enforceable, in Lender's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall
include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by Borrower of
this Agreement or any of the other Financing Agreements. Lender may, at
any time or times, proceed directly against Borrower or any Obligor to
collect the Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event
of Default exists or has occurred and is continuing, Lender may, in its
discretion and without limitation, (i) accelerate the payment of all
Obligations and demand immediate payment thereof to Lender (provided,
that, upon the occurrence of any Event of Default described in Sections
10.1(g) and 10.1(h), all Obligations shall automatically become
immediately due and payable), (ii) with or without judicial process or
the aid or assistance of others, enter upon any premises on or in which
any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require Borrower, at Borrower's expense,
to assemble and make available to Lender any part or all of the
Collateral at any place and time designated by Lender, (iv) collect,
foreclose, receive, appropriate, setoff and realize upon any and all
Collateral, (v) remove any or all of the Collateral from any premises on
or in which the same may be located for the purpose of effecting the
sale, foreclosure or other disposition thereof or for any other purpose,
(vi) sell, lease, transfer, assign, deliver or otherwise dispose of any
and all Collateral (including, without limitation, entering into
contracts with respect thereto, public or private sales at any exchange,
broker's board, at any office of Lender or elsewhere) at such prices or
terms as Lender may deem reasonable, for cash, upon credit or for future
delivery, with the Lender having the right to purchase the whole or any
part of the Collateral at any such public sale, all of the foregoing
being free from any right or equity of redemption of Borrower, which
right or equity of redemption is hereby expressly waived and released by
Borrower and/or (vii) terminate this Agreement. If any of the Collateral
is sold or leased by Lender upon credit terms or for future delivery, the
Obligations shall not be reduced as a result thereof until payment
therefor is finally collected by Lender. If notice of disposition of
Collateral is required by law, five (5) days prior notice by Lender to
Borrower designating the time and place of any public sale or the time
after which any private sale or other intended disposition of Collateral
is to be made, shall be deemed to be reasonable notice thereof and
Borrower waives any other notice. In the event Lender institutes an
action to recover any Collateral or seeks recovery of any Collateral by
way of prejudgment remedy, Borrower waives the posting of any bond which
might otherwise be required.
(c) Lender may apply the cash proceeds of Collateral
actually received by Lender from any sale, lease, foreclosure or other
disposition of the Collateral to payment of the Obligations, in whole or
in part and in such order as Lender may elect, whether or not then due.
Borrower shall remain liable to Lender for the payment of any deficiency
with interest at the highest rate provided for herein and all costs and
expenses of collection or enforcement, including attorneys' fees and
legal expenses.
(d) Without limiting the foregoing, upon the occurrence
of an Event of Default or an event which with notice or passage of time
or both would constitute an Event of Default, Lender may, at its option,
without notice, (i) cease making Loans or arranging for Letter of Credit
Accommodations or reduce the lending formulas or amounts of Revolving
Loans and Letter of Credit Accommodations available to Borrower and/or
(ii) terminate any provision of this Agreement providing for any future
Loans or Letter of Credit Accommodations to be made by Lender to
Borrower.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out
of the relationship between the parties hereto, whether in contract,
tort, equity or otherwise, shall be governed by the internal laws of the
State of Illinois (without giving effect to principles of conflicts of
law).
(b) Borrower and Lender irrevocably consent and submit to
the non-exclusive jurisdiction of the Illinois and the United States
District Court for the Northern District of Illinois and waive any
objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Agreement or any of the
other Financing Agreements or in any way connected with or related or
incidental to the dealings of the parties hereto in respect of this
Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agree
that any dispute with respect to any such matters shall be heard only in
the courts described above (except that Lender shall have the right to
bring any action or proceeding against Borrower or its property in the
courts of any other jurisdiction which Lender deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce
its rights against Borrower or its property).
(c) Borrower hereby waives personal service of any and
all process upon it and consents that all such service of process may be
made by certified mail (return receipt requested) directed to its address
set forth on the signature pages hereof and service so made shall be
deemed to be completed five (5) days after the same shall have been so
deposited in the U.S. mails, or, at Lender's option, by service upon
Borrower in any other manner provided under the rules of any such courts.
Within thirty (30) days after such service, Borrower shall appear in
answer to such process, failing which Borrower shall be deemed in default
and judgment may be entered by Lender against Borrower for the amount of
the claim and other relief requested.
(d) BORROWER AND LENDER EACH HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,
EQUITY OR OTHERWISE. BORROWER AND LENDER EACH HEREBY AGREES AND CONSENTS
THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER OR LENDER MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to Borrower
(whether in tort, contract, equity or otherwise) for losses suffered by
Borrower in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding
on Lender, that the losses were the result of acts or omissions
constituting gross negligence or willful misconduct.
11.2 Waiver of Notices. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with
respect to any and all instruments and commercial paper, included in or
evidencing any of the Obligations or the Collateral, and any and all
other demands and notices of any kind or nature whatsoever with respect
to the Obligations, the Collateral and this Agreement, except such as are
expressly provided for herein. No notice to or demand on Borrower which
Lender may elect to give shall entitle Borrower to any other or further
notice or demand in the same, similar or other circumstances.
11.3 Amendments and Waivers. Neither this Agreement nor any
provision hereof shall be amended, modified, waived or discharged orally
or by course of conduct, but only by a written agreement signed by an
authorized officer of Lender. Lender shall not, by any act, delay,
omission or otherwise be deemed to have expressly or impliedly waived any
of its rights, powers and/or remedies unless such waiver shall be in
writing and signed by an authorized officer of Lender. Any such waiver
shall be enforceable only to the extent specifically set forth therein.
A waiver by Lender of any right, power and/or remedy on any one occasion
shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lender would otherwise have on any future occasion,
whether similar in kind or otherwise.
11.4 Waiver of Counterclaims. Borrower waives all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature
(other then compulsory counterclaims) in any action or proceeding with
respect to this Agreement, the Obligations, the Collateral or any matter
arising therefrom or relating hereto or thereto; provided, however, that
nothing contained in this Section shall prohibit the Borrower from
bringing a separate action with respect to any claim that it has.
11.5 Indemnification. Borrower shall indemnify and hold Lender,
and its directors, agents, employees and counsel, harmless from and
against any and all losses, claims, damages, liabilities, costs or
expenses imposed on, incurred by or asserted against any of them in
connection with any litigation, investigation, claim or proceeding
commenced or threatened related to the negotiation, preparation,
execution, delivery, enforcement, performance or administration of this
Agreement, any other Financing Agreements, or any undertaking or
proceeding related to any of the transactions contemplated hereby or any
act, omission, event or transaction related or attendant thereto,
including, without limitation, amounts paid in settlement, court costs,
and the fees and expenses of counsel. To the extent that the undertaking
to indemnify, pay and hold harmless set forth in this Section may be
unenforceable because it violates any law or public policy, Borrower
shall pay the maximum portion which it is permitted to pay under
applicable law to Lender in satisfaction of indemnified matters under
this Section. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Term.
(a) This Agreement and the other Financing Agreements
shall become effective as of the date set forth on the first page hereof
and shall continue in full force and effect for a term ending on the date
two (2) years from the date hereof (the "Renewal Date"); provided, that,
Lender may, at its option, and upon Borrower's request, extend the
Renewal Date to the date two (2) years from the date of the then current
Renewal Date. On each extension of the Renewal Date, Borrower shall pay
Lender a renewal fee equal to one half of one percent (.5%) of the
Maximum Credit, which fee shall be fully earned and payable on each
applicable Renewal Date. Lender or Borrower may terminate this Agreement
and the other Financing Agreements effective on the then current Renewal
Date by giving to the other party at least sixty (60) days prior written
notice; provided, that, this Agreement and all other Financing Agreements
must be terminated simultaneously. Upon the effective date of
termination or non-renewal of the Financing Agreements, Borrower shall
pay to Lender, in full, all outstanding and unpaid Obligations and shall
furnish cash collateral to Lender in such amounts as Lender determines
are reasonably necessary to secure Lender from loss, cost, damage or
expense, including attorneys' fees and legal expenses, in connection with
any contingent Obligations, including issued and outstanding Letter of
Credit Accommodations and checks or other payments provisionally credited
to the Obligations and/or as to which Lender has not yet received final
and indefeasible payment. Such cash collateral shall be remitted by wire
transfer in Federal funds to such bank account of Lender, as Lender may,
in its discretion, designate in writing to Borrower for such purpose.
Interest shall be due until and including the next business day, if the
amounts so paid by Borrower to the bank account designated by Lender are
received in such bank account later than 12:00 noon, Chicago time.
(b) No termination of this Agreement or the other
Financing Agreements shall relieve or discharge Borrower of its
respective duties, obligations and covenants under this Agreement or the
other Financing Agreements until all Obligations have been fully and
finally discharged and paid, and Lender's continuing security interest in
the Collateral and the rights and remedies of Lender hereunder, under the
other Financing Agreements and applicable law, shall remain in effect
until all such Obligations have been fully and finally discharged and
paid.
(c) If for any reason this Agreement is terminated prior
to the end of the then current term or renewal term of this Agreement, in
view of the impracticality and extreme difficulty of ascertaining actual
damages and by mutual agreement of the parties as to a reasonable
calculation of Lender's lost profits as a result thereof, Borrower agrees
to pay to Lender, upon the effective date of such termination, an early
termination fee in the amount set forth below if such termination is
effective in the period indicated:
Amount Period
(i) 1.5% of Maximum Credit from the date hereof to and
including the first anniversary
of the date hereof
(ii) .5% of Maximum Credit from but excluding the first
anniversary of the date hereof
to the end of the then current
term or renewal term of this
Agreement.
Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrower
agrees that it is reasonable under the circumstances currently existing.
The early termination fee provided for in this Section 12.1 shall be
deemed included in the Obligations.
12.2 Notices. All notices, requests and demands hereunder shall be
in writing and (a) made to Lender at its address set forth below and to
Borrower at its chief executive office set forth below, or to such other
address as either party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been given or
made: if delivered in person, immediately upon delivery; if by telex,
telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier
service with instructions to deliver the next business day, one (1)
business day after sending; and if by certified mail, return receipt
requested, five (5) days after mailing.
12.3 Partial Invalidity. If any provision of this Agreement is
held to be invalid or unenforceable, such invalidity or unenforceability
shall not invalidate this Agreement as a whole, but this Agreement shall
be construed as though it did not contain the particular provision held
to be invalid or unenforceable and the rights and obligations of the
parties shall be construed and enforced only to such extent as shall be
permitted by applicable law.
12.4 Successors. This Agreement, the other Financing Agreements
and any other document referred to herein or therein shall be binding
upon and inure to the benefit of and be enforceable by Lender, Borrower
and their respective successors and assigns, except that Borrower may not
assign its rights under this Agreement, the other Financing Agreements
and any other document referred to herein or therein without the prior
written consent of Lender. Lender may, after notice to Borrower, assign
its rights and delegate its obligations under this Agreement and the
other Financing Agreements and further may assign, or sell participations
in, all or any part of the Loans, the Letter of Credit Accommodations or
any other interest herein to another financial institution or other
person, in which event, the assignee or participant shall have, to the
extent of such assignment or participation, the same rights and benefits
as it would have if it were the Lender hereunder, except as otherwise
provided by the terms of such assignment or participation.
12.5 Entire Agreement. This Agreement, the other Financing
Agreements, any supplements hereto or thereto, and any instruments or
documents delivered or to be delivered in connection herewith or
therewith represents the entire agreement and understanding concerning
the subject matter hereof and thereof between the parties hereto, and
supersede all other prior agreements, understandings, negotiations and
discussions, representations, warranties, commitments, proposals, offers
and contracts concerning the subject matter hereof, whether oral or
written.
IN WITNESS WHEREOF, Lender and Borrower have caused these presents to
be duly executed as of the day and year first above written.
LENDER BORROWER
CONGRESS FINANCIAL CORPORATION STOKELY USA, INC.
(CENTRAL)
By: By:
Title: Title:
Address: Chief Executive Office:
100 South Wacker Drive, Suite 1940 1055 Corporate Center Dr.
Chicago, Illinois 60606 Oconomowoc, Wisconsin 53066
Attention: William Bloom
EXHIBIT B
Customer Name Location
[TO BE PROVIDED]
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . -2-
SECTION 2. CREDIT FACILITIES . . . . . . . . . . . . . . . . . -11-
2.1 Revolving Loans. . . . . . . . . . . . . . . . -11-
2.2 Letter of Credit Accommodations. . . . . . . . -12-
2.3 Optional Reductions in Maximum Credit. . . . . -15-
2.4 Availability Reserves. . . . . . . . . . . . . -15-
SECTION 3. INTEREST AND FEES . . . . . . . . . . . . . . . . . -15-
3.1 Interest . . . . . . . . . . . . . . . . . . . -15-
3.2 Closing Fee. . . . . . . . . . . . . . . . . . -17-
3.3 Servicing Fee. . . . . . . . . . . . . . . . . -17-
3.4 Unused Line Fee. . . . . . . . . . . . . . . . -17-
3.5 Changes in Laws; Increased Costs of Loans;
Breakage Fees. . . . . . . . . . . . . . . . . -17-
SECTION 4. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . -18-
4.1 Conditions Precedent to Initial Loans and Letter
of Credit Accommodations . . . . . . . . . . . -18-
4.2 Conditions Precedent to All Loans and Letter of
Credit Accommodations. . . . . . . . . . . . . -19-
SECTION 5. GRANT OF SECURITY INTEREST. . . . . . . . . . . . . -20-
SECTION 6. COLLECTION AND ADMINISTRATION . . . . . . . . . . . -21-
6.1 Borrower's Loan Account. . . . . . . . . . . . -21-
6.2 Statements . . . . . . . . . . . . . . . . . . -21-
6.3 Collection of Accounts . . . . . . . . . . . . -21-
6.4 Payments . . . . . . . . . . . . . . . . . . . -22-
6.5 Authorization to Make Loans. . . . . . . . . . -23-
6.6 Use of Proceeds. . . . . . . . . . . . . . . . -23-
SECTION 7. COLLATERAL REPORTING AND COVENANTS. . . . . . . . . -23-
7.1 Collateral Reporting . . . . . . . . . . . . . -23-
7.2 Accounts Covenants . . . . . . . . . . . . . . -24-
7.3 Inventory Covenants. . . . . . . . . . . . . . -25-
7.4 Power of Attorney. . . . . . . . . . . . . . . -26-
7.5 Right to Cure. . . . . . . . . . . . . . . . . -26-
7.6 Access to Premises . . . . . . . . . . . . . . -27-
-i-
SECTION 8. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . -27-
8.1 Corporate Existence, Power and Authority;
Subsidiaries. . . . . . . . . . . . . . . . . -27-
8.2 Financial Statements; No Material Adverse
Change. . . . . . . . . . . . . . . . . . . . -28-
8.3 Chief Executive Office; Collateral Locations. -28-
8.4 Priority of Liens; Title to Properties. . . . -28-
8.5 Tax Returns . . . . . . . . . . . . . . . . . -28-
8.6 Litigation. . . . . . . . . . . . . . . . . . -28-
8.7 Compliance with Other Agreements and Applicable
Laws. . . . . . . . . . . . . . . . . . . . . -29-
8.8 Environmental Compliance. . . . . . . . . . . -29-
8.9 Employee Benefits . . . . . . . . . . . . . . -30-
8.10 Accuracy and Completeness of Information. . . -30-
8.11 Assignment of Futures Contracts . . . . . . . -31-
8.12 Purchase of Farm Products . . . . . . . . . . -31-
8.13 Oconomowoc Canning. . . . . . . . . . . . . . -31-
8.14 Survival of Warranties; Cumulative. . . . . . -31-
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS. . . . . . . . . -31-
9.1 Maintenance of Existence. . . . . . . . . . . -31-
9.2 New Collateral Locations. . . . . . . . . . . -32-
9.3 Compliance with Laws, Regulations, Etc. . . . -33-
9.4 Payment of Taxes and Claims . . . . . . . . . -33-
9.5 Insurance . . . . . . . . . . . . . . . . . . -33-
9.6 Financial Statements and Other Information. . -33-
9.7 Sale of Assets, Consolidation, Merger,
Dissolution, Etc. . . . . . . . . . . . . . . -35-
9.8 Encumbrances. . . . . . . . . . . . . . . . . -35-
9.9 Indebtedness. . . . . . . . . . . . . . . . . -36-
9.10 Loans, Investments, Guarantees, Etc . . . . . -36-
9.11 Dividends and Redemptions . . . . . . . . . . -36-
9.12 Transactions with Affiliates. . . . . . . . . -37-
9.13 Compliance with ERISA . . . . . . . . . . . . -37-
9.14 Use of Proceeds . . . . . . . . . . . . . . . -37-
9.15 Costs and Expenses. . . . . . . . . . . . . . -37-
9.16 Compliance with Federal Food Security Act . . -38-
9.17 Further Assurances. . . . . . . . . . . . . . -38-
SECTION 10. EVENTS OF DEFAULT AND REMEDIES. . . . . . . . . . . -39-
10.1 Events of Default . . . . . . . . . . . . . . -39-
10.2 Remedies. . . . . . . . . . . . . . . . . . . -40-
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
GOVERNING LAW . . . . . . . . . . . . . . . . . . . -42-
11.1 Governing Law; Choice of Forum; Service of
Process; Jury Trial Waiver. . . . . . . . . . -42-
11.2 Waiver of Notices . . . . . . . . . . . . . . -43-
11.3 Amendments and Waivers. . . . . . . . . . . . -43-
11.4 Waiver of Counterclaims . . . . . . . . . . . -43-
11.5 Indemnification . . . . . . . . . . . . . . . -43-
-ii-
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS. . . . . . . . . . -44-
12.1 Term. . . . . . . . . . . . . . . . . . . . . -44-
12.2 Notices . . . . . . . . . . . . . . . . . . . -45-
12.3 Partial Invalidity. . . . . . . . . . . . . . -45-
12.4 Successors. . . . . . . . . . . . . . . . . . -45-
12.5 Entire Agreement. . . . . . . . . . . . . . . -45-
-iii-
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Information Certificate
Exhibit B List of account debtors for Acceptable
Foreign Accounts
Exhibit C Form of Acceptable Third Party Agreement
Schedule 8.4 Liens
Schedule 8.7 Defaults
Schedule 8.8 Environmental
Schedule 9.11 Permitted Dividends and Other
Distributions on Capital Stock
-iv-
Exhibit 99.2
STOKELY USA, INC.
________________
AMENDED AND RESTATED
NOTE AGREEMENT
_______________
Dated as of July 25, 1996
RE: $9,841,805.00 AMENDED AND RESTATED SENIOR SECURED NOTE DUE
JANUARY 15, 2000<PAGE>
TABLE OF CONTENTS
PAGE
1. BACKGROUND; AMENDMENT AND RESTATEMENT . . . . . . . . . . 1
1.1 Background . . . . . . . . . . . . . . . . . . . . . 1
1.2 Agreement and Consent of Company to Amendments
and Restatements . . . . . . . . . . . . . . . . . . 2
1.3 Agreement and Consent of Purchaser to Amendments
and Restatements . . . . . . . . . . . . . . . . . . 4
1.4 Substitution of Notes on Effective Date. . . . . . . 4
1.5 Exchange of Warrants on Effective Date . . . . . . . 4
1.6 Failure to Deliver, Failure of Conditions. . . . . . 4
2. REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . 5
2.1 Representations of the Company . . . . . . . . . . . 5
2.2 Representations of the Purchaser . . . . . . . . . . 5
3. CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . 5
3.1 Notes. . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Collateral Document Amendments . . . . . . . . . . . 6
3.3 Title Matters. . . . . . . . . . . . . . . . . . . . 6
3.4 Warrants . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Intercreditor Agreement Amendment. . . . . . . . . . 6
3.6 Sale of Grandview and Walla Walla Properties;
Application of Proceeds. . . . . . . . . . . . . . . 6
3.7 Dean Foods Agreement . . . . . . . . . . . . . . . . 6
3.8 Nationwide Documents . . . . . . . . . . . . . . . . 7
3.9 Closing Certificate. . . . . . . . . . . . . . . . . 7
3.10 Legal Opinions . . . . . . . . . . . . . . . . . . . 7
3.11 Consent of Holders of Other Company Indebtedness . . 7
3.12 Private Placement Numbers. . . . . . . . . . . . . . 7
3.13 Accrued Interest on Existing Notes . . . . . . . . . 7
3.14 Expenses . . . . . . . . . . . . . . . . . . . . . . 8
3.15 Satisfactory Proceedings . . . . . . . . . . . . . . 8
3.16 Waiver of Conditions . . . . . . . . . . . . . . . . 8
4. INTEREST ON THE NOTES . . . . . . . . . . . . . . . . . . 8
4.1 Interest Payments. . . . . . . . . . . . . . . . . . 8
4.2 Capitalized Interest Amounts . . . . . . . . . . . . 8
5. PREPAYMENT OF NOTES . . . . . . . . . . . . . . . . . . . 9
5.1 Required Prepayments . . . . . . . . . . . . . . . . 9
5.2 Prepayment at Option of Holders Upon Occurrence of
Put Event. . . . . . . . . . . . . . . . . . . . . . 10
5.3 Optional Prepayment. . . . . . . . . . . . . . . . . 10
5.4 Prepayment Attending a Declined Waiver . . . . . . . 11
5.5 Prepayments from Excess Cash Flow. . . . . . . . . . 11
5.6 Prepayment Upon a Distribution of Proceeds . . . . . 12
5.7 Allocation and Application of Prepayments. . . . . . 12
5.8 Delivery of Notes in Payment of Warrant Purchase
Price. . . . . . . . . . . . . . . . . . . . . . . . 12
5.9 No Other Optional Prepayments. . . . . . . . . . . . 12
5.10 Direct Payment . . . . . . . . . . . . . . . . . . . 13
6. COMPANY COVENANTS . . . . . . . . . . . . . . . . . . . . 13
6.1 Corporate Existence, Etc . . . . . . . . . . . . . . 13
6.2 Insurance. . . . . . . . . . . . . . . . . . . . . . 14
6.3 Taxes, Claims for Labor and Materials, Compliance
with Laws. . . . . . . . . . . . . . . . . . . . . . 14
6.4 Maintenance, Etc . . . . . . . . . . . . . . . . . . 15
6.5 Nature of Business . . . . . . . . . . . . . . . . . 15
6.6 Limitations on Funded Debt . . . . . . . . . . . . . 15
6.7 Limitations on Liens . . . . . . . . . . . . . . . . 16
6.8 Maintenance of Consolidated Tangible Net Worth . . . 18
6.9 Minimum Current Ratio. . . . . . . . . . . . . . . . 18
6.10 Sales of Assets. . . . . . . . . . . . . . . . . . . 18
6.11 Mergers. . . . . . . . . . . . . . . . . . . . . . . 19
6.12 Capital Expenditures . . . . . . . . . . . . . . . . 19
6.13 Restricted Payments. . . . . . . . . . . . . . . . . 20
6.14 Restricted Investments . . . . . . . . . . . . . . . 20
6.15 Payments on Indebtedness . . . . . . . . . . . . . . 20
6.16 Repurchase of Notes. . . . . . . . . . . . . . . . . 20
6.17 Termination of Pension Plans . . . . . . . . . . . . 21
6.18 Reports and Rights of Inspection . . . . . . . . . . 21
6.19 Subsidiaries . . . . . . . . . . . . . . . . . . . . 25
6.20 Amendment of Credit Agreement. . . . . . . . . . . . 25
6.21 Transactions with Subsidiaries . . . . . . . . . . . 26
7. EVENTS OF DEFAULT AND REMEDIES THEREFOR . . . . . . . . . 26
7.1 Events of Default. . . . . . . . . . . . . . . . . . 26
7.2 Notice of Holders. . . . . . . . . . . . . . . . . . 29
7.3 Acceleration of Maturity . . . . . . . . . . . . . . 29
7.4 Rescission of Acceleration . . . . . . . . . . . . . 30
8. AMENDMENTS, WAIVERS AND CONSENTS. . . . . . . . . . . . . 30
8.1 Consent Required . . . . . . . . . . . . . . . . . . 30
8.2 Solicitation of Noteholders. . . . . . . . . . . . . 31
8.3 Effect of Amendment or Waiver. . . . . . . . . . . . 31
9. INTERPRETATION OF AGREEMENT; DEFINITIONS. . . . . . . . . 31
9.1 Definitions. . . . . . . . . . . . . . . . . . . . . 31
9.2 Accounting Principles. . . . . . . . . . . . . . . . 46
9.3 Directly or Indirectly . . . . . . . . . . . . . . . 46
10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 46
10.1 Note Register. . . . . . . . . . . . . . . . . . . . 46
10.2 Exchange of Notes. . . . . . . . . . . . . . . . . . 46
10.3 Loss, Theft, Etc. of Notes . . . . . . . . . . . . . 47
10.4 Expenses, Stamp Tax Indemnity. . . . . . . . . . . . 47
10.5 Waiver of Past Defaults. . . . . . . . . . . . . . . 48
10.6 Potential Restructuring after Effective Date . . . . 48
10.7 Powers and Rights Not Waived; Remedies Cumulative. . 49
10.8 Notices. . . . . . . . . . . . . . . . . . . . . . . 49
10.9 Reproduction of Documents. . . . . . . . . . . . . . 49
10.10 Counterparts. . . . . . . . . . . . . . . . . . . . 50
10.11 Successors and Assigns. . . . . . . . . . . . . . . 50
10.12 Survival of Covenants and Representations . . . . . 50
10.13 Severability. . . . . . . . . . . . . . . . . . . . 50
10.14 Governing law . . . . . . . . . . . . . . . . . . . 50
10.15 Captions. . . . . . . . . . . . . . . . . . . . . . 50
<PAGE>
Schedule I -- Purchaser Information
Schedule II -- Information as to Company and
Subsidiaries
Exhibit A -- Form of Amended and Restated Senior
Secured Note Due January 15, 2000
Exhibit B1 -- Form of Series A Warrant Agreement
Exhibit B2 -- Form of Series B Warrant Agreement
Exhibit C -- Form of Security Agreement Amendment
Exhibit D -- Form of Assignment Agreement Amendment
Exhibit E -- Form of Mortgage Amendment
Exhibit F -- Form of Indemnification Agreement
Amendment
Exhibit G -- Form of Intercreditor Agreement
Amendment
Exhibit H -- Form of Closing Certificate
Exhibit I2 -- Form of Opinion of Counsel to the
Company<PAGE>
Stokely USA, Inc.
Amended and Restated Note Agreement
$9,841,868.08 Amended and Restated Senior Secured Note Due
January 15, 2000
Dated as of July 25, 1996
To State of Wisconsin Investment Board
121 East Wilson Street
Madison, Wisconsin 53702
Attention: Private Placements
Ladies and Gentlemen:
The undersigned, STOKELY USA, INC., a Wisconsin corporation
agrees with you as follows:
1. BACKGROUND; AMENDMENT AND RESTATEMENT
1.1 Background
(a) Existing Note Agreement and Existing Notes. The
Company has issued its 9.74% Senior Secured Note (as amended
up to, but excluding, the Effective Date, the "Existing
Notes"), in the aggregate principal amount of $20,000,000,
pursuant to that certain Note Agreement dated as of
December 1, 1991, as amended by an Amendment to Note
Agreement dated August 18, 1992, a Second Amendment to Note
Agreement (the "Second Amendment") dated June 11, 1993, and
a Third Amendment to Note Agreement (the "Third Amendment")
dated May 31, 1995 (as amended up to, but excluding, the
Effective Date (the "Existing Note Agreement"), entered into
among the Company and the State of Wisconsin Investment
Board, the purchaser described in Schedule I hereto (the
"Purchaser").
(b) Existing Warrants and Existing Warrant
Certificates. In connection with the execution and delivery
of the Second Amendment, the Company issued those certain
Warrants (the "Existing Warrants") dated June 11, 1993,
granting the Purchaser the right to purchase, in the
aggregate, 40,000 shares of common stock, $.05 par value, of
the Company.
(c) Existing Collateral Documents and Existing
Intercreditor Agreement. In connection with the execution
and delivery of the Third Amendment, the following
agreements were executed and delivered:
(i) a Security Agreement dated as of May 31, 1995
(the "Existing Security Agreement"), among the Company,
the Purchaser and Nationwide Life Insurance Company,
Employers Life Insurance Company of Wausau, and West
Coast Life Insurance Company (the latter three parties
being hereinafter referred to collectively as
"Nationwide"), pursuant to which the Company granted
the Purchaser and Nationwide a Lien on and security
interest in certain assets of the Company therein
described;
(ii) an Assignment of Contracts, Warranties and
Permits dated as of May 31, 1995 (the "Existing
Assignment"), pursuant to which the Company assigned to
the Purchaser and Nationwide all contracts, warranties
and permits affecting the Properties (as defined
therein);
(iii) certain mortgages and deeds of trust
described on Schedule II hereto dated as of May 31,
1995 (collectively, the "Existing Mortgages") on all
interests in real property of the Company (other than
the real property described in Section 3N of the
Existing Security Agreement) in favor of the Purchaser
and Nationwide;
(iv) an Environmental Indemnification Agreement
dated as of May 31, 1995 (the "Existing Indemnification
Agreement"), pursuant to which the Company agreed to
indemnify the Purchaser and Nationwide for losses
relating to environmental matters; and
(v) an Intercreditor and Collateral Agency
Agreement dated as of May 31, 1995 (the "Existing
Intercreditor Agreement"), among the Purchaser and
Nationwide.
The Agreements described in the foregoing clauses (i)
through (iv), inclusive, are herein collectively referred to as
the "Existing Collateral Documents."
1.2 Agreement and Consent of Company to Amendments and
Restatements.
(a) Amended and Restated Note. The Company has
authorized, and (subject to the effectiveness of the
agreement and consent of Purchaser as provided in Section
1.3) agrees and consents to, the amendment and restatement
in their entirety of the Existing Note, as provided for in
this Agreement. The Existing Note as so amended and restated
(including each note delivered pursuant to any provision of
this Agreement and any note delivered in substitution for
any such note pursuant to any such provisions) are
hereinafter sometimes referred to, collectively, as the
"Notes." The Notes shall (i) be substituted in the place of
the Existing Note (which shall be surrendered to the Company
for cancellation), (ii) be dated and bear interest from
July 25, 1996, (iii) have the terms and conditions herein
and therein provided, and (iv) be substantially in the form
of Exhibit A.
(b) Exchange of Warrants. The Company has authorized,
and (subject to the effectiveness of the agreement and
consent of Purchaser as provided in Section 1.3) agrees to
deliver to Purchaser, one or more Warrants as set forth
below Purchaser's name in Schedule I hereto, representing
the number of Warrants of each series indicated on Schedule
I hereto. The Existing Warrants shall be surrendered by the
Purchasers to the Company for cancellation.
(c) Amendments of Existing Collateral Documents. The
Company has authorized, and (subject to the effectiveness of
the agreement and consent of Purchaser as provided in
Section 1.3) agrees and consents to,
(i) a First Amendment to the Existing Security
Agreement (the "Security Agreement Amendment"), in the
form attached hereto as Exhibit C;
(ii) a First Amendment to the Existing Assignment
(the "Assignment Agreement Amendment"), in the form
attached hereto as Exhibit D;
(iii) a First Amendment to each of the Existing
Mortgages that has not been released prior to the
Effective Date (the "Mortgage Amendments"), in the form
attached hereto as Exhibit E; and
(iv) a First Amendment to the Existing
Indemnification Agreement (the "Indemnification
Agreement Amendment"), in the form attached hereto as
Exhibit F.
(d) Warrants. The Company has authorized the issue of
Series A Warrants and Series B Warrants (collectively, the
"Warrants"), in the forms attached hereto as Exhibits B1 and
B2, respectively, granting the Purchasers the right to
purchase 996,876 shares of the Company's common stock, $.05
par value (the "Common Stock"), subject to the provisions
and adjustments and on the terms and conditions set forth
therein. The Warrants shall be issued in exchange for the
Existing Warrants held by the Purchasers (which shall be
surrendered to the Company for cancellation).
(e) Existing Defaults. The Company desires that the
Purchasers waive existing Events of Default resulting from
violations of Sections 5.8 and 5.14(a)(ii) of the Existing
Note Agreement and amend certain covenants in the Existing
Note Agreement in exchange for the substitution of Notes
described in subsection (a) above, the exchange of Warrants
described in subsection (d) above, and the application of
the net proceeds of the sale of certain Properties of the
Company to the partial prepayment of the Existing Notes, as
described in Section 3.6.
<PAGE>
1.3 Agreement and Consent of Purchaser to Amendments and
Restatements
Subject to the satisfaction of the conditions set forth in
Section 3, Purchaser, by execution of this Agreement, hereby
agrees and consents to the amendment and restatement of the
Existing Note and the Existing Note Agreement, the exchange of
the Warrants and the amendments of the Existing Collateral
Documents.
1.4 Substitution of Notes on Effective Date.
On the Effective Date, the Company will deliver to
Purchaser, at the office of Solheim Billing & Grimmer, S.C., One
South Pinckney Street, Madison, WI 53703, a Note (as set forth
below such Purchaser's name on Schedule I hereto), in the
denomination indicated on Schedule I hereto, in the aggregate
outstanding principal amount of the Existing Note held by such
Purchaser, dated July 25, 1996, and payable to such Purchaser or
payable as otherwise indicated on Schedule I hereto, against
delivery by such Purchaser of such Existing Note to the Company
for cancellation. All amounts owing under, and evidenced by, the
Existing Note as of the Effective Date shall continue to be
outstanding under, and shall after the Effective Date be
evidenced by, the Notes, and shall be repayable in accordance
with this Agreement and the Notes.
1.5 Exchange of Warrants on Effective Date
In consideration of the execution and delivery of this
Agreement by each Purchaser, the Company has authorized, and
(subject to the effectiveness of the agreement and consent of
Purchaser as provided in Section 1.3) agrees to deliver to
Purchaser, in exchange for the Existing Warrants held by such
Purchaser which shall be delivered to the Company for
cancellation, one or more Series A Warrants and Series B Warrants
(as set forth below your name in Schedule I hereto) for the
initial purchase of the number of shares of Common Stock
indicated on Schedule I hereto.
1.6 Failure to Deliver, Failure of Conditions
If on the Effective Date the Company fails to tender to the
Purchasers the Notes to be delivered on such date, or if the
conditions specified in Section 3 to be fulfilled on or before
the Effective Date have not been fulfilled, the Purchaser may
thereupon elect to be relieved of all further obligations
hereunder and the consent and agreement of the Purchaser
contemplated by Section 1.3 shall not become effective. In such
event, nothing in this Section 1.6 shall operate to relieve the
Company from any of its obligations under the Existing Note
Agreement, which shall continue in full force and effect and
shall not be modified by this Agreement.
<PAGE>
2. REPRESENTATIONS
2.1 Representations of the Company.
The Company represents and warrants that all representations
set forth in the form of certificate attached hereto as Exhibit H
are true and correct as of the date hereof and are incorporated
herein by reference with the same force and effect as though
herein set forth in full.
2.2 Representations of the Purchaser.
(a) Acquisition for Investment Purchaser
represents, and in entering into this Agreement the Company
understands, that such Purchaser is acquiring the Notes for
the purpose of investment and with no present intention of
distributing or reselling the Notes or any part thereof, but
without prejudice to its right at all times to (i) sell or
otherwise dispose of all or any part of the Notes pursuant
to a registration statement filed under the Securities Act,
or in a transaction exempt from the registration
requirements of the Securities Act, and (ii) have control
over the disposition of all of its assets to the fullest
extent required by any applicable law regulating the
Purchaser. Purchaser acknowledges that the Notes it is
acquiring on the Effective Date will not, as of said
Effective Date, be registered under the Securities Act and
that the Notes may only be offered or sold in compliance
with the Securities Act and applicable state securities
laws, or in a transaction exempted therefrom. Purchaser
further represents that is an "accredited investor" as that
term is defined in Rule 501 of Regulation D promulgated
pursuant to the Securities Act, and is an entity meeting one
of the descriptions set forth in Section 551.23(8) of the
Wisconsin Statutes.
(b) Source of Funds. Purchaser further represents
that its representation made in Section 3.2(a) of the
Existing Note Agreement was true at the time of its
execution and delivery of the Existing Note Agreement
(subject to clause (b) of such Section).
3. CLOSING CONDITIONS
The effectiveness of this Agreement, as to the parties
hereto, is subject to the satisfaction of the following
conditions precedent (such time of effectiveness is herein
referred to as the "Effective Date"):
3.1 Notes.
Purchaser shall have received Notes in the form of Exhibit
A, dated July 25, 1996, in the principal amount set forth
opposite its name in Schedule I, duly executed by the Company.
<PAGE>
3.2 Collateral Document Amendments.
The Company and, where applicable, Nationwide shall have
executed and delivered a counterpart of the Security Agreement
Amendment, the Assignment Agreement Amendment, the Mortgage
Amendments and the Indemnification Agreement Amendment.
3.3 Title Matters.
The Company shall have delivered or caused to be delivered
to the Purchaser endorsements to the existing loan policies down-
dating such policies to the date of the recording of the Mortgage
Amendments, satisfactory to the Purchaser and showing no
exceptions to title except as contained in the existing loan
policies or otherwise acceptable to the Purchaser.
3.4 Warrants.
Each Purchaser shall have received one or more Series A
Warrants and Series B Warrants, dated the Effective Date and duly
executed by the Company, in exchange for Purchaser's Existing
Warrants delivered to the Company on the Effective Date for
cancellation, for the purchase of the number of shares of Common
Stock set forth opposite Purchaser's name in Schedule I.
3.5 Intercreditor Agreement Amendment.
Nationwide shall have executed and delivered a counterpart
of the First Amendment to Intercreditor and Collateral Agency
Agreement (the "Intercreditor Agreement Amendment"), in the form
attached hereto as Exhibit G.
3.6 Sale of Grandview and Walla Walla Properties;
Application of Proceeds.
The Company shall have completed the sale of its Grandview,
Washington and Walla Walla, Washington properties and applied the
net proceeds of such sale (excluding the portion of such net
proceeds allocable to Nationwide) to the prepayment of principal
on the Existing Note, without premium, in accordance with Section
2.3A of the Existing Note Agreement. The portion of such net
proceeds allocable to the Existing Notes shall not be less than
$3,599,600.06.
3.7 Dean Foods Agreement.
Purchaser shall have received a copy of the Dean Foods
Agreement duly executed by the Company, Dean Foods Vegetable
Company, a Wisconsin corporation, and AGRIPAC, an Oregon
corporation, certified as true, correct and complete by the
President or a Vice President of the Company.
<PAGE>
3.8 Nationwide Documents.
Purchaser shall have received copies of the Amended and
Restated Note Agreement dated as of the date hereof between the
Company and Nationwide and the warrants dated as of the date
hereof issued by the company to Nationwide, each such document in
form and substance satisfactory to the Purchaser, and certified
as true, correct and complete by the President or a Vice
President of the Company.
3.9 Closing Certificate.
Purchaser shall have received a certificate dated the
Effective Date, signed by the President or a Vice President of
the Company, substantially in the form attached hereto as Exhibit
H.
3.10 Legal Opinions.
Purchaser shall have received from Solheim Billing &
Grimmer, S.C., who are acting as special counsel to the Purchaser
in this transaction, an opinion dated the Effective Date, in form
and substance reasonably satisfactory to the Purchaser, and from
Michael, Best & Friedrich, counsel for the Company, an opinion
dated the Effective Date, in form and substance reasonably
satisfactory to the Purchaser and covering the matters set forth
in Exhibits I.
3.11 Consent of Holders of Other Company Indebtedness.
Any consents or approvals required to be obtained from
Congress Financial and from any other holder or holders of any
outstanding Indebtedness of the Company and any amendments of
agreements pursuant to which any Indebtedness may have been
issued which shall be necessary to permit the consummation of the
transactions contemplated hereby on the Effective Date shall have
been obtained and all such consents or amendments shall be
satisfactory in form and substance to the Purchaser and their
special counsel.
3.12 Private Placement Numbers
The Company shall have obtained private placement numbers
for the Notes and the Warrants of each series from the CUSIP
Service Bureau of Standard & Poor's and shall have informed the
Purchaser thereof.
3.13 Accrued Interest on Existing Notes.
The Company shall have paid to Purchaser, as indicated on
Schedule I hereto, accrued interest on the Existing Note held by
such Purchaser up to but not including July 25, 1996.
<PAGE>
3.14 Expenses.
All fees and disbursements required to be paid pursuant to
Section 10.4 shall have been paid in full.
3.15 Satisfactory Proceedings.
All proceedings taken in connection with the transactions
contemplated by this Agreement, and all documents necessary to
the consummation thereof, shall be reasonably satisfactory in
form and substance to the Purchaser and their special counsel,
and purchaser shall have received a copy (executed or certified
as may be appropriate) of all legal documents or proceedings
taken in connection with the consummation of said transactions.
3.16 Waiver of Conditions.
If on the Effective Date the Company fails to tender to the
Purchaser the Notes to be issued to such Purchaser on such date
or if the conditions specified in this Section 3 have not been
fulfilled, the Purchaser may thereupon elect to be relieved of
all further obligations under this Agreement. Without limiting
the foregoing, if the conditions specified in this Section 3 have
not been fulfilled, the Purchaser may waive compliance by the
Company with any such condition to such extent as it may in its
sole discretion determine. Nothing in this Section 3.16 shall
operate to relieve the Company of any of its obligations
hereunder or to waive any of the Purchaser's rights against the
Company.
4. INTEREST ON THE NOTES
4.1 Interest Payments.
Interest (computed on the basis of a 360-day year of twelve
30-day months) shall accrue on the unpaid principal balance of
the Notes from time to time outstanding from and including the
date thereof at the Contract Rate, payable quarterly on the last
day of March, June, September and December in each year (each an
"Interest Payment Date"), commencing with the payment date next
succeeding the date of such Note, until the principal thereof
shall have become due and payable, and to the extent permitted by
law in respect of any Note on any overdue payment of principal,
any overdue payment of interest and any overdue payment of any
Make Whole Amount, payable, on demand, at a rate per annum equal
to the Overdue Rate.
4.2 Capitalized Interest Amounts.
In lieu of making any interest payment on a Note entirely in
cash, if the Contract Rate during the period in which such
interest accrued exceeded 11% per annum, the Company may elect to
add the portion of such interest payment representing interest
exceeding 11% per annum to the outstanding principal amount of
such Note (each such addition with respect to any Note, the
"Capitalized Interest Amount"). Interest shall begin to accrue
on such Capitalized Interest Amount beginning on and including
the Interest Payment Date on which such Capitalized Interest
Amount is added to the principal amount of the related Note.
Each addition of a Capitalized Interest Amount to the principal
amount of a Note shall be recorded by the holder of such Note on
the schedule attached thereto, provided that the failure to make
any such record entry with respect to any addition of capitalized
interest to principal or any payment of principal or interest
shall not limit or otherwise affect the obligations of the
Company under such Note.
5. PREPAYMENT OF NOTES
No prepayment of the Notes may be made except to the extent
and in the manner expressly provided in this Agreement.
5.1 Required Prepayments.
The Company shall pay, and there shall become due and
payable, on each of the dates set forth below, the principal
amount of the Notes set forth below opposite each such date
(each, a "Required Principal Payment"), as follows:
Date of Required Principal Amount of Required Principal
Payment: Payment:
- -------------------------- ----------------------------
September 30, 1996 $398,438
December 31, 1996 $398,438
September 30, 1997 $398,438
December 31, 1997 $398,438 plus such additional
amount, (the "Additional Amount"),
if any, so that the aggregate
amount of principal of the Notes
prepaid after the Effective Date
(excluding, for purposes hereof,
any Capitalized Interest Amount)
equals at least $1,580,093.94.
September 30, 1998 Formula Amount
December 31, 1998 Formula Amount
September 30, 1999 Formula Amount
December 31, 1999 Formula Amount
Formula Amount -- shall mean an amount equal to 10% of
the aggregate principal amount of the Notes outstanding on
December 31, 1997 (excluding the portion of such principal
attributable to capitalized interest) immediately after
giving effect to the prepayment of the Notes required to be
made on such date pursuant to this Section 5.1.
Each Required Principal Payment shall be at 100% of the principal
amount prepaid, together with interest accrued thereon to the
date of prepayment. The entire principal of the Notes remaining
outstanding on January 15, 2000, together with interest accrued
thereon, shall become due and payable on January 15, 2000.
5.2 Prepayment at Option of Holders Upon Occurrence of Put
Event.
In the event that any Put Event shall occur, the Company
will give written notice (the "Company Notice") of such fact to
the holders of the Notes no later than five Business Days
following the occurrence of such Put Event. The Company Notice
shall (a) describe the facts and circumstances of such Put Event
in reasonable detail, (b) make reference to this Section 5.2, (c)
offer in writing to prepay on a date (the "Prepayment Date"),
which shall be not less than 30 days nor more than 60 days after
the date of such Company Notice, all of the outstanding Notes
held by each holder, together with accrued interest to the date
of prepayment, and (d)(i) request each holder of the Notes to
notify the Company in writing, not less than ten days prior to
such Prepayment Date, of its acceptance or rejection of such
offer, and (ii) inform each holder of the Notes that, upon such
holder's receipt of such Company Notice, failure to accept such
offer in writing on or before the tenth day prior to such
Prepayment Date shall be deemed an acceptance of such prepayment
offer. The Company shall, on such Prepayment Date, prepay in
full the principal amount of all Notes held by holders who have
accepted such prepayment offer, together with accrued interest
thereon.
Without limiting the foregoing, notwithstanding any failure
on the part of the Company to give the Company Notice herein
required as a result of the occurrence of a Put Event, each
holder of a Note who fails to receive such notice shall have the
right by delivery of written notice to the Company to require the
Company to prepay, and the Company will prepay, such holder's
Notes in full, together with accrued interest thereon to the date
of prepayment, at any time within 90 days after such holder shall
have actual knowledge of any such Put Event.
5.3 Optional Prepayment.
The Company, upon not less than 10 nor more than 60 days'
prior written notice of the date and principal amount of any
optional prepayment to the holders of the Notes (the "Company
Call"), shall be entitled to prepay the Notes at any time in
whole, or from time to time in part (in multiples of $100,000),
in the manner set forth below. The Company Call shall (a) make
reference to this Section 5.3, (b) state whether the Notes are to
be prepaid in whole or in part and, if in part, shall state the
aggregate principal amount and the amount of each holder's Notes
to be prepaid (which shall be pro rata among all holders), and
(c) state the date for such prepayment. The Company shall, on
such prepayment date, make prepayments with accrued interest and,
except as hereinafter set forth, a premium equal to the Make
Whole Premium on the principal amount of Notes to be so prepaid
to the respective holders thereof. Any prepayment of the Notes
pursuant to this Section 5.3 shall be without a Make Whole
Premium if such prepayment (i) is made from the proceeds of a
Transfer of assets pursuant to Section 6.10 or (ii) when added to
all other prepayments made by the Company pursuant to this
Section 5.3 (other than pursuant to the preceding clause (i))
during the then current fiscal year of the Company does not
exceed 100% of Excess Cash Flow for the fiscal year of the
Company most recently ended. All other optional prepayments
shall be with a Make Whole Premium.
5.4 Prepayment Attending a Declined Waiver.
If (i) the Company shall request the holders of the Notes to
consent to a merger, acquisition, investment, corporate
reorganization or recapitalization which requires a waiver of any
covenant of the Company contained in this Agreement (each a
"Material Transaction") and (ii) the holders of the percentage of
Notes required to grant such waiver hereunder do not grant such
waiver within 30 days following the Company's request therefor (a
"Declined Waiver"), then for a period of 150 days following such
Declined Waiver the Company shall have the option to prepay the
Notes of the holders denying such waiver provided the Company
elects to complete such Material Transaction. In connection with
any such request for a waiver, the Company shall (a) describe in
reasonable detail the facts and circumstances of the Material
Transaction it is considering, (b) make reference to this Section
5.4, (c) state the covenant herein which the holders are
requested to waive upon completion of such Material Transaction
and the extent and duration of the requested waiver, (d) request
each holder of the Notes to notify the Company in writing, within
30 days of such request, whether such holder agrees to so waive
such covenant upon completion of such Material Transaction, and
(e) inform each holder that, upon such holder's receipt of such
notice, failure to grant such waiver in writing on or before the
30th day following such request shall be deemed a denial of such
waiver and entitle the Company to prepay in whole the Notes of
each holder denying such waiver on or before the 150th day
following the Declined Waiver upon not less than ten days' prior
written notice of prepayment. Any prepayment of Notes pursuant
to this Section 5.4 shall occur as soon as practicable prior to,
or concurrently with, the completion of the Material Transaction.
The Company shall give each holder withholding its consent to
such Material Transaction not less than ten days' prior written
notice of the date of prepayment pursuant to this Section 5.4
and, on such prepayment date, make prepayments with accrued
interest and a premium equal to the Make Whole Premium on all
Notes held by holders who have withheld their consent to the
Material Transaction.
5.5 Prepayments from Excess Cash Flow.
The Company shall pay, and there shall become due and
payable, on the last day of June in each of the years 1997, 1998
and 1999, the principal amount of the Notes, with accrued
interest, in an amount equal to 50% of Excess Cash Flow (if
positive) for the fiscal year of the Company ended on the March
31 immediately preceding such payment date.
<PAGE>
5.6 Prepayment Upon a Distribution of Proceeds.
The Company agrees that in the event that all or any portion
of the Notes shall be prepaid out of a distribution of proceeds
pursuant to Section 4 of the Intercreditor Agreement, it will
pay, in cash, concurrently with such prepayment accrued interest
on the principal amount of the Notes to be so prepaid to the
respective holders thereof, without premium.
5.7 Allocation and Application of Prepayments.
If at the time of any partial prepayment of the principal of
the Notes made pursuant to Section 5.1, Section 5.3, Section 5.5
or Section 5.6 there is more than one Note outstanding, the
aggregate principal amount of each such partial prepayment shall
be allocated among the Notes at the time outstanding pro rata in
proportion to their respective unpaid principal amounts. Each
partial prepayment of the principal of the Notes pursuant to any
of Sections 5.2 through 5.6 will be applied first, in the case of
any such prepayment made prior to December 31, 1997, to the then
remaining Additional Amount required to be paid on December 31,
1997 pursuant to Section 5.1, second, to the amount due on the
maturity date of the Notes until the aggregate outstanding
principal amount of the Notes is reduced to $6,773,446
(excluding, for purposes hereof, any Capitalized Interest
Amount), and third, to the scheduled prepayments applicable to
the Notes, as set forth in Section 5.1, in the order of the
maturity thereof.
5.8 Delivery of Notes in Payment of Warrant Purchase Price.
Each Warrant provides that the holder thereof may tender
Notes to the Company in partial or complete payment of the
purchase price for the shares of Common Stock issued upon
exercise of such Warrant. Promptly following the receipt of any
Note so tendered, the Company shall immediately cancel and retire
the same (and no such Note shall be reissued) and shall issue to
the holder thereof a new Note in the principal amount of such
tendered Note remaining after deduction of the principal amount
thereof applied to the payment of the purchase price for the
shares of Common Stock. The Company and the Purchasers agree
that a tender of Notes in payment of the exercise price in
respect of any Warrant shall not be deemed to be a prepayment or
an acquisition of the Notes, but rather a conversion of such
Notes, pursuant to the terms of such Warrant, into Common Stock.
5.9 No Other Optional Prepayments.
Except as provided in Section 5.3, the Company will not make
any optional prepayment (whether directly or indirectly by
purchase or other acquisition) in respect of any of the Notes.
Without limitation of the foregoing, any non-scheduled prepayment
of the Notes (including a prepayment made for purposes of
effecting a Partial Prepayment Event (as defined in the Series B
Warrant) that is not being made either (a) in connection with a
Change of Control or a Declined Waiver, or (b) from Excess Cash
Flow or proceeds of collateral, shall be made pursuant to the
terms and provisions of Section 5.3.
5.10 Direct Payment.
Notwithstanding anything to the contrary in this Agreement
or the Notes, in the case of any Note owned by the Purchaser or
its nominee or owned by any other institutional holder who has
given written notice to the Company requesting that the
provisions of this Section 5.10 shall apply, the Company will
promptly and punctually pay when due the principal thereof and
premium, if any, and interest thereon, without any presentment
thereof directly to such Purchaser or such subsequent holder at
the address of such Purchaser set forth in Schedule I or at such
other address as such Purchaser or such subsequent holder may
from time to time designate in writing to the Company or, if a
bank account is designated for Purchaser on Schedule I hereto or
in any written notice to the Company from such Purchaser or any
such subsequent holder, the Company will make such payments in
immediately available funds to such bank account, marked for
attention as indicated, or in such other manner or to such other
account of such Purchaser or such holder in any bank in the
United States as such Purchaser or any such subsequent holder may
from time to time direct in writing. The holder of any Notes to
which this Section 5.10 applies agrees that in the event it shall
sell or transfer any such Notes it will (a) prior to the delivery
of such Notes make a notation thereon of all principal, if any,
prepaid thereon and all interest capitalized in respect thereof,
and (b) promptly notify the Company in writing of the name and
address of the transferee of any Notes so transferred. With
respect to Notes to which this Section 5.10 applies, the Company
shall be entitled to presume conclusively that the original or
such subsequent institutional holder as shall have requested the
provisions hereof to apply to its Notes remains the holder of
such Notes until (i) the Company shall have received from an
authorized officer of the transferor thereof written notice of
the transfer of such Notes and of the name and address of the
transferee, or (ii) such Notes shall have been presented to the
Company as evidence of the transfer. The Purchaser agrees, and
any subsequent holder requesting direct payment pursuant to this
Section 5.10 shall so agree, to return their respective Notes to
the Company promptly following the final payment thereof.
6. COMPANY COVENANTS
From and after the Effective Date and continuing so long as
any amount remains unpaid on any Note:
6.1 Corporate Existence, Etc.
The Company will preserve and keep in force and effect, and
will cause each Subsidiary to preserve and keep in force and
effect, its respective corporate existence and all material
licenses and permits necessary to the proper conduct of its
business, provided that the foregoing shall not prevent any
transaction otherwise permitted or consented to under this
Agreement.
6.2 Insurance.
The Company will maintain, and will cause each Subsidiary to
maintain, insurance coverage by financially sound and reputable
insurers in such forms and amounts and against such risks as are
customary for corporations of established reputation engaged in
the same or similar businesses and owning and operating similar
Properties.
6.3 Taxes, Claims for Labor and Materials, Compliance with
Laws.
(a) The Company will promptly pay and discharge, and
will cause each Subsidiary promptly to pay and discharge,
all lawful taxes, assessments and governmental charges or
levies imposed upon the Company or such Subsidiary,
respectively, or upon or in respect of all or any part of
the Property or business of the Company or such Subsidiary,
and all claims for work, labor or materials which, if
unpaid, could become a Lien upon any Property of the Company
or such Subsidiary; provided that the Company or such
Subsidiary shall not be required to pay any such tax,
assessment, charge, levy, or claim if (i) the validity,
applicability or amount thereof is being diligently
contested in good faith by appropriate actions or
proceedings which will prevent the forfeiture or sale of any
material Property of the Company or such Subsidiary or any
material interference with the use thereof by the Company or
such Subsidiary, and (ii) the Company or such Subsidiary
shall set aside on its books reserves reasonably deemed by
it to be adequate with respect thereto.
(b) The Company will promptly comply, and will cause
each Subsidiary promptly to comply, with all laws,
ordinances or governmental rules and regulations to which it
is subject, including without limitation the Occupational
Safety and Health Act of 1970, ERISA and all Environmental
Legal Requirements, the violation of which could materially
and adversely affect the Properties, business or financial
condition of the Company and its Subsidiaries considered as
one enterprise or could result in any Lien upon any Property
of the Company or any Subsidiary that could materially and
adversely affect the Properties, business or financial
condition of the Company and its Subsidiaries considered as
one enterprise.
(c) The Company will, promptly and within the time
periods required, report every instance of noncompliance by
the Company or any Subsidiary with Environmental Legal
Requirements to the public authority charged with the
responsibility of enforcing the same unless, in the case of
any particular noncompliance, the Company did not know and
could not with reasonable diligence have known of the
noncompliance, or reporting is not required under applicable
Environmental Legal Requirements.
6.4 Maintenance, Etc.
The Company will maintain, preserve and keep, and will cause
each Subsidiary to maintain, preserve and keep, its Properties
which are used in the conduct of its business (whether owned in
fee or a leasehold interest), excluding any Properties that the
Company or any Subsidiary reasonably determines to be surplus,
obsolete or otherwise not useful in the conduct of its respective
business, in good repair and working order, normal wear and tear
excepted, and from time to time will make all necessary repairs,
replacements, renewals and additions which in the opinion of the
Company will maintain the efficiency thereof.
6.5 Nature of Business.
The Company will not, and will not permit any Subsidiary to,
engage in any business activities or operations substantially
different from and unrelated to the respective business
activities and operations in which they are now engaged.
6.6 Limitations on Funded Debt.
(a) The Company will not, and will not permit any
Subsidiary to, create, issue, assume, guarantee or otherwise
incur or in any manner become liable or responsible in
respect of any Funded Debt, except:
(i) the Notes;
(ii) Funded Debt of the Company and its
Subsidiaries described on Schedule II attached hereto
and renewals, extensions and refundings thereof
(without increase in the principal amount thereof
outstanding at the time of any such renewal, extension
or refunding);
(iii) Funded Debt of the Company and its
Subsidiaries from time to time outstanding under the
Congress Agreement or any subsequent Credit Agreement
that complies with the provisions of Section 6.20, in
an aggregate principal amount not exceeding $70,000,000;
(iv) additional Funded Debt of the Company and its
Subsidiaries secured by Liens permitted by Section
6.7(a)(vii), provided that at the time of issuance
thereof and after giving effect thereto, the aggregate
principal amount of Funded Debt secured by Liens
pursuant to Section 6.7(a)(vi) shall not exceed
$5,000,000; and
(v) Funded Debt of the Company owing to a Wholly-
owned Subsidiary.
<PAGE>
(b) Any corporation which becomes a Subsidiary after
the date of this Agreement shall for all purposes of this
Section 6.6 be deemed to have created, assumed or incurred
at the time it becomes a Subsidiary all Funded Debt of such
corporation existing immediately after it becomes a
Subsidiary.
6.7 Limitations on Liens.
(a) Negative Pledge. The Company will not, and will
not permit any Subsidiary to, cause or permit to exist, or
agree or consent to cause or permit to exist in the future
(upon the happening of a contingency or otherwise), any
mortgage, pledge, security interest, encumbrance, lien or
charge of any kind on its or their property or assets,
whether now owned or hereafter acquired, or upon any income
or profits therefrom (collectively, "Liens"), except:
(i) Liens for taxes, assessments or other
governmental charges or levies which are not yet due
and payable, or are being contested in accordance with
Section 6.3(a);
(ii) Liens created by or resulting from any
judicial or administrative proceeding which is being
diligently appealed in good faith by appropriate
actions or proceedings that will prevent the forfeiture
or sale of any material Property of the Company or any
Subsidiary or any material interference with the use
thereof by the Company or any Subsidiary;
(iii) other Liens incidental to the normal
conduct of the business of the Company or any
Subsidiary or the ownership of its Property which are
not incurred in connection with Indebtedness and which
do not individually or in the aggregate materially
impair the use of such Property in the business of the
Company or of the Company and its Subsidiaries
considered as one enterprise or the value of such
Property for the purposes of such business;
(iv) Liens existing as of the date of this
Agreement and described on Schedule II attached hereto;
(v) Liens securing extensions, renewals or
replacements of Indebtedness secured by Liens permitted
by the foregoing clause (iv) in respect of the same
Property theretofore subject to such Lien;
(vi) Liens on Property or rights relating thereto
securing Indebtedness (1) to secure all or part of the
purchase price or cost of construction of such Property
and which are created contemporaneously with, or within
120 days after, such acquisition or the completion of
such construction or (2) existing at the time of the
acquisition of such Property by the Company or a
Subsidiary, whether or not the Indebtedness secured
thereby is assumed by the Company or such Subsidiary;
provided that
(A) in the case of Liens described in clause
(2) above, no such Lien shall be created in
contemplation of any such transaction,
(B) the amount of any Indebtedness secured
by a Lien described in this clause (vi) shall not
exceed 100% of the Fair Market Value of the
Property subject thereto, and
(C) the aggregate outstanding amount of
Indebtedness secured by Liens described in this
clause (vi) shall not exceed $5,000,000 at any
time;
(vii) Liens (1) on the Property of the Company
described in Section 5 of the Congress Agreement on
May 21, 1996, whether pursuant to the Congress
Agreement or any subsequent Credit Agreement that
complies with the provisions of Section 6.20, and (2)
on all other Property of the Company created pursuant
to the Security Documents; and
(viii) the statutory floating trust arising
under PACA in favor of any seller of perishable
agricultural commodities and covering perishable
agricultural commodities purchased by the Company or
any Subsidiary from such seller and the proceeds
thereof, provided that the Company or such Subsidiary
pays such seller the full amount of the purchase price
thereof within the time specified therefor in the
contract between the Company or such Subsidiary and
such seller.
(b) Equal and Ratable Lien; Equitable Lien. In case
any Property shall be subjected to a Lien in violation of
this Section 6.7, the Company will forthwith make or cause
to be made, to the fullest extent permitted by applicable
law, provision whereby the Notes will be secured equally and
ratably with all other obligations secured thereby pursuant
to such agreements and instruments as shall be approved by
the Required Holders, and the Company will cause to be
delivered to each holder of a Note an opinion of independent
counsel to the effect that such agreements and instruments
are enforceable in accordance with their terms, and in any
such case the Notes shall have the benefit, to the full
extent that, and with such priority as, the holders of Notes
may be entitled under applicable law, of an equitable Lien
on such property securing the Notes. Such violation of this
Section 6.7 will constitute an Event of Default hereunder,
whether or not any such provision is made pursuant to this
Section 6.7(b).
(c) Financing Statements. The Company will not, and
will not permit any of its Subsidiaries to, sign or file a
financing statement under the Uniform Commercial Code of any
jurisdiction that names the Company or such Subsidiary as
debtor, or sign any security agreement authorizing any
secured party thereunder to file any such financing
statement, except, in any such case, a financing statement
filed or to be filed to perfect or protect a security
interest that the Company or such Subsidiary is entitled to
create, assume or incur, or permit to exist, under the
foregoing provisions of this Section 6.7 or to evidence for
informational purposes a lessor's interest in property
leased to the Company or any such Subsidiary.
6.8 Maintenance of Consolidated Tangible Net Worth.
The Company will at all times maintain Consolidated Tangible
Net Worth of no less than $18,000,000, which amount shall be
increased on the first day of each fiscal quarter of the Company,
beginning July 1, 1996, by an amount equal to 50% of Consolidated
Net Income (but not less than zero) for the immediately preceding
fiscal quarter then most recently ended.
6.9 Minimum Current Ratio.
The Company will maintain its ratio of Consolidated Current
Assets to Consolidated Current Liabilities at not less than
1.25:1.
6.10 Sales of Assets.
The Company will not, and will not permit any Subsidiary to,
sell, lease, transfer or otherwise dispose (each, a "Transfer")
of any of its assets to any Person, except:
(a) any Subsidiary may Transfer its assets to the
Company or a Wholly-owned Subsidiary;
(b) the Company or any Subsidiary may sell inventory
in the ordinary course of its business;
(c) the Company may Transfer assets pursuant to the
Restructuring, provided that if any of the assets that are
the subject of such Transfer are subject to a Lien created
pursuant to the Security Documents,
(i) such assets shall be sold for Fair Market
Value,
(ii) the consideration received by the Company
shall be paid in cash, and
(iii) the net proceeds of such Transfer shall
be applied to the prepayment of the Notes in accordance
with the terms and provisions of the Intercreditor
Agreement;
(d) the Company may Transfer assets if such Transfer
does not involve a Substantial Portion of the assets of the
Company and its Subsidiaries, provided that
(i) such Transfer does not violate Section 3D of
the Security Agreement, and
(ii) if the assets that are the subject of any
such Transfer are subject to a Lien created pursuant to
the Security Documents,
(A) such assets shall be sold for Fair
Market Value,
(B) the consideration received by the
Company shall be paid in cash, and
(C) the net proceeds of such Transfer shall
be applied to the prepayment of the Notes in
accordance with the terms and provisions of the
Intercreditor Agreement;
(e) subject to Section 3D of the Security Agreement,
the Company or any Subsidiary may Transfer Properties which
it is not required to maintain under Section 6.4; and
(f) the Company may Transfer assets (other than real
property) if the proceeds of such Transfer in excess of the
limitations contained in subsection (d) are
contemporaneously used to purchase other assets of a similar
nature and of at least equivalent value;
provided in each case that immediately after the consummation
thereof, no Default or Event of Default shall have occurred and
be continuing.
6.11 Mergers.
The Company will not, and will not permit any Subsidiary to,
merge or consolidate with or into any Person, except any
Subsidiary may merge or consolidate with or into the Company.
6.12 Capital Expenditures.
The Company shall not permit, during any fiscal year of the
Company set forth below, the aggregate amount of Capital
Expenditures of the Company and its Subsidiaries during such
fiscal year to exceed the permitted amount set froth opposite
such fiscal year, as follows:
Fiscal Year: Amount of Capital Expenditures:
------------ -------------------------------
Ending March 31, 1997 an amount equal to the FY 1997 Cap
Ex Amount
Ending March 31, 1998 $4,000,000 plus, during the period
beginning April 1, 1997 and ending
September 30, 1997, the Carryover
Cap Ex Amount if any
Ending March 31, 1999 $4,000,000
Ending March 31, 2000 $5,500,000
6.13 Restricted Payments.
The Company will not declare or make, or incur any liability
to declare or make, any Restricted Payments.
6.14 Restricted Investments.
The Company will not, and will not permit any of its
Subsidiaries to, make or authorize any Restricted Investments.
6.15 Payments on Indebtedness.
Except as hereinafter provided, the Company will not make
any payment (other than a scheduled payment) of the principal of
any Indebtedness of the Company or any Subsidiary (including,
without limitation, IRB Indebtedness) unless, concurrently with
such payment, the Company shall make a pro rata payment of the
principal amount of the Notes. Notwithstanding the foregoing,
the Company may
(a) pay or prepay the IRB Indebtedness relating to the
Walla Walla property and any unsecured IRB Indebtedness
related to any Properties sold in connection with the
Restructuring, provided that the source of funds used by the
Company to make any such payment or prepayment shall not
include any proceeds of the Transfer of Properties subject
to a Lien securing the Notes;
(b) prepay, in connection with the sale of any
Property,
(i) IRB Indebtedness secured by a Lien on such
Property having priority over the Lien on such Property
securing the Notes, provided that the net proceeds of
the sale of such Property will be sufficient to prepay
such IRB Indebtedness in full and the Company applies
the remaining net proceeds to the prepayment of the
Notes in accordance with Section 6.10(d), and
(ii) any other Indebtedness secured by Liens on
such Property permitted to exist under Section
6.7(a)(iv), (a)(v) or (a)(vi), and
(c) make payments of principal from time to time under
the Credit Agreement.
6.16 Repurchase of Notes.
Except as provided in Section 5, neither the Company nor any
Subsidiary, directly or indirectly, may repurchase or make any
offer to repurchase any Notes unless the offer has been made to
repurchase Notes, pro rata, from all holders of the Notes at the
same time and upon the same terms. In case the Company
repurchases any Notes, such Notes shall thereafter be cancelled
and no Notes shall be issued in substitution thereof. With
respect to provisions of this Agreement entitling holders of
outstanding Notes to vote, sign consents, amendments or waivers
or to take any other action under this Agreement, Notes owned or
held, directly or indirectly, legally or equitably, by the
Company or any of its Subsidiaries or Affiliates shall be
disregarded.
6.17 Termination of Pension Plans.
The Company will not and will not permit any Subsidiary to
permit any employee benefit plan maintained by it to be
terminated in a manner which would result in the imposition of a
lien on any property of the Company or any Subsidiary pursuant to
ERISA.
6.18 Reports and Rights of Inspection.
(a) Reports. The Company will keep, and will cause
each domestic Subsidiary to keep, proper books of record and
account in which full and accurate entries will be made of
all dealings or transactions of or in relation to the
business and affairs of the Company or such Subsidiary, in
accordance with GAAP, and will furnish to purchaser so long
as it is the holder of any Note and to each other
institutional holder of the then outstanding Notes (in
duplicate if so specified below or otherwise requested):
(i) Quarterly StatementsAs soon as available and
in any event within 45 days after the end of each
quarterly fiscal period (except the last) of each
fiscal year, duplicate copies of the Company's:
(A) consolidated balance sheet as of the
close of such quarter setting forth in comparative form
the amount for the preceding fiscal year-end,
(B) consolidated statement of income for
such quarterly period, setting forth in comparative
form the amount for the corresponding period of the
preceding fiscal year, and
(C) consolidated statement of cash flows for
the portion of the fiscal year ending with such
quarter, setting forth in comparative form the amount
for the corresponding period of the preceding fiscal
year,
all in reasonable detail and certified as full and accurate
by a Responsible Financial Officer of the Company;
(ii) Annual Statements. As soon as available and
in any event within 90 days after the close of each fiscal
year of the Company (or with respect to the fiscal year of
the Company ended March 31, 1996, not later than July 31,
1996), duplicate copies of the Company's:
(A) consolidated balance sheets as of the
close of such fiscal year, and
(B) consolidated statements of income and
cash flows for such fiscal year,
in each case setting forth in comparative form the
consolidated figures for the preceding fiscal year, all in
reasonable detail and accompanied by (x) an opinion thereon
of a firm of independent public accountants of recognized
national standing selected by the Company, to the effect
that the consolidated financial statements have been
prepared in accordance with GAAP and present fairly, in all
material respects, the financial condition of the Company
and its Subsidiaries and that the examination of such
accountants in connection with such financial statements has
been made in accordance with generally accepted auditing
standards; and (y) an additional statement by such
accountants that they have reviewed this Agreement and, in
the course of making the examination necessary for their
opinion on such consolidated financial statements, they
obtained no knowledge of any Default or Event of Default
arising under any of Sections 6.6, 6.8 through 6.10,
inclusive, 6.12 through 6.14, inclusive, and 6.19 or, if
such accountants shall have obtained knowledge of any such
Default or Event of Default under any such Section,
specifying such Default or Event of Default and the nature
and status thereof;
(ii) Audit Reports. Promptly after receipt thereof,
one copy of each interim or special audit made by
independent public accountants of the books of the Company
or any Subsidiary;
(iv) SEC and Other Reports. Promptly upon their
becoming publicly available, one copy of each financial
statement, report, notice or proxy statement sent by the
Company to stockholders generally, of each current or
periodic report filed by the Company or any Subsidiary with
any securities exchange or the Securities and Exchange
Commission or any successor agency, and of each registration
statement or prospectus filed by the Company or any
Subsidiary with any thereof;
(v) Requested Information. With reasonable
promptness, such other data and information as any Purchaser
or any such institutional holder may reasonably request;
(vi) Officer's Certificates. Within the periods
provided in clauses (i) and (ii) above, a certificate of a
Responsible Financial Officer of the Company stating that he
has reviewed the provisions of this Agreement and setting
forth: (1) the information and computations (in sufficient
detail) required in order to establish whether the Company
was in compliance with the requirements of Sections 5.2, 6.6
through 6.10, inclusive, 6.12 through 6.14, inclusive, and
6.19 at the end of the period covered by the financial
statements then being furnished, and (2) whether there
existed as of the date of such financial statements, and
whether there exists on the date of the certificate, any
Default or Event of Default and, if any such condition or
event existed or exists, specifying the nature and period of
existence thereof and the action the Company has taken, is
taking or proposes to take with respect thereto;
(vii) Notice of Default or Event of Default.
Immediately (and in any event within three Business Days)
after becoming aware of the existence of any condition or
event which constitutes a Default or an Event of Default, a
written notice specifying the nature and period of existence
thereof and what action the Company is taking or proposes to
take with respect thereto;
(viii) Notice of Claimed Default. Immediately upon
becoming aware that the holder of any Note or any other
evidence of Indebtedness or other Security of the Company or
any Subsidiary has given notice or taken any other action
with respect to the claimed Default or Event of Default, a
written notice specifying the notice given or action taken
by such holder and the nature of a claimed Default or Event
of Default and what action the Company is taking or proposes
to take with respect thereto;
(ix) Monthly Statements. As soon as available and in
any event within 30 days after the end of each month (except the
last) of each fiscal year or, with respect to the monthly period
ended April 30 in each fiscal year, within 45 days after the end
of such monthly period, duplicate copies of the Company's:
(A) consolidated balance sheet as of the last day
of such month, setting forth in comparative form the
amount for the preceding fiscal year-end,
(B) consolidated statement of income for such
monthly period, setting forth in comparative form the
amount for the corresponding period of the preceding
fiscal year, and
(C) consolidated statement of cash flows for the
portion of the fiscal year ending with such month,
setting forth in comparative form the amount for the
corresponding period of the preceding fiscal year,
in each case setting forth, in comparative form, the figures for
the corresponding period set forth in the Business Plan, all in
reasonable detail and certified as full and accurate by a
Responsible Financial Officer of the Company; and
(x) Other Information. Within the periods provided
therein, copies of all reports, notices, financial
statements and other information required to be furnished on
a regular basis by the Company to the lenders under the
Credit Agreement and to Nationwide under the Nationwide Note
Agreement.
(xi) Certain Additional Notices. Promptly after the
institution thereof, notice of any action, suit, proceeding
or other legal process which has been filed, levied or
served against the Company or any Subsidiary and which could
have a material adverse affect on the properties, business
or financial condition of the Company and its Subsidiaries
considered as one enterprise; and promptly after the receipt
thereof, copies of any report received by the Company or any
Subsidiary pursuant to ERISA regarding the occurrence of and
ERISA Event.
(b) Rights of Inspection. The Company will permit
Purchaser, so long as it is the holder of any Note, and each
other holder of the then outstanding Notes (or such Persons
as either such Purchaser or such other holder may
designate), to visit and inspect, under the Company's
guidance, any of the properties of the Company or any
Subsidiary, to examine all their books of account and
financial records of operations, to make copies and extracts
therefrom, and to discuss their respective affairs, finances
and accounts with their respective officers, other
executives and independent public accountants (and by this
provision the Company authorizes said accountants to discuss
with such Purchaser or such other holder the finances and
affairs of the Company and its Subsidiaries), all at such
reasonable times and as often as may be reasonably
requested; provided that such Purchaser or such other holder
shall give the Company at least five days' notice prior to
any meeting between the Purchaser or such other holder and
the Company's independent public accountants and that the
Company shall be permitted to attend any such meeting. So
long as no Default shall have occurred and be continuing at
such time, the Company shall not be required to pay or
reimburse any Purchaser or any such other holder for
expenses which it may incur in connection with any such
visitation or inspection.
(C) Any information regarding the Company or any
Subsidiary which is, pursuant to this Agreement, provided
to, or obtained or examined by, Purchaser or other holder of
any Notes, or any of its representatives, while such
Purchaser or such other holder or any nominee thereof holds
any Notes, shall be considered and treated by such Purchaser
or such other holder and its respective representatives as
confidential. Purchaser agrees that it will not disclose
any such information without the prior written consent of
the Company (which consent shall not be unreasonably
withheld) other than on a confidential basis to any one or
more of its respective directors, employees, agents,
attorneys and accountants, or any one or more of the
directors, employees, agents, attorneys and accountants of
any other holders of Notes, who would have access to such
information in the normal course of the performance of such
Person's duties and who first agree to be bound by the
confidentiality provisions hereof; provided, however, that
purchaser and any such other holder of any Notes may
disclose or disseminate any such information:
(i) as has become generally available to the
public (other than in violation of this Agreement);
(ii) as it in its reasonable discretion deems
necessary in connection with, in response to, or in
compliance with any law, ordinance or governmental
order, regulation, rule, policy, subpoena, notice of
discovery or similar ruling; provided that in each such
case it has provided prompt notice of any proposed
production of information to the Company to the extent
permitted by law; and
(iii) to any prospective purchaser, securities
broker or dealer, or investment banker in connection
with the resale or proposed resale of all or any
portion of the Notes by it or any other holder of
Notes; provided such purchaser, broker or dealer, or
investment banker agrees to maintain such confidential
information confidential.
Neither Purchaser nor a holder or holders of any Notes will
be liable for the breach of this subsection (c) by any third
party described above or by any other holder of the Notes.
6.19 Subsidiaries.
The Company will not permit the aggregate amount of assets
of all U.S. Subsidiaries to exceed $200,000 at any time.
6.20 Amendment of Credit Agreement.
The Company will at all times be party to the Congress
Agreement or a subsequent Credit Agreement that:
(a) has an aggregate commitment to provide loans of
not less than $30,000,000; and
(b) does not provide for the termination of such
agreement or the extension of loans thereunder prior to
May 21, 1998;
The Company shall not amend, supplement or modify the Congress
Agreement or any subsequent Credit Agreement, or replace any such
Credit Agreement, if such amended, supplemented, modified or
replacement Credit Agreement
(i) fails to satisfy the requirements described in
clause (a) or clause (b) above, or
(ii) fails to provide the Company, on a pro forma basis
for the 12-month period immediately following such
amendment, supplement, modification or replacement, with
projected availability thereunder of at least $30,000,000
during the peak borrowing season of the Company during such
period.
6.21 Transactions with Subsidiaries.
The Company will not enter into any transaction, including,
without limitation, the purchase, sale, lease or exchange of any
Property, or the rendering of any service, with any Subsidiary,
except in the ordinary course of and pursuant to the reasonable
requirements of the Company's business and upon fair and
reasonable terms not materially less favorable to the Company
than would be obtained in a comparable arm's-length transaction
with a Person not a Subsidiary.
7. EVENTS OF DEFAULT AND REMEDIES THEREFOR
7.1 Events of Default.
Any one or more of the following shall constitute an "Event
of Default" as such term is used herein:
(a) Payments on the Notes --
(i) Interest Payments -- Default shall occur
in the payment of interest on any Note when the
same shall become due and such default shall
continue for more than five days; or
(ii) Principal or Premium Payments -- Default
shall occur in the payment of the principal of any
Note or the premium thereon at the expressed or
any accelerated maturity date or at any date fixed
for prepayment thereof; or
(b) Default on Indebtedness --
(i) Default under Credit Agreement --
(A) Default -- any event shall occur or any
condition shall exist under the Credit Agreement,
or under any agreement relating thereto, that
immediately or with any one or more of the passage
of time or the giving of notice:
(I) causes (or permits any one or more
of the lenders thereunder or a trustee
therefor to cause) the Indebtedness
outstanding thereunder, or a portion thereof,
to become due prior to its stated maturity or
prior to its regularly scheduled date or
dates of payment; or
<PAGE>
(II) permits any one or more of the
holders thereof or a trustee therefor to
require the Company or any Subsidiary to
repurchase such Indebtedness from the holders
thereof;
(B) Termination of Commitment -- (I) the
commitment of the lender or lenders to provide
loans to the Company under the Congress Agreement
or any subsequent Credit Agreement shall be
terminated or shall expire prior to the
replacement of such commitment with new
commitments under a new Credit Agreement or (II)
the Congress Agreement or such subsequent Credit
Agreement shall at any time fail to satisfy all of
the requirements described in clauses (a) and (b)
of Section 6.20; or
(C) Failure to Comply with Loan Conditions
Precedent -- the Company fails, or becomes no
longer able, to satisfy the conditions precedent
to obtaining loans under the Credit Agreement
(other than full utilization of the borrowing base
availability thereunder) and such failure is not
remedied within three Business Days after the date
on which such failure shall first become known to
a Responsible Financial Officer of the Company;
(ii) Default on IRB Indebtedness -- default shall
occur in the payment of the principal or premium of or
interest on any IRB indebtedness (other than the IRB
Indebtedness relating to the Walla Walla property), as
and when the same shall become due and payable by lapse
of time, by declaration, by prepayment or otherwise, or
default shall occur in the performance or observance of
any covenant or agreement contained in any agreement or
other instrument under which any IRB Indebtedness is
outstanding (including without limitation, in the case
of the IRB Indebtedness relating to the Walla Walla
property, a default of the type described in clause (A)
above) and any such default shall result in
acceleration of the maturity of any Indebtedness
evidenced thereby or outstanding or secured thereunder;
or
(iii) Default on Other Indebtedness -- any
event shall occur or any condition shall exist under
any agreement pursuant to which any Indebtedness of the
Company or any Subsidiary (other than Indebtedness
under the Credit Agreement or IRB Indebtedness) in
excess of $250,000 in the aggregate is outstanding that
immediately or with any one or more of the passage of
time or the giving of notice:
(A) causes (or permits any one or more of
the lenders thereunder or a trustee therefor to
cause) the Indebtedness outstanding thereunder, or
a portion thereof, to become due prior to its
stated maturity or prior to its regularly
scheduled date or dates of payment; or
(B) permits any one or more of the holders
thereof or a trustee therefor to require the
Company or any Subsidiary to repurchase such
Indebtedness from the holders thereof; or
(c) Default on Other Agreements -- Any event of
default shall occur under any of the Other Agreements; or
(d) Particular Covenant Defaults -- Default shall
occur in the observance or performance of any covenant or
agreement contained in any Sections 6.5 through 6.15,
inclusive, or Section 6.19 or Section 6.20; or
(e) Other Defaults -- Default shall occur in the
performance or observance of any other covenant or agreement
contained in this Agreement which is not remedied within 30
days after the earlier of: the date on which such Default
shall first become known to a Responsible Financial Officer
of the Company, or written notice thereof to the Company by
the holder of any Note, which notice shall specify the
Default to be remedied and state that it is a notice
hereunder; or
(f) Representations or Warranties -- Any
representation or warranty made by the Company herein or in
any certificate furnished by or on behalf of the Company in
connection with the consummation of the issuance and
delivery of the Notes or furnished by the Company pursuant
hereto shall be untrue in any material respect as of the
date of the issuance or making thereof; or
(g) Final Judgments -- Final judgment or judgments for
the payment of money in excess of $500,000 in the aggregate
is or are outstanding against the Company or any Subsidiary
and remain unpaid, uncontested or unappealed for a period of
30 days from the date of entry; or
(h) Insolvency --
(i) The Company becomes insolvent or bankrupt, is
generally not paying its debts as they become due or
makes an assignment for the benefit of creditors, or
the Company causes or suffers an order for relief to be
entered with respect to it under applicable Federal
bankruptcy law or applies for or consents to the
appointment of a custodian, trustee, liquidator or
receiver for the Company or for the major part of its
property; or
<PAGE>
(ii) A custodian, trustee, liquidator or receiver
is appointed for the Company or for the major part of
its Property and is not discharged within 30 days after
such appointment; or
(iii) Bankruptcy, reorganization, arrangement
or insolvency proceedings, or other proceedings for
relief under any bankruptcy or similar law or laws for
the relief of debtors, are instituted by or against the
Company and, if instituted against the Company, are
consented to or are not dismissed within 30 days after
such institution.
7.2 Notice of Holders.
When any Event of Default described in the foregoing Section
7.1 has occurred, or if the holder of any Note or of any other
evidence of Indebtedness of the Company gives any notice or takes
any other action with respect to a claimed default, the Company
agrees to give notice within three Business Days of such event to
all holders of the Notes then outstanding, such notice to be in
writing and sent in the manner provided in Section 10.8.
7.3 Acceleration of Maturity.
If an Event of Default other than those described in Section
7.1(h) has occurred and is continuing, the holder or holders of
at least 35% in principal amount of the Notes then outstanding
(exclusive of Notes then owned by the Company, any Subsidiaries
or any Affiliates) may exercise any right, power or remedy
permitted to such holder or holders by law and under the Security
Documents, and shall have, in particular, without limiting the
generality of the foregoing, the right by written notice given to
the Company by prepaid overnight courier or personal delivery, to
declare the entire principal and all interest accrued on all
Notes then outstanding to be, and such Notes shall thereupon
become, forthwith due and payable, without any presentment,
demand, protest or other notice of any kind, all of which are
hereby expressly waived and each of the holders of any of the
Notes may proceed to protect and enforce its rights either by
suit in equity and/or by action at law, whether for specific
performance of any covenant or agreement contained in this
Agreement or in the Notes, or in aid of the exercise of any power
granted herein or therein or proceed to obtain judgment or any
other relief whatsoever appropriate to the action or proceeding,
or proceed to enforce any other legal or equitable right of any
such holder of any of the Notes. When any Event of Default
described in Section 7.1(h) has occurred, then all outstanding
Notes shall immediately become due and payable without
presentment, demand or notice of any kind. Upon the Notes
becoming due and payable as a result of any Event of Default as
aforesaid, the Company will forthwith pay to the holders of the
Notes the entire principal and interest accrued on the Notes and,
to the extent not prohibited by applicable law, interest on such
principal and accrued interest at the Overdue Rate for the period
from and after the date of acceleration to and including the date
of payment thereof, and as liquidated damages and not as a
penalty, an additional amount equal to the then applicable Make
Whole Premium. No course of dealing on the part of any holder of
the Notes nor any delay or failure on the part of any holder of
the Notes to exercise any right shall operate as a waiver of such
right or otherwise prejudice such holder's rights, powers and
remedies. The Company further agrees, to the extent not
prohibited by applicable law, to pay to the holder or holders of
the Notes all costs and expenses reasonably incurred by them in
the collection of any Notes upon any Event of Default hereunder
or thereon, including without limitation reasonable compensation
to such holder's or holders' attorneys for all services rendered
in connection therewith.
7.4 Rescission of Acceleration.
The provisions of Section 7.3 are subject to the condition
that if the principal of and accrued interest on all or any
outstanding Notes have been declared immediately due and payable
by reason of the occurrence of any Event of Default other than
those described in Section 7.1(h), the Required Holders may, by
written instrument filed with the Company, rescind and annul such
declaration and the consequences thereof, provided that at the
time such declaration is annulled and rescinded:
(a) no judgment or decree shall have been entered for
the payment of any monies due pursuant to the Notes or this
Agreement;
(b) all arrears of interest upon all the Notes and all
other sums payable under the Notes and under this Agreement
(except any principal, interest or premium on the Notes
which has become due and payable solely by reason of such
declaration under Section 7.3) shall have been duly paid;
and
(c) each and every other Default and Event of Default
shall have been made good, cured or waived pursuant to
Section 7.1;
and provided further, that no such rescission and annulment shall
extend to or affect any subsequent Default or Event of Default or
impair any right consequent thereto.
8. AMENDMENTS, WAIVERS AND CONSENTS
8.1 Consent Required.
Any term, covenant, agreement or condition of this Agreement
may, with the consent of the Company, be amended or compliance
therewith may be waived (either generally or in a particular
instance and either retroactively or prospectively), if the
Company shall have obtained the consent in writing of the holders
of at least 66-2/3% in aggregate principal amount of outstanding
Notes (exclusive of Notes then owned by the Company, any
Subsidiaries or any Affiliates); provided that without the
written consent of the holders of all of the Notes then
outstanding, no such waiver, modification, alteration or
amendment shall be effective which will (a) change the time of
payment of the principal of or the interest on any Note or change
the principal amount thereof or change the rate of interest
thereon, (b) change any of the provisions with respect to
prepayments, or (c) change the percentage of holders of the Notes
required to consent to any such amendment, alteration or
modification of any of the provisions of this Section 8 or
Section 7.3.
8.2 Solicitation of Noteholders.
The Company will not solicit, request or negotiate for or
with respect to any proposed waiver or amendment of any of the
provisions of this Agreement or the Notes unless each holder of
the Notes (irrespective of the amount of Notes then owned by it)
shall be informed thereof by the Company and shall be afforded
the opportunity of considering the same and shall be supplied by
the Company with sufficient information to enable it to make an
informed decision with respect thereto. Executed or true and
correct copies of any waiver effected pursuant to the provisions
of this Section 8.2 shall be delivered by the Company to each
holder of outstanding Notes forthwith following the date on which
the same shall have been executed and delivered by the holder or
holders of the requisite percentage of outstanding Notes. The
Company will not, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any holder of the Notes as
consideration for or as an inducement to the entering into by any
holder of the Notes of any waiver or amendment of any of the
terms and provisions of this Agreement unless such remuneration
is concurrently paid, on the same terms, ratably to the holders
of all of the Notes then outstanding.
8.3 Effect of Amendment or Waiver.
Except as otherwise provided in Section 5.2 or Section 5.4,
any amendment or waiver under this Agreement shall apply equally
to all of the holders of the Notes and shall be binding upon
them, upon each future holder of any Note and upon the Company,
whether or not such Note shall have been marked to indicate such
amendment or waiver. No such amendment or waiver shall extend to
or affect any obligation not expressly amended or waived or
impair any right consequent thereon.
9. INTERPRETATION OF AGREEMENT; DEFINITIONS
9.1 Definitions.
Unless the context otherwise requires, the terms hereinafter
set forth when used herein shall have the following meanings and
the following definitions shall be equally applicable to both the
singular and plural forms of any of the terms herein defined:
Additional Amount -- is defined in Section 5.1.
Affiliate shall mean any Person (other than a Subsidiary)
(a) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common
control with, the Company, (b) which beneficially owns or holds
5% or more of any class of the Voting Stock of the Company or (c)
5% or more of the Voting Stock (or in the case of a Person which
is not a corporation, 5% or more of the equity interest) of which
is beneficially owned or held by the Company or a Subsidiary.
The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of Voting
Stock, by contract or otherwise.
Applicable Margin shall mean (a) with respect to a Declined
Waiver, .25%, and (b) with respect to a Company Call or an Event
of Default, .60%.
Assignment Agreement Amendment is defined in Section
1.2(c).
Business Day shall mean any day other than a Saturday,
Sunday or other day on which Federally chartered banks are
required by law to close.
Business Plan shall mean the Stokely U.S.A. 1997-1998
Business Plan and Financing Request dated February, 1996 and
furnished by the Company to the Purchaser.
Capital Expenditures shall mean expenditures (including
payments under Capitalized Leases) made by any Person to acquire
or construct fixed assets, plant and equipment (including,
without limitation, renewals, improvements and replacements, but
excluding repairs).
Capitalized Interest Amount is defined in Section 4.2.
Capitalized Lease shall mean any lease, the obligation for
Rentals with respect to which is required to be capitalized on a
balance sheet of the lessee in accordance with GAAP.
Capitalized Rental of any Person shall mean as of the date
of any determination the amount at which the aggregate Rentals
due and to become due under all Capitalized Leases under which
such Person is a lessee would be reflected as a liability on a
consolidated balance sheet of such Person.
Carryover Cap Ex Amount --shall have the meaning set forth
in the definition of "FY 1997 Cap Ex Amount".
Change of Control shall mean the date of a public
announcement that a Person or group of affiliated or associated
Persons (any such Person being an "Acquiring Person") has
acquired or obtained the right to acquire legal or beneficial
ownership of more than 50% of the outstanding shares of the
Voting Stock of the Company; provided, however, that a Change of
Control shall be deemed not to have occurred if (x) the Acquiring
Person includes a member of the Company's Executive Committee (or
a member of any successor body thereto exercising the same or
substantially similar functions) and (y) the Company's Board of
Directors (or a Special Committee thereof constituted by such
Board of Directors) approves of such Acquiring Person's
acquisition.
Common Stock is defined in Section 1.2(d).
Company Call is defined in Section 5.3.
Company Notice is defined in Section 5.2.
Congress Agreement shall mean the Loan and Security
Agreement dated as of May 21, 1996, entered into by and between
the Company and Congress Financial, as from time to time amended,
modified or supplemented.
Congress Financial shall mean Congress Financial
Corporation (Central), an Illinois corporation.
Consolidated Current Assets means the current assets of the
Company and its Subsidiaries determined on a consolidated basis
in accordance with GAAP.
Consolidated Current Liabilities means the current
liabilities of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
Consolidated Fixed Charge Coverage Ratio -- shall mean, for
any period, the ratio of Consolidated Adjusted Net Income
Available for Fixed Charges for such period to Consolidated Fixed
Charges for such period (it being understood that all components
of such ratio shall be calculated on the basis of historical data
for such period, except that (x) the adjustments, if any,
described in the second and third sentences of the definition of
Consolidated Adjusted Net Income Available for Fixed Charges
shall be made to the extent necessary in connection with the
acquisition or disposition of any business entity, and (y) the
amount of Consolidated Operating Lease Rentals shall equal the
amount of such rentals incurred or expected to be incurred during
the Company's then-current fiscal year).
Consolidated Adjusted Net Income Available for Fixed
Charges -- for any period shall mean the sum of (i)
Consolidated Net Income during such period plus (to the
extent deducted or to be deducted in determining
Consolidated Net Income), (ii) all provisions for any
Federal, state or other income taxes made by the Company and
its Subsidiaries during such period, (iii) Consolidated
Fixed Charges, (iv) depreciation, amortization and any other
similar items of expense not payable in cash during such
period and (v) 100% of the addition to the Consolidated LIFO
Reserve for such period. For purposes of this Agreement,
Consolidated Adjusted Net Income Available for Fixed Charges
shall be adjusted retroactively to give effect to the
operations of any Significant Business Entity (based on the
actual financial performance of such Significant Business
Entity) or the assets and liabilities of such Significant
Business Entity acquired or disposed of by the Company or
any Subsidiary during the applicable period. Consolidated
Adjusted Net Income Available for Fixed Charges shall be
computed as though such Significant Business Entity (or the
assets and liabilities of such Significant Business Entity)
had been owned (or owed) by the Company or such Significant
Business Entity had been a Subsidiary, as the case may be,
throughout the applicable period and as though the assets
and debts so disposed of had not been owned or owed, as the
case may be, by the Company or any Subsidiary throughout the
applicable period.
Consolidated Fixed Charges -- shall mean the sum of (i)
Interest Charges on Consolidated Indebtedness for the
Company's most recently completed fiscal year and (ii)
33- % of Consolidated Operating Lease Rentals incurred or
expected to be incurred during the Company's then-current
fiscal year.
Consolidated Indebtedness -- shall mean Indebtedness of
the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
Consolidated LIFO Reserve -- shall mean the amount by
which the inventory account reflected on the most recent
consolidated balance sheet of the Company and its
Subsidiaries has been decreased as shown on such
consolidated balance sheet according to the last-in, first-
out method of calculating inventories, from the amount which
would have been reported on such consolidated balance sheet
under the first-in, first-out method of valuing inventories,
determined on a consolidated basis in accordance with GAAP.
Consolidated Operating Lease Rentals -- for any period
means the sum of the rental obligations required to be paid
by the Company or any Subsidiary as lessee under any lease
(other than a Capitalized Lease) of real or personal
property, excluding any amount required to be paid by the
lessee (whether or not designated as rental or additional
rental) on account of maintenance and repairs, insurance,
taxes, assessments, water rates and similar charges.
Interest Charges on Consolidated Indebtedness -- for
any period means the gross amount which would, in accordance
with GAAP, be deducted in computing Consolidated Net Income
for such period on account of interest on Consolidated
Indebtedness, including imputed interest in respect of
Capitalized Leases and amortization of debt discount and
expense.
Significant Business Entity -- shall mean a business
entity the total assets of which equal or exceed 5% of
Consolidated Total Assets immediately prior to the
acquisition thereof or immediately after the disposition
thereof.
Consolidated Funded Debt shall mean Funded Debt of the
Company and its Subsidiaries determined on a consolidated basis
in accordance with GAAP.
Consolidated Net Income (or, as applicable, Consolidated Net
Loss) -- for any period shall mean the gross revenues of the
Company and its Subsidiaries for such period less all expenses
and other proper charges (including taxes on income), determined
on a consolidated basis in accordance with GAAP, after
eliminating unremitted income or losses attributable to Persons
that are not Subsidiaries and after eliminating all extraordinary
items of gain or loss, determined on a consolidated basis in
accordance with GAAP.
Consolidated Net Worth shall mean, as of the date of any
determination thereof, Total Assets as of such date minus Total
Liabilities as of such date, determined on a consolidated basis
in accordance with GAAP.
Consolidated Tangible Net Worth shall mean, as of the date
of any determination thereof, Consolidated Net Worth as of such
date minus the amount of all Intangible Assets of the Company and
its Subsidiaries as of such date, determined on a consolidated
basis in accordance with GAAP.
Consolidated Total Assets shall mean, as of the date of any
determination thereof, the total amount of all assets of the
Company and its Subsidiaries determined on a consolidated basis
in accordance with GAAP.
Consolidated Total Capitalization shall mean the sum of
Consolidated Tangible Net Worth and Consolidated Funded Debt.
Contract Rate shall mean:
(a) during the period up to but not including the
second anniversary of the Effective Date (the "Second
Anniversary"), 14% per annum; and
(b) during the period beginning on and including the
Second Anniversary, until maturity,
(i) if the aggregate principal amount of the
Notes (excluding the portion of such principal
attributable to the Capitalized Interest Amount)
outstanding at the opening of business of the Company
on the Second Anniversary does not exceed $6,773,446,
11% per annum, and
(ii) if the aggregate principal amount of the
Notes (excluding the portion of such principal
attributable to the Capitalized Interest Amount)
outstanding at the opening of Business of the Company
on the Second Anniversary shall exceed $6,773,446, 16%
per annum.
Credit Agreement shall mean the Congress Agreement and any
other credit agreement subsequently entered into by the Company
to refinance the Indebtedness outstanding under the Congress
Agreement or any such subsequent credit agreement.
Declined Waiver is defined in Section 5.4.
Default shall mean any event or condition, the occurrence
of which would, with the lapse of time or the giving of notice,
or both, constitute an Event of Default as defined in Section
6.1.
Disposition Value shall mean, as of the date of any
determination thereof, with respect to any assets,
(a) in the case of any asset that does not constitute
Subsidiary Stock, the book value thereof, valued at the time
of such disposition in good faith by the Company, and
(b) in the case of any asset that constitutes
Subsidiary Stock, an amount equal to that percentage of the
book value of the assets of the Subsidiary that issued such
stock as is equal to the percentage that the book value of
such Subsidiary Stock represents of the book value of all of
the outstanding capital stock of such Subsidiary (assuming,
in making such calculations, that all Securities convertible
into such capital stock are so converted and giving full
effect to all transactions that would occur or be required
in connection with such conversion) determined at the time
of the disposition thereof, in good faith by the Company.
Distribution -- means, in respect of any corporation,
association or other business entity:
(a) dividends or other distributions or payments on
capital stock or other equity interest of such corporation,
association or other business entity (except distributions
in such stock or other equity interest); and
(b) the redemption or acquisition of such stock or
other equity interests or of warrants, rights or other
options to purchase such stock or other equity interests
(except when solely in exchange for such stock or other
equity interests) unless made, contemporaneously, from the
net proceeds of a sale of such stock or other equity
interests.
Effective Date is defined in Section 3.
Environmental Legal Requirement shall mean any applicable
law, statute or ordinance relating to public health, safety or
the environment, including without limitation any such applicable
law, statute or ordinance relating to releases, discharges or
emissions to air, water, land or groundwater, to the withdrawal
or use of groundwater, to the use and handling of polychlorinated
biphenyls or asbestos, to the disposal, transportation,
treatment, storage or management of solid or hazardous wastes or
to exposure to toxic or hazardous materials, to the handling,
transportation, discharge or release of gaseous or liquid
substances and any regulation, order, notice or demand issued
pursuant to any such law, statute or ordinance, in each case
applicable to the Property of the Company and its Subsidiaries or
the operation, construction or modification of any thereof,
including without limitation the following: the Clean Air Act,
the Federal Water Pollution Control Act, the Safe Drinking Water
Act, the Toxic Substances Control Act, the comprehensive
Environmental Response Compensation and Liability Act as amended
by the Superfund Amendments and Reauthorization Act of 1986, the
Resource Conservation and Recovery Act as amended by the Solid
and Hazardous Waste Amendments of 1984, the Occupational Safety
and Health Act, the Emergency Planning and Community Right-to-
Know Act of 1986, the Solid Waste Disposal Act, and any state
statutes addressing similar matters or providing for financial
responsibility for cleanup or other actions with respect to the
release or threatened release of hazardous substances and any
state nuisance statute.
ERISA shall mean the Employee Retirement Income Security
Act of 1974, as amended.
ERISA Event means: (a) the consummation of the
transactions provided for in this Agreement and the compliance by
the Company with the provisions thereof and the Notes involving a
"prohibited transaction" within the meaning of ERISA or Section
4975 of the Internal Revenue Code, as amended; (b) any "employee
pension benefit plans", as defined in ERISA, or any trusts
created thereunder incurring an "accumulated funding deficiency"
as defined in Section 302 of ERISA; or (c) the present value of
all benefits vested under all such employee pension benefit plans
exceeding, as of any annual valuation date, the value of the
assets of such plans allocable to such vested benefits.
Excess Cash Flow shall mean, for any period,
(a) the sum of
(i) Consolidated Net Income for such period, and
(ii) the amount of all depreciation and
amortization allowances and other non-cash expenses of
the Company and its Subsidiaries to the extent deducted
in the determination of Consolidated Net Income for
such period,
minus
(b) the sum of
(i) the aggregate amount of Capital Expenditures
of the Company and its Subsidiaries for such period,
(ii) the aggregate principal amount of mandatory
and optional prepayments of the principal of the Notes
and the Nationwide Notes made during such period, and
(iii) the aggregate amount of all other
regularly scheduled payments prior to maturity and the
payment at scheduled, unaccelerated maturity on other
Indebtedness of the Company.
Existing Assignment is defined in Section 1.1(c).
Existing Collateral Documentsis defined in Section 1.1.
Existing Indemnification Agreement is defined in Section
1.1(c).
Existing Intercreditor Agreement is defined in Section
1.1(c).
Existing Mortgages is defined in Section 1.1(c).
Existing Note Agreement is defined in Section 1.1(a).
Existing Note is defined in Section 1.1(a).
Existing Security Agreement is defined in Section 1.1(c).
Existing Warrants is defined in Section 1.1(b).
Fair Market Value means, at any time with respect to any
Property, the sale value of such Property that would be realized
in an arm's-length sale at such time between an informed and
willing buyer, and an informed and willing seller, under no
compulsion to buy or sell, respectively.
Funded Debt with respect to any Person shall mean all
indebtedness for borrowed money of such Person maturing by its
terms more than one year after, or which is renewable or
extendible at the option of such Person for a period ending one
year or more after, the date of determination, and shall include
indebtedness for borrowed money of such maturity created, assumed
or guaranteed by such Person either directly or indirectly,
including obligations of such maturity secured by Liens upon
Property of such Person and upon which such entity customarily
pays the interest, all current maturities of all such
indebtedness of such maturity and all Capitalized Rentals under
Capitalized leases of such maturity.
FY 1997 Cap Ex Amount means $2,000,000, provided that (a)
if the Restructuring shall take place during the fiscal year of
the Company ending March 31, 1997, the aggregate amount of
Capital Expenditures of the Company and its Subsidiaries during
such fiscal year shall be permitted to be in an amount not
exceeding $5,000,000 and (b) any unused FY 1997 Cap Ex Amount in
an amount not exceeding $3,000,000 may be carried over and used
during the period beginning April 1, 1997 and ending September
30, 1997 for Capital Expenditures for replacement equipment and
capacity consolidation related to the Restructuring (the
"Carryover Cap Ex Amount").
GAAP means United States generally accepted accounting
principles consistently applied and maintained throughout the
period indicated and consistent with the prior financial practice
of the Company and any predecessor, except changes mandated by
the Financial Accounting Standards Board or any similar
accounting authority of comparable standing. Whenever any
accounting term is used herein which is not otherwise defined, it
shall be interpreted in accordance with GAAP.
Guaranties by any Person shall mean all obligations (other
than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend
or other obligation of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including without
limitation all obligations incurred through an agreement,
contingent or otherwise, by such Persons (a) to purchase such
Indebtedness or obligation or any property or assets constituting
security therefor, (b) to advance or supply funds (1) for the
purchase or payment of such Indebtedness or obligation, or (2) to
maintain working capital or other balance sheet condition or
otherwise to advance or make available funds for the purchase or
payment of such Indebtedness or obligation, or (c) to lease
property or to purchase Securities or other property or services
primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor
to make payment of the Indebtedness or obligation, or (d)
otherwise to assure the owner of the Indebtedness or obligation
of the primary obligor against loss in respect thereof. For the
purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall
be deemed to be Indebtedness equal to the principal amount of
such Indebtedness for borrowed money which has been guaranteed,
and a Guaranty in respect of any other obligation or liability or
any dividend shall be deemed to be Indebtedness equal to the
maximum aggregate amount of such obligation, liability or
dividend guaranteed.
Indebtedness of any Person shall mean and include all (a)
obligations of such Person for borrowed money or to pay the
deferred purchase price of property, (b) obligations secured by
any lien or other charge upon property or assets owned by such
Person, even though such Person has not assumed or become liable
for the payment of such obligations, (c) obligations created or
arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person,
notwithstanding the fact that the rights and remedies of the
seller, lender or lessor under such agreement upon the occurrence
of an event of default thereunder are limited to repossession or
sale of property, (d) Capitalized Rentals under any Capitalized
Lease, and (e) Guarantees of Indebtedness of others; provided
that, with respect to the Company, Indebtedness shall not include
any unfunded obligations which may now or hereafter exist with
respect to Company's Plans.
Indemnification Agreement Amendment is defined in Section
1.2(c).
Intangible Assets shall mean license agreements,
trademarks, trade names, patents, capitalized research and
development, proprietary products (the results of past research
and development treated as long-term assets and excluded from
inventory), goodwill and all other Property which would be
considered to be intangible under GAAP.
Intercreditor Agreement shall mean the Existing
Intercreditor Agreement, as amended by the Intercreditor
Agreement Amendment, and as from time to time further amended,
modified or supplemented.
Intercreditor Agreement Amendment is defined in Section
3.5.
Interest Payment Date is defined in Section 4.1.
Investment shall mean any investment, made in cash or by
delivery of Property, by the Company or any Subsidiary (a) in any
Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, Guaranty, advance, capital
contribution or otherwise, or (b) in any Property.
IRB Indebtedness shall mean the Indebtedness described in
Exhibit B to the Second Amendment to Note Agreement.
Liens are defined in Section 6.7(a).
Make Whole Premium shall mean at any time with respect to
any payment or prepayment of the Notes (whether pursuant to
Section 5.3, Section 5.4 or Section 7.3), the excess of (a) the
present value of the principal and interest payments (assuming,
for purposes of this definition, that all such interest payments
are paid in cash) on and in respect of the Notes being prepaid
that would otherwise become due and payable discounted at a rate
(computed on the basis of a 360-day year of twelve 30-day months)
which is equal to the Reinvestment Rate over (b) the aggregate
principal amount of the Notes then to be prepaid. To the extent
that the Reinvestment Rate at the time of such prepayment is
equal to or greater than the Contract Rate at such time, the Make
Whole Premium is zero. Any calculation of the Make Whole Premium
shall be made by the Company on and as of one Business Day prior
to the date such Make Whole Premium is to be paid to any holder
or holders of the Notes and shall be delivered to each such
holder via telecopy or telex on such date of calculation.
Material Transaction is defined in Section 5.4.
Mortgage Amendments is defined in Section 1.2(c).
Nationwide is defined in Section 1.1.
Nationwide Documents is defined in the Intercreditor
Agreement.
Notes is defined in Section 1.2(a).
Other Agreements shall mean the Security Documents and any
and all agreements, instruments and documents heretofore, now or
hereafter executed by the Company and delivered to the holders of
the Notes, or to any agent appointed to act on behalf of the
holders of the Notes, in respect to the transactions contemplated
by this Agreement.
Overdue Rate shall mean, at any time, the Contract Rate at
such time plus 2.0% per annum.
PACA shall mean the Perishable Agricultural Commodities
Act, 7 USC Sec 499a, et seq.
Person shall mean an individual, partnership, corporation,
trust or unincorporated organization, and a government or agency
or political subdivision thereof.
Plans means "plans", as defined in ERISA.
Prepayment Date is defined in Section 5.2.
Property shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or
intangible.
Purchaser is defined in Section 1.1.
Put Event shall mean either (a) a Change of Control, or (b)
the failure by the Company to maintain a Consolidated Fixed
Charge Coverage Ratio of at least (i) 0.75:1.0 for the fiscal
year of the Company ending March 31, 1997 or (ii) 1.5:1.0 for any
fiscal year of the Company thereafter.
Reinvestment Rate shall mean the Treasury Rate plus the
Applicable Margin.
Rental shall mean and include all fixed rents (including as
such all payments which the lessee is obligated to make to the
lessor on termination of the lease or surrender of the Property)
payable by the Company or a Subsidiary, as lessee or sublessee
under a lease of real or personal property, but shall be
exclusive of any amounts required to be paid by the Company or a
Subsidiary (whether or not designated a rent or additional rents)
on account of maintenance, repairs, insurance, taxes and similar
charges. Fixed rents under any so-called "percentage leases"
shall be computed solely on the basis of the minimum rents, if
any, required to be paid by the lessee regardless of sales volume
or gross revenues.
Required Holders shall mean the holders of at least 66-2/3%
in aggregate principal amount of the Notes then outstanding
(exclusive of Notes then owned by the Company, any Subsidiaries
or any Affiliates).
Required Principal Payment is defined in Section 5.1.
Responsible Financial Officer shall mean the Vice President
Finance of the Company, the Treasurer of the Company or any
officer of the Company to whom either thereof customarily
reports.
Restricted Investments -- means all Investments except the
following:
(a) property to be used in the ordinary course of
business of the Company and its Subsidiaries;
(b) current assets arising from the sale of goods and
services in the ordinary course of business of the Company
and its Subsidiaries;
(c) the endorsement of instruments for collection or
deposit in the ordinary course of business;
(d) Investments existing on the Effective Date and
disclosed in Schedule III;
(e) Investments in United States Governmental
Securities, provided that such obligations mature within 365
days from the date of acquisition thereof;
(f) Investments in certificates of deposit or banker's
acceptances issued by an Acceptable Bank, provided that such
obligations mature within 365 days from the date of
acquisition thereof;
(g) Investments in commercial paper given the highest
rating by a credit rating agency of recognized national
standing and maturing not more than 270 days from the date
of creation thereof; and
(h) loans and advances to employees in the ordinary
course of business for travel and moving expenses in an
aggregate amount not to exceed $100,000 at any time
outstanding.
For purposes of this Agreement, an Investment shall be valued at
the lesser of (i) cost and (ii) the value at which such
Investment is to be shown on the books of the Company and its
Subsidiaries in accordance with GAAP.
As used in this definition of "Restricted Investments":
Acceptable Bank -- means any bank or trust company (i)
which is organized under the laws of the United States of
America or any State thereof, (ii) which has capital,
surplus and undivided profits aggregating at least
$250,000,000, and (iii) whose long-term unsecured debt
obligations (or the long-term unsecured debt obligations of
the bank holding company owning all of the capital stock of
such bank or trust company) shall have been given a rating
of "A" or better by Standard & Poor's Ratings Group, "A2" or
better by Moody's Investors Service, Inc., or an equivalent
rating by any other credit rating agency of recognized
national standing.
Restricted Payment -- means any Distribution in respect
of the Company or any Subsidiary (other than on account of
capital stock or other equity interests of a Subsidiary
owned legally and beneficially by the Company or another
Subsidiary), including, without limitation, any Distribution
resulting in the acquisition by the Company of Securities
which would constitute treasury stock. For purposes of this
Agreement, the amount of any Restricted Payment made in
property shall be the greater of (x) the Fair Market Value
of such property (as determined in good faith by the board
of directors (or equivalent governing body) of the Person
making such Restricted Payment) and (y) the net book value
thereof on the books of such Person, in each case determined
as of the date on which such Restricted Payment is made.
Restructuring -- is defined in Section 10.6.
Second Amendment -- is defined in Section 1.1(a).
Securities Act -- shall mean the Securities Act of 1933, as
amended from time to time.
Security -- shall have the same meaning as in Section 2(l)
of the Securities Act.
Security Agreement -- shall mean the Security Agreement
dated as of May 31, 1995, by and among the Company, the Purchaser
and Nationwide, as amended by the Security Agreement Amendment,
and as further amended, modified or supplemented from time to
time, including, without limitation, any amendment or supplement
pursuant to which an agent or trustee is appointed to act on
behalf of the holders of the Notes and any other Indebtedness
secured by the Security Agreement.
Security Agreement Amendment -- is defined in Section
1.2(c).
Security Documents -- shall have the meaning set forth in
Section 1 of the Security Agreement.
Series A Warrant -- means the collective reference to each
Series A Warrant to Purchase Shares of Common Stock of Stokely
USA, Inc. issued by the Company, originally executed in the form
of Exhibit B1 and dated July 25, 1996, together with any
acknowledgments and agreements delivered in connection therewith,
as the same may be amended, modified or supplemented from time to
time.
Series B Warrant -- means the collective reference to each
Series B Warrant to Purchase Shares of Common Stock of Stokely
USA, Inc, issued by the Company, originally executed in the form
of Exhibit B2 and dated July 25, 1996, together with any
acknowledgments and agreements delivered in connection therewith,
as the same may be amended, modified or supplemented from time to
time.
Significant Subsidiary -- is defined in paragraph 1 of
Exhibit B hereto.
subsidiary -- shall mean, as to any particular parent
corporation, any corporation or other entity of which more than
50% (by number of votes) of the Voting Stock shall be owned by
such parent corporation and/or one or more corporations which are
themselves subsidiaries of such parent corporation. The term
"Subsidiary" shall mean a direct or indirect subsidiary of the
Company.
Subsidiary Stock -- shall mean, with respect to any Person,
the stock (or any options or warrants to purchase stock or other
Securities exchangeable for or convertible into stock) of any
Subsidiary of such Person.
Substantial Portion -- shall mean, with respect to any
Transfer of assets, any portion of assets of the Company and its
Subsidiaries, if
(a) the Disposition Value of such assets, when added
to the Disposition Value of all other assets of the Company
and its Subsidiaries that were subject to a Transfer (other
than (i) pursuant to clause (a) or clause (b) of Section
6.10 or (ii) as described in Section 3.6, or (iii) in
connection with the Restructuring), during the period
beginning on the first day of such fiscal year and ending on
and including the date of the Transfer of such assets,
exceeds an amount equal to 10% of Consolidated Total Assets
determined as of the end of the then most recently ended
fiscal quarter of the Company, or
(b) the Disposition Value of such assets, when added
to the Disposition Value of all other assets of the Company
and its Subsidiaries that were subject to a Transfer (other
than (i) pursuant to clause (a) or clause (b) of Section
6.10 or (ii) as described in Section 3.6, or (iii) in
connection with the Restructuring), during the period
beginning on the Effective Date and ending on and including
the date of the Transfer of such assets, exceeds an amount
equal to 25% of Consolidated Total Assets determined as of
the end of the then most recently ended fiscal quarter of
the Company.
Third Amendment -- is defined in Section 1.1(a).
Total Assets -- shall mean, as of the date of any
determination thereof, the aggregate amount of assets of the
Company and its Subsidiaries as of such date, determined on a
consolidated basis in accordance with GAAP.
Total Liabilities -- shall mean, as of the date of any
determination thereof, the aggregate amount of liabilities of the
Company and its Subsidiaries as of such date, determined on a
consolidated basis in accordance with GAAP.
Transfer -- is defined in Section 6.10.
Treasury Rate -- shall mean at any time with respect to
Notes being paid or prepaid, the then existing yield to maturity
on the United States Treasury obligations with a maturity (as
compiled by and published in the most recently published issue of
the United States Federal Reserve Statistical Release designated
H.15(519) or its successor publication) equal to the maturity
date of such Notes. If no maturity exactly corresponding to the
maturity date of such Notes shall appear therein, the United
States Treasury obligations with the nearest published maturity
occurring before the scheduled maturity date of the Notes and
with the nearest published maturity occurring after the scheduled
maturity date of the Notes shall each be determined and the
Treasury Rate shall be interpolated on a straight-line basis
based on the respective yields to maturity of such obligations.
U.S. Subsidiaries -- shall mean all Subsidiaries organized
and existing under the laws of the United States or any state,
district or territory thereof.
Voting Stock -- shall mean Securities of any class or
classes, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect the corporate directors (or
Persons performing similar functions), irrespective of whether or
not at the time Securities of any class or classes shall have or
might have special voting powers or rights by reason of the
occurrence of any contingency.
Warrant Agreement -- means the collective reference of the
Series A Warrants and the Series B Warrants.
Warrants -- is defined in Section 1.2(d).
Wholly-owned -- when used in connection with any Subsidiary
shall mean a Subsidiary of which all of the issued and
outstanding shares of stock (except shares required by applicable
law as directors' qualifying shares) shall be owned by the
Company and/or one or more of its Wholly-owned Subsidiaries.
9.2 Accounting Principles.
Where the character or amount of any asset or liability or
item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be
made for the purposes of this Agreement, the same shall be done
in accordance with GAAP, to the extent applicable, except where
such principles are inconsistent with the requirements of this
Agreement, in which event this Agreement shall be controlling.
9.3 Directly or Indirectly.
Where any provision in this Agreement refers to action to be
taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether the action in
question is taken directly or indirectly by such Person.
10. MISCELLANEOUS
10.1 Note Register.
The Company shall cause to be kept at its principal office a
register for the registration and transfer of the Notes
(hereinafter called the "Note Register"), and the Company will
register or transfer or cause to be registered or transferred, as
hereinafter provided and under such reasonable regulations as it
may prescribe, any Notes issued pursuant to this Agreement.
At any time, and from time to time, the holder of any Notes
which have been duly registered as hereinabove provided may
transfer such Notes upon surrender thereof at the principal
office of the Company duly endorsed or accompanied by a written
instrument of transfer duly executed by the holder of such Note
or its attorney duly authorized in writing.
The Person in whose name any Note shall be registered shall
be deemed and treated as the owner and holder thereof for all
purposes of this Agreement. Payment of or on account of the
principal, premium, if any, and interest on any Note shall be
made to or upon the written order of such holder.
10.2 Exchange of Notes.
At any time, and from time to time, upon not less than ten
days' written notice to that effect given by the holder of any
Note initially delivered or of any Note substituted therefor
pursuant to Section 10.1, this Section 10.2 or Section 10.3, and,
upon surrender of such Note at its office, the Company will
deliver in exchange therefor, without expense to the holder,
except as set forth below, Notes for the same aggregate principal
amount as the then unpaid principal amount of the Note so
surrendered, in the denomination of $100,000 or integral
multiples thereof (except as may be necessary to reflect any
principal amount not evenly divisible by $100,000) as such holder
shall specify, dated as of the date to which interest has been
paid on the Note so surrendered or, if such surrender is prior to
the payment of any interest thereon, then dated as of the date of
issue, payable to such Person or Persons as may be designated by
such holder, and otherwise of the same form and tenor as the
Notes so surrendered for exchange. The Company may require the
payment of a sum sufficient to cover any stamp tax or
governmental charge imposed upon such exchange or transfer.
10.3 Loss, Theft, Etc. of Notes.
Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, mutilation or destruction of any
Note, and in the case of any such loss, theft or destruction upon
delivery of a bond of indemnity in such form and amount as shall
be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Note, the
Company will make and deliver without expense to the holder
thereof, a new Note, of the same tenor and form, in lieu of such
lost, stolen, destroyed or mutilated Note. If any Purchaser or
any subsequent institutional holder is the owner of any such
lost, stolen or destroyed Note, then the affidavit of any
authorized officer of such owner, setting forth the fact of loss,
theft or destruction and of its ownership of the Note 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
Note other than the written agreement of such owner to indemnify
the Company.
10.4 Expenses, Stamp Tax Indemnity.
Whether or not the transactions herein contemplated shall be
consummated, the Company agrees to pay directly to Purchaser or,
at Purchaser's request, to such persons to whom such expenses are
owing, the amount of $100,000, agreed by Company and Purchaser to
be an amount sufficient to reimburse Purchaser for all of its
indirect expenses and all of the Purchaser's reasonable out-of
pocket expenses in connection with the preparation, execution and
delivery of this Agreement, the amendments to the Security
Documents, and the transactions contemplated hereby and thereby,
including but not limited to the fees and disbursements of
Solheim Billing & Grimmer, S.C., the Purchaser's special counsel,
duplicating costs and charges for shipping the Notes, adequately
insured, to purchaser at its home office or at such other place
as such Purchaser may designate, and so long as such Purchaser
shall hold any of the Notes, all such expenses relating to any
amendments, waivers or consents pursuant to the provisions
hereof, including without limitation any amendments, waivers or
consents resulting from any work-out, restructuring or similar
events relating to the performance by the Company of its
obligations under this Agreement and the Notes. The Company also
agrees that it will pay and save the Purchaser harmless against
any and all liability with respect to stamp and other taxes, if
any, which may be payable or which may be determined to be
payable in connection with the execution and delivery of this
Agreement or the Notes, whether or not any Notes are then
outstanding. The Company agrees to protect and indemnify the
Purchaser against any liability for any and all brokerage fees
and commissions payable or claimed to be payable to any Person in
connection with the transactions contemplated by this Agreement.
Without limiting the foregoing, the Company agrees to obtain and
pay for a private placement number for the Notes and authorizes
the submission of such information as may be required by the
CUSIP Service Bureau of Standard & Poor's for the purpose of
obtaining such number.
10.5 Waiver of Past Defaults.
By execution of this Agreement, the holders of the Notes
waive the Event of Default existing prior to the Effective Date
resulting from a violation of Section 5.8 of the Existing Note
Agreement. Other than the foregoing, the holders of the Notes
have no knowledge of any other Default or Event of Default under
the Existing Note Agreement which has occurred and is continuing
on the date hereof.
10.6 Potential Restructuring after Effective Date.
The Company may, at its option, undergo a restructuring of
its canning business subsequent to the Effective Date, provided
that
(a) such restructuring is effected pursuant to a
business plan delivered to the holders of the Notes at least
ten Business Days prior to such restructuring,
(b) the holders of the Notes shall have received a
copy of the written consent of Congress Financial to such
restructuring at least three Business Days prior to such
restructuring, stating that such restructuring (including
without limitation the application, to the prepayment of the
Notes in the manner provided in Section 6.10(c)(iii), of the
proceeds of assets subject to a Lien securing the Notes that
are Transferred in connection with such restructuring) will
not constitute a breach under the Congress Agreement,
(c) actual non-recurring charges on the Company's
consolidated financial statements (determined in accordance
with GAAP) resulting from such restructuring would not
exceed $18,000,000, and
(d) actual cash charges (determined in accordance with
GAAP) including, without limitation, inventory, severance,
and out-of-pocket expenses, resulting from such
restructuring would not exceed $3,500,000.
If the Company shall undergo a restructuring complying with each
of clauses (a), (b), (c) and (d) above (a "Restructuring"), then:
(i) for purposes of determining whether the
Company has complied with Section 6.8, such actual non-
recurring charges up to, but not exceeding, $18,000,000
shall be excluded from the determination thereof,
(ii) for purposes of determining Excess Cash Flow
for the period in which such restructuring shall occur,
such actual cash charges up to, but not exceeding,
$3,500,000 shall be deducted in the calculation
thereof, and
(iii) for purposes of determining Consolidated
Adjusted Net Income Available for Fixed Charges (as
such term is defined in Section 9.1 in the definition
of "Consolidated Fixed Charge Coverage Ratio"), such
non-recurring charges up to, but not exceeding,
$18,000,000 shall be excluded from the determination
thereof.
10.7 Powers and Rights Not Waived; Remedies Cumulative.
No delay or failure on the part of the holder of any Note in
the exercise of any power or right shall operate as a waiver
thereof; nor shall any single or partial exercise of the same
preclude any other or further exercise thereof, or the exercise
of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to and are not exclusive of any
rights or remedies any such holder would otherwise have, and no
waiver or consent, given or extended pursuant to Section 8 shall
extend to or affect any obligation or right not expressly waived
or consented to.
10.8 Notices.
All communications provided for hereunder shall be in
writing and, if to the Purchaser, delivered or mailed by prepaid
overnight air courier, addressed to Purchaser at its address
appearing on Schedule I to this Agreement or such other address
as Purchaser or the subsequent holder of any Note initially
issued hereunder may designate to the Company in writing, and if
to the Company, delivered or mailed by prepaid overnight air
courier to the Company at 1055 Corporate Center Drive,
Oconomowoc, Wisconsin 53066, Attention: Vice-Chairman, or to such
other address as the Company may in writing designate to each of
the Purchaser and each subsequent holder of any Note initially
issued hereunder.
10.9 Reproduction of Documents
This Agreement and all documents relating thereto, including
without limitation (a) consents, waivers and modifications which
may hereafter be executed, (b) documents received by the
Purchaser at the closing of the transactions contemplated by this
Agreement (except the Notes and the Warrants themselves), and (c)
financial statements, certificates and other information
previously or hereafter furnished to the Purchaser, may be
reproduced by any Purchaser by any photographic, photostatic,
microfilm, micro-card, miniature photographic or other similar
process and such Purchaser may destroy any original document so
reproduced. The Company agrees and stipulates that any such
reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such
reproduction was made by any Purchaser in the regular course of
business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in
evidence.
10.10 Counterparts.
This Agreement may be executed in any number of
counterparts, each counterpart constituting an original but all
together only one Agreement.
10.11 Successors and Assigns.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and
assigns, including each successive holder or holders of any
Notes; provided that any subsequent holder of any Note that is a
Subsidiary or an Affiliate shall not be entitled to any voting
rights hereunder.
10.12 Survival of Covenants and Representations.
All covenants, representations and warranties made by the
Company herein and in any certificates delivered pursuant hereto,
whether or not in connection with the Effective Date, shall
survive the execution and delivery of this Agreement and the
Notes.
10.13 Severability.
Should any part of this Agreement 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 Agreement 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 the
remaining portion of this Agreement without including therein any
such part, parts, or portion which may, for any reason, be
hereafter declared invalid.
10.14 Governing law.
This Agreement and the Notes issued and sold hereunder shall
be governed by and construed in accordance with the internal laws
of the State of Wisconsin.
10.15 Captions.
The descriptive headings of the various Sections or parts of
this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
The execution hereof by you shall constitute a contract
between us for the uses and purposes hereinabove set forth, and
this Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all
together only one agreement.
Stokely USA, Inc.
By:
----------------------
Name:
Title:
Accepted and agreed to:
STATE OF WISCONSIN INVESTMENT BOARD
By:
-------------------------
Name:
Title:
Exhibit 99.3
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. WA-1 498,438 SHARES
SERIES A WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
STOKELY USA, INC.
Void after July 25, 2006
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 July 25, 2006 (the "Expiration
Date"), Four Hundred Ninety-Eight Thousand Four Hundred and Thirty-
Eight (498,438) 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 the Initial per share Warrant Price (as defined
in Section 13 hereof).
The aggregate price of the Common Stock which may be purchased
upon the exercise of this Warrant shall be equal to the Initial per
share Warrant Price 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 Initial per share Warrant Price 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.
The terms which are capitalized herein shall have the meanings
specified in Section 13 unless the context shall otherwise require.
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 the
Note 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 received a new Warrant of the
same series 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.
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.
3. PROTECTION AGAINST DILUTION.
The per share Warrant Price and the number of shares
deliverable hereunder shall be adjusted as hereinafter set forth:
3.1 Share Dividends, Subdivisions and Combinations. In case
after the date hereof the Company shall:
(a) take a record of the holders of its Common Stock for
the purpose of entitling them to receive a dividend payable
in, or other distribution of, 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.
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:
(i) 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
(ii) the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to
the issuance of such Additional Share 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:
(i) 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 Current Market Price per share, and
(ii) 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.
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.
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.
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 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, option
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 Section
3.4(a)) shall be deemed to have been received by the Company.
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.
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 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.
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 he
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.
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, and 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.
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.
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 provision hereof
(including, with out limitation, provisions for adjustment of the
per share Warrant Price) shall thereafter be applicable, as nearly
as 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.
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.
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 15 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 Section 6 shall not
apply to distributions made in connection with transactions covered
by Section 4.
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.
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 (except as set
forth in Section 180.0622 of the Wisconsin Business Corporation
Law). 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.
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.
10. RESTRICTIONS ON TRANSFERABILITY OF WARRANTS AND SHARES;
COMPLIANCE WITH LAWS.
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.
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 upon the conditions specified in the
Warrant pursuant to which such shares were issued."
In the event that a registration statement covering the
Registrable Securities 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 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.
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 Registrable Securities, 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 such
Registrable Securities, 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, qualification, filing or compliance has become
effective. All fees and expenses of counsel of 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.
10.4 Required Registration.
(a) Filing of Registration Statement. The Company will,
upon the written request of the Requisite Holders given at any
time on or after July 22, 1998, requesting that the Company
effect the registration under the Securities Act of all or at
least 25% of such Requisite Holders' Registrable Securities
and specifying the Registrable Securities to be sold and the
intended method of disposition thereof, promptly give written
notice of such requested registration to all holders of
Registrable Securities, and thereupon will use its best
efforts to effect the registration (a "Required Registration")
under the Securities Act of:
(i) the Registrable Securities that the Company has
been so requested to register by the Requisite Holders,
and
(ii) all other Registrable Securities that the
Company has been requested to register by the holders
thereof by written request given to the Company within 30
days after the giving of such written notice by the
Company (which request shall specify the Registrable
Securities to be sold and the intended method of
disposition of such Registrable Securities);
all to the extent required to permit the disposition (in accordance
with the intended method thereof as aforesaid) of the Registrable
Securities so to be registered; provided, however, that the Company
shall be required to effect only four (4) registrations pursuant to
this Section 10.4 that is deemed effected under Section 10.4(e) and
pursuant to similar terms contained in the Related Warrants that is
deemed effected under the terms contained in the Related Warrants.
It is expressly acknowledged that the Company shall be required to
effect only four (4) Required Registrations as may be requested by
the holder of this Warrant and the Related Warrants. If the
Registrable Securities subject to being registered pursuant to this
Section 10.4 may be, at the time of the request in respect thereof,
registered on Form S-3, the Company may effect such registration on
Form S-3, provided that the foregoing shall not be deemed to
release the Company from complying with the requirements of this
Section 10.4 if the Company is not eligible to register the
Registrable Securities on Form S-3 at the time of a request for a
Required Registration.
(b) Time for Filing and Effectiveness. On or before the
date which is 120 days after the request for such
registration, the Company shall file with the Commission the
Required Registration with respect to all Registrable
Securities to be so registered, and shall use its reasonable
best efforts to cause such Required Registration to become
effective as promptly as practicable after the filing thereof,
but in no event later than the day which is 210 days after the
request for such registration. Notwithstanding the foregoing,
if the Company shall furnish to the Requisite Holders
requesting a Required Registration pursuant to this Section
10.4 and each other holder of Registrable Securities
participating in the registration thereunder, a certificate
signed by the President or Chief Executive Officer of the
Company stating that, in the good faith and reasonable
business judgment of the Board of Directors of the Company,
the filing of such Required Registration would materially
interfere with the filing by the Company with the Commission
of a Form 10-K or any registration statement filed prior to a
request for a Required Registration hereunder or any
acquisition or corporate reorganization or debt restructuring
by the Company, and that it is therefore essential to defer
the filing of such Required Registration, the Company shall
have the right to defer the commencement of the taking of
action with respect to such filing for a period of not more
than 180 days after receipt of the request of the Requisite
Holders; provided, however, that the Company may not utilize
this right if this right has been used under the terms of this
Warrant or the Related Warrants at any time during the
immediately preceding 365-day period. If the Company shall so
postpone the filing of such Required Registration, the
Requisite Holders and all other holders of Registrable
Securities participating therein shall have the right to
withdraw from such registration by giving written notice to
the Company within 30 days after receipt of such notice of
postponement. In connection with any such withdrawal by the
Requisite Holders, the Requisite Holders shall be deemed to
fully rescind their request for such Required Registration, in
which case said request shall be deemed rescinded and
preserved for future use, the registration and offering of all
Registrable Securities in connection with such offering will
be cancelled and the Company will pay all costs in connection
therewith.
(c) Selection of Underwriters. If Registrable
Securities that the Company has been requested to register
pursuant to a Required Registration are to be disposed of in
an underwritten public offering, the underwriters of such
offering shall be one or more underwriting firms or recognized
standing reasonably acceptable to the Requisite Holders.
(d) Priority on Required Registrations. If the managing
underwriter shall advise the Company in writing (with a copy
to each holder of Registrable Securities requesting sale)
that, in such underwriter's opinion, the number of share of
securities requested to be included in such Required
Registration exceeds the number that can be sold in such
offering within a price range acceptable to the Company (such
writing to state the basis of such opinion and the approximate
number of shares of securities that may be included in such
offering without such effect), the Company will include in
such Required Registration, to the extent of the number of
shares of securities that the Company is so advised can be
sold in such offering:
(i) first, Registrable Securities requested to be
sold by the holders thereof pursuant to this Section
10.4, pro rata among such holders on the basis of the
number of Registrable Securities requested to be so
registered by such holders, and
(ii) second, all other securities proposed to be
registered by the Company and any other stockholders, in
such proportions as the Company and such other
stockholders shall agree or as shall be set forth in any
applicable agreement between the Company and such other
stockholders.
(e) When Required Registration is Deemed Effected. A
Required Registration pursuant to this Section 10.4 shall not
be deemed to have been effected for purposes of the proviso to
Section 10.4(a) if:
(i) the registration does not become effective and
remain effective for a period of at least 120 days (or
for (A) such shorter period in which all shares of
Registrable Securities proposed to be sold in such
Required Registration are actually sold, or (B) for such
longer period (not to exceed an additional 60 days) if an
underwriter selling such shares deems such longer period
reasonably necessary in order to sell all of the shares
subject to such Required Registration), without
interference by the issuance by the Commission of any
stop order with respect thereto, unless the registration
does not become effective after the Company has filed a
registration statement because the holders of the
Registrable Securities refuse to proceed (in which case
the Required Registration will be deemed to have been
effected);
(ii) the Requisite Holders withdraw their request
for registration in its entirety at any time because the
Requisite Holders reasonably and in good faith believed
that the registration statement or any prospectus related
thereto contained an untrue statement of a material fact
or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein
(in the case of any prospectus, in light of the
circumstances under which they were made) not misleading,
notified the Company of such fact, and requested that the
Company correct such alleged misstatement or omission,
and the Company has refused to correct such alleged
misstatement or omission; or
(iii) the conditions to closing specified in the
purchase agreement or underwriting agreement entered into
in connection with such Required Registration are not
satisfied, other than by reason of some act or omission
by the holders of the Registrable Securities that were to
have been registered and sold.
10.5 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
including therein of the Registrable Securities 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, or (iii) described in Section 10.13) (an "Incidental
Registration"), it will give written notice to all holders of
Registrable Securities of its intention so to do and upon the
written request of the holder of any such Registrable
Securities who intends to transfer such Registrable Securities
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 Registrable Securities 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 requesting registration of its Registrable
Securities shall in its request describe briefly the manner of
any proposed transfer of such Registrable Securities. Nothing
in this Section 10.5 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
Registrable Securities requesting registration pursuant to
Section 10.5, on the date that the registration statement with
respect to such Registrable Securities 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
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 Requisite Holders may reasonably
request.
(c) The Company's obligation to register Registrable
Securities under this Section 10.5 shall be subject to the
condition that each holder of Registrable Securities
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.
10.6 Registration Procedures. The Company will use its best
efforts to effect each Required Registration pursuant to Section
10.4 and to cooperate with the sale of such Registrable Securities
in accordance with the intended method of disposition thereof as
quickly as practicable, and the Company will as expeditiously as
possible:
(a) prepare and file with the Commission the
registration statement and use its best efforts to cause each
Required Registration to become effective; provided, however,
that before filing any registration statement or prospectus or
any amendments or supplements thereto, the Company will
furnish to the holders of the Registrable Securities covered
by such registration statement, their counsel, and the
underwriters, if any, and their counsel, copies of all such
documents proposed to be filed at least 10 Business Days prior
thereto, which documents will be subject to the reasonable
review, within such 10-Business Day period, of such holders,
their counsel and the underwriters; and the Company will not
file any registration statement or amendment thereto or any
prospectus or any supplement thereto (including such documents
incorporated by reference) to which the Requisite Holders
shall reasonably object within such 10-Business Day period,
and will not include or name any holder in any Required
Registration without the consent of such holder;
(b) prepare and file with the Commission such amendments
and post-effective amendments to any registration statement
and any prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to
comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities covered by
such registration statement until such time as all of such
Registrable Securities have been disposed of in accordance
with the intended methods of disposition by the seller or
sellers thereof set forth in such registration statement, and
cause the prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act;
(c) furnish to each holder of Registrable Securities
included in any Registration and the underwriter or
underwriters, if any, without charge, at least one signed copy
of the registration statement and any post-effective amendment
thereto, upon request, and such number of conformed copies
thereof and such number of copies of the prospectus (including
each preliminary prospectus and each prospectus filed under
Rule 424 under the Securities Act), any amendment or
supplements thereto and any documents incorporated by
reference therein, as such holder or underwriter may
reasonably request in order to facilitate the disposition of
the Registrable Securities being sold by such holder (it being
understood that the Company consents to the use of the
prospectus and any amendment or supplement thereto by each
holder of Registrable Securities covered by such registration
statement and the underwriter or underwriters, if any, in
connection with the offering and sale of the Registrable
Securities covered by the prospectus or any amendment or
supplement thereto);
(d) notify each holder of the Registrable Securities of
any stop order or other order suspending the effectiveness of
any registration statement, issued or threatened by the
Commission in connection therewith, and take all reasonable
actions required to prevent the entry of such stop order or to
remove it or obtain withdrawal of it at the earliest possible
moment if entered;
(e) if requested by the managing underwriter or
underwriters or any holder of Registrable Securities in
connection with any sale pursuant to a registration statement,
promptly incorporate in a prospectus supplement or post-
effective amendment such information relating to such
underwriting as the managing underwriter or underwriters or
such holder reasonably requests to be included therein; and
make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after being
notified of the matters incorporated in such prospectus
supplement or post-effective amendment;
(f) on or prior to the date on which a Required
Registration is declared effective, use its best efforts to
register or qualify, and cooperate with the holders of
Registrable Securities included in such Required Registration,
the underwriter or underwriters, if any, and their counsel, in
connection with the registration or qualification of the
Registrable Securities covered by such Required Registration
for offer and sale under the securities or "blue sky" laws of
up to ten states of the United States as any such holder or
underwriter reasonably requests in writing; use its best
efforts to keep each such registration or qualification
effective, including through new filings, or amendments or
renewals, during the period such registration statement is
required to be kept effective; and do any and all other acts
or things necessary or advisable to enable the disposition in
all such states reasonably requested of the Registrable
Securities covered by such Required Registration; provided,
however, that the Company will not be required to qualify
generally to do business in any jurisdiction where it is not
then so qualified or to take any action which would subject it
to general service or process in any such jurisdiction where
it is not then so subject;
(g) in connection with any sale pursuant to a Required
Registration, cooperate with the holders of Registrable
Securities and the managing underwriter or underwriters, if
any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends)
representing securities to be sold under such Required
Registration, and enable such securities to be in such
denominations and registered in such names as the managing
underwriter or underwriters, if any, or such holders may
request;
(h) use its best efforts to cause the Registrable
Securities to be registered with or approved by such other
governmental agencies or authorities within the United States
and having jurisdiction over the Company or any Subsidiary as
may reasonably be necessary to enable the seller or sellers
thereof or the underwriter or underwriters, if any, to
consummate the disposition of such Registrable Securities
(provided that nothing in this clause (h) shall be deemed to
require the Company to register or qualify the Registrable
Securities in more than ten states of the United States, as
more specifically set forth in clause (f) above);
(i) make available for inspection by any holder of
Registrable Securities included in any Required Registration,
any underwriter participating in any disposition pursuant to
any Required Registration, and any attorney, accountant or
other agent retained by any such seller or underwriter, all
financial and other records, pertinent corporate documents and
properties of the Company, as shall be reasonably necessary to
enable them to exercise their "due diligence" responsibility,
and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such person
in connection with such Required Registration;
(j) use its best efforts to obtain:
(i) at the time of effectiveness of each Required
Registration, a "comfort letter" from the Company's
independent certified public accountants covering such
matters of the type customarily covered by "cold comfort
letters" as the Requisite Holders and the underwriters
reasonably request; and
(ii) at the time of any underwritten sale pursuant
to the registration statement, a "bring-down comfort
letter," dated as of the date of such sale, from the
Company's independent certified public accountants
covering such matters of the type customarily covered by
comfort letters as the Requisite Holders and the
underwriters reasonably request;
(k) use its best efforts to obtain, at the time of
effectiveness of each Required Registration, an opinion or
opinions, reasonably acceptable to the Requisite Holders in
form and scope, from counsel for the Company in customary
form;
(l) notify each seller of Registrable Securities covered
by such Registration, upon discovery that, or upon the
happening of any event as a result of which, the prospectus
included in such Registration, as then in effect, includes an
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading, and promptly
prepare, file with the Commission and furnish to such seller
or holder a reasonable number of copies of a supplement to or
an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers or prospective
purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances under which they are made;
(m) use its best efforts to otherwise comply in all
material respects with all applicable rules and regulations of
the Commission, and make generally available to its security
holders (as contemplated by Section 11(a) under the Securities
Act) an earnings statement satisfying the provisions of Rule
158 under the Securities Act no later than 90 days after the
end of the 12-month period beginning with the first month of
the Company's first fiscal quarter commencing after the
effective date of the registration statement, which statement
shall cover said 12-month period;
(n) provide and cause to be maintained a transfer agent
and registrar for all Registrable Securities covered by each
Required Registration from and after a date not later than the
effective date of such Required Registration;
(o) use its best efforts to cause all Registrable
Securities covered by each Required Registration to be listed
subject to notice of issuance, prior to the date of the first
sale of such Registrable Securities pursuant to such Required
Registration, on each securities exchange on which the Common
Stock (or other securities issuable upon exercise of the
Warrants) issued by the Company are then listed, or admitted
to trading on NASDAQ, if the Common Stock or any such other
securities are then admitted to trading on NASDAQ; and
(p) enter into such agreements (including underwriting
agreements in customary form) and take such other actions as
the Requisite Holders shall reasonably request in order to
expedite or facilitate the disposition of such Registrable
Securities pursuant to each Required Registration.
The Company may require each holder of Registrable Securities that
will be included in any Registration to furnish the Company with
such information in respect of such holder of its Registrable
Securities that will be included in such Registration as the
Company may reasonably request and as is required by applicable
laws or regulations.
10.7 Preparation; Reasonable Investigation. In connection
with the preparation and filing of each registration statement
registering Registrable Securities under the Securities Act
pursuant to a Required Registration, the Company will give the
holders of such Registrable Securities so registered, their
underwriters, if any, and their respective counsel and accountants
the opportunity to participate in the preparation of such
registration statement (other than reports and proxy statements
incorporated therein by reference and lawfully and properly filed
with the Commission) and each prospectus included therein or filed
with the Commission, and each amendment thereof or supplement
thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the
Company with its officers and the independent public accountants
who have certified its financial statements as shall be necessary,
in the opinion of such holders or such underwriters, to conduct a
reasonable investigation within the meaning of Section 11(b)(3) of
the Securities Act.
10.8 Rights of Requesting Holders. Each holder of Registrable
Securities which makes a written request therefor within 30 days
after the notice to such holders provided for in Section 10.4 or
Section 10.5, as the case may be, shall have the right to receive
copies of the information, notices and other documents described in
Section 10.6(c), Section 10.6(l) and Section 10.6(m) in connection
with any proposed Registration by the Company under the Securities
Act.
10.9 Expenses.
(a) The holder of this Warrant agrees to pay a pro rata
share of the direct out of pocket costs of the Company paid to
third parties, including registration fees, qualification
fees, reasonable legal expenses of the Company, printing
expenses, the costs of special audits or "cold comfort"
letters and expenses of underwriters, and the reasonable fees
and expenses of any necessary special experts in connection
with all registrations, qualifications, notifications or
exemptions pursuant to Sections 10.4 or 10.13 and all
offerings and sales by each holder of the Restricted Stock
which is being registered in such registration pursuant to
Sections 10.4 or 10.13, the holder's pro rata share to be
determined with reference to the total number of shares of
stock included in such Registration.
(b) The Company agrees to pay all expenses (including
without limitation registration fees, qualification fees,
legal expenses (including the reasonable fees and expenses of
one counsel to the holders of Warrants or Restricted Stock
whose Underlying Shares relating to such Warrants or whose
Restricted Stock are being registered in any Incidental
Registration), 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 any registrations, qualifications,
notifications or exemptions pursuant to Section 10.5, other
than as described in Section 10.9(a) above, and all offerings
and sales by each such holder of the Restricted Stock which is
being registered in such registration pursuant to Section
10.5, other than as described in Section 10.9(a) above.
10.10 Indemnification. In connection with each
registration, qualification, notification, or exemption of
securities under Section 10.4 or Section 10.5, 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 10.10 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 10.10. 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 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.
10.11 Other Registration of Common Stock. If any shares
of Common Stock required to be reserved for purposes of the
exercise of Warrants require registration with or approval of any
governmental authority under any federal or state law (other than
the Securities Act) before such shares may be issued upon
conversion, the Company will, at its expense and as expeditiously
as possible, use its best efforts to cause such shares to be duly
registered or approved, as the case may be.
10.12 Availability of Information. The Company will use
its best efforts to comply with the reporting requirements of
Sections 13 and 15(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission
promulgated thereunder, and use its best efforts to comply with all
other public information reporting requirements of the Commission
as from time to time in effect, and cooperate with the holders of
Registrable Securities so as to permit disposition of the
Registrable Securities (including, without limitation, the current
public information requirements of Rule 144(c) and Rule 144A under
the Securities Act). The Company will also cooperate with each
holder of any Registrable Securities in supplying such information
as may be necessary for such holder to complete and file any
information reporting forms presently or hereafter required by the
Commission as a condition to the availability of an exemption from
the Securities Act for the sale of any Registrable Securities.
10.13 Nationwide Warrants. The Company agrees that at any
time it has received a request from any holder of the Nationwide
Warrants to register any of its Registrable Securities in a
Required Registration (as such terms are defined in the Nationwide
Warrants), it will give written notice to all holders of
Registrable Securities hereunder of its intention to proceed with
such registration, and upon the written request of the holder of
any such Registrable Securities who intends to transfer such
Registrable Securities promptly upon the effectiveness of such
registration, given within 20 days after receipt of any such notice
from the Company, and the consent of the Requisite Holders (as
defined in the Nationwide Warrants) of the Nationwide Warrants to
the inclusion of such Registrable Securities in such registration,
the Company will in each instance use its best efforts to cause all
Registrable Securities held by any requesting holder to be included
in such registration.
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 of the same series
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
of the same series 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 of the same series
covering the number of shares so assigned and setting forth the
proportionate aggregate Warrant Price applicable to such assigned
shares.
12. WARRANT DENOMINATIONS.
Warrants are issued 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 and of the same series as the Warrants so
surrendered. All Warrants will be dated the same date as this
Warrant.
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 625,000 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
The term "Commission" shall mean the Securities and Exchange
Commission, or any other Federal agency at the time administering
the Securities Act or 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 evidence 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 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 "Form S-3" shall mean such form under the Securities
Act as in effect on the date hereof or any registration form under
the Securities Act subsequently adopted by the Commission which
permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the
Commission.
The term "Initial per share Warrant Price" shall mean
the lesser of
(a) $2.25, and
(b) the average of the daily market prices per share
(determined in accordance with the definition of "Current
Market Price") of the Common Stock for the ten (10)
consecutive Business Days immediately following the
Business Day on which the Company publicly announces the
Restructuring (as such term is defined in the Note
Agreement) provided that in the event the Restructuring
does not take place, the Initial per share Warrant Price
shall be as set forth in clause (a) of this definition.
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 and West
Coast Life Insurance Company and all warrants hereafter issued in
exchange for the Nationwide Warrants.
The term "Note Agreement" shall mean the Amended and Restated
Note Agreement dated as of July 25, 1996, as amended from time to
time, among the Company and State of Wisconsin Investment Board.
The term "Note" shall mean the Senior Secured Note due January
15, 2000, of the Company issued pursuant to the Note Agreement.
The term "Registrable Securities" shall mean, at any time:
(a) any shares of Common Stock that have been issued
upon the exercise of any Warrant; and
(b) any shares of Common Stock that are issuable upon
the exercise of Warrants which are exercisable at such time.
For purposes of Section 10 of this Warrant, holders of Warrants at
any time shall be deemed to be holders of Registrable Securities
described in clause (b) of this definition that are at such time
issuable upon exercise in full of such Warrants. As to any
particular Registrable Securities, once issued, such Securities
shall cease to be Registrable Securities:
(i) when a registration statement with respect to
the sale of such Securities shall have become effective
under the Securities Act and such Securities shall have
been disposed of in accordance with such registration
statement;
(ii) when such Securities shall have been
distributed to the public pursuant to Rule 144 (or any
successor provision) under the Securities Act;
(iii) when such Securities shall have been
otherwise transferred and subsequent disposition thereof
shall not require registration or qualification under the
Securities Act;
(iv) when such Securities shall have ceased to be
outstanding or (with respect to Registrable Securities
described in clause (b) of this definition) issuable upon
exercise of the Warrants; or
(v) when such Securities shall be held (directly
or indirectly) by the Company, any Subsidiary or
any Affiliate.
The term "Registration" shall mean each Required Registration
and each Incidental Registration.
The term "Related Warrants" shall mean the warrants (other
than this Warrant) of series A and series B initially issued by the
Company on the date hereof to the holder of the Note.
The term "Requisite Holders" shall mean the holders of
Warrants and Restricted Stock which constitute 50% or more of the
sum of (i) the Underlying Shares which are issued 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 statue, 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
the Related Warrants and all warrants hereafter issued in exchange
or substitution for this Warrant or any Related Warrants.
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,
series, 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
evidence 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.
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
rights or liabilities as a shareholder, prior to the exercise
hereof as hereinbefore provided.
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.
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.
18. APPLICABLE LAW.
This Warrant will be construed in accordance with and governed
by the laws of the State of Wisconsin.
<PAGE>
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
July 25, 1996.
STOKELY USA, INC.
President
ATTEST:
Secretary
<PAGE>
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: <PAGE>
ASSIGNMENT
FOR VALUE RECEIVED ___________________________ hereby sells,
assigns and transfer 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:
Exhibit 99.4
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. WB-1 498,438 SHARES
SERIES B WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
STOKELY USA, INC.
Void after July 25, 2006
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 on or after
July 25, 1998 and up to and including 5:00 P.M. E.S.T. on July 25,
2006 (the "Expiration Date"), Four Hundred Ninety-Eight Thousand
Four Hundred and Thirty-Eight (498,438) 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 the Initial
per share Warrant Price (as defined in Section 13 hereof).
The aggregate price of the Common Stock which may be purchased
upon the exercise of this Warrant shall be equal to the Initial per
share Warrant Price 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 Initial per share Warrant Price 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.
The terms which are capitalized herein shall have the meanings
specified in Section 13 unless the context shall otherwise require.
1. EXERCISE OF WARRANT.
Subject to the conditions hereinafter set forth, this Warrant
may be exercised on or after July 25, 1998 and up to and including
the Expiration Date (the "Exercise Date"), in whole at any time or
in part from time to time, 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 the Note 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 received a new Warrant of the same series 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 upon the occurrence of a Partial
Prepayment Event occurring prior to the opening of business on July
25, 1998, or if a Partial Prepayment Event does not occur prior to
the opening of business on July 25, 1998, then 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.
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.
3. PROTECTION AGAINST DILUTION.
The per share Warrant Price and the number of shares
deliverable hereunder shall be adjusted as hereinafter set forth:
3.1 Share Dividends, Subdivisions and Combinations. In case
after the date hereof the Company shall:
(a) take a record of the holders of its Common Stock for
the purpose of entitling them to receive a dividend payable
in, or other distribution of, 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.
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:
(i) 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
(ii) the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to
the issuance of such Additional Share 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:
(i) 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 Current Market Price per share, and
(ii) 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.
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.
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.
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 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, option
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 Section
3.4(a)) shall be deemed to have been received by the Company.
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.
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 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.
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 he
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.
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, and 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.
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.
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 provision hereof
(including, with out limitation, provisions for adjustment of the
per share Warrant Price) shall thereafter be applicable, as nearly
as 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.
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.
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 15 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 Section 6 shall not
apply to distributions made in connection with transactions covered
by Section 4.
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.
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 (except as set
forth in Section 180.0622 of the Wisconsin Business Corporation
Law). 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.
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.
10. RESTRICTIONS ON TRANSFERABILITY OF WARRANTS AND SHARES;
COMPLIANCE WITH LAWS.
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.
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 upon the conditions specified in the
Warrant pursuant to which such shares were issued."
In the event that a registration statement covering the
Registrable Securities 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 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.
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 Registrable Securities, 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 such
Registrable Securities, 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, qualification, filing or compliance has become
effective. All fees and expenses of counsel of 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.
10.4 Required Registration.
(a) Filing of Registration Statement. The Company will,
upon the written request of the Requisite Holders given at any
time on or after July 22, 1998, requesting that the Company
effect the registration under the Securities Act of all or at
least 25% of such Requisite Holders' Registrable Securities
and specifying the Registrable Securities to be sold and the
intended method of disposition thereof, promptly give written
notice of such requested registration to all holders of
Registrable Securities, and thereupon will use its best
efforts to effect the registration (a "Required Registration")
under the Securities Act of:
(i) the Registrable Securities that the Company has
been so requested to register by the Requisite Holders,
and
(ii) all other Registrable Securities that the
Company has been requested to register by the holders
thereof by written request given to the Company within 30
days after the giving of such written notice by the
Company (which request shall specify the Registrable
Securities to be sold and the intended method of
disposition of such Registrable Securities);
all to the extent required to permit the disposition (in accordance
with the intended method thereof as aforesaid) of the Registrable
Securities so to be registered; provided, however, that (1) the
Company shall be required to effect only four (4) registrations
pursuant to this Section 10.4 that is deemed effected under Section
10.4(e) and pursuant to similar terms contained in the Related
Warrants that is deemed effected under the terms contained in the
Related Warrants and (2) the Company shall not be required to
effect any registration pursuant to this Section 10.4 if a Partial
Prepayment Event shall have occurred prior to the opening of
business on July 15, 1998. It is expressly acknowledged that the
Company shall be required to effect only four (4) Required
Registrations as may be requested by the holder of this Warrant and
the Related Warrants. If the Registrable Securities subject to
being registered pursuant to this Section 10.4 may be, at the time
of the request in respect thereof, registered on Form S-3, the
Company may effect such registration on Form S-3, provided that the
foregoing shall not be deemed to release the Company from complying
with the requirements of this Section 10.4 if the Company is not
eligible to register the Registrable Securities on Form S-3 at the
time of a request for a Required Registration.
(b) Time for Filing and Effectiveness. On or before the
date which is 120 days after the request for such
registration, the Company shall file with the Commission the
Required Registration with respect to all Registrable
Securities to be so registered, and shall use its reasonable
best efforts to cause such Required Registration to become
effective as promptly as practicable after the filing thereof,
but in no event later than the day which is 210 days after the
request for such registration. Notwithstanding the foregoing,
if the Company shall furnish to the Requisite Holders
requesting a Required Registration pursuant to this Section
10.4 and each other holder of Registrable Securities
participating in the registration thereunder, a certificate
signed by the President or Chief Executive Officer of the
Company stating that, in the good faith and reasonable
business judgment of the Board of Directors of the Company,
the filing of such Required Registration would materially
interfere with the filing by the Company with the Commission
of a Form 10-K or any registration statement filed prior to a
request for a Required Registration hereunder or any
acquisition or corporate reorganization or debt restructuring
by the Company, and that it is therefore essential to defer
the filing of such Required Registration, the Company shall
have the right to defer the commencement of the taking of
action with respect to such filing for a period of not more
than 180 days after receipt of the request of the Requisite
Holders; provided, however, that the Company may not utilize
this right if this right has been used under the terms of this
Warrant or the Related Warrants at any time during the
immediately preceding 365-day period. If the Company shall so
postpone the filing of such Required Registration, the
Requisite Holders and all other holders of Registrable
Securities participating therein shall have the right to
withdraw from such registration by giving written notice to
the Company within 30 days after receipt of such notice of
postponement. In connection with any such withdrawal by the
Requisite Holders, the Requisite Holders shall be deemed to
fully rescind their request for such Required Registration, in
which case said request shall be deemed rescinded and
preserved for future use, the registration and offering of all
Registrable Securities in connection with such offering will
be cancelled and the Company will pay all costs in connection
therewith.
(c) Selection of Underwriters. If Registrable
Securities that the Company has been requested to register
pursuant to a Required Registration are to be disposed of in
an underwritten public offering, the underwriters of such
offering shall be one or more underwriting firms or recognized
standing reasonably acceptable to the Requisite Holders.
(d) Priority on Required Registrations. If the managing
underwriter shall advise the Company in writing (with a copy
to each holder of Registrable Securities requesting sale)
that, in such underwriter's opinion, the number of share of
securities requested to be included in such Required
Registration exceeds the number that can be sold in such
offering within a price range acceptable to the Company (such
writing to state the basis of such opinion and the approximate
number of shares of securities that may be included in such
offering without such effect), the Company will include in
such Required Registration, to the extent of the number of
shares of securities that the Company is so advised can be
sold in such offering:
(i) first, Registrable Securities requested to be
sold by the holders thereof pursuant to this Section
10.4, pro rata among such holders on the basis of the
number of Registrable Securities requested to be so
registered by such holders, and
(ii) second, all other securities proposed to be
registered by the Company and any other stockholders, in
such proportions as the Company and such other
stockholders shall agree or as shall be set forth in any
applicable agreement between the Company and such other
stockholders.
(e) When Required Registration is Deemed Effected. A
Required Registration pursuant to this Section 10.4 shall not
be deemed to have been effected for purposes of the proviso to
Section 10.4(a) if:
(i) the registration does not become effective and
remain effective for a period of at least 120 days (or
for (A) such shorter period in which all shares of
Registrable Securities proposed to be sold in such
Required Registration are actually sold, or (B) for such
longer period (not to exceed an additional 60 days) if an
underwriter selling such shares deems such longer period
reasonably necessary in order to sell all of the shares
subject to such Required Registration), without
interference by the issuance by the Commission of any
stop order with respect thereto, unless the registration
does not become effective after the Company has filed a
registration statement because the holders of the
Registrable Securities refuse to proceed (in which case
the Required Registration will be deemed to have been
effected);
(ii) the Requisite Holders withdraw their request
for registration in its entirety at any time because the
Requisite Holders reasonably and in good faith believed
that the registration statement or any prospectus related
thereto contained an untrue statement of a material fact
or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein
(in the case of any prospectus, in light of the
circumstances under which they were made) not misleading,
notified the Company of such fact, and requested that the
Company correct such alleged misstatement or omission,
and the Company has refused to correct such alleged
misstatement or omission; or
(iii) the conditions to closing specified in the
purchase agreement or underwriting agreement entered into
in connection with such Required Registration are not
satisfied, other than by reason of some act or omission
by the holders of the Registrable Securities that were to
have been registered and sold.
10.5 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
including therein of the Registrable Securities 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, or (iii) described in Section 10.13) (an "Incidental
Registration"), it will give written notice to all holders of
Registrable Securities of its intention so to do and upon the
written request of the holder of any such Registrable
Securities who intends to transfer such Registrable Securities
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 Registrable Securities 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 requesting registration of its Registrable
Securities shall in its request describe briefly the manner of
any proposed transfer of such Registrable Securities. Nothing
in this Section 10.5 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
Registrable Securities requesting registration pursuant to
Section 10.5, on the date that the registration statement with
respect to such Registrable Securities 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
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 Requisite Holders may reasonably
request.
(c) The Company's obligation to register Registrable
Securities under this Section 10.5 shall be subject to the
condition that each holder of Registrable Securities
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.
10.6 Registration Procedures. The Company will use its best
efforts to effect each Required Registration pursuant to Section
10.4 and to cooperate with the sale of such Registrable Securities
in accordance with the intended method of disposition thereof as
quickly as practicable, and the Company will as expeditiously as
possible:
(a) prepare and file with the Commission the
registration statement and use its best efforts to cause each
Required Registration to become effective; provided, however,
that before filing any registration statement or prospectus or
any amendments or supplements thereto, the Company will
furnish to the holders of the Registrable Securities covered
by such registration statement, their counsel, and the
underwriters, if any, and their counsel, copies of all such
documents proposed to be filed at least 10 Business Days prior
thereto, which documents will be subject to the reasonable
review, within such 10-Business Day period, of such holders,
their counsel and the underwriters; and the Company will not
file any registration statement or amendment thereto or any
prospectus or any supplement thereto (including such documents
incorporated by reference) to which the Requisite Holders
shall reasonably object within such 10-Business Day period,
and will not include or name any holder in any Required
Registration without the consent of such holder;
(b) prepare and file with the Commission such amendments
and post-effective amendments to any registration statement
and any prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to
comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities covered by
such registration statement until such time as all of such
Registrable Securities have been disposed of in accordance
with the intended methods of disposition by the seller or
sellers thereof set forth in such registration statement, and
cause the prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act;
(c) furnish to each holder of Registrable Securities
included in any Registration and the underwriter or
underwriters, if any, without charge, at least one signed copy
of the registration statement and any post-effective amendment
thereto, upon request, and such number of conformed copies
thereof and such number of copies of the prospectus (including
each preliminary prospectus and each prospectus filed under
Rule 424 under the Securities Act), any amendment or
supplements thereto and any documents incorporated by
reference therein, as such holder or underwriter may
reasonably request in order to facilitate the disposition of
the Registrable Securities being sold by such holder (it being
understood that the Company consents to the use of the
prospectus and any amendment or supplement thereto by each
holder of Registrable Securities covered by such registration
statement and the underwriter or underwriters, if any, in
connection with the offering and sale of the Registrable
Securities covered by the prospectus or any amendment or
supplement thereto);
(d) notify each holder of the Registrable Securities of
any stop order or other order suspending the effectiveness of
any registration statement, issued or threatened by the
Commission in connection therewith, and take all reasonable
actions required to prevent the entry of such stop order or to
remove it or obtain withdrawal of it at the earliest possible
moment if entered;
(e) if requested by the managing underwriter or
underwriters or any holder of Registrable Securities in
connection with any sale pursuant to a registration statement,
promptly incorporate in a prospectus supplement or post-
effective amendment such information relating to such
underwriting as the managing underwriter or underwriters or
such holder reasonably requests to be included therein; and
make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after being
notified of the matters incorporated in such prospectus
supplement or post-effective amendment;
(f) on or prior to the date on which a Required
Registration is declared effective, use its best efforts to
register or qualify, and cooperate with the holders of
Registrable Securities included in such Required Registration,
the underwriter or underwriters, if any, and their counsel, in
connection with the registration or qualification of the
Registrable Securities covered by such Required Registration
for offer and sale under the securities or "blue sky" laws of
up to ten states of the United States as any such holder or
underwriter reasonably requests in writing; use its best
efforts to keep each such registration or qualification
effective, including through new filings, or amendments or
renewals, during the period such registration statement is
required to be kept effective; and do any and all other acts
or things necessary or advisable to enable the disposition in
all such states reasonably requested of the Registrable
Securities covered by such Required Registration; provided,
however, that the Company will not be required to qualify
generally to do business in any jurisdiction where it is not
then so qualified or to take any action which would subject it
to general service or process in any such jurisdiction where
it is not then so subject;
(g) in connection with any sale pursuant to a Required
Registration, cooperate with the holders of Registrable
Securities and the managing underwriter or underwriters, if
any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends)
representing securities to be sold under such Required
Registration, and enable such securities to be in such
denominations and registered in such names as the managing
underwriter or underwriters, if any, or such holders may
request;
(h) use its best efforts to cause the Registrable
Securities to be registered with or approved by such other
governmental agencies or authorities within the United States
and having jurisdiction over the Company or any Subsidiary as
may reasonably be necessary to enable the seller or sellers
thereof or the underwriter or underwriters, if any, to
consummate the disposition of such Registrable Securities
(provided that nothing in this clause (h) shall be deemed to
require the Company to register or qualify the Registrable
Securities in more than ten states of the United States, as
more specifically set forth in clause (f) above);
(i) make available for inspection by any holder of
Registrable Securities included in any Required Registration,
any underwriter participating in any disposition pursuant to
any Required Registration, and any attorney, accountant or
other agent retained by any such seller or underwriter, all
financial and other records, pertinent corporate documents and
properties of the Company, as shall be reasonably necessary to
enable them to exercise their "due diligence" responsibility,
and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such person
in connection with such Required Registration;
(j) use its best efforts to obtain:
(i) at the time of effectiveness of each Required
Registration, a "comfort letter" from the Company's
independent certified public accountants covering such
matters of the type customarily covered by "cold comfort
letters" as the Requisite Holders and the underwriters
reasonably request; and
(ii) at the time of any underwritten sale pursuant
to the registration statement, a "bring-down comfort
letter," dated as of the date of such sale, from the
Company's independent certified public accountants
covering such matters of the type customarily covered by
comfort letters as the Requisite Holders and the
underwriters reasonably request;
(k) use its best efforts to obtain, at the time of
effectiveness of each Required Registration, an opinion or
opinions, reasonably acceptable to the Requisite Holders in
form and scope, from counsel for the Company in customary
form;
(l) notify each seller of Registrable Securities covered
by such Registration, upon discovery that, or upon the
happening of any event as a result of which, the prospectus
included in such Registration, as then in effect, includes an
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading, and promptly
prepare, file with the Commission and furnish to such seller
or holder a reasonable number of copies of a supplement to or
an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers or prospective
purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances under which they are made;
(m) use its best efforts to otherwise comply in all
material respects with all applicable rules and regulations of
the Commission, and make generally available to its security
holders (as contemplated by Section 11(a) under the Securities
Act) an earnings statement satisfying the provisions of Rule
158 under the Securities Act no later than 90 days after the
end of the 12-month period beginning with the first month of
the Company's first fiscal quarter commencing after the
effective date of the registration statement, which statement
shall cover said 12-month period;
(n) provide and cause to be maintained a transfer agent
and registrar for all Registrable Securities covered by each
Required Registration from and after a date not later than the
effective date of such Required Registration;
(o) use its best efforts to cause all Registrable
Securities covered by each Required Registration to be listed
subject to notice of issuance, prior to the date of the first
sale of such Registrable Securities pursuant to such Required
Registration, on each securities exchange on which the Common
Stock (or other securities issuable upon exercise of the
Warrants) issued by the Company are then listed, or admitted
to trading on NASDAQ, if the Common Stock or any such other
securities are then admitted to trading on NASDAQ; and
(p) enter into such agreements (including underwriting
agreements in customary form) and take such other actions as
the Requisite Holders shall reasonably request in order to
expedite or facilitate the disposition of such Registrable
Securities pursuant to each Required Registration.
The Company may require each holder of Registrable Securities that
will be included in any Registration to furnish the Company with
such information in respect of such holder of its Registrable
Securities that will be included in such Registration as the
Company may reasonably request and as is required by applicable
laws or regulations.
10.7 Preparation; Reasonable Investigation. In connection
with the preparation and filing of each registration statement
registering Registrable Securities under the Securities Act
pursuant to a Required Registration, the Company will give the
holders of such Registrable Securities so registered, their
underwriters, if any, and their respective counsel and accountants
the opportunity to participate in the preparation of such
registration statement (other than reports and proxy statements
incorporated therein by reference and lawfully and properly filed
with the Commission) and each prospectus included therein or filed
with the Commission, and each amendment thereof or supplement
thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the
Company with its officers and the independent public accountants
who have certified its financial statements as shall be necessary,
in the opinion of such holders or such underwriters, to conduct a
reasonable investigation within the meaning of Section 11(b)(3) of
the Securities Act.
10.8 Rights of Requesting Holders. Each holder of Registrable
Securities which makes a written request therefor within 30 days
after the notice to such holders provided for in Section 10.4 or
Section 10.5, as the case may be, shall have the right to receive
copies of the information, notices and other documents described in
Section 10.6(c), Section 10.6(l) and Section 10.6(m) in connection
with any proposed Registration by the Company under the Securities
Act.
10.9 Expenses.
(a) The holder of this Warrant agrees to pay a pro rata
share of the direct out of pocket costs of the Company paid to
third parties, including registration fees, qualification
fees, reasonable legal expenses of the Company, printing
expenses, the costs of special audits or "cold comfort"
letters and expenses of underwriters, and the reasonable fees
and expenses of any necessary special experts in connection
with all registrations, qualifications, notifications or
exemptions pursuant to Sections 10.4 or 10.13 and all
offerings and sales by each holder of the Restricted Stock
which is being registered in such registration pursuant to
Sections 10.4 or 10.13, the holder's pro rata share to be
determined with reference to the total number of shares of
stock included in such Registration.
(b) The Company agrees to pay all expenses (including
without limitation registration fees, qualification fees,
legal expenses (including the reasonable fees and expenses of
one counsel to the holders of Warrants or Restricted Stock
whose Underlying Shares relating to such Warrants or whose
Restricted Stock are being registered in any Incidental
Registration), 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 any registrations, qualifications,
notifications or exemptions pursuant to Section 10.5, other
than as described in Section 10.9(a) above, and all offerings
and sales by each such holder of the Restricted Stock which is
being registered in such registration pursuant to Section
10.5, other than as described in Section 10.9(a) above.
10.10 Indemnification. In connection with each
registration, qualification, notification, or exemption of
securities under Section 10.4 or Section 10.5, 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 10.10 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 10.10. 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 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.
10.11 Other Registration of Common Stock. If any shares
of Common Stock required to be reserved for purposes of the
exercise of Warrants require registration with or approval of any
governmental authority under any federal or state law (other than
the Securities Act) before such shares may be issued upon
conversion, the Company will, at its expense and as expeditiously
as possible, use its best efforts to cause such shares to be duly
registered or approved, as the case may be.
10.12 Availability of Information. The Company will use
its best efforts to comply with the reporting requirements of
Sections 13 and 15(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission
promulgated thereunder, and use its best efforts to comply with all
other public information reporting requirements of the Commission
as from time to time in effect, and cooperate with the holders of
Registrable Securities so as to permit disposition of the
Registrable Securities (including, without limitation, the current
public information requirements of Rule 144(c) and Rule 144A under
the Securities Act). The Company will also cooperate with each
holder of any Registrable Securities in supplying such information
as may be necessary for such holder to complete and file any
information reporting forms presently or hereafter required by the
Commission as a condition to the availability of an exemption from
the Securities Act for the sale of any Registrable Securities.
10.13 Nationwide Warrants. The Company agrees that at any
time it has received a request from any holder of the Nationwide
Warrants to register any of its Registrable Securities in a
Required Registration (as such terms are defined in the Nationwide
Warrants), it will give written notice to all holders of
Registrable Securities hereunder of its intention to proceed with
such registration, and upon the written request of the holder of
any such Registrable Securities who intends to transfer such
Registrable Securities promptly upon the effectiveness of such
registration, given within 20 days after receipt of any such notice
from the Company, and the consent of the Requisite Holders (as
defined in the Nationwide Warrants) of the Nationwide Warrants to
the inclusion of such Registrable Securities in such registration,
the Company will in each instance use its best efforts to cause all
Registrable Securities held by any requesting holder to be included
in such registration.
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 of the same series
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
of the same series 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 of the same series
covering the number of shares so assigned and setting forth the
proportionate aggregate Warrant Price applicable to such assigned
shares.
12. WARRANT DENOMINATIONS.
Warrants are issued 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 and of the same series as the Warrants so
surrendered. All Warrants will be dated the same date as this
Warrant.
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 625,000 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
The term "Commission" shall mean the Securities and Exchange
Commission, or any other Federal agency at the time administering
the Securities Act or 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 evidence 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 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 "Form S-3" shall mean such form under the Securities
Act as in effect on the date hereof or any registration form under
the Securities Act subsequently adopted by the Commission which
permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the
Commission.
The term "Initial per share Warrant Price" shall mean
the lesser of
(a) $2.25, and
(b) the average of the daily market prices per share
(determined in accordance with the definition of "Current
Market Price") of the Common Stock for the ten (10)
consecutive Business Days immediately following the
Business Day on which the Company publicly announces the
Restructuring (as such term is defined in the Note
Agreement) provided that in the event the Restructuring
does not take place, the Initial per share Warrant Price
shall be as set forth in clause (a) of this definition.
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 and West
Coast Life Insurance Company and all warrants hereafter issued in
exchange for the Nationwide Warrants.
The term "Note Agreement" shall mean the Amended and Restated
Note Agreement dated as of July 25, 1996, as amended from time to
time, among the Company and State of Wisconsin Investment Board.
The term "Note" shall mean the Senior Secured Note due January
15, 2000, of the Company issued pursuant to the Note Agreement.
The term "Partial Prepayment Event" shall mean any payment of
the principal amount of the Notes such that after giving effect to
such payment the aggregate principal amount of the Notes (excluding
the portion of such principal amount attributable to capitalized
interest) outstanding does not exceed $6,773,446.
The term "Registrable Securities" shall mean, at any time:
(a) any shares of Common Stock that have been issued
upon the exercise of any Warrant; and
(b) any shares of Common Stock that are issuable upon
the exercise of Warrants which are exercisable at such time.
For purposes of Section 10 of this Warrant, holders of Warrants at
any time shall be deemed to be holders of Registrable Securities
described in clause (b) of this definition that are at such time
issuable upon exercise in full of such Warrants. As to any
particular Registrable Securities, once issued, such Securities
shall cease to be Registrable Securities:
(i) when a registration statement with respect to
the sale of such Securities shall have become effective
under the Securities Act and such Securities shall have
been disposed of in accordance with such registration
statement;
(ii) when such Securities shall have been
distributed to the public pursuant to Rule 144 (or any
successor provision) under the Securities Act;
(iii) when such Securities shall have been otherwise
transferred and subsequent disposition thereof shall not
require registration or qualification under the
Securities Act;
(iv) when such Securities shall have ceased to be
outstanding or (with respect to Registrable Securities
described in clause (b) of this definition) issuable upon
exercise of the Warrants; or
(v) when such Securities shall be held (directly
or indirectly) by the Company, any Subsidiary or
any Affiliate.
The term "Registration" shall mean each Required Registration
and each Incidental Registration.
The term "Related Warrants" shall mean the warrants (other
than this Warrant) of series A and series B initially issued by the
Company on the date hereof to the holder of the Note.
The term "Requisite Holders" shall mean the holders of
Warrants and Restricted Stock which constitute 50% or more of the
sum of (i) the Underlying Shares which are issued 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 statue, 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
the Related Warrants and all warrants hereafter issued in exchange
or substitution for this Warrant or any Related Warrants.
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,
series, 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
evidence 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.
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
rights or liabilities as a shareholder, prior to the exercise
hereof as hereinbefore provided.
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.
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.
18. APPLICABLE LAW.
This Warrant will be construed in accordance with and governed
by the laws of the State of Wisconsin.
<PAGE>
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
July 25, 1996.
STOKELY USA, INC.
President
ATTEST:
Secretary
<PAGE>
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: <PAGE>
ASSIGNMENT
FOR VALUE RECEIVED ___________________________ hereby sells,
assigns and transfer 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:
Exhibit 99.5
_________________________________________________________________
_________________________________________________________________
STOKELY USA, INC.
AMENDED AND RESTATED
NOTE AGREEMENT
Dated as of July 25, 1996
Re: $14,859,199.75 Amended and Restated Senior Secured Notes Due
January 15, 2000
________________________________________________________________
________________________________________________________________
TABLE OF CONTENTS
PAGE
1. BACKGROUND; AMENDMENT AND RESTATEMENT . . . . . . . . . . 1
1.1 Background . . . . . . . . . . . . . . . . . . . . . 1
1.2 Agreement and Consent of Company to Amendments and
Restatements . . . . . . . . . . . . . . . . . . . . 2
1.3 Agreement and Consent of Purchasers to Amendments
and Restatements . . . . . . . . . . . . . . . . . . 4
1.4 Substitution of Notes on Effective Date. . . . . . . 4
1.5 Exchange of Warrants on Effective Date . . . . . . . 4
1.6 Failure to Deliver, Failure of Conditions. . . . . . 4
2. REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . 5
2.1 Representations of the Company . . . . . . . . . . . 5
2.2 Representations of the Purchasers. . . . . . . . . . 5
3. CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . 5
3.1 Notes. . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Collateral Document Amendments . . . . . . . . . . . 6
3.3 Title Matters. . . . . . . . . . . . . . . . . . . . 6
3.4 Warrants . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Intercreditor Agreement Amendment. . . . . . . . . . 6
3.6 Sale of Grandview and Walla Walla Properties;
Application of Proceeds. . . . . . . . . . . . . . . 6
3.7 Dean Foods Agreement . . . . . . . . . . . . . . . . 6
3.8 SWIB Documents . . . . . . . . . . . . . . . . . . . 7
3.9 Closing Certificate. . . . . . . . . . . . . . . . . 7
3.10 Legal Opinions . . . . . . . . . . . . . . . . . . . 7
3.11 Consent of Holders of Other Company Indebtedness . . 7
3.12 Private Placement Numbers. . . . . . . . . . . . . . 7
3.13 Accrued Interest on Existing Notes . . . . . . . . . 7
3.14 Expenses . . . . . . . . . . . . . . . . . . . . . . 8
3.15 Satisfactory Proceedings . . . . . . . . . . . . . . 8
3.16 Waiver of Conditions . . . . . . . . . . . . . . . . 8
4. INTEREST ON THE NOTES . . . . . . . . . . . . . . . . . . 8
4.1 Interest Payments. . . . . . . . . . . . . . . . . . 8
4.2 Capitalized Interest Amounts . . . . . . . . . . . . 8
5. PREPAYMENT OF NOTES . . . . . . . . . . . . . . . . . . . 9
5.1 Required Prepayments . . . . . . . . . . . . . . . . 9
5.2 Prepayment at Option of Holders Upon Occurrence of
Put Event. . . . . . . . . . . . . . . . . . . . . . 10
5.3 Optional Prepayment. . . . . . . . . . . . . . . . . 10
5.4 Prepayment Attending a Declined Waiver . . . . . . . 11
5.5 Prepayments from Excess Cash Flow. . . . . . . . . . 12
5.6 Prepayment Upon a Distribution of Proceeds . . . . . 12
5.7 Allocation and Application of Prepayments. . . . . . 12
5.8 Delivery of Notes in Payment of Warrant Purchase
Price. . . . . . . . . . . . . . . . . . . . . . . . 12
5.9 No Other Optional Prepayments. . . . . . . . . . . . 13
5.10 Direct Payment . . . . . . . . . . . . . . . . . . . 13
6. COMPANY COVENANTS . . . . . . . . . . . . . . . . . . . . 14
6.1 Corporate Existence, Etc . . . . . . . . . . . . . . 14
6.2 Insurance. . . . . . . . . . . . . . . . . . . . . . 14
6.3 Taxes, Claims for Labor and Materials, Compliance
with Laws. . . . . . . . . . . . . . . . . . . . . . 14
6.4 Maintenance, Etc . . . . . . . . . . . . . . . . . . 15
6.5 Nature of Business . . . . . . . . . . . . . . . . . 15
6.6 Limitations on Funded Debt . . . . . . . . . . . . . 15
6.7 Limitations on Liens . . . . . . . . . . . . . . . . 16
6.8 Maintenance of Consolidated Tangible Net Worth . . . 18
6.9 Minimum Current Ratio. . . . . . . . . . . . . . . . 18
6.10 Sales of Assets. . . . . . . . . . . . . . . . . . . 18
6.11 Mergers. . . . . . . . . . . . . . . . . . . . . . . 19
6.12 Capital Expenditures . . . . . . . . . . . . . . . . 20
6.13 Restricted Payments. . . . . . . . . . . . . . . . . 20
6.14 Restricted Investments . . . . . . . . . . . . . . . 20
6.15 Payments on Indebtedness . . . . . . . . . . . . . . 20
6.16 Repurchase of Notes. . . . . . . . . . . . . . . . . 21
6.17 Termination of Pension Plans . . . . . . . . . . . . 21
6.18 Reports and Rights of Inspection . . . . . . . . . . 21
6.19 Subsidiaries . . . . . . . . . . . . . . . . . . . . 26
6.20 Amendment of Credit Agreement. . . . . . . . . . . . 26
6.21 Transactions with Subsidiaries . . . . . . . . . . . 26
7. EVENTS OF DEFAULT AND REMEDIES THEREFOR . . . . . . . . . 27
7.1 Events of Default. . . . . . . . . . . . . . . . . . 27
7.2 Notice of Holders. . . . . . . . . . . . . . . . . . 30
7.3 Acceleration of Maturity . . . . . . . . . . . . . . 30
7.4 Rescission of Acceleration . . . . . . . . . . . . . 31
8. AMENDMENTS, WAIVERS AND CONSENTS. . . . . . . . . . . . . 31
8.1 Consent Required . . . . . . . . . . . . . . . . . . 31
8.2 Solicitation of Noteholders. . . . . . . . . . . . . 32
8.3 Effect of Amendment or Waiver. . . . . . . . . . . . 32
9. INTERPRETATION OF AGREEMENT; DEFINITIONS. . . . . . . . . 32
9.1 Definitions. . . . . . . . . . . . . . . . . . . . . 32
9.2 Accounting Principles. . . . . . . . . . . . . . . . 47
9.3 Directly or Indirectly . . . . . . . . . . . . . . . 47
10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 47
10.1 Note Register. . . . . . . . . . . . . . . . . . . . 47
10.2 Exchange of Notes. . . . . . . . . . . . . . . . . . 47
10.3 Loss, Theft, Etc. of Notes . . . . . . . . . . . . . 48
10.4 Expenses, Stamp Tax Indemnity. . . . . . . . . . . . 48
10.5 Waiver of Past Defaults. . . . . . . . . . . . . . . 49
10.6 Potential Restructuring after Effective Date . . . . 49
10.7 Powers and Rights Not Waived; Remedies Cumulative. . 50
10.8 Notices. . . . . . . . . . . . . . . . . . . . . . . 50
10.9 Reproduction of Documents. . . . . . . . . . . . . . 50
10.10 Counterparts. . . . . . . . . . . . . . . . . . 51
10.11 Successors and Assigns. . . . . . . . . . . . . 51
10.12 Survival of Covenants and Representations . . . 51
10.13 Severability. . . . . . . . . . . . . . . . . . 51
10.14 Governing law . . . . . . . . . . . . . . . . . 51
10.15 Captions. . . . . . . . . . . . . . . . . . . . 52
Schedule I -- Purchaser Information
Schedule II -- Information as to Company and
Subsidiaries
Exhibit A -- Form of Amended and Restated Senior
Secured Note Due January 15, 2000
Exhibit B1 -- Form of Series A Warrant
Exhibit B2 -- Form of Series B Warrant
Exhibit C -- Form of Security Agreement Amendment
Exhibit D -- Form of Assignment Agreement Amendment
Exhibit E -- Form of Mortgage Amendment
Exhibit F -- Form of Indemnification Agreement
Amendment
Exhibit G -- Form of Intercreditor Agreement
Amendment
Exhibit H -- Form of Closing Certificate
Exhibit I -- Form of Opinion of Counsel to the
Company
<PAGE>
Stokely USA, Inc.
Amended and Restated Note Agreement
$14,859,199.75 Amended and Restated Senior Secured Notes Due
January 15, 2000
Dated as of July 25, 1996
To each of the Purchasers named in
Schedule I hereto which is a
signatory to this Agreement
Ladies and Gentlemen:
The undersigned, STOKELY USA, INC., a Wisconsin corporation
(the "Company"), agrees with each of you as follows:
1. BACKGROUND; AMENDMENT AND RESTATEMENT
1.1 Background.
(a) Existing Note Agreement and Existing Notes. The
Company has issued its 9.37% Senior Secured Notes (as
amended up to, but excluding, the Effective Date, the
"Existing Notes"), in the aggregate principal amount of
$25,000,000, pursuant to that certain Note Agreement dated
as of January 1, 1990, as amended by an Amendment to Note
Agreement dated August 18, 1992, a Second Amendment to Note
Agreement (the "Second Amendment") dated June 11, 1993, and
a Third Amendment to Note Agreement (the "Third Amendment")
dated May 31, 1995 (as amended up to, but excluding, the
Effective Date (the "Existing Note Agreement"), entered into
among the Company and each of the institutions named in
Schedule I hereto (the "Purchasers").
(b) Existing Warrants and Existing Warrant
Certificates. In connection with the execution and delivery
of the Second Amendment, the Company issued those certain
Warrants (the "Existing Warrants") dated June 11, 1993,
granting the Purchasers the right to purchase, in the
aggregate, 50,000 shares of common stock, $.05 par value, of
the Company.
(c) Existing Collateral Documents and Existing
Intercreditor Agreement. In connection with the execution
and delivery of the Third Amendment, the following
agreements were executed and delivered:
(i) a Security Agreement dated as of May 31, 1995
(the "Existing Security Agreement"), among the Company,
the Purchasers and State of Wisconsin Investment Board
("SWIB"), pursuant to which the Company granted the
Purchasers and SWIB a Lien on and security interest in
certain assets of the Company therein described;
(ii) an Assignment of Contracts, Warranties and
Permits dated as of May 31, 1995 (the "Existing
Assignment"), pursuant to which the Company assigned to
the Purchasers and SWIB all contracts, warranties and
permits affecting the Properties (as defined therein);
(iii) certain mortgages and deeds of trust
described on Schedule II hereto dated as of May 31,
1995 (collectively, the "Existing Mortgages") on all
interests in real property of the Company (other than
the real property described in Section 3N of the
Existing Security Agreement) in favor of the Purchasers
and SWIB;
(iv) an Environmental Indemnification Agreement
dated as of May 31, 1995 (the "Existing Indemnification
Agreement"), pursuant to which the Company agreed to
indemnify the Purchasers and SWIB for losses relating
to environmental matters; and
(v) an Intercreditor and Collateral Agency
Agreement dated as of May 31, 1995 (the "Existing
Intercreditor Agreement"), among the Purchasers and
SWIB.
The Agreements described in the foregoing clauses (i)
through (iv), inclusive, are herein collectively referred to as
the "Existing Collateral Documents."
1.2 Agreement and Consent of Company to Amendments and
Restatements.
(a) Amended and Restated Notes. The Company has
authorized, and (subject to the effectiveness of the
agreement and consent of each Purchaser as provided in
Section 1.3) agrees and consents to, the amendment and
restatement in their entirety of the Existing Notes, as
provided for in this Agreement. The Existing Notes as so
amended and restated (including each note delivered pursuant
to any provision of this Agreement and any note delivered in
substitution for any such note pursuant to any such
provisions) are hereinafter sometimes referred to,
collectively, as the "Notes." The Notes shall (i) be
substituted in the place of the Existing Notes (which shall
be surrendered to the Company for cancellation), (ii) be
dated and bear interest from July 25, 1996, (iii) have the
terms and conditions herein and therein provided, and (iv)
be substantially in the form of Exhibit A.
(b) Exchange of Warrants. The Company has authorized,
and (subject to the effectiveness of the agreement and
consent of each Purchaser as provided in Section 1.3) agrees
to deliver to each Purchaser, one or more Warrants as set
forth below such Purchaser's name in Schedule I hereto,
representing the number of Warrants of each series indicated
on Schedule I hereto. The Existing Warrants shall be
surrendered by the Purchasers to the Company for
cancellation.
(c) Amendments of Existing Collateral Documents. The
Company has authorized, and (subject to the effectiveness of
the agreement and consent of each Purchaser as provided in
Section 1.3) agrees and consents to,
(i) a First Amendment to the Existing Security
Agreement (the "Security Agreement Amendment"), in the
form attached hereto as Exhibit C;
(ii) a First Amendment to the Existing Assignment
(the "Assignment Agreement Amendment"), in the form
attached hereto as Exhibit D;
(iii) a First Amendment to each of the
Existing Mortgages that has not been released prior to
the Effective Date (the "Mortgage Amendments"), in the
form attached hereto as Exhibit E; and
(iv) a First Amendment to the Existing
Indemnification Agreement (the "Indemnification
Agreement Amendment"), in the form attached hereto as
Exhibit F.
(d) Warrants. The Company has authorized the issue of
Series A Warrants and Series B Warrants (collectively, the
"Warrants"), in the forms attached hereto as Exhibits B1 and
B2, respectively, granting the Purchasers the right to
purchase 1,203,124 shares of the Company's common stock,
$.05 par value (the "Common Stock"), subject to the
provisions and adjustments and on the terms and conditions
set forth therein. The Warrants shall be issued in exchange
for the Existing Warrants held by the Purchasers (which
shall be surrendered to the Company for cancellation).
(e) Existing Defaults. The Company desires that the
Purchasers waive existing Events of Default resulting from
violations of Sections 5.8 and 5.14(a)(ii) of the Existing
Note Agreement and amend certain covenants in the Existing
Note Agreement in exchange for the substitution of Notes
described in subsection (a) above, the exchange of Warrants
described in subsection (d) above, and the application of
the net proceeds of the sale of certain Properties of the
Company to the partial prepayment of the Existing Notes, as
described in Section 3.6.
1.3 Agreement and Consent of Purchasers to Amendments and
Restatements.
Subject to the satisfaction of the conditions set forth in
Section 3, each Purchaser, by execution of this Agreement, hereby
agrees and consents to the amendment and restatement of the
Existing Notes and the Existing Note Agreement, the exchange of
the Warrants and the amendments of the Existing Collateral
Documents.
1.4 Substitution of Notes on Effective Date.
On the Effective Date, the Company will deliver to each
Purchaser, at the office of Hebb & Gitlin, a Professional
Corporation, One State Street, Hartford, CT 06103, one or more
Notes (as set forth below such Purchaser's name on Schedule I
hereto), in the denominations indicated on Schedule I hereto, in
the aggregate outstanding principal amount of the Existing Notes
held by such Purchaser, dated July 25, 1996, and payable to such
Purchaser or payable as otherwise indicated on Schedule I hereto,
against delivery by such Purchaser of such Existing Notes to the
Company for cancellation. All amounts owing under, and evidenced
by, the Existing Notes as of the Effective Date shall continue to
be outstanding under, and shall after the Effective Date be
evidenced by, the Notes, and shall be repayable in accordance
with this Agreement and the Notes.
1.5 Exchange of Warrants on Effective Date.
In consideration of the execution and delivery of this
Agreement by each Purchaser, the Company has authorized, and
(subject to the effectiveness of the agreement and consent of
each Purchaser as provided in Section 1.3) agrees to deliver to
each Purchaser, in exchange for the Existing Warrants held by
such Purchaser which shall be delivered to the Company for
cancellation, one or more Series A Warrants and Series B Warrants
(as set forth below your name in Schedule I hereto) for the
initial purchase of the number of shares of Common Stock
indicated on Schedule I hereto.
1.6 Failure to Deliver, Failure of Conditions.
If on the Effective Date the Company fails to tender to the
Purchasers the Notes to be delivered on such date, or if the
conditions specified in Section 3 to be fulfilled on or before
the Effective Date have not been fulfilled, the Purchasers may
thereupon elect to be relieved of all further obligations
hereunder and the consent and agreement of the Purchasers
contemplated by Section 1.3 shall not become effective. In such
event, nothing in this Section 1.6 shall operate to relieve the
Company from any of its obligations under the Existing Note
Agreement, which shall continue in full force and effect and
shall not be modified by this Agreement.
2. REPRESENTATIONS
2.1 Representations of the Company.
The Company represents and warrants that all representations
set forth in the form of certificate attached hereto as Exhibit H
are true and correct as of the date hereof and are incorporated
herein by reference with the same force and effect as though
herein set forth in full.
2.2 Representations of the Purchasers.
(a) Acquisition for Investment. Each Purchaser
severally represents, and in entering into this Agreement
the Company understands, that such Purchaser is acquiring
the Notes for the purpose of investment and with no present
intention of distributing or reselling the Notes or any part
thereof, but without prejudice to its right at all times to
(i) sell or otherwise dispose of all or any part of the
Notes pursuant to a registration statement filed under the
Securities Act, or in a transaction exempt from the
registration requirements of the Securities Act, and (ii)
have control over the disposition of all of its assets to
the fullest extent required by any applicable insurance law.
Each Purchaser acknowledges that the Notes it is acquiring
on the Effective Date will not, as of said Effective Date,
be registered under the Securities Act and that the Notes
may only be offered or sold in compliance with the
Securities Act and applicable state securities laws, or in a
transaction exempted therefrom.
(b) Source of Funds. Each Purchaser further severally
represents that its representation made in Section 3.2(a) of
the Existing Note Agreement was true at the time of its
execution and delivery of the Existing Note Agreement
(subject to clause (b)(3) of such Section).
(c) Accredited Investor. Each Purchaser severally
represents that it is an "accredited investor" as such term
is defined in Rule 501 of Regulation D promulgated pursuant
to the Securities Act.
3. CLOSING CONDITIONS
The effectiveness of this Agreement, as to the parties
hereto, is subject to the satisfaction of the following
conditions precedent (such time of effectiveness is herein
referred to as the "Effective Date"):
3.1 Notes.
Each Purchaser shall have received Notes in the form of
Exhibit A, dated July 25, 1996, in the principal amount set forth
opposite its name in Schedule I, duly executed by the Company.
3.2 Collateral Document Amendments.
The Company and, where applicable, SWIB, shall have executed
and delivered a counterpart of the Security Agreement Amendment,
the Assignment Agreement Amendment, the Mortgage Amendments and
the Indemnification Agreement Amendment.
3.3 Title Matters.
The Company shall have delivered or caused to be delivered
to the Purchasers endorsements to the existing loan policies
down-dating such policies to the date of the recording of the
Mortgage Amendments, satisfactory to the Purchasers and showing
no exceptions to title except as contained in the existing loan
policies or otherwise acceptable to the Purchasers.
3.4 Warrants.
Each Purchaser shall have received one or more Series A
Warrants and Series B Warrants, dated the Effective Date and duly
executed by the Company, in exchange for such Purchaser's
Existing Warrants delivered to the Company on the Effective Date
for cancellation, for the purchase of the number of shares of
Common Stock set forth opposite such Purchaser's name in Schedule
I.
3.5 Intercreditor Agreement Amendment.
SWIB shall have executed and delivered a counterpart of the
First Amendment to Intercreditor and Collateral Agency Agreement
(the "Intercreditor Agreement Amendment"), in the form attached
hereto as Exhibit G.
3.6 Sale of Grandview and Walla Walla Properties;
Application of Proceeds.
The Company shall have completed the sale of its Grandview,
Washington and Walla Walla, Washington properties and applied the
net proceeds of such sale (excluding the portion of such net
proceeds allocable to SWIB) to the prepayment of principal on the
Existing Notes, without premium, in accordance with Section 2.5
of the Existing Note Agreement. The portion of such net proceeds
allocable to the Existing Notes shall not be less than
$5,434,678.95.
3.7 Dean Foods Agreement.
Each Purchaser shall have received a copy of the Dean Foods
Agreement duly executed by the Company, Dean Foods Vegetable
Company, a Wisconsin corporation, and AGRIPAC, an Oregon
corporation, certified as true, correct and complete by the
President or a Vice President of the Company.
3.8 SWIB Documents.
Each Purchaser shall have received copies of the Amended and
Restated Note Agreement dated as of the date hereof between the
Company and SWIB and the warrants dated as of the date hereof
issued by the Company to SWIB, each such document in form and
substance satisfactory to the Purchasers and certified as true,
correct and complete by the President or a Vice President of the
Company.
3.9 Closing Certificate.
Each Purchaser shall have received a certificate dated the
Effective Date, signed by the President or a Vice President of
the Company, substantially in the form attached hereto as Exhibit
H.
3.10 Legal Opinions.
Each Purchaser shall have received from Hebb & Gitlin, who
are acting as special counsel to the Purchasers in this
transaction, an opinion dated the Effective Date, in form and
substance reasonably satisfactory to the Purchasers, and from
Michael, Best & Friedrich, counsel for the Company, an opinion
dated the Effective Date, in form and substance reasonably
satisfactory to the Purchasers and covering the matters set forth
in Exhibit I.
3.11 Consent of Holders of Other Company Indebtedness.
Any consents or approvals required to be obtained from
Congress Financial and from any other holder or holders of any
outstanding Indebtedness of the Company and any amendments of
agreements pursuant to which any Indebtedness may have been
issued which shall be necessary to permit the consummation of the
transactions contemplated hereby on the Effective Date shall have
been obtained and all such consents or amendments shall be
satisfactory in form and substance to the Purchasers and their
special counsel.
3.12 Private Placement Numbers.
The Company shall have obtained private placement numbers
for the Notes and the Warrants of each series from the CUSIP
Service Bureau of Standard & Poor's and shall have informed the
Purchasers thereof.
3.13 Accrued Interest on Existing Notes.
The Company shall have paid to each Purchaser, as indicated
on Schedule I hereto, accrued interest on the Existing Notes held
by such Purchaser up to but not including July 25, 1996.
3.14 Expenses.
All fees and disbursements required to be paid pursuant to
Section 10.4 shall have been paid in full.
3.15 Satisfactory Proceedings.
All proceedings taken in connection with the transactions
contemplated by this Agreement, and all documents necessary to
the consummation thereof, shall be reasonably satisfactory in
form and substance to the Purchasers and their special counsel,
and each Purchaser shall have received a copy (executed or
certified as may be appropriate) of all legal documents or
proceedings taken in connection with the consummation of said
transactions.
3.16 Waiver of Conditions.
If on the Effective Date the Company fails to tender to the
Purchasers the Notes to be issued to such Purchasers on such date
or if the conditions specified in this Section 3 have not been
fulfilled, the Purchasers may thereupon elect to be relieved of
all further obligations under this Agreement. Without limiting
the foregoing, if the conditions specified in this Section 3 have
not been fulfilled, the Purchasers may waive compliance by the
Company with any such condition to such extent as they may in
their sole discretion determine. Nothing in this Section 3.16
shall operate to relieve the Company of any of its obligations
hereunder or to waive any of the Purchasers' rights against the
Company.
4. INTEREST ON THE NOTES
4.1 Interest Payments.
Interest (computed on the basis of a 360-day year of twelve
30-day months) shall accrue on the unpaid principal balance of
the Notes from time to time outstanding from and including the
date thereof at the Contract Rate, payable quarterly on the last
day of March, June, September and December in each year (each an
"Interest Payment Date"), commencing with the payment date next
succeeding the date of such Note, until the principal thereof
shall have become due and payable, and to the extent permitted by
law in respect of any Note on any overdue payment of principal,
any overdue payment of interest and any overdue payment of any
Make Whole Amount, payable, on demand, at a rate per annum equal
to the Overdue Rate.
4.2 Capitalized Interest Amounts.
In lieu of making any interest payment on a Note entirely in
cash, if the Contract Rate during the period in which such
interest accrued exceeded 11% per annum, the Company may elect to
add the portion of such interest payment representing interest
exceeding 11% per annum to the outstanding principal amount of
such Note (each such addition with respect to any Note, the
"Capitalized Interest Amount"). Interest shall begin to accrue
on such Capitalized Interest Amount beginning on and including
the Interest Payment Date on which such Capitalized Interest
Amount is added to the principal amount of the related Note.
Each addition of a Capitalized Interest Amount to the principal
amount of a Note shall be recorded by the holder of such Note on
the schedule attached thereto, provided that the failure to make
any such record entry with respect to any addition of capitalized
interest to principal or any payment of principal or interest
shall not limit or otherwise affect the obligations of the
Company under such Note.
5. PREPAYMENT OF NOTES
No prepayment of the Notes may be made except to the extent
and in the manner expressly provided in this Agreement.
5.1 Required Prepayments.
The Company shall pay, and there shall become due and
payable, on each of the dates set forth below, the principal
amount of the Notes set forth below opposite each such date
(each, a "Required Principal Payment"), as follows:
Date of Required Principal
Payment:
Amount of Required Principal
Payment:
September 30, 1996
$601,562
December 31, 1996
$601,562
September 30, 1997
$601,563
December 31, 1997
$601,563 plus such additional
amount (the "Additional
Amount"), if any, so that the
aggregate amount of principal
of the Notes prepaid after the
Effective Date (excluding, for
purposes hereof, any
Capitalized Interest Amount)
equals at least $2,385,627.05.
September 30, 1998
Formula Amount
December 31, 1998
Formula Amount
September 30, 1999
Formula Amount
December 31, 1999
Formula Amount
Formula Amount -- shall mean an amount equal to 10% of
the aggregate principal amount of the Notes outstanding on
December 31, 1997 (excluding the portion of such principal
attributable to capitalized interest) immediately after
giving effect to the prepayment of the Notes required to be
made on such date pursuant to this Section 5.1.
Each Required Principal Payment shall be at 100% of the principal
amount prepaid, together with interest accrued thereon to the
date of prepayment. The entire principal of the Notes remaining
outstanding on January 15, 2000, together with interest accrued
thereon, shall become due and payable on January 15, 2000.
5.2 Prepayment at Option of Holders Upon Occurrence of Put
Event.
In the event that any Put Event shall occur, the Company
will give written notice (the "Company Notice") of such fact to
the holders of the Notes no later than five Business Days
following the occurrence of such Put Event. The Company Notice
shall (a) describe the facts and circumstances of such Put Event
in reasonable detail, (b) make reference to this Section 5.2, (c)
offer in writing to prepay on a date (the "Prepayment Date"),
which shall be not less than 30 days nor more than 60 days after
the date of such Company Notice, all of the outstanding Notes
held by each holder, together with accrued interest to the date
of prepayment, and (d)(i) request each holder of the Notes to
notify the Company in writing, not less than ten days prior to
such Prepayment Date, of its acceptance or rejection of such
offer, and (ii) inform each holder of the Notes that, upon such
holder's receipt of such Company Notice, failure to accept such
offer in writing on or before the tenth day prior to such
Prepayment Date shall be deemed an acceptance of such prepayment
offer. The Company shall, on such Prepayment Date, prepay in
full the principal amount of all Notes held by holders who have
accepted such prepayment offer, together with accrued interest
thereon.
Without limiting the foregoing, notwithstanding any failure
on the part of the Company to give the Company Notice herein
required as a result of the occurrence of a Put Event, each
holder of a Note who fails to receive such notice shall have the
right by delivery of written notice to the Company to require the
Company to prepay, and the Company will prepay, such holder's
Notes in full, together with accrued interest thereon to the date
of prepayment, at any time within 90 days after such holder shall
have actual knowledge of any such Put Event.
5.3 Optional Prepayment.
The Company, upon not less than ten nor more than 60 days'
prior written notice of the date and principal amount of any
optional prepayment to the holders of the Notes (the "Company
Call"), shall be entitled to prepay the Notes at any time in
whole, or from time to time in part (in multiples of $100,000),
in the manner set forth below. The Company Call shall (a) make
reference to this Section 5.3, (b) state whether the Notes are to
be prepaid in whole or in part and, if in part, shall state the
aggregate principal amount and the amount of each holder's Notes
to be prepaid (which shall be pro rata among all holders), and
(c) state the date for such prepayment. The Company shall, on
such prepayment date, make prepayments with accrued interest and,
except as hereinafter set forth, a premium equal to the Make
Whole Premium on the principal amount of Notes to be so prepaid
to the respective holders thereof. Any prepayment of the Notes
pursuant to this Section 5.3 shall be without a Make Whole
Premium if such prepayment (i) is made from the proceeds of a
Transfer of assets pursuant to Section 6.10 or (ii) when added to
all other prepayments made by the Company pursuant to this
Section 5.3 (other than pursuant to the preceding clause (i))
during the then current fiscal year of the Company does not
exceed 100% of Excess Cash Flow for the fiscal year of the
Company most recently ended. All other optional prepayments
shall be with a Make Whole Premium.
5.4 Prepayment Attending a Declined Waiver.
If (i) the Company shall request the holders of the Notes to
consent to a merger, acquisition, investment, corporate
reorganization or recapitalization which requires a waiver of any
covenant of the Company contained in this Agreement (each a
"Material Transaction") and (ii) the holders of the percentage of
Notes required to grant such waiver hereunder do not grant such
waiver within 30 days following the Company's request therefor (a
"Declined Waiver"), then for a period of 150 days following such
Declined Waiver the Company shall have the option to prepay the
Notes of the holders denying such waiver provided the Company
elects to complete such Material Transaction. In connection with
any such request for a waiver, the Company shall (a) describe in
reasonable detail the facts and circumstances of the Material
Transaction it is considering, (b) make reference to this Section
5.4, (c) state the covenant herein which the holders are
requested to waive upon completion of such Material Transaction
and the extent and duration of the requested waiver, (d) request
each holder of the Notes to notify the Company in writing, within
30 days of such request, whether such holder agrees to so waive
such covenant upon completion of such Material Transaction, and
(e) inform each holder that, upon such holder's receipt of such
notice, failure to grant such waiver in writing on or before the
30th day following such request shall be deemed a denial of such
waiver and entitle the Company to prepay in whole the Notes of
each holder denying such waiver on or before the 150th day
following the Declined Waiver upon not less than ten days' prior
written notice of prepayment. Any prepayment of Notes pursuant
to this Section 5.4 shall occur as soon as practicable prior to,
or concurrently with, the completion of the Material Transaction.
The Company shall give each holder withholding its consent to
such Material Transaction not less than ten days' prior written
notice of the date of prepayment pursuant to this Section 5.4
and, on such prepayment date, make prepayments with accrued
interest and a premium equal to the Make Whole Premium on all
Notes held by holders who have withheld their consent to the
Material Transaction.
5.5 Prepayments from Excess Cash Flow.
The Company shall pay, and there shall become due and
payable, on the last day of June in each of the years 1997, 1998
and 1999, the principal amount of the Notes, with accrued
interest, in an amount equal to 50% of Excess Cash Flow (if
positive) for the fiscal year of the Company ended on the March
31 immediately preceding such payment date.
5.6 Prepayment Upon a Distribution of Proceeds.
The Company agrees that in the event that all or any portion
of the Notes shall be prepaid out of a distribution of proceeds
pursuant to Section 4 of the Intercreditor Agreement, it will
pay, in cash, concurrently with such prepayment accrued interest
on the principal amount of the Notes to be so prepaid to the
respective holders thereof, without premium.
5.7 Allocation and Application of Prepayments.
If at the time of any partial prepayment of the principal of
the Notes made pursuant to Section 5.1, Section 5.3, Section 5.5
or Section 5.6 there is more than one Note outstanding, the
aggregate principal amount of each such partial prepayment shall
be allocated among the Notes at the time outstanding pro rata in
proportion to their respective unpaid principal amounts. Each
partial prepayment of the principal of the Notes pursuant to any
of Sections 5.2 through 5.6 will be applied first, in the case of
any such prepayment made prior to December 31, 1997, to the then
remaining Additional Amount required to be paid on December 31,
1997 pursuant to Section 5.1, second, to the amount due on the
maturity date of the Notes until the aggregate outstanding
principal amount of the Notes is reduced to $10,226,554
(excluding, for purposes hereof, any Capitalized Interest
Amount), and third, to the scheduled prepayments applicable to
the Notes, as set forth in Section 5.1, in the order of the
maturity thereof.
5.8 Delivery of Notes in Payment of Warrant Purchase Price.
Each Warrant provides that the holder thereof may tender
Notes to the Company in partial or complete payment of the
purchase price for the shares of Common Stock issued upon
exercise of such Warrant. Promptly following the receipt of any
Note so tendered, the Company shall immediately cancel and retire
the same (and no such Note shall be reissued) and shall issue to
the holder thereof a new Note in the principal amount of such
tendered Note remaining after deduction of the principal amount
thereof applied to the payment of the purchase price for the
shares of Common Stock. The Company and the Purchasers agree
that a tender of Notes in payment of the exercise price in
respect of any Warrant shall not be deemed to be a prepayment or
an acquisition of the Notes, but rather a conversion of such
Notes, pursuant to the terms of such Warrant, into Common Stock.
5.9 No Other Optional Prepayments.
Except as provided in Section 5.3, the Company will not make
any optional prepayment (whether directly or indirectly by
purchase or other acquisition) in respect of any of the Notes.
Without limitation of the foregoing, any non-scheduled prepayment
of the Notes (including a prepayment made for purposes of
effecting a Partial Prepayment Event (as defined in the Series B
Warrant) that is not being made either (a) in connection with a
Change of Control or a Declined Waiver, or (b) from Excess Cash
Flow or proceeds of collateral, shall be made pursuant to the
terms and provisions of Section 5.3.
5.10 Direct Payment.
Notwithstanding anything to the contrary in this Agreement
or the Notes, in the case of any Note owned by any Purchaser or
its nominee or owned by any other institutional holder who has
given written notice to the Company requesting that the
provisions of this Section 5.10 shall apply, the Company will
promptly and punctually pay when due the principal thereof and
premium, if any, and interest thereon, without any presentment
thereof directly to such Purchaser or such subsequent holder at
the address of such Purchaser set forth in Schedule I or at such
other address as such Purchaser or such subsequent holder may
from time to time designate in writing to the Company or, if a
bank account is designated for any Purchaser on Schedule I hereto
or in any written notice to the Company from such Purchaser or
any such subsequent holder, the Company will make such payments
in immediately available funds to such bank account, marked for
attention as indicated, or in such other manner or to such other
account of such Purchaser or such holder in any bank in the
United States as such Purchaser or any such subsequent holder may
from time to time direct in writing. The holder of any Notes to
which this Section 5.10 applies agrees that in the event it shall
sell or transfer any such Notes it will (a) prior to the delivery
of such Notes make a notation thereon of all principal, if any,
prepaid thereon and all interest capitalized in respect thereof,
and (b) promptly notify the Company in writing of the name and
address of the transferee of any Notes so transferred. With
respect to Notes to which this Section 5.10 applies, the Company
shall be entitled to presume conclusively that the original or
such subsequent institutional holder as shall have requested the
provisions hereof to apply to its Notes remains the holder of
such Notes until (i) the Company shall have received from an
authorized officer of the transferor thereof written notice of
the transfer of such Notes and of the name and address of the
transferee, or (ii) such Notes shall have been presented to the
Company as evidence of the transfer. The Purchasers severally
agree, and any subsequent holder requesting direct payment
pursuant to this Section 5.10 shall so agree, to return their
respective Notes to the Company promptly following the final
payment thereof.
6. COMPANY COVENANTS
From and after the Effective Date and continuing so long as
any amount remains unpaid on any Note:
6.1 Corporate Existence, Etc.
The Company will preserve and keep in force and effect, and
will cause each Subsidiary to preserve and keep in force and
effect, its respective corporate existence and all material
licenses and permits necessary to the proper conduct of its
business, provided that the foregoing shall not prevent any
transaction otherwise permitted or consented to under this
Agreement.
6.2 Insurance.
The Company will maintain, and will cause each Subsidiary to
maintain, insurance coverage by financially sound and reputable
insurers in such forms and amounts and against such risks as are
customary for corporations of established reputation engaged in
the same or similar businesses and owning and operating similar
Properties.
6.3 Taxes, Claims for Labor and Materials, Compliance with
Laws.
(a) The Company will promptly pay and discharge, and
will cause each Subsidiary promptly to pay and discharge,
all lawful taxes, assessments and governmental charges or
levies imposed upon the Company or such Subsidiary,
respectively, or upon or in respect of all or any part of
the Property or business of the Company or such Subsidiary,
and all claims for work, labor or materials which, if
unpaid, could become a Lien upon any Property of the Company
or such Subsidiary; provided that the Company or such
Subsidiary shall not be required to pay any such tax,
assessment, charge, levy, or claim if (i) the validity,
applicability or amount thereof is being diligently
contested in good faith by appropriate actions or
proceedings which will prevent the forfeiture or sale of any
material Property of the Company or such Subsidiary or any
material interference with the use thereof by the Company or
such Subsidiary, and (ii) the Company or such Subsidiary
shall set aside on its books reserves reasonably deemed by
it to be adequate with respect thereto.
(b) The Company will promptly comply, and will cause
each Subsidiary promptly to comply, with all laws,
ordinances or governmental rules and regulations to which it
is subject, including without limitation the Occupational
Safety and Health Act of 1970, ERISA and all Environmental
Legal Requirements, the violation of which could materially
and adversely affect the Properties, business or financial
condition of the Company and its Subsidiaries considered as
one enterprise or could result in any Lien upon any Property
of the Company or any Subsidiary that could materially and
adversely affect the Properties, business or financial
condition of the Company and its Subsidiaries considered as
one enterprise.
6.4 Maintenance, Etc.
The Company will maintain, preserve and keep, and will cause
each Subsidiary to maintain, preserve and keep, its Properties
which are used in the conduct of its business (whether owned in
fee or a leasehold interest), excluding any Properties that the
Company or any Subsidiary reasonably determines to be surplus,
obsolete or otherwise not useful in the conduct of its respective
business, in good repair and working order, normal wear and tear
excepted, and from time to time will make all necessary repairs,
replacements, renewals and additions which in the opinion of the
Company will maintain the efficiency thereof.
6.5 Nature of Business.
The Company will not, and will not permit any Subsidiary to,
engage in any business activities or operations substantially
different from and unrelated to the respective business
activities and operations in which they are now engaged.
6.6 Limitations on Funded Debt.
(a) The Company will not, and will not permit any
Subsidiary to, create, issue, assume, guarantee or otherwise
incur or in any manner become liable or responsible in
respect of any Funded Debt, except:
(i) the Notes;
(ii) Funded Debt of the Company and its
Subsidiaries described on Schedule II attached hereto
and renewals, extensions and refundings thereof
(without increase in the principal amount thereof
outstanding at the time of any such renewal, extension
or refunding);
(iii) Funded Debt of the Company and its
Subsidiaries from time to time outstanding under the
Congress Agreement or any subsequent Credit Agreement
that complies with the provisions of Section 6.20, in
an aggregate principal amount not exceeding
$70,000,000;
(iv) additional Funded Debt of the Company and its
Subsidiaries secured by Liens permitted by Section
6.7(a)(vii), provided that at the time of issuance
thereof and after giving effect thereto, the aggregate
principal amount of Funded Debt secured by Liens
pursuant to Section 6.7(a)(vi) shall not exceed
$5,000,000; and
(v) Funded Debt of the Company owing to a Wholly-
owned Subsidiary.
(b) Any corporation which becomes a Subsidiary after
the date of this Agreement shall for all purposes of this
Section 6.6 be deemed to have created, assumed or incurred
at the time it becomes a Subsidiary all Funded Debt of such
corporation existing immediately after it becomes a
Subsidiary.
6.7 Limitations on Liens.
(a) Negative Pledge. The Company will not, and will
not permit any Subsidiary to, cause or permit to exist, or
agree or consent to cause or permit to exist in the future
(upon the happening of a contingency or otherwise), any
mortgage, pledge, security interest, encumbrance, lien or
charge of any kind on its or their property or assets,
whether now owned or hereafter acquired, or upon any income
or profits therefrom (collectively, "Liens"), except:
(i) Liens for taxes, assessments or other
governmental charges or levies which are not yet due
and payable, or are being contested in accordance with
Section 6.3(a);
(ii) Liens created by or resulting from any
judicial or administrative proceeding which is being
diligently appealed in good faith by appropriate
actions or proceedings that will prevent the forfeiture
or sale of any material Property of the Company or any
Subsidiary or any material interference with the use
thereof by the Company or any Subsidiary;
(iii) other Liens incidental to the normal
conduct of the business of the Company or any
Subsidiary or the ownership of its Property which are
not incurred in connection with Indebtedness and which
do not individually or in the aggregate materially
impair the use of such Property in the business of the
Company or of the Company and its Subsidiaries
considered as one enterprise or the value of such
Property for the purposes of such business;
(iv) Liens existing as of the date of this
Agreement and described on Schedule II attached hereto;
(v) Liens securing extensions, renewals or
replacements of Indebtedness secured by Liens permitted
by the foregoing clause (iv) in respect of the same
Property theretofore subject to such Lien;
(vi) Liens on Property or rights relating thereto
securing Indebtedness (1) to secure all or part of the
purchase price or cost of construction of such Property
and which are created contemporaneously with, or within
120 days after, such acquisition or the completion of
such construction or (2) existing at the time of the
acquisition of such Property by the Company or a
Subsidiary, whether or not the Indebtedness secured
thereby is assumed by the Company or such Subsidiary;
provided that
(A) in the case of Liens described in clause
(2) above, no such Lien shall be created in
contemplation of any such transaction,
(B) the amount of any Indebtedness secured
by a Lien described in this clause (vi) shall not
exceed 100% of the Fair Market Value of the
Property subject thereto, and
(C) the aggregate outstanding amount of
Indebtedness secured by Liens described in this
clause (vi) shall not exceed $5,000,000 at any
time;
(vii) Liens (1) on the Property of the Company
described in Section 5 of the Congress Agreement on May
21, 1996, whether pursuant to the Congress Agreement or
any subsequent Credit Agreement that complies with the
provisions of Section 6.20, and (2) on all other
Property of the Company created pursuant to the
Security Documents; and
(viii) the statutory floating trust arising
under PACA in favor of any seller of perishable
agricultural commodities and covering perishable
agricultural commodities purchased by the Company or
any Subsidiary from such seller and the proceeds
thereof, provided that the Company or such Subsidiary
pays such seller the full amount of the purchase price
thereof within the time specified therefor in the
contract between the Company or such Subsidiary and
such seller.
(b) Equal and Ratable Lien; Equitable Lien. In case
any Property shall be subjected to a Lien in violation of
this Section 6.7, the Company will forthwith make or cause
to be made, to the fullest extent permitted by applicable
law, provision whereby the Notes will be secured equally and
ratably with all other obligations secured thereby pursuant
to such agreements and instruments as shall be approved by
the Required Holders, and the Company will cause to be
delivered to each holder of a Note an opinion of independent
counsel to the effect that such agreements and instruments
are enforceable in accordance with their terms, and in any
such case the Notes shall have the benefit, to the full
extent that, and with such priority as, the holders of Notes
may be entitled under applicable law, of an equitable Lien
on such property securing the Notes. Such violation of this
Section 6.7 will constitute an Event of Default hereunder,
whether or not any such provision is made pursuant to this
Section 6.7(b).
(c) Financing Statements. The Company will not, and
will not permit any of its Subsidiaries to, sign or file a
financing statement under the Uniform Commercial Code of any
jurisdiction that names the Company or such Subsidiary as
debtor, or sign any security agreement authorizing any
secured party thereunder to file any such financing
statement, except, in any such case, a financing statement
filed or to be filed to perfect or protect a security
interest that the Company or such Subsidiary is entitled to
create, assume or incur, or permit to exist, under the
foregoing provisions of this Section 6.7 or to evidence for
informational purposes a lessor's interest in property
leased to the Company or any such Subsidiary.
6.8 Maintenance of Consolidated Tangible Net Worth.
The Company will at all times maintain Consolidated Tangible
Net Worth of no less than $18,000,000, which amount shall be
increased on the first day of each fiscal quarter of the Company,
beginning July 1, 1996, by an amount equal to 50% of Consolidated
Net Income (but not less than zero) for the immediately preceding
fiscal quarter then most recently ended.
6.9 Minimum Current Ratio.
The Company will maintain its ratio of Consolidated Current
Assets to Consolidated Current Liabilities at not less than
1.25:1.
6.10 Sales of Assets.
The Company will not, and will not permit any Subsidiary to,
sell, lease, transfer or otherwise dispose (each, a "Transfer")
of any of its assets to any Person, except:
(a) any Subsidiary may Transfer its assets to the
Company or a Wholly-owned Subsidiary;
(b) the Company or any Subsidiary may sell inventory
in the ordinary course of its business;
(c) the Company may Transfer assets pursuant to the
Restructuring, provided that if any of the assets that are
the subject of such Transfer are subject to a Lien created
pursuant to the Security Documents,
(i) such assets shall be sold for Fair Market
Value,
(ii) the consideration received by the Company
shall be paid in cash, and
(iii) the net proceeds of such Transfer shall
be applied to the prepayment of the Notes in accordance
with the terms and provisions of the Intercreditor
Agreement;
(d) the Company may Transfer assets if such Transfer
does not involve a Substantial Portion of the assets of the
Company and its Subsidiaries, provided that
(i) such Transfer does not violate Section 3D of
the Security Agreement, and
(ii) if the assets that are the subject of any
such Transfer are subject to a Lien created pursuant to
the Security Documents,
(A) such assets shall be sold for Fair
Market Value,
(B) the consideration received by the
Company shall be paid in cash, and
(C) the net proceeds of such Transfer shall
be applied to the prepayment of the Notes in
accordance with the terms and provisions of the
Intercreditor Agreement;
(e) subject to Section 3D of the Security Agreement,
the Company or any Subsidiary may Transfer Properties which
it is not required to maintain under Section 6.4; and
(f) the Company may Transfer assets (other than real
property) if the proceeds of such Transfer in excess of the
limitations contained in subsection (d) are
contemporaneously used to purchase other assets of a similar
nature and of at least equivalent value;
provided in each case that immediately after the consummation
thereof, no Default or Event of Default shall have occurred and
be continuing.
6.11 Mergers.
The Company will not, and will not permit any Subsidiary to,
merge or consolidate with or into any Person, except any
Subsidiary may merge or consolidate with or into the Company.
6.12 Capital Expenditures.
The Company shall not permit, during any fiscal year of the
Company set forth below, the aggregate amount of Capital
Expenditures of the Company and its Subsidiaries during such
fiscal year to exceed the permitted amount set forth opposite
such fiscal year, as follows:
Fiscal Year:
Amount of Capital
Expenditures:
Ending March 31, 1997
an amount equal to
the FY 1997 Cap Ex Amount
Ending March 31, 1998
$4,000,000 plus, during the
period beginning April 1,
1997 and ending
September 30, 1997,
the Carryover Cap Ex
Amount, if any
Ending March 31, 1999
$4,000,000
Ending March 31, 2000
$5,500,000
6.13 Restricted Payments.
The Company will not declare or make, or incur any liability
to declare or make, any Restricted Payments.
6.14 Restricted Investments.
The Company will not, and will not permit any of its
Subsidiaries to, make or authorize any Restricted Investments.
6.15 Payments on Indebtedness.
Except as hereinafter provided, the Company will not make
any payment (other than a scheduled payment) of the principal of
any Indebtedness of the Company or any Subsidiary (including,
without limitation, IRB Indebtedness) unless, concurrently with
such payment, the Company shall make a pro rata payment of the
principal amount of the Notes. Notwithstanding the foregoing,
the Company may
(a) pay or prepay the IRB Indebtedness relating to the
Walla Walla property and any unsecured IRB Indebtedness
related to any Properties sold in connection with the
Restructuring, provided that the source of funds used by the
Company to make any such payment or prepayment shall not
include any proceeds of the Transfer of Properties subject
to a Lie n securing the Notes;
(b) prepay, in connection with the sale of any
Property ,
(i) IRB Indebtedness secured by a Lien on such
Property having priority over the Lien on such Property
securing the Notes, provided that the net proceeds of
the sale of such Property will be sufficient to prepay
such IRB Indebtedness in full and the Company applies
the remaining net proceeds to the prepayment of the
Notes in accordance with Section 6.10(d), and
(ii) any other Indebtedness secured by Liens on
such Property permitted to exist under Section
6.7(a)(iv), (a)(v) or (a)(vi), and
(c) make payments of principal from time to time under
the Cred it Agreement.
6.16 Repurchase of Notes.
Except as provided in Section 5, neither the Company nor any
Subsidiary, directly or indirectly, may repurchase or make any
offer to repurchase any Notes unless the offer has been made to
repurchase Notes, pro rata, from all holders of the Notes at the
same time and upon the same terms. In case the Company
repurchases any Notes, such Notes shall thereafter be cancelled
and no Notes shall be issued in substitution thereof. With
respect to provisions of this Agreement entitling holders of
outstanding Notes to vote, sign consents, amendments or waivers
or to take any other action under this Agreement, Notes owned or
held, directly or indirectly, legally or equitably, by the
Company or any of its Subsidiaries or Affiliates shall be
disregarded.
6.17 Termination of Pension Plans.
The Company will not and will not permit any Subsidiary to
permit any employee benefit plan maintained by it to be
terminated in a manner which would result in the imposition of a
lien on any property of the Company or any Subsidiary pursuant to
ERISA.
6.18 Reports and Rights of Inspection.
(a) Reports. The Company will keep, and will cause
each domestic Subsidiary to keep, proper books of record and
account in which full and accurate entries will be made of
all dealings or transactions of or in relation to the
business and affairs of the Company or such Subsidiary, in
accordance with GAAP, and will furnish to each Purchaser so
long as it is the holder of any Note and to each other
institutional holder of the then outstanding Notes (in
duplicate if so specified below or otherwise requested):
(i) Quarterly Statements. As soon as available
and in any event within 45 days after the end of each
quarterly fiscal period (except the last) of each
fiscal year, duplicate copies of the Company's:
(A) consolidated balance sheet as of the
close of such quarter setting forth in comparative
form the amount for the preceding fiscal year-end,
(B) consolidated statement of income for
such quarterly period, setting forth in
comparative form the amount for the corresponding
period of the preceding fiscal year, and
(C) consolidated statement of cash flows for
the portion of the fiscal year ending with such
quarter, setting forth in comparative form the
amount for the corresponding period of the
precedin g fiscal year,
all in reasonable detail and certified as full and
accurate by a Responsible Financial Officer of the
Company;
(ii) Annual Statements. As soon as available and
in any event within 90 days after the close of each
fiscal year of the Company (or, with respect to the
fiscal year of the Company ended March 31, 1996, not
later than July 31, 1996), duplicate copies of the
Company's :
(A) consolidated balance sheets as of the
close of such fiscal year, and
(B) consolidated statements of income and
cash flows for such fiscal year,
in each case setting forth in comparative form the
consolidated figures for the preceding fiscal year, all
in reasonable detail and accompanied by (x) an opinion
thereon of a firm of independent public accountants of
recognized national standing selected by the Company,
to the effect that the consolidated financial
statements have been prepared in accordance with GAAP
and present fairly, in all material respects, the
financial condition of the Company and its Subsidiaries
and that the examination of such accountants in
connection with such financial statements has been made
in accordance with generally accepted auditing
standards, and (y) an additional statement by such
accountants that they have reviewed this Agreement and,
in the course of making the examination necessary for
their opinion on such consolidated financial
statements, they obtained no knowledge of any Default
or Event of Default arising under any of Sections 6.6,
6.8 through 6.10, inclusive, 6.12 through 6.14,
inclusive, and 6.19 or, if such accountants shall have
obtained knowledge of any such Default or Event of
Default under any such Section, specifying such Default
or Event of Default and the nature and status thereof;
(iii) Audit Reports. Promptly after receipt
thereof, one copy of each interim or special audit made
by independent public accountants of the books of the
Company or any Subsidiary;
(iv) SEC and Other Reports. Promptly upon their
becoming publicly available, one copy of each financial
statement, report, notice or proxy statement sent by
the Company to stockholders generally, of each current
or periodic report filed by the Company or any
Subsidiary with any securities exchange or the
Securities and Exchange Commission or any successor
agency, and of each registration statement or
prospectus filed by the Company or any Subsidiary with
any there of;
(v) Requested Information. With reasonable
promptness, such other data and information as any
Purchaser or any such institutional holder may
reasonab ly request;
(vi) Officer's Certificates. Within the periods
provided in clauses (i) and (ii) above, a certificate
of a Responsible Financial Officer of the Company
stating that he has reviewed the provisions of this
Agreement and setting forth: (1) the information and
computations (in sufficient detail) required in order
to establish whether the Company was in compliance with
the requirements of Sections 5.2, 6.6 through 6.10,
inclusive, 6.12 through 6.14, inclusive, and 6.19 at
the end of the period covered by the financial
statements then being furnished, and (2) whether there
existed as of the date of such financial statements,
and whether there exists on the date of the
certificate, any Default or Event of Default and, if
any such condition or event existed or exists,
specifying the nature and period of existence thereof
and the action the Company has taken, is taking or
proposes to take with respect thereto;
(vii) Notice of Default or Event of Default.
Immediately (and in any event within three Business
Days) after becoming aware of the existence of any
condition or event which constitutes a Default or an
Event of Default, a written notice specifying the
nature and period of existence thereof and what action
the Company is taking or proposes to take with respect
thereto;
(viii) Notice of Claimed Default. Immediately
upon becoming aware that the holder of any Note or any
other evidence of Indebtedness or other Security of the
Company or any Subsidiary has given notice or taken any
other action with respect to the claimed Default or
Event of Default, a written notice specifying the
notice given or action taken by such holder and the
nature of a claimed Default or Event of Default and
what action the Company is taking or proposes to take
with respec t thereto;
(ix) Monthly Statements. As soon as available and
in any event within 30 days after the end of each month
(except the last) of each fiscal year or, with respect
to the monthly period ended April 30 in each fiscal
year, within 45 days after the end of such monthly
period, duplicate copies of the Company's:
(A) consolidated balance sheet as of the
last day of such month, setting forth in
comparative form the amount for the preceding
fiscal y ear-end,
(B) consolidated statement of income for
such monthly period, setting forth in comparative
form the amount for the corresponding period of
the preceding fiscal year, and
(C) consolidated statement of cash flows for
the portion of the fiscal year ending with such
month, setting forth in comparative form the
amount for the corresponding period of the
precedin g fiscal year,
in each case setting forth, in comparative form, the
figures for the corresponding period set forth in the
Business Plan, all in reasonable detail and certified
as full and accurate by a Responsible Financial Officer
of the Company; and
(x) Other Information. Within the periods
provided therein, copies of all reports, notices,
financial statements and other information required to
be furnished on a regular basis by the Company to the
lenders under the Credit Agreement and to SWIB under
the SWIB Note Agreement.
(b) Rights of Inspection. The Company will permit
any Purchaser, so long as it is the holder of any Note, and
each other holder of the then outstanding Notes (or such
Persons as either such Purchaser or such other holder may
designate), to visit and inspect, under the Company's
guidance, any of the properties of the Company or any
Subsidiary, to examine all their books of account and
financial records of operations, to make copies and extracts
therefrom, and to discuss their respective affairs, finances
and accounts with their respective officers, other
executives and independent public accountants (and by this
provision the Company authorizes said accountants to discuss
with such Purchaser or such other holder the finances and
affairs of the Company and its Subsidiaries), all at such
reasonable times and as often as may be reasonably
requested; provided that such Purchaser or such other holder
shall give the Company at least five days' notice prior to
any meeting between the Purchaser or such other holder and
the Company's independent public accountants and that the
Company shall be permitted to attend any such meeting. So
long as no Default shall have occurred and be continuing at
such time, the Company shall not be required to pay or
reimburse any Purchaser or any such other holder for
expenses which it may incur in connection with any such
visitation or inspection.
(c) Confidential Information. Any information
regarding the Company or any Subsidiary which is, pursuant
to this Agreement, provided to, or obtained or examined by,
any Purchaser or other holder of any Notes, or any of its
representatives, while such Purchaser or such other holder
or any nominee thereof holds any Notes, shall be considered
and treated by such Purchaser or such other holder and its
respective representatives as confidential. Each Purchaser
severally agrees that it will not disclose any such
information without the prior written consent of the Company
(which consent shall not be unreasonably withheld) other
than on a confidential basis to any one or more of its
respective directors, employees, agents, attorneys and
accountants, or any one or more of the directors, employees,
agents, attorneys and accountants of any other holders of
Notes, who would have access to such information in the
normal course of the performance of such Person's duties and
who first agree to be bound by the confidentiality
provisions hereof; provided, however, that each Purchaser
any such other holder of any Notes may disclose or
disseminate any such information:
(i) as has become generally available to the
public (other than in violation of this Agreement);
(ii) as it in its reasonable discretion deems
necessary in connection with, in response to, or in
compliance with any law, ordinance or governmental
order, regulation, rule, policy, subpoena, notice of
discovery or similar ruling; provided that in each such
case it has provided prompt notice of any proposed
production of information to the Company to the extent
permitted by law; and
(iii) to any prospective purchaser, securities
broker or dealer, or investment banker in connection
with the resale or proposed resale of all or any
portion of the Notes by it or any other holder of
Notes; provided such purchaser, broker or dealer, or
investment banker agrees to maintain such confidential
informatio n confidential.
No Purchaser and no other holder or holders of any Notes
will be liable for the breach of this subsection (c) by any
third party described above or by any other holder of the
Notes.
6.19 Subsidiaries.
The Company will not permit the aggregate amount of assets
of all U.S. Subsidiaries to exceed $200,000 at any time.
6.20 Amendment of Credit Agreement.
The Company will at all times be party to the Congress
Agreement or a subsequent Credit Agreement that:
(a) has an aggregate commitment to provide loans of
not less than $30,000,000; and
(b) does not provide for the termination of such
agreement or the extension of loans thereunder prior to May
21, 1998 .
The Company shall not amend, supplement or modify the Congress
Agreement or any subsequent Credit Agreement, or replace any such
Credit Agreement, if such amended, supplemented, modified or
replacement Credit Agreement
(i) fails to satisfy the requirements described in
clause ( a) or clause (b) above, or
(ii) fails to provide the Company, on a pro forma basis
for the 12-month period immediately following such
amendment, supplement, modification or replacement, with
projected availability thereunder of at least $30,000,000
during the peak borrowing season of the Company during such
period.
6.21 Transactions with Subsidiaries.
The Company will not enter into any transaction, including,
without limitation, the purchase, sale, lease or exchange of any
Property, or the rendering of any service, with any Subsidiary,
except in the ordinary course of and pursuant to the reasonable
requirements of the Company's business and upon fair and
reasonable terms not materially less favorable to the Company
than would be obtained in a comparable arm's-length transaction
with a Person not a Subsidiary.
7. EVENTS OF DEFAULT AND REMEDIES THEREFOR
7.1 Events of Default.
Any one or more of the following shall constitute an "Event
of Default" as such term is used herein:
(a) Payments on the Notes --
(i) Interest Payments -- Default shall occur
in the payment of interest on any Note when the
same shall become due and such default shall
continue for more than five days; or
(ii) Principal or Premium Payments -- Default
shall occur in the payment of the principal of any
Note or the premium thereon at the expressed or
any accelerated maturity date or at any date fixed
for prepayment thereof; or
(b) Default on Indebtedness --
(i) Default under Credit Agreement --
(A) Default -- any event shall occur or any
condition shall exist under the Credit Agreement,
or under any agreement relating thereto, that
immediately or with any one or more of the passage
of time or the giving of notice:
(I) causes (or permits any one or more
of the lenders thereunder or a trustee
therefor to cause) the Indebtedness
outstanding thereunder, or a portion thereof,
to become due prior to its stated maturity or
prior to its regularly scheduled date or
dates of payment; or
(II) permits any one or more of the
holders thereof or a trustee therefor to
require the Company or any Subsidiary to
repurchase such Indebtedness from the holders
thereof;
(B) Termination of Commitment -- (I) the
commitment of the lender or lenders to provide
loans to the Company under the Congress Agreement
or any subsequent Credit Agreement shall be
terminated or shall expire prior to the
replacement of such commitment with new
commitments under a new Credit Agreement or (II)
the Congress Agreement or such subsequent Credit
Agreement shall at any time fail to satisfy all of
the requirements described in clauses (a) and (b)
of Section 6.20; or
(C) Failure to Comply with Loan Conditions
Precedent -- the Company fails, or becomes no
longer able, to satisfy the conditions precedent
to obtaining loans under the Credit Agreement
(other than full utilization of the borrowing base
availability thereunder) and such failure is not
remedied within three Business Days after the date
on which such failure shall first become known to
a Responsible Financial Officer of the Company;
(ii) Default on IRB Indebtedness -- (A) default
shall occur in the payment of the principal or premium
of or interest on any IRB indebtedness (other than the
IRB Indebtedness relating to the Walla Walla property),
as and when the same shall become due and payable by
lapse of time, by declaration, by prepayment or
otherwise, or (B) default shall occur in the
performance or observance of any covenant or agreement
contained in any agreement or other instrument under
which any IRB Indebtedness is outstanding (including
without limitation, in the case of the IRB Indebtedness
relating to the Walla Walla property, a default of the
type described in clause (A) above) and any such
default shall result in acceleration of the maturity of
any Indebtedness evidenced thereby or outstanding or
secured thereunder; or
(iii) Default on Other Indebtedness -- any
event shall occur or any condition shall exist under
any agreement pursuant to which any Indebtedness of the
Company or any Subsidiary (other than Indebtedness
under the Credit Agreement or IRB Indebtedness) in
excess of $250,000 in the aggregate is outstanding that
immediately or with any one or more of the passage of
time or the giving of notice:
(A) causes (or permits any one or more of
the lenders thereunder or a trustee therefor to
cause) the Indebtedness outstanding thereunder, or
a portion thereof, to become due prior to its
stated maturity or prior to its regularly
scheduled date or dates of payment; or
(B) permits any one or more of the holders
thereof or a trustee therefor to require the
Company or any Subsidiary to repurchase such
Indebtedness from the holders thereof; or
(c) Default on Other Agreements -- Any event of
default shall occur under any of the Other Agreements; or
(d) Particular Covenant Defaults -- Default shall
occur in the observance or performance of any covenant or
agreement contained in any Sections 6.5 through 6.15,
inclusive, or Section 6.19 or Section 6.20; or
(e) Other Defaults -- Default shall occur in the
performance or observance of any other covenant or agreement
contained in this Agreement which is not remedied within 30
days after the earlier of: (i) the date on which such
Default shall first become known to a Responsible Financial
Officer of the Company, or (ii) written notice thereof to
the Company by the holder of any Note, which notice shall
specify the Default to be remedied and state that it is a
notice hereunder; or
(f) Representations or Warranties -- Any
representation or warranty made by the Company herein or in
any certificate furnished by or on behalf of the Company in
connection with the consummation of the issuance and
delivery of the Notes or furnished by the Company pursuant
hereto shall be untrue in any material respect as of the
date of the issuance or making thereof; or
(g) Final Judgments -- Final judgment or judgments for
the payment of money in excess of $500,000 in the aggregate
is or are outstanding against the Company or any Subsidiary
and remain unpaid, uncontested or unappealed for a period of
30 days from the date of entry; or
(h) Insolvency --
(i) The Company becomes insolvent or bankrupt, is
generally not paying its debts as they become due or
makes an assignment for the benefit of creditors, or
the Company causes or suffers an order for relief to be
entered with respect to it under applicable Federal
bankruptcy law or applies for or consents to the
appointment of a custodian, trustee, liquidator or
receiver for the Company or for the major part of its
property; or
(ii) A custodian, trustee, liquidator or receiver
is appointed for the Company or for the major part of
its Property and is not discharged within 30 days after
such appointment; or
(iii) Bankruptcy, reorganization, arrangement
or insolvency proceedings, or other proceedings for
relief under any bankruptcy or similar law or laws for
the relief of debtors, are instituted by or against the
Company and, if instituted against the Company, are
consented to or are not dismissed within 30 days after
such institution.
7.2 Notice of Holders.
When any Event of Default described in the foregoing Section
7.1 has occurred, or if the holder of any Note or of any other
evidence of Indebtedness of the Company gives any notice or takes
any other action with respect to a claimed default, the Company
agrees to give notice within three Business Days of such event to
all holders of the Notes then outstanding, such notice to be in
writing and sent in the manner provided in Section 10.8.
7.3 Acceleration of Maturity.
If an Event of Default other than those described in Section
7.1(h) has occurred and is continuing, the holder or holders of
at least 35% in principal amount of the Notes then outstanding
(exclusive of Notes then owned by the Company, any Subsidiaries
or any Affiliates) may exercise any right, power or remedy
permitted to such holder or holders by law and under the Security
Documents, and shall have, in particular, without limiting the
generality of the foregoing, the right by written notice given to
the Company by prepaid overnight courier or personal delivery, to
declare the entire principal and all interest accrued on all
Notes then outstanding to be, and such Notes shall thereupon
become, forthwith due and payable, without any presentment,
demand, protest or other notice of any kind, all of which are
hereby expressly waived and each of the holders of any of the
Notes may proceed to protect and enforce its rights either by
suit in equity and/or by action at law, whether for specific
performance of any covenant or agreement contained in this
Agreement or in the Notes, or in aid of the exercise of any power
granted herein or therein or proceed to obtain judgment or any
other relief whatsoever appropriate to the action or proceeding,
or proceed to enforce any other legal or equitable right of any
such holder of any of the Notes. When any Event of Default
described in Section 7.1(h) has occurred, then all outstanding
Notes shall immediately become due and payable without
presentment, demand or notice of any kind. Upon the Notes
becoming due and payable as a result of any Event of Default as
aforesaid, the Company will forthwith pay to the holders of the
Notes the entire principal and interest accrued on the Notes and,
to the extent not prohibited by applicable law, interest on such
principal and accrued interest at the Overdue Rate for the period
from and after the date of acceleration to and including the date
of payment thereof, and as liquidated damages and not as a
penalty, an additional amount equal to the then applicable Make
Whole Premium. No course of dealing on the part of any holder of
the Notes nor any delay or failure on the part of any holder of
the Notes to exercise any right shall operate as a waiver of such
right or otherwise prejudice such holder's rights, powers and
remedies. The Company further agrees, to the extent not
prohibited by applicable law, to pay to the holder or holders of
the Notes all costs and expenses reasonably incurred by them in
the collection of any Notes upon any Event of Default hereunder
or thereon, including without limitation reasonable compensation
to such holder's or holders' attorneys for all services rendered
in connection therewith.
7.4 Rescission of Acceleration.
The provisions of Section 7.3 are subject to the condition
that if the principal of and accrued interest on all or any
outstanding Notes have been declared immediately due and payable
by reason of the occurrence of any Event of Default other than
those described in Section 7.1(h), the Required Holders may, by
written instrument filed with the Company, rescind and annul such
declaration and the consequences thereof, provided that at the
time such declaration is annulled and rescinded:
(a) no judgment or decree shall have been entered for
the payment of any monies due pursuant to the Notes or this
Agreement;
(b) all arrears of interest upon all the Notes and all
other sums payable under the Notes and under this Agreement
(except any principal, interest or premium on the Notes
which has become due and payable solely by reason of such
declaration under Section 7.3) shall have been duly paid;
and
(c) each and every other Default and Event of Default
shall have been made good, cured or waived pursuant to
Section 7.1;
and provided further, that no such rescission and annulment shall
extend to or affect any subsequent Default or Event of Default or
impair any right consequent thereto.
8. AMENDMENTS, WAIVERS AND CONSENTS
8.1 Consent Required.
Any term, covenant, agreement or condition of this Agreement
may, with the consent of the Company, be amended or compliance
therewith may be waived (either generally or in a particular
instance and either retroactively or prospectively), if the
Company shall have obtained the consent in writing of the holders
of at least 66-2/3% in aggregate principal amount of outstanding
Notes (exclusive of Notes then owned by the Company, any
Subsidiaries or any Affiliates); provided that without the
written consent of the holders of all of the Notes then
outstanding, no such waiver, modification, alteration or
amendment shall be effective which will (a) change the time of
payment of the principal of or the interest on any Note or change
the principal amount thereof or change the rate of interest
thereon, (b) change any of the provisions with respect to
prepayments, or (c) change the percentage of holders of the Notes
required to consent to any such amendment, alteration or
modification of any of the provisions of this Section 8 or
Section 7.3.
8.2 Solicitation of Noteholders.
The Company will not solicit, request or negotiate for or
with respect to any proposed waiver or amendment of any of the
provisions of this Agreement or the Notes unless each holder of
the Notes (irrespective of the amount of Notes then owned by it)
shall be informed thereof by the Company and shall be afforded
the opportunity of considering the same and shall be supplied by
the Company with sufficient information to enable it to make an
informed decision with respect thereto. Executed or true and
correct copies of any waiver effected pursuant to the provisions
of this Section 8.2 shall be delivered by the Company to each
holder of outstanding Notes forthwith following the date on which
the same shall have been executed and delivered by the holder or
holders of the requisite percentage of outstanding Notes. The
Company will not, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any holder of the Notes as
consideration for or as an inducement to the entering into by any
holder of the Notes of any waiver or amendment of any of the
terms and provisions of this Agreement unless such remuneration
is concurrently paid, on the same terms, ratably to the holders
of all of the Notes then outstanding.
8.3 Effect of Amendment or Waiver.
Except as otherwise provided in Section 5.2 or Section 5.4,
any amendment or waiver under this Agreement shall apply equally
to all of the holders of the Notes and shall be binding upon
them, upon each future holder of any Note and upon the Company,
whether or not such Note shall have been marked to indicate such
amendment or waiver. No such amendment or waiver shall extend to
or affect any obligation not expressly amended or waived or
impair any right consequent thereon.
9. INTERPRETATION OF AGREEMENT; DEFINITIONS
9.1 Definitions.
Unless the context otherwise requires, the terms hereinafter
set forth when used herein shall have the following meanings and
the following definitions shall be equally applicable to both the
singular and plural forms of any of the terms herein defined:
Additional Amount -- is defined in Section 5.1.
Affiliate -- shall mean any Person (other than a Subsidiary)
(a) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common
control with, the Company, (b) which beneficially owns or holds
5% or more of any class of the Voting Stock of the Company or (c)
5% or more of the Voting Stock (or in the case of a Person which
is not a corporation, 5% or more of the equity interest) of which
is beneficially owned or held by the Company or a Subsidiary.
The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of Voting
Stock, by contract or otherwise.
Applicable Margin -- shall mean (a) with respect to a
Declined Waiver, .25%, and (b) with respect to a Company Call or
an Event of Default, .60%.
Assignment Agreement Amendment -- is defined in Section
1.2(c).
Business Day -- shall mean any day other than a Saturday,
Sunday or other day on which Federally chartered banks are
required by law to close.
Business Plan -- shall mean the Stokely U.S.A. 1997-1998
Business Plan and Financing Request dated February, 1996 and
furnished by the Company to the Purchasers.
Capital Expenditures -- shall mean expenditures (including
payments under Capitalized Leases) made by any Person to acquire
or construct fixed assets, plant and equipment (including,
without limitation, renewals, improvements and replacements, but
excluding repairs).
Capitalized Interest Amount -- is defined in Section 4.2.
Capitalized Lease -- shall mean any lease, the obligation
for Rentals with respect to which is required to be capitalized
on a balance sheet of the lessee in accordance with GAAP.
Capitalized Rentals -- of any Person shall mean as of the
date of any determination the amount at which the aggregate
Rentals due and to become due under all Capitalized Leases under
which such Person is a lessee would be reflected as a liability
on a consolidated balance sheet of such Person.
Carryover Cap Ex Amount -- shall have the meaning set forth
in the definition of "FY 1997 Cap Ex Amount."
Change of Control -- shall mean the date of a public
announcement that a Person or group of affiliated or associated
Persons (any such Person being an "Acquiring Person") has
acquired or obtained the right to acquire legal or beneficial
ownership of more than 50% of the outstanding shares of the
Voting Stock of the Company; provided, however, that a Change of
Control shall be deemed not to have occurred if (x) the Acquiring
Person includes a member of the Company's Executive Committee (or
a member of any successor body thereto exercising the same or
substantially similar functions) and (y) the Company's Board of
Directors (or a Special Committee thereof constituted by such
Board of Directors) approves of such Acquiring Person's
acquisition.
Common Stock -- is defined in Section 1.2(d).
Company Call -- is defined in Section 5.3.
Company Notice -- is defined in Section 5.2.
Congress Agreement -- shall mean the Loan and Security
Agreement dated as of May 21, 1996, entered into by and between
the Company and Congress Financial, as from time to time amended,
modified or supplemented.
Congress Financial -- shall mean Congress Financial
Corporation (Central), an Illinois corporation.
Consolidated Current Assets -- means the current assets of
the Company and its Subsidiaries determined on a consolidated
basis in accordance with GAAP.
Consolidated Current Liabilities -- means the current
liabilities of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
Consolidated Fixed Charge Coverage Ratio -- shall mean, for
any period, the ratio of Consolidated Adjusted Net Income
Available for Fixed Charges for such period to Consolidated Fixed
Charges for such period (it being understood that all components
of such ratio shall be calculated on the basis of historical data
for such period, except that (x) the adjustments, if any,
described in the second and third sentences of the definition of
Consolidated Adjusted Net Income Available for Fixed Charges
shall be made to the extent necessary in connection with the
acquisition or disposition of any business entity, and (y) the
amount of Consolidated Operating Lease Rentals shall equal the
amount of such rentals incurred or expected to be incurred during
the Company's then-current fiscal year).
Consolidated Adjusted Net Income Available for Fixed
Charges -- for any period shall mean the sum of (i)
Consolidated Net Income during such period plus (to the
extent deducted or to be deducted in determining
Consolidated Net Income), (ii) all provisions for any
Federal, state or other income taxes made by the Company and
its Subsidiaries during such period, (iii) Consolidated
Fixed Charges, (iv) depreciation, amortization and any other
similar items of expense not payable in cash during such
period and (v) 100% of the addition to the Consolidated LIFO
Reserve for such period. For purposes of this Agreement,
Consolidated Adjusted Net Income Available for Fixed Charges
shall be adjusted retroactively to give effect to the
operations of any Significant Business Entity (based on the
actual financial performance of such Significant Business
Entity) or the assets and liabilities of such Significant
Business Entity acquired or disposed of by the Company or
any Subsidiary during the applicable period. Consolidated
Adjusted Net Income Available for Fixed Charges shall be
computed as though such Significant Business Entity (or the
assets and liabilities of such Significant Business Entity)
had been owned (or owed) by the Company or such Significant
Business Entity had been a Subsidiary, as the case may be,
throughout the applicable period and as though the assets
and debts so disposed of had not been owned or owed, as the
case may be, by the Company or any Subsidiary throughout the
applicable period.
Consolidated Fixed Charges -- shall mean the sum of (i)
Interest Charges on Consolidated Indebtedness for the
Company's most recently completed fiscal year and (ii) 33-
% of Consolidated Operating Lease Rentals incurred or
expected to be incurred during the Company's then-current
fiscal year.
Consolidated Indebtedness -- shall mean Indebtedness of
the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
Consolidated LIFO Reserve -- shall mean the amount by
which the inventory account reflected on the most recent
consolidated balance sheet of the Company and its
Subsidiaries has been decreased as shown on such
consolidated balance sheet according to the last-in, first-
out method of calculating inventories, from the amount which
would have been reported on such consolidated balance sheet
under the first-in, first-out method of valuing inventories,
determined on a consolidated basis in accordance with GAAP.
Consolidated Operating Lease Rentals -- for any period
means the sum of the rental obligations required to be paid
by the Company or any Subsidiary as lessee under any lease
(other than a Capitalized Lease) of real or personal
property, excluding any amount required to be paid by the
lessee (whether or not designated as rental or additional
rental) on account of maintenance and repairs, insurance,
taxes, assessments, water rates and similar charges.
Interest Charges on Consolidated Indebtedness -- for
any period means the gross amount which would, in accordance
with GAAP, be deducted in computing Consolidated Net Income
for such period on account of interest on Consolidated
Indebtedness, including imputed interest in respect of
Capitalized Leases and amortization of debt discount and
expense.
Significant Business Entity -- shall mean a business
entity the total assets of which equal or exceed 5% of
Consolidated Total Assets immediately prior to the
acquisition thereof or immediately after the disposition
thereof.
Consolidated Funded Debt -- shall mean Funded Debt of the
Company and its Subsidiaries determined on a consolidated basis
in accordance with GAAP.
Consolidated Net Income (or, as applicable, Consolidated Net
Loss) -- for any period shall mean the gross revenues of the
Company and its Subsidiaries for such period less all expenses
and other proper charges (including taxes on income), determined
on a consolidated basis in accordance with GAAP, after
eliminating unremitted income or losses attributable to Persons
that are not Subsidiaries and after eliminating all extraordinary
items of gain or loss, determined on a consolidated basis in
accordance with GAAP.
Consolidated Net Worth -- shall mean, as of the date of any
determination thereof, Total Assets as of such date minus Total
Liabilities as of such date, determined on a consolidated basis
in accordance with GAAP.
Consolidated Tangible Net Worth -- shall mean, as of the
date of any determination thereof, Consolidated Net Worth as of
such date minus the amount of all Intangible Assets of the
Company and its Subsidiaries as of such date, determined on a
consolidated basis in accordance with GAAP.
Consolidated Total Assets -- shall mean, as of the date of
any determination thereof, the total amount of all assets of the
Company and its Subsidiaries determined on a consolidated basis
in accordance with GAAP.
Consolidated Total Capitalization -- shall mean the sum of
Consolidated Tangible Net Worth and Consolidated Funded Debt.
Contract Rate -- shall mean:
(a) during the period up to but not including the
second anniversary of the Effective Date (the "Second
Anniversary"), 14% per annum; and
(b) during the period beginning on and including the
Second Anniversary, until maturity,
(i) if the aggregate principal amount of the
Notes (excluding the portion of such principal
attributable to the Capitalized Interest Amount)
outstanding at the opening of business of the Company
on the Second Anniversary does not exceed $10,226,554,
11% per annum, and
(ii) if the aggregate principal amount of the
Notes (excluding the portion of such principal
attributable to the Capitalized Interest Amount)
outstanding at the opening of Business of the Company
on the Second Anniversary shall exceed $10,226,554, 16%
per annum.
Credit Agreement -- shall mean the Congress Agreement and
any other credit agreement subsequently entered into by the
Company to refinance the Indebtedness outstanding under the
Congress Agreement or any such subsequent credit agreement.
Declined Waiver -- is defined in Section 5.4.
Default -- shall mean any event or condition, the occurrence
of which would, with the lapse of time or the giving of notice,
or both, constitute an Event of Default as defined in Section
6.1.
Disposition Value -- shall mean, as of the date of any
determination thereof, with respect to any assets,
(a) in the case of any asset that does not constitute
Subsidiary Stock, the book value thereof, valued at the time
of such disposition in good faith by the Company, and
(b) in the case of any asset that constitutes
Subsidiary Stock, an amount equal to that percentage of the
book value of the assets of the Subsidiary that issued such
stock as is equal to the percentage that the book value of
such Subsidiary Stock represents of the book value of all of
the outstanding capital stock of such Subsidiary (assuming,
in making such calculations, that all Securities convertible
into such capital stock are so converted and giving full
effect to all transactions that would occur or be required
in connection with such conversion) determined at the time
of the disposition thereof, in good faith by the Company.
Distribution -- means, in respect of any corporation,
association or other business entity:
(a) dividends or other distributions or payments on
capital stock or other equity interest of such corporation,
association or other business entity (except distributions
in such stock or other equity interest); and
(b) the redemption or acquisition of such stock or
other equity interests or of warrants, rights or other
options to purchase such stock or other equity interests
(except when solely in exchange for such stock or other
equity interests) unless made, contemporaneously, from the
net proceeds of a sale of such stock or other equity
interests.
Effective Date -- is defined in Section 3.
Environmental Legal Requirement -- shall mean any applicable
law, statute or ordinance relating to public health, safety or
the environment, including without limitation any such applicable
law, statute or ordinance relating to releases, discharges or
emissions to air, water, land or groundwater, to the withdrawal
or use of groundwater, to the use and handling of polychlorinated
biphenyls or asbestos, to the disposal, transportation,
treatment, storage or management of solid or hazardous wastes or
to exposure to toxic or hazardous materials, to the handling,
transportation, discharge or release of gaseous or liquid
substances and any regulation, order, notice or demand issued
pursuant to any such law, statute or ordinance, in each case
applicable to the Property of the Company and its Subsidiaries or
the operation, construction or modification of any thereof,
including without limitation the following: the Clean Air Act,
the Federal Water Pollution Control Act, the Safe Drinking Water
Act, the Toxic Substances Control Act, the comprehensive
Environmental Response Compensation and Liability Act as amended
by the Superfund Amendments and Reauthorization Act of 1986, the
Resource Conservation and Recovery Act as amended by the Solid
and Hazardous Waste Amendments of 1984, the Occupational Safety
and Health Act, the Emergency Planning and Community Right-to-
Know Act of 1986, the Solid Waste Disposal Act, and any state
statutes addressing similar matters or providing for financial
responsibility for cleanup or other actions with respect to the
release or threatened release of hazardous substances and any
state nuisance statute.
ERISA -- shall mean the Employee Retirement Income Security
Act of 1974, as amended.
Excess Cash Flow -- shall mean, for any period,
(a) the sum of
(i) Consolidated Net Income for such period, and
(ii) the amount of all depreciation and
amortization allowances and other non-cash expenses of
the Company and its Subsidiaries to the extent deducted
in the determination of Consolidated Net Income for
such period,
minus
(b) the sum of
(i) the aggregate amount of Capital Expenditures
of the Company and its Subsidiaries for such period,
(ii) the aggregate principal amount of mandatory
and optional prepayments of the principal of the Notes
and the SWIB Note made during such period, and
(iii) the aggregate amount of all other
regularly scheduled payments prior to maturity and the
payment at scheduled, unaccelerated maturity on other
Indebtedness of the Company.
Existing Assignment -- is defined in Section 1.1(c).
Existing Collateral Documents -- is defined in Section 1.1.
Existing Indemnification Agreement -- is defined in Section
1.1(c).
Existing Intercreditor Agreement -- is defined in Section
1.1(c).
Existing Mortgages -- is defined in Section 1.1(c).
Existing Note Agreement -- is defined in Section 1.1(a).
Existing Notes -- is defined in Section 1.1(a).
Existing Security Agreement -- is defined in Section 1.1(c).
Existing Warrants -- is defined in Section 1.1(b).
Fair Market Value -- means, at any time with respect to any
Property, the sale value of such Property that would be realized
in an arm's-length sale at such time between an informed and
willing buyer, and an informed and willing seller, under no
compulsion to buy or sell, respectively.
Funded Debt -- with respect to any Person shall mean all
indebtedness for borrowed money of such Person maturing by its
terms more than one year after, or which is renewable or
extendible at the option of such Person for a period ending one
year or more after, the date of determination, and shall include
indebtedness for borrowed money of such maturity created, assumed
or guaranteed by such Person either directly or indirectly,
including obligations of such maturity secured by Liens upon
Property of such Person and upon which such entity customarily
pays the interest, all current maturities of all such
indebtedness of such maturity and all Capitalized Rentals under
Capitalized Leases of such maturity.
FY 1997 Cap Ex Amount -- means $2,000,000, provided that if
the Restructuring shall take place during the fiscal year of the
Company ending March 31, 1997, (a) the aggregate amount of
Capital Expenditures of the Company and its Subsidiaries during
such fiscal year shall be permitted to be in an amount not
exceeding $5,000,000 and (b) any unused FY 1997 Cap Ex Amount in
an amount not exceeding $3,000,000 may be carried over and used
during the period beginning April 1, 1997 and ending September
30, 1997 for Capital Expenditures for replacement equipment and
capacity consolidation related to the Restructuring (the
"Carryover Cap Ex Amount").
GAAP -- means United States generally accepted accounting
principles consistently applied and maintained throughout the
period indicated and consistent with the prior financial practice
of the Company and any predecessor, except changes mandated by
the Financial Accounting Standards Board or any similar
accounting authority of comparable standing. Whenever any
accounting term is used herein which is not otherwise defined, it
shall be interpreted in accordance with GAAP.
Guaranties -- by any Person shall mean all obligations
(other than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend
or other obligation of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including without
limitation all obligations incurred through an agreement,
contingent or otherwise, by such Persons (a) to purchase such
Indebtedness or obligation or any property or assets constituting
security therefor, (b) to advance or supply funds (1) for the
purchase or payment of such Indebtedness or obligation, or (2) to
maintain working capital or other balance sheet condition or
otherwise to advance or make available funds for the purchase or
payment of such Indebtedness or obligation, or (c) to lease
property or to purchase Securities or other property or services
primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor
to make payment of the Indebtedness or obligation, or (d)
otherwise to assure the owner of the Indebtedness or obligation
of the primary obligor against loss in respect thereof. For the
purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall
be deemed to be Indebtedness equal to the principal amount of
such Indebtedness for borrowed money which has been guaranteed,
and a Guaranty in respect of any other obligation or liability or
any dividend shall be deemed to be Indebtedness equal to the
maximum aggregate amount of such obligation, liability or
dividend guaranteed.
Indebtedness -- of any Person shall mean and include all (a)
obligations of such Person for borrowed money or to pay the
deferred purchase price of property, (b) obligations secured by
any lien or other charge upon property or assets owned by such
Person, even though such Person has not assumed or become liable
for the payment of such obligations, (c) obligations created or
arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person,
notwithstanding the fact that the rights and remedies of the
seller, lender or lessor under such agreement upon the occurrence
of an event of default thereunder are limited to repossession or
sale of property, (d) Capitalized Rentals under any Capitalized
Lease, and (e) Guarantees of Indebtedness of others; provided
that, with respect to the Company, Indebtedness shall not include
any unfunded obligations which may now or hereafter exist with
respect to Company's Plans.
Indemnification Agreement Amendment -- is defined in Section
1.2(c).
Intangible Assets -- shall mean license agreements,
trademarks, trade names, patents, capitalized research and
development, proprietary products (the results of past research
and development treated as long-term assets and excluded from
inventory), goodwill and all other Property which would be
considered to be intangible under GAAP.
Intercreditor Agreement -- shall mean the Existing
Intercreditor Agreement, as amended by the Intercreditor
Agreement Amendment, and as from time to time further amended,
modified or supplemented.
Intercreditor Agreement Amendment -- is defined in Section
3.5.
Interest Payment Date -- is defined in Section 4.1.
Investment -- shall mean any investment, made in cash or by
delivery of Property, by the Company or any Subsidiary (a) in any
Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, Guaranty, advance, capital
contribution or otherwise, or (b) in any Property.
IRB Indebtedness -- shall mean the Indebtedness described in
Exhibit B to the Second Amendment to Note Agreement.
Liens -- are defined in Section 6.7(a).
Make Whole Premium -- shall mean at any time with respect to
any payment or prepayment of the Notes (whether pursuant to
Section 5.3, Section 5.4 or Section 7.3), the excess of (a) the
present value of the principal and interest payments (assuming,
for purposes of this definition, that all such interest payments
are paid in cash) on and in respect of the Notes being prepaid
that would otherwise become due and payable discounted at a rate
(computed on the basis of a 360-day year of twelve 30-day months)
which is equal to the Reinvestment Rate over (b) the aggregate
principal amount of the Notes then to be prepaid. To the extent
that the Reinvestment Rate at the time of such prepayment is
equal to or greater than the Contract Rate at such time, the Make
Whole Premium is zero. Any calculation of the Make Whole Premium
shall be made by the Company on and as of one Business Day prior
to the date such Make Whole Premium is to be paid to any holder
or holders of the Notes and shall be delivered to each such
holder via telecopy or telex on such date of calculation.
Material Transaction -- is defined in Section 5.4.
Mortgage Amendments -- is defined in Section 1.2(c).
Notes -- is defined in Section 1.2(a).
Other Agreements -- shall mean the Security Documents and
any and all agreements, instruments and documents heretofore, now
or hereafter executed by the Company and delivered to the holders
of the Notes, or to any agent appointed to act on behalf of the
holders of the Notes, in respect to the transactions contemplated
by this Agreement.
Overdue Rate -- shall mean, at any time, the Contract Rate
at such time plus 2.0% per annum.
PACA -- shall mean the Perishable Agricultural Commodities
Act, 7 USC Section 499a, et seq.
Person -- shall mean an individual, partnership,
corporation, trust or unincorporated organization, and a
government or agency or political subdivision thereof.
Plans -- means "plans", as defined in ERISA.
Prepayment Date -- is defined in Section 5.2.
Property -- shall mean any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or
intangible.
Purchasers -- is defined in Section 1.1.
Put Event -- shall mean either (a) a Change of Control, or
(b) the failure by the Company to maintain a Consolidated Fixed
Charge Coverage Ratio of at least (i) 0.75:1.0 for the fiscal
year of the Company ending March 31, 1997 or (ii) 1.5:1.0 for any
fiscal year of the Company thereafter.
Reinvestment Rate -- shall mean the Treasury Rate plus the
Applicable Margin.
Rental -- shall mean and include all fixed rents (including
as such all payments which the lessee is obligated to make to the
lessor on termination of the lease or surrender of the Property)
payable by the Company or a Subsidiary, as lessee or sublessee
under a lease of real or personal property, but shall be
exclusive of any amounts required to be paid by the Company or a
Subsidiary (whether or not designated a rent or additional rents)
on account of maintenance, repairs, insurance, taxes and similar
charges. Fixed rents under any so-called "percentage leases"
shall be computed solely on the basis of the minimum rents, if
any, required to be paid by the lessee regardless of sales volume
or gross revenues.
Required Holders -- shall mean the holders of at least 66-
2/3% in aggregate principal amount of the Notes then outstanding
(exclusive of Notes then owned by the Company, any Subsidiaries
or any Affiliates).
Required Principal Payment -- is defined in Section 5.1.
Responsible Financial Officer -- shall mean the Vice
President Finance of the Company, the Treasurer of the Company or
any officer of the Company to whom either thereof customarily
reports.
Restricted Investments -- means all Investments except the
following:
(a) property to be used in the ordinary course of
business of the Company and its Subsidiaries;
(b) current assets arising from the sale of goods and
services in the ordinary course of business of the Company
and its Subsidiaries;
(c) the endorsement of instruments for collection or
deposit in the ordinary course of business;
(d) Investments existing on the Effective Date and
disclosed in Schedule II;
(e) Investments in United States Governmental
Securities, provided that such obligations mature within 365
days from the date of acquisition thereof;
(f) Investments in certificates of deposit or banker's
acceptances issued by an Acceptable Bank, provided that such
obligations mature within 365 days from the date of
acquisition thereof;
(g) Investments in commercial paper given the highest
rating by a credit rating agency of recognized national
standing and maturing not more than 270 days from the date
of creation thereof; and
(h) loans and advances to employees in the ordinary
course of business for travel and moving expenses in an
aggregate amount not to exceed $100,000 at any time
outstanding.
For purposes of this Agreement, an Investment shall be valued at
the lesser of (i) cost and (ii) the value at which such
Investment is to be shown on the books of the Company and its
Subsidiaries in accordance with GAAP.
As used in this definition of "Restricted Investments":
Acceptable Bank -- means any bank or trust company (i)
which is organized under the laws of the United States of
America or any State thereof, (ii) which has capital,
surplus and undivided profits aggregating at least
$250,000,000, and (iii) whose long-term unsecured debt
obligations (or the long-term unsecured debt obligations of
the bank holding company owning all of the capital stock of
such bank or trust company) shall have been given a rating
of "A" or better by Standard & Poor's Ratings Group, "A2" or
better by Moody's Investors Service, Inc., or an equivalent
rating by any other credit rating agency of recognized
national standing.
Restricted Payment -- means any Distribution in respect of
the Company or any Subsidiary (other than on account of capital
stock or other equity interests of a Subsidiary owned legally and
beneficially by the Company or another Subsidiary), including,
without limitation, any Distribution resulting in the acquisition
by the Company of Securities which would constitute treasury
stock. For purposes of this Agreement, the amount of any
Restricted Payment made in property shall be the greater of (x)
the Fair Market Value of such property (as determined in good
faith by the board of directors (or equivalent governing body) of
the Person making such Restricted Payment) and (y) the net book
value thereof on the books of such Person, in each case
determined as of the date on which such Restricted Payment is
made.
Restructuring -- is defined in Section 10.6.
Second Amendment -- is defined in Section 1.1(a).
Securities Act -- shall mean the Securities Act of 1933, as
amended from time to time.
Security -- shall have the same meaning as in Section 2(l)
of the Securities Act.
Security Agreement -- shall mean the Security Agreement
dated as of May 31, 1995, by and among the Company, the
Purchasers and SWIB, as amended by the Security Agreement
Amendment, and as further amended, modified or supplemented from
time to time, including, without limitation, any amendment or
supplement pursuant to which an agent or trustee is appointed to
act on behalf of the holders of the Notes and any other
Indebtedness secured by the Security Agreement.
Security Agreement Amendment -- is defined in Section
1.2(c).
Security Documents -- shall have the meaning set forth in
Section 1 of the Security Agreement.
Series A Warrant -- means the collective reference to each
Series A Warrant to Purchase Shares of Common Stock of Stokely
USA, Inc. issued by the Company, originally executed in the form
of Exhibit B1 and dated July 25, 1996, together with any
acknowledgments and agreements delivered in connection therewith,
as the same may be amended, modified or supplemented from time to
time.
Series B Warrant -- means the collective reference to each
Series B Warrant to Purchase Shares of Common Stock of Stokely
USA, Inc. issued by the Company, originally executed in the form
of Exhibit B2 and dated July 25, 1996, together with any
acknowledgments and agreements delivered in connection therewith,
as the same may be amended, modified or supplemented from time to
time.
Significant Subsidiary -- is defined in paragraph 1 of
Exhibit B hereto.
subsidiary -- shall mean, as to any particular parent
corporation, any corporation or other entity of which more than
50% (by number of votes) of the Voting Stock shall be owned by
such parent corporation and/or one or more corporations which are
themselves subsidiaries of such parent corporation. The term
"Subsidiary" shall mean a direct or indirect subsidiary of the
Company.
Subsidiary Stock -- shall mean, with respect to any Person,
the stock (or any options or warrants to purchase stock or other
Securities exchangeable for or convertible into stock) of any
Subsidiary of such Person.
Substantial Portion -- shall mean, with respect to any
Transfer of assets, any portion of assets of the Company and its
Subsidiaries, if
(a) the Disposition Value of such assets, when added
to the Disposition Value of all other assets of the Company
and its Subsidiaries that were subject to a Transfer (other
than (i) pursuant to clause (a) or clause (b) of Section
6.10, or (ii) as described in Section 3.6, or (iii) in
connection with the Restructuring), during the period
beginning on the first day of such fiscal year and ending on
and including the date of the Transfer of such assets,
exceeds an amount equal to 10% of Consolidated Total Assets
determined as of the end of the then most recently ended
fiscal quarter of the Company, or
(b) the Disposition Value of such assets, when added
to the Disposition Value of all other assets of the Company
and its Subsidiaries that were subject to a Transfer (other
than (i) pursuant to clause (a) or clause (b) of Section
6.10, or (ii) as described in Section 3.6, or (iii) in
connection with the Restructuring), during the period
beginning on the Effective Date and ending on and including
the date of the Transfer of such assets, exceeds an amount
equal to 25% of Consolidated Total Assets determined as of
the end of the then most recently ended fiscal quarter of
the Company.
SWIB -- is defined in Section 1.1.
SWIB Note -- is defined in the Intercreditor Agreement.
SWIB Note Agreement -- is defined in the Intercreditor
Agreement.
Third Amendment -- is defined in Section 1.1(a).
Total Assets -- shall mean, as of the date of any
determination thereof, the aggregate amount of assets of the
Company and its Subsidiaries as of such date, determined on a
consolidated basis in accordance with GAAP.
Total Liabilities -- shall mean, as of the date of any
determination thereof, the aggregate amount of liabilities of the
Company and its Subsidiaries as of such date, determined on a
consolidated basis in accordance with GAAP.
Transfer -- is defined in Section 6.10.
Treasury Rate -- shall mean at any time with respect to
Notes being paid or prepaid, the then existing yield to maturity
on the United States Treasury obligations with a maturity (as
compiled by and published in the most recently published issue of
the United States Federal Reserve Statistical Release designated
H.15(519) or its successor publication) equal to the maturity
date of such Notes. If no maturity exactly corresponding to the
maturity date of such Notes shall appear therein, the United
States Treasury obligations with the nearest published maturity
occurring before the scheduled maturity date of the Notes and
with the nearest published maturity occurring after the scheduled
maturity date of the Notes shall each be determined and the
Treasury Rate shall be interpolated on a straight-line basis
based on the respective yields to maturity of such obligations.
U.S. Subsidiaries -- shall mean all Subsidiaries organized
and existing under the laws of the United States or any state,
district or territory thereof.
Voting Stock -- shall mean Securities of any class or
classes, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect the corporate directors (or
Persons performing similar functions), irrespective of whether or
not at the time Securities of any class or classes shall have or
might have special voting powers or rights by reason of the
occurrence of any contingency.
Warrant Agreement -- means the collective reference to the
Series A Warrants and the Series B Warrants.
Warrants -- is defined in Section 1.2(d).
Wholly-owned -- when used in connection with any Subsidiary
shall mean a Subsidiary of which all of the issued and
outstanding shares of stock (except shares required by applicable
law as directors' qualifying shares) shall be owned by the
Company and/or one or more of its Wholly-owned Subsidiaries.
9.2 Accounting Principles.
Where the character or amount of any asset or liability or
item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be
made for the purposes of this Agreement, the same shall be done
in accordance with GAAP, to the extent applicable, except where
such principles are inconsistent with the requirements of this
Agreement, in which event this Agreement shall be controlling.
9.3 Directly or Indirectly.
Where any provision in this Agreement refers to action to be
taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether the action in
question is taken directly or indirectly by such Person.
10. MISCELLANEOUS
10.1 Note Register.
The Company shall cause to be kept at its principal office a
register for the registration and transfer of the Notes
(hereinafter called the "Note Register"), and the Company will
register or transfer or cause to be registered or transferred, as
hereinafter provided and under such reasonable regulations as it
may prescribe, any Notes issued pursuant to this Agreement.
At any time, and from time to time, the holder of any Notes
which have been duly registered as hereinabove provided may
transfer such Notes upon surrender thereof at the principal
office of the Company duly endorsed or accompanied by a written
instrument of transfer duly executed by the holder of such Note
or its attorney duly authorized in writing.
The Person in whose name any Note shall be registered shall
be deemed and treated as the owner and holder thereof for all
purposes of this Agreement. Payment of or on account of the
principal, premium, if any, and interest on any Note shall be
made to or upon the written order of such holder.
10.2 Exchange of Notes.
At any time, and from time to time, upon not less than ten
days' written notice to that effect given by the holder of any
Note initially delivered or of any Note substituted therefor
pursuant to Section 10.1, this Section 10.2 or Section 10.3, and,
upon surrender of such Note at its office, the Company will
deliver in exchange therefor, without expense to the holder,
except as set forth below, Notes for the same aggregate principal
amount as the then unpaid principal amount of the Note so
surrendered, in the denomination of $100,000 or integral
multiples thereof (except as may be necessary to reflect any
principal amount not evenly divisible by $100,000) as such holder
shall specify, dated as of the date to which interest has been
paid on the Note so surrendered or, if such surrender is prior to
the payment of any interest thereon, then dated as of the date of
issue, payable to such Person or Persons as may be designated by
such holder, and otherwise of the same form and tenor as the
Notes so surrendered for exchange. The Company may require the
payment of a sum sufficient to cover any stamp tax or
governmental charge imposed upon such exchange or transfer.
10.3 Loss, Theft, Etc. of Notes.
Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, mutilation or destruction of any
Note, and in the case of any such loss, theft or destruction upon
delivery of a bond of indemnity in such form and amount as shall
be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Note, the
Company will make and deliver without expense to the holder
thereof, a new Note, of the same tenor and form, in lieu of such
lost, stolen, destroyed or mutilated Note. If any Purchaser or
any subsequent institutional holder is the owner of any such
lost, stolen or destroyed Note, then the affidavit of any
authorized officer of such owner, setting forth the fact of loss,
theft or destruction and of its ownership of the Note 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
Note other than the written agreement of such owner to indemnify
the Company.
10.4 Expenses, Stamp Tax Indemnity.
Whether or not the transactions herein contemplated shall be
consummated, the Company agrees to pay directly all of the
Purchasers' reasonable out-of pocket expenses in connection with
the preparation, execution and delivery of this Agreement, the
amendments to the Security Documents, and the transactions
contemplated hereby and thereby, including but not limited to the
fees and disbursements of Hebb & Gitlin, the Purchasers' special
counsel, and The Blackstone Group L.P., the Purchasers' financial
advisor, duplicating costs and charges for shipping the Notes,
adequately insured, to each Purchaser at its home office or at
such other place as such Purchaser may designate, and so long as
such Purchaser shall hold any of the Notes, all such expenses
relating to any amendments, waivers or consents pursuant to the
provisions hereof, including without limitation any amendments,
waivers or consents resulting from any work-out, restructuring or
similar events relating to the performance by the Company of its
obligations under this Agreement and the Notes. The Company also
agrees that it will pay and save the Purchasers harmless against
any and all liability with respect to stamp and other taxes, if
any, which may be payable or which may be determined to be
payable in connection with the execution and delivery of this
Agreement or the Notes, whether or not any Notes are then
outstanding. The Company agrees to protect and indemnify the
Purchasers against any liability for any and all brokerage fees
and commissions payable or claimed to be payable to any Person in
connection with the transactions contemplated by this Agreement.
Without limiting the foregoing, the Company agrees to obtain and
pay for a private placement number for the Notes and authorizes
the submission of such information as may be required by the
CUSIP Service Bureau of Standard & Poor's for the purpose of
obtaining such number.
10.5 Waiver of Past Defaults.
By execution of this Agreement, the holders of the Notes
waive the Event of Default existing prior to the Effective Date
resulting from a violation of Section 5.8 of the Existing Note
Agreement. Other than the foregoing, the holders of the Notes
have no knowledge of any other Default or Event of Default under
the Existing Note Agreement which has occurred and is continuing
on the date hereof.
10.6 Potential Restructuring after Effective Date.
The Company may, at its option, undergo a restructuring of
its canning business subsequent to the Effective Date, provided
that
(a) such restructuring is effected pursuant to a
business plan delivered to the holders of the Notes at least
ten Business Days prior to such restructuring,
(b) the holders of the Notes shall have received a
copy of the written consent of Congress Financial to such
restructuring at least three Business Days prior to such
restructuring, stating that such restructuring (including
without limitation the application, to the prepayment of the
Notes in the manner provided in Section 6.10(c)(iii), of the
proceeds of assets subject to a Lien securing the Notes that
are Transferred in connection with such restructuring) will
not constitute a breach under the Congress Agreement,
(c) actual non-recurring charges on the Company's
consolidated financial statements (determined in accordance
with GAAP) resulting from such restructuring would not
exceed $18,000,000, and
(d) actual cash charges (determined in accordance with
GAAP) including, without limitation, inventory, severance,
and out-of-pocket expenses, resulting from such
restructuring would not exceed $3,500,000.
If the Company shall undergo a restructuring complying with each
of clauses (a), (b), (c) and (d) above (a "Restructuring"), then:
(i) for purposes of determining whether the Company
has complied with Section 6.8, such actual non-recurring
charges up to, but not exceeding, $18,000,000 shall be
excluded from the determination thereof,
(ii) for purposes of determining Excess Cash Flow for
the period in which such restructuring shall occur, such
actual cash charges up to, but not exceeding, $3,500,000
shall be deducted in the calculation thereof, and
(iii) for purposes of determining Consolidated
Adjusted Net Income Available for Fixed Charges (as such
term is defined in Section 9.1 in the definition of
"Consolidated Fixed Charge Coverage Ratio"), such actual
non-recurring charges up to, but not exceeding, $18,000,000
shall be excluded from the determination thereof.
10.7 Powers and Rights Not Waived; Remedies Cumulative.
No delay or failure on the part of the holder of any Note in
the exercise of any power or right shall operate as a waiver
thereof; nor shall any single or partial exercise of the same
preclude any other or further exercise thereof, or the exercise
of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to and are not exclusive of any
rights or remedies any such holder would otherwise have, and no
waiver or consent, given or extended pursuant to Section 8 shall
extend to or affect any obligation or right not expressly waived
or consented to.
10.8 Notices.
All communications provided for hereunder shall be in
writing and, if to the Purchasers, delivered or mailed by prepaid
overnight air courier, addressed to each Purchasers at its
respective address appearing on Schedule I to this Agreement or
such other address as any Purchaser or the subsequent holder of
any Note initially issued hereunder may designate to the Company
in writing, and if to the Company, delivered or mailed by prepaid
overnight air courier to the Company at 1055 Corporate Center
Drive, Oconomowoc, Wisconsin 53066, Attention: Vice-Chairman, or
to such other address as the Company may in writing designate to
each of the Purchasers and each subsequent holder of any Note
initially issued hereunder.
10.9 Reproduction of Documents.
This Agreement and all documents relating thereto, including
without limitation (a) consents, waivers and modifications which
may hereafter be executed, (b) documents received by the
Purchasers at the closing of the transactions contemplated by
this Agreement (except the Notes and the Warrants themselves),
and (c) financial statements, certificates and other information
previously or hereafter furnished to the Purchasers, may be
reproduced by any Purchaser by any photographic, photostatic,
microfilm, micro-card, miniature photographic or other similar
process and such Purchaser may destroy any original document so
reproduced. The Company agrees and stipulates that any such
reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such
reproduction was made by any Purchaser in the regular course of
business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in
evidence.
10.10 Counterparts.
This Agreement may be executed in any number of
counterparts, each counterpart constituting an original but all
together only one Agreement.
10.11 Successors and Assigns.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and
assigns, including each successive holder or holders of any
Notes; provided that any subsequent holder of any Note that is a
Subsidiary or an Affiliate shall not be entitled to any voting
rights hereunder.
10.12 Survival of Covenants and Representations.
All covenants, representations and warranties made by the
Company herein and in any certificates delivered pursuant hereto,
whether or not in connection with the Effective Date, shall
survive the execution and delivery of this Agreement and the
Notes.
10.13 Severability.
Should any part of this Agreement 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 Agreement 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 the
remaining portion of this Agreement without including therein any
such part, parts, or portion which may, for any reason, be
hereafter declared invalid.
10.14 Governing law.
This Agreement and the Notes issued and sold hereunder shall
be governed by and construed in accordance with the internal laws
of the State of Wisconsin.
10.15 Captions.
The descriptive headings of the various Sections or parts of
this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
[Remainder of page intentionally blank. Next page is signature
page.]<PAGE>
The execution hereof by you shall constitute a contract
between us for the uses and purposes hereinabove set forth, and
this Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original but all
together only one agreement.
Stokely USA, Inc.
By:
Name:
Title:
Accepted and agreed to:
[PURCHASER]
By:
Name:
Title: <PAGE>
SCHEDULE I
PURCHASER INFORMATION
<PAGE>
SCHEDULE II
INFORMATION AS TO COMPANY AND SUBSIDIARIES
<PAGE>
Purchaser Name
NATIONWIDE LIFE INSURANCE COMPANY
Name in Which Note is
Registered
NATIONWIDE LIFE INSURANCE COMPANY
Note Registration
Number; Principal Amount
R-1; $12,185,032.27
Warrant Registration
Number; Series; Initial
Number of Shares
WA-1; Series A; 493,281
WB-1; Series B; 493,281
Payment on Account of
Note
Method
Account
Information
Federal Funds Wire Transfer
Morgan Guaranty Trust Company of New York
ABA #021-000-238
JOURNAL #999-99-024
F/A/O Nationwide Life Insurance Company Custody A/C
#71615
Attn: Custody Service Dept.
Accompanying Information
Name of Company: STOKELY USA, INC.
Description of
Securities: Amended and Restated Senior
Secured Notes due January 15,
2000
Series A Warrant to Purchase
Shares of Common Stock
Series B Warrant To Purchase
Shares of Common Stock
Security Numbers: 861502 B* 2 (Amended and
Restated Senior Secured Notes)
861502 2* 2 (Series A Warrant)
861502 2@ 0 (Series B Warrant)
Due Date and Application (as among principal,
premium and interest) of the payment being made:
Address for Notices
Related to Payments
Nationwide Life Insurance Company
One Nationwide Plaza (1-32-09)
Columbus, Ohio 43215-2220
Attention: Corporate Money Management
Address for All other
Notices
Nationwide Life Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Other Instructions
NATIONWIDE LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
Instructions re Delivery
of Notes and Warrants
Mr. Martin Petroski
Morgan Guaranty Trust Company of New York
Safekeeping Incoming
55 Exchange Place - A Level
New York, NY 10260-0023
F/A/O Nationwide Life Insurance Company
Custody Account #71615
Tax Identification
Number
31-4156830
<PAGE>
Purchaser Name
EMPLOYERS LIFE INSURANCE COMPANY OF WAUSAU
Name in Which Note is
Registered
EMPLOYERS LIFE INSURANCE COMPANY OF WAUSAU
Series; Note
Registration Number;
Principal Amount
R-2; $1,782,582.17
Warrant Registration
Number; Series; Initial
Number of Shares
WA-2; Series A; 72,187
WB-2; Series B; 72,187
Payment on Account of
Note
Method
Account
Information
Federal Funds Wire Transfer
Bank of New York
ABA #021-000-018
BNF: 10C566
F/A/O Employers Life Custody A/C #267827
Attn: P&I Dept.
Accompanying Information
Name of Company: STOKELY USA, INC.
Description of
Securities: Amended and Restated Senior
Secured Notes due January 15,
2000
Series A Warrant to Purchase
Shares of Common Stock
Series B Warrant To Purchase
Shares of Common Stock
Security Numbers: 861502 B* 2 (Amended and
Restated Senior Secured Notes)
861502 2* 2 (Series A Warrant)
861502 2@ 0 (Series B Warrant)
Due Date and Application (as among principal,
premium and interest) of the payment being made:
Address for Notices
Related to Payments
Ms. Cindy Peterson
Employers Life Insurance Company of Wausau
2000 Westwood Drive
Wausau, Wisconsin 54401
Address for All other
Notices
Employers Life Insurance Company of Wausau
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Other Instructions
EMPLOYERS LIFE INSURANCE COMPANY OF WAUSAU
By_______________________
Name:
Title:
Instructions re Delivery
of Notes and Warrants
Mr. Paul Cuadrado
The Bank of New York
Attn: Free Receive Dept.
One Wall Street - 3rd Floor
New York, NY 10286
with a copy to:
Ms. Cindy Peterson
Employers Life Insurance Company of Wausau
2000 Westwood Drive
Wausau, Wisconsin 54401
Tax Identification
Number
39-1049873
<PAGE>
Purchaser Name
WEST COAST LIFE INSURANCE COMPANY
Name in Which Note is
Registered
WEST COAST LIFE INSURANCE COMPANY
Series; Note
Registration Number;
Principal Amount
R-3; $891,585.31
Warrant Registration
Number; Series; Initial
Number of Shares
WA-3; Series A; 36,094
WB-3; Series B; 36,094
Payment on Account of
Note
Method
Account
Information
Federal Funds Wire Transfer
Morgan Guaranty Trust Company of New York
ABA #021-00-238
JOURNAL #999-99-024
F/A/O West Coast Life Custody A/C #73290
Attn: Custody Service Dept.
Accompanying Information
Name of Company: STOKELY USA, INC.
Description of
Securities: Amended and Restated Senior
Secured Notes due January 15,
2000
Series A Warrant to Purchase
Shares of Common Stock
Series B Warrant To Purchase
Shares of Common Stock
Security Numbers 861502 B* 2 (Amended and
Restated Senior Secured Notes)
861502 2* 2 (Series A Warrant)
861502 2@ 0 (Series B Warrant)
Due Date and Application (as among principal,
premium and interest) of the payment being made:
Address for Notices
Related to Payments
West Coast Life Insurance Company
343 Sansome Street
San Francisco, CA 94104
Attention: Karl Snover
Address for All other
Notices
West Coast Life Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Other Instructions
WEST COAST LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
Instructions re Delivery
of Notes and Warrants
Mr. Martin Petroski
Morgan Guaranty Trust Company of New York
Safekeeping Incoming
55 Exchange Place - A Level
New York, NY 10260-0023
F/A/O West Coast Life Insurance Company
Custody Account #73290
with a copy to:
Mr. Karl Snover
West Coast Life Insurance Company
343 Sansome Street
San Francisco, CA 94104
Tax Identification
Number
94-0971150
Exhibit 99.6
_________________________________________________________________
_________________________________________________________________
SERIES A WARRANT
No. WA-____ _______________ Shares
PPN: 861502 2* 2
Series A Warrant To Purchase
Shares Of Common Stock
Of
Stokely USA, Inc.
Void after July 25, 2006
_________________________________________________________________
_________________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
1. EXERCISE OF WARRANT . . . . . . . . . . . . . . . . . . . 1
2. RESERVATION OF COMMON STOCK . . . . . . . . . . . . . . . 2
3. PROTECTION AGAINST DILUTION . . . . . . . . . . . . . . . 2
3.1 Share Dividends, Subdivisions and Combinations . . . 2
3.2 Issuance of Additional Shares of Common Stock. . . . 3
3.3 Issuance of Warrants or Other Rights, Convertible
Securities . . . . . . . . . . . . . . . . . . . . . 3
3.4 Other Provisions Applicable to Adjustments Under
this Section . . . . . . . . . . . . . . . . . . . . 5
3.5 Extraordinary Dividends. . . . . . . . . . . . . . . 7
3.6 Adjustment of Number of Shares Purchasable . . . . . 7
3.7 Minimum Adjustment . . . . . . . . . . . . . . . . . 7
3.8 Notice of Adjustments. . . . . . . . . . . . . . . . 7
3.9 Date of Determination of Current Market Price. . . . 8
4. MERGERS, CONSOLIDATIONS, SALES. . . . . . . . . . . . . . 8
5. DISSOLUTION OR LIQUIDATION. . . . . . . . . . . . . . . . 9
6. NOTICE OF EXTRAORDINARY DIVIDENDS . . . . . . . . . . . . 9
7. FRACTIONAL SHARES . . . . . . . . . . . . . . . . . . . . 9
8. FULLY PAID STOCK; TAXES . . . . . . . . . . . . . . . . . 10
9. CLOSING OF TRANSFER BOOKS . . . . . . . . . . . . . . . . 10
10. RESTRICTIONS ON TRANSFERABILITY OF WARRANTS AND SHARES;
COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . 10
10.1 In General . . . . . . . . . . . . . . . . . . . . . 10
10.2 Restrictive Legends. . . . . . . . . . . . . . . . . 10
10.3 Notice of Proposed Transfer; Registration Not
Required . . . . . . . . . . . . . . . . . . . . . . 11
10.4 Required Registration. . . . . . . . . . . . . . . . 12
10.5 Incidental Registration. . . . . . . . . . . . . . . 15
10.6 Registration Procedures. . . . . . . . . . . . . . . 17
10.7 Preparation; Reasonable Investigation. . . . . . . . 21
10.8 Rights of Requesting Holders . . . . . . . . . . . . 22
10.9 Expenses . . . . . . . . . . . . . . . . . . . . . . 22
10.10 Indemnification . . . . . . . . . . . . . . . . 22
10.11 Other Registration of Common Stock. . . . . . . 23
10.12 Availability of Information . . . . . . . . . . 23
10.13 SWIB Warrants . . . . . . . . . . . . . . . . . 24
11. PARTIAL EXERCISE AND PARTIAL ASSIGNMENT . . . . . . . . . 24
12. WARRANT DENOMINATIONS . . . . . . . . . . . . . . . . . . 25
13. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 25
14. LOST, STOLEN WARRANTS, ETC. . . . . . . . . . . . . . . . 29
15. WARRANT HOLDER NOT SHAREHOLDER. . . . . . . . . . . . . . 29
16. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . 29
17. INDEX AND CAPTIONS. . . . . . . . . . . . . . . . . . . . 29
18. APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . . 29
<PAGE>
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. WA-_________ _______ SHARES
SERIES A WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
STOKELY USA, INC.
Void after July 25, 2006
THIS IS TO CERTIFY that, for value received and subject to
the provisions hereinafter set forth,
_____________________________________________________________ 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 July 25, 2006 (the "Expiration
Date"), _________ 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 the Initial per share
Warrant Price (as defined in Section 13 hereof).
The aggregate price of the Common Stock which may be
purchased upon the exercise of this Warrant shall be equal to the
Initial per share Warrant Price 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 Initial per share Warrant
Price 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.
The terms which are capitalized herein shall have the
meanings specified in Section 13 unless the context shall
otherwise require.
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 of the same
series 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.
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.
3. PROTECTION AGAINST DILUTION.
The per share Warrant Price and the number of shares
deliverable hereunder shall be adjusted as hereinafter set forth:
3.1 Share Dividends, Subdivisions and Combinations. In
case after the date hereof the Company shall:
(a) take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend
payable in, or other distribution of, 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.
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:
(i) 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
(ii) 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:
(i) 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 Current Market Price per share, and
(ii) 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.
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.
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.
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 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 Section 3.4(a)) shall be deemed to have been
received by the Company.
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.
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 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.
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.
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, and 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.
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.
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 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.
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.
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 15 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 Section 6 shall not apply to distributions made in
connection with transactions covered by Section 4.
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.
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
(except as set forth in Section 180.0622 of the Wisconsin
Business Corporation Law). 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.
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.
10. RESTRICTIONS ON TRANSFERABILITY OF WARRANTS AND SHARES;
COMPLIANCE WITH LAWS.
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.
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 upon the
conditions specified in the Warrant pursuant to which such
shares were issued."
In the event that a registration statement covering the
Registrable Securities 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
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.
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 Registrable
Securities, 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 such Registrable Securities, 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, 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.
10.4 Required Registration.
(a) Filing of Registration Statement. The Company
will, upon the written request of the Requisite Holders
given at any time on or after July 22, 1998, requesting that
the Company effect the registration under the Securities Act
of all or at least 25% of such Requisite Holders'
Registrable Securities and specifying the Registrable
Securities to be sold and the intended method of disposition
thereof, promptly give written notice of such requested
registration to all holders of Registrable Securities, and
thereupon will use its best efforts to effect the
registration (a "Required Registration") under the
Securities Act of:
(i) the Registrable Securities that the Company
has been so requested to register by the Requisite
Holders, and
(ii) all other Registrable Securities that the
Company has been requested to register by the holders
thereof by written request given to the Company within
30 days after the giving of such written notice by the
Company (which request shall specify the Registrable
Securities to be sold and the intended method of
disposition of such Registrable Securities);
all to the extent required to permit the disposition (in
accordance with the intended method thereof as aforesaid) of
the Registrable Securities so to be registered; provided,
however, that the Company shall be required to effect only
one Required Registration pursuant to this Section 10.4 that
is deemed effected under Section 10.4(e) and pursuant to
similar terms contained in the Related Warrants that is
deemed effected under the terms contained in the Related
Warrants. It is expressly acknowledged that the Company
shall be required to effect only one Required Registration
as may be requested by the holder of this Warrant and the
Related Warrants. If the Registrable Securities subject to
being registered pursuant to this Section 10.4 may be, at
the time of the request in respect thereof, registered on
Form S-3, the Company may effect such registration on Form
S-3, provided that the foregoing shall not be deemed to
release the Company from complying with the requirements of
this Section 10.4 if the Company is not eligible to register
the Registrable Securities on Form S-3 at the time of a
request for a Required Registration.
(b) Time for Filing and Effectiveness. On or before
the date which is 120 days after the request for such
registration, the Company shall file with the Commission the
Required Registration with respect to all Registrable
Securities to be so registered, and shall use its reasonable
best efforts to cause such Required Registration to become
effective as promptly as practicable after the filing
thereof, but in no event later than the day which is 210
days after the request for such registration.
Notwithstanding the foregoing, if the Company shall furnish
to the Requisite Holders requesting a Required Registration
pursuant to this Section 10.4 and each other holder of
Registrable Securities participating in the registration
thereunder, a certificate signed by the President or Chief
Executive Officer of the Company stating that, in the good
faith and reasonable business judgment of the Board of
Directors of the Company, the filing of such Required
Registration would materially interfere with the filing by
the Company with the Commission of a Form 10-K or any
registration statement filed prior to a request for a
Required Registration hereunder or any acquisition or
corporate reorganization or debt restructuring by the
Company, and that it is therefore essential to defer the
filing of such Required Registration, the Company shall have
the right to defer the commencement of the taking of action
with respect to such filing for a period of not more than
180 days after receipt of the request of the Requisite
Holders; provided, however, that the Company may not utilize
this right if this right has been used under the terms of
this Warrant or the Related Warrants at any time during the
immediately preceding 365-day period. If the Company shall
so postpone the filing of such Required Registration, the
Requisite Holders and all other holders of Registrable
Securities participating therein shall have the right to
withdraw from such registration by giving written notice to
the Company within 30 days after receipt of such notice of
postponement. In connection with any such withdrawal by the
Requisite Holders, the Requisite Holders shall be deemed to
fully rescind their request for such Required Registration,
in which case said request shall be deemed rescinded and
preserved for future use, the registration and offering of
all Registrable Securities in connection with such offering
will be cancelled and the Company will pay all costs in
connection therewith as provided in Section 10.9.
(c) Selection of Underwriters. If Registrable
Securities that the Company has been requested to register
pursuant to a Required Registration are to be disposed of in
an underwritten public offering, the underwriters of such
offering shall be one or more underwriting firms of
recognized standing reasonably acceptable to the Requisite
Holders.
(d) Priority on Required Registrations. If the
managing underwriter shall advise the Company in writing
(with a copy to each holder of Registrable Securities
requesting sale) that, in such underwriter's opinion, the
number of shares of securities requested to be included in
such Required Registration exceeds the number that can be
sold in such offering within a price range acceptable to the
Company (such writing to state the basis of such opinion and
the approximate number of shares of securities that may be
included in such offering without such effect), the Company
will include in such Required Registration, to the extent of
the number of shares of securities that the Company is so
advised can be sold in such offering:
(i) first, Registrable Securities requested to be
sold by the holders thereof pursuant to this Section
10.4, pro rata among such holders on the basis of the
number of Registrable Securities requested to be so
registered by such holders, and
(ii) second, all other securities proposed to be
registered by the Company and any other stockholders,
in such proportions as the Company and such other
stockholders shall agree or as shall be set forth in
any applicable agreement between the Company and such
other stockholders.
(e) When Required Registration is Deemed Effected. A
Required Registration pursuant to this Section 10.4 shall
not be deemed to have been effected for purposes of the
proviso to Section 10.4(a) if:
(i) the registration does not become effective
and remain effective for a period of at least 120 days
(or for (A) such shorter period in which all shares of
Registrable Securities proposed to be sold in such
Required Registration are actually sold, or (B) for
such longer period (not to exceed an additional 60
days) if an underwriter selling such shares deems such
longer period reasonably necessary in order to sell all
of the shares subject to such Required Registration),
without interference by the issuance by the Commission
of any stop order with respect thereto, unless the
registration does not become effective after the
Company has filed a registration statement because the
holders of the Registrable Securities refuse to proceed
(in which case the Required Registration will be deemed
to have been effected);
(ii) the Requisite Holders withdraw their request
for registration in its entirety at any time because
the Requisite Holders reasonably and in good faith
believed that the registration statement or any
prospectus related thereto contained an untrue
statement of a material fact or omitted to state a
material fact required to be stated therein or
necessary to make the statements made therein (in the
case of any prospectus, in light of the circumstances
under which they were made) not misleading, notified
the Company of such fact, and requested that the
Company correct such alleged misstatement or omission,
and the Company has refused to correct such alleged
misstatement or omission; or
(iii) the conditions to closing specified in
the purchase agreement or underwriting agreement
entered into in connection with such Required
Registration are not satisfied, other than by reason of
some act or omission by the holders of the Registrable
Securities that were to have been registered and sold.
10.5 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 Registrable Securities 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 or (iii) described in Section
10.13) (an "Incidental Registration"), it will give written
notice to all holders of Registrable Securities of its
intention so to do and upon the written request of the
holder of any such Registrable Securities who intends to
transfer such Registrable Securities 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 Registrable Securities 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 requesting registration of its Registrable Securities
shall in its request describe briefly the manner of any
proposed transfer of such Registrable Securities. Nothing
in this Section 10.5 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
Registrable Securities requesting registration pursuant to
Section 10.5, on the date that the registration statement
with respect to such Registrable Securities 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 Requisite Holders may
reasonably request.
(c) The Company's obligation to register Registrable
Securities under this Section 10.5 shall be subject to the
condition that each holder of Registrable Securities
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.
10.6 Registration Procedures. The Company will use its best
efforts to effect each Required Registration pursuant to Section
10.4 and to cooperate with the sale of such Registrable
Securities in accordance with the intended method of disposition
thereof as quickly as practicable, and the Company will as
expeditiously as possible:
(a) prepare and file with the Commission the
registration statement and use its best efforts to cause the
Required Registration to become effective; provided,
however, that before filing any registration statement or
prospectus or any amendments or supplements thereto, the
Company will furnish to the holders of the Registrable
Securities covered by such registration statement, their
counsel, and the underwriters, if any, and their counsel,
copies of all such documents proposed to be filed at least
10 Business Days prior thereto, which documents will be
subject to the reasonable review, within such 10-Business
Day period, of such holders, their counsel and the
underwriters; and the Company will not file any registration
statement or amendment thereto or any prospectus or any
supplement thereto (including such documents incorporated by
reference) to which the Requisite Holders shall reasonably
object within such 10-Business Day period, and will not
include or name any holder in any Required Registration
without the consent of such holder;
(b) prepare and file with the Commission such
amendments and post-effective amendments to any registration
statement and any prospectus used in connection therewith as
may be necessary to keep such registration statement
effective and to comply with the provisions of the
Securities Act with respect to the disposition of all
Registrable Securities covered by such registration
statement until such time as all of such Registrable
Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers
thereof set forth in such registration statement, and cause
the prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act;
(c) furnish to each holder of Registrable Securities
included in any Registration and the underwriter or
underwriters, if any, without charge, at least one signed
copy of the registration statement and any post-effective
amendment thereto, upon request, and such number of
conformed copies thereof and such number of copies of the
prospectus (including each preliminary prospectus and each
prospectus filed under Rule 424 under the Securities Act),
any amendments or supplements thereto and any documents
incorporated by reference therein, as such holder or
underwriter may reasonably request in order to facilitate
the disposition of the Registrable Securities being sold by
such holder (it being understood that the Company consents
to the use of the prospectus and any amendment or supplement
thereto by each holder of Registrable Securities covered by
such registration statement and the underwriter or
underwriters, if any, in connection with the offering and
sale of the Registrable Securities covered by the prospectus
or any amendment or supplement thereto);
(d) notify each holder of the Registrable Securities
of any stop order or other order suspending the
effectiveness of any registration statement, issued or
threatened by the Commission in connection therewith, and
take all reasonable actions required to prevent the entry of
such stop order or to remove it or obtain withdrawal of it
at the earliest possible moment if entered;
(e) if requested by the managing underwriter or
underwriters or any holder of Registrable Securities in
connection with any sale pursuant to a registration
statement, promptly incorporate in a prospectus supplement
or post-effective amendment such information relating to
such underwriting as the managing underwriter or
underwriters or such holder reasonably requests to be
included therein; and make all required filings of such
prospectus supplement or post-effective amendment as soon as
practicable after being notified of the matters incorporated
in such prospectus supplement or post-effective amendment;
(f) on or prior to the date on which a Required
Registration is declared effective, use its best efforts to
register or qualify, and cooperate with the holders of
Registrable Securities included in such Required
Registration, the underwriter or underwriters, if any, and
their counsel, in connection with the registration or
qualification of the Registrable Securities covered by such
Required Registration for offer and sale under the
securities or "blue sky" laws of up to ten states of the
United States as any such holder or underwriter reasonably
requests in writing; use its best efforts to keep each such
registration or qualification effective, including through
new filings, or amendments or renewals, during the period
such registration statement is required to be kept
effective; and do any and all other acts or things necessary
or advisable to enable the disposition in all such states
reasonably requested of the Registrable Securities covered
by such Required Registration; provided, however, that the
Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to
general service of process in any such jurisdiction where it
is not then so subject;
(g) in connection with any sale pursuant to a Required
Registration, cooperate with the holders of Registrable
Securities and the managing underwriter or underwriters, if
any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends)
representing securities to be sold under such Required
Registration, and enable such securities to be in such
denominations and registered in such names as the managing
underwriter or underwriters, if any, or such holders may
request;
(h) use its best efforts to cause the Registrable
Securities to be registered with or approved by such other
governmental agencies or authorities within the United
States and having jurisdiction over the Company or any
Subsidiary as may reasonably be necessary to enable the
seller or sellers thereof or the underwriter or
underwriters, if any, to consummate the disposition of such
Registrable Securities (provided that nothing in this clause
(h) shall be deemed to require the Company to register or
qualify the Registrable Securities in more than ten states
of the United States, as more specifically set forth in
clause (f) above);
(i) make available for inspection by any holder of
Registrable Securities included in any Required
Registration, any underwriter participating in any
disposition pursuant to any Required Registration, and any
attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company,
as shall be reasonably necessary to enable them to exercise
their "due diligence" responsibility, and cause the
Company's officers, directors and employees to supply all
information reasonably requested by any such person in
connection with such Required Registration;
(j) use its best efforts to obtain:
(i) at the time of effectiveness of the Required
Registration, a "comfort letter" from the Company's
independent certified public accountants covering such
matters of the type customarily covered by "cold
comfort letters" as the Requisite Holders and the
underwriters reasonably request; and
(ii) at the time of any underwritten sale pursuant
to the registration statement, a "bring-down comfort
letter," dated as of the date of such sale, from the
Company's independent certified public accountants
covering such matters of the type customarily covered
by comfort letters as the Requisite Holders and the
underwriters reasonably request;
(k) use its best efforts to obtain, at the time of
effectiveness of the Required Registration, an opinion or
opinions, reasonably acceptable to the Requisite Holders in
form and scope, from counsel for the Company in customary
form;
(l) notify each seller of Registrable Securities
covered by such Registration, upon discovery that, or upon
the happening of any event as a result of which, the
prospectus included in such Registration, as then in effect,
includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and
promptly prepare, file with the Commission and furnish to
such seller or holder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers
or prospective purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances
under which they are made;
(m) use its best efforts to otherwise comply in all
material respects with all applicable rules and regulations
of the Commission, and make generally available to its
security holders (as contemplated by Section 11(a) under the
Securities Act) an earnings statement satisfying the
provisions of Rule 158 under the Securities Act no later
than 90 days after the end of the 12-month period beginning
with the first month of the Company's first fiscal quarter
commencing after the effective date of the registration
statement, which statement shall cover said 12-month period;
(n) provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered
by the Required Registration from and after a date not later
than the effective date of such Required Registration;
(o) use its best efforts to cause all Registrable
Securities covered by the Required Registration to be listed
subject to notice of issuance, prior to the date of the
first sale of such Registrable Securities pursuant to such
Required Registration, on each securities exchange on which
the Common Stock (or other securities issuable upon exercise
of the Warrants) issued by the Company are then listed, or
admitted to trading on NASDAQ, if the Common Stock or any
such other securities are then admitted to trading on
NASDAQ; and
(p) enter into such agreements (including underwriting
agreements in customary form) and take such other actions as
the Requisite Holders shall reasonably request in order to
expedite or facilitate the disposition of such Registrable
Securities pursuant to the Required Registration.
The Company may require each holder of Registrable Securities
that will be included in any Registration to furnish the Company
with such information in respect of such holder of its
Registrable Securities that will be included in such Registration
as the Company may reasonably request and as is required by
applicable laws or regulations.
10.7 Preparation; Reasonable Investigation. In connection
with the preparation and filing of each registration statement
registering Registrable Securities under the Securities Act
pursuant to the Required Registration, the Company will give the
holders of such Registrable Securities so registered, their
underwriters, if any, and their respective counsel and
accountants the opportunity to participate in the preparation of
such registration statement (other than reports and proxy
statements incorporated therein by reference and lawfully and
properly filed with the Commission) and each prospectus included
therein or filed with the Commission, and each amendment thereof
or supplement thereto, and will give each of them such access to
its books and records and such opportunities to discuss the
business of the Company with its officers and the independent
public accountants who have certified its financial statements as
shall be necessary, in the opinion of such holders or such
underwriters, to conduct a reasonable investigation within the
meaning of Section 11(b)(3) of the Securities Act.
10.8 Rights of Requesting Holders. Each holder of
Registrable Securities which makes a written request therefor
within 30 days after the notice to such holders provided for in
Section 10.4 or Section 10.5, as the case may be, shall have the
right to receive copies of the information, notices and other
documents described in Section 10.6(c), Section 10.6(l) and
Section 10.6(m) in connection with any proposed Registration by
the Company under the Securities Act.
10.9 Expenses. The Company agrees to pay all expenses
(including without limitation registration fees, qualification
fees, legal expenses (including the reasonable fees and expenses
of one 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 or Section
10.5 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 or Section 10.5.
10.10 Indemnification. In connection with each
registration, qualification, notification, or exemption of
securities under Section 10.4 or Section 10.5, 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 10.10 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 10.10. 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.
10.11 Other Registration of Common Stock. If any shares
of Common Stock required to be reserved for purposes of the
exercise of Warrants require registration with or approval of any
governmental authority under any federal or state law (other than
the Securities Act) before such shares may be issued upon
conversion, the Company will, at its expense and as expeditiously
as possible, use its best efforts to cause such shares to be duly
registered or approved, as the case may be.
10.12 Availability of Information. The Company will use
its best efforts to comply with the reporting requirements of
Sections 13 and 15(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission
promulgated thereunder, and use its best efforts to comply with
all other public information reporting requirements of the
Commission as from time to time in effect, and cooperate with the
holders of Registrable Securities so as to permit disposition of
the Registrable Securities pursuant to an exemption from the
Securities Act for the sale of any Registrable Securities
(including, without limitation, the current public information
requirements of Rule 144(c) and Rule 144A under the Securities
Act). The Company will also cooperate with each holder of any
Registrable Securities in supplying such information as may be
necessary for such holder to complete and file any information
reporting forms presently or hereafter required by the Commission
as a condition to the availability of an exemption from the
Securities Act for the sale of any Registrable Securities.
10.13 SWIB Warrants. The Company agrees that at any
time it has received a request from the holder of the SWIB
Warrants to register any of its Registrable Securities in a
Required Registration (as such terms are defined in the SWIB
Warrants), it will give written notice to all holders of
Registrable Securities hereunder of its intention to proceed with
such registration, and upon the written request of the holder of
any such Registrable Securities who intends to transfer such
Registrable Securities promptly upon the effectiveness of such
registration, given within 20 days after receipt of any such
notice from the Company, and the consent of the Requisite Holders
(as defined in the SWIB Warrants) of the SWIB Warrants to the
inclusion of such Registrable Securities in such registration,
the Company will in each instance use its best efforts to cause
all Registrable Securities held by any requesting holder to be
included in such registration. If any Registrable Securities are
included in any such registration, each holder of such
Registrable Securities shall pay its pro rata share (to be
determined with reference to the total number of shares of stock
included in such registration) of the direct out of pocket costs
of the Company paid to third parties, including registration
fees, qualification fees, reasonable legal expenses of the
Company, printing expenses, the costs of special audits or "cold
comfort" letters and expenses of underwriters, and the reasonable
fees and expenses of any necessary special experts in connection
with all registrations, qualifications, notifications or
exemptions pursuant to such registration and all offerings and
sales by each holder of the Restricted Stock which is being
registered in such registration.
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 of the same series
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 of the same series 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 of the same series covering the number of shares so
assigned and setting forth the proportionate aggregate Warrant
Price applicable to such assigned shares.
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 and of the same series as the Warrants
so surrendered. All Warrants will be dated the same date as this
Warrant.
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 SWIB
Warrants; and
(c) Up to 625,000 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
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 "Form S-3" shall mean such form under the
Securities Act as in effect on the date hereof or any
registration form under the Securities Act subsequently adopted
by the Commission which permits inclusion or incorporation of
substantial information by reference to other documents filed by
the Company with the Commission.
The term "Initial per share Warrant Price" shall mean the
lesser of
(a) $2.25 and
(b) the average of the daily market prices per share
(determined in accordance with the definition of "Current
Market Price") of the Common Stock for the ten consecutive
Business Days immediately following the Business Day on
which the Company publicly announces the Restructuring (as
such term is defined in the Note Agreement),
provided that in the event the Restructuring does not take place,
the Initial per share Warrant Price shall be as set forth in
clause (a) of this definition.
The term "Note Agreement" shall mean the Amended and
Restated Note Agreement dated as of July 25, 1996, as amended
from time to time, among the Company, Nationwide Life Insurance
Company, Employers Life Insurance Company of Wausau and West
Coast Life Insurance Company.
The term "Notes" shall mean the Senior Secured Notes due
January 15, 2000, of the Company issued pursuant to the Note
Agreement.
The term "Registrable Securities" shall mean, at any time:
(a) any shares of Common Stock that have been issued
upon the exercise of any Warrant; and
(b) any shares of Common Stock that are issuable upon
the exercise of Warrants which are exercisable at such time.
For purposes of Section 10 of this Warrant, holders of Warrants
at any time shall be deemed to be holders of Registrable
Securities described in clause (b) of this definition that are at
such time issuable upon exercise in full of such Warrants. As to
any particular Registrable Securities, once issued, such
Securities shall cease to be Registrable Securities:
(i) when a registration statement with respect to the
sale of such Securities shall have become effective under
the Securities Act and such Securities shall have been
disposed of in accordance with such registration statement;
(ii) when such Securities shall have been distributed
to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act;
(iii) when such Securities shall have been
otherwise transferred and subsequent disposition thereof
shall not require registration or qualification under the
Securities Act;
(iv) when such Securities shall have ceased to be
outstanding or (with respect to Registrable Securities
described in clause (b) of this definition) issuable upon
exercise of the Warrants; or
(v) when such Securities shall be held (directly or
indirectly) by the Company, any Subsidiary or any Affiliate.
The term "Registration" shall mean the Required Registration
and each Incidental Registration.
The term "Related Warrants" shall mean the warrants (other
than this Warrant) of series A and series B initially issued by
the Company on the date hereof to the holders of the Notes.
The term "Requisite Holders" 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 "Restructuring" shall have the meaning ascribed
thereto in the Note Agreement.
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 "SWIB Warrants" shall mean the warrants initially
issued by the Company on the date hereof to State of Wisconsin
Investment Board and all warrants hereafter issued in exchange
for the SWIB Warrants.
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 the Related Warrants and all warrants hereafter issued in
exchange or substitution for this Warrant or any Related
Warrants.
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,
series, 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.
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.
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.
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.
18. APPLICABLE LAW.
This Warrant will be construed in accordance with and
governed by the laws of the State of Wisconsin.
<PAGE>
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 July ___, 1996.
STOKELY USA, INC.
ATTEST: President
___________________________
Secretary
<PAGE>
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 ________________________________
<PAGE>
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:______________________________
Exhibit 99.7
_________________________________________________________________
_________________________________________________________________
SERIES B WARRANT
No. WB-___________________ Shares
PPN: 861502 2@ 0
Series B Warrant To Purchase
Shares Of Common Stock
Of
Stokely USA, Inc.
Void after July 25, 2006
_________________________________________________________________
_________________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
1. EXERCISE OF WARRANT . . . . . . . . . . . . . . . . . . . 2
2. RESERVATION OF COMMON STOCK . . . . . . . . . . . . . . . 2
3. PROTECTION AGAINST DILUTION . . . . . . . . . . . . . . . 2
3.1 Share Dividends, Subdivisions and Combinations . . . 3
3.2 Issuance of Additional Shares of Common Stock. . . . 3
3.3 Issuance of Warrants or Other Rights, Convertible
Securities . . . . . . . . . . . . . . . . . . . . . 4
3.4 Other Provisions Applicable to Adjustments Under
this Section . . . . . . . . . . . . . . . . . . . . 5
3.5 Extraordinary Dividends. . . . . . . . . . . . . . . 7
3.6 Adjustment of Number of Shares Purchasable . . . . . 7
3.7 Minimum Adjustment . . . . . . . . . . . . . . . . . 7
3.8 Notice of Adjustments. . . . . . . . . . . . . . . . 8
3.9 Date of Determination of Current Market Price. . . . 8
4. MERGERS, CONSOLIDATIONS, SALES. . . . . . . . . . . . . . 8
5. DISSOLUTION OR LIQUIDATION. . . . . . . . . . . . . . . . 9
6. NOTICE OF EXTRAORDINARY DIVIDENDS . . . . . . . . . . . . 9
7. FRACTIONAL SHARES . . . . . . . . . . . . . . . . . . . . 9
8. FULLY PAID STOCK; TAXES . . . . . . . . . . . . . . . . . 10
9. CLOSING OF TRANSFER BOOKS . . . . . . . . . . . . . . . . 10
10. RESTRICTIONS ON TRANSFERABILITY OF WARRANTS AND SHARES;
COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . 10
10.1 In General . . . . . . . . . . . . . . . . . . . . . 10
10.2 Restrictive Legends. . . . . . . . . . . . . . . . . 11
10.3 Notice of Proposed Transfer; Registration Not
Required . . . . . . . . . . . . . . . . . . . . . . 11
10.4 Required Registration. . . . . . . . . . . . . . . . 12
10.5 Incidental Registration. . . . . . . . . . . . . . . 16
10.6 Registration Procedures. . . . . . . . . . . . . . . 17
10.7 Preparation; Reasonable Investigation. . . . . . . . 21
10.8 Rights of Requesting Holders . . . . . . . . . . . . 22
10.9 Expenses . . . . . . . . . . . . . . . . . . . . . . 22
10.10 Indemnification . . . . . . . . . . . . . . . . 22
10.11 Other Registration of Common Stock. . . . . . . 23
10.12 Availability of Information . . . . . . . . . . 24
10.13 SWIB Warrants . . . . . . . . . . . . . . . . . 24
11. PARTIAL EXERCISE AND PARTIAL ASSIGNMENT . . . . . . . . . 24
12. WARRANT DENOMINATIONS . . . . . . . . . . . . . . . . . . 25
13. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 25
14. LOST, STOLEN WARRANTS, ETC. . . . . . . . . . . . . . . . 29
15. WARRANT HOLDER NOT SHAREHOLDER. . . . . . . . . . . . . . 29
16. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . 29
17. INDEX AND CAPTIONS. . . . . . . . . . . . . . . . . . . . 30
18. APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . . 30
<PAGE>
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. WB-________ ________ SHARES
SERIES B WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
STOKELY USA, INC.
Void after July 25, 2006
THIS IS TO CERTIFY that, for value received and subject to
the provisions hereinafter set forth,
_____________________________________________________________ or
assigns, is entitled to purchase from Stokely USA, Inc., a
Wisconsin corporation (the "Company"), at any time on or after
July 25, 1998 and up to and including 5:00 P.M. E.S.T. on July
25, 2006 (the "Expiration Date"), _________ 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 the
Initial per share Warrant Price (as defined in Section 13
hereof).
The aggregate price of the Common Stock which may be
purchased upon the exercise of this Warrant shall be equal to the
Initial per share Warrant Price 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 Initial per share Warrant
Price 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.
The terms which are capitalized herein shall have the
meanings specified in Section 13 unless the context shall
otherwise require.
<PAGE>
1. EXERCISE OF WARRANT.
Subject to the conditions hereinafter set forth, this
Warrant may be exercised on or after July 25, 1998 and up to and
including the Expiration Date (the "Exercise Date"), in whole or
from time to time in part, 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 of the same series 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 upon the
occurrence of a Partial Prepayment Event occurring prior to the
opening of business on July 25, 1998, or if a Partial Prepayment
Event does not occur prior to the opening of business on July 25,
1998, then 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.
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.
3. PROTECTION AGAINST DILUTION.
The per share Warrant Price and the number of shares
deliverable hereunder shall be adjusted as hereinafter set forth:
3.1 Share Dividends, Subdivisions and Combinations. In
case after the date hereof the Company shall:
(a) take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend
payable in, or other distribution of, 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.
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:
(i) 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
(ii) 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:
(i) 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 Current Market Price per share, and
(ii) 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.
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.
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.
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 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 Section 3.4(a)) shall be deemed to have been
received by the Company.
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.
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 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.
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.
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, and 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.
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.
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 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.
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.
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 15 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 Section 6 shall not apply to distributions made in
connection with transactions covered by Section 4.
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.
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
(except as set forth in Section 180.0622 of the Wisconsin
Business Corporation Law). 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.
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.
10. RESTRICTIONS ON TRANSFERABILITY OF WARRANTS AND SHARES;
COMPLIANCE WITH LAWS.
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.
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 upon the conditions specified in the Warrant
pursuant to which such shares were issued."
In the event that a registration statement covering the
Registrable Securities 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
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.
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 Registrable
Securities, 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 such Registrable Securities, 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, 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.
10.4 Required Registration.
(a) Filing of Registration Statement. The Company
will, upon the written request of the Requisite Holders
given at any time on or after July 22, 1998, requesting that
the Company effect the registration under the Securities Act
of all or at least 25% of such Requisite Holders'
Registrable Securities and specifying the Registrable
Securities to be sold and the intended method of disposition
thereof, promptly give written notice of such requested
registration to all holders of Registrable Securities, and
thereupon will use its best efforts to effect the
registration (a "Required Registration") under the
Securities Act of:
(i) the Registrable Securities that the Company
has been so requested to register by the Requisite
Holders, and
(ii) all other Registrable Securities that the
Company has been requested to register by the holders
thereof by written request given to the Company within
30 days after the giving of such written notice by the
Company (which request shall specify the Registrable
Securities to be sold and the intended method of
disposition of such Registrable Securities);
all to the extent required to permit the disposition (in
accordance with the intended method thereof as aforesaid) of
the Registrable Securities so to be registered; provided,
however, that (1) the Company shall be required to effect
only one Required Registration pursuant to this Section 10.4
that is deemed effected under Section 10.4(e) and pursuant
to similar terms contained in the Related Warrants that is
deemed effected under the terms contained in the Related
Warrants and (2) the Company shall not be required to effect
any registration pursuant to this Section 10.4 if a Partial
Prepayment Event shall have occurred prior to the opening of
business on July 25, 1998. It is expressly acknowledged
that the Company shall be required to effect only one
Required Registration as may be requested by the holder of
this Warrant and the Related Warrants. If the Registrable
Securities subject to being registered pursuant to this
Section 10.4 may be, at the time of the request in respect
thereof, registered on Form S-3, the Company may effect such
registration on Form S-3, provided that the foregoing shall
not be deemed to release the Company from complying with the
requirements of this Section 10.4 if the Company is not
eligible to register the Registrable Securities on Form S-3
at the time of a request for a Required Registration.
(b) Time for Filing and Effectiveness. On or before
the date which is 120 days after the request for such
registration, the Company shall file with the Commission the
Required Registration with respect to all Registrable
Securities to be so registered, and shall use its reasonable
best efforts to cause such Required Registration to become
effective as promptly as practicable after the filing
thereof, but in no event later than the day which is 210
days after the request for such registration.
Notwithstanding the foregoing, if the Company shall furnish
to the Requisite Holders requesting a Required Registration
pursuant to this Section 10.4 and each other holder of
Registrable Securities participating in the registration
thereunder, a certificate signed by the President or Chief
Executive Officer of the Company stating that, in the good
faith and reasonable business judgment of the Board of
Directors of the Company, the filing of such Required
Registration would materially interfere with the filing by
the Company with the Commission of a Form 10-K or any
registration statement filed prior to a request for a
Required Registration hereunder or any acquisition or
corporate reorganization or debt restructuring by the
Company, and that it is therefore essential to defer the
filing of such Required Registration, the Company shall have
the right to defer the commencement of the taking of action
with respect to such filing for a period of not more than
180 days after receipt of the request of the Requisite
Holders; provided, however, that the Company may not utilize
this right if this right has been used under the terms of
this Warrant or the Related Warrants at any time during the
immediately preceding 365-day period. If the Company shall
so postpone the filing of such Required Registration, the
Requisite Holders and all other holders of Registrable
Securities participating therein shall have the right to
withdraw from such registration by giving written notice to
the Company within 30 days after receipt of such notice of
postponement. In connection with any such withdrawal by the
Requisite Holders, the Requisite Holders shall be deemed to
fully rescind their request for such Required Registration,
in which case said request shall be deemed rescinded and
preserved for future use, the registration and offering of
all Registrable Securities in connection with such offering
will be cancelled and the Company will pay all costs in
connection therewith as provided in Section 10.9.
(c) Selection of Underwriters. If Registrable
Securities that the Company has been requested to register
pursuant to a Required Registration are to be disposed of in
an underwritten public offering, the underwriters of such
offering shall be one or more underwriting firms of
recognized standing reasonably acceptable to the Requisite
Holders.
(d) Priority on Required Registrations. If the
managing underwriter shall advise the Company in writing
(with a copy to each holder of Registrable Securities
requesting sale) that, in such underwriter's opinion, the
number of shares of securities requested to be included in
such Required Registration exceeds the number that can be
sold in such offering within a price range acceptable to the
Company (such writing to state the basis of such opinion and
the approximate number of shares of securities that may be
included in such offering without such effect), the Company
will include in such Required Registration, to the extent of
the number of shares of securities that the Company is so
advised can be sold in such offering:
(i) first, Registrable Securities requested to be
sold by the holders thereof pursuant to this Section
10.4, pro rata among such holders on the basis of the
number of Registrable Securities requested to be so
registered by such holders, and
(ii) second, all other securities proposed to be
registered by the Company and any other stockholders,
in such proportions as the Company and such other
stockholders shall agree or as shall be set forth in
any applicable agreement between the Company and such
other stockholders.
(e) When Required Registration is Deemed Effected. A
Required Registration pursuant to this Section 10.4 shall
not be deemed to have been effected for purposes of the
proviso to Section 10.4(a) if:
(i) the registration does not become effective
and remain effective for a period of at least 120 days
(or for (A) such shorter period in which all shares of
Registrable Securities proposed to be sold in such
Required Registration are actually sold, or (B) for
such longer period (not to exceed an additional 60
days) if an underwriter selling such shares deems such
longer period reasonably necessary in order to sell all
of the shares subject to such Required Registration),
without interference by the issuance by the Commission
of any stop order with respect thereto, unless the
registration does not become effective after the
Company has filed a registration statement because the
holders of the Registrable Securities refuse to proceed
(in which case the Required Registration will be deemed
to have been effected);
(ii) the Requisite Holders withdraw their request
for registration in its entirety at any time because
the Requisite Holders reasonably and in good faith
believed that the registration statement or any
prospectus related thereto contained an untrue
statement of a material fact or omitted to state a
material fact required to be stated therein or
necessary to make the statements made therein (in the
case of any prospectus, in light of the circumstances
under which they were made) not misleading, notified
the Company of such fact, and requested that the
Company correct such alleged misstatement or omission,
and the Company has refused to correct such alleged
misstatement or omission; or
(iii) the conditions to closing specified in
the purchase agreement or underwriting agreement
entered into in connection with such Required
Registration are not satisfied, other than by reason of
some act or omission by the holders of the Registrable
Securities that were to have been registered and sold.
10.5 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 Registrable Securities 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 or (iii) described in Section
10.13) (an "Incidental Registration"), it will give written
notice to all holders of Registrable Securities of its
intention so to do and upon the written request of the
holder of any such Registrable Securities who intends to
transfer such Registrable Securities 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 Registrable Securities 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 requesting registration of its Registrable Securities
shall in its request describe briefly the manner of any
proposed transfer of such Registrable Securities. Nothing
in this Section 10.5 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
Registrable Securities requesting registration pursuant to
Section 10.5, on the date that the registration statement
with respect to such Registrable Securities 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 Requisite Holders may
reasonably request.
(c) The Company's obligation to register Registrable
Securities under this Section 10.5 shall be subject to the
condition that each holder of Registrable Securities
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.
10.6 Registration Procedures. The Company will use its best
efforts to effect each Required Registration pursuant to Section
10.4 and to cooperate with the sale of such Registrable
Securities in accordance with the intended method of disposition
thereof as quickly as practicable, and the Company will as
expeditiously as possible:
(a) prepare and file with the Commission the
registration statement and use its best efforts to cause the
Required Registration to become effective; provided,
however, that before filing any registration statement or
prospectus or any amendments or supplements thereto, the
Company will furnish to the holders of the Registrable
Securities covered by such registration statement, their
counsel, and the underwriters, if any, and their counsel,
copies of all such documents proposed to be filed at least
10 Business Days prior thereto, which documents will be
subject to the reasonable review, within such 10-Business
Day period, of such holders, their counsel and the
underwriters; and the Company will not file any registration
statement or amendment thereto or any prospectus or any
supplement thereto (including such documents incorporated by
reference) to which the Requisite Holders shall reasonably
object within such 10-Business Day period, and will not
include or name any holder in any Required Registration
without the consent of such holder;
(b) prepare and file with the Commission such
amendments and post-effective amendments to any registration
statement and any prospectus used in connection therewith as
may be necessary to keep such registration statement
effective and to comply with the provisions of the
Securities Act with respect to the disposition of all
Registrable Securities covered by such registration
statement until such time as all of such Registrable
Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers
thereof set forth in such registration statement, and cause
the prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act;
(c) furnish to each holder of Registrable Securities
included in any Registration and the underwriter or
underwriters, if any, without charge, at least one signed
copy of the registration statement and any post-effective
amendment thereto, upon request, and such number of
conformed copies thereof and such number of copies of the
prospectus (including each preliminary prospectus and each
prospectus filed under Rule 424 under the Securities Act),
any amendments or supplements thereto and any documents
incorporated by reference therein, as such holder or
underwriter may reasonably request in order to facilitate
the disposition of the Registrable Securities being sold by
such holder (it being understood that the Company consents
to the use of the prospectus and any amendment or supplement
thereto by each holder of Registrable Securities covered by
such registration statement and the underwriter or
underwriters, if any, in connection with the offering and
sale of the Registrable Securities covered by the prospectus
or any amendment or supplement thereto);
(d) notify each holder of the Registrable Securities
of any stop order or other order suspending the
effectiveness of any registration statement, issued or
threatened by the Commission in connection therewith, and
take all reasonable actions required to prevent the entry of
such stop order or to remove it or obtain withdrawal of it
at the earliest possible moment if entered;
(e) if requested by the managing underwriter or
underwriters or any holder of Registrable Securities in
connection with any sale pursuant to a registration
statement, promptly incorporate in a prospectus supplement
or post-effective amendment such information relating to
such underwriting as the managing underwriter or
underwriters or such holder reasonably requests to be
included therein; and make all required filings of such
prospectus supplement or post-effective amendment as soon as
practicable after being notified of the matters incorporated
in such prospectus supplement or post-effective amendment;
(f) on or prior to the date on which a Required
Registration is declared effective, use its best efforts to
register or qualify, and cooperate with the holders of
Registrable Securities included in such Required
Registration, the underwriter or underwriters, if any, and
their counsel, in connection with the registration or
qualification of the Registrable Securities covered by such
Required Registration for offer and sale under the
securities or "blue sky" laws of up to ten states of the
United States as any such holder or underwriter reasonably
requests in writing; use its best efforts to keep each such
registration or qualification effective, including through
new filings, or amendments or renewals, during the period
such registration statement is required to be kept
effective; and do any and all other acts or things necessary
or advisable to enable the disposition in all such states
reasonably requested of the Registrable Securities covered
by such Required Registration; provided, however, that the
Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to
general service of process in any such jurisdiction where it
is not then so subject;
(g) in connection with any sale pursuant to a Required
Registration, cooperate with the holders of Registrable
Securities and the managing underwriter or underwriters, if
any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends)
representing securities to be sold under such Required
Registration, and enable such securities to be in such
denominations and registered in such names as the managing
underwriter or underwriters, if any, or such holders may
request;
(h) use its best efforts to cause the Registrable
Securities to be registered with or approved by such other
governmental agencies or authorities within the United
States and having jurisdiction over the Company or any
Subsidiary as may reasonably be necessary to enable the
seller or sellers thereof or the underwriter or
underwriters, if any, to consummate the disposition of such
Registrable Securities (provided that nothing in this clause
(h) shall be deemed to require the Company to register or
qualify the Registrable Securities in more than ten states
of the United States, as more specifically set forth in
clause (f) above);
(i) make available for inspection by any holder of
Registrable Securities included in any Required
Registration, any underwriter participating in any
disposition pursuant to any Required Registration, and any
attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company,
as shall be reasonably necessary to enable them to exercise
their "due diligence" responsibility, and cause the
Company's officers, directors and employees to supply all
information reasonably requested by any such person in
connection with such Required Registration;
(j) use its best efforts to obtain:
(i) at the time of effectiveness of the Required
Registration, a "comfort letter" from the Company's
independent certified public accountants covering such
matters of the type customarily covered by "cold
comfort letters" as the Requisite Holders and the
underwriters reasonably request; and
(ii) at the time of any underwritten sale pursuant
to the registration statement, a "bring-down comfort
letter," dated as of the date of such sale, from the
Company's independent certified public accountants
covering such matters of the type customarily covered
by comfort letters as the Requisite Holders and the
underwriters reasonably request;
(k) use its best efforts to obtain, at the time of
effectiveness of the Required Registration, an opinion or
opinions, reasonably acceptable to the Requisite Holders in
form and scope, from counsel for the Company in customary
form;
(l) notify each seller of Registrable Securities
covered by such Registration, upon discovery that, or upon
the happening of any event as a result of which, the
prospectus included in such Registration, as then in effect,
includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and
promptly prepare, file with the Commission and furnish to
such seller or holder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers
or prospective purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances
under which they are made;
(m) use its best efforts to otherwise comply in all
material respects with all applicable rules and regulations
of the Commission, and make generally available to its
security holders (as contemplated by Section 11(a) under the
Securities Act) an earnings statement satisfying the
provisions of Rule 158 under the Securities Act no later
than 90 days after the end of the 12-month period beginning
with the first month of the Company's first fiscal quarter
commencing after the effective date of the registration
statement, which statement shall cover said 12-month period;
(n) provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered
by the Required Registration from and after a date not later
than the effective date of such Required Registration;
(o) use its best efforts to cause all Registrable
Securities covered by the Required Registration to be listed
subject to notice of issuance, prior to the date of the
first sale of such Registrable Securities pursuant to such
Required Registration, on each securities exchange on which
the Common Stock (or other securities issuable upon exercise
of the Warrants) issued by the Company are then listed, or
admitted to trading on NASDAQ, if the Common Stock or any
such other securities are then admitted to trading on
NASDAQ; and
(p) enter into such agreements (including underwriting
agreements in customary form) and take such other actions as
the Requisite Holders shall reasonably request in order to
expedite or facilitate the disposition of such Registrable
Securities pursuant to the Required Registration.
The Company may require each holder of Registrable Securities
that will be included in any Registration to furnish the Company
with such information in respect of such holder of its
Registrable Securities that will be included in such Registration
as the Company may reasonably request and as is required by
applicable laws or regulations.
10.7 Preparation; Reasonable Investigation. In connection
with the preparation and filing of each registration statement
registering Registrable Securities under the Securities Act
pursuant to the Required Registration, the Company will give the
holders of such Registrable Securities so registered, their
underwriters, if any, and their respective counsel and
accountants the opportunity to participate in the preparation of
such registration statement (other than reports and proxy
statements incorporated therein by reference and lawfully and
properly filed with the Commission) and each prospectus included
therein or filed with the Commission, and each amendment thereof
or supplement thereto, and will give each of them such access to
its books and records and such opportunities to discuss the
business of the Company with its officers and the independent
public accountants who have certified its financial statements as
shall be necessary, in the opinion of such holders or such
underwriters, to conduct a reasonable investigation within the
meaning of Section 11(b)(3) of the Securities Act.
10.8 Rights of Requesting Holders. Each holder of
Registrable Securities which makes a written request therefor
within 30 days after the notice to such holders provided for in
Section 10.4 or Section 10.5, as the case may be, shall have the
right to receive copies of the information, notices and other
documents described in Section 10.6(c), Section 10.6(l) and
Section 10.6(m) in connection with any proposed Registration by
the Company under the Securities Act.
10.9 Expenses. The Company agrees to pay all expenses
(including without limitation registration fees, qualification
fees, legal expenses (including the reasonable fees and expenses
of one 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 or Section
10.5 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 or Section 10.5.
10.10 Indemnification. In connection with each
registration, qualification, notification, or exemption of
securities under Section 10.4 or Section 10.5, 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 10.10 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 10.10. 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.
10.11 Other Registration of Common Stock. If any shares
of Common Stock required to be reserved for purposes of the
exercise of Warrants require registration with or approval of any
governmental authority under any federal or state law (other than
the Securities Act) before such shares may be issued upon
conversion, the Company will, at its expense and as expeditiously
as possible, use its best efforts to cause such shares to be duly
registered or approved, as the case may be.
10.12 Availability of Information. The Company will use
its best efforts to comply with the reporting requirements of
Sections 13 and 15(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission
promulgated thereunder, and use its best efforts to comply with
all other public information reporting requirements of the
Commission as from time to time in effect, and cooperate with the
holders of Registrable Securities so as to permit disposition of
the Registrable Securities pursuant to an exemption from the
Securities Act for the sale of any Registrable Securities
(including, without limitation, the current public information
requirements of Rule 144(c) and Rule 144A under the Securities
Act). The Company will also cooperate with each holder of any
Registrable Securities in supplying such information as may be
necessary for such holder to complete and file any information
reporting forms presently or hereafter required by the Commission
as a condition to the availability of an exemption from the
Securities Act for the sale of any Registrable Securities.
10.13 SWIB Warrants. The Company agrees that at any
time it has received a request from the holder of the SWIB
Warrants to register any of its Registrable Securities in a
Required Registration (as such terms are defined in the SWIB
Warrants), it will give written notice to all holders of
Registrable Securities hereunder of its intention to proceed with
such registration, and upon the written request of the holder of
any such Registrable Securities who intends to transfer such
Registrable Securities promptly upon the effectiveness of such
registration, given within 20 days after receipt of any such
notice from the Company, and the consent of the Requisite Holders
(as defined in the SWIB Warrants) of the SWIB Warrants to the
inclusion of such Registrable Securities in such registration,
the Company will in each instance use its best efforts to cause
all Registrable Securities held by any requesting holder to be
included in such registration. If any Registrable Securities are
included in any such registration, each holder of such
Registrable Securities shall pay its pro rata share (to be
determined with reference to the total number of shares of stock
included in such registration) of the direct out of pocket costs
of the Company paid to third parties, including registration
fees, qualification fees, reasonable legal expenses of the
Company, printing expenses, the costs of special audits or "cold
comfort" letters and expenses of underwriters, and the reasonable
fees and expenses of any necessary special experts in connection
with all registrations, qualifications, notifications or
exemptions pursuant to such registration and all offerings and
sales by each holder of the Restricted Stock which is being
registered in such registration.
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 of the same series
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 of the same series 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 of the same series covering the number of shares so
assigned and setting forth the proportionate aggregate Warrant
Price applicable to such assigned shares.
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 and of the same series as the Warrants
so surrendered. All Warrants will be dated the same date as this
Warrant.
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 SWIB
Warrants; and
(c) Up to 625,000 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
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 "Form S-3" shall mean such form under the
Securities Act as in effect on the date hereof or any
registration form under the Securities Act subsequently adopted
by the Commission which permits inclusion or incorporation of
substantial information by reference to other documents filed by
the Company with the Commission.
The term "Initial per share Warrant Price" shall mean the
lesser of
(a) $2.25 and
(b) the average of the daily market prices per share
(determined in accordance with the definition of "Current
Market Price") of the Common Stock for the ten consecutive
Business Days immediately following the Business Day on
which the Company publicly announces the Restructuring (as
such term is defined in the Note Agreement),
provided that in the event the Restructuring does not take place,
the Initial per share Warrant Price shall be as set forth in
clause (a) of this definition.
The term "Note Agreement" shall mean the Amended and
Restated Note Agreement dated as of July 25, 1996, as amended
from time to time, among the Company, Nationwide Life Insurance
Company, Employers Life Insurance Company of Wausau and West
Coast Life Insurance Company.
The term "Notes" shall mean the Senior Secured Notes due
January 15, 2000, of the Company issued pursuant to the Note
Agreement.
The term "Partial Prepayment Event" shall mean any payment
of the principal amount of the Notes such that after giving
effect to such payment, the aggregate principal amount of the
Notes (excluding the portion of such principal amount
attributable to capitalized interest) outstanding does not exceed
$10,226,554.
The term "Registrable Securities" shall mean, at any time:
(a) any shares of Common Stock that have been issued
upon the exercise of any Warrant; and
(b) any shares of Common Stock that are issuable upon
the exercise of Warrants which are exercisable at such time.
For purposes of Section 10 of this Warrant, holders of
Warrants at any time shall be deemed to be holders of Registrable
Securities described in clause (b) of this definition that are at
such time issuable upon exercise in full of such Warrants. As to
any particular Registrable Securities, once issued, such
Securities shall cease to be Registrable Securities:
(i) when a registration statement with respect to
the sale of such Securities shall have become effective
under the Securities Act and such Securities shall have
been disposed of in accordance with such registration
statement;
(ii) when such Securities shall have been
distributed to the public pursuant to Rule 144 (or any
successor provision) under the Securities Act;
(iii) when such Securities shall have been
otherwise transferred and subsequent disposition
thereof shall not require registration or qualification
under the Securities Act;
(iv) when such Securities shall have ceased to be
outstanding or (with respect to Registrable Securities
described in clause (b) of this definition) issuable
upon exercise of the Warrants; or
(v) when such Securities shall be held (directly
or indirectly) by the Company, any Subsidiary or any
Affiliate.
The term "Registration" shall mean the Required Registration
and each Incidental Registration.
The term "Related Warrants" shall mean the warrants (other
than this Warrant) of series A and series B initially issued by
the Company on the date hereof to the holders of the Notes.
The term "Requisite Holders" 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 "Restructuring" shall have the meaning ascribed
thereto in the Note Agreement.
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 "SWIB Warrants" shall mean the warrants initially
issued by the Company on the date hereof to State of Wisconsin
Investment Board and all warrants hereafter issued in exchange
for the SWIB Warrants.
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 the Related Warrants and all warrants hereafter issued in
exchange or substitution for this Warrant or any Related
Warrants.
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,
series, 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.
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.
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.
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.
18. APPLICABLE LAW.
This Warrant will be construed in accordance with and
governed by the laws of the State of Wisconsin.<PAGE>
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 July ___, 1996.
STOKELY USA, INC.
ATTEST: President
Secretary
<PAGE>
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 ________________________________
<PAGE>
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:______________________________
