EXHIBIT 10.66
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AMENDMENT TO INVESTMENT AND STOCK PURCHASE AGREEMENT
Reference is made to a certain Investment and Stock Purchase Agreement,
dated as of December 2, 1999 (the "Original Agreement"), by and between ANNIE'S
HOMEGROWN INC. ("Annie's"), a Delaware corporation, and HOMEGROWN NATURAL FOODS,
INC. (formerly known as Homegrown Holdings Corp.) ("Homegrown"), a Delaware
corporation. This Amendment to the Original Agreement is made as of October 16,
2000. Capitalized terms not defined in this Amendment shall have the meaning
given to them in the Original Agreement.
BACKGROUND
A. Annie's and Homegrown entered into the Original Agreement to define
and establish the terms and conditions of a certain cash investment by Homegrown
in exchange for (I) a certain $1,000,000 unsecured subordinated promissory note
bearing interest at 9% per annum, providing for interest only payments for five
years with principal then being due (the "Note"); and (II) preferred stock
having an aggregate par value of $2,000,000 redeemable at par with a liquidation
preference of par plus 10% per annum and having the voting rights of 1,000,000
shares of Common Stock of Annie's; and (III) a Warrant to purchase 1,500,000
shares of Annie's Common Stock, par value $.001 (the "Warrant").
B. Pursuant to the terms and conditions of the Original Agreement,
Annie's and Homegrown agreed to place the Note and Warrant into escrow with
Kirkpatrick & Lockhart LLP pending funding of the Note.
C. The Note has not been funded.
D. The parties wish to terminate the Note and Warrant and all legal
obligations and rights arising thereform.
AGREEMENT
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In consideration of the foregoing, the mutual agreement of the parties,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Annie's and Homegrown agree as follows:
1. The cover page of the Original Agreement is hereby amended by
striking ". . . $1,000,000 9% Subordinated Note and Series A Convertible
Preferred Stock With Aggregate Par Value of $2,000,000 and Warrant to Purchase
Shares of Common Stock" and replacing it with "Series A Convertible Preferred
Stock With Aggregate Par Value of $2,000,000."
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2. Section 1.1 of the Original Agreement is hereby amended by striking
"(i) its unsecured subordinated promissory note in the principal amount of
$1,000,000, bearing interest at 9% per annum, providing for interest only
payments for five years with principal then being due (the "Note"), (ii)
preferred stock having an aggregate par value of $2,000,000 redeemable at par
with a liquidation preference of par plus 10% per annum and having the voting
rights of 1,000,000 shares of Common Stock of ANNIE'S (the "Series A Convertible
Preferred Stock"), and (iii) a Warrant to purchase 1,500,000 shares of the
Common Stock of ANNIE'S, par value $.001 (the "Common Stock")." and replacing it
with "preferred stock having an aggregate par value of $2,000,000 redeemable at
par with a liquidation preference of par plus 10% per annum and having the
voting rights of 1,000,000 shares of Common Stock of ANNIE'S (the "Series A
Convertible Preferred Stock")."
3. Section 1.2 of the Original Agreement is hereby amended by striking
"The Note. The Note shall be in an aggregate principal amount of $1,000,000 due
on the fifth anniversary of its issuance, and shall be (i) dated the date of
issue, (ii) expressed to bear interest prior to maturity at the rate of 9% per
annum, payable semi-annually on the last day of June and December in each year
commencing on the first of such dates after the date of issuance thereof, and at
maturity, and to bear interest on any overdue installment of interest or payment
of principal in the amount of 1% per month for each month that payment is so
overdue, until paid, (iii) expressed to mature on the fifth anniversary of its
issue, (iv) subordinate to any payments due to current or future bank or
institutional lenders of ANNIE'S and (v) otherwise substantially in the form
attached hereto as Exhibit "A". Interest on the Note shall be computed on the
basis of a 360-day year of twelve 30-day months.
ANNIE'S shall have the privilege of prepaying the outstanding Note, in
whole or in part without penalty. Prepayment on the Note shall be made by the
payment of the aggregate principal amount remaining unpaid on the Note and
accrued interest thereon to the date of such prepayment. Any prepayment of less
than the balance of principal and accrued interest on the Note shall be applied
to the payment in full of the Note." and replacing it with "[INTENTIONALLY
OMITTED]."
4. Section 1.3 of the Original Agreement is hereby amended by striking
"The Warrant. At the time of the issuance of the Note, ANNIE'S shall issue,
convey, transfer, assign and deliver to HOLDINGS, a Warrant substantially in the
form attached hereto as Exhibit "B" to purchase the Common Stock (the
"Warrant").
The Warrant shall have a term of five years and shall have an exercise
price equal to $2.00 per share of Common Stock until the third anniversary of
the Closing (as defined in ss.2); $2.50 during the six months thereafter; $3.00
from then to the fourth anniversary of the Closing; $3.50 for six months
thereafter; and $4.00 per share from four and one-half years after the Closing
until expiration of the Warrant.
In the event the net sales of ANNIE'S for the fiscal year ended March
31, 2000 do not equal or exceed $9,500,000 or the "adjusted net income" of
ANNIE'S for that
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fiscal year is not positive, the exercise price of the Warrant shall be reduced
by $.50 per share from each of the prices set forth above. "Net Sale" means the
gross sales price arising from the sales by ANNIE'S of goods during the fiscal
year ended March 31, 2000 (recorded in accordance with generally accepted
accounting principles) net of returns or disputed transactions. "Adjusted net
income" is defined on Exhibit "C" hereto.
The rights, powers and terms of the Common Stock will be provided for
in ANNIE'S Certificate of Incorporation and Certificate of Designation in effect
on the Closing Date, and as otherwise provided by the Delaware General
Corporation Law." and replacing it with "[INTENTIONALLY OMITTED]."
5. Section 2.1 of the Original Agreement is hereby amended by striking
"On the Closing Date, ANNIE'S also agrees to execute and place in escrow with
Kirkpatrick & Lockhart LLP, counsel to ANNIE'S, the Note and Warrant to be held
according to an Escrow Agreement by and among HOLDINGS, ANNIE'S and Kirkpatrick
& Lockhart LLP as Escrow Agent (the "Escrow Agreement"). Pursuant to the terms
of the Escrow Agreement, the Note and Warrant shall be released to the escrow
agent (the "Pledge Escrow Agent") identified in the Pledge and Escrow Agreement
(the "Pledge Agreement"), dated the date hereof, between HOLDINGS, Ann E. Withey
and Andrew M. Martin, on behalf of HOLDINGS and subject to the Pledge Agreement,
upon the receipt by ANNIE'S of the remaining $1,000,000 of the Investment, which
HOLDINGS shall be obligated to deliver to ANNIE'S on or before April 30, 2000,
unless ANNIE'S is then insolvent or bankrupt." and replacing it with
"[INTENTIONALLY OMITTED]."
6. Section 2.2 of the Original Agreement is hereby amended by striking
"ANNIE'S shall also deliver to Kirkpatrick & Lockhart LLP, as Escrow Agent, the
Note and Warrant, to be held by the Escrow Agent pursuant to the terms of the
Escrow Agreement."
7. Section 5.1 of the Original Agreement is hereby amended by striking
"HOLDINGS understands that the securities it is purchasing hereunder (or will
acquire upon conversion of the Series A Preferred Stock or upon exercise of the
Warrant) are characterized as restricted securities under Federal laws because
they are being acquired from ANNIE'S in a transaction not involving a public
offering and that under such laws and applicable regulations the securities may
be resold without registration under Federal securities laws only in certain
limited circumstances. HOLDINGS represents, and in entering into this Agreement
ANNIE'S understands, that HOLDINGS is acquiring the Note, the Warrant and the
Series A Convertible Preferred Stock for the purpose of investment and not with
a view to the distribution thereof, and that HOLDINGS has no present intention
of selling, negotiating or otherwise disposing of the Note, the Warrant or the
Series A Convertible Preferred Stock; it being understood, however, that the
disposition of HOLDINGS' property will at all times be and remain within its
control." and replacing it with "HOLDINGS understands that the securities it is
purchasing hereunder (or will acquire upon conversion of the Series A Preferred
Stock) are characterized as restricted securities under Federal laws because
they are being acquired from ANNIE'S in a transaction not involving a public
offering and that under
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such laws and applicable regulations the securities may be resold without
registration under Federal securities laws only in certain limited
circumstances. HOLDINGS represents, and in entering into this Agreement ANNIE'S
understands, that HOLDINGS is acquiring the Series A Convertible Preferred Stock
for the purpose of investment and not with a view to the distribution thereof,
and that HOLDINGS has no present intention of selling, negotiating or otherwise
disposing of the Series A Convertible Preferred Stock; it being understood,
however, that the disposition of HOLDINGS' property will at all times be and
remain within its control."
8. Section 5.2 of the Original Agreement is hereby amended by striking
"The issuance of the Series A Convertible Preferred Stock as contemplated by
this Agreement (and the Common Stock that would be issued upon conversion of the
Series A Preferred Stock or upon exercise of the Warrant) is exempt from the
registration requirements of the Securities Act 1933 as amended and the
registration and qualification requirements of applicable California securities
laws, and neither ANNIE'S nor anyone acting on its behalf will take any action
that would cause the loss of such exemptions." and replacing it with "The
issuance of the Series A Convertible Preferred Stock as contemplated by this
Agreement (and the Common Stock that would be issued upon conversion of the
Series A Preferred Stock) is exempt from the registration requirements of the
Securities Act 1933 as amended and the registration and qualification
requirements of applicable California securities laws, and neither ANNIE'S nor
anyone acting on its behalf will take any action that would cause the loss of
such exemptions."
9. Section 10.1(c) of the Original Agreement is hereby amended by
striking "Default shall occur in the observance or performance of the agreements
and undertakings of ANNIE'S set forth in the Warrant or any such Warrant shall
be held by a court of competent jurisdiction to be invalid or unenforceable in
any material respect;" and replacing it with "Default shall occur in the
observance or performance of the agreements;"
10. Section 11.1 of the Original Agreement is hereby amended by
striking "ANNIE'S will pay all of its expenses in connection with this Agreement
and the transactions contemplated hereby. ANNIE'S will pay and save HOLDINGS
harmless against any and all liability with respect to stamp and other taxes, if
any, which may be payable in connection with the execution and delivery of this
Agreement, the Note, the Warrant or Series A Convertible Preferred Stock,
whether or not the Note, Warrant or Series A Convertible Preferred Stock are
then outstanding." and replacing it with "ANNIE'S will pay all of its expenses
in connection with this Agreement and the transactions contemplated hereby.
ANNIE'S will pay and save HOLDINGS harmless against any and all liability with
respect to stamp and other taxes, if any, which may be payable in connection
with the execution and delivery of this Agreement or the Series A Convertible
Preferred Stock, whether or not the Series A Convertible Preferred Stock is then
outstanding."
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11. Section 11.4 of the Original Agreement is hereby amended by
striking "All covenants, representations and warranties made by ANNIE'S herein
and in any certificates delivered pursuant hereto, whether or not in connection
with the Closing Date, will survive the closing and the delivery of this
Agreement, the Note, the Warrant and the Series A Convertible Preferred Stock,
for a period of nine months from the Closing Date." and replacing it with "All
covenants, representations and warranties made by ANNIE'S herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date, will survive the closing and the delivery of this Agreement and
the Series A Convertible Preferred Stock, for a period of nine months from the
Closing Date."
12. Section 11.6 of the Original Agreement is hereby amended by
striking "This Agreement and the Notes, Warrant, and Series A Convertible
Preferred Stock issued and sold hereunder shall be governed by and construed in
accordance with Delaware law." and replacing it with "This Agreement and the
Series A Convertible Preferred Stock issued and sold hereunder shall be governed
by and construed in accordance with Delaware law."
IN WITNESS WHEREOF, this Amendment has been executed as of the date set
forth above.
ANNIE'S HOMEGROWN INC.
By: /s/ Paul Nardone
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Paul Nardone, President and CEO
HOMEGROWN NATURAL FOODS, INC.
By: /s/ John Foraker
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John Foraker, President
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