SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 22, 1998
Seneca Foods Corporation
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(Exact name of registrant as specified in its charter)
New York 0-1989 16-0733425
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1162 Pittsford-Victor Road, Pittsford, New York 14534
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 716/385-9500
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Not Applicable
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Former name or former address, if changed since last report
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FORM 8-K
SENECA FOODS CORPORATION
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Item 1. Changes in Control of Registrant.
See discussion in Item 5 below.
Item 5. Other Events.
On June 22, 1998, the Registrant entered into a Stock Purchase
Agreement with Carl Marks Strategic Investments, L.P., a Delaware limited
partnership, Carl Marks Strategic Investments II, L.P., a Delaware limited
partnership and Uranus Fund, Ltd., a Cayman Islands corporation (collectively,
the "New Investors"), whereby the New Investors agreed to purchase from the
Registrant 1,166,667 shares of Convertible Participating Preferred Stock, with
$0.025 par value per share (the "New Preferred Stock") for a total investment of
$14,000,004 (or $12.00 per share)(the "Stock Purchase Agreement"). The shares of
New Preferred Stock are convertible immediately into shares of the Registrant's
Class A common stock, $0.25 par value per share ("Class A Common Stock").
To complete the equity investment transaction contemplated by
the Stock Purchase Agreement, the Registrant will declare a distribution payable
to the holders of Class A Common Stock and Class B common stock, $0.25 par value
per share ("Class B Common Stock") whereby each holder (a "Rights Holder") will
receive one-half of a right (the "Right") to purchase at a subscription price of
$12.00 per share, (the "Subscription Price") shares of the New Preferred Stock
(the "Rights Offering"). Each whole Right will entitle the Rights Holder to
receive, upon payment of the Subscription Price, one share of New Preferred
Stock.
The New Investors have agreed to purchase from the Registrant
up to 2,500,000 shares of New Preferred Stock which the Registrant's
shareholders do not purchase in the Rights Offering. Under no circumstances
shall the Registrant be required to issue more than 4,166,667 shares of New
Preferred Stock, or a total sale of $50,000,004 (the "$50 Million Limit") to the
New Investors and shareholders who exercise their purchase rights under the
Rights Offering in the total equity investment transaction. This limitation
affects only the purchase rights of the New Investors. Assuming (i) the New
Investors acquire the maximum number of shares which they can acquire in the
Transaction and the Related Existing Shareholders (as hereinafter defined)
exercise all Rights distributed to them as current shareholders; (ii) the New
Investors and the Related Existing Shareholders convert all shares of New
Preferred Stock acquired by them into shares of Class A Common Stock and, except
for that conversion, neither reduce nor increase their aggregate holdings of
Company voting stock; (iii) the Wolcott and Kayser families
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neither reduce nor increase their aggregate holdings of Company voting stock
after the Transaction; and (iv) the Company issues no more shares of voting
stock after the Transaction except in conversion of New Preferred Stock: (A)
the New Investors will own, in the aggregate, 4.4% of the voting power of the
Registrant's shares and (B) certain long-standing shareholders of the Registrant
that are related to the New Investors through family relationships and the
common ownership of family-held investments (the "Related Investors") will own,
in the aggregate, 19.3% of the voting power of the Registrant. The Wolcott and
Kayser family shareholders referred to in the following paragraph would then own
36.8% of the total voting power.
Concurrently with the Stock Purchase Agreement, the New
Investors, the Registrant, and certain of its substantial shareholders, entered
into a Shareholders Agreement dated June 22, 1998 (the "Shareholders Agreement")
whereby certain substantial shareholders of the Registrant, including the
Wolcott and Kayser families, agreed that they would not exercise, sell or
otherwise transfer the Rights to which they were entitled pursuant to the terms
of the Rights Offering. The Pillsbury Company has separately agreed that it will
not exercise, sell or otherwise transfer the Rights to which it is entitled
pursuant to the terms of the Rights Offering. The members of the Kayser and
Wolcott families have also agreed to certain restrictions on sales by them of
shares of (i) Class A Common Stock, (ii) Class B Common Stock, (iii) New
Preferred Stock and (iv) other securities of the Registrant that are entitled to
vote in the election of directors (the "Shares") including a general restriction
against sales of Shares to third persons within two years of the closing of the
final transaction of the equity investment.
The consummation of the Stock Purchase Agreement, the
Shareholders Agreement and Rights Offering result in significant participation
by the New Investors in the governance of the Registrant. The number of
directors comprising the Registrant's Board of Directors will be increased from
seven to nine members, with the two new positions being filled by designees of
the New Investors (the "Investor Designees"). The Investor Designees will
continue to be nominated for election to the Board and shareholders who executed
the Shareholders Agreement will continue to vote for the Investor Designees
until the Stock Purchase Agreement is terminated or such time as the New
Investors no longer own, in the aggregate, at least 10% of the Registrant's
Class A Common Stock (assuming conversion of all shares of the New Preferred
Stock into Class A Common Stock). The Shareholders Agreement also requires that
the Investor Designees will comprise at least 22% of any committee of the Board
of Directors. Moreover, the Registrant has agreed to require unanimous approval
of the Registrant's Board of Directors (excluding directors who abstain from
voting) for certain defined "major corporate actions", including (i) any
amendment or modification to the Registrant's Certificate of Incorporation or
Bylaws; (ii) any business combination; (iii) any
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sale or transfer of all or substantially all of the assets of the Registrant;
(iv) certain issuances of securities; (v) any acquisition or disposition or
series of related acquisitions or dispositions of assets involving gross
consideration in excess of $15 million; (vi) certain changes in the Registrant's
line of business; (vii) any change in the Registrant's certified public
accountants; (viii) the settlement of certain litigation; or (ix) the
commencement by the Registrant of proceedings relating to bankruptcy,
insolvency, reorganization or relief of debtors. The requirement of unanimous
Board approval (excluding directors who abstain from voting) terminates when the
New Investors no longer own, in the aggregate, at least 15% of the Registrant's
Class A Common Stock (assuming conversion of all shares of New Preferred Stock
into shares of Class A Common Stock).
On June 19, 1998, the Board of Directors of the Company
exempted the New Investors and their affiliates from the provisions of Section
912(b) of the New York Business Corporation Law, which impose certain
restrictions and limitations on certain "business combinations" between the
Registrant and an "interested shareholder" as such quoted terms are defined in
Section 912.
Pursuant to a Registration Rights Agreement dated June 22,
1998, the Registrant granted to the New Investors certain registration rights
under the Securities Act of 1933 (the "Registration Rights") with respect to the
shares purchased by the New Investors pursuant to the Stock Purchase Agreement
and the Rights Offering. The Registration Rights Agreement gives the New
Investors, subject to certain limitations, (i) demand Registration Rights and
(ii) Registration Rights to participate in other public securities offerings
initiated on behalf of the Registrant or other holders.
To effect the foregoing Stock Purchase Agreement and Rights
Offering, the Registrant will amend its Certificate of Incorporation to: (i)
increase the number of authorized shares of Class A Common Stock from 10,000,000
shares to 20,000,000 shares; (ii) increase the number of authorized shares of
Preferred Stock with $.025 par value per share, Class A from 4,000,000 shares to
8,200,000 shares; (iii) set forth the rights, preferences and limitations of the
New Preferred Stock; (iv) require unanimous board approval, in accordance with
Section 709 of the New York Business Corporation Law, of the major corporate
actions; and (v) remove the acquisition by the New Investors of Class A Common
Stock issuable upon conversion of the New Preferred Stock from the operation of
certain provisions of the Certificate of Incorporation with respect to the
purchase of Class A Common Stock. Consequently, the complete equity investment
transaction cannot be effected without prior shareholder approval. The Wolcott
and Kayser family shareholders who signed the Shareholder Agreement and The
Pillsbury Company have agreed to vote all their shares of the Company's voting
stock in favor of the amendments to the Certificate of Incorporation.
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Registrant intends to use the proceeds from the total equity
investment to reduce Registrant's indebtedness.
Item 7. Financial Statements and Exhibits
2(a) Stock Purchase Agreement dated as of June 22, 1998 between the
Registrant and the New Investors
2(b) Shareholders Agreement dated as of June 22, 1998 between the
Registrant, the New Investors and certain substantial shareholders of
the Registrant
2(c) Registration Right Agreement dated as of June 22, 1998 between the
Registrant and the New Investors
3(i) Proposed Certificate of Amendment of the Registrant's Certificate of
Incorporation
20 Press Release of the Registrant dated June 22, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SENECA FOODS CORPORATION
Date: July 2, 1998 By :/s/Philip G. Paras
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Name: Philip G. Paras
Title: Vice President-Finance
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STOCK PURCHASE AGREEMENT
BY AND AMONG
SENECA FOODS CORPORATION,
CARL MARKS STRATEGIC INVESTMENTS, L.P.,
CARL MARKS STRATEGIC INVESTMENTS II, L.P.
AND URANUS FUND, LTD.
Dated as of June 22, 1998
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TABLE OF CONTENTS
Page
1. DEFINITIONS..........................................................3
2. CLOSING.............................................................13
2.1 Time and Place of the Closing............................13
2.2 Transactions at the Closing..............................14
3. CONDITIONS TO THE CLOSING...........................................15
3.1 Conditions Precedent to the Obligations of the
Purchaser...............................................15
3.1.1 Compliance by the Company.........................15
3.1.2 Shareholder Approval..............................16
3.1.3 Rights Offering...................................16
3.1.4 Amendment to Certificate of Incorporation.........16
3.1.5 Board of Directors................................16
3.1.6 Consents..........................................17
3.1.7 Hart-Scott-Rodino.................................18
3.1.8 Absence of Material Adverse Effect................18
3.1.9 Nasdaq Listing....................................18
3.1.10 Stock Price.......................................18
3.1.11 Legal Opinions....................................18
3.1.12 Exemption from Special Voting Requirements........18
3.1.13 Officer's Certificate.............................19
3.1.14 Secretary's Certificate...........................19
3.1.15 No Injunction.....................................19
3.1.16 Change of Control.................................20
3.2 Conditions Precedent to Obligations of the Company.......20
3.2.1 Compliance by the Purchaser.......................20
3.2.2 Shareholder Approval..............................20
3.2.3 Consents..........................................20
3.2.4 Hart-Scott-Rodino.................................21
3.2.5 Nasdaq Listing....................................21
3.2.6 No Injunction.....................................21
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................21
4.1 Corporate Existence and Power............................21
4.2 Power and Authority......................................22
4.3 Affiliate Transactions...................................23
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4.4 No Contravention, Conflict, Breach, Etc..................24
4.5 Consents.................................................24
4.6 Capitalization of the Company............................25
4.7 No Rights Plan...........................................27
4.8 Registration Rights......................................27
4.9 Subsidiaries.............................................27
4.10 SEC Documents............................................29
4.11 Financial Statements.....................................31
4.12 No Existing Violation, Default, Etc......................32
4.13 Licenses and Permits.....................................34
4.14 Title to Properties......................................35
4.15 Intellectual Property....................................35
4.16 Environmental Matters....................................38
4.17 Taxes....................................................39
4.18 Litigation...............................................42
4.19 Labor Matters............................................42
4.20 Employee Benefits........................................43
4.21 Contracts................................................45
4.22 Contingent Liabilities...................................46
4.23 No Material Adverse Effect...............................46
4.24 Finder's Fees............................................48
4.25 Investment Company.......................................48
4.26 Exemption from Registration; Restrictions on Offer
and Sale of Same or Similar Securities.................48
4.27 Use of Proceeds..........................................49
4.28 Full Disclosure..........................................49
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.....................49
5.1 Partnership Existence and Power..........................49
5.2 Power and Authority......................................50
5.3 No Contravention, Conflict, Breach, Etc..................50
5.4 Consents.................................................51
5.5 Acquisition for Own Account..............................51
5.6 Third Party Agreements...................................52
5.7 Finder's Fee.............................................52
5.8 Ownership of Common Stock................................53
5.9 Full Disclosure..........................................53
6. COVENANTS OF THE PARTIES............................................53
6.1 Shareholder Meeting; Proxy Material; Certificate
of Amendment...........................................53
6.2 Rights Offering..........................................54
6.3 Rights Offering Registration Statement...................55
6.4 Pre-Closing Activities...................................58
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6.5 Option Shares............................................62
6.6 Hart-Scott-Rodino........................................63
6.7 Access to Information....................................63
6.8 Publicity................................................64
6.9 Certificates for Shares To Bear Legends..................64
6.10 Reservation of Shares....................................65
7. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS...........................................................65
8. INDEMNIFICATION.................................... ................66
8.1 Indemnification by the Company...........................66
8.2 Notification.............................................67
8.3 Registration Rights Agreement............................69
9. TERMINATION.........................................................70
9.1 Termination..............................................70
9.2 Expenses.................................................71
9.3 Effect of Termination....................................71
10. MISCELLANEOUS.......................................................72
10.1 Performance; Waiver......................................72
10.2 Extension or Modification of Rights Offering.............72
10.3 Successors and Assigns...................................73
10.4 Notices..................................................73
10.5 Governing Law............................................74
10.6 Severability.............................................74
10.7 Headings; Interpretation.................................75
10.8 Entire Agreement.........................................75
10.9 No Third Party Rights....................................75
10.10 Counterparts.............................................75
EXHIBITS
A Pillsbury Letter Agreement
B Certificate of Amendment
C Registration Rights Agreement
D Rights Offering Registration Statement
E Shareholders Agreement
F Jaeckle Fleischmann & Mugel, LLP Opinion
G Chamberlain, D'Amanda, Oppenheimer & Greenfield Opinion
SCHEDULES
I Shares Purchased
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT ("AGREEMENT"), dated as of June 22,
1998, by and among Seneca Foods Corporation, a New York corporation (the
"Company"), Carl Marks Strategic Investments, L.P., a Delaware limited
partnership ("CMSI"), Carl Marks Strategic Investments II, L.P., a Delaware
limited partnership ("CMSI II"), Uranus Fund, Ltd., a Cayman Islands corporation
("Uranus" and, together with CMSI and CMSI II, the "Purchasers").
WHEREAS, the Company desires to sell to the Purchasers, and
the Purchasers desire to purchase, an aggregate of 1,166,667 shares of
Convertible Participating Preferred Stock, par value $.025 per share, of the
Company (the "Preferred Stock"), at a purchase price equal to $12.00 per Share
(the "Purchase Price Per Share") (or $14,000,004 in the aggregate) upon the
terms and subject to the conditions set forth herein;
WHEREAS, each share of Preferred Stock may be converted at any
time by the holder thereof into one share of Class A Common Stock, par value
$.25 per share, of the Company (the "Class A Common Stock");
WHEREAS, the Company proposes, as soon as practicable after
the Rights Offering Registration Statement (as defined herein) becomes
effective, to distribute to holders of its Class A Common Stock and Class B
common stock, par value $.25 per share, of the Company (the "Class B Common
Stock" and, together with the Class A Common Stock, the "Common Stock")
transferable rights (the "Rights") to subscribe for and purchase up to an
aggregate of 3,000,000 shares of the Preferred Stock at a subscription price
equal to the Purchase Price Per Share;
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WHEREAS, pursuant to the Rights Offering (as defined herein),
stockholders of record will receive one-half of a Right for each share of Common
Stock held by them as of the applicable record date, and each whole Right will
entitle the holder to purchase one share of Preferred Stock at the Purchase
Price Per Share;
WHEREAS, the Company desires to assure the sale of at least
2,500,000 of the shares of Preferred Stock as a result of the Rights Offering in
order to realize proceeds of not less than $30,000,000 (the "Minimum Proceeds");
WHEREAS, Arthur S. Wolcott (Individually and as Trustee),
Audrey S. Wolcott (as Trustee), Susan W. Stuart (Individually and as Trustee for
Alexius Lyle Wadell and Kyle Aaron Wadell), Donald Stuart, Kraig H. Kayser
(Individually and as Trustee for certain Kayser family trusts), Kurt Kayser,
Karl Kayser, Marilyn W. Kayser, Robert Oppenheimer (as Trustee of certain Kayser
family trusts), Mark S. Wolcott (Individually and as Trustee for Erin Lorraine
Wolcott and Cassandra Jean Wolcott), Kari Wolcott, Bruce S. Wolcott
(Individually and as Trustee for Kaitlin Kerr Wolcott, Michael Stanton Wolcott
and Paige Strode Wolcott), Constance Wolcott, Grace W. Wadell (Individually and
as Trustee for Sara Elizabeth Stuart, Jennifer Grace Stuart and Donald Arthur
Stuart), Aaron Wadell and The Pillsbury Company ("Pillsbury") (collectively, the
"Existing Shareholders"), the owners of approximately 30.4% of the outstanding
Class A Common Stock and approximately 23.8% of the outstanding Class B Common
Stock, have advised the
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Company that, pursuant to the terms of the Shareholders Agreement (as defined
herein) and a letter agreement, dated as of June 9, 1998, between Pillsbury and
the Company and attached as Exhibit A hereto, respectively, they will not
exercise any of their Rights;
WHEREAS, in lieu thereof, and to assist the Company in its
efforts to assure realization of the Minimum Proceeds, the Purchasers have
offered to purchase from the Company, and the Company is willing to sell to the
Purchasers at the Purchase Price Per Share, up to 2,500,000 shares of Preferred
Stock that otherwise would have been available for purchase by the shareholders
of the Company pursuant to the Rights Offering; and
WHEREAS, if less than 2,500,000 shares of Preferred Stock
become available for purchase by the Purchasers following the Rights Offering,
the Purchasers may require the Company to issue and sell to them additional
shares of Preferred Stock so as to permit them to acquire up to 2,500,000 shares
of Preferred Stock (subject to certain limitations).
NOW, THEREFORE, in consideration of the premises and the
respective representations, warranties, covenants, agreements and conditions
contained herein, the Company and the Purchasers agree as follows:
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1. DEFINITIONS.
The terms defined in this Section 1 shall have the following
meanings for all purposes of this Agreement:
"Act" means the Securities Act of 1933, as amended, or any
superseding Federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect from time to time. References to
a particular section of the Securities Act of 1933, as amended, shall include a
reference to the comparable section, if any, of any such superseding Federal
statute.
An "Affiliate" of, or a person "affiliated" with, a specified
Person, means a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified. The term "control" (including the terms "controlling,"
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, by
contract, or otherwise.
"Alliance Agreement" has the meaning set forth in Section 4.12.
"Annual Report" means the Company's Annual Report on Form 10-K
for the year ended March 31, 1997, as filed with the SEC (including all exhibits
and schedules thereto and documents incorporated by reference therein).
"Benefit Plans" has the meaning set forth in Section 4.20.
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"Blank Check Preferred Stock" means preferred stock, Class A,
par value $0.025 per share, of the Company.
"Board of Directors" means the Board of Directors of the
Company, as constituted from time to time.
"Business Day" shall mean any day that is not a Saturday,
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
"By-Laws" means the By-laws of the Company, as amended through
the date hereof.
"Certificate of Amendment" means the Certificate of Amendment
of the Certificate of Incorporation to be filed for recording by the Company
with the Department of State of the State of New York on or prior to the date
and time of the Closing, in the form attached as Exhibit B hereto.
"Certificate of Incorporation" means the Restated Certificate
of Incorporation of the Company, as filed for recording with the Department of
State of the State of New York, as amended through the date hereof.
"Change of Control" means the acquisition by any Person or 13D
Group (other than the parties to the Shareholders Agreement and their
Affiliates) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of the outstanding Voting Securities representing 25% or more of
the voting power of the Company.
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"Class A Common Stock" has the meaning set forth in the preamble to
this Agreement.
"Class B Common Stock" has the meaning set forth in the preamble to
this Agreement.
"Closing" has the meaning set forth in Section 2.1.
"Closing Date" has the meaning set forth in Section 2.1.
"CMSI" has the meaning set forth in the preamble to this Agreement.
"CMSI II" has the meaning set forth in the preamble to this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" has the meaning set forth in the preamble to this
Agreement.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Conversion Shares" means the shares of Class A Common Stock
issuable upon conversion of the Preferred Stock pursuant to the terms of the
Certificate of Amendment.
"Credit Agreement" has the meaning set forth in Section 4.12.
"Disclosure Letter" has the meaning set forth in Article 4.
"Draft Form 10-K" means the draft of the Company's Annual Report
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on Form 10-K for the year ended March 31, 1998, dated June 12, 1998 (excluding
all exhibits and schedules thereto and documents incorporated by reference
therein), and the draft of the Company's annual report for the year ended March
31, 1998, dated June 16, 1998, each in the form previously delivered to the
Purchasers.
"Encumbrance" means any mortgage, pledge, lien, security
interest, restriction upon voting or transfer, claim or other encumbrance of any
kind.
"Environmental Laws" means all federal, state, local and
foreign laws, principles of common law, regulations, codes and ordinances, as
well as orders, decrees, judgments or injunctions issued, promulgated, approved
or entered thereunder relating to pollution, protection of the environment, or
health and safety, including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Sec. 9601 et
--
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6901 et seq.,
- --- ------
the Toxic Substances Control Act, 15 U.S.C. Sec. 2601 et seq., the Federal Water
------
Pollution Control Act, 33 U.S.C. Sec. 1251 et seq., the Clean Air Act, 42 U.S.C.
------
Sec. 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7
------
U.S.C. Sec. 121 et seq., the Occupational Safety and Health Act, 29 U.S.C. Sec.
------
651 et seq., the Asbestos Hazard Emergency Response Act, 15 U.S.C. Sec. 2601 et
------ --
seq., the Safe Drinking Water Act, 42 U.S.C. Sec. 300f et seq., the Oil
- ---- ------
Pollution Act of 1990, 33 U.S.C. Sec. 2701 et seq., and analogous state acts.
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8
"ERISA" has the meaning set forth in Section 4.20.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any superseding Federal statute, and the rules and regulations
promulgated thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of 1934, as
amended, shall include a reference to the comparable section, if any, of such
superseding Federal statute.
"Existing Shareholders" has the meaning set forth in the preamble to
this Agreement.
"Governmental Authority" means the government of any nation or
state, or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Intellectual Property" has the meaning set forth in Section 4.15(A).
"Investment Proposal" has the meaning set forth in Section 6.1.
"IP Licenses" has the meaning set forth in Section 4.15(B).
"Knowledge of the Company" means the actual knowledge of (i) the
executive officers of the Company named in the Annual Report and (ii) each of
the Presidents of the Company's processed food groups, in each case, after
reasonable inquiry.
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"Law" means any law, treaty, rule or regulation of a
Governmental Authority or judgment, order, writ, injunction or determination of
an arbitrator or a court or other Governmental Authority.
"Liabilities" has the meaning set forth in Section 8.1.
"Licenses" means any certificates, permits, licenses, franchises,
consents, approvals, orders, authorizations and clearances from appropriate
Governmental Authorities.
"Material Adverse Effect" means a material adverse effect on
(i) the assets, results of operations, business, prospects or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole,
and (ii) the ability of the Company to consummate the transactions contemplated
by this Agreement, the Registration Rights Agreement and the Shareholders
Agreement, or to perform its obligations under such agreements.
"Minimum Proceeds" has the meaning set forth in the preamble to this
Agreement.
"Most Recent Balance Sheet" means the balance sheet contained
within the unaudited consolidated and consolidating balance sheets and
statements of income, changes in stockholders' equity, and cash flow as of and
for the months ended December 27, 1997.
"Most Recent Fiscal Month End" means December 27, 1997.
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"Nasdaq" means the Nasdaq National Market.
"1997 Note Agreement" has the meaning set forth in Section 4.12.
"No Par Preferred Stock" has the meaning set forth in Section 4.6.
"Option Closing Date" has the meaning set forth in Section 6.3.
"Option Shares" has the meaning set forth in Section 6.3.
"Person" means any individual, firm, corporation, partnership, limited
liability company or partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind, and shall include
any successor (by merger or otherwise) of such entity.
"Pillsbury" has the meaning set forth in the preamble to this
Agreement.
"Preferred Stock" has the meaning set forth in the preamble to this
Agreement.
"Proxy Statement" means the proxy statement of the Company on
Schedule 14A to be filed with the SEC in connection with the Stockholder
Meeting, as amended or supplemented (including all exhibits and schedules
thereto and documents incorporated by reference therein).
"Purchase Price Per Share" has the meaning set forth in the
first recital of this Agreement.
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"Purchasers" has the meaning set forth in the preamble to this
Agreement.
"Purchaser Designees" has the meaning set forth in Section 3.1.4.
"Quarterly Reports" means the Company's Quarterly Report on
Form 10-Q for the quarter ended June 28, 1997, the Company's Quarterly Report on
Form 10-Q for the quarter ended September 27, 1997 and the Company's Quarterly
Report on Form 10-Q for the quarter ended December 27, 1997, each as filed with
the SEC.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, between the Company and the Purchasers,
substantially in the form attached as Exhibit C hereto, as amended, supplemented
and modified from time to time in accordance with the terms thereof.
"Representatives" shall mean the employees, counsel,
accountants and other authorized representatives of the Purchasers.
"Rights" has the meaning set forth in the preamble to this Agreement.
"Rights Offering" means the offering of Rights, shares of Preferred
Stock and Class A Common Stock pursuant to the Rights Offering Registration
Statement, with the material terms described in Exhibit D hereto.
"Rights Offering Expiration Date" shall mean the date on which
the subscription period (as the same may be extended for up to 30 days by the
Company
<PAGE>
12
at the request or with the prior consent of the Purchasers) under the Rights
Offering expires.
"Rights Offering Prospectus" shall mean the final prospectus
included in the Rights Offering Registration Statement for use in connection
with the issuance of the Rights (including, without limitation, any prospectus
filed pursuant to Rule 424(b) under the Act).
"Rights Offering Registration Statement" shall mean the
Company's Registration Statement on Form S-1 under the Act or such other
appropriate form under the Act, pursuant to which the Rights, the underlying
shares of Preferred Stock and shares of Class A Common Stock will be registered
pursuant to the Act, with the material terms described in Exhibit D.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" means the Annual Reports and all documents
(including any Annual Reports) filed by the Company with the SEC (including all
exhibits and schedules thereto and documents incorporated by reference therein)
since January 1, 1997, but shall not include any portion of any document which
is not deemed to be filed under applicable SEC rules and regulations.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) liens for Taxes not yet due and payable,
(c) purchase money liens
<PAGE>
13
and liens securing rental payments under capital lease arrangements, and (d)
other liens arising in the ordinary course of business (consistent with past
custom and practice) and not incurred in connection with the borrowing of money.
"Series A Preferred Stock" has the meaning set forth in Section 4.6.
"Series B Preferred Stock" has the meaning set forth in Section 4.6.
"6% Preferred Stock" has the meaning set forth in Section 4.6.
"Shareholders Agreement" means the Shareholders Agreement, dated as
of the date hereof, by and among the Company, the persons listed therein and the
Purchasers, substantially in the form attached as Exhibit E hereto, as amended,
supplemented and modified from time to time in accordance with the terms
thereof.
"Shares" means the shares of Preferred Stock to be purchased by the
Purchasers pursuant to Section 2.2.
"Standby Commitment Amount" has the meaning set forth in
Section 2.2(B).
"Stockholder Meeting" has the meaning set forth in Section 6.1.
"Subsidiary" means, with respect to any Person, any corporation,
limited or general partnership, joint venture, association, limited liability
company or partnership, joint stock company, trust, unincorporated organization,
or other entity analogous to any of the foregoing of which 50% or more of the
equity ownership (whether voting stock or comparable interest) is, at the time,
owned, directly or
<PAGE>
14
indirectly by such Person.
"Tax" or "Taxes" means all requisite federal, state, county,
local, foreign and other taxes (including income, profits, premium, estimated,
excise, sales, use, occupancy, gross receipts, franchise, ad valorem, severance,
capital levy, production transfer, withholding, employment, unemployment
compensation, payroll related and property taxes, import duties and other
governmental charges and assessments), whether or not measured in whole or in
part by net income, and including deficiencies, interest, additions to tax or
interest, and penalties with respect thereto, and including expenses associated
with contesting any proposed adjustment related to any of the foregoing.
"13D Group" means any partnership, limited partnership,
syndicate or other "group" (as such term is used in Section 13(d)(3) of the
Exchange Act).
"Time of Mailing" means the commencement of the mailing of
certificates representing the Rights to the shareholders of the Common Stock.
"Uranus" has the meaning set forth in the preamble to this Agreement.
"Voting Securities" means any securities of the Company entitled to
vote generally in the election of directors, or securities convertible into or
exercisable or exchangeable for such securities.
"Year 2000 Data" has the meaning set forth in 4.15(I).
<PAGE>
15
2. CLOSING.
2.1 Time and Place of the Closing. Subject to the terms and
conditions of this Agreement, the closing of the sale and purchase of the shares
of Preferred Stock (including shares purchased upon the expiration of Rights)
contemplated hereby (the "Closing") shall take place at the offices of Paul,
Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New
York 10019-6064, at 10:00 A.M., New York time, three Business Days after the
Rights Offering Expiration Date, or at such other date as may be agreed to by
the parties hereto, assuming that all of the conditions to Closing in Section 3
shall have been satisfied or waived. The "Closing Date" shall be the date the
Closing occurs.
2.2 Transactions at the Closing. At the Closing, subject to
the terms and conditions of this Agreement:
(A) The Company shall issue and sell to each Purchaser,
and each Purchaser shall purchase, such number of shares of Preferred Stock as
are set forth opposite such Purchaser's name on Schedule I at the Purchase Price
Per Share.
(B) The Company shall issue and sell to the
Purchasers and the Purchasers shall purchase from the Company, at the Purchase
Price Per Share, a number of shares of Preferred Stock equal to the Standby
Commitment Amount. The "Standby Commitment Amount" is an amount equal to the
number of shares of Preferred Stock that are not purchased by shareholders
pursuant to the exercise of
<PAGE>
16
Rights in the Rights Offering plus the difference between (i) 3,000,000 and (ii)
the number of shares of Preferred Stock purchased pursuant to the exercise of
Rights in the Rights Offering (up to a maximum amount of 2,500,000 shares of
Preferred Stock). Notwithstanding the foregoing, under no circumstance shall the
Company be required to issue shares pursuant to this Section 2.2, Sections 6.2
and 6.5 of this Agreement with an aggregate purchase price of more than
$50,000,004. It is understood and agreed that, if and to the extent that the
Purchasers are required to purchase shares of Preferred Stock pursuant to this
Section 2.2(B), such shares shall be so purchased by each of the Purchasers,
severally and not jointly, equal to the product of (i) the aggregate number of
shares of Preferred Stock to be purchased pursuant to this Section 2.2(B) and
(ii) the percentage set forth opposite such Purchaser's name on Schedule I (to
be adjusted by the Purchasers to eliminate fractional shares).
(C) The Company shall deliver to each Purchaser a
certificate representing such number of shares of Preferred Stock as determined
pursuant to Sections 2.2(A) and (B), each registered in the name of such
Purchaser or its nominees, against payment of the Purchase Price Per Share, with
respect thereto by wire transfer of immediately available funds to an account or
accounts previously designated by the Company.
<PAGE>
17
3. CONDITIONS TO THE CLOSING.
3.1 Conditions Precedent to the Obligations of the Purchaser.
The obligations of the Purchasers to be discharged under this Agreement on or
prior to the Closing are subject to satisfaction of the following conditions at
or prior to the Closing (unless expressly waived in writing by each of the
Purchasers at or prior to the Closing):
3.1.1 Compliance by the Company. All of the terms,
covenants and conditions of this Agreement and the Shareholders Agreement to be
complied with and performed by the Company and the Existing Shareholders at or
prior to the Closing shall have been complied with and performed by such parties
in all material respects, and the representations and warranties made by the
Company in this Agreement shall be true and correct at and as of the Closing,
with the same force and effect as though such representations and warranties had
been made at and as of the Closing, except for representations and warranties
that are made as of a specific time, which shall be true and correct only as of
such time.
3.1.2 Shareholder Approval. The sale of the Shares (and the
Conversion Shares) to the Purchasers pursuant to this Agreement shall have been
duly approved by the holders of the Common Stock and other Voting Securities of
the Company entitled to vote thereon at the Stockholder Meeting.
3.1.3 Rights Offering. The Rights Offering Registration
Statement shall have become effective; no stop order suspending the
effectiveness of
<PAGE>
18
the Rights Offering Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending, or
shall be contemplated by the SEC, and any request on the part of the SEC for
additional information shall have been complied with. The Rights Offering
Expiration Date shall have occurred.
3.1.4 Amendment to Certificate of Incorporation. At the
Stockholder Meeting, the holders of the Common Stock and other Voting Securities
of the Company entitled to vote thereon shall have duly approved the amendments
in the Certificate of Amendment, such amendment shall have been filed with the
Department of State of the State of New York and such amendment shall be in full
force and effect.
3.1.5 Board of Directors. The Board of Directors shall
increase the size of the Board of Directors from seven members to nine members
and shall elect two new members who shall take office effective upon the Closing
and be designated by the Purchasers (the "Purchaser Designees"). The other seven
directors of the Company upon the Closing shall be the existing Board of
Directors. At the next annual meeting of shareholders of the Company, the Board
of Directors shall nominate the two Purchaser Designees (or any other Person or
Persons) in accordance with the Shareholders Agreement for election as directors
with terms expiring in 2000 and 2001. Effective upon the Closing, the Board of
Directors shall include a number
<PAGE>
19
of Purchaser Designees on any committee of that Board of Directors equal to the
product of 22% and the total number of directors on such committee (rounded up
to the next whole number). Within 20 days of the date of this Agreement, the
Purchasers shall deliver a written notice to the Company designating the two
Purchaser Designees and shall cause such Purchase Designees to provide to the
Company all information required to be disclosed in the Proxy Statement with
respect to such designees.
3.1.6 Consents. All consents, approvals, authorizations,
orders, registrations, filings and qualifications of or with any (A)
Governmental Authority, (B) Nasdaq or any stock exchange on which the securities
of the Company are traded and (C) other Persons (whether acting in an
individual, fiduciary or other capacity) necessary or required to be made or
obtained by the Company, any of its Subsidiaries or the Existing Shareholders
for the consummation of the transactions contemplated by this Agreement, the
Certificate of Amendment, the Shareholders Agreement, the Rights Offering
Registration Statement or the Registration Rights Agreement, shall have been
made or obtained, as the case may be, and shall be in full force and effect, and
the Purchasers shall have been furnished with appropriate evidence thereof.
3.1.7 Hart-Scott-Rodino. The waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 shall have expired or been
<PAGE>
20
terminated, to the extent applicable.
3.1.8 Absence of Material Adverse Effect. No event or
events shall have occurred after March 31, 1997 that individually or in the
aggregate has had or would reasonably be expected to have a Material Adverse
Effect (other than any event specifically disclosed in a Quarterly Report or the
Draft Form 10-K).
3.1.9 Nasdaq Listing. The Conversion Shares shall have been
approved for quotation on the Nasdaq by the Nasdaq Stock Market, Inc.
3.1.10 Stock Price. For any five consecutive trading day period
after the date hereof, the five consecutive trading day average of the closing
price of the Class A Common Stock (as reported in the Wall Street Journal) shall
not be $12.00 per share or lower.
3.1.11 Legal Opinions. The Company shall have furnished to
the Purchasers on the Closing Date the opinions of Jaeckle Fleischmann & Mugel,
LLP, special counsel for the Company, and Chamberlain, D'Amanda, Oppenheimer &
Greenfield, counsel to Robert Oppenheimer, as Trustee, each dated the Closing
Date, and each substantially in the forms attached hereto of Exhibits F and G,
respectively.
3.1.12 Exemption from Special Voting Requirements. The
Board of Directors shall have irrevocably taken all action necessary under
Section 912 of the New York Business Corporation Law to exempt the transactions
contemplated
<PAGE>
21
by this Agreement, the Registration Rights Agreement and the Shareholders
Agreement and any future transactions between the Company and its Subsidiaries,
on the one hand, and the Purchasers and their "affiliates" and "associates"
(each as defined in such Section 912), on the other hand, from the provisions of
such Section 912 and the Purchasers shall have received evidence reasonably
satisfactory to it that such action shall have been taken.
3.1.13 Officer's Certificate. The Purchasers shall have
received a certificate, dated the Closing Date and signed by the Chairman of the
Board of Directors or the President of the Company, certifying that the
conditions set forth in this Section 3.1 have been satisfied on and as of such
date.
3.1.14 Secretary's Certificate. The Purchasers shall have
received a certificate, dated the Closing Date and signed by the secretary or an
assistant secretary of the Company, certifying the truth and correctness of
attached copies of the Certificate of Incorporation (including amendments
thereto), the By-Laws (including amendments thereto), and resolutions of the
Board of Directors and the holders of the Common Stock approving the sale of the
Shares to the Purchasers, the Rights Offering and the other transactions
contemplated hereby (including the execution and delivery of the Shareholders
Agreement and the Registration Rights Agreement).
3.1.15 No Injunction. There shall be no judgment, injunction,
<PAGE>
22
order or decree enjoining the Company or the Purchaser from consummating the
transactions contemplated by this Agreement, the Shareholders Agreement, the
Rights Offering Registration Statement or the Registration Rights Agreement to
be consummated at or before the Closing.
3.1.16 Change of Control. No Change of Control shall have
occurred on or after the date of this Agreement and on or prior to the Closing.
3.2 Conditions Precedent to Obligations of the Company. The
obligations of the Company to be discharged under this Agreement on or prior to
the Closing are subject to satisfaction of the following conditions at or prior
to the Closing (unless expressly waived in writing by the Company at or prior to
the Closing):
3.2.1 Compliance by the Purchaser. All of the terms,
covenants and conditions of this Agreement to be complied with and performed by
the Purchasers in all material respects at or prior to the Closing, shall have
been complied with and performed by the Purchasers and the representations and
warranties made by the Purchasers in this Agreement, shall be true and correct
at and as of the Closing, with the same force and effect as though such
representations and warranties had been made at and as of the Closing, except
for changes contemplated by this Agreement.
3.2.2 Shareholder Approval. The sale of the Shares to the
Purchasers pursuant to this Agreement and the Certificate of Amendment shall
have
<PAGE>
23
been duly approved by the holders of the Common Stock and other Voting
Securities of the Company entitled to vote thereon at the Stockholder Meeting.
3.2.3 Consents. All consents, approvals, authorizations,
orders, registrations, filings and qualifications of or with any (A)
Governmental Authority and (B) other Persons (whether acting in an individual,
fiduciary or other capacity) necessary or required to be made or obtained by the
Purchasers for the consummation of the transactions contemplated by this
Agreement, the Rights Offering Registration Statement or the Registration Rights
Agreement, shall have been made or obtained, as the case may be, and shall be in
full force and effect, and the Company shall have been furnished with
appropriate evidence thereof.
3.2.4 Hart-Scott-Rodino. The waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 shall have expired or been
terminated, to the extent applicable.
3.2.5 Nasdaq Listing. The Conversion Shares shall have been
approved for quotation on the Nasdaq by the Nasdaq Stock Market, Inc.
3.2.6 No Injunction. There shall be no judgment, injunction,
order or decree enjoining the Company or the Purchasers from consummating the
transactions contemplated by this Agreement to be consummated at or before the
Closing.
<PAGE>
24
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Purchasers
that, except as disclosed in writing by the Company to the Purchasers in a
letter specifically with respect to this Article 4 (the "Disclosure Letter")
delivered to the Purchasers on or prior to the date hereof:
4.1 Corporate Existence and Power. (A) The Company is a
corporation duly organized, validly existing and subsisting under the laws of
the State of New York. The Company has the corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
SEC Documents and the Draft Form 10-K, and as currently conducted. The Company
is duly qualified to transact business as a foreign corporation and is in good
standing (if applicable) in each jurisdiction in which the conduct of its
business or its ownership, leasing or operation of property requires such
qualification, other than any failure to be so qualified or in good standing as
would not singly or in the aggregate with all such other failures reasonably be
expected to have a Material Adverse Effect.
(B) True and complete copies of the Certificate of
Incorporation and the By-Laws as in effect on the date hereof have been provided
by the Company to the Purchasers. The minute books of the Company contain in all
material respects true and complete records of all meetings and consents in lieu
of meetings of the Board of Directors (and any committees thereof) and of the
shareholders of the Company.
<PAGE>
25
4.2 Power and Authority. The Company has the full corporate
power and authority to execute and deliver this Agreement, the Certificate of
Amendment, the Shareholders Agreement, the Rights and the Registration Rights
Agreement and to perform its obligations under this Agreement, the Certificate
of Amendment, the Shareholders Agreement, the Rights and the Registration Rights
Agreement. The execution, delivery and performance by the Company of this
Agreement, the Certificate of Amendment, the Shareholders Agreement, the Rights
and the Registration Rights Agreement and the consummation by the Company of the
transactions contemplated hereby and thereby (including the Rights Offering)
have been duly authorized and approved by the Board of Directors and no further
corporate action on the part of the Company or the holders of its securities
(other than the actions described in Sections 3.1.2 and 3.1.4, the filing of the
Certificate of Amendment under the New York Business Corporation Law and the
effectiveness of the Rights Offering Registration Statement pursuant to the Act)
is necessary to authorize the execution, delivery and performance by the Company
of such agreements or the consummation by the Company of the transactions
contemplated hereby and thereby (including the Rights Offering). Subject to
shareholder approval, the Board of Directors has duly adopted the Certificate of
Amendment. The foregoing authorization and approval by the Board of Directors
constitutes prior approval by the Board of Directors of the transaction which
resulted in the Purchasers
<PAGE>
26
becoming "interested shareholders" within the meaning of Section 912 of the New
York Business Corporation Law. As of the Closing Date, future transactions
between the Company and its Subsidiaries, on the one hand, and the Purchasers
and their "affiliates" and "associates" (each as defined in such Section 912),
on the other hand, shall be exempted from the provisions of such Section 912.
Each of this Agreement, the Shareholders Agreement and the Registration Rights
Agreement has been duly executed and delivered by the Company and is a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms.
4.3 Affiliate Transactions. Except as disclosed in any SEC
Document filed prior to the date hereof, in the Draft Form 10-K or in the
Disclosure Letter, the Company and its Subsidiaries have not entered into any
transaction or series of transactions with any shareholder, director, officer,
employee or Affiliate of the Company other than any transaction (or series of
related transactions) not involving amounts in excess of $60,000 and conducted
on an arms'-length basis in the ordinary course of business of the Company.
4.4 No Contravention, Conflict, Breach, Etc. The execution,
delivery and performance of each of this Agreement, the Certificate of
Amendment, the Shareholders Agreement, the Rights and the Registration Rights
Agreement by the Company and the Existing Shareholders, the issuance of the
Rights and the shares of Preferred Stock upon the exercise thereof by the
Company and the consummation of
<PAGE>
27
the transactions contemplated hereby and thereby (including the Rights Offering)
will not conflict with, contravene or result in a breach or violation of any of
the terms and provisions of, or constitute a default under (or permit any party
to terminate all or any provisions of), or result in the creation or imposition
of any Encumbrance upon any assets or properties of the Company or of any of its
Subsidiaries or cause the Company or any of its Subsidiaries to be required to
redeem, repurchase or offer to repurchase any of their respective indebtedness
under (A) the certificate of incorporation, the by-laws or other organizational
documents of the Company or any of its Subsidiaries, (B) any Law of any
Governmental Authority having jurisdiction over the Company, any of its
Subsidiaries or any of their respective assets, properties or operations or (C)
any indenture, mortgage, loan agreement, note or other agreement or instrument
for borrowed money, any guarantee of any agreement or instrument for borrowed
money or any lease, permit, license or other agreement or instrument to which
the Company or any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries is bound or to which any of the assets, properties or
operations of the Company or any of its Subsidiaries is subject.
4.5 Consents. No consent, approval, authorization, order,
registration, filing or qualification of or with any (A) Governmental Authority,
(B) Nasdaq or any stock exchange on which the securities of the Company are
traded or (C) other Person (whether acting in an individual, fiduciary or other
capacity) is
<PAGE>
28
required to be made or obtained by the Company or any of its Subsidiaries for
the execution, delivery and performance by the Company and the Existing
Shareholders of this Agreement, the Certificate of Amendment, the Shareholders
Agreement, the Rights and the Registration Rights Agreement and the consummation
of the transactions contemplated hereby, except the actions described in
Sections 3.1.2, 3.1.4 and 3.1.7 and such approvals as may be required under the
Act and state securities laws in connection with the performance by the Company
of its obligations under the Registration Rights Agreement.
4.6 Capitalization of the Company. As of the date hereof, the
authorized capital stock of the Company consists of: (A) 10,000,000 shares of
Class A Common Stock, par value $0.25 per share, of which 3,143,125 shares are
outstanding; (B) 10,000,000 shares of Class B Common Stock, par value $0.25 per
share, of which 2,796,555 shares are outstanding; (C) 200,000 shares of six
percent (6%) Voting Cumulative Preferred Stock, par value $0.25 per share ("6%
Preferred Stock"), of which 200,000 shares are outstanding; (D) 30,000 shares of
Preferred Stock, no par value ("No Par Preferred Stock"), of which no shares are
outstanding; (E) 1,000,000 shares of 10% Cumulative Convertible Voting Preferred
Stock-Series A, par value $0.025 per share ("Series A Preferred Stock"), of
which 407,240 shares are outstanding; (F) 400,000 shares of 10% Cumulative
Convertible Voting Preferred Stock - Series B, par value $0.025 per share
("Series B Preferred Stock"),
<PAGE>
29
of which 400,000 shares are outstanding; and (G) 2,600,000 shares of Blank Check
Preferred Stock, of which no shares are outstanding. At the Closing (after
giving effect to the Certificate of Amendment), the authorized capital stock of
the Company will consist of 20,000,000 shares of Class A Common Stock, those
securities described in clauses (B) through (F) of the preceding sentence,
2,633,333 shares of Blank Check Preferred Stock, of which no shares will be
outstanding, and 4,166,667 shares of Preferred Stock, of which 4,166,667 shares
will be outstanding (assuming the exercise of all Rights). No other class of
capital stock of the Company is, or at the Closing will be, authorized or
issued. From the date hereof until the Closing, except for the conversion of
outstanding shares of Series A Preferred Stock, Series B Preferred Stock and
Class B Common Stock in accordance with their terms, the Company will not issue
any shares of its capital stock. All outstanding shares of capital stock of the
Company have been duly authorized, are validly issued, fully paid and
nonassessable and have been issued in compliance with applicable federal and
state securities laws. At the Closing, all of the Shares will be duly authorized
and, when issued in accordance with this Agreement, will be validly issued,
fully paid and nonassessable. The Rights and the shares of Preferred Stock
issuable upon exercise of the Rights have been duly authorized and, when issued
and paid for, will be validly issued, fully paid and nonassessable. The
Conversion Shares are duly authorized and reserved for issuance upon conversion
of the Shares and, when issued in accordance
<PAGE>
30
with the Certificate of Amendment, will be validly issued, fully paid and
nonassessable. The shareholders of the Company have no preemptive or similar
rights with respect to the securities of the Company or which will enable them
to subscribe for the Shares. Except as set forth in the Disclosure Letter, there
are no outstanding (i) securities or obligations of the Company convertible into
or exchangeable for any capital stock of the Company, (ii) warrants, rights or
options to subscribe for or purchase from the Company any such capital stock or
any such convertible or exchangeable securities or obligations or (iii)
obligations of the Company to issue such shares, any such convertible or
exchangeable securities or obligations, or any such warrants, rights or options.
4.7 No Rights Plan. Except for the rights set forth in Article
4(a)(C)(ii) of the Certificate of Incorporation, the Company has not adopted a
shareholders rights plan, poison pill or similar arrangement.
4.8 Registration Rights. Except as set forth in the Disclosure
Letter, neither the Company nor any of its Subsidiaries has previously entered
into any agreement granting any registration rights to any Person, whether
consistent or inconsistent with the rights to be granted to the Purchasers in
the Registration Rights Agreement.
4.9 Subsidiaries. The Disclosure Letter sets forth a complete and
accurate list of all of the Subsidiaries of the Company together with their
respective
<PAGE>
31
jurisdictions of incorporation or organization. Except for its Subsidiaries and
except as disclosed in any SEC Document filed prior to the date hereof or in the
Draft Form 10-K, the Company holds no equity, partnership, joint venture or
other interest in any Person. True and complete copies of the certificate of
incorporation, by-laws and other organizational documents of the Subsidiaries of
the Company as in effect on the date hereof have been provided by the Company to
the Purchasers. Each Subsidiary of the Company has been duly incorporated or
organized and is validly existing as a corporation or other legal entity in good
standing under the laws of the jurisdiction of its incorporation or
organization, has the corporate or other power and authority to own, lease and
operate its properties and to conduct its business as currently conducted and is
duly qualified to transact business as a foreign corporation or other legal
entity and is in good standing (if applicable) in each jurisdiction in which the
conduct of its business or its ownership, leasing or operation of property
requires such qualification, other than any failure to be so qualified or in
good standing as would not singly or in the aggregate with all such other
failures reasonably be expected to have a Material Adverse Effect. All of the
outstanding capital stock of each Subsidiary of the Company has been duly
authorized and validly issued, is fully paid and nonassessable and is owned by
the Company, directly or through other Subsidiaries of the Company, free and
clear of any Encumbrance (other than such transfer restrictions as may exist
under federal and state securities laws or any
<PAGE>
32
Encumbrances between or among the Company and/or any Subsidiary of the Company),
and there are no rights granted to or in favor of any third party (whether
acting in an individual, fiduciary or other capacity), other than the Company or
any Subsidiary of the Company, to acquire any such capital stock, any additional
capital stock or any other securities of any such Subsidiary. There exists no
restriction, other than those pursuant to applicable law or regulation, on the
payment of cash dividends by any Subsidiary.
4.10 SEC Documents.
(A) The Company has delivered true and complete copies of
all SEC Documents to the Purchasers except for schedules and exhibits thereto
and documents incorporated by reference therein.
(B) As of its filing date, each SEC Document filed,
and
each SEC Document that will be filed by the Company prior to the Closing Date,
as amended or supplemented prior to the Closing Date, if applicable, pursuant to
the Exchange Act (i) complied or will comply in all material respects with the
applicable requirements of the Exchange Act (except as set forth in the
Disclosure Letter) and (ii) did not or will not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading.
(C) Each final registration statement filed with the
SEC, and
<PAGE>
33
each final registration statement that will be filed with the SEC by the Company
prior to the Closing Date, as amended or supplemented prior to the Closing Date,
if applicable, pursuant to the Act, as of the date such statement or amendment
became or will become effective (i) complied or will comply in all material
respects with the applicable requirements of the Act and (ii) did not or will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading (in the case of any prospectus, in light of the
circumstances under which they were made).
(D) At the time the Proxy Statement is first mailed
to the shareholders of the Company, and at the time such shareholders vote on
approval of the transactions contemplated hereby, the Proxy Statement, as then
amended or supplemented, will comply in all material respects with the Exchange
Act and will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of circumstances under which they were made, not misleading; provided that
the Company makes no representation or warranty with respect to (i) any
statement or omissions included in the Proxy Statement based upon information
furnished in writing to the Company by the Purchasers specifically for use
therein or (ii) any portion thereof which is not deemed to be filed under
applicable SEC rules and regulations.
<PAGE>
34
(E) At the time the Rights Offering Registration Statement
becomes effective, the Rights Offering Registration Statement, as then amended,
will comply in all material respects with the requirements of the Act and will
not contain an untrue statement of a material fact required to be stated therein
or necessary to make the statements therein not misleading. The Rights Offering
Prospectus, at the time the Rights Offering Registration Statement becomes
effective and at the Closing Date, will not include an untrue statement or a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Notwithstanding the foregoing, the representations and
warranties in this Section 4.10(E) shall not apply to statements in or omissions
from the Rights Offering Registration Statement or the Rights Offering
Prospectus made in reliance upon or in conformity with the information furnished
to the Company in writing by the Purchasers specifically for use in the Rights
Offering Registration Statement or in the Rights Offering Prospectus.
4.11 Financial Statements. The audited consolidated financial
statements and related schedules and notes included in the SEC Documents and the
Draft Form 10-K (including, without limitation, the Rights Offering Registration
Statement) comply in all material respects with the requirements of the Exchange
Act and the Act and the rules and regulations of the SEC thereunder, were
prepared in accordance with generally accepted accounting principles
consistently applied
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35
throughout the period involved and fairly present in all material respects the
financial condition, results of operations, cash flows and changes in
stockholders' equity of the Company and its Subsidiaries (and in the case of the
financial statements of net assets to be acquired of the Curtice Burns Vegetable
Processing Plant and Food Storage Warehouse and Aunt Nellie's Farm Kitchens, the
financial condition, results of operation and cash flows of such assets) at the
dates and for the periods presented. The unaudited quarterly consolidated
financial statements and the related notes included in the SEC Documents and in
the Draft Form 10-K (including, without limitation, the Rights Offering
Registration Statement) fairly present in all material respects the financial
condition, results of operations and cash flows of the Company and its
Subsidiaries (and in the case of the financial statements of net assets to be
acquired of the Curtice Burns Vegetable Processing Plant and Food Storage
Warehouse and Aunt Nellie's Farm Kitchens, the financial condition, results of
operation and cash flows of such assets) at the dates and for the periods to
which they relate, subject to year-end adjustments (consisting only of normal
recurring accruals), and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis except as otherwise
stated therein and have been prepared on a basis consistent with that of the
audited financial statements referred to above except as otherwise stated
therein.
4.12 No Existing Violation, Default, Etc. Neither the Company nor
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36
any of its Subsidiaries is (A) in violation of any provision of its certificate
of incorporation, by-laws or other organizational documents or (B) in violation
of any applicable Law, stock exchange rule or regulation, which violation has or
would reasonably be expected to have a Material Adverse Effect. Except as set
forth in the Disclosure Letter, no breach, event of default, event that, but for
the giving of notice or the lapse of time or both, would constitute an event of
default or breach that would result in the loss of a benefit under or give to
others any right of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or other encumbrance on any property or asset
of the Company or any of its Subsidiaries exists under any indenture, mortgage,
loan agreement, note or other agreement or instrument for borrowed money, any
guarantee of any agreement or instrument for borrowed money or any lease,
permit, license or other agreement to which the Company or any of its
Subsidiaries is a party or by which the Company or any such Subsidiary is bound
or to which any of the properties, assets or operations of the Company or any
such Subsidiary is subject, which breach, event of default, or event that has or
would reasonably be expected to have a Material Adverse Effect. Except as set
forth in the Disclosure Letter, (i) no event of default, (ii) no event that, but
for the giving of notice or the lapse of time or both, would constitute an event
of default, and (iii) no event that would require the Company to prepay, redeem,
repurchase or offer to repurchase any of its indebtedness exists and (iv) no
breach that would result
<PAGE>
37
in the loss of a benefit under or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of the Company or any of its
Subsidiaries exists under (a) the Amended and Restated Credit Agreement, dated
as of September 24, 1997, among the Company, the Banks signatory thereto and The
Chase Manhattan Bank, as Agent (the "Credit Agreement"), (b) the Note Agreement,
dated as of February 23, 1995, among the Company and The Prudential Insurance
Company of America and John Hancock Mutual Life Insurance Company, as
Purchasers, relating to a $75 million 10.78% Series A Senior Note and a $50
million 10.81% Series B Senior Note, (c) the Note Agreement, dated as of
September 26, 1997, among the Company, Signature 1A (Cayman), Ltd., by John
Hancock Mutual Life Insurance Company, Portfolio Advisor, Mellon Bank, N.A. as
Trustee for the Long-Term Investment Trust, Mellon Bank, N.A. as Trustee for
NYNEX Master Pension Trust, and CoBank, ACB, as Purchasers, relating to $15
million 9.17% Senior Notes (the "1997 Note Agreement"), (d) the 8% Secured
Nonrecourse Subordinated Promissory Note, dated as of February 1, 1995, issued
by the Company to Pillsbury, as Payee, and (e) the Master Reimbursement
Agreement, dated as of September 15, 1997, between the Company, as borrower, and
General Electric Capital Corporation, as lender. No event of default, no event
that, but for the giving of notice or the lapse of time or both, would
constitute an event of default and no breach that would result in the loss
<PAGE>
38
of a benefit under or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Company or any of its Subsidiaries
exists under the First Amended and Restated Alliance Agreement by and among the
Company, Pillsbury and Grand Metropolitan Incorporated, dated December 8, 1994,
as amended February 10, 1995 (the "Alliance Agreement"), or the First Amended
and Restated Asset Purchase Agreement by and between the Company and Pillsbury,
dated December 8, 1994, as amended February 10, 1995.
4.13 Licenses and Permits. The Company and its Subsidiaries
have such Licenses as are necessary to own, lease or operate their properties
and to conduct their businesses in the manner described in the SEC Documents and
the Draft Form 10-K, and as currently owned or leased and conducted, and all
such Licenses are valid and in full force and effect except such Licenses that
the failure to have or to be in full force and effect individually or in the
aggregate has not had, and would not reasonably be expected to have, a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has received any
written notice that any violations are being or have been alleged in respect of
any such License and no proceeding is pending or, to the Knowledge of the
Company, threatened, to suspend, revoke or limit any such License the effect of
which would reasonably be expected to have a Material Adverse Effect. The
Company and its Subsidiaries are in compliance with
<PAGE>
39
their respective obligations under such Licenses, with such exceptions as
individually or in the aggregate have not had, and would not reasonably be
expected to have, a Material Adverse Effect, and no event has occurred that
allows, or after notice or lapse of time would allow, revocation, suspension,
limitation or termination of such Licenses, except such events as have not had,
or would not reasonably be expected to have, a Material Adverse Effect.
4.14 Title to Properties. Except as set forth in the
Disclosure Letter, the Company and its Subsidiaries have sufficient title to all
material properties (real and personal) owned by the Company and any such
Subsidiary that are necessary for the conduct of the business of the Company and
any such Subsidiary as described in the SEC Documents and the Draft Form 10-K
and as currently conducted, free and clear of any Encumbrance that may
reasonably be expected to materially interfere with the conduct of its business
taken as a whole, and all material properties held under lease by the Company
and the Subsidiaries are held under valid, subsisting and enforceable leases
except for such leases the loss of which would not reasonably be expected to
have a Material Adverse Effect.
4.15 Intellectual Property. (A) The Company and each of its
Subsidiaries own or are licensed to use all (i) patents, trademarks, trade
names, service marks, copyrights and any applications therefor and (ii) trade
secrets, know-how, computer software programs and proprietary information, in
each case, that are
<PAGE>
40
material to the conduct of the business of the Company and the Subsidiaries as
described in the SEC Documents and the Draft Form 10-K and as currently
conducted (collectively, the "Intellectual Property") free and clear of any
material Encumbrance, except for any Encumbrances set forth in the Disclosure
Letter.
(B) The Disclosure Letter lists (i) all Intellectual Property
described in Section 4.15(A)(i) owned by the Company and any of its Subsidiaries
and that has been registered or for which an application for registration has
been filed with the United States Patent and Trademark Office or the United
States Copyright Office, as applicable, or any similar office in any other
country, specifying as to each item, as applicable: (a) the category of
Intellectual Property, (b) the jurisdictions in which the item is recognized or
registered, or in which any application for registration has been filed,
including the registration or application number; and (c) with respect to any
trademarks or service marks, the type of goods or services on which such mark is
or is intended to be used; and (ii) all material licenses, sublicenses and other
agreements ("IP Licenses") under which the Company or any of its Subsidiaries is
either a licensor or licensee of any Intellectual Property. A true and complete
list of all material documents evidencing Intellectual Property as in effect on
the date hereof has been delivered by the Company to the Purchasers.
(C) None of the Company, any of its Subsidiaries or, to the
Knowledge of the Company, any other party is in breach of or default under
any IP
<PAGE>
41
License. Each IP License is now, and immediately following the consummation of
the transactions herein contemplated will be, valid and in full force and
effect.
(D) No litigation is pending or, to the Knowledge of the
Company, threatened, that challenges the validity, enforceability or ownership
of, or right to use or license, any Intellectual Property.
(E) No item of Intellectual Property is subject to any
outstanding order, ruling, judgment, decree or written agreement restricting the
use thereof by the Company or its Subsidiaries except for agreements made in the
ordinary course of business of the Company or its Subsidiaries. None of the
Company or any Subsidiary has agreed to indemnify any person against any charge
of infringement or other violation with respect to any Intellectual Property
owned or used by the Company or any Subsidiary except in the ordinary course of
business.
(F) To the Knowledge of the Company, none of the
Company or its Subsidiaries has infringed upon or otherwise violated the
intellectual property rights of third parties which would reasonably be expected
to have a Material Adverse Effect. Neither the Company nor its Subsidiaries has
received any complaint or notice alleging any such infringement or other
violation.
(G) To the Knowledge of the Company, no third party is
infringing upon or otherwise violating the Intellectual Property rights of the
Company or any Subsidiary.
<PAGE>
42
(H) All material patents and registered trademarks and
registered copyrights held by the Company or any Subsidiary are valid and
subsisting. The Company and its Subsidiaries have taken all necessary action to
maintain and protect the Intellectual Property that they own or use other than
such actions taken in the ordinary course of business of the Company and its
Subsidiaries that would not reasonably be expected to have a material adverse
effect on the Intellectual Property.
(I) The Company has (i) issued purchase orders to upgrade
certain material computer software programs and systems (accounts payable,
general ledger and payroll) and (ii) initiated the reprogramming of certain
other material computer software programs (order processing systems) (items (i)
and (ii) being collectively referred to as "Programs and Systems"), all of which
are used by the Company and any Subsidiary so that such Programs and Systems
will operate during and after calendar year 2000 A.D. to accurately process date
data (including, but not limited to, calculating, comparing and sequencing)
from, into and between the twentieth and twenty-first centuries, including
leap-year calculations (the "Year 2000 Data"). The Company expects to have the
Programs and Systems installed, fully tested and operational at March 31, 1999.
To the Knowledge of the Company, the computer programs and systems of its major
customer, Pillsbury, will be capable of accurately processing the Year 2000
Data. The Company has not finished inquiring of its major customers, suppliers
and vendors as to whether such persons' computer
<PAGE>
43
systems and programs will be capable of accurately processing the Year 2000
Data. Except for Pillsbury, the Company does not believe that any failure by any
single customer, supplier or vendor to accurately process the Year 2000 Data
will have a Material Adverse Effect on the Company.
4.16 Environmental Matters. Subject to such disclosures as are
contained in the SEC Documents and the Draft Form 10-K:
(A) The Company and its Subsidiaries and their respective
operations and properties, are and have been in compliance with all applicable
Environmental Laws except for such failures which, individually or in the
aggregate, have not had, and would not reasonably be expected to have, a
Material Adverse Effect.
(B) There is no civil, criminal or administrative judgment,
action, suit, demand, claim, hearing, notice of violation, investigation,
proceeding, notice or demand letter pending or, to their knowledge, threatened
against the Company or any of its Subsidiaries pursuant to Environmental Laws
which could reasonably be expected to result in a fine, penalty or other
obligation, cost or expense, except such obligations, costs or expenses which,
individually or in the aggregate, have not had, and would not reasonably be
expected to have, a Material Adverse Effect.
<PAGE>
44
(C) There are no past or present events, conditions,
circumstances, activities, practices, incidents, agreements, actions or plans
which may prevent compliance by the Company or its Subsidiaries with, or which
have given rise to, or will give rise to, material liability to the Company or
any of its Subsidiaries under Environmental Laws, except any such events,
conditions, circumstances, activities, practices, incidents, agreements, actions
or plans which, individually or in the aggregate, have not had, and would not
reasonably be expected to have, a Material Adverse Effect.
4.17 Taxes.
(A) Each of the Company and its Subsidiaries has
filed all returns, reports and other forms related to Taxes with
respect to the business, activities or assets of the Company or its
Subsidiaries (collectively, "Tax Returns") required to be filed. All
such Tax Returns were correct and complete in all material respects.
All Taxes owed by any of the Company and its Subsidiaries (whether or
not shown on any Tax Return) have been paid. None of the Company and
its Subsidiaries currently is the beneficiary of any extension of time
within which to file any Tax Return. Except as set forth in the
Disclosure Letter, no claim has ever been made by an authority in a
jurisdiction where any of the Company and its Subsidiaries does not
file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of the assets of
any of the Company and its
<PAGE>
45
Subsidiaries that arose in connection with any failure (or alleged
failure) to pay any Tax.
(B) Each of the Company and its Subsidiaries has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent
contractor, creditor, shareholder, or other third party.
(C) The Disclosure Letter sets forth all federal,
state, county, local and foreign Tax elections under the Code
and other applicable provisions of law that are in effect with
respect to the Company and its Subsidiaries for the fiscal year ended
March 31, 1998, and the fiscal year beginning April 1, 1998.
(D) The Disclosure Letter sets forth the status of
state, county, local and foreign Tax audits of the Tax Returns of the
Company and its Subsidiaries for each fiscal year for which the statute
of limitations has not expired, including the amounts of any
deficiencies or additions to Tax, interest and penalties that have been
made or proposed, and the amounts of any payments made by the Company
or any of its Subsidiaries with respect thereto. Each state, county,
local and foreign Tax Return filed by or with respect to the Company or
any of its Subsidiaries for which the state, county, local or foreign
Tax audit has not been completed accurately reflects the
<PAGE>
46
amount of its liability for Taxes thereunder and makes all disclosures
required by applicable provisions of law.
(E) None of the Company and its Subsidiaries has
waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.
(F) None of the Company and its Subsidiaries has
filed a consent under Code Section 341(f) concerning collapsible
corporations. None of the Company and its Subsidiaries has been a
United States real property holding corporation within the meaning of
Code Section 897(c)(2) during the applicable period specified in Code
Section 897(c)(1)(A)(ii). None of the Company and its Subsidiaries is a
party to any Tax allocation or sharing agreement. None of the Company
and its Subsidiaries (A) has been a member of an Affiliated Group
filing a consolidated federal income Tax Return (other than a group the
common parent of which was the Company) or (B) has any liability for
the Taxes of any Person (other than any of the Company and its
Subsidiaries) under Reg. Sec. 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(G) The Disclosure Letter sets forth, as of the most
recent practicable date, the amount of any net operating loss, net
capital loss, unused investment or other credit, unused foreign tax, or
excess charitable
<PAGE>
47
contribution allocable to the Company or Subsidiary.
(H) Based upon preliminary estimates which are
subject to adjustment or verification, the unpaid Taxes of the Company
and its Subsidiaries (A) did not, as of the Most Recent Fiscal Month
End, exceed the reserve for Tax liability (rather than any reserve for
deferred Taxes established to reflect timing differences between book
and Tax income) set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) and (B) do not exceed that reserve
as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company and its
Subsidiaries in filing their Tax Returns. Such adjustments may be
material to the reserve for Tax liability but would not have a Material
Adverse Effect on the Company's operating results.
4.18 Litigation. Except as set forth in the Disclosure Letter
in SEC Documents filed with the SEC prior to the date of this Agreement or in
the Draft Form 10-K, there are no pending actions, suits, proceedings,
arbitrations or investigations against or affecting the Company, any of its
Subsidiaries or any of their respective properties, assets or operations, or
with respect to which the Company or any such Subsidiary is responsible by way
of indemnity or otherwise, that are required under the Exchange Act to be
described in such SEC Documents or the Draft Form 10-K (as if it were filed
under applicable SEC rules and regulations), that
<PAGE>
48
questions the validity of this Agreement, the Shareholders Agreement, the Rights
or the Registration Rights Agreement, or that could singly, or in the aggregate,
with all such other actions, suits, investigations or proceedings, reasonably be
expected to have a Material Adverse Effect and, to the Knowledge of the Company,
no such actions, suits, proceedings or investigations are threatened.
4.19 Labor Matters. Except as set forth in the Disclosure
Letter, no labor disturbance by the employees of the Company or any of its
Subsidiaries that has had or that could reasonably be expected to have a
Material Adverse Effect exists or, to the Knowledge of the Company, is
threatened.
4.20 Employee Benefits. (A) Except for the plans set forth in
the Disclosure Letter (the "Benefit Plans"), there are no employee benefit plans
or arrangements of any type (including, without limitation, plans described in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
and the regulations thereunder ("ERISA")), under which the Company or any of its
Subsidiaries has or in the future could have directly, or indirectly through a
Commonly Controlled Entity (within the meaning of Code Sections 414(b), (c), (m)
and (o)), any material liability with respect to any current or former employee
of the Company, any of its Subsidiaries or any Commonly Controlled Entity.
Except as set forth in the Disclosure Letter, no such Benefit Plan is a
"multiemployer plan" (within the meaning of ERISA Section 4001(a)(3)).
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49
(B) With respect to each Benefit Plan that is not a
multiemployer plan, the Company has delivered or made available to the
Purchasers complete and accurate copies of (i) all plan texts and agreements (as
amended or modified to date), (ii) all summary plan descriptions and similar
material employee communications, (iii) the most recent annual report (Form 5500
including, if applicable, Schedule B thereto), (iv) the most recent annual and
periodic accounting of plan assets, (v) the most recent determination letter
received from the Internal Revenue Service and (vi) the most recent actuarial
valuation.
(C) With respect to each Benefit Plan that is not a
multiemployer plan: (i) such Benefit Plan has been maintained and administered
at all times in material compliance with its terms and applicable law and
regulation; (ii) to the Knowledge of the Company, no event has occurred and
there exists no circumstance under which the Company or any of its Subsidiaries
could directly, or indirectly through a Commonly Controlled Entity, incur any
material liability under ERISA, the Code or otherwise (other than routine claims
for benefits and other liabilities arising in the ordinary course pursuant to
the normal operation of such Benefit Plan); (iii) there are no actions, suits or
claims (other than routine claims for benefits) pending or, to the Knowledge of
the Company, threatened, with respect to any Benefit Plan or against the assets
of any Benefit Plan with respect to which suits the Company or any of its
Subsidiaries could incur any material liability; (iv) all
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50
contributions and premiums due and owing to any Benefit Plan have been made or
paid on a timely basis and no "accumulated funding deficiency", as defined in
Code Section 412, has been incurred, whether or not waived; (v) all
contributions made under any Benefit Plan have met the requirements for
deductibility under the Code, and all contributions that have not been made have
been properly recorded on the books of the Company, or a Commonly Controlled
Entity thereof in accordance with generally accepted accounting principles; (vi)
if such Benefit Plan is intended to be qualified under Code Section 401(a), such
Benefit Plan has been determined to be so qualified and each trust created under
such Benefit Plan has been determined to be exempt from tax under Code Section
501(a) and no event has occurred since the date of such determinations,
including effective changes in laws or regulations or modifications to the
Benefit Plans, that would adversely affect such qualification or tax exempt
status; and (vii) as of the most recent valuation date, the value of assets
under any Benefit Plan subject to Title IV of ERISA exceeded the liabilities of
such plan on a projected benefit obligation basis determined using the
assumptions used to fund such Plan.
(D) The Accumulated Postretirement Benefit Obligation (as defined in
Statement of Financial Accounting Standards No. 106) in respect of post-
retirement health and medical benefits for current and former employees of the
Company and its Subsidiaries, calculated as of March 31, 1997 on the basis of
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51
reasonable actuarial assumptions in accordance with generally accepted
accounting principles, does not exceed $1,000,000. No condition exists that
would prevent the Company or any of its Subsidiaries from amending or
terminating any plan providing health or medical benefits in respect of current
or former employees of the Company or its Subsidiaries.
(E) There is no contract, plan or arrangement (written or
otherwise) covering any employee or former employee of the Company or its
Subsidiaries that, individually or collectively, could give rise to the payment
by the Company or its Subsidiaries of any amount that would not be deductible
pursuant to the terms of Code Section 280G.
(F) No employee or former employee of the Company or its
Subsidiaries will become entitled to any bonus, retirement, severance, job
security or similar benefit or enhanced such benefit (including acceleration of
vesting or exercise of an incentive award) as a result of the transactions
contemplated hereby.
4.21 Contracts. All of the material contracts of the Company
or any of its Subsidiaries that are required to be described in the SEC
Documents and the Draft Form 10-K (as if it were filed under applicable SEC
rules or regulations) (including, without limitation, the Rights Offering
Registration Statement) or to be filed as exhibits thereto are (or will be, as
applicable) described in the SEC Documents or the Draft Form 10-K or filed as
exhibits thereto and are (or will be, as
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52
applicable) in full force and effect. True and complete copies of all such
material contracts have been delivered by the Company to the Purchasers. Neither
the Company nor any of its Subsidiaries nor, to the Knowledge of the Company,
any other party is in breach of or in default under any such contract except for
such breaches and defaults as in the aggregate have not had, and would not
reasonably be expected to, have a Material Adverse Effect.
4.22 Contingent Liabilities. Except as fully reflected or
reserved against in the audited financial statements included in the Annual
Report or the financial statements included in the Draft Form 10-K, or disclosed
in the footnotes contained in such financial statements, the Company and its
Subsidiaries had no liabilities (including tax liabilities) at the date of such
financial statements, absolute or contingent, that were material either
individually or in the aggregate to the Company and its Subsidiaries taken as a
whole.
4.23 No Material Adverse Effect. Since March 31, 1997: (A) the
Company and its Subsidiaries have not incurred any material liability or
obligation (indirect, direct or contingent), or entered into any material oral
or written agreement or other transaction, that is not in the ordinary course of
business or that would reasonably be expected to result in a Material Adverse
Effect; (B) the Company and its Subsidiaries have not sustained any loss or
interference with its business or properties from fire, flood, windstorm,
accident or other calamity (whether or not
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53
covered by insurance) that has had or that would reasonably be expected to have
a Material Adverse Effect; (C) except for seasonal changes in outstanding
indebtedness under the Credit Agreement and the requirement to reduce all
indebtedness under the Credit Agreement to an aggregate amount not in excess of
$30 million for a period of 30 consecutive days, there has been no material
change in the indebtedness of the Company and its Subsidiaries except for the
$15 million increase in long-term indebtedness pursuant to the 1997 Note
Agreement, and no change in the capital stock of the Company except for the
conversion of outstanding shares of Series A Preferred Stock, Series B Preferred
Stock and Class B Common Stock in accordance with their terms; (D) except for
(i) the aggregate payment of semiannual dividends in the amount of $11,590.50 on
its outstanding shares of 6% Preferred Stock, Series A Preferred Stock and
Series B Preferred Stock, and (ii) the aggregate payment of accumulated
dividends in the amount of $34,771.50 on such 6% Preferred Stock, Series A
Preferred Stock and Series B Preferred Stock that initially accrued on January 1
and July 1, 1996, and January 1, 1997, there has been no dividend or
distribution of any kind declared, paid or made by the Company or any of its
Subsidiaries on any class of its capital stock; (E) neither the Company nor any
of its Subsidiaries has made (nor does it propose to make) (i) any material
change in its accounting methods or practices or (ii) any material change in the
depreciation or amortization policies or rates adopted by it, in either case,
except as may be required
<PAGE>
54
by law or applicable accounting standards; and (F) there has been no event
causing a Material Adverse Effect, nor any development that would, singly or in
the aggregate, reasonably be expected to result in a Material Adverse Effect
(other than an event or development specifically disclosed in any Quarterly
Report or the Draft Form 10-K).
4.24 Finder's Fees. No broker, finder or other party is
entitled to receive from the Company or any of its Subsidiaries any brokerage or
finder's fee for the transactions contemplated by this Agreement as a result of
the actions of the Company, any of its Subsidiaries, or any of its Affiliates.
4.25 Investment Company. Neither the Company nor any of its
Subsidiaries is or, after giving effect to the Closing, will be an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
4.26 Exemption from Registration; Restrictions on Offer and
Sale of Same or Similar Securities. Assuming the representations and warranties
of the Purchasers set forth in Section 5.5 hereof are true and correct in all
material respects, the offer and sale of the Shares and the Conversion Shares
made pursuant to this Agreement will be exempt from the registration
requirements of the Act. Neither the Company nor any Person acting on its behalf
has, in connection with the offering of the Shares, engaged in (A) any form of
general solicitation or general advertising (as those terms are used within the
meaning of Rule 502(c) under the Act), (B) any action involving a public
offering within the meaning of Section 4(2) of the Act, or (C) any
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55
action that would require the registration under the Act of the offering and
sale of the Shares and the Conversion Shares pursuant to this Agreement or that
would violate applicable state securities or "blue sky" laws. The Company has
not made and will not prior to the Closing make, directly or indirectly, any
offer or sale of Shares or Conversion Shares or of securities of the same or a
similar class as the Shares or Conversion Shares if as a result the offer and
sale of the Shares and Conversion Shares contemplated hereby could fail to be
entitled to exemption from the registration requirements of the Act. As used
herein, the terms "offer" and "sale" have the meanings specified in Section 2(3)
of the Act.
4.27 Use of Proceeds. The net proceeds of the sale of the
Shares will be used by the Company and its Subsidiaries to reduce currently
outstanding indebtedness under the Credit Agreement.
4.28 Full Disclosure. To the Knowledge of the Company, no
statement by the Company contained in this Agreement, the Disclosure Letter, the
SEC Documents, the Draft Form 10-K (including, without limitation, the Rights
Offering Registration Statement) or any other documents listed in the Disclosure
Letter or on any certificates, notices or consents delivered to the Purchasers
in connection with the purchase and sale of the Shares at or prior to the
Closing, taken as a whole, in light of the circumstances in which made, contains
(or will contain) an untrue statement of a material fact or omits (or will omit)
to state a material fact
<PAGE>
56
required to be stated therein or necessary to make the statements made, in light
of the circumstances in which made, not materially false or misleading.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchasers hereby represent and warrant to the Company that:
5.1 Partnership Existence and Power. Each Purchaser (other
than Uranus) is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Delaware. Uranus is a corporation
duly incorporated, validly existing and in good standing under the laws of the
Cayman Islands. Each Purchaser has all requisite power and authority to own,
lease and operate its properties and to conduct its business as currently
conducted.
5.2 Power and Authority. Each Purchaser has the full
corporate or partnership power and authority to execute and deliver this
Agreement, the Shareholders Agreement and the Registration Rights Agreement and
to perform its obligations under this Agreement, the Shareholders Agreement and
the Registration Rights Agreement. The execution, delivery and performance by
each Purchaser of this Agreement, the Shareholders Agreement and the
Registration Rights Agreement and the consummation by each Purchaser of the
transactions contemplated hereby have been duly authorized. Each of this
Agreement, the Shareholders Agreement and the Registration Rights Agreement has
been duly executed and delivered by each Purchaser and is a valid and binding
agreement of each Purchaser, enforceable against
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57
such Purchaser in accordance with their respective terms.
5.3 No Contravention, Conflict, Breach, Etc. The execution,
delivery and performance of each of this Agreement, the Shareholders Agreement
and the Registration Rights Agreement by the Purchasers and the consummation of
the transactions contemplated hereby will not conflict with, contravene or
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, (A) the certificate of incorporation, by-laws,
partnership agreement or other organizational documents of the Purchasers, (B)
any Law of any Governmental Authority having jurisdiction over any Purchaser or
(iii) any agreement to which any Purchasers is a party.
5.4 Consents. No consent, approval, authorization, order,
registration, filing, or qualification of or with any (A) Governmental Authority
or (B) other Person (whether acting in an individual, fiduciary or other
capacity) is required to be made or obtained by the Purchasers for the
consummation of the transactions contemplated hereby except for compliance with
any applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976.
5.5 Acquisition for Own Account. The Shares and the Conversion
Shares to be acquired by the Purchasers pursuant to this Agreement are being
acquired by them for their own account for investment purposes and with no
intention of distributing or reselling the Shares and the Conversion Shares in
any transaction
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58
that would be in violation of the Act or the securities laws of any state,
without prejudice, however, to the rights of the Purchasers at all times to sell
or otherwise dispose of all or any part of the Shares or the Conversion Shares
under an effective registration statement under the Act, under an exemption from
such registration available under the Act, and subject, nevertheless, to the
disposition of the Purchasers' property being at all times within their control,
except as otherwise provided by this Agreement. Each of the Purchasers is an
"accredited investor" within the definition of Rule 501(a) of Regulation D under
the Act. Each Purchaser (A) has such knowledge, sophistication and experience in
business and financial matters that it is capable of evaluating the merits and
risks of an investment in the Shares, (B) fully understands the nature, scope
and duration of the limitations on transfer contained in this Agreement and (C)
can bear the economic risk of an investment in the Shares and the Conversion
Shares and can afford a complete loss of such investment. Each Purchaser
acknowledges receipt of the SEC Documents, the Draft Form 10-K, the Disclosure
Letter and all documents delivered in accordance therewith and that it has been
afforded the opportunity to ask such questions as it deemed necessary, and to
receive answers from, representatives of the Company concerning the merits and
risks of investing in the Shares and to obtain such additional information that
the Company possesses or can acquire that is necessary to verify the accuracy
and completeness of the information contained in the SEC
<PAGE>
59
Documents and the Draft Form 10-K. Notwithstanding the foregoing, nothing
contained in this Section 5.5 shall affect or be deemed to modify any
representation or warranty made by the Company.
5.6 Third Party Agreements. None of the Purchasers has any
contract, arrangement, understanding or agreement with any other Person with
respect to any securities of the Company, including but not limited to the
transfer or voting of securities or the giving of proxies, and has no current
plans or proposals or any contract, arrangement, understanding or agreement with
any Person which relate to or would result in a major corporate transaction,
including but not limited to the types of transactions described in Item 4 of
Schedule 13D of the Exchange Act, except as provided for in this Agreement, the
Registration Rights Agreement and the Shareholders Agreement and except as
disclosed in writing to the Company prior to the execution of this Agreement.
5.7 Finder's Fee. No broker, finder or other party is entitled
to receive from the Company or any of its Subsidiaries any brokerage or finder's
fee for the transactions contemplated by this Agreement as a result of the
actions of the Purchaser.
5.8 Ownership of Common Stock. Except as otherwise disclosed in
writing to the Company prior to the execution of this Agreement, the Purchasers
do not own beneficially (within the meaning of Rule 13d-3 of the Exchange Act)
any
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60
shares of Common Stock or other Voting Securities of the Company.
5.9 Full Disclosure. To the knowledge of the Purchasers, none
of the written information provided to the Company by the Purchasers or their
Representatives expressly for use in connection with the Proxy Statement and the
Rights Offering Registration Statement, taken as a whole, in light of the
circumstances in which made, contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances in which made,
not materially false or misleading.
6. COVENANTS OF THE PARTIES.
6.1 Shareholder Meeting; Proxy Material; Certificate of
Amendment. The Company shall cause a meeting of its shareholders to be duly
called and held as soon as practicable, subject to the Company's right to
adjourn such meeting at any time or from time to time if in the Board of
Directors' good faith judgment such action is desirable to effectuate the
transactions contemplated hereunder, for the purpose of voting on (A) the
approval of the purchase of the Shares by the Purchasers pursuant to the terms
of this Agreement (the "Investment Proposal"), (B) the approval of each of the
amendments of the Certificate of Amendment and (C) transacting such other
business as may properly come before the meeting or any adjournment thereof (the
"Stockholder Meeting"). The Board of
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61
Directors shall recommend approval and adoption of the Investment Proposal and
the Certificate of Amendment. In connection with the Stockholder Meeting, the
Company: (A) shall promptly prepare and file with the SEC in accordance with the
Exchange Act the Proxy Statement, shall use its best efforts to have the Proxy
Statement and/or any amendment or supplement thereto cleared by the SEC and
shall thereafter mail to its shareholders as promptly as practicable the Proxy
Statement; (B) shall use all best efforts to obtain the necessary approvals by
its shareholders of the Investment Proposal and the Certificate of Amendment;
and (C) shall otherwise comply with all legal requirements applicable to such
meeting. The Company shall make available to the Purchasers prior to the filing
thereof with the SEC copies of the preliminary Proxy Statement and any
amendments or supplements thereto, shall make any changes therein reasonably
requested by the Purchasers insofar as such changes relate to any matters
relating to the Purchasers or the description of the transactions contemplated
by this Agreement, the Rights Offering, the Certificate of Amendment, the
Shareholders Agreement and the Registration Rights Agreement and shall not file
any such Proxy Statement or amendments or supplements thereto as to which the
Purchaser shall reasonably object.
6.2 Rights Offering. Under the terms of the Rights Offering,
the Company shall offer to holders of its Common Stock of record at the Record
Date the right to purchase shares of Preferred Stock at the Purchase Price Per
Share on the
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62
basis of one right to purchase one-half share of Preferred Stock for every share
of Class A Common Stock or Class B Common Stock held. The Company shall, or
shall cause its transfer agent to, mail certificates representing the Rights to
such holders of Common Stock as promptly as practicable after the Rights
Offering Registration Statement becomes effective, and in any event will
complete such mailing not later than midnight on the day next succeeding the
effective date of the Rights Offering Registration Statement, unless the
Purchasers shall consent to a later time in writing. At the Time of Mailing, the
Company shall notify each of the Purchasers of such mailing, and the Company
shall advise each of the Purchasers daily during the period of such offer of the
subscriptions received and of sales. Not later than 10:00 a.m., New York City
time, on the first full Business Day following the Rights Offering Expiration
Date, the Company will notify each Purchaser by telephone of the total number of
shares of Preferred Stock subscribed for by holders of certificates representing
the Rights and the resulting amount of unsubscribed shares of Preferred Stock
and will continue to confirm such notice as to the amount of unsubscribed shares
of Preferred Stock to be purchased by them in accordance with Section 2.2(B)
hereto.
6.3 Rights Offering Registration Statement.
(A) The Company shall promptly prepare and file the Rights
Offering Registration Statement. Notwithstanding the foregoing, the Company
shall
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63
not at any time, whether before or after the Rights Offering Registration
Statement shall have become effective, file or make any amendment or supplement
to the Rights Offering Registration Statement or Rights Offering Prospectus of
which the Purchasers have not previously been advised and furnished a copy, or
to which the Purchasers shall reasonably object in writing.
(B) The Company will use its best efforts to cause the
Rights Offering Registration Statement to become effective and will advise the
Purchasers immediately, and confirm the advice in writing (i) when the Rights
Offering Registration Statement, or any post-effective amendment to the Rights
Offering Registration Statement, shall have become effective, or any supplement
to the Rights Offering Prospectus or any amended Rights Offering Prospectus
shall have been filed, (ii) of the necessity of amending or supplementing the
Rights Offering Prospectus or any amended Rights Offering Prospectus in order to
then meet the requirements of the Act, (iii) of any request of the SEC for
amendment or supplementation of the Rights Offering Registration Statement or
Rights Offering Prospectus or the additional information and (iv) of the
issuance by the SEC of any stop order suspending the effectiveness of the Rights
Offering Registration Statement or of any order preventing or suspending the use
of any preliminary or amended preliminary prospectus, or of the suspension or
the qualification of the Rights, the Preferred Stock and the Class A Common
Stock for offering for sale in any
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64
jurisdiction, or of the institution of any proceeding for any of such purposes.
The Company will use its best efforts to prevent the issuance of any such stop
order or of any order preventing or suspending such use and to obtain the
lifting thereof as soon as possible, if issued.
(C) The Company will deliver to the Purchasers, without
charge from time to time until the effective date of the Rights Offering
Registration Statement and thereafter from time to time as requested, as many
copies of each preliminary or amended preliminary prospectus and the Rights
Offering Prospectus (as supplemented or amended, if the Company shall have made
any supplements or amendments to the Rights Offering Prospectus) as the
Purchasers may reasonably request. The Company has furnished or will furnish to
the Purchasers two copies of the Rights Offering Registration Statement as
originally filed and of all amendments thereto, whether filed before or after
the Rights Offering Registration Statement becomes effective, and two copies of
all exhibits filed therewith or incorporated therein by reference.
(D) The Company will use its best efforts to comply with
the Act and the Exchange Act and the rules and regulations thereunder so as to
permit the continuance of sales of, and dealings in, the Rights, the Preferred
Stock and the Class A Common Stock in the Rights Offering under the Act and the
Exchange Act. Subject to the provisions of subsection (A) of this Section 6.3,
if at any time when a
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65
Rights Offering Prospectus is required to be delivered under the Act (i) an
event shall have occurred as a result of which it is necessary to amend or
supplement the Rights Offering Prospectus in order to make the statements
therein not untrue or misleading or to make the Rights Offering Prospectus
comply with the Act or (ii) the proposed offering of the Shares makes it
necessary to amend or supplement the Rights Offering Prospectus, the Company
promptly will amend or supplement the Rights Offering Prospectus (and if a
post-effective amendment to the Rights Offering Registration Statement is
necessary in connection therewith, will promptly prepare and file the same) and
will use its best efforts to cause the same to become effective as necessary to
permit the lawful use of the Rights Offering Prospectus in connection with the
distribution of the Preferred Stock.
(E) The Company will take the necessary action to qualify
the Rights, the Preferred Stock and the Class A Common Stock in connection with
the offer and sale thereof by the Company in the Rights Offering, under the laws
of such jurisdictions as may be deemed advisable by the Company in respect of
the offer to the holders of its Common Stock. The Company, however, shall not be
obligated to qualify as a foreign corporation or file any general consent to
service of process under the laws of any such jurisdiction or subject itself to
taxation as doing business in any such jurisdiction. The Company will use its
best efforts to comply with state securities and blue sky laws so as to permit
the continuance of sales of and dealings in
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66
the Rights, the Preferred Stock and the Class A Common Stock in the Rights
Offering.
6.4 Pre-Closing Activities. From and after the date of this
Agreement until the Closing, each of the Company and the Purchasers shall act
with good faith towards, and shall use its best efforts to consummate, the
transactions contemplated by this Agreement, and neither the Company nor the
Purchasers will take any action that would prohibit or impair its ability to
consummate the transactions contemplated by this Agreement. From the date hereof
until the Closing, the Company shall conduct the business of it and its
Subsidiaries in the ordinary course and shall use its best efforts to preserve
intact its business organizations and relationships with third parties and to
keep available the services of the present directors, officers and key
employees. Without limiting the generality of the foregoing, from the date
hereof until the Closing, except as contemplated by this Agreement, without the
Purchasers' prior written consent:
(A) the Company shall not adopt or propose (or agree to
commit to) any change in the Certificate of Incorporation or its By-Laws (except
for the Certificate of Amendment) or any shareholders rights plan, poison pill
or similar arrangement;
(B) the Company shall not, and shall cause each of its
Subsidiaries not to, (i) enter into any loan agreement or other financing
agreement
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67
(other than any such agreement among the Company and its wholly owned
Subsidiaries or among the Company's wholly owned Subsidiaries), (ii) amend or
terminate any such existing agreement (except as set forth in the Disclosure
Letter), (iii) incur any indebtedness other than (a) seasonal borrowings under
the Credit Agreement, (b) other indebtedness incurred in the ordinary course of
business consistent with past practice in an aggregate amount not to exceed
$1,000,000 and (c) such indebtedness as is set forth in the Disclosure Letter,
(iv) amend or terminate the Alliance Agreement or any agreement entered into or
related to such alliance with Pillsbury (except in the manner contemplated in
the Disclosure Letter), (v) issue stock or any other shares of capital
securities except pursuant to the operation of the Seneca Foods Corporation
Employees' Savings Plan, as in effect on the date hereof, or (vi) initiate,
solicit or encourage any inquiries or proposals or offers to purchase any of its
securities by any third party;
(C) the Company shall not, and shall cause each of
its Subsidiaries not to, enter into any other material agreements, commitments
or contracts other than in the ordinary course of business consistent with past
practice, or otherwise make any material change in any existing agreement,
commitment or arrangement other than in the ordinary course of business
consistent with past practice;
(D) the Company shall not, and shall cause each of
its
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68
Subsidiaries not to, merge, consolidate or otherwise combine with any Person or
sell or otherwise transfer any of the assets of the Company or such Subsidiaries
(or the securities of entities holding the same) in one transaction or a series
of related transactions other than immaterial asset sales in the ordinary course
of business of the Company consistent with past practice;
(E) the Company shall not, and shall cause each of
its Subsidiaries not to, acquire any assets of any other Person or Persons
(other than in the ordinary course of business of the Company consistent with
past practice) or acquire any equity, partnership or other interests in any
other Person or Persons, in one transaction or series of related transactions
other than any transactions or series of related transactions in an aggregate
amount not to exceed $500,000;
(F) except for repayments of seasonal borrowings
under the Credit Agreement and scheduled payments of indebtedness, the Company
shall not, and shall cause each of its Subsidiaries not to, repay, redeem or
repurchase any indebtedness of the Company or any of the Subsidiaries or any
shares of capital stock of the Company or to declare or pay any dividends on any
shares of capital stock except for aggregate semiannual dividends of $11,590.50
on the outstanding shares of the 6% Preferred Stock, Series A Preferred Stock
and Series B Preferred Stock;
(G) except as set forth in the Disclosure Letter,
the Company shall not, and shall cause each of its Subsidiaries not to, enter
into any
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69
transaction with any director, executive officer or Affiliate (other than any
transaction among the Company and its wholly-owned Subsidiaries or among any
wholly-owned Subsidiaries of the Company) of the Company other than any
transaction (or series of related transactions) not involving amounts in excess
of $60,000 and conducted on an arm's-length basis in the ordinary course of
business of the Company;
(H) the Company shall not, and shall cause each of
its Subsidiaries not to, (i) grant to any employee, officer or director, any
option, warrant or other subscription or purchase right with respect to shares
of capital stock other than pursuant to the Seneca Foods Corporation Employees'
Savings Plan in effect on the date hereof; (ii) grant to any employee any
increase in salary or other remuneration not consistent with past practices,
grant to any officer or director any increase in salary, bonus incentive
compensation, service award or other remuneration or grant to any employee,
officer or director any increase in severance or termination pay; (iii) enter
into any employment contract or severance arrangement with any officer or
director; or (iv) adopt or amend in any respect any of its employee benefit
plans except as required by law;
(I) the Company shall, and shall cause each of its
Subsidiaries to, not take or agree to commit to take any action that would make
any representation or warranty of the Company hereunder required to be true at
and as of the Closing as a condition to the Purchasers' obligations to
consummate the
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70
transactions contemplated hereby, inaccurate at the Closing;
(J) except as permitted by the Credit Agreement and
consistent with the Company's operating budget existing on the date hereof, the
Company shall not, and shall cause its Subsidiaries not to, agree to expend,
commit or otherwise obligate itself to make any capital expenditures; and
(K) the Company shall not, and shall cause each of its
Subsidiaries not to, (i) agree or commit to do any of the foregoing or (ii)
solicit or encourage any proposals from third parties, or enter into any
negotiations with any third party or parties, to do any of the foregoing actions
described in clauses (B)(iv), (B)(v), (D), (E) and (F).
6.5 Option Shares. The Company hereby grants to each Purchaser
the right to purchase prior to the Closing at its election the number of shares
of Preferred Stock (the "Option Shares") set forth opposite its name on Schedule
I at the Purchase Price Per Share. Any such election to purchase the Option
Shares may be exercised by the Purchasers by written notice to the Company
setting forth the aggregate number of Option Shares to be purchased and the date
of purchase of such shares (which must be prior to the Closing and no earlier
than 15 business days after the date of such notice (the "Option Closing
Date")). On the Option Closing Date, the Company shall issue and sell to the
Purchasers exercising such option, and such Purchasers shall purchase, the
number of Option Shares for which such option has
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71
been exercised. The Company shall take all actions necessary to effect such sale
(including, without limitation, filing a certificate of designation for the
Option Shares that is reasonably acceptable to the Purchasers). At such closing,
the Company shall deliver to each of the Purchasers exercising such option
certificates representing the number of Option Shares for which such Purchaser
has exercised its option, each registered in the name of such Purchaser or its
nominees, against payment of the Purchase Price Per Share with respect thereto
by wire transfer of immediately available funds to an account or accounts
previously designated by the Company. Upon the purchase of such Option Shares,
the number of Shares to be purchased by each Purchaser hereunder shall be
reduced automatically by an amount equal to the Option Shares purchased by such
Purchaser under this Section 6.5. The option granted under this Section 6.5
shall expire immediately prior to the Closing.
6.6 Hart-Scott-Rodino. To the extent applicable, whether made
prior to or after the Closing, the Company and the Purchasers shall make all
filings and furnish all information required with respect to the transactions
contemplated by this Agreement by the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and shall use their best efforts to obtain the early termination of
the waiting period thereunder.
6.7 Access to Information. Upon reasonable notice prior
to the Closing, the Company shall (and shall cause each of its Subsidiaries to)
afford the
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72
Purchasers and their Representatives reasonable access during normal business
hours to its properties, books, contracts and records and personnel and advisors
(who will be instructed by the Company to cooperate), and the Company shall (and
shall cause each of the Subsidiaries to) furnish promptly to the Purchasers all
information concerning its business, properties and personnel as the Purchasers
or their Representatives may reasonably request, provided that any review will
be conducted in a way that will not interfere unreasonably with the conduct of
the Company's business, and provided, further, that no review pursuant to this
Section 6.7 shall affect or be deemed to modify any representation or warranty
made by the Company.
6.8 Publicity. Except as required by law, regulation or stock
exchange requirements, neither (A) the Company nor any of its Affiliates nor (B)
the Purchasers or any of their respective Affiliates shall, without the consent
of the other, make any public announcement or issue any press release with
respect to the transactions contemplated by this Agreement. In the event that
either (i) the Company or any of its Affiliates or (ii) the Purchasers or any of
their respective Affiliates are required by law, regulation or stock exchange
requirements to make any public announcement or issue any press release, such
party or parties agree to consult with the other party or parties, to the extent
feasible, as to the content of such public announcement or press release.
6.9 Certificates for Shares To Bear Legends.
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73
(A) So long as the Shares or Conversion Shares are not sold
pursuant to an effective registration statement under the Act or pursuant to
Rule 144 under the Act, the Shares or the Conversion Shares shall bear the
following legend by which each holder thereof shall be bound:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR
(ii) AN APPLICABLE EXEMPTION FROM REGISTRATION THEREUNDER."
(B) If (i) any of the Shares or Conversion Shares are sold
pursuant to an effective Registration Statement or Rule 144 promulgated under
the Act, or (ii) the Shares or Conversion Shares may be sold pursuant to Rule
144(k) promulgated under the Act, the Company shall, upon the written request of
the holders of the Shares or Conversion Shares and receipt by the Company of
evidence reasonably satisfactory to it that such requirement has terminated
(including a written opinion of outside counsel with respect to clause (ii)
above), issue certificates for such Shares or Conversion Shares that do not bear
all or part of the legend described in Section 6.9(A).
6.10 Reservation of Shares. The Company shall at all
times reserve and keep available, out of its authorized and unissued stock,
solely for the purpose of
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74
effecting the conversion of the Preferred Stock, such number of shares of Class
A Common Stock as shall from time to time be sufficient to effect the conversion
of all shares of Preferred Stock from time to time.
7. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS.
Notwithstanding any investigation by the Purchasers, the
representations, warranties, covenants and agreements contained herein shall
survive the execution and delivery of this Agreement and the Closing hereunder;
provided that, the representations and warranties of the parties in Section 4
and Section 5 (other than the representations and warranties set forth in
Sections 4.1, 4.2, 4.6, 4.16, 4.17 and 4.20) shall survive only for a period of
three years after the Closing Date.
8. INDEMNIFICATION.
8.1 Indemnification by the Company. In addition to all other
sums due hereunder or provided for in this Agreement, the Company agrees to
indemnify and hold harmless the Purchasers, their partners or stockholders and
their respective Affiliates and the respective officers, directors, agents,
employees, subsidiaries, partners, advisors, representatives and controlling
Persons of each of the foregoing (each, an "indemnified party") to the fullest
extent permitted by law from and against any and all losses, claims, damages,
expenses (including reasonable fees, disbursements and other charges of counsel)
or other liabilities ("Liabilities") resulting
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75
from any legal, administrative or other actions brought by any Person or entity
(including actions brought by the Company or any equity or debtholders of the
Company or derivative actions brought by any Person claiming through the Company
or in the Company's name), proceedings or investigations (whether formal or
informal), or written threats thereof, based upon, relating to or arising out of
this Agreement, the transactions contemplated hereby, or any indemnified party's
role therein or in the transactions contemplated hereby (including Liabilities
to which an indemnified party may become subject under the Act, the Exchange Act
or other federal or state statutory law or regulation, at common law, or
otherwise, insofar as such losses, claims, damages or liabilities arise out of
or are based on any untrue statement or alleged untrue statement of a material
fact contained in the Proxy Statement, any preliminary prospectus, the Rights
Offering Registration Statement or the Rights Offering Prospectus or any
amendment or supplement thereto, or the omission or alleged omission to state in
such document a material fact required to be stated in it or necessary to make
the statements in it not misleading, provided, however, that the Company will
not be liable to the extent that such Liability is based on an untrue statement
or omission or alleged untrue statement or omission made in reliance on and in
conformity with information furnished in writing to the Company by or on behalf
of the Purchasers expressly for use in such document); provided, however, that
the Company shall not be liable under this Section 8.1 to an
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76
indemnified party to the extent (i) that it is finally judicially determined
that such Liabilities resulted primarily from the willful malfeasance of such
indemnified party or (ii) any Liability arising out of the failure of the
parties to make any filings under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 prior to the Closing; and provided, further, that if and to the
extent that such indemnification is unenforceable for any reason other than the
immediately preceding proviso, the Company shall make the maximum contribution
to the payment and satisfaction of such indemnified Liabilities that shall be
permissible under applicable laws. In connection with the obligation of the
Company to indemnify for Liabilities as set forth above, the Company further
agrees to reimburse each indemnified party for all such expenses (including
reasonable fees, disbursements and other charges of counsel) as they are
incurred by such indemnified party.
8.2 Notification. Each indemnified party under this Section 8
will, promptly after the receipt of notice of the commencement of any action or
other proceeding against such indemnified party in respect of which indemnity
may be sought from the Company under Section 8, notify the Company in writing of
the commencement thereof. The omission of any indemnified party so to notify the
Company of any such action shall not relieve the Company from any liability that
it may have to such indemnified party unless the Company is materially
prejudiced thereby. In case any such action or other proceeding shall be brought
against any
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77
indemnified party and it shall notify the Company of the commencement thereof,
the Company shall be entitled to participate therein and, to the extent that it
may wish, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; provided, however, that any indemnified party may, at
its own expense, retain separate counsel to participate in such defense.
Notwithstanding the foregoing, in any action or proceeding in which both the
Company and an indemnified party is, or is reasonably likely to become, a party,
such indemnified party shall have the right to employ separate counsel at the
Company's expense and to control its own defense of such action or proceeding
if, in the opinion of counsel to such indemnified party, (i) there are or may be
legal defenses available to such indemnified party or to other indemnified
parties that are different from or additional to those available to the Company
or (ii) any conflict or potential conflict exists between the Company and such
indemnified party that would make such separate representation advisable;
provided, however, that in no event shall the Company be required to pay fees
and expenses under this Article 8 for more than one firm of attorneys
representing the indemnified parties (together, if appropriate, with one firm of
local counsel per jurisdiction) in any one legal action or group of related
legal actions. The Company shall not be liable for any settlement of such action
or proceeding effected without its prior written consent, not to be unreasonably
withheld. Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested the
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78
Company to reimburse the indemnified party for fees and expenses of counsel as
contemplated by this Section 8, the Company agrees that it shall be liable for
any settlement of any proceeding effected without the Company's written consent
if (i) such settlement is entered into more than 30 days after receipt by the
Company of the aforesaid request, and (ii) the Company shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement. The Company agrees that the Company will not, without the prior
written consent of the Purchaser, not to be unreasonably withheld, settle,
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding relating to any matter subject to indemnification
hereunder unless such settlement, compromise or consent includes an
unconditional release of the Purchasers and each other indemnified party from
all liability arising or that may arise out of such claim, action or proceeding
and the Purchasers and each other indemnified party are not obligated to take or
forego taking any action, including the payment of money, thereunder. The rights
accorded to indemnified parties hereunder shall be in addition to any rights
that any indemnified party may have at common law, under federal and state
securities laws, by separate agreement or otherwise.
8.3 Registration Rights Agreement. Notwithstanding anything to the
contrary in this Section 8, the indemnification and contribution provisions of
the Registration Rights Agreement shall govern any claim made with respect to
<PAGE>
79
registration statements filed pursuant thereto or sales made thereunder.
9. TERMINATION.
9.1 Termination. Subject to Section 9.2, this Agreement may be
terminated at any time prior to the Closing:
(A) by the Purchasers if (i) the Board of Directors
determines not to give, withdraws, modifies or changes its approval or
recommendation of the sale of the Shares to the Purchasers or any of the other
matters contemplated by Sections 3.1.2 and 3.1.4, (ii) a Change of Control
occurs or (iii) the Stockholder Meeting is held to consider the transactions
contemplated hereby and the shareholders fail to approve the sale of the Shares
to the Purchasers or any of the other matters contemplated by Sections 3.1.2 and
3.1.4;
(B) by the Purchasers if there has been a material breach of
any representation, warranty, covenant or agreement of the Company contained in
this Agreement, which breach is incurable or has not been cured by the Company
within 30 days after written notice from the Purchasers;
(C) by the Company if there has been a material breach of
any representation, warranty, covenant or agreement of the Purchasers contained
in this Agreement, which breach is incurable or has not been cured by the
Purchasers within 30 days after written notice from the Company;
(D) by the Purchasers if any one or more of the conditions
to the obligation of the Purchasers to close has not been fulfilled as of the
scheduled Closing Date;
<PAGE>
80
(E) by the Company if any one or more of the conditions to
the obligation of the Company to close has not been fulfilled as of the
scheduled Closing Date;
(F) by the Company or the Purchasers, if the Closing shall
not have occurred on or before October 30, 1998; provided, however, that the
right to terminate this Agreement under this Section 9.1(F) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Closing to
occur on or before such date;
(G) by the Company or the Purchasers, if any judgment,
injunction, order or decree enjoining the Company or the Purchasers from
consummating the transactions contemplated by this Agreement is entered and such
judgment, injunction, order or decree becomes final and nonappealable; provided,
however, that the party seeking to terminate this Agreement must use all
reasonable efforts to remove such judgment, injunction, order or decree; and
(H) by mutual written consent of the Company and the
Purchasers.
9.2 Expenses. Except as otherwise provided in the Registration
Rights Agreement, each party hereto shall bear its own expenses arising out of
the drafting, negotiation and execution of this Agreement, the Shareholders
Agreement, the Rights Offering Registration Statement and the Registration
Rights Agreement and the transactions contemplated herein and therein.
9.3 Effect of Termination. If this Agreement is terminated
pursuant to Section 9.1, this Agreement shall become void and of no effect with
no liability on
<PAGE>
81
the part of any party hereto, except (A) to the extent such termination results
from the breach by a party hereto of any of its representations, warranties,
covenants or agreements set forth in this Agreement and (B) that the
representation contained in Section 4.24 and the covenants and agreements
contained in Sections 6.8, 8.1, 8.2, 9.2, 9.3 and 10 (except Section 10.2) shall
survive the termination hereof.
10. MISCELLANEOUS.
10.1 Performance; Waiver. The provisions of this Agreement may
be modified or amended, and waivers and consents to the performance and
observance of the terms hereof may be given by written instrument executed and
delivered by the Company and the Purchasers. The failure at any time to require
performance of any provision hereof shall in no way affect the full right to
require such performance at any time thereafter (unless performance thereof has
been waived in accordance with the terms hereof for all purposes and at all
times by the parties to whom the benefit of such performance is to be rendered).
The waiver by any party to this Agreement of a breach of any provision hereof
shall not be taken or held to be a waiver of any succeeding breach of such
provision of any other provision or as a waiver of the provision itself.
10.2 Extension or Modification of Rights Offering. Without the
prior written consent of the Purchasers, the Company will not permit the Rights
Offering Expiration Date to be extended or any of the other terms or conditions
of the Rights, the Preferred Stock or the offering of the Preferred Stock for
subscription as described in the Rights Offering Prospectus to be amended,
modified or terminated in
<PAGE>
82
any material respect, except that, without such consent, the Company may waive
irregularities in the manner of exercise of the Rights to the extent that such
waiver does not materially adversely affect the interests of the Purchasers. At
the request of the Purchasers, the Company will extend the Rights Offering
Expiration Date, but in no event shall any such extension (i) be made other than
with the consent or at the request of the Purchasers or (ii) postpone the Rights
Offering Expiration Date to a date more than 30 days later than the date set
forth in the Rights Offering Prospectus.
10.3 Successors and Assigns. All covenants and agreements
contained in this Agreement by or on behalf of the parties hereto shall bind,
and inure the benefit of, the respective successors and assigns of the parties
hereto; provided, however, that the rights and obligations of either party
hereto may not be assigned without the prior written consent of the other
parties, except that prior to the Closing, the Purchasers may assign, with the
prior written consent of the Company, not to be unreasonably withheld, all or a
portion of their rights and obligations hereunder to an Affiliate of any of the
Purchasers or to any Person for whom Carl Marks Management Company, L.P. acts as
investment advisor, in which event the Purchasers will be relieved of their
obligations hereunder to the extent so assumed by such Affiliate or Affiliates
and such Affiliate or Affiliates shall be considered to be included within the
term "Purchaser" for all purposes of this Agreement.
10.4 Notices. All notices or other communications given or
made hereunder shall be validly given or made if in writing and delivered by
facsimile transmission or in Person at, mailed by registered or certified mail,
return receipt
<PAGE>
83
requested, postage prepaid, or sent by a reputable overnight courier to, the
following addresses (and shall be deemed effective at the time of receipt
thereof).
If to the Company:
Seneca Foods Corporation
1162 Pittsford-Victor Road
Pittsford, New York 14534
Telecopy: (716) 385-4249
Attention: Kraig H. Kayser, President and
Chief Executive Officer
with a copy to:
Jaeckle Fleischmann & Mugel, LLP
Fleet Bank Building
Twelve Fountain Plaza
Buffalo, New York 14202-2292
Telecopy: (716) 856-0432
Attention: William I. Schapiro, Esq.
If to the Purchasers:
Carl Marks Strategic Investments, L.P.
Carl Marks Strategic Investments II, L.P.
Uranus Fund, Ltd.
c/o Carl Marks Management Company, L.P.
135 East 57th Street
New York, New York 10022
Telecopy: (212) 980-2631
Attention: Andrew M. Boas
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopy: (212) 757-3990
Attention: John C. Kennedy, Esq.
<PAGE>
84
or to such other address as the party to whom notice is to be given may have
previously furnished notice in writing to the other in the manner set forth
above.
10.5 Governing Law. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.
10.6 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, each of the Company and the Purchasers direct
that such court interpret and apply the remainder of this Agreement in the
manner that it determines most closely effectuates their intent in entering into
this Agreement, and in doing so particularly take into account the relative
importance of the term, provision, covenant or restriction being held invalid,
void or unenforceable.
10.7 Headings; Interpretation. The index and section headings
herein are for convenience only and shall not affect the construction hereof.
References to sections means sections of this Agreement unless the context
otherwise requires. References to herein or hereof mean this Agreement.
10.8 Entire Agreement. This Agreement embodies the entire
agreement between the parties relating to the subject matter hereof and
supersedes any and all prior oral or written agreements, representations or
warranties, contracts, understandings, correspondence, conversations, and
memoranda, whether written or oral, between the Company and the Purchasers, or
between or among any agents,
<PAGE>
85
representatives, parents, Subsidiaries, Affiliates, predecessors in interest or
successors in interest, with respect to the subject matter hereof.
10.9 No Third Party Rights. Except for the indemnified
parties, directors and officers described in Article 8 and the rights of such
Persons expressly created under Article 8, this Agreement is intended solely for
the benefit of the parties hereto and is not intended to confer any benefits
upon, or create any rights in favor of, any Person (including, without
limitation, any shareholder or debtholder of the Company) other than the parties
hereto.
10.10 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and both of which
together shall be deemed to be one and the same instrument.
<PAGE>
86
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement.
SENECA FOODS CORPORATION
By: /s/Kraig H. Kayser
--------------------------------
Name: Kraig H. Kayser
Title: President and Chief Executive Officer
CARL MARKS STRATEGIC INVESTMENTS, L.P.
By: Carl Marks Management Company, L.P.,
its general partner
By:/s/Andrew M. Boas
---------------------------------
Name: Andrew M. Boas
Title: General Partner
CARL MARKS STRATEGIC INVESTMENTS II, L.P.
By: Carl Marks Management Company, L.P.,
its general partner
By: /s/Andrew M. Boas
-------------------------
Name: Andrew M. Boas
Title: General Partner
<PAGE>
87
URANUS FUND, LTD.
By: Carl Marks Offshore Management, Inc.,
its Investment Manager
By: /s/Andrew M. Boas
------------------------
Name: Andrew M. Boas
Title: President
<PAGE>
<PAGE>
317923
SHAREHOLDERS AGREEMENT
BY AND AMONG
SENECA FOODS CORPORATION
AND
THE PARTIES LISTED HEREIN
Dated as of June 22, 1998
Doc#:DS4:313595.8
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINED TERMS.........................................2
ARTICLE II LIMITATIONS ON TRANSFER...............................7
2.1 General Restrictions on Transfer......................7
2.2 Certain Permitted Transfers...........................8
2.3 Tag-Along Right.......................................9
ARTICLE III RIGHT TO PARTICIPATE IN CERTAIN ISSUANCES OF
CAPITAL STOCK .....................................12
3.1 Right to Participate in New Issuance.................12
3.2 Exercise of Right....................................12
3.3 Closing..............................................13
ARTICLE IV AGREEMENT OF THE SHAREHOLDERS TO ACT IN
FAVOR OF THE STOCK PURCHASE AGREEMENT
TRANSACTIONS.........................................13
4.1 Vote in Favor of the Stock Purchase Agreement
Transactions........................................13
4.2 Renounce and Cease from Transferring the
Rights.............................................14
ARTICLE V CORPORATE GOVERNANCE AND CERTAIN OTHER
ACTIONS..............................................14
5.1 General..............................................14
5.2 Election of Directors................................14
5.3 Removal and Replacement..............................14
ARTICLE VI AFTER-ACQUIRED SECURITIES............................15
ARTICLE VII STOCK CERTIFICATE RESTRICTIONS.......................16
7.1 Beneficial Ownership.................................16
7.2 Liquidated Damages...................................16
ARTICLE VIII MISCELLANEOUS........................................16
8.1 Notices..............................................16
8.2 Authority and Effect of Agreement....................19
8.3 Action By Written Consent............................20
8.4 Amendment and Waiver.................................20
8.5 Specific Performance.................................21
8.6 Headings.............................................21
8.7 Severability.........................................21
8.8 Entire Agreement.....................................21
8.9 Term of Agreement....................................21
8.10 GOVERNING LAW........................................22
8.11 Further Assurances ..................................22
8.12 Successors and Assigns; Power of Certain
Representatives....................................22
8.13 Counterparts.........................................22
i
<PAGE>
SCHEDULES
SCHEDULE 8.2 Ownership of Shares
ii
<PAGE>
SHAREHOLDERS AGREEMENT
----------------------
SHAREHOLDERS AGREEMENT, dated as of June 22, 1998 (this
"Agreement") by and among the persons listed on the signature pages hereto as
---------
Investor Shareholders (the "Investor Shareholders"), the persons listed on the
----------------------
signature pages hereto as Existing Marks Shareholders (the "Existing Marks
---------------
Shareholders"), the persons listed on the signature pages hereto as Existing
- ------------
Shareholders (the "Existing Shareholders") and Seneca Foods Corporation, a New
----------------------
York corporation (the "Company"). The Investor Shareholders, the Existing Marks
-------
Shareholders and the Existing Shareholders are hereinafter referred to,
collectively, as the "Shareholders."
------------
WHEREAS, the Company proposes, as soon as practicable after
the Rights Offering Registration Statement (as defined herein) becomes
effective, to distribute to holders of its Class A common stock, par value $.25
per share, of the Company (the "Class A Common Stock") and Class B common stock,
--------------------
par value $.25 per share, of the Company (the "Class B Common Stock") rights
---------------------
(the "Rights") to subscribe for and purchase up to an aggregate of 3,000,000
------
shares of the Company's Convertible Participating Preferred Stock, par value
$.025 per share (the "Preferred Stock"), at a subscription price (the
-----------------
"Subscription Price") of $12.00 per share (the "Rights Offering");
------------------ ---------------
WHEREAS, the Investor Shareholders and the Company are parties
to a Stock Purchase Agreement, dated as of June 22, 1998 (as amended,
supplemented or otherwise modified, the "Stock Purchase Agreement"), which
--------------------------
provides for: (i) the sale by the Company to the Investor Shareholders of an
aggregate of 1,166,667 shares of the Preferred Stock at an aggregate price of
$14,000,004 ($12.00 per share of Preferred Stock) and (ii) the purchase by the
Investor Shareholders upon the expiration of the Rights Offering of up to
2,500,000 shares of Preferred Stock, at the Subscription Price, to the extent
provided for in the Stock Purchase Agreement; and
WHEREAS, a condition to the execution and delivery of the
Stock Purchase Agreement was the execution and delivery by the Shareholders and
the Company of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
agreements set forth herein, the adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINED TERMS
-------------
As used in this Agreement, the following terms shall have the meanings
<PAGE>
set forth below:
"Adjusted Tangible Assets" means all assets of the Company and
------------------------
its subsidiaries on a consolidated basis except (i) patents, copyrights,
trademarks, trade names, franchises, goodwill, and other similar intangibles,
(ii) unamortized debt discount and expense, (iii) accounts, notes and other
receivables due from Affiliates, and (iv) write-ups in the book value of any
fixed asset resulting from a revaluation thereof effective after the Closing.
"Adjusted Tangible Net Worth" means (i) the net book value
------------------------------
(after deducting related depreciation, obsolescence, amortization, valuation,
and other proper reserves, which reserves will be determined in accordance with
generally accepted accounting principles) at which the Adjusted Tangible Assets
are shown on the latest available consolidated balance sheet of the Company on
such date minus (ii) the amount at which the liabilities of the Company and its
subsidiaries are shown on such consolidated balance sheet (including as
liabilities all reserves for contingencies and other potential liabilities as
shown on such consolidated balance sheet).
"Affiliate" of any Person means any other Person directly or
---------
indirectly controlling, controlled by or under common control with such Person.
The term "control" means, with respect to any Person, the power to direct or
-------
cause the direction of the management or policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
----------- ----------
correlative to the foregoing.
"Agreement" has the meaning set forth in the preamble to this
---------
Agreement.
"Board of Directors" means the Board of Directors of the
--------------------
Company.
"Business Day" means any day other than a Saturday, Sunday or
------------
day on which the Company's principal offices are not open generally for
business.
"Charter Documents" means the Certificate of Incorporation and
-----------------
the Bylaws of the Company, as amended through the date hereof.
"Class A Common Stock" has the meaning set forth in the
-----------------------
preamble to this Agreement.
2
<PAGE>
"Class B Common Stock" has the meaning set forth in the
-----------------------
preamble to this Agreement.
"Closing" means the closing of the sale and purchase of the
-------
shares of Preferred Stock (including shares purchased upon the expiration of
Rights) as contemplated by the Stock Purchase Agreement.
"Common Stock" means and includes: (i) the Class A Common
-------------
Stock, (ii) the Class B Common Stock and (iii) each other class of capital stock
of the Company that does not have a preference over any other class of capital
stock of the Company as to dividends or upon liquidation, dissolution or winding
up of the Company and, in each case, shall include any other class of capital
stock of the Company into which such stock is reclassified or reconstituted.
"Common Stock Weighted Average Sale Price" means, when applied
----------------------------------------
to a Proposed Sale, the price obtained by dividing (i) the aggregate
consideration to be received from the sale of any shares of Common Stock and any
Voting Securities convertible into or exercisable or exchangeable for shares of
Common Stock in the Proposed Sale by (ii) the sum of (a) the number of shares of
Common Stock to be sold in such Proposed Sale and (b) the number of shares of
Common Stock to be received upon conversion, exercise or exchange of any Voting
Securities described in clause (i) in accordance with the terms of such Voting
Securities.
"Company" has the meaning set forth in the preamble to this
-------
Agreement.
"Company Special Meeting" means an annual or special meeting
-------------------------
of the shareholders of the Company, called for the purpose of voting on (i) the
approval of the purchase of the shares of Preferred Stock by the Investor
Shareholders pursuant to the terms of the Stock Purchase Agreement, (ii) the
approval of the Certificate of Amendment (as defined in the Stock Purchase
Agreement) and (iii) transacting such other business as may properly come before
the meeting or any adjournment thereof.
"Existing Marks Shareholders" has the meaning set forth in the
---------------------------
preamble to this Agreement.
"Existing Shareholders" has the meaning set forth in the
----------------------
preamble to this Agreement.
3
<PAGE>
"Individual Permitted Transferee" means, with respect to an
---------------------------------
Existing Shareholder who is an individual or which is a trustee, a Person to
whom any of the following Transfers is made:
(i) Transfer upon the death of such Existing
Shareholder or the death of the beneficiary of such trust to such
Existing Shareholder's or beneficiary's spouse or descendants
(including adopted children and stepchildren, if any), parents,
siblings or descendants of siblings (including adopted children and
stepchildren, if any), or to such Existing Shareholder's or
beneficiary's executor, administrator or testamentary or inter vivos
-----------
trustee;
(ii) a Transfer to such Existing Shareholder's
spouse or descendants (including adopted children and stepchildren, if
any), or a trust, the sole income beneficiaries of which, or a
corporation, partnership or limited liability company, the sole
stockholders, limited and/or general partners or members, as the
case may be, of which, include only such Existing Shareholder, such
Existing Shareholder's spouse and/or such Existing Shareholder's
descendants (including adopted children and stepchildren, if any); or
(iii) a Transfer to the legal guardian of such
Existing Shareholder, if such Existing Shareholder shall be or become
disabled;
provided that, in the event of death or disability of any Person to whom a
- --------
Transfer is to be made pursuant to clause (i), (ii) or (iii) above, the term
"Individual Permitted Transferee" shall include:
-------------------------------
(x) in the case of such Person's death, such Person's
spouse or descendants (including adopted children and stepchildren, if
any), or such Person's executor, administrator or testamentary or inter
-----
vivos trustee; and
-----
(y) in the case of such Person's disability, such
Person's legal guardian.
"Investor Designees" is defined in Section 5.2.
------------------
"Investor Shareholder" has the meaning set forth in the
---------------------
preamble to this Agreement.
4
<PAGE>
"Line of Business" means food processing, packaging,
-------------------
distribution and canning of fruits and vegetables and other business operations
complementary or incidental thereto.
"Liquidated Damages Breach" is defined in Section 7.2.
-------------------------
"Market Price" means, per share of Class A Common Stock, on
-------------
any date specified herein: (a) the closing price per share of the Class A Common
Stock on such date published in The Wall Street Journal or, if no such closing
price on such date is published in The Wall Street Journal, the average of the
closing bid and asked prices on such date, as officially reported on the
principal national securities exchange on which the Class A Common Stock is then
listed or admitted to trading; or (b) if the Class A Common Stock is not then
listed or admitted to trading on any national securities exchange but is
designated as a national market system security by the NASD, the last trading
price of the Class A Common Stock on such date; or (c) if there shall have been
no trading on such date or if the Class A Common Stock is not so designated, the
average of the reported closing bid and asked prices of the Class A Common
Stock, on such date as shown by the Nasdaq National Market or other
over-the-counter market and reported by any member firm of the New York Stock
Exchange selected by the Company; or (d) if none of (a), (b) or (c) is
applicable, a market price per share determined at the Company's expense by a
nationally recognized appraiser chosen by the Investor Shareholders and approved
by the Company, which approval shall not be unreasonably withheld. If no such
appraiser is so chosen more than 20 Business Days after notice of the necessity
of such calculation shall have been delivered by the Company to the Investor
Shareholders, then the appraiser shall be chosen by the Company.
"NASD" means the National Association of Securities Dealers, Inc.
----
"New Issuance" is defined in Section 3.1.
------------
"Participating Tag-Along Shareholder" is defined in Section
-------------------------------------
2.3(b).
"Participating Tag-Along Shares" is defined in Section 2.3(b).
------------------------------
"Permitted Transferee" means, with respect to any Existing
---------------------
Shareholder, a Person to whom or to which such Existing Shareholder is permitted
to Transfer Shares pursuant to Section 2.2(a)(i) or (ii).
5
<PAGE>
"Person" means any individual, firm, corporation, partnership,
------
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, governmental body or other entity of any
kind.
"Preferred Stock" has the meaning set forth in the preamble to
---------------
this Agreement.
"Proposed Sale" is defined in Section 2.3(a).
-------------
"Proposed Sale Price" is defined in Section 2.3(a).
-------------------
"Proposed Sale Shares" is defined in Section 2.3(a).
--------------------
"Public Offering" means any offer for sale of Shares pursuant
----------------
to an effective Registration Statement filed under the Securities Act in which
any one Person or 13D Group does not acquire more than 5% of any class of Voting
Securities.
"Registration Statement" means a registration statement filed
-----------------------
pursuant to the Securities Act.
"Rights" has the meaning set forth in the preamble to this
------
Agreement.
"Rights Offering" has the meaning set forth in the preamble to
---------------
this Agreement.
"Rights Offering Registration Statement" means the
----------------------------------------------
Registration Statement on Form S-1 under the Securities Act or such other
appropriate form under the Securities Act, pursuant to which the Rights, the
underlying shares of Preferred Stock and shares of Class A Common Stock will be
registered pursuant to the Securities Act.
"Rule 144" means Rule 144 under the Securities Act, or any
--------
successor rule.
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended,
--------------
and the rules and regulations of the SEC thereunder.
6
<PAGE>
"Selling Shareholder" is defined in Section 2.3(a).
-------------------
"Shareholders" has the meaning set forth in the preamble to
------------
this Agreement.
"Shares" means, with respect to any Shareholder, all
------
outstanding shares of Common Stock, Preferred Stock and other Voting Securities
of the Company, in each case, owned by such Shareholder, whether now owned or
hereafter acquired.
"Stock Purchase Agreement" has the meaning set forth in the
--------------------------
preamble to this Agreement.
"Subscription Price" has the meaning set forth in the preamble
------------------
to this Agreement.
"Tag-Along Notice" is defined in Section 2.3(a).
----------------
"Tag-Along Notice Period" is defined in Section 2.3(b).
-----------------------
"Tag-Along Price" is defined in Section 2.3(a).
---------------
"Tag-Along Shareholders" is defined in Section 2.3(a).
----------------------
"Tag-Along Shares" is defined in Section 2.3(b).
----------------
"Third Party Purchaser" is defined in Section 2.3(a).
---------------------
"13D Group" means any partnership, limited partnership,
----------
syndicate or other "group" (as such term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended).
"Transfer" is defined in Section 2.1.
--------
"Transfer Restriction Period" means the period beginning on
-----------------------------
the date hereof and ending on (and including) the date which is the second
anniversary of the Closing.
"Voting Securities" means the Common Stock, any other
-----------------
securities of
7
<PAGE>
the Company entitled to vote generally in the election of directors (including,
without limitation, the Six Percent (6%) Voting Cumulative Preferred Stock, par
value $0.25 per share, 10% Cumulative Convertible Voting Preferred Stock-Series
A, par value $0.025 per share, and 10% Cumulative Convertible Voting Preferred
Stock-Series B, par value $0.025 per share), or any securities convertible into
or exercisable or exchangeable for such securities (including the Preferred
Stock).
"Voting Securities Weighted Average Sale Price" means, when
-----------------------------------------------
applied to a Proposed Sale, the price obtained by dividing (a) the aggregate
consideration to be received from the sale of any Voting Securities in the
Proposed Sale by (b) the sum of (i) the number of shares of Common Stock to be
sold in the Proposed Sale, (ii) the number of shares of Common Stock to be
received upon conversion, exercise or exchange of any Voting Securities to be
sold in the Proposed Sale in accordance with the terms of such Voting Securities
and (iii) the number of shares of Voting Securities that are not convertible
into, exercisable for or exchangeable for shares of Common Stock to be sold in
the Proposed Sale.
ARTICLE II
LIMITATIONS ON TRANSFER
-----------------------
2.1 General Restrictions on Transfer. (a) Each Existing
-----------------------------------
Shareholder agrees that such Existing Shareholder shall not, either directly or
indirectly, offer, sell, transfer, assign, mortgage, hypothecate, pledge, create
a security interest in or lien upon, encumber, donate, contribute, place in
trust, or otherwise voluntarily or involuntarily dispose of (any of the
foregoing actions, to "Transfer" and, any offer, sale, transfer, assignment,
mortgage, hypothecation, pledge, security interest or lien, encumbrance,
donation, contribution, placing in trust or other disposition, a "Transfer") any
Shares, or any interest therein, except in a transaction that is specifically
permitted by this Agreement.
(b) Any attempt to Transfer any Shares, or any interest
therein, which is not in compliance with this Agreement shall be null and void
ab initio. The Company shall not permit, and shall cause any transfer agent not
- ---------
to permit, any Transfer of Shares in violation of this Agreement. Neither the
Company nor any transfer agent shall give any effect in the Company's stock
records to such attempted Transfer.
8
<PAGE>
(c) Notwithstanding any other provision of this Agreement,
no Transfer may be made pursuant to this Agreement unless:
(i) such Transfer complies in all respects with
the applicable provisions of this Agreement and applicable federal and
state securities laws, including, without limitation, the Securities
Act;
(ii) except in the case of a Transfer pursuant to
Section 2.2(a)(iv), 2.2(a)(v) or 2.2(c), the Transferee agrees in
writing with the Company and the other Shareholders to be bound by the
terms and conditions of this Agreement with respect to the Shares
Transferred to such Transferee to the same extent as the Existing
Shareholder who originally held such Shares is or was bound hereby
(whereupon such Transferee shall be entitled to the same rights as such
Existing Shareholder who originally held such Shares had with respect
to such Shares and shall be deemed to be an Existing Shareholder for
all purposes hereunder with respect to such Shares).
2.2 Certain Permitted Transfers. (a) Subject to Sections 2.1(c) and
---------------------------
2.2(b), after the Closing each Existing Shareholder may Transfer Shares:
(i) if such Existing Shareholder is a trust or
individual, to an Individual Permitted Transferee;
(ii) with the prior written consent of each of the
Investor Shareholders;
(iii) after the Transfer Restriction Period, to a
Third Party Purchaser in accordance with Section 2.3;
(iv) after the Transfer Restriction Period, in
an arm's length transaction pursuant to a Public Offering or Rule 144;
provided that the aggregate gross proceeds from all Transfers under
this clause (iv) shall not exceed the amounts described in clauses
(x) and (y):
(x) as to each Existing Shareholder, the amount of
proceeds realized from sales of securities from time to time pursuant
to Rule 144 and subject to the limitation as to amount of securities
sold specified in paragraph (e) of Rule 144, as in effect on the date
hereof, and
(y) the aggregate gross proceeds from all Public
Offerings shall not exceed an amount calculated on the date of such
Public Offering equal to the product of $2,000,000 and an amount equal
to (i) the
9
<PAGE>
then Market Price of a share of Class A Common Stock divided by (ii)
the Market Price of a share of Class A Common Stock on the date hereof;
and
(v) to pay estate taxes if (1) any Existing
Shareholder, (2) any Individual Permitted Transferee which becomes a
shareholder of the Company, (3) any beneficiary of a trust which is an
Existing Shareholder, or (4) any Individual Permitted Transferee which
is the beneficiary of a trust or estate which becomes a shareholder of
the Company dies and estate taxes become due (provided that the
aggregate gross proceeds from all Transfers under this clause (v)
relating to the death of one individual shall not exceed an amount
calculated on the date of Transfer equal to the product of (a)
$5,000,000 and (b) an amount equal to (x) the then Market Price of a
share of Class A Common Stock divided by (y) the Market Price of a
share of Class A Common Stock on the date hereof).
(b) In the event that any Existing Shareholder wishes to
Transfer Shares in a transaction permitted by Section 2.2(a) (other than in
clause (iii)), such Existing Shareholder shall give written notice to the
Company and the other Shareholders of its intention to make such Transfer not
less than 10 days prior to effecting such Transfer, which notice shall state the
proposed timing of the Transfer, the name and address of each Permitted
Transferee to whom such Transfer is proposed (or in the case of Section
2.2(a)(iv), the aggregate gross proceeds from all prior Transfers pursuant to
Section 2.2(a)(iv) and the aggregate gross proceeds expected to be received from
the proposed Transfer) and the number and type of Shares proposed to be
Transferred.
(c) Notwithstanding anything contained in this Agreement,
(i) the Seneca Foods Corporation Employees' Pension Benefit Plan may Transfer
any Shares and (ii) the Seneca Foods Corporation Employees' Savings Plan may
Transfer any Shares in the ordinary course of business consistent with past
practice.
2.3 Tag-Along Right. (a) After the Transfer Restriction
----------------
Period, if any Existing Shareholder or Shareholders (each a "Selling Shareholder
and, collectively, the "Selling Shareholders") shall desire to sell any Shares
to any Person other than a Permitted Transferee (a "Third Party Purchaser") of
such Selling Shareholders (a "Proposed Sale"), then, such Selling Shareholders
shall offer the Investor Shareholders and the Existing Marks Shareholders (the
"Tag-Along Shareholders") the right to participate in the Proposed Sale with
-----------------------
respect to a number of Shares determined as provided in this Section 2.3 by
sending written notice (the
10
<PAGE>
"Tag-Along Notice") to the Company and the Tag-Along Shareholders, which notice
----------------
shall (i) state the number and type of Shares proposed to be sold in such
Proposed Sale by such Selling Shareholders (the "Proposed Sale Shares"), (ii)
--------------------
state the proposed purchase price per Proposed Sale Share for each type of
Proposed Sale Share (each, "a Proposed Sale Price") and all other material terms
---------------------
and conditions of such Proposed Sale and (iii) if applicable, be accompanied by
any written offer from the Third Party Purchaser. The "Tag Along Price" shall
---------------
mean the higher of the Common Stock Weighted Average Sale Price and the Voting
Securities Weighted Average Sale Price.
(b) Each Tag-Along Shareholder shall have the right to
require the Selling Shareholder to cause the Third Party Purchaser to purchase
from such Tag-Along Shareholder at the Tag-Along Price (and otherwise upon the
same terms and conditions as those set forth in the Tag-Along Notice) a number
of Shares that are Common Stock and/or Preferred Stock owned by such Tag-Along
Shareholder determined in accordance with this Section 2.3(b) (such Tag-Along
Shareholder's "Tag-Along Shares"); provided that if any Tag-Along Shares are
-----------------
Preferred Stock, the Tag-Along Price for such Shares shall be appropriately
adjusted by multiplying the Tag-Along Price by the number of shares of Common
Stock receivable upon conversion of one share of Preferred Stock. Each Tag-Along
Shareholder may sell a number of shares of Preferred Stock and/or Common Stock
which represents on a fully diluted basis a number of shares of Common Stock not
in excess of the product of (i) the total number of Proposed Sale Shares times
(ii) a fraction, the numerator of which is the total number of Shares of Common
Stock owned by such Tag-Along Shareholder (assuming the conversion of all shares
of Preferred Stock owned by such Tag-Along Shareholder into shares of Class A
Common Stock) and the denominator of which is the total number of Shares of
Common Stock owned by the Selling Shareholders and the Tag-Along Shareholders
(assuming the conversion of all shares of Preferred Stock owned by all Tag-Along
Shareholders into Shares of Class A Common Stock). Such right of each Tag-Along
Shareholder shall be exercisable by written notice to the Selling Shareholders
with copies to the Company given within 10 Business Days after receipt of the
Tag-Along Notice (the "Tag-Along Notice Period"), which notice shall state the
------------------------
number and type of Tag-Along Shares that such Tag-Along Shareholder elects to
sell in the Proposed Sale, if less than the maximum number of such Tag-Along
Shareholder's Tag-Along Shares that it is permitted to sell under this Section
2.3(b); provided that, if such notice shall not state a number of Tag-Along
--------
Shares, then such Tag-Along Shareholder will be deemed to have elected to sell
the maximum number of such Tag-Along Shareholder's Tag-Along Shares. Failure by
a Tag-Along Shareholder to
11
<PAGE>
respond within the Tag-Along Notice Period shall be regarded as a rejection of
the offer made pursuant to the Tag-Along Notice. Each Tag-Along Shareholder that
elects to sell any or all of such Tag-Along Shareholder's Tag-Along Shares is
referred to in this Section 2.3 as a "Participating Tag-Along Shareholder" and
-------------------------------------
the number of Tag-Along Shares elected, or deemed to be elected, by such
Tag-Along Shareholder to be sold as provided above is referred to in this
Section 2.3 as such Tag-Along Shareholder's "Participating Tag-Along Shares."
-------------------------------
The number of Shares to be sold by the Selling Shareholders in the Proposed Sale
shall be reduced by the aggregate number of Participating Tag-Along Shares to be
sold pursuant to this Section 2.3 (assuming the conversion of any such
Participating Tag-Along Shares that are Preferred Stock into shares of Class A
Common Stock) by all Participating Tag-Along Shareholders.
(c) At the request of the Selling Shareholders made not less
than two Business Days prior to the proposed Transfer, a Participating Tag-Along
Shareholder shall deliver to the Selling Shareholders certificates representing
such Participating Tag-Along Shareholder's Participating Tag-Along Shares, duly
endorsed, in proper form for Transfer, together with a limited power-of-attorney
authorizing the Selling Shareholders to transfer such Participating Tag-Along
Shares to the Tag-Along Purchaser and to execute all other documents required to
be executed in connection with such transaction.
(d) If no Transfer of the Tag-Along Shares in accordance
with the provisions of this Section 2.3 shall have been completed within 100
days of the date of the Tag-Along Notice, then the Selling Shareholders shall
promptly return to the Participating Tag-Along Shareholder, in proper form, all
certificates representing such Participating Tag-Along Shareholder's
Participating Tag-Along Shares and the limited power-of-attorney previously
delivered by such Participating Tag-Along Shareholder to the Selling
Shareholders.
(e) The closing of the sale of the Participating Tag-Along
Shares by the Participating Tag-Along Shareholders shall be held at the same
place and time as the closing of the sale by the Selling Shareholders in the
Proposed Sale. Promptly after the consummation of the Transfer of the
Participating Tag-Along Shares pursuant to this Section 2.3, each Participating
Tag-Along Shareholder shall receive (i) the consideration with respect to the
Participating Tag-Along Shares so Transferred and (ii) such other evidence of
the completion of such Transfer and the terms and conditions (if any) thereof as
may reasonably be requested by such Participating Tag-Along Shareholder.
12
<PAGE>
(f) The provisions of this Section 2.3 shall remain in effect,
notwithstanding any return to any Participating Tag-Along Shareholder of
Participating Tag-Along Shares as provided in Section 2.3(d).
(g) Notwithstanding anything to the contrary in this
Agreement, the provisions of this Section 2.3 shall not be applicable to any
Transfer proposed to be made by a Selling Shareholder pursuant to Sections
2.2(a)(i), 2.2(a)(ii), 2.2(a)(iv), or 2.2(a)(v).
ARTICLE III
RIGHT TO PARTICIPATE IN CERTAIN
ISSUANCES OF CAPITAL STOCK
-------------------------------
3.1 Right to Participate in New Issuance. If the Company determines to
---------------------------------------
issue any Voting Securities (other than capital stock to be issued (i) in
connection with an employee stock option plan or other bona fide employment
compensation arrangement that is approved by the Company's Board of Directors,
(ii) pursuant to a stock split or stock dividend, (iii) pursuant to the exercise
of any option, warrant or convertible security theretofore issued, (iv) as
consideration in connection with a bona fide acquisition by the Company or any
of its subsidiaries, or (v) pursuant to the Rights Offering (each such issuance
not excluded by the immediately preceding parenthetical being herein referred to
as a "New Issuance")), then the Company shall notify each Investor Shareholder
and each Existing Marks Shareholder of the proposed New Issuance. Such notice
shall specify the number and class of securities to be issued, the rights, terms
and privileges thereof and the estimated price at which such securities will be
issued.
3.2 Exercise of Right. By written notice to the Company given within
------------------
15 days of being notified of such New Issuance, each Investor Shareholder and
each Existing Marks Shareholder shall be entitled to purchase that percentage of
the New Issuance determined by dividing (a) the total number of outstanding
shares of Class A Common Stock owned by such Investor Shareholder or Existing
Marks Shareholder (assuming the conversion of all shares of the Preferred Stock
owned by such Investor Shareholder or Existing Marks Shareholder into Class A
Common Stock) by (b) the total number of outstanding shares of Class A Common
Stock (assuming the conversion of all shares of the Preferred Stock into Class A
Common Stock). If any such Investor Shareholder or Existing Marks Shareholder
does not fully subscribe for the number or amount of Voting Securities that it
is entitled to
13
<PAGE>
purchase pursuant to this Article III, the Company shall notify the Investor
Shareholders of the same and each Investor Shareholder and Existing Marks
Shareholder participating in such purchase to the full extent provided for in
the preceding sentence shall have the right to purchase that percentage of the
New Issuance not so subscribed for, based on a fraction, the numerator of which
is the total number of shares of Class A Common Stock then owned by such fully
participating Investor Shareholder or Existing Marks Shareholder (assuming the
conversion of all shares of the Preferred Stock owned by such Investor
Shareholder or Existing Marks Shareholder into Class A Common Stock) and the
denominator of which is the total number of shares of Class A Common Stock then
owned by all fully participating Investor Shareholders and Existing Marks
Shareholders who elect to purchase such unsubscribed securities (assuming the
conversion of all shares of the Preferred Stock owned by all such Investor
Shareholders and Existing Marks Shareholders into Class A Common Stock). Such
right shall be exercisable within 15 days following the receipt of the notice
delivered pursuant to the previous sentence. To the extent the Investor
Shareholders and Existing Marks Shareholders do not elect to purchase all of the
securities proposed to be offered and sold in the New Issuance, the Company may
issue those securities not so subscribed for, provided that such sales are
--------
consummated within 120 days after the rights of the Investor Shareholders and
the Existing Marks Shareholders hereunder have expired or been waived.
3.3 Closing. The closing of the New Issuance shall be held at such time as
-------
the Company shall designate in writing to the Investor Shareholders and the
Existing Marks Shareholders that elect to purchase securities in the New
Issuance pursuant to this Article III not fewer than five Business Days prior to
the date of such closing, at the Company's principal offices, or at another
place designated by the Company in writing to such Investor Shareholders in such
notice.
14
<PAGE>
ARTICLE IV
AGREEMENT OF THE SHAREHOLDERS
TO ACT IN FAVOR OF THE STOCK
PURCHASE AGREEMENT TRANSACTIONS
-------------------------------
4.1 Vote in Favor of the Stock Purchase Agreement Transactions.
------------------------------------------------------------------
The Existing Shareholders hereby irrevocably and unconditionally agree to vote,
or to cause to be voted, all of their Shares at the Company Special Meeting and
at any other annual or special meeting of shareholders of the Company where the
following matters arise: (a) in favor of the approval and adoption of the Stock
Purchase Agreement and the transactions contemplated by the Stock Purchase
Agreement, this Agreement and the Registration Rights Agreement (as defined in
the Stock Purchase Agreement) (including, without limitation, the approval of
the purchase of shares of Preferred Stock by the Investor Stockholders), (b) the
approval of the Certificate of Amendment and (c) against approval of any
proposal made in opposition to the matters set forth in clause (a) (which may
include (i) any merger, consolidation, sale of assets, business combination,
share exchange, reorganization or recapitalization of the Company or any of its
subsidiaries, with or involving any party, (ii) any liquidation or winding up of
the Company, (iii) any extraordinary dividend by the Company, (iv) any change in
the capital structure of the Company (other than pursuant to the Stock Purchase
Agreement and the Certificate of Amendment) and (v) any other action that may
reasonably be expected to impede, interfere with, delay, postpone or attempt to
discourage the transactions contemplated by the Stock Purchase Agreement, this
Agreement and the Registration Rights Agreement or result in a breach of any of
the covenants, representations, warranties or other obligations or agreements of
the Company under the Stock Purchase Agreement, this Agreement and the
Registration Rights Agreement) which would materially and adversely affect the
Company or its ability to consummate the transactions contemplated by the Stock
Purchase Agreement, this Agreement and the Registration Rights Agreement.
4.2 Renounce and Cease from Transferring the Rights. The Existing
--------------------------------------------------
Shareholders hereby irrevocably and unconditionally agree not to exercise, in
whole or in part, any of the Rights granted to such Existing Shareholder
pursuant to the terms of the Rights Offering, to subscribe for any shares of
Preferred Stock pursuant to the terms of any such Rights or to Transfer any of
such Rights (or any interest therein) to any Person.
15
<PAGE>
ARTICLE V
CORPORATE GOVERNANCE
AND CERTAIN OTHER ACTIONS
-------------------------
5.1 General. Each Existing Shareholder and each Existing Marks Shareholder
-------
shall vote its Shares at any regular or special meeting of shareholders of the
Company, or in any written consent executed in lieu of such a meeting of
shareholders, and shall take all other actions necessary, to give effect to the
provisions of this Agreement (including, without limitation, Section 5.2
hereof), and to ensure that the Charter Documents do not, at any time hereafter,
conflict in any respect with the provisions of this Agreement.
5.2 Election of Directors. After the Closing, the Existing Shareholders
----------------------
and the Existing Marks Shareholders agree that, except as they may otherwise
agree in writing, the number of directors constituting the entire Board of
Directors shall be no more than nine and shall include at all times two
individuals designated by the Investor Shareholders (the "Investor Designees").
The initial individuals designated by the Investor Shareholders shall be
designated in accordance with Section 3.1.3 of the Stock Purchase Agreement.
During the term of this Agreement, the Board of Directors shall nominate a
number of individuals designated by the Investor Shareholders for election as
directors at each annual meeting such that after such annual meeting (assuming
such individuals are elected) at least two individuals on the Board of Directors
shall have been designated for election as a director by the Investor
Shareholders in accordance with this Section 5.2. After the Closing, any
committee of the Board of Directors shall include at all times a number of
Investor Designees equal to the product of 22% and the total number of directors
on such committee (rounded up to the next whole number).
5.3 Removal and Replacement. (a) The Investor Shareholders shall be
------------------------
entitled at any time and for any reason (or for no reason) to designate any or
all of the Investor Designees on the Board of Directors for removal or to inform
the Company that such designees should not be re-nominated for election pursuant
to Section 5.2. In such a case, the Board of Directors shall not re-nominate any
such director and shall take any action reasonably requested by the Investor
Shareholders to effect any requested removal of such a director. Notwithstanding
the foregoing, the Board of Directors shall not be obligated to: (i) remove any
director if such removal is not permitted by the Charter Documents or (ii) call
a special meeting of shareholders to remove such a director.
(b) If at any time a vacancy is created on the Board of
16
<PAGE>
Directors by reason of the death, removal or resignation of any Investor
Designee, then the Investor Shareholders shall, as soon as practicable
thereafter, designate a replacement director and, as soon as practicable
thereafter, each of the Existing Shareholders, the Existing Marks Shareholders
and the existing Board of Directors shall take action (including, if necessary,
the voting of any Shares by the Existing Shareholders and the Existing Marks
Shareholders) to elect or cause the election of such replacement director in
accordance with Section 5.2.
(c) If at any time a vacancy is created on the Board of
Directors by reason of the death, removal or resignation of any of the Investor
Designees, then the Board of Directors shall not conduct any business (other
than business incident to the designation and election of a replacement director
in accordance with this Section 5.3) until a replacement director has been
designated by the Investor Shareholders in accordance with Section 5.2; provided
that the foregoing restriction on the transaction of business shall terminate on
the earlier to occur of (i) the 20th day after the creation of such vacancy and
(ii) the day after the date (following such vacancy) on which the Company has
notified the Investor Shareholders in writing that the directors must take
action in order to fulfill their fiduciary duties, in each case, if no such
replacement director has been designated.
ARTICLE VI
AFTER-ACQUIRED SECURITIES
-------------------------
Except as otherwise provided in Section 8.9(b), all of the provisions of
this Agreement shall apply to all of the Shares now owned or that may be issued
or transferred hereafter to a Shareholder in consequence of any additional
issuance, purchase, conversion, exchange or reclassification of any of the
Preferred Stock, Common Stock or other Voting Securities (including without
limitation, upon the exercise of any option or warrant), corporate
reorganization, or any other form of recapitalization, consolidation, merger,
share split or share dividend, or that are acquired by a Shareholder in any
other manner, and, in the case of any such event, appropriate adjustment shall
be made to any number of Voting Securities hereunder to take account of such
event. The provisions of the immediately preceding sentence shall be effective
with respect to such Shares without action by any person or entity immediately
upon the acquisition by the Shareholder of beneficial ownership of such
additional Shares.
17
<PAGE>
ARTICLE VII
STOCK CERTIFICATE RESTRICTIONS
------------------------------
7.1 Beneficial Ownership. Each Existing Shareholder agrees to hold
---------------------
as the owner of record any Voting Securities now or hereafter beneficially owned
by such Existing Shareholder.
7.2 Liquidated Damages. The Investor Shareholders and the Existing
-------------------
Shareholders agree that it would be extremely difficult to calculate the damage
to be caused to the Investor Shareholders should any Existing Shareholder breach
this Agreement by Transferring any Shares in violation of this Agreement (a
"Liquidated Damages Breach"). Accordingly, the Investor Shareholders and the
--------------------------
Existing Shareholders have made a good faith effort to preestimate the damages,
costs, losses and injuries the Investor Shareholders will sustain by reason of
such Liquidated Damages Breach. Accordingly, to the extent that the Investor
Shareholders do not seek damages or specific performance in accordance with
Section 8.5, the Existing Shareholders agree to pay to the Investor Shareholders
100% of the proceeds received by each Existing Shareholder from any third party
as a result of any Transfer constituting any such Liquidated Damages Breach.
The Existing Shareholders acknowledge that the liquidated damages
provided for herein are not a penalty and are not unreasonable or
disproportionate to the probable loss to be suffered by the Investor
Shareholders in the event of a Liquidated Damages Breach.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 Notices. All notices or other communications required or
-------
permitted hereunder shall be in writing and shall be delivered personally,
telecopied or sent by certified, registered or express mail, postage prepaid.
Any such notice shall be deemed given when so delivered personally, telecopied
or sent by certified, registered or express mail or, if mailed, five days after
the date of deposit in the United States mail, as follows:
18
<PAGE>
If to the Company:
-----------------
Seneca Foods Corporation
1162 Pittsford-Victor Road
Pittsford, New York 14534
Telecopy: (716) 385-4249
Attention: Kraig H. Kayser
with a copy to:
Jaeckle Fleischmann & Mugel, LLP
Fleet Bank Building
Twelve Fountain Plaza
Buffalo, New York 14202-2292
Telecopy: (716) 856-0432
Attention: William I. Schapiro, Esq.
If to the Investor Shareholders:
-------------------------------
Carl Marks Strategic Investments, L.P.
Carl Marks Strategic Investments II, L.P.
Uranus Fund, Ltd.
c/o Carl Marks Management Company, L.P.
135 East 57th Street
New York, New York 10022
Telecopy: (212) 980-2631
Attention: Andrew M. Boas
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopy: (212) 757-3990
Attention: John C. Kennedy, Esq.
If to the Existing Marks Shareholders:
-------------------------------------
CMCO, Inc.
Edwin S. Marks
19
<PAGE>
Nancy Marks
Marjorie Boas
135 East 57th Street
New York, New York 10022
Telecopy: (212) 985-2630
Attention: Chief Operating Officer of CMCO, Inc.
If to the Existing Shareholders:
-------------------------------
Arthur S. Wolcott
1605 Main Street, Suite 1010
Sarasota, Florida 34236
Telecopy: (941) 954-7508
Audrey S. Wolcott
1605 Main Street, Suite 1010
Sarasota, Florida 34236
Telecopy: (941) 954-7508
Kraig H. Kayser
1162 Pittsford-Victor Road
Pittsford, New York 14534
Telecopy: (716) 385-4249
Susan W. Stuart
192 Mulberry Hill Road
Fairfield, Connecticut 06430
Telecopy: (203) 761-0660
Donald Stuart
192 Mulberry Hill Road
Fairfield, Connecticut 06430
Telecopy: (203) 761-0660
Kurt Kayser
374 Chartley Court South
Sarasota, Florida 34232
Telecopy: (941) 755-6379
20
<PAGE>
Karl Kayser
68 Van Woert Road
Spencer, New York 14883
Marilyn W. Kayser
3543 Fair Oaks Lane
Longboat Key, Florida 34228
Telecopy: (716) 381-4515
Robert Oppenheimer, as Trustee of certain Kayser family trusts
Chamberlain, D'Amanda, Oppenheimer & Greenfield
1600 Crossroads Building
2 State Street
Rochester, New York 14614
Telecopy: (716) 232-3882
Mark S. Wolcott
6 Mile Post Lane
Pittsford, New York 14534
Kari Wolcott
6 Mile Post Lane
Pittsford, New York 14534
Bruce S. Wolcott
36 Scotland Road
Canandaigua, New York 14424
Telecopy: (716) 385-4249
Constance Wolcott
36 Scotland Road
Canandaigua, New York 14424
Telecopy: (716) 385-4249
Grace W. Wadell
320 Kent Road
Bala Cynwyd, Pennsylvania 19004
21
<PAGE>
Aaron Wadell
320 Kent Road
Bala Cynwyd, Pennsylvania 19004
Any party may, by notice given in accordance with this Section 8.1, designate
another address or person for receipt of notices hereunder.
8.2 Authority and Effect of Agreement. (a) Each Shareholder represents
---------------------------------
and warrants to the other parties hereto as follows: (i) such party has all
requisite power, authority and legal capacity to enter into this Agreement and
perform such party's obligations hereunder; (ii) if such party is a corporation
or partnership, the execution and delivery of this Agreement by such party and
the performance of such party's obligations hereunder have been duly authorized
by all necessary corporate or partnership action, as the case may be, on the
part of such party; (iii) as of the date hereof, if such party is a trustee,
such Shareholder as trustee owns the number and type of shares set forth on
Schedule 8.2 hereto; (iv) as of the date hereof, such Shareholder beneficially
owns or is the beneficiary of a trust which owns the number and type of Shares
set forth on Schedule 8.2 hereto; and (v) this Agreement has been duly executed
and delivered by and (assuming this Agreement constitutes a valid and binding
agreement of the other parties) constitutes a valid and binding obligation of
such party, enforceable against such party in accordance with its terms, except
to the extent enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to or affecting creditors' rights
generally.
(b) Each Existing Shareholder has full legal power, authority
and right to vote all of the Shares owned by it on the date hereof in the manner
set forth in Articles IV and V hereof, without the consent or approval of, or
any other action on the part of, any other person or entity. Without limiting
the generality of the foregoing, except for this Agreement, and as disclosed on
Schedule 8.2, each Existing Shareholder is not a party to any voting agreement
with any Person with respect to any of the Shares owned by it on the date
hereof, granted any Person any proxy (revocable or irrevocable) or power of
attorney with respect to any of such Shares, deposited any of such Shares in a
voting trust or entered into any arrangement or agreement with any person or
entity limiting or affecting any of its legal power, authority or right to vote
such Shares in the manner set forth in Articles IV and V hereof. From and after
the date hereof, the Existing Shareholders will not commit any act that could
restrict or otherwise affect such legal power, authority and right to vote the
Shares owned by them in the manner set forth in Articles IV and V hereof.
Without limiting the generality of the foregoing, from and after the date
hereof, the Existing Shareholders will not enter into any voting agreement with
any person or
22
<PAGE>
entity with respect to any of the Shares owned by them, grant any person or
entity any proxy (revocable or irrevocable) or power of attorney with respect to
any of such Shares, deposit any of such Shares into a voting trust or otherwise
enter into any agreement or arrangement limiting or affecting their legal power,
authority or right to vote such Shares in the manner set forth in Articles IV
and V hereof.
8.3 Action By Written Consent. If, in lieu of any annual or special
-------------------------
shareholder meeting of the Company, action is taken by written consent, the
provisions of this Agreement imposing obligations in respect of or in connection
with such shareholder meeting shall apply mutatis mutandis to such action by
written consent.
8.4 Amendment and Waiver.(a) Any amendment, supplement or modification
--------------------
of or to any provision of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure by any party from the terms of any
provision of this Agreement, shall be effective:
(i) only if it is made or given in writing and signed
by each of the Shareholders; and
(ii) only in the specific instance and for the
specific purpose for which it was made or given.
(b) No failure or delay on the part of any party hereto in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the parties
hereto at law, in equity or otherwise.
8.5 Specific Performance. The parties hereto intend that each of
---------------------
the parties has the right to seek damages or specific performance in the event
that any other party hereto fails to perform such party's obligations hereunder.
Therefore, if any party shall institute any action or proceeding to enforce the
provisions hereof, any party against whom such action or proceeding is brought
hereby waives any claim or defense therein that the plaintiff party has an
adequate remedy at law.
8.6 Headings. The headings in this Agreement are for convenience
--------
of reference only and shall not limit or otherwise affect the meaning hereof.
23
<PAGE>
8.7 Severability. If any one or more of the provisions contained
------------
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
8.8 Entire Agreement. This Agreement supersedes any other agreement,
----------------
whether written or oral, that may have been made or entered into between the
parties hereto, and constitutes the entire agreement by the parties hereto,
related to the matters specified herein.
8.9 Term of Agreement. (a) This Agreement shall become effective
------------------
upon the execution hereof and shall terminate on the earlier of: (i) the date on
which the Stock Purchase Agreement is terminated pursuant to Section 9 of the
Stock Purchase Agreement, (ii) after the Closing, the date on which the Investor
Shareholders cease to own in the aggregate at least 10% of the outstanding Class
A Common Stock (assuming conversion of all shares of Preferred Stock into Class
A Common Stock) or (iii) such earlier date as the Shareholders shall unanimously
agree in writing to terminate this Agreement.
(b) Notwithstanding Section 8.9(a), this Agreement shall
terminate permanently as to any Shareholder at such time as such Shareholder no
longer owns any Shares.
8.10 GOVERNING LAW. THIS AGREEMENT HAS BEEN NEGOTIATED, EXECUTED
-------------
AND DELIVERED IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
8.11 Further Assurances. Each of the parties shall, and shall cause
-------------------
their respective Affiliates to, execute such instruments and take such
action as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby.
8.12 Successors and Assigns; Power of Certain Representatives.
--------------------------------------------------------
(a) This Agreement shall be binding upon and inure to the benefit of
24
<PAGE>
the parties and their respective successors and permitted assigns. This
Agreement is not assignable except in connection with a transfer of Shares in
accordance with this Agreement.
(b) For the purpose of any notice, consent, waiver, approval
or action given or taken hereunder, Carl Marks Management Company, L.P. shall be
deemed to be the representative of the Investor Shareholders and any such
notice, consent, waiver, approval or action so given or made shall be binding
upon the Investor Shareholders.
8.13 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, and all of which
taken together shall constitute one and the same instrument.
25
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed and
delivered this Agreement as of the date first above written.
COMPANY:
-------
SENECA FOODS CORPORATION
By:/s/Kraig H. Kayser
---------------------------
Name: Kraig H. Kayser
Title: President and Chief Executive
Officer
INVESTOR SHAREHOLDERS:
---------------------
CARL MARKS STRATEGIC INVESTMENTS,
L.P.
By: Carl Marks Management Company,
L.P.; its general partner
By:/s/Andrew M. Boas
--------------------------
Name: Andrew M. Boas
Title: General Partner
CARL MARKS STRATEGIC
INVESTMENTS II, L.P.
By: Carl Marks Management Company,
L.P., its general partner
By:/s/Andrew M. Boas
----------------------
Name: Andrew M. Boas
Title: General Partner
S-1
<PAGE>
URANUS FUND, LTD.
By: Carl Marks Offshore Management, Inc.,
its Investment Manager
By:/s/Andrew M. Boas
-----------------------------
Name: Andrew M. Boas
Title:President
EXISTING MARKS SHAREHOLDERS:
CMCO, INC.
By:/s/Mark Claster
---------------------------
Name: Mark Claster
Title: Managing Director
------------------------------
Edwin S. Marks
------------------------------
Nancy Marks
------------------------------
Marjorie Boas
EXISTING SHAREHOLDERS:
------------------------------
Arthur S. Wolcott, Individually and
as Trustee
S-2
<PAGE>
------------------------------
Audrey S. Wolcott, as Trustee
------------------------------
Kraig H. Kayser, Individually and as
Trustee for certain Kayser family
trusts
------------------------------
Susan W. Stuart, Individually and as
Trustee for Alexius Lyle Wadell and
Kyle Aaron Wadell
------------------------------
Donald Stuart
------------------------------
Kurt Kayser
------------------------------
Karl Kayser
------------------------------
Marilyn W. Kayser
------------------------------
Robert Oppenheimer, as Trustee of
certain Kayser family trusts
------------------------------
Mark S. Wolcott, Individually and as
Trustee for Erin Lorraine Wolcott
and Cassandra Jean Wolcott
S-3
<PAGE>
------------------------------
Kari Wolcott
------------------------------
Bruce S. Wolcott, Individually and
as Trustee for Kaitlin Kerr Wolcott,
Michael Stanton Wolcott and Paige
Strode Wolcott
------------------------------
Constance Wolcott
------------------------------
Grace W. Waddell, Individually and
as Trustee for Sara Elizabeth
Stuart, Jennifer Grace Stuart and
Donald Arthur Stuart
------------------------------
Aaron Waddell
S-4
REGISTRATION RIGHTS AGREEMENT
among
Seneca Foods Corporation,
Carl Marks Strategic Investments, L.P.,
Carl Marks Strategic Investments II, L.P.,
Uranus Fund, Ltd.,
Edwin S. Marks,
Nancy Marks,
Marjorie Boas and
CMCO, Inc.
---------------------------------------
Dated as of June 22, 1998
---------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
1. Background................................................................1
2. Registration Under Securities Act, etc..............................1
2.1 Registration on Request....................................1
2.2 Incidental Registration....................................4
2.3 Registration Procedures....................................5
2.4 Underwritten Offerings.....................................9
2.5 Preparation; Reasonable Investigation.....................10
2.6 Limitations, Conditions and Qualifications to Obligations
under Registration Covenants..............................10
2.7 Indemnification...........................................11
3. Definitions........................................................14
4. Rule 144...........................................................17
5. Amendments and Waivers.............................................17
6. Nominees for Beneficial Owners.....................................18
7. Notices............................................................18
8. Assignment.........................................................19
9. Calculation of Percentage Interests in Registrable Securities......19
10. No Inconsistent Agreements.........................................19
11. Remedies...........................................................19
12. Severability.......................................................19
13. Entire Agreement...................................................20
14. Headings...........................................................20
15. Governing Law......................................................20
16. Counterparts.......................................................20
17. Termination........................................................20
<PAGE>
REGISTRATION RIGHTS AGREEMENT, dated as of June 22, 1998,
among Seneca Foods Corporation, a New York corporation (the "Company"), Carl
Marks Strategic Investments, L.P., a Delaware limited partnership ("CMSI"), Carl
Marks Strategic Investments II, L.P., a Delaware limited partnership ("CMSI
II"), Uranus Fund, Ltd., a Cayman Islands corporation ("Uranus" and, together
with CMSI and CMSI II, the "Purchasers"), Edwin S. Marks, Nancy Marks, Marjorie
Boas and CMCO, Inc. ("CMCO" and, together with Edwin Marks, Nancy Marks and
Marjorie Boas, the "Existing Shareholders").
The parties hereby agree as follows:
1. Background. The Company proposes, as soon as practicable
----------
after the Rights Offering Registration Statement becomes effective, to
distribute to holders of its Class A Common Stock, par value $.25 per share, of
the Company (the "Class A Common Stock") and Class B Common Stock, par value
$.25 per share, of the Company (the "Class B Common Stock") rights (the
"Rights") to subscribe for and purchase up to an aggregate of 3,000,000 shares
of the Company's Convertible Participating Preferred Stock, par value $.025 per
share (the "Preferred Stock"), at a subscription price (the "Subscription
Price") of $12.00 per share (the "Rights Offering").
Pursuant to a Stock Purchase Agreement, dated as of June 22,
1998, among the Company and the Purchasers (as amended, supplemented or
otherwise modified, the "Purchase Agreement"), the Purchasers have agreed to
purchase from the Company, and the Company has agreed to issue and sell to the
Purchasers: (i) an aggregate of 1,166,667 shares of the Preferred Stock at an
aggregate price of $14,000,004 ($12.00 per share of Preferred Stock) and (ii)
upon the expiration of the Rights Offering, up to 2,500,000 shares of Preferred
Stock, at the Subscription Price, to the extent provided for in the Purchase
Agreement ((i) and (ii), collectively, referred to as the "Shares"). The
Purchasers would not enter into the Purchase Agreement unless this Registration
Rights Agreement were being simultaneously entered into by the Company.
Capitalized terms used herein but not otherwise defined shall have the meanings
given them in Section 3.
2. Registration Under Securities Act, etc.
---------------------------------------
2.1 Registration on Request.
------------------------
(a) Request. At any time after the first anniversary of
-------
the closing of the purchase of the Shares under the Purchase Agreement, upon the
written request of one or more holders (the "Initiating Holders") of Registrable
Securities holding at least 10% of the Registrable Securities (assuming the
conversion of the Shares of any Registrable Securities that are Class B Common
Stock into Class A Common Stock) that the Company effect the registration under
the Securities Act of all or part of such Initiating Holders' Registrable
Securities, the Company promptly
<PAGE>
will give written notice of such requested registration to all registered
holders of Registrable Securities, and thereupon the Company will use its best
efforts to effect, at the earliest possible date, the registration under the
Securities Act, of
(i) the Registrable Securities which the
Company has been so requested to register by such Initiating Holders, and
(ii) all other Registrable Securities
which the Company has been requested to register by the holders thereof
(such holders together with the Initiating Holders hereinafter are
referred to as the "Selling Holders") by written request given to the
Company within 30 days after the giving of such written notice by the
Company, all to the extent necessary to permit the disposition of the
Registrable Securities so to be registered.
(b) Registration of Other Securities. Whenever the
--------------------------------
Company shall effect a registration pursuant to this Section 2.1, no securities
other than Registrable Securities shall be included among the securities covered
by such registration unless the Selling Holders of not less than 66-2/3% of all
Registrable Securities to be covered by such registration (assuming the
conversion of any Registrable Securities that are Class B Common Stock into
Class A Common Stock) shall have consented in writing to the inclusion of such
other securities.
(c) Registration Statement Form. Registrations under
---------------------------
this Section 2.1 shall be on such appropriate registration form of the
Commission as shall be reasonably selected by the Company.
(d) Effective Registration Statement. A registration
--------------------------------
requested pursuant to this Section 2.1 shall not be deemed to have been effected
(i) unless a registration statement with respect thereto has become effective
and remained effective in compliance 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 (unless
the failure to so dispose of such Registrable Securities shall be caused solely
by reason of a failure on the part of the Selling Holders); provided, that such
period need not exceed 135 days, (ii) if after it has become effective, such
registration is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason not attributable solely to the Selling Holders, or (iii) if the
conditions
<PAGE>
to closing specified in the underwriting agreement, if any, entered into in
connection with such registration are not satisfied or waived, other than solely
by reason of a failure on the part of the Selling Holders.
(e) Selection of Underwriters. The underwriter or
-------------------------
underwriters of each underwritten offering of the Registrable Securities so to
be registered shall be selected by the Selling Holders of more than 50% of the
Registrable Securities to be included in such registration (assuming the
conversion of the Shares of any Registrable Securities that are Class B Common
Stock into Class A Common Stock) and shall be reasonably acceptable to the
Company.
(f) Priority in Requested Registration. If the
----------------------------------
managing underwriter of any underwritten offering shall advise the Company (and
the Company shall so advise each Selling Holder of Registrable Securities
requesting registration of such advice) that, in its opinion, the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering within a price range acceptable to the
Selling Holders of 66-2/3% of the Registrable Securities requested to be
included in such registration (assuming the conversion of any Registrable
Securities that are Class B Common Stock into Class A Common Stock), the
Company, except as provided in the following sentence, will include in such
registration, to the extent of the number and type which the Company is so
advised can be sold in such offering, first, Registrable Securities requested to
be included in such registration, pro rata (based on the number of Registrable
Securities held by each of the Selling Holders) among the Selling Holders
requesting such registration, second, all securities proposed to be sold by the
------
Company for its own account, and third, any Third Party Securities requested to
-----
be included in such registration. Notwithstanding the foregoing, if the total
number of Registrable Securities requested to be included in any registration
cannot be included, holders of Registrable Securities requesting registration
thereof pursuant to Section 2.1, representing not less than 50% of the
Registrable Securities with respect to which registration has been requested
(assuming the conversion of any Registrable Securities that are Class B Common
Stock into Class A Common Stock), shall have the right to withdraw the request
for registration of all such Registrable Securities by giving written notice to
the Company within 20 days after receipt of the notice from the managing
underwriter described above by the Company and, in the event of such withdrawal,
such request for all Registrable Securities shall not be counted for purposes of
the requests for registration to which holders of Registrable Securities are
entitled pursuant to Section 2.1 hereof.
(g) Limitations on Registration Requests.
------------------------------------
Notwithstanding anything in this Section 2.1 to the contrary, in no event will
the
<PAGE>
Company be required to (i) effect a registration pursuant to this Section 2.1
within the six-month period occurring immediately subsequent to the
effectiveness (within the meaning of Section 2.1(d)) of a registration statement
filed pursuant to this Section 2.1, unless a majority of the Disinterested
Directors determines that effecting a second registration within the six-month
period would not have a material adverse effect on the market price of the
Common Stock, or (ii) effect a registration with respect to any class of
Registrable Securities pursuant to Section 2.1 covering less than such number of
Registrable Securities having an estimated Market Price at the time of such
request of at least $5,000,000.
(h) Expenses. The Selling Holders will pay all
--------
Registration Expenses in connection with any registrations requested pursuant to
this Section 2.1, allocated pro rata (based on the number and type of
Registrable Securities of each of the Selling Holders included in the
registration under this Section 2.1) and the Company will pay all other fees and
expenses, if any, incident to the Company's performance of or compliance with
Section 2.1; provided, however, that if a registration is withdrawn under
Section 2.1(f) or 2.6, then the Company will pay all expenses related to such
registration incident to its performance of or compliance with Section 2.1
(including all Registration Expenses); and provided further, that if a
registration under Section 2.1 includes any securities other than the
Registrable Securities, the Company will pay all expenses related to such
registration incident to its performance of or compliance with this Section 2.1
(including all Registration Expenses other than Fee Expenses) and the Selling
Holders will pay all Fee Expenses allocated pro rata (based on the number and
type of Registrable Securities of each of the Selling Holders included in the
registration under this Section 2.1).
2.2 Incidental Registration.
-----------------------
(a) Right to Include Registrable Securities. If the
---------------------------------------
Company at any time proposes to register any of its Common Stock or any other
class of Registrable Securities or other securities convertible into or
exchangeable for shares of its Common Stock or any other class of Registrable
Securities under the Securities Act by registration on any form other than Forms
S-4 or S-8 (or any successor forms), whether or not for sale for its own
account, it will each such time give prompt written notice to all registered
holders of Registrable Securities of its intention to do so and of such holders'
rights under this Section 2.2. Upon the written request of any such holder (a
"Requesting Holder") made as promptly as practicable and in any event within 30
days after the receipt of any such notice from the Company (which request shall
specify the Registrable Securities intended to be disposed of by such Requesting
Holder), the Company will use its best efforts to
<PAGE>
effect the registration under the Securities Act of all Registrable Securities
which the Company has been so requested to register by the Requesting Holders
thereof; provided, that prior to the effective date of the registration
--------
statement filed in connection with such registration, immediately upon
notification to the Company from the managing underwriter of the price at which
such securities are to be sold, if such price is below the price which any
Requesting Holder shall have indicated to be acceptable to such Requesting
Holder, the Company shall so advise such Requesting Holder of such price, and
such Requesting Holder shall then have the right to withdraw its request to have
its Registrable Securities included in such registration statement; provided,
--------
further, however, that if, at any time after giving written notice of its
- ------- -------
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each Requesting Holder of Registrable Securities and (x) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration,
without prejudice, however, to the rights of any holder or holders of
Registrable Securities entitled to do so to cause such registration to be
effected as a registration under Section 2.1, and (y) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities, for the same period as the delay in registering such
other securities. No registration effected under this Section 2.2 shall relieve
the Company of its obligation to effect any registration upon request under
Section 2.1.
(b) Priority in Incidental Registrations. If the
------------------------------------
managing underwriter of any underwritten offering shall inform the Company by
letter of its opinion that the number or type of Registrable Securities and
Third Party Securities requested to be included in such registration would
materially adversely affect such offering, and the Company has so advised the
Requesting Holders in writing, then the Company will include in such
registration, to the extent of the number and type which the Company is so
advised can be sold in (or during the time of) such offering, first, all
securities proposed by the Company to be sold for its own account, second, such
Registrable Securities requested to be included in such registration pursuant to
this Agreement, pro rata (based on the number of Registrable Securities
requested to be included therein by each Selling Holder) among such Selling
Holders and third, any Third Party Securities.
(c) Expenses. The Company will pay all fees and
--------
expenses incident to its performance of or compliance with this Section 2.2
(other than Fee Expenses) and the Requesting Holders will pay all Fee Expenses,
allocated
<PAGE>
pro rata (based on the number and type of Registrable Securities of each of the
Requesting Holders included in the registration under this Section 2.2);
provided, however, that if any Registrable Securities are withdrawn from a
registration pursuant to Section 2.2(a) or (b), then the Company shall pay all
Fee Expenses related to such Registrable Securities.
(d) Pillsbury Registration. Notwithstanding anything
----------------------
contained herein to the contrary, the Purchasers shall have no rights to
participate in any registration of the Company's securities occurring at the
request of The Pillsbury Company ("Pillsbury") pursuant to the terms of the
Purchase and Registration Rights Agreement, dated as of March 15, 1996, as
amended, between the Company and Pillsbury.
2.3 Registration Procedures. If and whenever the Company
-----------------------
is required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Sections 2.1 and
2.2, the Company will, as expeditiously as possible:
(i) prepare and (within 90 days after the end
of the period within which requests for registration may be given to
the Company) file with the Commission the requisite registration
statement to effect such registration and thereafter use its best
efforts to cause such registration statement to become effective;
provided, however, that the Company may discontinue any registration of
its securities which are not Registrable Securities (and, under the
circumstances specified in Section 2.2(b), Registrable Securities) at
any time prior to the effective date of the registration statement
relating thereto;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective in accordance with Section
2.1(d)(i) hereof 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; provided, that except with
respect to any such registration statement filed pursuant to Rule 415
under the Securities Act, such period need not exceed 135 days;
<PAGE>
(iii) furnish to each seller of Registrable
Securities covered by such registration statement, such number of
conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits),
such number of copies of the prospectus contained in such registration
statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities
Act, and such other documents, as such seller may reasonably request;
(iv) use its best efforts (x) to register or qualify
all Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws of
such States of the United States of America where an exemption is not
available and as the sellers of Registrable Securities covered by such
registration statement shall reasonably request, (y) to keep such
registration or qualification in effect for so long as such
registration statement remains in effect and (z) to take any other
action which may be reasonably necessary or advisable to enable such
sellers to consummate the disposition in such jurisdictions of the
securities to be sold by such sellers, except that the Company shall
not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this subdivision (iv) be obligated to
be so qualified or to consent to general service of process in any such
jurisdiction;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered with
or approved by such other federal or state governmental agencies or
authorities as may be necessary in the reasonable opinion of counsel to
the Company and counsel to the seller or sellers of Registrable
Securities to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(vi) furnish at the effective date of such
registration statement to each seller of Registrable Securities, and
each such seller's underwriters, if any, a signed counterpart of:
(x) an opinion of counsel for the Company,
dated the effective date of such registration
statement and, if applicable, the date of the
closing under the underwriting agreement, and
<PAGE>
(y) a "comfort" letter signed by the independent
public accountants who have certified the
Company's financial statements included or
incorporated by reference in such registration
statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of the accountants' comfort letter, with respect to events
subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' comfort
letters delivered to the underwriters in underwritten public offerings
of securities and, in the case of the accountants' comfort letter, such
other financial matters, and, in the case of the legal opinion, such
other legal matters, as the underwriters may reasonably request;
(vii) notify each seller of Registrable Securities
covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act,
upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, 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, in the light of the
circumstances under which they were made, and at the request of any
such seller promptly prepare and furnish to it 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 Purchaser of such
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 were made;
(viii) otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable
(but not more than eighteen months after the effective date of such
registration statement), an earnings statement covering the period of
at least twelve months beginning with the first full calendar month
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder;
(ix) provide and cause to be maintained a
<PAGE>
transfer agent and registrar (which, in each case, may be the Company)
for all Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such
registration;
(x) use its best efforts to cause all Registrable
Securities covered by such registration statement either (a) to be
listed on any national securities exchange on which Registrable
Securities of the same class covered by such registration statement are
then listed or (b) to be approved for quotation on the NASDAQ National
Market or any other over the counter market on Registrable Securities
of the same class covered by any such registration statement are then
quoted, and, if no such Registrable Securities are so listed or quoted,
either (x) on any national securities exchange on which the Common
Stock is then listed or (y) approved for quotation on the NASDAQ
National Market or any other over the counter market on which the
Common Stock is then quoted.
(xi) cooperate and assist in any filings required
to be made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the
rules and regulations of the NASD.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company (i) such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing and (ii) if requested by the
Company, an executed custody agreement and power of attorney in form and
substance reasonably satisfactory to the Company with respect to the Registrable
Securities to be registered pursuant to this Agreement.
Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the Company of
the happening of any event of the kind described in subdivision (vii) of this
Section 2.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
Section 2.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
<PAGE>
2.4 Underwritten Offerings.
----------------------
(a) Requested Underwritten Offerings. If requested
--------------------------------
by the underwriters for any underwritten offering by holders of Registrable
Securities pursuant to a registration requested under Section 2.1, the Company
will enter into an underwriting agreement with such underwriters for such
offering, such agreement to be reasonably satisfactory in substance and form to
each such holder and the underwriters and to contain such representations and
warranties by the Company and such other terms as are generally prevailing in
agreements of that type, including, without limitation, indemnities to the
effect and to the extent provided in Section 2.7 or such other indemnities as
are customarily received by underwriters in public offerings of similar
securities. The holders of the Registrable Securities proposed to be sold by
such underwriters will reasonably cooperate with the Company in the negotiation
of the underwriting agreement. Such holders of Registrable Securities to be sold
by such underwriters shall be parties to such underwriting agreement and may, at
their option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit of
such underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. No
holder of Registrable Securities shall be required to make any representations
or warranties to or agreements with the Company other than representations,
warranties or agreements regarding such holder, such holder's Registrable
Securities and such holder's intended method of distribution or any other
representations required by applicable law.
(b) Incidental Underwritten Offerings. If the
---------------------------------
Company proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any
Requesting Holder of Registrable Securities, use its best efforts to arrange for
such underwriters to include all the Registrable Securities to be offered and
sold by such Requesting Holder among the securities of the Company to be
distributed by such underwriters, subject to the provisions of Section 2.2(b).
The holders of Registrable Securities to be distributed by such underwriters
shall be parties to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting
<PAGE>
agreement be conditions precedent to the obligations of such holders of
Registrable Securities. Any such Requesting Holder of Registrable Securities
shall not be required to make any representations or warranties to or agreements
with the Company or the underwriters other than representations, warranties or
agreements regarding such Requesting Holder, such Requesting Holder's
Registrable Securities and such Requesting Holder's intended method of
distribution or any other representations required by applicable law.
2.5 Preparation; Reasonable Investigation. In connection with
-------------------------------------
the preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company will give the holders of Registrable
Securities to be registered under such registration statement, their
underwriters, if any, and their respective counsel the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such reasonable 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' and
such underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
2.6 Limitations, Conditions and Qualifications to Obligations
---------------------------------------------------------
under Registration Covenants. The Company shall be entitled to postpone for a
- ------------------------------
reasonable period of time (but not exceeding 90 days) the filing of any
registration statement otherwise required to be prepared and filed by it
pursuant to Section 2.1 if the Company determines, in its reasonable judgment,
that such registration and offering would interfere with any financing,
acquisition, corporate reorganization or other material transaction involving
the Company and promptly gives the holders of Registrable Securities requesting
registration thereof pursuant to Section 2.1 written notice of such
determination, containing a general statement of the reasons for such
postponement and an approximation of the anticipated delay. If the Company shall
so postpone the filing of a registration statement, holders of Registrable
Securities requesting registration thereof pursuant to Section 2.1, representing
not less than 50% of the Registrable Securities with respect to which
registration has been requested, shall have the right to withdraw the request
for registration by giving written notice to the Company within 30 days after
receipt of the notice of postponement and, in the event of such withdrawal, such
request shall not be counted for purposes of the requests for registration to
which holders of Registrable Securities are entitled pursuant to Section 2.1
hereof.
<PAGE>
2.7 Indemnification.
---------------
(a) Indemnification by the Company. The Company
------------------------------
will, and hereby does, indemnify and hold harmless, in the case of any
registration statement filed pursuant to Section 2.1 or 2.2, each seller of any
Registrable Securities covered by such registration statement and each other
Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act or the Exchange Act, and
their respective directors, officers, partners, agents and affiliates, against
any losses, claims, damages or liabilities, joint or several, to which such
seller or underwriter or any such director, officer, partner, agent, affiliate
or controlling person may become subject under the Securities Act or otherwise,
including, without limitation, the reasonable fees and expenses of legal
counsel, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or 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, and the Company will reimburse such seller or
underwriter and each such director, officer, partner, agent, affiliate and
controlling Person for any reasonable legal or any other expenses incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, however, that the Company shall not
-------- -------
be liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such seller or underwriter, as the case may be,
specifically stating that it is for use in the preparation thereof; provided,
--------
further, that the Company shall not be liable in any such case to the extent
- -------
that any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement of any material fact
contained in any such registration statement, preliminary prospectus, final
prospectus or summary prospectus contained therein or any omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances in which they were made not
misleading in a prospectus or prospectus supplement, if such untrue statement or
<PAGE>
omission is completely corrected in an amendment or supplement to such
prospectus or prospectus supplement, the seller of the Registrable Securities
has an obligation under the Securities Act to deliver a prospectus or prospectus
supplement in connection with such sale of Registrable Securities and the seller
of Registrable Securities thereafter fails to deliver such prospectus or
prospectus supplement as so amended or supplemented prior to or concurrently
with the sale of Registrable Securities to the person asserting such loss,
claim, damage or liability after the Company has furnished such seller with a
sufficient number of copies of the same. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
seller or underwriter or any such director, officer, partner, agent, affiliate
or controlling person and shall survive the transfer of such securities by such
seller or underwriter.
(b) Indemnification by the Sellers. As a condition to
------------------------------
including any Registrable Securities in any registration statement, the Company
shall have received an undertaking reasonably satisfactory to it from the
prospective seller of such Registrable Securities, to indemnify and hold
harmless (in the same manner and to the same extent as set forth in Section
2.7(a)) the Company, and each director of the Company, each officer of the
Company and each other Person, if any, who participates as an underwriter in the
offering or sale of such securities and each other Person who controls the
Company or any such underwriter within the meaning of the Securities Act or the
Exchange Act, with respect to any statement or alleged statement in or omission
or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such seller specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement; provided, however, that the liability of such indemnifying party
-------- -------
under this Section 2.7(b) shall be limited to the amount of proceeds received by
such indemnifying party in the offering giving rise to such liability. Such
indemnity shall remain in full force and effect, regardless of any investigation
made by or on behalf of the Company or any such director, officer or controlling
person and shall survive the transfer of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by
----------------------
an indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in Section 2.7(a) or (b), such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party,
give written
<PAGE>
notice to the latter of the commencement of such action; provided, however, that
-------- -------
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subdivisions of this Section 2.7, except to the extent that the indemnifying
party is actually and materially prejudiced by such failure to give notice. In
case any such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it may
wish, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; provided, however, that any indemnified party may, at
-------- -------
its own expense, retain separate counsel to participate in such defense.
Notwithstanding the foregoing, in any action or proceeding in which both the
Company and an indemnified party is, or is reasonably likely to become, a party,
such indemnified party shall have the right to employ separate counsel at the
Company's expense and to control its own defense of such action or proceeding
if, in the opinion of counsel to such indemnified party, (a) there are or may be
legal defenses available to such indemnified party or to other indemnified
parties that are different from or additional to those available to the Company
or (b) any conflict or potential conflict exists between the Company and such
indemnified party that would make such separate representation advisable;
provided, however, that in no event shall the Company be required to pay fees
- -------- -------
and expenses under this Section 2.7 for more than one firm of attorneys
representing the indemnified parties (together, if appropriate, with one firm of
local counsel per jurisdiction) in any one legal action or group of related
legal actions. No indemnifying party shall be liable for any settlement of any
action or proceeding effected without its written consent, which consent shall
not be unreasonably withheld. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested the indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by this Section 2.7, the indemnifying party agrees that it shall be liable for
any settlement of any proceeding effected without the indemnifying party's
written consent if (i) such settlement is entered into more than thirty (30)
days after receipt by the indemnifying party of the aforesaid request, and (ii)
the indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the consent of the indemnified party, which
consent shall not be unreasonably withheld, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation or which
requires action other than the payment of money by the indemnifying party.
(d) Contribution. If the indemnification provided for
------------
<PAGE>
in this Section 2.7 shall for any reason be held by a court to be unavailable to
an indemnified party under Section 2.7(a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Section 2.7(a) or (b), the indemnified party
and the indemnifying party under Section 2.7(a) or (b) shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same), (i) in
such proportion as is appropriate to reflect the relative fault of the Company
and the sellers or prospective sellers of Registrable Securities covered by the
registration statement which resulted in such loss, claim, damage or liability,
or action or proceeding in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action or
proceeding in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and such sellers or
prospective sellers from the offering of the securities covered by such
registration statement, provided, that for purposes of this Section 2.7(d), the
--------
amounts required to be contributed by the sellers or prospective sellers of
Registrable Securities shall not exceed the amount of proceeds received by such
sellers or prospective sellers. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. Such sellers or prospective sellers' obligations to
contribute as provided in this Section 2.7(d) are several in proportion to the
relative value of their respective Registrable Securities covered by such
registration statement and not joint.
(e) Indemnification Payments. The indemnification
------------------------
and contribution required by this Section 2.7 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.
3. Definitions. As used herein, unless the context otherwise
-----------
requires, the following terms have the following respective meanings:
"Commission" means the Securities and Exchange Commission or
----------
any other federal agency at the time administering the Securities Act.
"Class A Common Stock" is defined in Section 1.
--------------------
"Class B Common Stock"is defined in Section 1.
--------------------
<PAGE>
"Common Stock" shall mean and include: (i) the Class A common
------------
stock, par value $.25 per share, of the Company, (ii) the Class B common stock,
par value $.25 per share, of the Company, and (iii) each other class of capital
stock of the Company that does not have a preference over any other class of
capital stock of the Company as to dividends or upon liquidation, dissolution or
winding up of the Company and, in each case, shall include any other class of
capital stock of the Company into which such stock is reclassified or
reconstituted.
"Disinterested Director" means, with respect to any
------------------------
transaction or series of related transactions, a member of the board of
directors of the Company who does not have any material direct or indirect
financial interest in or with respect to such transaction or series of related
transactions.
"Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended, or any superseding Federal statute, and the rules and regulations
promulgated thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of 1934, as
amended, shall include a reference to the comparable section, if any, of any
such superseding Federal statute.
"Fee Expenses" means, with respect to any Registrable
-------------
Securities included in a registration, all registration and filing fees with the
Commission, all filing fees of the New York Stock Exchange, Inc., other national
securities exchanges or the National Association of Securities Dealers, Inc.,
and all filing fees to comply with securities or blue sky laws which relate
solely to such Registrable Securities.
"Initiating Holder" is defined in Section 2.1.
-----------------
"Market Price" means, per share of Class A Common Stock, on
-------------
any date specified herein: (a) the closing price per share of the Class A Common
Stock on such date published in The Wall Street Journal or, if no such closing
price on such date is published in The Wall Street Journal, the average of the
closing bid and asked prices on such date, as officially reported on the
principal national securities exchange on which the Class A Common Stock is then
listed or admitted to trading; or (b) if the Class A Common Stock is not then
listed or admitted to trading on any national securities exchange but is
designated as a national market system security by the NASD, the last trading
price of the Class A Common Stock on such date; or (c) if there shall have been
no trading on such date or if the Class A Common Stock is not so designated, the
average of the reported closing bid and asked prices of the Class A Common
Stock, on such date as shown by the Nasdaq National Market or other
over-the-counter market and reported by any member firm of the New York Stock
<PAGE>
Exchange selected by the Company; or (d) if none of (a), (b) or (c) is
applicable, a market price per share determined at the Company's expense by a
nationally recognized appraiser chosen by the Purchasers and approved by the
Company, which approval shall not be unreasonably withheld. If no such appraiser
is so chosen more than 20 days after notice of the necessity of such calculation
shall have been delivered by the Company to the Purchasers, then the appraiser
shall be chosen by the Company.
"NASD" means National Association of Securities Dealers, Inc.
----
"Person" means any individual, firm, corporation, partnership,
------
limited liability company or partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind and shall include any
successor (by merger or otherwise) of such entity.
"Pillsbury" is defined in Section 2.2(d).
---------
"Preferred Stock" is defined in Section 1.
---------------
"Purchase Agreement" is defined in Section 1.
------------------
"Registrable Securities" means (i) any Shares, (ii) any shares
----------------------
of Common Stock issuable upon conversion of the Shares, (iii) any other shares
of Common Stock or Voting Securities beneficially owned by any Purchaser or
Existing Shareholder (whether owned on the date hereof or hereafter acquired)
and (iv) any securities of the Company issued or issuable with respect to any of
the securities described in clauses (i), (ii) or (iii) by way of a dividend or
stock split or in connection with a combination of shares, recapitalization,
reclassification, merger, consolidation, reconstitution or other reorganization
or otherwise. As to any particular Registrable Securities, once issued, such
securities shall cease to be Registrable Securities when (a) 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, (b) they shall have been sold
as permitted by Rule 144 (or any successor provision) under the Securities Act,
(c) they shall have been otherwise transferred, new certificates for them not
bearing a legend restricting further transfer shall have been delivered by the
Company and subsequent public distribution of them shall not require
registration of such distribution under the Securities Act or (d) they shall
have ceased to be outstanding. All references to percentages of Registrable
Securities shall be
<PAGE>
calculated pursuant to Section 9.
"Registration Expenses" means with respect to any registration
---------------------
under Section 2, all Fee Expenses with respect to Registrable Securities
included in such registration, all reasonable printing, messenger and delivery
expenses incurred in such registration, the reasonable fees and disbursements of
counsel for the Company and of its independent public accountants incurred in
such registration, including the reasonable expenses of "comfort" letters
required by or incident to such performance and compliance, any reasonable fees
and disbursements of underwriters customarily paid by issuers or sellers of
securities (excluding any underwriting discounts or commissions with respect to
the Registrable Securities) and the reasonable fees and expenses of one counsel
to the Selling Holders incurred in such registration (selected by Selling
Holders representing at least 50% of the Registrable Securities covered by such
registration).
"Requesting Holder" is defined in Section 2.2.
-----------------
"Rights" is defined in Section 1.
------
"Rights Offering" is defined in Section 1.
---------------
"Rights Offering Registration Statement" means the
----------------------------------------------
Registration Statement on Form S-1 under the Securities Act or such other
appropriate form under the Securities Act, pursuant to which the Rights, the
underlying shares of Preferred Stock and shares of Class A Common Stock will be
registered pursuant to the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended,
--------------
or any superseding Federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933, as amended, shall include a
reference to the comparable section, if any, of any such superseding Federal
statute.
"Selling Holder" is defined in Section 2.1.
--------------
"Shares" is defined in Section 1.
------
"Subscription Price" is defined in Section 1.
------------------
"Third Party Securities" means any securities included in a
-----------------------
registration statement requested under Section 2.1 or 2.2, other than (i)
Registrable Securities,
<PAGE>
and (ii) securities to be sold by the Company for its own account.
"Voting Securities" means any securities of the Company
------------------
entitled to vote generally in the election of directors, or securities
convertible into or exercisable or exchangeable for such securities.
4. Rule 144. The Company shall take all actions reasonably
--------
necessary to enable holders of Registrable Securities to sell such securities
without registration under the Securities Act within the limitation of the
provisions of (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rules or regulations hereafter adopted by
the Commission. Upon the request of any holder of Registrable Securities, the
Company will deliver to such holder a written statement as to whether it has
complied with such requirements.
5. Amendments and Waivers. This Agreement may be amended with
----------------------
the consent of the Company and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company shall have obtained the written consent to such amendment,
action or omission to act, of the holder or holders of at least 66-2/3% of the
Registrable Securities (assuming conversion of the Shares of any Registrable
Securities that are Class B Common Stock into Class A Common Stock) affected by
such amendment, action or omission to act. Each holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any consent
authorized by this Section 5, whether or not such Registrable Securities shall
have been marked to indicate such consent. If the Securities Act is amended or
new regulations are adopted thereunder, to permit company registration such that
the Company would not be able to grant the holders of Registrable Securities the
right to register and resell their Registrable Securities in the manner
contemplated under this Agreement on the date of its execution, then the parties
hereto agree to negotiate in good faith to amend this Agreement to grant such
holders of Registrable Securities substantially equivalent rights to those that
were provided on the date of this Agreement.
6. Nominees for Beneficial Owners. In the event that any
---------------------------------
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes of
any request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
shares of Registrable Securities held by any holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the
<PAGE>
Company may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Securities.
7. Notices. All notices, demands and other communications
-------
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier,
courier service or personal delivery:
(a) if to any Purchaser, addressed to it in the manner set
forth in the Purchase Agreement, or at such other address as they shall have
furnished to the Company in writing in the manner set forth herein;
(b) if to any other holder of Registrable Securities, at the
address that such holder shall have furnished to the Company in writing in the
manner set forth herein, or, until any such other holder so furnishes to the
Company an address, then to and at the address of the last holder of such
Registrable Securities who has furnished an address to the Company; or
(c) if to the Company, addressed to it in the manner set
forth in the Purchase Agreement, or at such other address as the Company shall
have furnished to each holder of Registrable Securities at the time outstanding
in the manner set forth herein.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; when delivered
by a courier, if delivered by overnight courier service; three business days
after being deposited in the mail, postage prepaid, if mailed; and when receipt
is acknowledged, if telecopied.
8. Assignment. This Agreement shall be binding upon and inure
----------
to the benefit of and be enforceable by the parties hereto and, with respect to
the Company, its respective successors and permitted assigns and, with respect
to the Purchaser, any holder of any Registrable Securities, subject to the
provisions respecting the minimum amount of Registrable Securities required in
order to be entitled to certain rights, or take certain actions, contained
herein. Except by operation of law, this Agreement may not be assigned by the
Company without the prior written consent of the holders of 66-2/3% of the
Registrable Securities outstanding at the time such consent is requested.
<PAGE>
9. Calculation of Percentage Interests in Registrable Securities.
-------------------------------------------------------------
For purposes of this Agreement, all references to a percentage of the
Registrable Securities shall be calculated based upon the number of Registrable
Securities outstanding at the time such calculation is made. If there is more
than one class of Registrable Securities, then each reference to a percentage of
the Registrable Securities shall mean a percentage of each class of the
Registrable Securities.
10. No Inconsistent Agreements. The Company will not hereafter
--------------------------
enter into any agreement with respect to its securities which is inconsistent
with the rights granted to the holders of Registrable Securities in this
Agreement. Without limiting the generality of the foregoing, the Company will
not hereafter enter into any agreement with respect to its securities which
grants, or modify any existing agreement with respect to its securities to
grant, to the holder of its securities in connection with an incidental
registration of such securities equal or higher priority to the rights granted
to the Purchaser under this Section 2.
11. Remedies. Each holder of Registrable Securities, in
--------
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
12. Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
Purchaser shall be enforceable to the fullest extent permitted by law.
13. Entire Agreement. This Agreement, together with the
-----------------
Purchase Agreement (including the exhibits and schedules thereto), is intended
by the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement and the
Purchase Agreement (including the exhibits and schedules thereto) supersede all
prior agreements and understandings between the parties with respect to such
subject matter.
<PAGE>
14. Headings. The headings in this Agreement are for
--------
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
15. Governing Law. This Agreement has been negotiated,
--------------
executed and delivered in the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of law.
16. Counterparts. This Agreement may be executed in any number
------------
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed an original and all of which taken
together shall constitute one and the same instrument.
17. Termination. Upon termination of the Purchase Agreement in
-----------
accordance with Section 9 thereof, this Agreement shall terminate automatically.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their respective representatives
hereunto duly authorized as of the date first above written.
SENECA FOODS CORPORATION
By: /s/ Kraig H. Kayser
--------------------------
Name: Kraig H. Kayser
Title: President and Chief Executive Officer
CARL MARKS STRATEGIC INVESTMENTS, L.P.
By: Carl Marks Management Company, L.P.,
its general partner
By: /s/Andrew M. Boas
---------------------------
Name: Andrew M. Boas
Title: General Partner
CARL MARKS STRATEGIC INVESTMENTS II, L.P.
By: Carl Marks Management Company, L.P.,
its general partner
By: /s/Andrew M. Boas
----------------------------
Name: Andrew M. Boas
Title: General Partner
URANUS FUND, LTD.
By: Carl Marks Offshore Management Company, L.P.,
its Investment Manager
By: /s/Andrew M. Boas
---------------------------
Name: Andrew M. Boas
Title: President
<PAGE>
/s/Edwin S. Marks
--------------------------
Edwin S. Marks
/s/Nancy Marks
--------------------------
Nancy Marks
/s/Marjorie Boas
--------------------------
Marjorie Boas
CMCO, INC.
By: /s/Mark Claster
--------------------
Name: Mark Claster
Title: Managing Director
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
SENECA FOODS CORPORATION
----------------------------------------------
Under Section 805 of the
Business Corporation Law
----------------------------------------------
We, the undersigned, being the President and Secretary of
SENECA FOODS CORPORATION, do hereby certify as follows:
FIRST: The name of the Corporation is SENECA FOODS CORPORATION. The
name under which the Corporation was formed is SENECA GRAPE JUICE
CORPORATION.
SECOND: The certificate of incorporation of the Corporation was filed
by the Department of State on August 17, 1949.
THIRD: The certificate of incorporation of the Corporation hereby is
amended to:
(a) Increase the number of authorized shares of Class A Common
Stock, $0.25 par value per share from ten million (10,000,000) shares to twenty
million (20,000,000) shares; and
(b) Increase the number of authorized shares of Preferred
Stock with $.025 par value, Class A from four million (4,000,000) shares to
eight million two hundred thousand (8,200,000) shares.
To accomplish this, Article 3 of the certificate of
incorporation, hereby is amended to read in its entirety as follows:
(a) The Capital Stock of the Corporation shall consist of
twenty million (20,000,000) shares of Class A Common Stock of the par value of
$0.25 each; ten million (10,000,000) shares of Class B Common Stock of the par
value of $0.25 each; two hundred thousand (200,000) shares of Six Percent (6%)
Voting Cumulative Preferred Stock of the par value of $0.25 each; thirty
thousand (30,000) shares of Preferred Stock Without Par Value, to be issued in
series by the Board of Directors, pursuant to the provisions of Article 4,
Section (c) hereof, subject to the limitations prescribed by law; and eight
million two hundred thousand (8,200,000) shares of Preferred Stock with $.025
par value, Class A, to be issued in series by the Board of Directors pursuant to
the provisions of Article 4, Section (d) hereof, subject to the limitations
prescribed by law.
FOURTH: Article 4, paragraph (a)(C) of the certificate of incorporation
of the Corporation hereby is amended as follows:
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(a) The definition of "Person" in paragraph (a)(C)(ii) hereby
is amended to read in its entirety as follows:
As used in this Article 4(a)(C), "Person" shall include one or
more persons or entities who act or agree to act in concert with respect to the
acquisition or disposition of Class B Common Stock or with respect to proposing
or effecting a plan or proposal to (a) a merger, reorganization or liquidation
of the Corporation or a sale of a material amount of its assets, (b) a change in
the Corporation's Board of Directors or management, including any plans or
proposal to fill vacancies on the Board of Directors or change the number or
term of Directors, (c) a material change in the business or corporate structure
of the Corporation, or (d) any material change in the capitalization or dividend
policy of the Corporation. As used in the preceding sentence, "act or agree to
act in concert" shall not include acts or agreements to act by persons pursuant
to their official capacities as Directors or officers of the Corporation or
because they are related by blood or marriage; it being determined for purposes
of this paragraph that the agreements dated as of June 22, 1998 made with
respect to capitalization and management changes between the Corporation,
certain of its directors and officers and various shareholders, including
certain shareholders related to said directors and officers and the Investors
(as defined in paragraph (a)(C)(iii) of this Article 4), as they may be amended
from time to time, were "acts or agreements to act by persons pursuant to their
official capacities as Directors or officers of the Corporation or because they
are related by blood or marriage."
(b) The following new paragraph (a)(C)(iii) hereby is added to
Article 4:
"(iii) For purposes of Article 4(a)(C)(ii), any shares of Participating
Preferred Stock (as defined in paragraph (d)(F) of this Article 4) held by Carl
Marks Strategic Investments, L.P., Carl Marks Strategic Investments, II, L.P.,
Uranus Fund, Ltd., or any of their Affiliates (as defined in paragraph (d)(F) of
this Article 4) (the "Investors") shall be deemed to have been converted into
shares of Class A Common Stock that are acquired after the Threshold Date. Any
such shares of Class A Common Stock deemed to be held by the Investors or their
Affiliates pursuant to the preceding sentence or any shares of Class A Common
Stock issued upon conversion of the Convertible Participating Preferred Stock
and held by the Investors shall be deemed to have been acquired for an
"equitable price" for purposes of Article 4(a)(C)(ii)."
(c) The existing paragraph (a)(C)(iii) hereby is renumbered as
paragraph (a)(C)(iv).
FIFTH: The certificate of incorporation of the Corporation is amended to
permit the Board of Directors to provide for additional or participating
distributions to holders of shares of Preferred Stock with $.025 Par Value,
Class A.
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To accomplish this, Article 4, paragraph (d)(C) hereby is
amended to read in its entirety as follows:
(C) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the
holders of shares of each series of Class A Preferred Stock
then outstanding shall be entitled to receive out of the
assets of the Corporation, before any distribution or payment
shall be made to the holders of any class of common stock, an
amount equal to the stated value of the stock plus, in respect
of each share with respect to which dividends are cumulative,
a sum computed at the dividend rate or dividend amount
provided for in the certificate of incorporation from and
after the date on which dividends on such shares became
cumulative to and including the date fixed for such payment,
less the aggregate of the dividends theretofore paid thereon,
but computed without interest. If the amounts payable on
liquidation in respect to the shares of all series of Class A
Preferred Stock are not paid in full, the shares of all series
of such class shall share ratably in any distribution of
assets other than by way of dividends in accordance with the
sums which would be payable in such distribution if all sums
payable were discharged in full. If such payment shall have
been made in full to the holders of all shares of Class A
Preferred Stock on voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the remaining
assets of the Corporation shall, except as otherwise provided
herein, be distributed among the holders of each class of
common stock pro rata in accordance with their respective
holdings. For the purpose of this paragraph, a consolidation
or merger of the Corporation with one or more other
corporations shall not be deemed to be a liquidation or
winding up of the Corporation. In addition to the above-stated
distributions to holders of preferred stock, the Board of
Directors is authorized, in the rights, preferences and other
provisions with respect to any one or more series of Class A
Preferred Stock, to provide for additional or participating
distributions to holders of shares of such series on
liquidation, dissolution or winding up of the Corporation.
SIXTH: The certificate of incorporation of the Corporation hereby is
amended to authorize a third series of Class A Preferred Stock to be designated
Convertible Participating Preferred Stock.
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To accomplish this, the following new Article 4(d)(F) hereby
is added to the certificate of incorporation:
"(F) Third Series of Class A Preferred Stock. The third series
of 4,166,667 shares of Class A Preferred Stock shall be designated Convertible
Participating Preferred Stock (hereinafter "Participating Preferred Stock"), and
shall have the following rights, preferences and limitations:
(i) Stated Value. The stated value for each share of Participating
Preferred Stock shall be $12 (the "Stated Value").
(ii) Dividends and Distributions. At any time after the Issue Date,
the holders of each share of Participating Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, but out of funds
legally available therefor, a dividend or distribution in cash, evidences of
indebtedness of the Corporation or another issuer, options, warrants or rights
to acquire securities or other property (including, without limitation, rights
issued pursuant to a shareholder rights plan, "poison pill" or similar plan or
arrangement and options or rights granted to each holder of Class A Common
Stock), securities of the Corporation or another issuer (excluding securities
for which adjustment is made under paragraph (vii)(d)(1) or paragraph
(vii)(d)(2)) or other property or assets, including, without limitation, any
such distribution made in connection with a consolidation or merger in which the
Corporation is the resulting or surviving corporation), at a rate per share (and
in the type of property) equal to the amount of any dividend or distribution
(and in the same type of property) as that declared or made on any shares
(including, without limitation, Class A Common Stock) into which one share of
Participating Preferred Stock may be converted pursuant to paragraph (vii) below
on the record date for such dividend or distribution. Any such dividend or
distribution shall be paid to the holders of shares of Participating Preferred
Stock at the same time such dividend or distribution is made to the holders of
the shares of Class A Common Stock. No dividend or distribution shall be
declared or made on any shares of Class A Common Stock unless any dividend or
distribution required to be declared or made under the first sentence of this
paragraph is previously or simultaneously declared or made. Dividends and
distributions shall be cumulative from and after the date of issuance of such
shares of Participating Preferred Stock, but any arrearage in payment shall not
pay interest.
(iii) Voting Rights. (a) Except as otherwise required by law or as
set forth in paragraph (b), the holders of shares of Participating Preferred
Stock shall not be entitled or permitted to vote on any matter required or
permitted to be voted upon by the shareholders of the Corporation.
(b) Unless the consent or approval of a greater number of
shares shall then be required by law, the affirmative vote of the holders of at
least 66-2/3% of the outstanding shares of Participating Preferred Stock, voting
separately as a single class, in person or by proxy, at a special or annual
meeting of shareholders called for the purpose,
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shall be necessary to (i) authorize the issuance after the Issue Date of any
class of capital stock that will rank as to payment of dividends or rights on
liquidation, dissolution or winding up of the Corporation senior to the
Participating Preferred Stock, (ii) authorize, adopt or approve an amendment to
the certificate of incorporation that would increase or decrease the par value
of the shares of Participating Preferred Stock, (iii) amend, alter or repeal the
certificate of incorporation so as to affect the shares of Participating
Preferred Stock adversely or (iv) effect the voluntary liquidation, dissolution,
winding up, recapitalization or reorganization of the Corporation, or the
consolidation or merger of the Corporation with or into any other Person, or the
sale or other distribution to another Person of all or substantially all of the
assets of the Corporation; provided, however, that no separate vote of the
holders of Participating Preferred Stock shall be required to effect any of the
transactions described in clause (iv) above unless such transaction would either
require a class vote pursuant to clause (i), (ii) or (iii) above or would
require a vote by any shareholders of the Corporation.
(iv) Redemption. The shares of Participating Preferred Stock shall
not be redeemed or subject to redemption, whether at the option of the
Corporation or any holder thereof, or otherwise.
(v) Acquired Shares. Any shares of Participating Preferred Stock
converted, exchanged, redeemed, purchased or otherwise acquired by the
Corporation or any of its subsidiaries in any manner whatsoever shall be retired
and canceled promptly after the acquisition thereof. All such shares of
Participating Preferred Stock shall upon their cancellation become authorized
but unissued shares of Class A Preferred Stock and, upon the filing of an
appropriate certificate with the Department of State of the State of New York,
may be reissued as part of another series of Class A Preferred Stock subject to
the conditions or restrictions on issuance set forth herein, but in any event
may not be reissued as shares of Participating Preferred Stock unless all of the
shares of Participating Preferred Stock issued on the Issue Date shall have
already been converted or exchanged.
(vi) Participating Distribution upon Liquidation of the Corporation.
In addition to the preferential distribution payable to holders of Participating
Preferred Stock equal to the Stated Value (the "Preferential Distribution") as
provided for under Article 4(d)(C) of this certificate of incorporation, an
additional participating distribution shall be payable to holders of
Participating Preferred Stock upon voluntary or involuntary liquidation,
dissolution or winding up of the Corporation (the "Participating Distribution")
with the effect that the total distribution to holders of the Participating
Preferred Stock shall be the greater of (a) the Preferential Distribution or (b)
the total distribution which holders of Participating Preferred Stock would have
received if all outstanding shares of Participating Preferred Stock were
converted into shares of common stock immediately prior to the date for
calculating the total distribution available to holders of preferred stocks and
common stocks. To achieve the distribution required by the preceding sentence,
the following calculation shall be made:
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(1) Calculate the sum of (a) the total
amounts available for distribution
to holders of all classes of common
stock after payment of all
preferential distributions to all
classes of preferred stocks of the
Corporation, including the
Preferential Distribution to
Participating Preferred Stock, plus
(b) the total amount of the
Preferential Distribution to holders
of all outstanding shares of
Participating Preferred Stock.
(2) Divide the sum calculated in
subparagraph (1) by the total number
of shares of common stock into which
the Participating Preferred Stock is
convertible and of all classes of
common stock deemed outstanding for
purposes of calculating the
distribution on liquidation,
dissolution or winding up of the
Corporation. The product of this
calculation is the "Per Share
Distribution on Assumed Conversion."
(3) The excess, if any, of the Per Share
Distribution on Assumed Conversion
over the Preferential Distribution
to each share of Participating
Preferred Stock shall be distributed
as a Participating Distribution to
the holders of the Participating
Preferred Stock upon liquidation,
dissolution or winding up of the
Corporation.
(vii) Conversion. (a) Any holder of Participating Preferred Stock
shall have the right, as its option, at any time (but subject to the provisions
of paragraph (vii)(b)) to convert, subject to the terms and provisions of this
paragraph (vii), any or all of such holder's shares of Participating Preferred
Stock into such number of fully paid and nonassessable shares of Class A Common
Stock as is equal to the product of the number of shares of Participating
Preferred Stock being so converted multiplied by the quotient of (i) the Stated
Value divided by (ii) the conversion price of $12.00 per share, subject to
adjustment as provided in paragraph (vii)(d) (the "Conversion Price"), then in
effect. Such conversion right shall be exercised by the surrender of the shares
of Participating Preferred Stock to be converted to the Corporation at any time
during usual business hours at its principal place of business to be maintained
by it, accompanied by written notice that the holder elects to convert such
shares and specifying the name or names (with addresses) in which a certificate
or certificates for shares of Class A Common Stock are to be issued and (if so
required by the Corporation) by a written instrument or instruments of transfer
in form reasonably satisfactory to the Corporation duly executed by the holder
or its duly authorized legal representative and transfer tax stamps or funds
therefor, if required pursuant to paragraph (vii)(k). All shares of
Participating Preferred Stock surrendered for conversion shall be delivered to
the Corporation for cancellation and canceled by it and no shares shall be
issued in lieu thereof.
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(b) As promptly as practicable after the surrender, as herein
provided, of any shares of Participating Preferred Stock for conversion pursuant
to paragraph (vii)(a), the Corporation shall deliver to or upon the written
order of the holder of the shares so surrendered a certificate or certificates
representing the number of fully paid non-assessable shares of Class A Common
Stock into which such shares may be or have been converted in accordance with
the provisions of this paragraph (vii). Subject to the following provisions of
this paragraph and of paragraph (vii)(d), such conversion shall be deemed to
have been made immediately prior to the close of business on the date that such
shares shall have been surrendered in satisfactory form for conversion, and the
Person or Persons entitled to receive the Class A Common Stock deliverable upon
conversion of such shares shall be treated for all purposes as having become the
record holder or holders of such Class A Common Stock at such time.
(c) To the extent permitted by law, when shares of
Participating Preferred Stock are converted, all unpaid dividends (whether or
not currently payable) on the Participating Preferred Stock so converted to the
date of conversion shall be immediately due and payable and must accompany the
shares of the Class A Common Stock issued upon such conversion.
(d) The Conversion Price shall be subject to adjustment as
follows:
(1) In case the Corporation shall at any time or from
time to time (A) pay a dividend or make a distribution on the outstanding shares
of Class A Common Stock in Class A Common Stock, (B) sub-divide the outstanding
shares of Class A Common Stock into a larger number of shares, (C) combine the
outstanding shares of Class A Common Stock into a smaller number of shares or
(D) issue any shares of its capital stock in a reclassification of the Class A
Common Stock, then, and in each such case, the Conversion Price in effect
immediately prior to such event shall be adjusted (and any other appropriate
actions shall be taken by the Corporation) so that the holder of any share of
Participating Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number of shares of Class A Common Stock or other
capital stock of the Corporation that such holder would have owned or would have
been entitled to receive upon or by reason of any of the events described above,
had such share of Participating Preferred Stock been converted immediately prior
to the occurrence of such event. An adjustment made pursuant to this paragraph
(vii)(d)(1) shall become effective retroactively (A) in the case of any such
dividend or distribution, to the opening of business on the day immediately
following the close of business on the record date for the determination of
holders of Class A Common Stock entitled to receive such dividend or
distribution or (B) in the case of any such subdivision, combination or
reclassification, to the close of business on the day upon which such corporate
action becomes effective.
(2) In case the Corporation shall at any time or from
time to time issue or sell shares of Class A Common Stock or Class B Common
Stock (or
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securities convertible into or exchangeable for shares of Class A Common Stock
or Class B Common Stock), or any options, warrants or other rights to acquire
shares of Class A Common Stock or Class B Common Stock (other than (x) options
granted to any employee or director of the Corporation pursuant to a stock
option plan approved by the shareholders of the Corporation, (y) options,
warrants or rights granted to each holder of Class A Common Stock or (z) rights
issued pursuant to a shareholder right plans, "poison pill" or similar
arrangement that complies with paragraph (vii)(j)) for a consideration per share
less than the Current Market Price at the record date or issuance date, as the
case may be (the "Date"), referred to in the following sentence (treating the
price per share of any security convertible or exchangeable or exercisable into
Class A Common Stock and/or Class B Common Stock as equal to (A) the sum of the
price for such security convertible, exchangeable or exercisable into Class A
Common Stock and/or Class B Common Stock plus any additional consideration
payable (without regard to any anti-dilution adjustments) upon the conversion,
exchange or exercise of such security into Class A Common Stock and/or Class B
Common Stock divided by (B) the number of shares of Class A Common Stock and/or
Class B Common Stock initially underlying such convertible, exchangeable or
exercisable security), other than issuances or sales for which an adjustment is
made pursuant to another paragraph of this paragraph (vii)(d), then, and in each
case, the Conversion Price then in effect shall be adjusted by dividing the
Conversion Price in effect on the day immediately prior to the Date by a
fraction (x) the numerator of which shall be the sum of the numbers of shares of
Class A Common Stock and Class B Common Stock outstanding immediately prior to
the Date plus the number of additional shares of Class A Common Stock and Class
B Common Stock issued or to be issued (or the maximum number into which such
convertible or exchangeable securities initially may convert or exchange or for
which such options, warrants or other right initially may be exercised) and (y)
the denominator of which shall be the sum of the number of shares of Class A
Common Stock and Class B Common Stock outstanding immediately prior to the Date
plus the number of shares of Class A Common Stock and Class B Common Stock that
the aggregate consideration (if any of such aggregate consideration is other
than cash, as valued by the Board of Directors including a majority of the
directors who are not officers or employees of the Corporation or any of its
subsidiaries, which determination shall be conclusive and described in a
resolution of the Board of Directors) for the total number of such additional
shares of Class A Common Stock and/or Class B Common Stock so issued (or into
which such convertible or exchangeable securities may convert or exchange for
which such options, warrants or other rights may be exercised plus the aggregate
amount of any additional consideration initially payable upon conversion,
exchange or exercise of such security) would purchase at the Current Market
Price. Such adjustment shall be made whenever such shares, securities, options,
warrants or other rights are issued, and shall become effective retroactively to
a date immediately following the close of business (i) in the case of issuance
to shareholders of the Corporation, as such, on the record date for the
determination of shareholders entitled to receive such shares, securities,
options, warrants or other rights and (ii) in all other cases, on the date (the
"Issuance Date") of such issuance; provided, however, that the determination as
to whether an adjustment is required to be made pursuant to this paragraph
(vii)(d)(2) shall only be made upon the issuance of such shares or such
convertible
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<PAGE>
or exchangeable securities, options, warrants or other rights, and not upon the
issuance of the security into which such convertible or exchangeable security
converts or exchanges, or the security underlying such options, warrants or
other right.
(3) In case the Corporation or any subsidiary thereof
shall, at any time or from time to time while any of the Participating Preferred
Stock is outstanding, make a Pro Rata Repurchase, the Conversion Price shall be
adjusted by dividing the Conversion Price in effect immediately prior to such
action by a fraction (which in no event shall be less than one), the numerator
of which shall be the product of (i) the number of shares of Class A Common
Stock and Class B Common Stock outstanding immediately before such Pro Rata
Repurchase minus the number of shares of Class A Common Stock and Class B Common
Stock repurchased in such Pro Rata Repurchase and (ii) the Current Modified
Market Price as of the day immediately preceding the first public announcement
by the Corporation of the intent to effect such Pro Rata Repurchase, and the
denominator of which shall be (i) the product of (x) the number of shares of
Class A Common Stock and Class B Common Stock outstanding immediately before
such Pro Rata Repurchase and (y) the Current Modified Market Price as of the day
immediately preceding the first public announcement by the Corporation of the
intent to effect such Pro Rata Repurchase minus (ii) the aggregate purchase
price of the Pro Rata Repurchase.
(4) In case the Corporation at any time or from time
to time shall take any action affecting its Class A Common Stock, other than an
action described in any of paragraph (vii)(d)(1) through paragraph (vii)(d)(3),
inclusive, or paragraph (vii)(g), then, the Conversion Price shall be adjusted
in such manner and at such time as the Board of Directors of the Corporation in
good faith determines to be equitable in the circumstances (such determinations
to be evidenced in a resolution, a certified copy of which shall be mailed to
the holders of the Participating Preferred Stock).
(5) The Corporation may make such reductions in the
Conversion Price, in addition to those required by subparagraphs (1) through (4)
of this paragraph (vii)(d), as the Board of Directors considers to be advisable
in order to avoid or to diminish any income tax to holders of Class A Common
Stock or rights to purchase Class A Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes.
(6) Notwithstanding anything herein to the contrary,
no adjustment of the Conversion Price shall be required pursuant to this
paragraph (vi)(d) by reason of the initial issuance or sale of any of the
4,166,667 authorized shares of Participating Preferred Stock.
(7) Notwithstanding anything herein to the contrary,
no adjustment under this paragraph (vii)(d) need to be made to the Conversion
Price unless such adjustment would require an increase or decrease of at least
1% of the Conversion Price then in effect. Any lesser adjustment shall be
carried forward and shall be made at the time
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of and together with the next subsequent adjustment, which, together with any
adjustment or adjustments so carried forward, shall amount to an increase or
decrease of at least 1% of such Conversion Price. Any adjustment to the
Conversion Price carried forward and not theretofore made shall be made
immediately prior to the conversion of any shares of Participating Preferred
Stock pursuant hereto; provided, however, that any such adjustment shall in any
event be made no later than one year after the occurrence of the event giving
rise to such adjustment.
(e) Upon any increase or decrease in the Conversion Price,
then, and in each such case, the Corporation promptly shall deliver to each
registered holder of Participating Preferred Stock at least ten Business Days
prior to effecting any of the foregoing transactions a certificate, signed by
the President or a Vice President and by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary of the Corporation, setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the increased or decreased
Conversion Price then in effect following such adjustment.
(f) No fractional shares or scrip representing fractional
shares shall be issued upon the conversion of any shares of Participating
Preferred Stock. If more than one share of Participating Preferred Stock shall
be surrendered for conversion at one time by the same holder, the number of full
shares of Class A Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate Stated Value of the shares of
Participating Preferred Stock so surrendered. If the conversion of any share or
shares of Participating Preferred Stock results in a fraction, an amount equal
to such fraction multiplied by the Current Market Price of the Class A Common
Stock on the Business Day preceding the day of conversion shall be paid to such
holder in cash by the Corporation on the date of issuance of the certificates
representing the shares by the Corporation upon such conversion.
(g) In case of any capital reorganization or reclassification or
other change of outstanding shares of Class A Common Stock, or in case of any
consolidation or merger of the Corporation with or into another Person (other
than a consolidation or merger in which the Corporation is the resulting or
surviving Person and which does not result in any reclassification or change of
outstanding Class A Common Stock), or in case of any sale or other disposition
to another Person of all or substantially all of the assets of the Corporation
(any of the foregoing, a "Transaction"), the Corporation, or such successor or
purchasing Person, as the case may be, shall execute and deliver to each holder
of Participating Preferred Stock at least ten Business Days prior to effecting
any of the foregoing Transactions a certificate that the holder of each share of
Participating Preferred Stock then outstanding shall have the right hereafter to
convert such share of Participating Preferred Stock into the kind and amount of
shares of stock or other securities (of such Corporation or another issuer) or
property or cash receivable upon such Transaction by a holder of the number of
shares of Class A Common Stock into which such share of Participating Preferred
Stock could have been converted immediately prior to such
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transaction. Such certificate shall provide for adjustments that shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
paragraph (vii). If, in the case of any such Transaction, the stock, other
securities, cash or property receivable thereupon by a holder of Class A Common
Stock includes shares of stock or other securities of a Person other than the
successor or purchasing Person and other than the Corporation, which controls or
is controlled by the successor or purchasing Person or which, in connection with
such Transaction, issues, stock securities, other property or cash to holders of
Class A Common Stock, then such certificate also shall be executed by such
Person, and such Person shall, in such certificate, specifically acknowledge the
obligations of such successor or purchasing Person and acknowledge its
obligations to issue such stock, securities, other property or cash to the
holders of the Participating Preferred Stock upon conversion of the shares of
Participating Preferred Stock as provided above. The provisions of this
paragraph (vii) and any equivalent thereof in any such certificate similarly
shall apply to successive Transactions.
(h) In case at any time or from time to time:
(1) the Corporation shall authorize the granting to the
holders of its Class A Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or of any other rights or warrants;
(2) there shall be any reclassification of the Class A
Common Stock (other than a subdivision or combination of the outstanding Class A
Common Stock, or a change in par value, or from par value to no par value, or
from no par value to par value), or any consolidation or merger to which the
Corporation is a party and for which approval of any shareholders of the
Corporation is required, or any sale or other disposition of all or
substantially all of the assets of the Corporation; or
(3) the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall mail to each holder of shares of Participating
Preferred Stock at such holder's address as it appears on the transfer books of
the Corporation, at least 20 days prior to the applicable date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such rights or warrants or, if a record is not to be taken, the
date as of which the holders of Class A Common Stock of record to be entitled to
such rights are to be determined, or (y) the date on which such
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding up is expected to become effective. Such notice also
shall specify the date as of which it is expected that holders of Class A Common
Stock of record shall be entitled to exchange their Class A Common Stock for
shares of stock or other securities or property or cash deliverable upon such
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding up.
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(i) The Corporation shall at all times reserve and keep
available for issuance upon the conversion of the Participating Preferred Stock,
such number of its authorized but unissued shares of Class A Common Stock as
will from time to time be sufficient to permit the conversion of all outstanding
shares of Participating Preferred Stock.
(j) The Corporation shall not adopt a shareholder rights
plan, "poison pill" or similar arrangement unless such plan or arrangement shall
provide that each holder of a share of Participating Preferred Stock shall be
entitled to receive thereunder rights for each share of Class A Common Stock
that may be issued upon conversion of such share of Participating Preferred
Stock in an amount equal to the amount of rights issued with respect to each
outstanding share of Class A Common Stock pursuant to such plan.
(k) The issuance or delivery of certificates for Class A
Common Stock upon the conversion of shares of Participating Preferred Stock
shall be made without charge to the converting holder of shares of Participating
Preferred Stock for such certificates or for any tax in respect of the issuance
or delivery of such certificates or the securities represented thereby, and such
certificates shall be issued or delivered in the respective names of, or in such
names as may be directed by, the holders of the shares of Participating
Preferred Stock converted; provided, however, that the Corporation shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such certificate in a name other than that
of the holder of the shares of Participating Preferred Stock converted, and the
Corporation shall not be required to issue or deliver such certificates unless
or until the Person or Persons requesting the issuance or delivery thereof shall
have paid to the Corporation the amount of such tax or shall have established to
the reasonable satisfaction of the Corporation that such tax has been paid.
(l) To the extent that pursuant to the terms of this
paragraph (vii), the Participating Preferred Stock is convertible into any
securities or property other than Class A Common Stock, then for purposes of
this Article 4(d)(F), references to Class A Common Stock shall be deemed
appropriately amended to refer to such other securities or property.
(viii) Definitions. As used in this Article 4(d)(F), the
following terms shall have the meanings indicated:
(a) An "Affiliate" of, or a person "affiliated" with a
specified Person, means a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the Person specified. The term "control" (including the terms
"controlling," "controlled by" and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a person, whether through the ownership of voting
securities, by contract, or otherwise.
12
<PAGE>
(b) "Business Day" shall mean any day other than a
Saturday, Sunday or other day on which commercial banks in the City of New York
are authorized or required by law or executive order to close.
(c) "Current Market Price" per share shall mean, on any
date specified herein for the determination thereof, (A) the average daily
Market Price of the Class A Common Stock for those days during the period
commencing not more than 30 days before, and ending not later than such date, on
which the national securities exchanges were open for trading or the Class A
Common Stock was quoted in the over-the-counter market, and (B) if the Class A
Common Stock is not then listed or admitted to trading on any national
securities exchange or quoted in the over-the-counter market, the Market Price
on such date.
(d) "Current Modified Market Price" per share shall mean,
on any date specified herein for the determination thereof, (A) the average
daily Modified Market Price of the Class A Common Stock for those days during
the period commencing not more than 30 days before, and ending not later than
such date, on which the national securities exchanges were open for trading or
the Class A Common Stock was quoted in the over-the-counter market, and (B) if
the Class A Common Stock is not then listed or admitted to trading on any
national securities exchange or quoted in the over-the-counter market, the
Modified Market Price on such date.
(e) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Securities and
Exchange Commission thereunder.
(f) "Fair Market Value" shall mean the amount which a
willing buyer would pay a willing seller in an arm's length transaction.
(g) "Issue Date" shall mean the first date on which
shares of Participating Preferred Stock are issued.
(h) "Market Price" shall mean, per share of Class A
Common Stock, on any date specified herein: (a) the closing price per share of
the Class A Common Stock on such date published in The Wall Street Journal or,
if no such closing price on such date is published in The Wall Street Journal,
the closing bid price on such date, as officially reported on the principal
national securities exchange on which the Class A Common Stock is then listed or
admitted to trading; or (b) if the Class A Common Stock is not then listed or
admitted to trading on any national securities exchange but is designated as a
national market system security by the NASD, the last trading price of the Class
A Common Stock on such date; or (c) if there shall have been no trading on such
date or if the Class A Common Stock is not so designated, the reported closing
bid price of the Class A Common Stock, on such date as shown by the Nasdaq
National Market or other over-the-counter market and reported by any member firm
of the New York Stock Exchange selected
13
<PAGE>
by the Corporation; or (d) if none of (a), (b) or (c) is applicable, a market
price per share determined at the Corporation's expense by a nationally
recognized appraiser chosen by the holders of a majority of the shares of
Participating Preferred Stock and approved by the Corporation, which approval
shall not be unreasonably withheld. If no such appraiser is chosen more than 20
Business Days after notice of the necessity of such calculation shall have been
delivered by the Corporation to the holders of Participating Preferred Stock,
then the appraiser shall be chosen by the Corporation.
(i) "Modified Market Price" shall mean, per share of Class
A Common Stock, on any date specified herein: (a) the closing price per share of
the Class A Common Stock on such date published in The Wall Street Journal or,
if no such closing price on such date is published in The Wall Street Journal,
the closing asked price on such date, as officially reported on the principal
national securities exchange on which the Class A Common Stock is then listed or
admitted to trading; or (b) if the Class A Common Stock is not then listed or
admitted to trading on any national securities exchange but is designated as a
national market system security by the NASD, the last trading price of the Class
A Common Stock on such date; or (c) if there shall have been no trading on such
date or if the Class A Common Stock is not so designated, the reported closing
asked price of the Class A Common Stock on such date as shown by the Nasdaq
National Market or other over-the-counter market and reported by any member firm
of the New York Stock Exchange selected by the Corporation; or (d) if none of
(a), (b) or (c) is applicable, a market price per share determined at the
Corporation's expense by a nationally recognized appraiser chosen by the holders
of a majority of the shares of Participating Preferred Stock and approved by the
Corporation, which approval shall not be unreasonably withheld. If no such
appraiser is chosen more than 20 Business Days after notice of the necessity of
such calculation shall have been delivered by the Corporation to the holders of
Participating Preferred Stock, then the appraiser shall be chosen by the
Corporation.
(j) "NASD" shall mean the National Association of
Securities Dealers, Inc.
(k) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company or partnership, trust, incorporated or
unincorporated association, joint venture, joint stock company, government (or
any agency or political subdivision thereof) or other entity of any kind, and
shall include any successor (by merger or otherwise) of such entity.
(l) "Pro Rata Repurchase" shall mean any purchase of
shares of Class A Common Stock or Class B Common Stock by the Corporation or by
any of its subsidiaries whether for cash, shares of capital stock of the
Corporation, other securities of the Corporation, evidences of indebtedness of
the Corporation or any other Person or any other property (including, without
limitation, shares of capital stock, other securities or evidences of
indebtedness of a subsidiary of the Corporation), or any combination thereof,
effected while any of the shares of Participating Preferred Stock are
outstanding, which
14
<PAGE>
purchase is subject to Section 13(e) of the Exchange Act or is made pursuant to
an offer made available to all holders of Class A Common Stock or Class B Common
Stock.
SEVENTH: The certificate of incorporation of the Corporation is hereby amended
to require unanimous approval of the Corporation's Board of Directors for
certain major corporate actions.
To accomplish this, the following new Article 10 hereby is
added to the certificate of incorporation:
10. Until such time as the Investors and any permitted assignees under
the Shareholders Agreement shall own, in the aggregate, 15% or less of
the outstanding Class A Common Stock (assuming conversion of all shares
of Participating Preferred Stock into Class A Common Stock):
(a) All of the directors of the Corporation shall be present
at any meeting of the directors in order to constitute a quorum for the
transaction of any Major Corporate Actions (as defined in subparagraph (b))
below; and
(b) Each of the following actions (the "Major Corporate
Actions") shall require the unanimous approval of all of the Corporation's
directors voting thereon (excluding directors who abstain from voting):
(i) any amendment or modification of the Corporation's
Restated Certificate of Incorporation, as amended, or ByLaws;
(ii) any merger, consolidation, amalgamation,
recapitalization or other form of business combination (other that any
acquisition that would be permitted under paragraph (d) below)
involving the Corporation or any subsidiary of the Corporation;
(iii) any sale, conveyance, lease, transfer or other
disposition of all or substantially all of the assets of the
Corporation;
(iv) any single acquisition or disposition or series
of related acquisitions or disposition of assets, including stock
(whether by purchase, merger or otherwise), in the Principal Line of
Business (as hereinafter defined) of the Corporation involving gross
consideration in excess of $15 million;
(v) any change in the line of business (food
processing, packaging, distribution and canning of fruits and
vegetables and other business operations complementary or incidental
thereto) of the Corporation and its subsidiaries (the "Principal Line
of Business"), whether by acquisition of assets or otherwise; provided,
that the Corporation and its subsidiaries may
15
<PAGE>
change or dispose of any existing business or acquire any business
that, in each case, is not within their Principal Line of Business, if
the consolidated net sales from all such business engaged in (or
proposed to be engaged in) by the Corporation and its subsidiaries do
not exceed in the aggregate 2% of the consolidated net sales of the
Corporation and its subsidiaries (determined by reference to the latest
annual or quarterly period in the latest available consolidated
financial statements of the Corporation and any business proposed to be
acquired);
(vi) any issuance of or agreement to issue, or any
repurchase, redemption or other acquisition or agreement to repurchase,
redeem or otherwise acquire, any shares of capital stock of the
Corporation or any of its subsidiaries or rights of any kind
convertible into or exercisable or exchangeable for, any shares of
capital stock of the Corporation or any of its subsidiaries, or any
option, warrant or other subscription or purchase right with respect to
shares of capital stock except for (i) any stock buybacks not to exceed
$100,000 in any one transaction or $1 million in the aggregate and (ii)
any issuances of shares of Class A Common Stock pursuant to the terms
of Seneca Foods Corporation Employees' Savings Plan in effect on the
date hereof;
(vii) any change in the Corporation's certified
public accountants from Deloitte & Touche LLP, or any successor of
Deloitte & Touche LLP;
(viii) the settlement of any litigation to which the
Corporation or any of its subsidiaries is a party involving the payment
by the Corporation or its subsidiaries of an aggregate amount greater
than 5% of the Company's Adjusted Tangible Net Worth, or involving the
consent to any injunctive or similar relief; and
(ix) the commencement by the Corporation or any of
its subsidiaries or proceedings under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for
it or for all or any substantial part of its assets, or the making by
the Corporation or any of its subsidiaries of a general assignment for
the benefit of its creditors.
16
<PAGE>
To the extent that the above-referenced Board approval is not obtained with
respect to any Major Corporate Action, the Corporation may not take or perform
such Major Corporate Action. For purposes of paragraph (h) above, the
Corporation's "Adjusted Tangible Net Worth" shall mean (i) the net book value
(after deducting related depreciation, obsolescence, amortization, valuation and
other proper reserves, which reserves will be determined in accordance with
generally accepted accounting principles) at which the assets of the Corporation
and its subsidiaries on a consolidated basis (except (w) patents, copyrights,
trademarks, trade names, franchises, goodwill and other similar intangibles, (x)
unamortized debt discount and expense, (y) accounts, notes and other receivables
due from any person directly or indirectly controlling, controlled by or under
common control with the Corporation, and (z) write-ups in the book value of any
fixed asset resulting from a revaluation thereof effective after June 22, 1998)
are shown on the latest available consolidated balance sheet of the Corporation
on such date minus (ii) the amount at which the liabilities of the Corporation
and its subsidiaries are shown on such consolidated balance sheet (including as
liabilities all reserves for contingencies and other potential liabilities as
shown on such consolidated balance sheet).
EIGHTH: The manner in which shares of the Corporation shall be changed hereby
upon the filing of this certificate by the Department of State is as follows:
<TABLE>
<CAPTION>
Shares Changed Hereby Shares Resulting From Change
<S> <C>
Class A Common Stock with a par value of Class A Common Stock with a par value of
$0.25 per share: $0.25 per share:
3,143,125 issued shares 3,143,125 issued shares
6,856,875 unissued shares 16,856,875 unissued shares
Preferred Stock with $.025 par value per Preferred Stock with $.025 par value per
share, Class A: share, Class A:
807,240 issued shares 807,240 issued shares
3,192,760 unissued shares 7,392,760 unissued shares
</TABLE>
NINTH: The foregoing amendments of the certificate of incorporation were
authorized at a meeting of the Board of Directors, followed by the votes cast in
person or by proxy of the holders of record of a majority of the outstanding
shares entitled to vote at a special shareholders meeting of the Corporation
with respect to the remaining amendments set forth in this Certificate.
17
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this
Certificate of Amendment to be executed this _____ day of _____________ 1998,
and affirm that the statements made herein are true under penalty of perjury.
SENECA FOODS CORPORATION
By:___________________________
Name: Kraig H. Kayser
Title: President
By:___________________________
Name: Jeffrey L. Van Riper
Title: Secretary
18
<PAGE>
For Immediate Release Contact: Seneca Foods Corporation
Philip G. Paras
(716) 383-4643
<PAGE>
SENECA FOODS CORPORATION ANNOUNCES AN AGREEMENT
FOR A $44 TO $50 MILLION EQUITY INVESTMENT IN THE COMPANY
AND FISCAL YEAR 1998 RESULTS
ROCHESTER, New York, June 22, 1998 -- Seneca Foods Corporation announced today
that it has entered into an agreement for a $44 million to $50 million equity
investment in Seneca. Carl Marks Strategic Investments, L.P. and certain of its
affiliates have agreed to make a $14 million equity investment in a new series
of convertible participating preferred stock. In addition, the agreement
provides for a $36 million Rights Offering for shares of the convertible
participating preferred stock to the holders of Seneca's Class A and Class B
Common Stock. The purchase price for the shares of convertible participating
preferred stock to be purchased by the Carl Marks investors or holders of rights
in the Rights Offering will be $12 per share. Seneca expects to use the net
proceeds from the equity investment to reduce its outstanding indebtedness.
Seneca's President/CEO, Kraig H. Kayser stated that "The $44 to $50 million
equity investment by our shareholders and the Carl Marks investors is a very
welcome development for Seneca. The investment commitment by the Carl Marks
investors, a respected and knowledgeable financial group whose principals have
been long-term Seneca shareholders, will allow Seneca to proceed with its
business plan and reduce indebtedness."
The convertible participating preferred stock will not pay regular dividends
(except for dividends paid at the same rate and at the same time as dividends
paid on Seneca's Common Stock) and will be convertible share-for-share into
Seneca's Class A Common Stock at any time. In the Rights Offering, Seneca's
common shareholders will receive one right for every two shares of outstanding
Common Stock. Each right allows the holder to acquire, for $12 per share, a
share of convertible participating preferred stock. The Carl Marks investors
have agreed to act as standby purchasers of shares of convertible participating
preferred stock not purchased by Seneca's shareholders in the Rights Offering
(up to a maximum of 2.5 million shares, or $30 million). Certain significant
shareholders of Seneca Common Stock, including Arthur Wolcott and Kraig Kayser,
Seneca's chairman and president/CEO, respectively, and their families, have
agreed not to exercise the rights issued to them in the Rights Offering. This
will assure that the Carl Marks investors will acquire, as standby purchasers,
at least 810,374 shares of convertible participating preferred stock in addition
to the 1,166,667 shares of convertible participating preferred stock to be
purchased directly from Seneca.
As part of the transaction, Seneca's Board of Directors will be increased by two
persons who will be designated by the Carl Marks investors. The directors
designated by the Carl Marks investors will also fill a comparable percentage of
seats on the Board's committees. The agreements relating to the transaction
contain other provisions respecting corporate governance (including a
requirement that certain material transactions be unanimously approved by the
Board of Directors of Seneca).
The purchase price of $12 per share of convertible participating preferred stock
(and the conversion price for the Class A Common Stock) represents both a
discount of $3.00 per share from Seneca's tangible book value per common share
of approximately $15 and a $3.50 per share discount from the $15.50 closing
price of an equivalent share of Class A Common Stock, as reported by the Nasdaq
National Stock Market on June 19, 1998. Accordingly, existing Seneca
shareholders will incur potential dilution to both the market value and tangible
book value of their shares of common stock.
The transaction is subject to certain conditions, including approval by Seneca's
shareholders and the effectiveness of a registration statement relating to the
Rights Offering. Certain substantial Seneca shareholders, including the Wolcott
and Kayser shareholders previously mentioned, have agreed to vote their shares
(which represent approximately 39% of the total shareholder vote) in favor of
the transaction. The closing of the transaction is expected to occur by the end
of October 1998.
In a related development, Seneca announced that for the fiscal year ended March
31, 1998, net sales totaled $703,220,000 versus $730,135,000 for the comparable
period last year. The current year's net loss was $5,144,000, or $.87 per share,
compared with net earnings of $7,531,000, or $1.27 per share, last year.
Mr. Kayser stated that "The year's performance was obviously disappointing;
however, this has been a transition year for Seneca and the industry. Vegetable
selling prices were at or near historical lows for much of the year and there
were several acquisitions by Seneca as well as our competitors which resulted in
industry consolidation."
Seneca is primarily a fruit and vegetable processing company with manufacturing
facilities located throughout the United States. Its products are sold under the
Seneca, Libby's and TreeSweet labels as well as through the private label and
industrial markets. In addition, under an alliance with The Pillsbury Company,
Seneca produces canned and frozen vegetables which are sold by Pillsbury under
the Green Giant label. Seneca's common stock is traded on the Nasdaq National
Stock Market under the symbols "SENEA" and "SENEB".
Certain statements in this press release contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Investors are cautioned that these
statements involve risks and uncertainties, which may cause actual results or
achievements to be materially different from any future results or achievements
expressed or implied by the forward-looking statements. These risks include, but
are not limited to, product demand and industry conditions; weather and other
conditions effecting growing cycles and crop production; the impact of
competitive products and pricing; the effect of Seneca's accounting policies;
and other risks detailed in Seneca's filings with the U.S. Securities and
Exchange Commission.
This announcement shall not constitute an offer for any security described
herein and the offering of any security in the Rights Offering shall only be
made by means of a prospectus in a registration statement filed with the U.S.
Securities and Exchange Commission.
316708
<TABLE>
Seneca Foods Corporation
Consolidated Statements of Net Earnings
For the Periods Ended March 31, 1998 and 1997
(In thousands of dollars, except share data)
<CAPTION>
Year-to-Date
------------------------------
1998 1997
-------------- -------------
<S> <C> <C>
Net sales $ 703,220 $ 730,135
Other income (see note) - 8,308
-------------- -------------
Total revenue $ 703,220 $ 738,443
============== =============
Earnings (loss) before income taxes $ (8,457) $ 11,746
Income taxes (3,313) 4,215
-------------- -------------
Net earnings (loss) $ (5,144) $ 7,531
============== =============
Basic earnings (loss) per share $ (0.87) $ 1.27
============== =============
Diluted earnings (loss) per share $ (0.87) $ 1.25
============== =============
Weighted average shares outstanding 5,939,680 5,939,680
<FN>
Note: Prior year-to-date other income includes the gain on the sale of the
Company's investment in Moog Class A Common Stock of $7,501,000, a gain
on the sale of the Company's facility in Clifton Park, New York of
$1,640,000, and a loss on the sale of the Company's facility in Eau
Claire, Michigan of $833,000.
</FN>
</TABLE>
